<PAGE>
As filed with the Securities and Exchange Commission on September 1, 1998
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
-----------------
AMERICAN MARINE RECREATION, INC.
(Name of small business issuer in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 5551 59-3518196
-------- ---- ----------
(State or other jurisdiction of (Primary Standard Industrial Classification (I.R.S. Employer
incorporation or organization) Code Number) Identification No.)
</TABLE>
1924 33rd Street
Orlando, Florida 32834
(407) 422-8141
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
------------------
Joseph G. Pozo, Jr., President
American Marine Recreation, Inc.
1924 33rd Street
Orlando, Florida 32834
(407) 422-8141
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
Copies to:
Martin C. Licht, Esq. Robert J. Mittman, Esq.
McLaughlin & Stern, LLP Tenzer Greenblatt LLP
260 Madison Avenue 405 Lexington Avenue
New York, New York 10016 New York, New York 10174
Telephone: (212) 448-1100 Telephone: (212) 885-5000
Facsimile: (212) 448-6260 Facsimile: (212) 885-5001
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 on 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. [X]
If this Form is filed to register additional securities 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 this Form is a post-effective amendment filed pursuant to Rule
462(d) 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, please check the following box. [ ]
------------------
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 Section 8(a), may
determine.
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Proposed maximum Proposed maximum Amount of
Title of each class of securities to be Amount to be offering price per aggregate offering registration fee
registered registered security (1) price (1) (2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share...................................... 2,507,000(3) $9.00 $22,563,000 $6,656.09
- ---------------------------------------------------------------------------------------------------------------------------------
Representatives' Warrants (4).............. 218,000 $.001 $218.00 $-------(5)
- ---------------------------------------------------------------------------------------------------------------------------------
Shares of Common Stock issuable upon
exercise of the Representatives'
Warrants................................... 218,000(6) $11.40 $2,485,200 $ 733.13
- ---------------------------------------------------------------------------------------------------------------------------------
Total Registration Fee.......................................................................................... $7,389.22
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated in accordance with Rule 457 under the Securities Act of 1933, as
amended.
(3) Includes 327,000 shares of Common Stock which the Representatives may
purchase to cover over-allotments, if any.
(4) Represents warrants to be issued by the Company to the Representatives at
the time of delivery and acceptance of the securities to be sold by the
Company to the public hereunder.
(5) None, pursuant to Rule 457(g).
(6) Pursuant to Rule 416, there are also being registered such additional
securities as may become issuable pursuant to the anti-dilution provisions
contained in the Representatives' Warrants.
<PAGE>
AMERICAN MARINE RECREATION, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item No. Caption in Form SB-2 Location in Prospectus
- -------- -------------------- ----------------------
<S> <C> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus................................. Outside Front Cover.
2. Inside Front and Outside Bank Cover Pages of
Prospectus ................................................... Inside Front and Outside Back Covers.
3. Summary Information; Risk Factors.............................. Prospectus Summary; Risk Factors.
4. Use of Proceeds................................................ Use of Proceeds.
5. Determination of Offering Price................................ Underwriting.
6. Dilution....................................................... Dilution.
7. Plan of Distribution........................................... Underwriting.
8. Directors, Executive Officers, Promoters and
Control Persons................................................ Management; Certain Transactions.
9. Security Ownership of Certain Beneficial Owners and
Management.................................................... Principal Stockholders.
10. Description of Securities ..................................... Description of Securities; Underwriting.
11. Interests of named Experts and Counsel......................... Legal Matters; Experts.
12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities................................ Description of Securities.
13. Organization Within Last Five Years............................ Prospectus Summary.
14. Description of Business........................................ Prospectus Summary; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; and Financial Statements.
15. Management's Discussion and Analysis or Plan of
Operation..................................................... Management's Discussion and Analysis of
Financial Condition and Results of
Operations.
16. Description of Property........................................ Business - Properties.
17. Certain Relationships and Related Transactions................. Certain Transactions.
18. Market for Common Equity and Related Stockholder
Matters....................................................... Outside Front Cover.
19. Executive Compensation......................................... Management - Executive Compensation.
20. Financial Statements........................................... Financial Statements.
</TABLE>
-i-
<PAGE>
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.
PRELIMINARY PROSPECTUS DATED SEPTEMBER 1, 1998
SUBJECT TO COMPLETION
2,180,000 Shares
AMERICAN MARINE RECREATION, INC.
Common Stock
All of the shares of Common Stock, par value $.01 per share (the "Common
Stock"), offered hereby (the "Offering") are being issued and sold by American
Marine Recreation, Inc. (the "Company"). Prior to the Offering, there has been
no public market for the Common Stock and there can be no assurance that any
such market will develop. It is anticipated that the Common Stock will be quoted
on the Nasdaq National Market under the symbol "AMRI." It is currently estimated
that the initial public offering price of the Common Stock will be between $8.50
and $9.50 per share. For a discussion of the factors considered in determining
the initial public offering price, see "Underwriting."
---------------------------
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS" COMMENCING
ON PAGE 11 AND "DILUTION" ON PAGE 21 OF THIS PROSPECTUS FOR
INFORMATION 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>
====================================================================================================
Price Underwriting Proceeds
to Discounts and to
Public Commissions(1) Company(2)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $ $ $
- ----------------------------------------------------------------------------------------------------
Total(3)......................... $ $ $
====================================================================================================
</TABLE>
(1) Does not include additional compensation to be received by BlueStone Capital
Partners, L.P. ("BlueStone") and Royce Investment Group, Inc., as
representatives of the several Underwriters (the "Representatives"), in the
form of warrants to purchase up to 218,000 shares of Common Stock (the
"Representatives' Warrants"). The Company has also agreed to indemnify the
Underwriters against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses of the Offering payable by the Company, estimated
at $950,000.
(3) The Company has granted the Representatives an option, exercisable within 45
days from the date of this Prospectus, to purchase up to 327,000 additional
shares of Common Stock, on the same terms set forth above, solely for the
purpose of covering over-allotments, if any. If the Representatives'
over-allotment option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
<PAGE>
---------------------------
The shares of Common Stock are being offered, subject to prior sale, when,
as and if delivered to and accepted by the Underwriters, and subject to approval
of certain legal matters by counsel and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify the Offering and to
reject any order in whole or in part. It is expected that delivery of the
certificates representing the shares of Common Stock offered hereby will be made
against payment therefor at the offices of BlueStone Capital Partners, L.P., 575
Fifth Avenue, New York, New York 10017, on or about
, 1998.
---------------------------
BlueStone Capital Partners, L.P. Royce Investment Group, Inc.
The date of this Prospectus is , 1998
<PAGE>
[PHOTOS]
AVAILABLE INFORMATION
As of the date of this Prospectus, the Company will become subject to
the reporting requirements of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act") and, in accordance therewith, will file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). The Company intends to furnish its stockholders
with annual reports containing audited financial statements and such other
periodic reports as the Company deems appropriate or as may be required by law.
---------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF
THE COMMON STOCK, INCLUDING PLACING STABILIZING BIDS OR EFFECTING PURCHASES OF
THE COMMON STOCK IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
more detailed information and financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Each prospective investor is urged to
read this Prospectus in its entirety. Except as otherwise indicated herein, the
information in this Prospectus, including per share data and information
relating to the number of shares of Common Stock outstanding, assumes no
exercise of the Representatives' over-allotment option to purchase up to 327,000
additional shares of Common Stock. See "Underwriting."
Immediately prior to the consummation of the Offering, all of the
stockholders of Boat Tree, Inc. ("Boat Tree"), a Florida corporation, will
exchange all of the issued and outstanding common stock of Boat Tree for all of
the outstanding shares of Common Stock of the Company (which was formed solely
for such purpose on June 22, 1998), making Boat Tree a wholly-owned subsidiary
of the Company (the "Boat Tree Exchange"). As used in this Prospectus, unless
the context otherwise requires, the term "Company" refers to American Marine
Recreation, Inc. and its subsidiaries, after giving effect to the Boat Tree
Exchange. In addition, unless the context indicates otherwise, the description
of the Company set forth in this Prospectus gives retroactive effect to the Boat
Tree Exchange as if Boat Tree were wholly-owned by the Company for all periods
presented and thus includes the operations of Boat Tree. The Financial
Statements included herein are those of Boat Tree, as the Company had not yet
commenced operations as of the dates or during the periods indicated. See Note 1
of Notes to Financial Statements.
This Prospectus contains forward-looking statements that involve risks
and uncertainties. The Company's actual results may differ materially from those
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in "Risk Factors."
The Company
General
The Company is one of the largest retailers of recreational boats in
Florida where it currently operates six retail locations, including locations in
Orlando, Jacksonville, Doctor's Lake, Melbourne, Tierra Verde and Pinellas Park.
In addition, the Company will acquire an additional retail location concurrently
with the consummation of this Offering, in Belmont, North Carolina, which it
currently operates pursuant to a management agreement and intends to relocate to
Cornelius, North Carolina. See "-Concurrent Closing Transactions." At each of
its retail locations, the Company offers a wide selection of new and used boats
and related marine products, such as trailers, parts and accessories. In
addition, the Company arranges boat financing, insurance and extended service
contracts for its customers and, at most of the Company's locations, provides
them with convenient, skilled and cost-effective repair and maintenance services
from state-of-the-art service facilities located adjacent to its showroom
operations.
The Company is the largest volume buyer of recreational boats sold
under the popular Regal brand name and sells six other lines of high quality
recreational boats under the brand names Malibu, Hydra-Sport, Sailfish, Carver,
Stratos Bass Boats and Hurricane Deck Boats. The boats offered by the Company
range in size from 14 feet to 55 feet and in price from approximately $12,000 to
$650,000 (with gross profit margins ranging between 15% and 28%). The Company
believes that it differentiates itself from its competitors by offering seven
different brand name product lines, with over 100 different models of new
cruisers, fishing boats, water-skiing boats and general recreational boats to
choose from, at prices ranging from the low-end to the high-end of the market
spectrum. In 1997, approximately 66% of the Company's new boat sales were sport
boats and fishing boats ranging in price from $11,000 to $150,000 and 26% of its
new boat sales were cruisers ranging in price from $35,000 to $650,000. For the
years ended December 31, 1996 and 1997, the Company sold 413 and 571 new boats,
respectively, generating revenues of approximately $10.4 million and $15.3
million, respectively, and for the six months ended June 30, 1997 and 1998, the
Company sold 287 and 315 new boats, respectively, for revenues of approximately
$7.8 million and $9.2 million, respectively. In addition to its new boat sales,
for the years ended December 31, 1996 and 1997, the Company sold 128 and 254
used boats, respectively, for revenues of
3
<PAGE>
approximately $1.8 million and $3.3 million, respectively, and for the six
months ended June 30, 1997 and 1998, the Company sold 133 and 183 used boats,
respectively, for revenues of approximately $1.7 million and $2.5 million,
respectively.
Based upon information compiled by the National Marine Manufacturer's
Association (the "NMMA"), the recreational boating industry has experienced
significant growth within the last five years with total nationwide consumer
expenditures related to recreational boating (including sales of new and used
boats, motors, trailers, equipment and accessories and related expenditures for
fuel, docking, storage and repairs) of $19.3 billion in 1997 as compared to
$10.3 billion in 1992. In 1997, the NMMA estimates that over 78 million people
participated in recreational boating and that new boat and motor sales alone
represented $8.6 billion of the $19.3 billion in total recreational boating
sales for that year. In addition, Florida generated $733 million or almost 4% of
the nation's total recreational boating sales for 1997, placing it number one
among the states in terms of such sales, and, together with the Company's other
targeted expansion areas (North Carolina, South Carolina, Georgia and Alabama),
it generated $1.5 billion of such sales.
The boat retailing industry is not only highly competitive but also
highly fragmented. The market is characterized by thousands of independent
retailers, most of which operate in only a single market, have limited financial
resources and offer only limited inventory, have annual sales of less than $3
million and provide varying degrees of merchandising, professional management
and customer service. Management believes that many of these independent
retailers do not have the managerial or capital resources necessary to compete
in the highly competitive recreational boating industry and are thus ripe for
consolidation. As part of its expansion strategy, the Company intends to acquire
a number of existing dealerships and to capitalize upon its professional
management team, access to capital, focused purchasing and marketing strategies,
ability to leverage overhead expenses and generate operating efficiencies, and
expanding management information system infrastructure to increase the sales,
control the costs and raise the profitability levels of the dealerships it
acquires.
The Company has already experienced substantial growth as a result of
both acquisitions and internal growth. For the year ended December 31, 1997, the
Company had total revenue of $21.2 million, representing an increase of 55.5%
when compared to its total revenue of $13.7 million for the year ended December
31, 1996. For the six months ended June 30, 1998 and 1997, the Company had total
revenue of approximately $14.0 million and $11.0 million, respectively,
representing an increase of 27.7%. In addition, the Company's same-store sales
increased by approximately 22.3% for the six months ended June 30, 1998 and by
approximately 15.5% for the year ended December 31, 1997.
Strategy
The Company intends to continue its growth trend and to become one of
the leading operators of recreational boat dealerships in the southeastern
United States through the continued implementation and maintenance of its
operating and growth strategies.
Operating Strategy
The Company's operating strategy is to maximize its profits by
increasing its operating efficiencies and through the structured application of
management's proven operating philosophies, key elements of which are set forth
below:
o Operate with Centralized Management. The Company has adopted a
centralized approach to the operational management of its dealerships
while conducting each of its dealerships as separate profit centers.
The Company believes that this system takes advantage of the experience
and knowledge of the Company's senior management, while enabling local
managers to implement the Company's standardized practices with respect
to inventory, advertising, pricing, customer service and personnel.
o Increase Operating Efficiencies. As it grows, the Company will
continually seek ways in which to increase operating efficiencies among
its dealerships, including those that will be provided as a result of
an increasing
4
<PAGE>
number of dealerships (such as the more effective use of advertising
and marketing dollars and the lower inventory costs associated with
bulk financing) in order to enhance its profitability. In connection
with such strategy, the Company will also continue to centralize
certain administrative functions, such as accounting, finance,
insurance, marketing, purchasing and management information systems, at
the corporate level in order to maintain more effective cost controls.
o Maintain a Diverse Product Line. The Company currently sells seven
lines of high quality recreational boats and intends to obtain
additional product lines through the acquisition of dealerships with
product distribution rights. Management believes that offering a broad
selection of high quality boats enables it to appeal to a wide variety
of customers, minimizes the Company's dependence on any one
manufacturer and reduces its exposure to supply problems and product
cycles. In addition, the Company plans to place an increased emphasis
on the sale of used boats, thereby adding even greater diversity to its
product offerings.
o Focus on Consumer Loyalty and Satisfaction. The Company emphasizes
customer satisfaction throughout its organization and continually seeks
to maintain its reputation for quality and fairness. The Company
strives to provide an enjoyable boat purchasing environment at each of
its locations and trains its sales personnel to identify an appropriate
boat for each customer at a price affordable to that customer. In
addition, the Company attempts to make the purchase of a boat a
convenient and stress-free experience by arranging fast, easy and
competitive financing and insurance for its customers. The Company also
provides special amenities to its customers such as boater education
and has established cruise clubs, fishing clubs and picnics for its
customers in order to keep them involved in boating. These programs
have built strong consumer loyalty resulting in referrals and repeat
business. In addition, the Company considers its parts and service
operations to be an integral part of its customer service program and
an important factor in the establishment of customer loyalty and repeat
sales.
Growth Strategy
The Company's growth strategy is to continue increasing sales at its
existing stores while expanding its current store base through the further
development of its existing markets and by entering new markets. Initially, the
Company intends to focus its plans for expansion in the southeastern United
States, primarily in Florida, North Carolina, South Carolina, Georgia and
Alabama. In keeping with its growth strategy, the Company intends to own and
operate at least seven additional stores, in addition to the dealership which it
will acquire concurrently with the consummation of this Offering, within the
next 18 months. The Company intends to accomplish such goal through the
acquisition of existing dealership stores and/or through the opening of new
stores, in the latter case either by acquiring (by lease or purchase) and
converting compatible existing facilities or by constructing new facilities.
Strategic Acquisitions of Existing Stores. The Company intends to
capitalize upon the significant consolidation opportunities available in the
highly fragmented recreational boat dealer industry by acquiring additional
retailers and improving their performance and profitability through the
implementation of the Company's operating strategies and the establishment of
the Company's customer service specialties (such as its financing and insurance
facilitation services and its comprehensive repair and maintenance services,
each of which helps to foster customer satisfaction while providing the Company
with an additional revenue stream). The Company's growth strategy includes
acquiring (i) boat dealerships that, among other criteria, possess either the
sole franchise of a major boat manufacturer or a significant share of new boat
sales in a specific targeted market or (ii) boat dealerships that, while located
in attractive geographic markets, have not been able to realize favorable market
share or profitability and can benefit substantially from the Company's capital,
systems and operating strategies. In connection with its growth strategy, the
Company may also acquire an existing dealership merely to obtain a new
territorial exclusive, with the intention of moving it to a newly built or
converted facility developed by the Company in a more strategic or larger
location within the acquired territory. The Company may also seek to expand its
product mix by acquiring dealerships that distribute a range of products that
are not currently offered by the Company.
5
<PAGE>
Opening of New Stores. In connection with opening new stores, the
Company intends to acquire (by lease or purchase) and convert compatible
existing facilities or to build new facilities with 10,000 to 25,000 square feet
of enclosed space ("superstores"). In connection with its opening of new
superstores, the Company plans to utilize its existing dealership in Orlando,
Florida as a prototype. The Orlando superstore is located directly off of, and
is visible from, a major interstate highway on five and one-half acres, abutting
a four-acre lake. The building is 20,000 square feet and accommodates up to 35
boats in an air conditioned showroom. From this location, the Company has
garnered a market share of approximately 30% of the sports boats and cruisers
sold in the Orlando, Florida market.
Management believes that the average cost to build a new 20,000 square
foot superstore will be approximately $1,200,000, excluding the cost of the
land. The Company believes that the conversion of existing facilities into
superstores will typically involve a lower cash investment, yet generate similar
sales and gross profit margins. In addition, for both converted and newly built
superstore locations, initial pre-opening expenses are estimated to be $75,000
to $100,000 and initial inventory requirements are anticipated to total
approximately $1 to $2 million, most of which will be financed by floor plan
financing arrangements and will result in little additional capital investment.
--------------------------
The Company was incorporated under the laws of the State of Delaware on
June 22, 1998. Boat Tree, which will become a wholly-owned subsidiary of the
Company immediately prior to the consummation of the Offering in connection with
the Boat Tree Exchange, was incorporated under the laws of the State of Florida
in June 1992 and commenced operations that same month when it purchased the
Company's Orlando dealership from Regal Marine Industries, Inc. ("Regal"). The
Company opened an additional location in Melbourne, Florida in 1995, relocated
the Orlando, Florida dealership to its current superstore facility in 1996 and
opened a location in Jacksonville, Florida in 1997. During the first half of
1998, the Company commenced operating a dealership pursuant to a management
agreement in Belmont, North Carolina and intends to acquire the dealership upon
the consummation of the Offering. In addition, in February 1998, the Company
opened a dealership in Doctor's Lake, Florida and, in June 1998, it opened
dealerships in Tierra Verde and Pinellas Park, Florida.
The Company maintains its principal executive offices at 1924 33rd
Street, Orlando, Florida 32834, and its telephone number is (407) 422-8141.
Concurrent Closing Transactions
Marine America Acquisition
Upon the consummation of the Offering, the Company will acquire all of
the outstanding capital stock of Marine America, Inc. ("Marine America"), a
corporation owned 40% by Joseph G. Pozo, Jr., the Company's Chairman, President,
Chief Executive Officer and majority stockholder, 10% by Joseph J. Pozo (Mr.
Pozo, Jr.'s son) and 50% by Lakewood Marine International Ltd. ("Lakewood"), an
unaffiliated third party, for 1,100 shares of Common Stock valued at $10,000,
the approximated net book value of Marine America (the "Marine America
Acquisition"). In January 1998, Marine America acquired certain of Lakewood's
assets, as well as a five-year lease relating to its 8,000 square foot retail
boat dealership in Belmont, North Carolina, for a purchase price of $130,858. As
part of such acquisition, the Company purchased Lakewood's new and used boat and
trailer inventory for a purchase price of $998,634 and agreed to provide Marine
America with new and used boat inventory, as needed, at the Company's invoice
cost plus freight. In addition, the Company entered into a management agreement
with Marine America pursuant to which the Company agreed to manage the
operations of the Lakewood dealership. Immediately prior to the consummation of
the Marine America Acquisition, Marine America intends to borrow $125,000 from
the Company (which loan will be eliminated on the Company's consolidated
financial statements following the consummation of the Marine America
Acquisition) in order to redeem the shares of capital stock of Marine America
held by Lakewood. The Company intends to relocate the operations of the Belmont,
North Carolina dealership to a three-acre tract of land located in Cornelius,
North Carolina, which the Company acquired on May 15, 1998 for a purchase price
of $348,100 and the Company intends to utilize a portion of the net Offering
6
<PAGE>
proceeds to construct a 20,000 square foot superstore on such site. See "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Certain Transactions" and Note 10 of Notes to Financial
Statements.
Regal Option Exercise
On June 6, 1992, Boat Tree granted Regal a ten-year option to purchase
25% of its capital stock for an aggregate purchase price of $10 (the "Regal
Option"). On September 1, 1998, Regal agreed to (i) reduce the number of shares
issuable upon the exercise of the Regal Option to the number of shares equal to
15.65% of Boat Tree's outstanding capital stock, which, after giving effect to
the Boat Tree Exchange, represents 303,825 shares of Common Stock (7.4% of the
number of shares of Common Stock that will be outstanding immediately following
the consummation of the Offering) and (ii) to exercise such option effective
upon the consummation of the Offering. See "Principal Stockholders" and "Certain
Transactions."
Pending S Corporation Termination
Since its incorporation in June 1992, Boat Tree has been treated for
Federal and Florida state income tax purposes as an S Corporation under
Subchapter S of the Internal Revenue Code and Florida law. As a result of Boat
Tree's status as an S Corporation, the stockholders of Boat Tree, rather than
Boat Tree itself, have been taxed on the earnings of Boat Tree for Federal and
state corporate income tax purposes, whether or not such earnings were
distributed to them. In connection with the Boat Tree Exchange, Boat Tree is
terminating its status as an S Corporation and will thereafter become subject to
federal and state income taxes at applicable C Corporation rates.
As of June 30, 1998, the undistributed S Corporation earnings of Boat
Tree totaled $2,180,875. In connection with the conversion of Boat Tree from an
S Corporation to a C Corporation, Boat Tree is declaring a final distribution of
$550,000 of its undistributed S Corporation earnings to its current (pre-Boat
Tree Exchange) stockholders (the "Final S Corporation Distribution").
The Company intends to pay the Final S Corporation Distribution out of
the net proceeds from, and on the consummation of, this Offering. Purchasers in
this Offering will not receive any portion of the Final S Corporation
Distribution. See "Use of Proceeds," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 of Notes to
Financial Statements.
7
<PAGE>
The Offering
Common Stock offered....................... 2,180,000 shares
Common Stock to be outstanding
after the Offering....................... 4,122,000 shares (1)
Use of Proceeds............................ The Company intends to use the net
proceeds of the Offering primarily
for the acquisition and
construction of additional boat
dealerships, the construction of a
boat storage facility, the
repayment of indebtedness, the
payment of the Final S Corporation
Distribution, the purchase of used
boat inventory, the upgrading of
management information systems,
the expansion of the Orlando
superstore's service department
and for working capital and other
general corporate purposes. See
"Use of Proceeds."
Risk Factors............................... The securities offered hereby
involve a high degree of risk and
immediate substantial dilution.
See "Risk Factors" and "Dilution."
Proposed Nasdaq National Market symbol..... "AMRI"
- -------------------
(1) Includes 303,825 shares of Common Stock which will be issued in connection
with the exercise of the Regal Option upon the consummation of the
Offering, immediately prior to the Boat Tree Exchange, and 1,100 shares of
Common Stock which will be issued in connection with the Marine America
Acquisition upon the consummation of the Offering, immediately following
the Boat Tree Exchange. Does not include (i) 218,000 shares of Common Stock
reserved for issuance upon exercise of the Representatives' Warrants; and
(ii) 410,000 shares of Common Stock reserved for issuance upon exercise of
stock options issuable under the Company's 1998 Stock Option Plan (the
"Option Plan"), of which options to purchase 315,000 shares of Common Stock
have been granted effective upon the consummation of the Offering. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Management-Stock Options," "Certain Transactions" and
"Underwriting."
8
<PAGE>
Summary Financial Information
(Dollars in thousands, except per share data)
Set forth below is certain summary financial information for the
periods, and as of the dates, indicated. This information is derived from, and
should be read in conjunction with, the financial statements of Boat Tree,
including the notes thereto, appearing elsewhere in this Prospectus, except that
the pro forma share and per share information gives effect to the exchange of
all of the capital stock of Boat Tree for shares of Common Stock upon the
consummation of the Offering in connection with the Boat Tree Exchange.
<TABLE>
<CAPTION>
Year ended December 31, Six Months Ended June 30,
------------------------------- ----------------------------
1996 1997 1997 1998
---------- --------- ---------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Statement of Income Data:
Sales and service revenue.............. $13,058 $20,183 $10,445 $13,359
Finance and insurance income........... 591 1,043 517 639
---------- --------- ---------- ---------
Total revenue.................... 13,649 21,226 10,962 13,998
Cost of sales and service revenue...... 10,544 16,327 7,870 10,568
--------- ---------- --------- --------
Gross profit..................... 3,105 4,899 3,092 3,430
Selling, general and administrative
expenses............................... 2,493 4,085 1,829 2,063
---------- --------- --------- --------
Income from operations........... 612 814 1,263 1,366
Other income........................... 10 33 12 26
Interest expense....................... (239) (333) (196) (358)
----------- ---------- -------- ---------
Net Income............................. $383 $514 $1,079 $1,034
==== ==== ====== ======
Pro Forma Unaudited Statements
of Income Data (1):
Pro forma taxes on income.............. 198 401
--- ---
Pro forma net income................... 316 633
=== ===
Pro forma net income per share:
Basic............................ .19 .39
Diluted (2)...................... .16 .33
Supplemental (3)................. .16 .32
Pro forma weighted average shares outstanding:
Basic............................ 1,637,075 1,637,075
Diluted (2)...................... 1,940,900 1,940,900
Supplemental (3)................. 2,057,567 2,057,567
<CAPTION>
December 31, 1997 June 30, 1998
--------------------- -----------------------------
Actual As Adjusted(4)
Balance Sheet Data:
<S> <C> <C> <C>
Cash and cash equivalents..... $308 $1,308 $17,555
Working capital............... 171 698 17,527
Total assets.................. 9,681 14,348 30,677
Long-term debt................ 1,220 1,526 1,526
Total liabilities............. 8,542 12,326 11,826
Stockholders' equity.......... 1,138 2,022 18,851
</TABLE>
(footnotes on following page)
9
<PAGE>
- -----------------------------
(1) Prior to the date of this Prospectus, Boat Tree has been an S Corporation
and therefore has not been subject to Federal or State corporate income
taxes (other than Florida franchise taxes). The S Corporation status will
be terminated upon the consummation of the Offering. Pro forma taxes on
income reflect a tax provision as if the Company had not been an S
Corporation during the indicated periods. The pro forma provision for
income taxes represents a combined Federal and State tax rate of 38.6%.
Historical earnings per share is not presented because earnings per share
of an S Corporation may not be meaningful. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Notes 1 and
8 of Notes to Financial Statements.
(2) Gives effect to the exercise of the Regal Option but not to the Marine
America Acquisition, as the latter's effect on the information herein is
not significant. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Notes 1, 5 and 10 of Notes to
Financial Statements.
(3) Supplemental net income per share is based on the weighted average number
of shares of Common Stock used in the calculation of net income per share,
increased by the sale of 61,111 and 55,556 of the shares of Common Stock
offered hereby, which represent the approximate number of shares of the
Common Stock being sold by the Company that need to be sold in order to
fund the payment of the Final S Corporation Distribution of $550,000 and to
reduce line of credit borrowings by $500,000 with a related reduction in
interest expense, respectively, at an assumed price of $9.00 per share, the
midpoint of the currently anticipated range of the initial public offering
price. See "Use of Proceeds" and Notes 1 and 4 of Notes to Financial
Statements.
(4) Adjusted to give retroactive effect to the termination of the Company's S
Corporation status and the deferred tax benefit of $82,000 associated
therewith and to the sale of the 2,180,000 shares of Common Stock offered
hereby at an assumed price of $9.00 per share (the midpoint of the
currently anticipated range of the initial public offering price) and the
anticipated application of the estimated net proceeds therefrom, including
for the repayment of indebtedness and the payment of the Final S
Corporation Distribution to the current (pre-Boat Tree Exchange)
stockholders of Boat Tree. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
10
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. In addition to the other information in this Prospectus,
prospective investors should carefully consider the following risk factors in
evaluating the Company and its business before purchasing shares of the Common
Stock offered hereby.
Risks Relating to Proposed Expansion Plans
The Company's growth has resulted primarily from, and the Company
anticipates it will continue to be increasingly dependent upon, the addition of
new stores and continued sales and profitability from existing stores. The
Company has opened six stores since its inception in 1992, through the
acquisition of existing dealerships and the development of new facilities, and
will acquire an additional store concurrently with the consummation of the
Offering in connection with the Marine America Acquisition. The Company has
allocated $10,320,000 (59.7%) of the net proceeds of this Offering to the
acquisition, conversion and/or construction of at least seven additional stores
during the next 18 months, as well as to the subsequent relocation and expansion
(into a superstore) of the store to be acquired in connection with the Marine
America Acquisition.
The Company's expansion plans are based upon acquiring existing boat
dealership stores and/or opening new store facilities (either by purchasing or
leasing existing facilities and converting them into new dealership stores or by
building new stores) in target markets where acquisitions are not available. The
success of the Company's expansion plans will depend upon a number of general
factors, including the identification of new markets and locations, the
Company's financial capabilities, the hiring, training and retention of
qualified personnel and the integration of new stores into existing operations.
The Company's growth strategy will also depend upon the Company's ability to
locate and acquire suitable acquisition candidates at a reasonable cost and to
dispose, timely and effectively, of the acquired entity's remaining inventory,
as well as the ability of the Company to sell its product line to the customer
base of the previous owner. In addition, the Company's expansion plans will
depend upon the Company's ability (i) to locate and lease or construct suitable
facilities at a reasonable cost, (ii) to obtain the reliable data necessary to
determine the size and product preferences of potential markets, (iii) to
introduce successfully the Company's product lines and (iv) to hire and train
management and sales teams for each additional location. There can be no
assurance that suitable acquisition candidates will be identified, that
acquisitions will be consummated, that new facilities will be constructed on a
cost-effective basis or that the operations of any new or acquired facility 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. Consequently, there can be no assurance
that the Company will be able to achieve its expansion goals or, if it is able
to expand its operations, that the Company will be able to achieve greater
operating income or profitability. Unforeseen expenses, difficulties, and delays
frequently encountered in connection with rapid expansion could inhibit the
Company's growth and negatively impact profitability. Moreover, in light of the
significant up-front capital expenditures and pre-opening costs (which, in the
case of a newly constructed 20,000 square foot superstore, are estimated to be
approximately $1,200,000, excluding the cost of the land and financed inventory)
associated with the establishment of a new dealership and the length of time
required to consummate an acquisition or construct a new facility and to open a
new dealership, the failure of any such new dealership would have a material
adverse effect on the Company.
In addition, while the Company will explore acquisitions of dealerships
that it believes are compatible with its business strategy and regularly
evaluates possible acquisition opportunities, as of the date of this Prospectus,
the Company has no agreements, commitments, understandings or arrangements with
respect to any potential acquisitions other than the Marine America Acquisition.
Consequently, these is no basis for investors in this Offering to evaluate,
prior to their investment in the Company, the specific merits or risks of any
potential acquisition that the Company may undertake following the consummation
of the Offering. Moreover, under Delaware law, various forms of business
combinations can be effected without stockholder approval; accordingly,
investors in this Offering will, in some instances, neither receive nor
otherwise have the opportunity to evaluate any financial or other information
11
<PAGE>
which may be made available to the Company in the future in connection with any
acquisition and must rely entirely upon the ability of management in selecting,
structuring and consummating acquisitions that are consistent with the Company's
business objectives. Although the Company will endeavor to evaluate the risks
inherent in a particular acquisition, there can be no assurance that the Company
will properly ascertain or assess all significant risk factors prior to
consummating any acquisition. Any inability to do so, particularly in instances
in which the Company has made significant capital investments, could have a
material adverse effect on the Company. In addition, there can be no assurance
that any acquired business will increase the revenues and/or market share of the
Company or otherwise improve the financial condition of the Company. See
"Business - Strategy--Growth Strategy."
Possible Inability to Manage Growth
As a result of its recent and anticipated future expansion, the Company
has and will increasingly become vulnerable to a variety of business risks
associated with rapidly growing companies. The Company's current growth plans
require, among other things, reviewing and reorganizing acquired business
operations, product offerings, corporate infrastructure and systems, and
financial controls and assimilating newly acquired or start-up operations within
the Company's existing corporate structure. Such strategy may place significant
pressures on the Company's management and staff, working capital and financial
and management control systems as such growth will require development and
operation of a significantly larger business over a broader geographical area.
The failure to maintain or upgrade financial and management control systems or
to recruit additional staff or to respond effectively to difficulties
encountered during growth could have a material adverse effect on the Company's
business, financial condition and operating results. Although the Company is
taking steps to ensure that its systems and controls are adequate to address its
current and anticipated needs, including the recent hiring of a Chief Financial
Officer, and is attempting to recruit additional staff, there can be no
assurance that, if it continues to grow, the Company will be able to effectively
manage its growth, anticipate and satisfy all of the changing demands and
requirements that such growth will impose upon it or achieve greater operating
income or profitability. See "Business - Strategy."
Reliance on Manufacturers and Other Key Vendors
The Company is substantially dependent upon its relationship with, and
receiving favorable pricing arrangements from, a limited number of major
manufacturers. The Company purchased 65% of its new boats in 1997 from Regal
(which will be a principal stockholder of the Company upon the consummation of
the Offering), of which 98% were powered with Volvo-Penta engine packages. Sales
of Regal boats constituted approximately 55% of the Company's sales in 1997. The
Company did not purchase more than 10% of its new boats from any other
manufacturer in 1997. 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 those of Regal. In addition, any adverse change
in the financial condition, production efficiency, product development, and
management and marketing capabilities of the Company's manufacturers,
particularly those of Regal given the Company's reliance on Regal, would 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 Regal and
other manufacturers to increase production levels or allocate a greater
percentage of their production to the Company. In the event the operations of
Regal or the Company's other major manufacturers were interrupted or
discontinued, the Company could experience temporary inventory shortfalls, or
disruptions or delays with respect to any unfilled purchase orders. Although the
Company believes that adequate alternate sources would be available that could
replace a manufacturer as a product resource, there can be no assurance that
such alternate sources will be available at the time of any such interruption or
that alternative products will be available at comparable quality and prices or
that the Company's customers would accept such replacements. The cancellation of
the Company's agreement with Regal, Regal's arrangements with Volvo-Penta or the
Company's arrangements with any other of its major manufacturers, the
unanticipated failure of any manufacturer or supplier to meet the Company's
requirements with regard to volume or design specifications, the Company's
inability to locate acceptable alternative manufacturers or suppliers, the
Company's failure to have dealer agreements renewed or to fail to comply with
the terms of the dealer agreements, or any substantial increase in a
manufacturer's pricing to the Company could have a material adverse effect on
the Company's business, financial condition and operating results. See "Business
- - Relationship with Boat Manufacturers."
12
<PAGE>
As is typical in the recreational boating industry, the Company deals with
each of its manufacturers pursuant to annually renewable, (except for its
current agreement with Regal which has a three-year term) non-exclusive, 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 that the Company's arrangements
with these manufacturers were changed or terminated for any reason, including as
a result of changes in competitive, regulatory or marketing practices, the
Company's business, financial condition and operating results 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 "Business - Relationship with Boat Manufacturers."
Limited Number of Stores in Operation; Geographic Concentration
There are currently six Boat Tree stores in operation, all of which are
located in Florida, and one store operated by the Company in North Carolina
pursuant to a management agreement. Consequently, the results achieved to date
by the Company's stores may not be indicative of the prospects or market
acceptance of a larger number of stores, particularly in wider and more
geographically dispersed areas with varied demographic characteristics. In
addition, given the Company's current geographic concentration, adverse
publicity relating to the Company's dealerships or adverse weather conditions
could have a more pronounced adverse effect on the Company's operating results
than might be the case if the Company's stores were more geographically
dispersed. Adverse weather conditions or an economic decline in the Florida
stores could have a material adverse effect on the Company's operations and
prospects. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business - Properties."
Impact of Seasonality and Weather on Operations; Fluctuations in
Operating Results
The recreational boating industry is highly seasonal. The Company's sales
are typically the strongest commencing in March, following the beginning of the
public boat and recreation shows, and continuing through October. If the
Company's sales were to be substantially below seasonal norms, the Company's
business, financial condition and operating results would be materially and
adversely affected. Historically, the Company generally realizes significantly
lower sales in the fourth quarter of the year, resulting in operating losses
during that quarter. Weather patterns also may significantly affect the
Company's business and may adversely impact the Company's operating results. For
example, reduced rainfall levels, as well as excessive rain or drought
conditions, may render boating dangerous or inconvenient or force area lakes to
close, thereby reducing customer demand for the Company's products. In addition,
prolonged winter conditions or unseasonably cool weather may lead to a shorter
selling season in affected locations. Moreover, the Company's current
concentration in the Florida area and the limited geographic diversity of the
Company's near term expansion plans increases the potential adverse effect that
adverse weather conditions in the Company's locations could have on the
Company's operating performance. The Company's results of operations may also
fluctuate significantly from quarter to quarter as a result of a number of other
factors, including timing of new store openings (and expenses incurred in
connection therewith) by either the Company or its competitors, the advertising
activities of the Company and its competitors and the emergence of new market
entrants. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business - Seasonality."
Impact of General Economic and Industry Conditions and Discretionary
Consumer Spending
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
13
<PAGE>
of the Company to sell its products. 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. See "Business -
Recreational Boating Industry."
Fuel Prices and Availability
The 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 -
Recreational Boating Industry."
Limitations to Market Entry
Under certain of its dealer agreements, the Company must obtain permission
from its manufacturers to sell products in new markets. While the Company
believes it can sell products of other manufacturers in new markets, there can
be no assurance that all of the Company's current manufacturers will grant
permission for the Company to sell in new markets, or if unable to obtain such
permission, that the Company can obtain suitable alternative sources of supply.
See "Business - Relationship with Boat Manufacturers."
Competition
The Company operates in a highly competitive environment. In addition to
facing competition generally from businesses seeking to attract discretionary
spending dollars, the recreational boat industry itself is highly fragmented,
resulting in intense competition for customers, access to quality products,
access to boat show space in new markets and suitable retail locations. The
Company relies heavily on boat shows to generate sales. If the Company is
impeded in its ability to participate in boat shows in its existing or targeted
markets, it could have a material adverse effect on the Company's business,
financial condition and operating results.
The Company competes primarily with single-location boat dealers and
national or regional chains 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. 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 the new markets that the Company plans to enter. The Company
competes in each of its markets with retailers of brands of boats and motors not
sold by the Company in that market. In addition, several of the Company's
competitors, especially those selling boating accessories, are large national or
regional chains that have substantially greater financial, marketing and other
resources than the Company. There can be no assurance that the Company will
continue to be able to compete successfully in the recreational boating
industry. See "Business - Competition."
Income from Financing, Insurance and Extended Service Contracts
The Company derives a substantial portion of its income from referral fees
relating to the origination and placement of customer financing and the sale of
extended service contracts and insurance products (collectively, "F&I
Products"), the most significant component of which is the income resulting from
the Company's origination of customer financing contracts. In fiscal 1997, F&I
Products accounted for 4.9% of the Company's gross revenues and 21.3% of the
Company's gross profit. The availability of financing for the Company's
customers and the level of participation and other fees received by the Company
in connection with such financing depend on the particular arrangement between
the Company and the lender. The Company's lenders may choose to pursue this
business
14
<PAGE>
directly, rather than through intermediaries such as the Company. Moreover, such
lenders may impose terms in their retail dealer financing arrangements with the
Company that may be materially unfavorable to the Company or its customers. For
these and other reasons, the Company could experience a significant reduction in
income resulting from reduced demand for its customer financing programs. In
addition, if profit margins are reduced on sales of F&I Products, or if these
products are no longer available, it would have a material adverse effect on the
Company's business, financial condition and operating results. Furthermore,
under optional extended service contracts with customers, the Company may
experience significant breach of warranty claims that may, in the aggregate, be
material to the Company's business. Beginning in 1996 and ceasing in April 1998,
the Company's use of a "dealer rebate" by certain customers as part of, or in
lieu of, a customer down payment resulted in a breach of certain provisions of
the retail dealer financing agreements. Under the terms of these agreements, the
use of dealer rebates obligates the Company in such instances to indemnify the
finance company against foreclosure losses. Upon the Company's repayment of the
customer's defaulted obligation, the finance company will assign the customer's
loan contract to the Company and the Company would attempt to collect on the
customer's loan or repossess the underlying collateral. Repossessed boats would
be sold in the normal course of business through the Company's stores. In the
event that the Company's obligation to indemnify the finance company against
foreclosure losses exceeds the proceeds received by the Company from collection
on the loans and/or the sale of the repossessed boats (plus any amounts accrued
by the Company for such losses), there could be a material adverse effect on the
business, financial condition and operating results of the Company. See
"Business - Products and Services-Boat Financing."
Availability of Financing
The Company currently has significant floor plan financing and other
inventory lines of credit from financing institutions and other lenders, which
the Company believes are competitive. While the Company believes it will
continue to be able to obtain competitive financing, there can be no assurance
that such financing will be available to the Company. The failure to obtain
sufficient financing on favorable terms and conditions could have a material
adverse effect on the business, financial condition and operating results of the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" and "Business -
Operations-Floor Plan Financing."
Impact of Environmental and Other Regulatory Issues
On December 3, 1996, the U.S. Environmental Protection Agency ("EPA")
announced final regulations for outboard marine motors. Under the regulations,
manufacturers beginning with model year 1998 and phased in over nine years must
reduce hydrocarbon emissions by 75% from the previously acceptable levels. The
regulation only effects new engines. The EPA estimated that average costs for
these engines would, as a consequence, increase modestly, approximately 10-15%
or approximately $700 on the average power output engine. While the Company
believes that its outboard motor manufacturers currently meet or exceed the new
EPA standards and specifications and that any increased costs to the Company
resulting from such new regulations have already been factored into its
manufacturing costs, future costs of compliance and/or the inability of some or
all of the Company's manufacturers to comply with the EPA requirements in the
future, could have a material adverse affect on the Company's business,
financial condition and operating results.
The Company, in the ordinary course of its business, is required to
dispose of certain waste products that are regulated by state or federal
agencies. These products include waste motor oil, tires, batteries and certain
paints. The Company retains a waste management firm to dispose of such products.
If there were improper disposal of these products, it could result in potential
liability for the Company.
Additionally, certain states have required or are considering requiring a
license in order to operate a recreational boat. While such licensing
requirements are not expected to be unduly restrictive, regulations may
discourage potential first-time buyers, thereby limiting future sales and
adversely affecting the Company's business, financial condition and operating
results. See "Business - Environmental and Other Regulatory Issues."
15
<PAGE>
Product and Service Liability Risks
The Company may be exposed to potential liability for personal injury or
property damage claims relating to the use of products sold and serviced by the
Company. The resolution of product liability claims has not materially affected
the Company in the past. The Company believes that 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. Any significant claims against the Company which are not covered by
insurance could adversely affect the Company's business, financial condition,
operating results and prospects as well as its business reputation with
potential customers. See "Business - Product Liability" and "Business -
Insurance."
Dependence on Key Personnel
The future success of the Company will largely depend on the continued
efforts and abilities of Joseph G. Pozo, Jr., the Company's Chairman, President,
Chief Executive Officer and majority stockholder. Although the Company has a
three-year employment agreement with Mr. Pozo and maintains key-person life
insurance on his life in the amount of $1,000,000, the Company cannot assure
that Mr. Pozo will remain with the Company throughout the term of the agreement,
or thereafter, or that the proceeds of such insurance policy would adequately
compensate the Company for the lack of Mr. Pozo's services. In addition, the
Company will likely 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 success of the
Company will also be dependent upon its ability to hire and retain additional
qualified management, sales and financial personnel. The Company faces
considerable competition for such personnel from other marketers of recreational
boats and other vehicles. There can be no assurance that the Company will be
able to attract and retain additional qualified personnel. Any inability to do
so could have a material adverse effect on the Company. See "Management."
Control by Existing Stockholders
Upon the consummation of the Offering, Joseph G. Pozo, Jr. will continue
to own and/or control approximately 30.1% of the outstanding shares of Common
Stock. As a result, Mr. Pozo will continue to be able to exert significant
influence over the outcome of all matters submitted to a vote of the
stockholders, including the election of directors, amendments to the Company's
Certificate of Incorporation and approval of significant corporate transactions.
Such consolidation of voting power could also have the effect of delaying,
deterring or preventing a change in control of the Company that might be
beneficial to other stockholders. See "Principal Stockholders" and "Description
of Securities."
Shares Eligible for Future Sale; Registration Rights
No prediction can be made as to the effect, if any, that future sales of
Common Stock or the availability of such shares for future sales will have on
the market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock, or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Stock.
Upon the consummation of the Offering, the Company will have 4,122,000 shares of
Common Stock issued and outstanding (4,449,000 if the Representatives'
over-allotment option is exercised in full), of which the 2,180,000 shares of
Common Stock sold in the Offering will be freely tradeable without restriction
or further registration under the Securities Act, unless such shares are
acquired by an "affiliate" of the Company as that term is defined under the Rule
144 under the Securities Act ("Rule 144"). The remaining 1,942,000 shares of
Common Stock have not been registered under the Securities Act and may not be
sold unless they are registered or unless an exemption from registration, such
as the exemption provided by Rule 144, is available. Such unregistered shares of
Common Stock will become eligible for sale pursuant to Rule 144, subject to the
volume and manner of sale limitations prescribed by Rule 144 and to the
contractual restriction of a 12-month
16
<PAGE>
"lock-up" agreement with BlueStone, at various times commencing 90 days
following the date of this Prospectus. In addition, the Representatives have
been granted certain demand and "piggyback" registration rights commencing one
year from the date of this Prospectus with respect to the registration under the
Securities Act of the securities issuable upon exercise of the Representatives'
Warrants. The exercise of such rights could result in substantial expense to the
Company. Furthermore, in the event the Representatives exercise their
registration rights, the Representatives and any holder of such warrants who is
a market maker of the Company's securities prior to such distribution, will be
unable to make a market in the Company's securities for up to nine days prior to
the commencement of such distribution and until such distribution is completed.
If the Representatives cease making a market, the market and market prices for
the securities may be adversely affected and the holders thereof may be unable
to sell such securities. See "Shares Eligible for Future Sale" and
"Underwriting."
Absence of Public Market; Possible Volatility of Stock Price
Prior to the Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or be sustained in the future or that the market price of the Common Stock will
not decline below its initial public offering price. If an active public market
for the Common Stock does not develop, the market price and liquidity of the
Common Stock will likely be materially adversely affected. The initial public
offering price of the Common Stock, which will be determined by negotiations
between the Company and the Representatives, will not necessarily be related to
the Company's asset value, net worth or other established criteria of value and
may not be indicative of the market price for the Common Stock after this
Offering. The trading price of the Common Stock could be subject to wide
fluctuations in response to variations in the Company's quarterly operating
results, changes in earnings estimates by analysts, conditions in the Company's
businesses or general market or economic conditions. In addition, in recent
years, the stock market has experienced extreme price and volume fluctuations.
These fluctuations have had a substantial effect on the market prices for many
growth companies often unrelated to the operating performance of the specific
companies. Such market fluctuations could have a material adverse effect on the
market price for the Common Stock. See "Underwriting."
No Dividends Anticipated
The Company intends to retain all future earnings for use in the
development of its business and does not anticipate paying any dividends in the
foreseeable future. See "Dividend Policy."
Immediate and Substantial Dilution to New Investors
Purchasers of Common Stock in the Offering will acquire approximately 53%
of the then outstanding Common Stock for 99.7% of the total consideration paid
for the then outstanding Common Stock (based on an assumed initial public
offering price of $9.00 per share, the midpoint of the currently anticipated
range of the initial public offering price) and will experience immediate and
substantial dilution in net tangible book value per share. As of June 30, 1998,
the Company had a net tangible book value of approximately $1.24 per share.
After giving retroactive effect to the sale of the shares of Common Stock
offered hereby and the anticipated use of the estimated net proceeds therefrom
and certain other transactions to be effected by the Company upon the
consummation of the Offering, the as adjusted net tangible book value of the
Company at June 30, 1998 would have been $4.57 per share, representing an
immediate dilution of $4.43 (49%) per share to purchasers in the Offering. See
"Dilution."
Adverse Effect of the Authorization of Preferred Stock; Anti-Takeover
Provisions Affecting Stockholders
The Company's Certificate of Incorporation authorizes the Company's Board
of Directors to issue 1,500,000 shares of "blank check" preferred stock of the
Company (the "Preferred Stock") and to fix the rights, preferences, privileges
and restrictions, including voting rights, of these shares, without further
stockholder approval. The rights of the holders of Common Stock will be subject
to and may be adversely affected by the rights of holders of any Preferred Stock
that may be issued in the future. The ability to issue Preferred Stock without
stockholder approval could have the effect of making it more difficult for a
third party to acquire a majority of the voting stock of the
17
<PAGE>
Company, thereby delaying, deferring or preventing a change in control of the
Company. Moreover, following the consummation of this Offering, the Company will
be subject to the State of Delaware's "business combination" statute, which
prohibits a publicly-traded Delaware corporation from engaging in various
business combination transactions with any of its 15% stockholders for a period
of three years after the date of the transaction in which the person became an
"interested stockholder," unless certain approvals are obtained or other events
occur. The statute could prohibit or delay mergers or other attempted takeovers
or changes in control with respect to the Company and, accordingly, may
discourage attempts to acquire the Company. See "Description of Securities."
Limited Lead Underwriting Experience
Although BlueStone has engaged in the investment banking business since
its formation as a broker-dealer in March 1996, and its principals have had
extensive experience in the underwriting of securities in their capacities with
other broker-dealers, this Offering constitutes one of the first public
offerings for which BlueStone has acted as the lead Underwriter. See
"Underwriting."
Year 2000 Issues
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 system and will otherwise be compliant on
a timely basis with Year 2000 requirements. The Company currently is developing
a plan to evaluate the Year 2000 compliance status of third parties with which
its system interfaces. Any failure of the Company's management information
system or the systems of third parties to timely achieve Year 2000 compliance
could have a material adverse effect on the Company's business, financial
condition, and operating results. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Forward-Looking Information May Prove Inaccurate
This Prospectus contains various forward-looking statements that are based
on the Company's beliefs as well as assumptions made by and information
currently available to the Company. When used in this Prospectus, the words
"believe," "expect," "anticipate," "estimate" and similar expressions are
intended to identify forward-looking statements. The accuracy of such
forward-looking statements is subject to certain risks, uncertainties and
assumptions, including those identified above under "Risk Factors." Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, or projected. The Company cautions potential purchasers
not to place undue reliance on any such forward-looking statements.
18
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,180,000 shares of
Common Stock offered hereby are estimated to be approximately $17,296,600
($20,033,590 if the Representatives' over-allotment option is exercised in
full), assuming an initial public offering price of $9.00 per share (the
midpoint of the currently anticipated range of the initial public offering
price) and after deducting underwriting discounts and estimated offering
expenses. The Company expects to use the net proceeds approximately as follows:
<TABLE>
<CAPTION>
Approximate
Approximate Percentage of
Anticipated Use of Net Proceeds Dollar Amount Net Proceeds
- ------------------------------- ------------- ------------
<S> <C> <C>
Acquisition and construction of dealerships(1)................ $10,320,000 59.7%
Acquisition and development of boat storage facility(2)....... 1,300,000 7.5
Repayment of indebtedness(3).................................. 800,000 4.6
Final S Corporation Distribution(4)........................... 550,000 3.2
Purchase of used boat inventory(5)............................ 530,000 3.1
Management information systems(6)............................. 350,000 2.0
Expansion of service department(7)............................ 250,000 1.4
Working capital and general corporate purposes................ 3,196,600 18.5
--------- -----
Total.................................................... $17,296,600 100.0%
=========== ======
</TABLE>
(1) Represents $1,670,000 to be used in connection with the Company's
relocation of the Belmont, North Carolina dealership (which the Company
will acquire in connection with the Marine America Acquisition concurrently
with the consummation of this Offering) and construction of a new
superstore on property recently acquired by the Company in Cornelius,
North Carolina, as well as $8,650,000 (the estimated maximum amount of the
proceeds that would be required) to acquire, convert and/or construct at
least seven additional stores (including at least one additional superstore
in the Florida panhandle area) during the next 18 months. The Company
expects the average cost to construct a new 20,000 square foot superstore
to be approximately $1,200,000, excluding the cost of land. See "Business -
Strategy--Growth Strategy."
(2) Represents amounts to be used for the acquisition and development of a boat
storage facility in Orlando, Florida. See "Business - Products and Services
-- Future Boat Storage Services."
(3) Represents repayment of (i) a line of credit from Regal with a maximum
borrowing availability of $300,000 at an interest rate of 10%, the proceeds
of which the Company intends to use in connection with certain pre-offering
expenses relating to this Offering and working capital and (ii) a line of
credit in the amount of approximately $500,000 which bears interest at the
prime rate plus .5% and is due September 1998. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Certain
Transactions."
(4) Represents the amount of the Final S Corporation Distribution to be made to
the current (pre-Boat Tree Exchange) stockholders of Boat Tree upon the
consummation of this Offering. See "Prospectus Summary - Pending S
Corporation Termination."
(5) Represents the purchase of additional used boat inventory.
(6) Represents amounts to be utilized to upgrade and expand the Company's
management information systems. See "Business - Management Information
Systems."
(7) Represents amounts to be used to expand the service depasrtment in the
Company's existing Orlando superstore.
19
<PAGE>
If the Representatives exercise their over-allotment option in full, the
Company will realize additional net proceeds of approximately $2,736,990. Such
proceeds, if received, will be used for working capital and general corporate
purposes. Pending their uses as set forth above, the Company intends to invest
the net proceeds of this Offering in short-term, investment grade,
interest-bearing securities.
The allocation of the net proceeds set forth above represents the
Company's best estimates based on its proposed plans and assumptions relating to
its operations and growth strategy and on current economic and industry
conditions. The amounts actually expended for the above purposes may vary
significantly; furthermore, new purposes may take precedence over these listed
above, depending upon numerous factors, including the availability of desirable
dealership acquisition opportunities, changes in economic and/or industry
conditions, creditor and supplier relations, the progress and timing of new
dealership openings, government regulation and future revenues and expenditures.
The Company believes that the proceeds of this Offering, together with
anticipated revenues from operations and its existing capital resources, will be
sufficient to satisfy its contemplated cash requirements for at least 18 months
following the consummation of this Offering. In the event, however, that the
Company's plans change (due to changes in market conditions, competitive factors
or new opportunities that may become available in the future), its assumptions
change or prove to be inaccurate or if the proceeds of this Offering or cash
flows prove to be insufficient to implement its business and expansion plans
(due to unanticipated expenses, difficulties or otherwise), the Company could be
required to seek additional financing prior to such time. Consequently, there
can be no assurance that the proceeds of this Offering will be sufficient to
permit the Company to implement its business plan or that any assumptions
relating to the implementation of such plans will prove to be accurate.
Moreover, although the Company has applied for a $10 million line of credit from
TransAmerica Commercial Finance Corp. ("TransAmerica") to be effective upon the
consummation of this Offering, there can be no assurance that such application
will be granted or that any additional financing, if needed, would be available
to the Company on commercially reasonable terms, or at all.
DIVIDEND POLICY
From June 1992 through the consummation of the Offering, Boat Tree will be
an S Corporation for Federal and Florida state income tax purposes. As a result,
during and for such period, the net income of Boat Tree for Federal and certain
state income tax purposes is reported by, and taxed directly to, the
stockholders of Boat Tree rather than to Boat Tree itself. As an S Corporation,
Boat Tree has made distributions in the form of cash dividends to its
stockholders, and the Company will make the Final S Corporation Distribution to
such stockholders in the amount of $550,000 out of the net proceeds of this
Offering. The Company currently intends to retain all future available earnings,
if any, for the development and growth of its business and, therefore, does not
anticipate paying any cash dividends in the foreseeable future.
20
<PAGE>
DILUTION
The difference between the initial public offering price per share of
Common Stock and the net tangible book value per share of Common Stock after the
Offering constitutes the dilution to investors in the Offering. Net tangible
book value per share on any given date is determined by dividing the net
tangible book value of the Company (total tangible assets less total
liabilities) on such date by the number of then outstanding shares of Common
Stock.
At June 30, 1998, the net tangible book value of the Company was
$2,022,196, or $1.24 per share. After giving retroactive effect to (i) the
termination of the Company's S Corporation status and the deferred tax benefit
of $82,000 associated therewith, (ii) the issuance of 303,825 shares of Common
Stock upon the consummation of the Offering in connection with the exercise of
the Regal Option (but not to the Marine America Acquisition or the 1,100 shares
of Common Stock to be issued in connection therewith, as their effect on the
information herein is not significant,) and (iii) the sale of the 2,180,000
shares of Common Stock offered hereby at an assumed initial public offering
price of $9.00 per share (the midpoint of the currently anticipated range of the
initial public offering price) and the receipt and anticipated application of
the estimated net proceeds therefrom, the as adjusted net tangible book value of
the Company at June 30, 1998 would have been $18,850,796 or $4.57 per share,
representing an immediate increase in net tangible book value of $3.33 per share
to existing stockholders and an immediate dilution of $4.43 (49%) per share to
investors in the Offering.
The following table illustrates the foregoing information with respect to
dilution to new investors on a per share basis:
Assumed initial public offering price....................... $9.00
Net tangible book value before the Offering........... $1.24
Increase attributable to investors in the Offering.... 3.33
------
Adjusted net tangible book value after the Offering......... 4.57
----
Dilution to investors in the Offering....................... $4.43
=====
The following table sets forth, with respect to existing stockholders,
giving retroactive effect to the exercise of the Regal Option (but not to the
Marine America Acquisition, as its effect on the information herein is not
significant), and with respect to the investors in the Offering, a comparison of
the number of shares of Common Stock purchased from the Company, the percentage
ownership of such shares, the aggregate consideration paid, the percentage of
total consideration paid and the average price paid per share.
<TABLE>
<CAPTION>
Shares Acquired Total Consideration
--------------------- ----------------------
Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................... 1,940,900 47.1% $ 55,100 .3% $ .03
Investors in the Offering................ 2,180,000 52.9% 19,620,000 99.7% $9.00(1)
--------- ----- ---------- ------
4,120,900 100.0% $19,675,100 100.0%
========= ======= =========== ======
</TABLE>
- ----------------
(1) Based on the midpoint of the currently anticipated range of the initial
public offering price.
The foregoing table assumes no exercise of the Representatives'
over-allotment option. If such option is exercised in full, the new investors
will have paid $22,563,000 (based on an assumed initial public offering price of
$9.00 per share, the midpoint of the currently anticipated range of the initial
public offering price) for 2,507,000 shares of Common Stock, representing
approximately 99.8% of the total consideration for 56.4% of the total number of
shares outstanding. In addition, the computations set forth in the above table
exclude an aggregate of 315,000 shares
21
<PAGE>
of Common Stock reserved for issuance upon the exercise of stock options which
have been granted under the Option Plan effective upon the consummation of the
Offering at a price per share equal to the initial public offering price per
share and 218,000 shares of Common Stock reserved for issuance upon the exercise
of the Representatives' Warrants. See "Management - Stock Options" and
"Underwriting."
22
<PAGE>
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
the Company, as of June 30, 1998, on an actual basis and as adjusted to give
retroactive effect to (i) the termination of the Company's S Corporation status
and the deferred tax benefit of $82,000 associated therewith, (ii) the exercise
of the Regal Option, and (iii) the issuance and sale of the 2,180,000 shares of
Common Stock offered hereby at an assumed initial public offering price of $9.00
per share (the midpoint of the currently anticipated range of the initial public
offering price) and the anticipated application of the estimated net proceeds
therefrom. This table should be read in conjunction with the Financial
Statements and the Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
June 30, 1998
-------------
Actual As Adjusted(1)
------ --------------
<S> <C> <C>
Short-term debt:
Floor plan payable......................................... $8,964 $8,964
Line of credit............................................. 500 ---
Current maturities of long term debt....................... 126 126
------- -------
Total short-term debt.................................. $9,590 $9,090
====== ======
Long-term debt............................................... $1,526 $1,526
------ ------
Stockholders' equity:
Preferred Stock, $.01 par value; 1,500,000 shares
authorized; none issued ................................. --- ---
Common Stock, $.01 par value: 20,000,000 shares
authorized; 1,637,075 shares issued and outstanding,
actual, and 4,120,900 shares issued and outstanding,
as adjusted (2).......................................... 27 41
Additional paid-in capital................................. 27 17,311
Accumulated retained earnings.............................. 1,967 1,499
------- ---------
Total stockholders' equity............................. 2,022 18,851
------- --------
Total capitalization................................... $3,548 $20,377
====== =======
</TABLE>
(1) The table excludes the effect of the Marine America Acquisition as its
effect on the information herein is not significant. See "Prospectus Summary
- Concurrent Closing Transactions" and Notes 1 and 10 of the Notes to
Financial Statements.
(2) Includes 303,825 shares of Common Stock to be issued upon the consummation
of the Offering in connection with the exercise of the Regal Option, but
does not include (i) 1,100 shares of Common Stock to be issued in connection
with the Marine America Acquisition, (ii) 218,000 shares of Common Stock
reserved for issuance upon exercise of the Representatives' Warrants, and
(iii) 410,000 shares of Common Stock reserved for issuance upon exercise of
stock options issuable under the Option Plan, of which options to purchase
315,000 shares of Common Stock have been granted effective upon the
consummation of the Offering. See "Management-Stock Options," "Certain
Transactions" and "Underwriting."
23
<PAGE>
SELECTED FINANCIAL DATA
The following selected statement of income data for the years ended
December 31, 1996 and 1997 and the selected balance sheet data at December 31,
1997, are derived from the financial statements of Boat Tree included elsewhere
herein (except that the pro forma share and per share data gives retroactive
effect to the exchange of all of the capital stock of Boat Tree for shares of
Common Stock in connection with the Boat Tree Exchange), which statements have
been audited by BDO Seidman, LLP, independent auditors, whose report thereon is
included elsewhere herein. The selected statement of income data presented for
the six-month periods ended June 30, 1997 and 1998, and the selected balance
sheet data at June 30, 1998, are unaudited and were prepared by management of
the Company on the same basis as the audited financial statements of Boat Tree
included elsewhere herein and, in the opinion of management, include all
adjustments (consisting of normal recurring adjustments) necessary to present
fairly the information set forth therein. The selected financial data for the
six-month period ended June 30, 1998 is not necessarily indicative of the
results to be expected for the full year. The following data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements of Boat Tree, including
the notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Year ended December 31, Six Months Ended June 30,
--------------------------- -------------------------
1996 1997 1997 1998
------- ------- ------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Statement of Income Data:
Sales and service revenue.............. $13,058 $20,183 $10,445 $13,359
Finance and insurance income........... 591 1,043 517 639
------- ------- ------- -------
Total revenue................... 13,649 21,226 10,962 13,998
Cost of sales and service revenue...... 10,544 16,327 7,870 10,568
------- ------- ------- -------
Gross profit.................... 3,105 4,899 3,092 3,430
Selling, general and administrative
expenses............................... 2,493 4,085 1,829 2,063
------- ------- ------- -------
Income from operations.......... 612 814 1,263 1,366
Other income........................... 10 33 12 26
Interest expense....................... (239) (333) (196) (358)
------- ------- ------- -------
Net Income............................. $383 $514 $1,079 $1,034
======= ======= ======= =======
Pro Forma Unaudited Statements
of Income Data (1):
Pro forma taxes on income.............. 198 401
--- ---
Pro forma net income................... 316 633
=== ===
Pro forma net income per share:
Basic........................... .19 .39
Diluted(2)...................... .16 .33
Supplemental (3)................ .16 .32
Pro forma weighted average shares
outstanding:
Basic........................... 1,637,075 1,637,075
Diluted(2)...................... 1,940,900 1,940,900
Supplemental (3)................ 2,057,567 2,057,567
</TABLE>
24
<PAGE>
December 31, 1997 June 30, 1998
----------------- -------------
Balance Sheet Data:
Cash and cash equivalents.... $308 $1,308
Working capital.............. 171 698
Total assets................. 9,681 14,348
Long-term debt............... 1,220 1,526
Total liabilities............ 8,542 12,326
Stockholders' equity......... 1,138 2,022
- ----------
(1) Prior to the date of this Prospectus, Boat Tree has been an S Corporation
and therefore has not been subject to Federal or State corporate income
taxes (other than Florida franchise taxes). The S Corporation status will be
terminated upon the consummation of the Offering. Pro forma taxes on income
reflect a tax provision as if the Company had not been an S Corporation
during the indicated periods. The pro forma provision for income taxes
represents a combined Federal and State tax rate of 38.6%. Historical
earnings per share is not presented because earnings per share of an S
Corporation may not be meaningful. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Notes 1 and 8 of Notes
to Financial Statements.
(2) Gives effect to the exercise of the Regal Option but not to the Marine
America Acquisition, as the latter's effect on the information herein is not
significant. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Notes 1, 5 and 10 of Notes to
Financial Statements.
(3) Supplemental net income per share is based on the weighted average number of
shares of Common Stock used in the calculation of net income per share,
increased by the sale of 61,111 and 55,556 of the shares of Common Stock
offered hereby, which represent the approximate number of the shares of
Common Stock being sold by the Company that need to be sold in order to fund
the payment of the Final S Corporation Distribution of $550,000 and to
reduce line of credit borrowings by $500,000 with a related reduction in
interest expense, respectively, at an assumed initial public offering price
of $9.00 per share, the midpoint of the currently anticipated range of the
initial public offering price. See Notes 1 and 4 of Notes to Financial
Statements.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company is one of the largest retailers of recreational boats in
Florida where it currently owns and operates six retail locations, including
locations in Orlando, Jacksonville, Doctor's Lake, Melbourne, Tierra Verde and
Pinellas Park. The Company will acquire an additional retail location
concurrently with the consummation of this Offering in Belmont, North Carolina,
which it currently operates pursuant to a management agreement and intends to
relocate to Cornelius, North Carolina. At each of its retail locations, the
Company offers a wide selection of new and used boats and related marine
products, such as trailers, parts and accessories. In addition, the Company
arranges boat financing, insurance and extended service contracts for its
customers and at most of the Company's locations provides them with convenient,
skilled and cost-effective repair and maintenance services from state-of-the-art
service facilities located adjacent to its showroom operations.
The Company is the largest volume buyer of recreational boats sold under
the popular Regal brand name and sells six other lines of high quality
recreational boats under the brand names Malibu, Hydra-Sport, Sailfish, Carver,
Stratos Bass Boats and Hurricane Deck Boats. The boats offered by the Company
range in size from 14 feet to 55 feet and in price from approximately $12,000 to
$650,000 (with gross profit margins ranging between 15% and 28%). The Company
believes that it differentiates itself from its competitors by offering seven
different brand name product lines, with over 100 different models of new
cruisers, fishing boats, water-skiing boats and general recreational boats to
choose from, at prices ranging from the low-end to the high-end of the market
spectrum. In 1997, approximately 66% of the Company's new boat sales were sport
boats and fishing boats ranging in price from $11,000 to $150,000 and 26% of its
new boat sales were cruisers ranging in price from $35,000 to $650,000. For the
years ended December 31, 1996 and 1997, the Company sold 413 and 571 new boats,
respectively, generating revenues of approximately $10.4 million and $15.3
million, respectively, and, for the six months ended June 30, 1997 and 1998, the
Company sold 287 and 315 new boats, respectively, for revenues of approximately
$7.8 million and $9.2 million, respectively. In addition to its new boat sales,
for the years ended December 31, 1996 and 1997, the Company sold 128 and 254
used boats, respectively, for revenues of approximately $1.8 million and $3.3
million, respectively, and for the six months ended June 30, 1997 and 1998, the
Company sold 133 and 183 used boats, respectively, for revenues of approximately
$1.7 million and $2.5 million, respectively.
Results of Operations
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1998
Sales and Service Revenue
The Company's sales and service revenue for the six months ended June 30,
1997 was $10,445,303 as compared to sales and service revenue for the six months
ended June 30, 1998 of $13,359,045, an increase of $2,913,742 or 27.9%. Of this
increase, approximately $2,326,000 was attributable to a 22.3% increase in
comparable store sales in 1998. During the six months ended June 30, 1998, the
Jacksonville, Florida store and the Orlando, Florida store generated increases
of approximately $1.6 million and $700,000, respectively, in sales and service
revenues as compared to the six months ended June 30, 1997. Management believes
that the increase in comparable store sales during the six months ended June 30,
1998 resulted primarily from the maturation of the Jacksonville, Florida store,
which opened in February 1997. Management believes that the balance of the
increase in sales and service revenue resulted primarily from the opening of a
new location in Doctors Lake, Florida in February 1998.
26
<PAGE>
Finance and Insurance Income
The Company's finance and insurance income for the six months ended June
30, 1997 was $516,454 (4.7% as a percentage of total revenue), as compared to
$638,802 for the six months ended June 30, 1998 (4.6% as a percentage of total
revenue), an increase of 23.7%. Management believes that the increase in finance
and insurance income is primarily attributable to the increase in sales and
service revenue of 27.9% for the six month period ended June 30, 1998.
Gross Profit
The Company's cost of sales and service revenue for the six months ended
June 30, 1997 was $7,869,712, or 71.8% as a percentage of total revenue, as
compared to $10,567,889 for the six months ended June 30, 1998, or 75.5% as a
percentage of total revenue. The Company's gross profit for the six months ended
June 30, 1997 was $3,092,045, or 28.2% as a percentage of total revenue, as
compared to $3,429,958 for the six months ended June 30, 1998, or 24.5% as a
percentage of total revenue. The Company's gross profit includes finance and
insurance income; however, the cost of sales and service revenue is not
attributable to finance and insurance income. For the six months ended June 30,
1997, the Company's gross profit on sales and service revenue was $2,575,591, or
24.7% as a percentage of sales and service revenue. For the six months ended
June 30, 1998 the Company's gross profit on sales and service was $2,791,156, or
20.9% as a percentage of sales and service revenue. Management believes that the
decrease in gross profit as a percentage of total revenue and of sales and
service revenue was primarily attributable to an increase in the Company's cost
of sales and service revenue for the six months ended June 30, 1998 as compared
to June 30, 1997. The decrease in gross profit margin is primarily attributable
to the Company liquidating the inventory of three discontinued boat lines at
lower gross profit margins.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the six months ended
June 30, 1997 were $1,829,046, or 16.7% as a percentage of total revenue, as
compared to $2,063,411 for the six months ended June 30, 1998, or 14.7% as a
percentage of total revenue. Management believes that the decrease in selling,
general and administrative expenses as a percentage of total revenues is
primarily attributable to cost savings at the Orlando, Florida superstore
attributable to being operational for a full year in 1998 as compared to part of
the year in 1997. In addition, the Company realized additional cost savings from
the centralization of corporate management, purchasing and standardization of
products and processes.
Other Income
Other income was $12,205 for the six months ended June 30, 1997 as
compared to $25,775 for the six months ended June 30, 1998. Management believes
that the increase in other income is primarily attributable to an increase in
interest income derived from greater cash balances for the six months ended June
30, 1998 as compared to June 30, 1997. At June 30, 1997, the Company had cash
balances of $343,967 as compared to $1,307,886 at June 30, 1998, an increase of
$963,919.
Interest Expense
Interest expense was $195,969 for the six months ended June 30, 1997 as
compared to $358,233 for the six months ended June 30, 1998, a percentage
increase of 82.8%. Management believes that the increase in interest expense is
primarily attributable to the increase in balances on the Company's floor plan
financing lines of credit used to support the inventory requirements for the
additional stores opened during the six months ended June 30, 1998 and
anticipated increases in sales in the new locations. Floor plan payable balance
was $4,466,724 as of June 30, 1997 as compared to $8,964,376 as of June 30, 1998
reflecting a percentage increase of 100.7%.
27
<PAGE>
Year Ended December 31, 1996 as Compared to Year Ended December 31, 1997
Sales and Service Revenue
The Company's sales and service revenue for the year ended December 31,
1996 was $13,058,313 as compared to sales and service revenue for the year ended
December 31, 1997 of $20,183,674, an increase of 54.6%. Of this increase,
approximately $2,029,000 was attributable to a 15.54% increase in comparable
store sales in 1997. Management believes that the increase in comparable store
sales resulted primarily from the new Orlando, Florida superstore being fully
operational for the full year of 1997 as compared to four months in 1996. The
store was relocated from a smaller location in September 1996 and, therefore,
the larger facility only contributed to the Company's sales for four months
which included the fourth quarter of 1996, the weakest sales quarter of the
year. Management believes that the balance of the increase in sales and service
revenue resulted primarily from the opening of a Jacksonville, Florida location
in February 1997 which contributed approximately $5,100,000 of sales and service
revenue.
Finance and Insurance Income
The Company's finance and insurance income for the year ended December
31, 1996 was $591,014, or 4.3% as a percentage of total revenue, as compared to
$1,042,795 for the year ended December 31, 1997, or 4.9% as a percentage of
total revenue, an increase of 76.4%. Management believes that the increase in
finance and insurance income is primarily attributable to the increase in sales
and service revenue. Management believes that the increase is also attributable
to more competitive financing packages offered by the third party providers of
customer financing.
Gross Profit
The Company's cost of sales and service revenue for the year ended
December 31, 1996 was $10,544,193, or 77.3% as a percentage of total revenue, as
compared to $16,327,484 for the year ended December 31, 1997, or 76.9% as a
percentage of total revenue. The Company's gross profit for the year ended
December 31, 1996 was $3,105,134, 22.7% as a percentage of total revenue, as
compared to $4,898,985 for the year ended December 31, 1997, or 23.1% as a
percentage of total revenue. Management believes that the increase in gross
profit as a percentage of total revenue was primarily attributable to the
increase in finance and insurance income.
For the year ended December 31, 1996, gross profit on sales and service
revenue was $2,514,120, or 19.3% as a percentage of sales and service revenue.
For the year ended December 31, 1997, gross profit on sales and service revenue
was $3,856,190, or 19.1% as a percentage of sales and service revenue. Gross
profit as a percentage of sales and service revenue was relatively constant
between the year ended December 31, 1996 and the year ended December 31, 1997.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the year ended December
31, 1996 were $2,492,775, or 18.3% as a percentage of total revenue, as compared
to $4,084,993 for the year ended December 31, 1997, or 19.3% as a percentage of
total revenue. Management believes that the increase in selling, general and
administrative expenses for the year ended December 31, 1997 is primarily
attributable to the increased costs associated with the establishment of a
larger, multi-location, operation as well as the direct costs incurred to
establish the Orlando, Florida superstore, which was opened in September 1996.
Other Income
Other income was $10,115 for the year ended December 31, 1996 as compared
to $33,481 for the year ended December 31, 1997. Management believes that the
increase in other income is primarily attributable to an increase in interest
income attributable to greater cash balances at December 31, 1997.
28
<PAGE>
Interest Expense
Interest expense was $239,362 for the year ended December 31, 1996 as
compared to $333,958 for the year ended December 31, 1997, reflecting a
percentage increase of 39.5%. Management believes that the increase in interest
expense is primarily attributable to the increase in balances on the Company's
floor plan financing lines of credit in connection with the Company's increased
levels of inventory requirements for additional stores and anticipated increases
in sales. Floor plan payables were $4,632,731 at December 31, 1996 as compared
to $6,250,903 at December 31, 1997, reflecting a percentage increase of 34.9%.
Termination of S Corporation Status
As a result of terminating the Company's S Corporation status upon the
consummation of the Offering, the Company will be required to record a one-time,
non-cash tax benefit added to earnings for deferred income taxes. This tax
benefit will be recorded in the year ended December 31, 1998. If this benefit
had been recorded at June 30, 1998, the amount would have been $82,000. The
Company expects that, following the termination of its S Corporation status, its
combined Federal and state income tax rate will be approximately 38%.
Liquidity and Capital Resources
The Company has funded its requirements for working capital to support
operations and capital expenditures from net cash provided from operations and
borrowings under credit facilities, including lines of credit and inventory
floor plan financing facilities. As of June 30, 1998, the Company had working
capital of $697,999 and a debt equity ratio of 6 to 1.
For the year ended December 31, 1997 and the six-month period ended June
30, 1998, net cash flows used for operating activities were $1,250,246 and
$1,167,210, respectively. For the year ended December 31, 1996 and the six-month
period ended June 30, 1997, the Company generated cash flows from operating
activities of $301,534 and $483,180, respectively. The increase in cash used by
operating activities was due primarily to an increase in inventory of $199,875
for the year ended December 31, 1996 as compared to $1,868,008 for the year
ended December 31, 1997, and an increase in inventory purchases of $84,895 for
the six months ended June 30, 1997 as compared to $1,835,991 for the six months
ended June 30, 1998. The Company increased floor plan payable during the year
ended December 31, 1997 and the six months ended June 30, 1998 in connection
with the purchase of additional inventory due to an increase in comparable store
sales and the opening of new locations.
For the six months ended June 30, 1997 and 1998, cash flows used by
investing activities were $63,255 and $141,175, respectively. For the years
ended December 31, 1996 and 1997, cash flows used by investing activities were
$368,357 and $175,906, respectively. Cash used in investing activities during
1997 was attributable to the purchase of property and equipment for the opening
of the Jacksonville, Florida location and improvements to the Orlando, Florida
facility. For the six months ended June 30, 1998, cash used in investing
activities resulted primarily from the opening of the three new Florida
locations.
For the six-month period ended June 30, 1997, cash flows used by
financing activities were $415,551 and for the six-month period ended June 30,
1998 cash flows provided by financing activities were $2,308,808. For the years
ended December 31, 1996 and 1997, cash flows provided by financing activities
were $193,845 and $1,394,022, respectively. Cash flows used by financing
activities during the years ended December 31, 1996 and 1997 and the six-month
periods ended June 30, 1997 and 1998 reflect net borrowings and repayments on
lines of credit, repayment of long-term debt, payments for deferred offering
costs, payment of stockholder distributions and net borrowings under the
Company's inventory floor plan financing facilities. For the years ended
December 31, 1996 and 1997, stockholder distributions were made by the Company
in the amounts of $185,000 and $45,000, respectively, for the payment of
stockholder tax liabilities acquired as a result of the Company's S Corporation
status. In 1997, the Company repaid related party long-term debt in the amount
of $320,483 which was used by the
29
<PAGE>
Company to repay a third mortgage on the Orlando, Florida superstore in the
amount of $194,948 and working capital loans totaling $125,535.
At June 30, 1998, the Company had $1,525,752 of long-term debt, less
current maturities, which consisted of mortgage notes payable on the Orlando,
Florida superstore and on vacant land in Cornelius, North Carolina.
The Company has a $500,000 line of credit from AmSouth Bank of Florida,
which bears interest at .5% above the prime rate, is secured by the Company's
used boat inventory and is due in September 1998. As of June 30, 1998, the
outstanding balance was $500,000, which the Company intends to repay from the
net proceeds of the Offering. Regal has provided the Company with a $300,000
line of credit which is due on August 31, 1999. The line of credit from Regal
bears interest at the rate of 10% per annum and is guaranteed by Joseph G. Pozo,
Jr., the Company's Chairman, President, Chief Executive Officer and majority
stockholder. As of June 30, 1998, the Company had not drawn upon the line of
credit from Regal. The Company intends to utilize the line of credit from Regal
for expenses of the Offering and working capital and to utilize a portion of the
net proceeds of the Offering to repay any amounts outstanding under such line of
credit upon the consummation of the Offering. See "Certain Transactions."
The Company finances substantially all of its new boat inventory through
floor plan financing arrangements with TransAmerica and Deutsche Financial
Services Corp. The floor plan financing is due upon the sale of the related boat
and is secured by the Company's new boat inventory, accounts receivable,
equipment and a personal guarantee from Joseph G. Pozo, Jr. The outstanding
balances on the floor plan financing arrangements at December 31, 1997 and June
30, 1998 were $6,250,903 and $8,964,376, respectively. The boat manufacturers
generally provide a pre-determined period of interest free financing during
which the manufacturers pay the financing costs to the lender. As a result of
interest free financing and certain interest rebates received from boat
manufacturers, the weighted average interest rate on floor plan financing was
approximately 4.5% for the year ended December 31, 1997. The maximum borrowing
availability under the floor plan financing arrangements was $8,750,000 and
$15,250,000, as of December 31, 1997 and June 30, 1998, respectively.
Joseph G. Pozo, Jr. owns 51% of the capital stock of Bob's Boats, Inc.
("Bob's Boats") a corporation which operates an approximately 10,000 square foot
retail boat dealership in Orlando, Florida and primarily sells new boats under
the Bayliner brand name. On January 8, 1998, Bob's Boats purchased the assets of
H&J Sales, Inc., an unaffiliated third party which operated the dealership, for
a purchase price of $1,806,150, financed in part by loans collateralized by
Bob's Boats' inventory and guaranteed by the Company, Mr. Pozo, Jr. and the
other stockholder of Bob's Boats, including inventory floor plan borrowings of
$1,173,234 and $470,347 borrowed from South Trust Bank, N.A. On or prior to the
consummation of the Offering, Mr. Pozo, Jr. is selling his 51% interest in Bob's
Boats to Bob's Boats' other stockholder for $1,000,000 pursuant to a note. In
connection with such transfer of ownership, the guarantee by the Company of
Bob's Boats' debt will be terminated. See "Certain Transactions."
Upon the consummation of the Offering, in connection with the Marine
America Acquisition, the Company will acquire all of the outstanding capital
stock of Marine America, a corporation owned 40% by Mr. Pozo, Jr., 10% by Joseph
J. Pozo (Mr. Pozo, Jr.'s son) and 50% by Lakewood, an unaffiliated third party,
for 1,100 shares of Common Stock valued at $10,000, the approximated net book
value of Marine America. In January 1998, Marine America acquired certain of
Lakewood's assets, as well as a five-year lease relating to its 8,000 square
foot retail boat dealership in Belmont, North Carolina, for a purchase price of
$130,858. As part of such acquisition, the Company purchased Lakewood's new and
used boat and trailer inventory for a purchase price of $998,634 and agreed to
provide Marine America with new and used boat inventory, as needed, at the
Company's invoice cost plus freight. In addition, the Company entered into a
management agreement with Marine America pursuant to which the Company agreed to
manage the operations of the Lakewood dealership. Immediately prior to the
consummation of the Marine America Acquisition, Marine America intends to borrow
$125,000 from the Company (which loan will be eliminated on the Company's
consolidated financial statements following the consummation of the Marine
America Acquisition) in order to redeem the shares of capital stock of Marine
America held by Lakewood. The Company intends to relocate the operations of the
Belmont, North Carolina dealership to a three-acre tract of land located in
Cornelius, North Carolina, which the Company acquired on May 15, 1998 for a
purchase price of
30
<PAGE>
$348,100, and intends to utilize a portion of the net Offering proceeds to
construct a 20,000 square foot superstore on such site. See "Certain
Transactions" and Note 10 of Notes to Financial Statements.
In addition to the new North Carolina superstore, the Company intends to
utilize a portion of the net proceeds of the Offering to acquire, convert and/or
construct at least seven additional stores (including at least one additional
superstore in the Florida panhandle area) during the next 18 months, to acquire
and develop a boat storage facility in Orlando, Florida, to expand the service
department of its existing Orlando superstore, to acquire additional used boat
inventory and to upgrade its management information systems to enhance internal
controls and reporting. See "Use of Proceeds" and "Business."
Except as specified in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Company has no material
commitments for capital for the next 18 months. The Company believes that the
proceeds from the Offering, together with anticipated revenues from operations
and its existing capital resources, will be sufficient to satisfy its
contemplated cash requirements for at least 18 months following the consummation
of the Offering, including for the opening of at least seven additional stores
during such period. The success of the Company's expansion plans, however, will
depend upon a number of other factors besides the Company's financial
capabilities, including the identification of new markets and locations, the
hiring, training and retention of qualified personnel and the integration of new
stores into existing operations. The Company's growth strategy will also depend
upon the Company's ability to locate and acquire suitable acquisition candidates
and to dispose, timely and effectively, of the acquired entity's remaining
inventory, as well as the ability of the Company to sell its product line to the
customer base of the previous owner. In addition, the Company's expansion plans
will depend upon the Company's ability (i) to locate and lease or construct
suitable facilities at a reasonable cost, (ii) to obtain the reliable data
necessary to determine the size and product preferences of potential markets,
(iii) to introduce successfully the Company's product lines and (iv) to hire and
train management and sales teams for each additional location. There can be no
assurance that suitable acquisition candidates will be identified, that
acquisitions will be consummated, that new facilities will be constructed on a
cost-effective basis or that the operations of any new or acquired facility will
be successfully integrated into the Company's operations and managed profitably
without substantial costs, delays, or other operational or financial
difficulties. Moreover, although the Company has applied for a $10 million line
of credit from TransAmerica to be effective upon the consummation of this
Offering, there can be no assurance that such application will be granted or
that any additional financing, if needed, would be available to the Company on
commercially reasonable terms, or at all.
Seasonality
The impact of seasonality and weather on the operation of the Company's
business, as well as the entire recreational boating industry, is highly
material. Strong sales typically begin in March following the start of public
boat and recreation shows, and continue through October. This eight-month period
for the years ended December 31, 1996 and 1997 has accounted for 77.1% and
80.9%, respectively, of the Company's annual sales. If, for any reason, the
Company's sales were to fall substantially below those normally expected during
these periods, the Company's business, financial condition and results of
operations would be materially and adversely affected. The Company generally
realizes significantly lower sales in the quarterly period ending December 31,
resulting in operating losses during that quarter.
The Company's business is also significantly affected by weather patterns
which may adversely impact the Company's operating results. For example, drought
conditions or merely reduced rainfall levels, as well as excessive rain, may
force area lakes to close or render boating dangerous or inconvenient, thereby
curtailing customer demand for the Company's products. In addition, unseasonably
cool weather and prolonged winter conditions may lead to a shorter selling
season in certain locations. Due to the foregoing factors, among others, the
Company's operating results in some future quarters may be below the
expectations of stock market analysts and investors. In such event, there could
be an immediate and significant adverse effect on the trading price of the
Common Stock.
With regard to net income, the Company historically generates profits in
three of its fiscal quarters and experiences operating losses in the quarter
ended December 31 due to a broad seasonal slowdown in sales. During the quarter
ended September 30, inventory reaches its lowest levels and accumulated cash
reserves reach the highest levels. During the quarter ended December 31, the
Company generally builds inventory levels in preparation for the
31
<PAGE>
upcoming selling season which begins with boat and recreation shows occurring in
March and April in certain market areas in which the Company conducts business.
The Company's operating results would be materially and adversely affected if
net sales were to fall significantly below historical levels during the months
of March through October. Quarterly results also may fluctuate as a result of
the expenses associated with new store openings or acquisitions. Accordingly,
the results for any quarterly period may not be indicative of the expected
results for any other quarterly period.
Year 2000 Issue
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 system and will otherwise be compliant on
a timely basis with Year 2000 requirements. The Company currently is developing
a plan to evaluate the Year 2000 compliance status of third parties with which
its system interfaces. Any failure of the Company's management information
system or the systems of third parties to timely achieve Year 2000 compliance
could have a material adverse effect on the Company's business, financial
condition, and operating results.
32
<PAGE>
BUSINESS
General
The Company is one of the largest retailers of recreational boats in
Florida where it currently owns and operates six retail locations, including
locations in Orlando, Jacksonville, Doctor's Lake, Melbourne, Tierra Verde and
Pinellas Park. The Company will acquire an additional retail location
concurrently with the consummation of this Offering in Belmont, North Carolina,
which it currently operates pursuant to a management agreement and intends to
relocate to Cornelius, North Carolina. At each of its retail locations, the
Company offers a wide selection of new and used boats and related marine
products, such as trailers, parts and accessories. In addition, the Company
arranges boat financing, insurance and extended service contracts for its
customers and, at most of the Company's locations, provides them with
convenient, skilled and cost-effective repair and maintenance services from
state-of-the-art service facilities located adjacent to its showroom operations.
The Company is the largest volume buyer of recreational boats sold
under the popular Regal brand name and sells six other lines of high quality
recreational boats under the brand names Malibu, Hydra-Sport, Sailfish, Carver,
Stratos Bass Boats and Hurricane Deck Boats. The boats offered by the Company
range in size from 14 feet to 55 feet and in price from approximately $12,000 to
$650,000 (with gross profit margins ranging between 15% and 28%). The Company
believes that it differentiates itself from its competitors by offering seven
different brand name product lines, with over 100 different models of new
cruisers, fishing boats, water-skiing boats and general recreational boats to
choose from, at prices ranging from the low-end to the high-end of the market
spectrum.
The boat retailing industry is characterized by thousands of
independent retailers, most of which operate in only a single market, have
limited financial resources and offer only limited inventory, have annual sales
of less than $3 million and provide varying degrees of merchandising,
professional management and customer service. Management believes that many of
these independent retailers do not have the managerial or capital resources
necessary to compete in the highly competitive recreational boating industry and
are thus ripe for consolidation. As part of its expansion strategy, the Company
intends to acquire a number of existing dealerships and to capitalize upon its
professional management team, access to capital, focused purchasing and
marketing strategies, ability to leverage overhead expenses and generate other
operating efficiencies, and expanding management information system
infrastructure to increase the sales, control the costs and raise the
profitability levels of the dealerships it acquires.
Strategy
The Company intends to continue its growth trend and become one of the
leading operators of recreational boat dealerships in the southeastern United
States through the continued implementation and/or maintenance of its operating
and growth strategies.
Operating Strategy
The Company's operating strategy is to maximize its profits by
increasing its operating efficiencies and through the structured application of
management's proven operating philosophies, key elements of which are set forth
below:
o Operate with Centralized Management. The Company has adopted a
centralized approach to the operational management of its dealerships
while conducting each of its dealerships as separate profit centers.
The Company believes that this system takes advantage of the experience
and knowledge of the Company's senior management, while enabling local
managers to implement the Company's standardized practices with respect
to inventory, advertising, pricing, customer service and personnel.
o Increase Operating Efficiencies. As it grows, the Company will
continually seek ways in which to increase operating efficiencies among
its dealerships, including those that will be provided as a result of
an increasing
33
<PAGE>
number of dealerships (such as the more effective use of advertising
and marketing dollars and the lower inventory costs associated with
bulk financing) in order to enhance its profitability. In connection
with such strategy, the Company will also continue to centralize
certain administrative functions, such as accounting, finance,
insurance, marketing, purchasing and management information systems, at
the corporate level in order to maintain more effective cost controls.
o Maintain a Diverse Product Line. The Company currently sells eight
lines of high quality recreational boats and intends to obtain
additional product lines through the acquisition of dealerships with
product distribution rights. Management believes that offering a broad
selection of high quality boats enables it to appeal to a wide variety
of customers, minimizes the Company's dependence on any one
manufacturer and reduces its exposure to supply problems and product
cycles. In addition, the Company plans to place an increased emphasis
on the sale of used boats, thereby adding even greater diversity to its
product offerings.
o Focus on Consumer Loyalty and Satisfaction. The Company emphasizes
customer satisfaction throughout its organization and continually seeks
to maintain its reputation for quality and fairness. The Company
strives to provide an enjoyable boat purchasing environment at each of
its locations and trains its sales personnel to identify an appropriate
boat for each customer at a price affordable to that customer. In
addition, the Company attempts to make the purchase of a boat a
convenient and stress-free experience by arranging fast, easy and
competitive financing and insurance for its customers. The Company also
provides special amenities to its customers such as boater education
and has established cruise clubs, fishing clubs and picnics for its
customers in order to keep them involved in boating. These programs
have built strong consumer loyalty resulting in referrals and repeat
business. In addition, the Company considers its parts and service
operations to be an integral part of its customer service program and
an important factor in the establishment of customer loyalty and repeat
sales.
Growth Strategy
The Company's growth strategy is to continue increasing sales at its
existing stores while expanding its current store base through the further
development of its existing markets and by entering new markets. Initially, the
Company intends to focus its plans for expansion in the southeastern United
States, primarily in Florida, North Carolina, South Carolina, Georgia and
Alabama. In keeping with its growth strategy, the Company intends to own and
operate at least seven additional stores, in addition to the dealership which it
will acquire concurrently with the consummation of this Offering, within the
next 18 months. The Company intends to accomplish such goal through the
acquisition of existing dealership stores and/or through the opening of new
stores, in the latter case either by acquiring (by lease or purchase) and
converting compatible existing facilities or by constructing new facilities.
Strategic Acquisitions of Existing Stores. The Company intends to
capitalize upon the significant consolidation opportunities available in the
highly fragmented recreational boat dealer industry by acquiring additional
retailers and improving their performance and profitability through the
implementation of the Company's operating strategies and the establishment of
the Company's customer service specialties (such as its financing and insurance
facilitation services and its comprehensive repair and maintenance services,
each of which helps to foster customer satisfaction while providing the Company
with an additional revenue stream). The Company's growth strategy includes
acquiring (i) boat dealerships that, among other criteria, possess either the
sole franchise of a major boat manufacturer or a significant share of new boat
sales in a specific targeted market or (ii) boat dealerships that, while located
in attractive geographic markets, have not been able to realize favorable market
share or profitability and can benefit substantially from the Company's capital,
systems and operating strategies. In connection with its growth strategy, the
Company may also acquire an existing dealership merely to obtain a new
territorial exclusive, with the intention of moving it to a newly built or
converted facility developed by the Company in a more strategic or larger
location within the acquired territory. The Company may also seek to expand its
product mix by acquiring dealerships that distribute a range of products that
are not currently offered by the Company.
34
<PAGE>
Opening of New Stores. In connection with opening new stores, the
Company intends to acquire (by lease or purchase) and convert compatible
existing facilities or to build new facilities with 10,000 to 25,000 square feet
of enclosed space ("superstores"). In connection with its opening of new
superstores, the Company plans to utilize its existing dealership in Orlando,
Florida as a prototype. The Orlando superstore is located directly off of, and
is visible from, a major interstate highway on five and one-half acres, abutting
a four-acre lake. The building is 20,000 square feet and accommodates up to 35
boats in an air conditioned showroom. From this location, the Company has
garnered a market share of approximately 30% of the sports boats and cruisers
sold in the Orlando, Florida market.
Management believes that the average cost to build a new 20,000 square
foot superstore will be approximately $1,200,000, excluding the cost of the
land. The Company believes that the conversion of existing facilities into
superstores will typically involve a lower cash investment, yet generate similar
sales and gross profit margins. In addition, for both converted and newly built
superstore locations, initial pre-opening expenses are estimated to be $75,000
to $100,000 and initial inventory requirements are anticipated to total
approximately $1 to $2 million, most of which will be financed by floor plan
financing arrangements and will result in little additional capital investment.
Recreational Boating Industry
Based upon information compiled by the NMMA, the recreational boating
industry has experienced significant growth within the last five years with
total nationwide consumer expenditures related to recreational boating
(including sales of new and used boats, motors, trailers, equipment and
accessories and related expenditures for fuel, docking, storage and repairs) of
$19.3 billion in 1997 as compared to $10.3 billion in 1992.
Retail recreational boating sales were $17.9 billion in 1988, but
declined to a low of $10.3 billion in 1992. The Company believes that this
decline can be attributed to a recession and the imposition 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.
In 1997, the NMMA estimates that over 78 million people participated in
recreational boating and that new boat and motor sales alone represented $8.6
billion of the $19.3 billion in total recreational boating sales for that year.
The Company's management believes that the southeastern United States is a
particularly strong market for its products due to mild weather conditions,
extended fishing and recreational seasons and accessibility to the Gulf of
Mexico, the Caribbean Sea, the Atlantic Ocean and numerous lakes, rivers,
estuaries and wetlands. Florida generated $733 million or almost 4% of the
nation's total recreational boating sales for 1997, placing it number one among
the states in terms of such sales, and, together with the Company's other
targeted expansion areas (North Carolina, South Carolina, Georgia and Alabama),
it generated $1.5 billion of such sales.
Demographics continue to be a key factor in growth. The NMMA reports
that the typical boat owner is in the late 40 year plus category with a
household income in excess of $50,000 per annum. The 35-54 age group, which is
the fastest growing segment of the United States population, is the largest age
group purchasing boats. Although these individuals account for 38% of the U.S.
population over age 16, they account for over 44% of all consumer purchases and
over 48% of all consumer recreation purchases.
Products and Services
New Boat Sales
The Company is the largest volume buyer of recreational boats sold
under the popular Regal brand name and sells six other lines of high quality
recreational boats under the brand names Malibu, Hydra-Sport, Sailfish, Carver,
Stratos Bass Boats and Hurricane Deck Boats. The boats offered by the Company
range in size from 14 feet to 55 feet and in price from approximately $12,000 to
$650,000 (with gross profit margins ranging between 15% and 28%). The Company
believes that it differentiates itself from its competitors by offering seven
different brand
35
<PAGE>
name product lines, with over 100 different models of new cruisers, fishing
boats, water-skiing boats and general recreational boats to choose from, at
prices ranging from the low-end to the high-end of the market spectrum. In 1997,
approximately 66% of the Company's new boat sales were sport boats and fishing
boats ranging in price from $11,000 to $150,000 and 26% of its new boat sales
were cruisers ranging in price from $35,000 to $650,000.
For the years ended December 31, 1996 and 1997, the Company sold 413
and 571 new boats, respectively, generating revenues of approximately $10.4
million and $15.3 million, respectively, and, for the six months ended June 30,
1997 and 1998, the Company sold 287 and 315 new boats, respectively, for
revenues of approximately $7.8 million and $9.2 million, respectively. The
average sale price per new boat sold by the Company during the year ended
December 31, 1997 and the six months ended June 30, 1998 was approximately
$27,000 and $23,800, respectively. The Company believes that the Company's
average sale price is higher than the industry average as a result of its focus
on the sale of cruisers sold under the Regal brand name and the high quality of
products and customer service offered by the Company. The Company believes that
it accounted for approximately 12% of Regal's recreational boat sales in 1997.
Used Boat Sales
The Company offers a wide variety of makes and models of used boats.
The sales of used boats are an important part of the Company's operations. The
Company intends to use a portion of the net proceeds of the Offering to buy used
boats at a discount in the off-season and refurbish them for resale. The Company
acquires used boats from customer trade-ins and purchases used boats from
individual boat owners. The Company also sells used boats on consignment and
plans to offer boat brokerage services. The Company intends to establish a used
boat certification program which will include a limited warranty by the Company
on every used boat sold. The Company's goal is to sell one used boat for every
two new boats sold. For fiscal 1997 the ratio was one-to-five.
In fiscal 1996, the Company sold 128 used boats generating revenue of
$1.8 million, 15% of the Company's total boat revenue, and, in fiscal 1997, the
Company sold 254 used boats generating revenue of $3.3 million, 18% of the
Company's total boat revenue. For the six months ended June 30, 1997 and 1998,
the Company sold 133 and 183 used boats, respectively, for revenues of
approximately $1.7 million and $2.5 million, respectively. The average sale
price of the used boats sold by the Company during the year ended December 31,
1997 and the six months ended June 30, 1998 was approximately $13,000 and
$13,700, respectively.
Boat Financing
A substantial portion of the Company's income results from the
origination and placement of customer financing and the sale of insurance
products and extended service contracts, the most significant component of which
is the income resulting from the Company's origination of customer financing.
The Company believes that the ability of its customers to obtain financing from
the Company is critical to its ability to sell new and used boats. The Company
provides a variety of financing alternatives in order to meet the needs of its
customers. The Company believes its ability to obtain customer-tailored
financing on a "same day" basis provides it with an advantage over many of its
competitors, particularly smaller competitors which the Company believes lack
the resources to offer boat financing or which do not generate sufficient volume
to attract the diversity of financing sources that are available to the Company.
Beginning in 1996 and ceasing in April 1998, the Company's use of a "dealer
rebate" by certain customers as part of, or in lieu of, a customer down payment
resulted in a breach of certain provisions of the retail dealer financing
agreements. Under the terms of these agreements, the use of dealer rebates
obligates the Company in such instances to indemnify the finance company against
foreclosure losses. Upon the Company's repayment of the customer's defaulted
obligation, the finance company would assign the customer's loan contract to the
Company and the Company would attempt to collect on the customer's loan or
repossess the underlying collateral. Repossessed boats would be sold in the
normal course of business through the Company's stores. At December 31, 1997 and
June 30, 1998, the Company had accrued liabilities of approximately $86,000 and
$119,000, respectively, for estimated foreclosure losses related to such loans.
36
<PAGE>
The Company maintains relationships with a number of financing sources
and arranges financing for its customers with those sources that the Company
believes are best suited to satisfy a customer's particular needs. The interest
rates available and the required down payment, if any, depend to a large extent,
upon the bank or other financial institution providing the financing and the
customer's credit history.
Maintenance and Repair Services
The Company considers its service operations to be an integral part of
its customer service program. The Company provides maintenance and repair
services at most of its retail locations. 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 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, the
manufacturer generally 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's maintenance and repair services are performed by factory-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.
Marine Parts and Accessories
The Company sells related marine parts which are primarily the original
equipment manufacturers line of products including oils, lubricants, steering,
control systems, corrosion control products, engine care and service products.
The Company also sells a complete line of boating accessories including life
jackets, ski equipment, cleaners, safety equipment and novelty items such as
shirts, caps, and logo apparel bearing the various manufacturers or dealer's
logo.
Future Boat Storage Services
The Company intends to use approximately $1,300,000 of the estimated
net proceeds of this Offering to develop a boat storage location in Orlando,
Florida near the Company's prototype superstore. The Company believes that
there is a shortage of boat storage locations that provide safe and secure
storage and other amenities in the Orlando area.
The Company will seek to acquire three to four acres of land on which
the Company can store up to 350 boats. For such storage services, the Company
will charge $3 a foot per month, with a minimum charge of $50 per boat per
month. With such new location, the Company will be able to provide its Orlando
customers with a convenient environment in which to store their boats as well as
additional amenities such as boat cleaning and preparation services to
complement the sales and services offered by the Company's Orlando Superstore.
In addition, the Company believes that the provision of such services will
enable the Company to attract additional, and retain existing, customers.
Operations
Management Practices
The operations of each retail location are conducted as a separate
profit center. The general manager at each retail location implements
management's decisions relating to inventory, advertising, pricing, customer
service and personnel. The Company compensates its general managers and
department managers based on the profitability of their operations and
departments rather than on sales volume. The Company utilizes computer-based
management information systems to monitor each retail location's sales,
profitability and inventory on a daily basis. The Company believes that its
professional management practices provide it with a competitive advantage over
many dealerships and is critical to its ability to achieve levels of
profitability superior to industry averages. Upon opening each additional
location, the Company will install its own Company-trained management team. The
leader of the management team will report directly to the Company's senior
management.
Sales and Marketing
The general manager at each location is trained at the Company's
Orlando superstore. The Company employs uniform pricing, sales and service
techniques which can only be modified by the Company's senior management. The
Company's sales force works closely with each customer to identify an
appropriate boat at a price affordable to that customer. The Company utilizes a
counseling approach during the sales process which it believes increases the
likelihood that a customer will be satisfied with the boat purchased and will do
business with the Company in the future. The Company believes that this
philosophy enables the Company to sell more boats at higher gross profit
margins.
37
<PAGE>
The competitive environment of the boat dealership industry requires
that a substantial portion of each sales dollar be allocated to advertising and
boat shows. However, as with most new boat dealerships, approximately 30% of the
Company's qualified advertising and marketing expenses are paid for by the boat
manufacturers. The manufacturers also provide the Company with the benefit of
market research which assists the Company in developing its own advertising and
marketing programs. The Company believes that it receives a significant benefit
from the manufacturers' advertising of brand awareness on a national basis.
The Company's marketing efforts focus on a wide range of potential
buyers. The Company offers a variety of new and used boats at a wide range of
prices with various financing terms. The Company utilizes newspaper, radio and
direct mail advertising. The Company primarily uses advertising that focuses on
developing its image as a reputable dealer offering quality service, affordable
boats and financing for all potential buyers.
The Company also participates in area boat shows. These shows are
normally held at convention centers with all area dealers attending purchasing
space. The Company believes that boat shows and other offsite promotions
generate a significant amount of interest in products and often have an
immediate impact on sales at a nominal incremental cost. The Company plans to
organize exhibitions with other area boat dealers. In fiscal 1997 approximately
10% of the Company's sales were generated at recreational boat shows. In
addition, the Company believes that an additional 25% of the Company's sales
were attributable to leads generated at recreational boat shows.
The Company's cruise and fishing clubs are another method which the
Company utilizes for promotion. The Company's cruise clubs lead members to a new
destination each month. The Company also offers its fishing customers a similar
opportunity by holding fishing tournaments in which the Company's customers who
have purchased fishing boats compete against one another for cash prizes.
The Company's focus on customer relationships extends to a strong
commitment to service after the sale. The Company analyzes each boat's systems
and has a certified sea captain deliver the boats rather than a salesperson in
order to provide elementary training. Several times a year the Company's
dealerships hold free hands-on training classes on topics such as electronics,
charting and docking. The Company also offers special seminars for women
boaters.
Floor Plan Financing
The Company acquires a substantial portion of its inventory through
floor plan financing agreements. Inventory is generally purchased under floor
plan lines of credit (secured by such inventory) maintained with third party
finance companies and/or commercial banks depending upon the product purchased.
In addition, the Company receives interest free floor plan financing from
several vendors. This arrangement is based on the boat's model year which
generally begins July 1. The number of months of free floor plan financing
received by the Company is either based upon date of the inventory purchased by
the Company until the end of the model year, or for a fixed period of months,
depending on the vendor. Management believes that these financing arrangements
are standard within the industry. As of June 30, 1998, the Company's maximum
borrowings available under floor plan lines of credit was $15,250,000 and the
average borrowings outstanding during the six-month period ended June 30, 1998
was $7,607,640. The Company employs cash management systems designed to maximize
returns and minimize interest expense. The Company due to its cash position and
financial strength is able to take advantage of manufacturers' buy outs at a
discount and other special cash discounts.
Management Information Systems
The Company's financial information, operational and accounting data
and other related statistical information are consolidated, processed and
maintained at the Company's headquarters in Orlando, Florida. The flexible
nature of the Company's installed network allows for accumulation, processing
and distribution of information. All sales and expense information, and other
data related to the operations of each dealership are entered at each location
and "key indicators" are reported daily. Reports can be generated that set forth
and compare revenue
38
<PAGE>
and expense data by dealership and department, allowing management to analyze
operating results, identify trends in the business and focus on areas that
require attention at the Company's bi-monthly staff meetings.
The Company believes that its management information systems will
enable the Company to successfully integrate additional dealerships into the
Company's operations. The Company plans to use a portion of the net proceeds of
the Offering to upgrade and expand the Company's management information systems.
Following the opening of each new dealership, the Company intends to install its
management information systems, thereby permitting access to financial,
accounting and other operational data.
Relationship with Boat Manufacturers
As is typical in the recreational boating industry, the Company deals
with each of its manufacturers pursuant to annually renewable, (except for its
current agreement with Regal which has a three-year term) non-exclusive, dealer
agreements that 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. The Company purchased 65% of its new boats in 1997 from Regal (which
will become a principal stockholder of the Company upon the consummation of the
Offering) of which 98% were powered with Volvo-Penta engine packages. Sales of
Regal boats constituted approximately 55% of the Company's sales in 1997. The
Company did not purchase more than 10% of its new boats from any other
manufacturer in 1997. 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 those of Regal.
Pursuant to its arrangements with certain manufacturers, the Company's
right to display some product lines in certain markets may be restricted. The
Company does not believe that these restrictions imposed by manufacturers will
materially affect the Company's expansion plans. See "Risk Factors -
Limitations to Market Entry."
Trademarks
The Company has filed an application to trademark the "Boat Tree" name
and logo.
Environmental and Other Regulatory Issues
On December 3, 1996, the EPA announced final regulations for outboard
marine motors. Under the regulations, manufacturers beginning with model year
1998 and phased in over nine years must reduce hydrocarbon emissions by 75% from
present levels. The regulation only effects new engines. The EPA expects that
average costs for these engines will increase modestly, approximately 10-15% or
approximately $700 on the average power output engine. Costs of these new
models, and/or the manufacturers' inability to comply with the EPA requirements,
could have a material adverse affect on the Company's business, financial
condition, operating results and prospects. The Company believes that its
outboard motor manufacturers currently meet all common standards and has
proprietary or licensed technology to meet or exceed EPA standards with a new
line of motors.
The Company, in the ordinary course of its business, is required to
dispose of certain waste products that are regulated by state or federal
agencies. These products include waste motor oil, tires, batteries and certain
paints. It is the Company's policy to use appropriately licensed waste disposal
firms to handle this refuse. The Company retains a waste management firm to
dispose of such products. If there were improper disposal of these products, it
could result in potential liability to the Company.
Additionally, certain states have required or are considering requiring
a license in order to operate a recreational boat. While the licensing
requirements are not expected to be unduly restrictive, such regulations may
discourage potential first-time buyers thereby limiting future sales. The
adoption of such licensing regulations could have a material adverse effect on
the Company's business.
39
<PAGE>
Product Liability
The Company may be exposed to potential liabilities for personal injury
or property damage claims relating to the use of the those products. The
resolution of product liability claims has not materially affected the Company's
business in the past. The Company believes that manufacturers of the products
sold by the Company maintain 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 claims
that are ultimately not covered by insurance. Any significant claims against the
Company which are not covered by insurance could adversely affect the Company's
business, financial condition, operating results and prospects. The Company also
may be adversely affected by related negative publicity.
Insurance
The Company carries a general liability policy which provides for
coverage of $1,000,000 per occurrence and $5,000,000 in the aggregate. The
Company will face potential claims and liabilities, including claims for
products liability, which arise out of the Company's business activities. Claims
could possibly be asserted against the Company under federal and state statutes
and regulations, common law, contractual indemnification agreements or
otherwise. There can be no assurance that the Company will not be subject to
claims which could materially and adversely affect its business, financial
condition, operating results or prospects. The Company currently has purchased
insurance (which it believes to be adequate) to cover the exposure it could face
from such claims; however, there can be no assurance that adequate insurance
coverage will continue to be available on terms acceptable to the Company or at
all, or that the Company will not face claims outside or in excess of its
coverage under its insurance in the event a claim is asserted against the
Company. Because the Company has limited financial and managerial resources,
such an action (or the establishment of actual liability against the Company)
could materially and adversely affect the Company.
Employees
As of August 15, 1998, the Company employed 117 persons on a full-time
basis of which 13 were in store-level management, 58 were in sales and
marketing, 26 were in parts and service and 20 were in corporate administration
and management. None of the Company's employees are represented by a labor union
or bound by a collective bargaining agreement. The Company believes that its
relationship with its employees is satisfactory.
Properties
The Company owns the property upon which its signature dealership
superstore and corporate offices are located in Orlando, Florida. The Company's
dealerships in Jacksonville, Melbourne, Pinellas Park, Tierra Verde and Doctor's
Lake, Florida are leased facilities and Marine America leases its facility in
Belmont, North Carolina. Subsequent to the consummation of the Offering and the
Marine America Acquisition, the Company intends to relocate the Belmont, North
Carolina facility to three acres of land it recently acquired in Cornelius,
North Carolina and open a new superstore on such parcel. After the Marine
America Acquisition, the Company and its various dealerships
40
<PAGE>
will occupy an aggregate of approximately 19 acres of land and approximately
53,000 square feet of building space, of which 49,700 square feet are utilized
for sales, services and parts and 3,300 square feet are utilized for office
space. Such properties consist primarily of boat showrooms, display lots,
service facilities, boat storage lots, parking lots and offices. The Company
believes its facilities are currently adequate for its needs and are in good
maintenance and repair. Pursuant to the leases, the Company is generally
responsible for taxes, utilities, repairs and maintenance. The leases expire
commencing in 1999 through 2003 and in certain cases have renewal options. In
fiscal 1997, the Company made lease payments in the aggregate amount of
approximately $159,000.
The Company intends to use a portion of the net proceeds of the
Offering to acquire and construct a boat storage facility in Orlando, Florida,
to expand the service department in the Orlando, Florida superstore, and to
construct its new superstore in Cornelius, North Carolina. In addition, upon the
consummation of the Offering, the Company will acquire an approximately 1.5 acre
site adjacent to the Orlando superstore from JCJ Family Partnership for a
purchase price of $400,000. Joseph G. Pozo, Jr., the Company's Chairman,
President, Chief Executive Officer and majority stockholder, is the general
partner of JCJ Family Partnership. See"Certain Transactions."
The following table sets forth each of the Company's facilities, the
approximate square footage at each facility and the acreage of each location.
Dealership/Facility Location Total Building/Square Ft. Total Land/Acres
- ---------------------------- ------------------------- ----------------
Orlando, Florida (superstore) 20,000 5.5
Jacksonville, Florida 8,000 3.0
Doctor's Lake, Florida 8,000 2.0
Belmont, North Carolina (1) 8,000 2.5
Melbourne, Florida 4,000 3.0
Tierra Verde, Florida 3,000 1.0
Pinellas Park, Florida 2,000 2.0
- ----------------------
(1) To be acquired in connection with the Marine America Acquisition and
subsequently relocated to Cornelius, North Carolina, where the Company
intends to open a 20,000 square foot superstore.
41
<PAGE>
MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information concerning the
directors, nominees for director and executive officers of the Company. Upon the
consummation of the Offering, Sir Brian Wolfson, Jeffrey Schottenstein, Brady
Churches, and James W. Traweek have agreed to serve as directors of the Company.
Name Age Position with the Company
---- --- -------------------------
Joseph G. Pozo, Jr....... 50 Chairman, President and
Chief Executive Officer
Gary E. Stein............ 48 Executive Vice President,
Secretary and Director
Melven R. Nehleber....... 48 Chief Financial Officer and Treasurer
Marcelo Pozo............. 49 Vice President
Brady Churches........... 40 Director Nominee
James Gregory Humphries.. 42 Director Nominee
Jeffrey Schottenstein.... 57 Director Nominee
James W. Traweek......... 54 Director Nominee
Sir Brian Wolfson........ 62 Director Nominee
Joseph G. Pozo, Jr., the founder of Boat Tree and of the Company, has
been the Chairman of the Board, President and Chief Executive Officer of Boat
Tree and of the Company since their respective inceptions. He is also the
founder and a principal stockholder of Dollar Depot, Inc., a multi-chain
retailer. Mr. Pozo has over 25 years of experience in the retail and wholesale
industry. Mr. Pozo is Marcelo Pozo's brother.
Gary E. Stein became Executive Vice President, Secretary and a director
of the Company in June 1998. Prior thereto, from October 1997 to June 1998, Mr.
Stein served as a business consultant to the Company. In addition, from February
1997 to June 1998, Mr. Stein was the Chief Administrative Officer and Chief
Financial Officer of Pinnacle Technologies Resources, Inc., an information
technology consulting firm. From January 1993 to January 1997, Mr. Stein was the
President of DB Capital Corp., a private investment banking firm. Mr. Stein is
licensed to practice law in Ohio and Florida.
Melven R. Nehleber joined the Company as its Chief Financial Officer
and Treasurer in August 1998. From April 1998 through August 1998, Mr. Nehleber
was the Acting President of Rockport Occupational Network, Inc., a worker's
compensation and occupational/industrial medical network in Houston, Texas. From
April 1997 through March 1998, Mr. Nehleber was Administrator and Chief
Financial Officer for Infusion Plus Homecare, a comprehensive health care group
in Midland, Texas. From January 1993 to June 1996, Mr. Nehleber was the Chief
Executive Officer and a principal stockholder of Hospicenter, Inc., a Houston,
Texas company majority-owned by Coram Healthcare, Inc., a New York Stock
Exchange company. Mr. Nehleber has also acted as a consultant for government
business and healthcare companies throughout the above periods.
Marcelo Pozo has been the Vice President of the Company since August
1998 and the Company's General Manager, F&I since January 1996. From 1992 to
1996, he was the President of Dollar Depot, Inc. Mr. Pozo is the brother of
Joseph G. Pozo, Jr.
Brady Churches has served as the President of Mazel Stores, Inc. since
1996 and has served as President - Retail since August 1995. Mr. Churches was
employed by Consolidated Stores, Inc. ("Consolidated") for 19 years until he
resigned in April 1995. He held various senior management positions in the
merchandising area at Consolidated and was President from August 1993 until his
resignation. Mr. Churches is currently a member of the Board of Directors of Sun
Television & Appliance, Inc. and Mazel Stores, Inc.
42
<PAGE>
James Gregory Humphries has been a partner of the law firm of Shutts &
Brown in Orlando, Florida since 1997. From 1991 to 1997, Mr. Humphries was a
principal in the law firm of Smith, Williams & Humphries. Mr. Humphries is a
member of the Virginia and Florida Bars.
Jeffrey M. Schottenstein has been the President and Chief Operating
Officer of Schottenstein Realty Company, a company that owns and operates
commercial and residential real estate, and its related entities since 1982.
James W. Traweek has been the President and Chief Executive Officer
of PS Management Company and its related companies ("PSM") since August 1994.
PSM owns or manages a chain of floor covering showrooms. From July 1990 to July
1994, Mr. Traweek was the President of Pro Source Wholesale Floor Coverings,
which operated franchise floor covering showrooms.
Sir Brian Wolfson has served as Chairman of Natural Health Trends Corp.
since July 1997. Sir Brian served as Chairman of Wembley, PLC from 1986 to 1995.
Sir Brian is currently a director of Fruit of the Loom, Inc., Kepner-Tregoe,
Inc., Playboy Enterprises, Inc., Autotote Corporation, Inc. and Natural Health
Trends Corp.
Directors are elected to serve until the next annual meeting of
stockholders or until a successor is duly elected and qualified. Executive
officers are duly elected by the Board of Directors to serve until their
respective successors are elected and qualified.
The Company has obtained key man life insurance on the life of Joseph
G. Pozo, Jr. in the amount of $1,000,000.
Committees of the Board of Directors
Upon the consummation of this Offering, the Board of Directors will
establish two standing committees, the Audit Committee and the Compensation
Committee. The Audit Committee will recommend to the Company's Board of
Directors the engagement of auditors, review the results and scope of the audit
and other services provided by the Company's auditors and review the adequacy of
the Company's internal accounting controls. The Compensation Committee will be
responsible for the approval of compensation arrangements for the officers of
the Company, the review of the Company's compensation plans and policies and the
administration of the Company's stock option plans. All of the members of the
Audit Committee and a majority of the members of the Compensation Committee will
be non-employee directors.
Directors' Compensation
Members of the Board of Directors who are not employees of the Company
will receive a quarterly directors' fee of $2,500, half of which will be paid by
the issuance of shares of Common Stock based on the then-current market value of
the Common Stock and the remainder of which will be paid at the director's
option in cash or shares of Common Stock. Non-employee directors who serve on
committees will also receive $500 per committee meeting. All directors will be
reimbursed for out-of-pocket expenses incurred in attending meetings of the
Board of Directors and committee meetings. In addition, non-employee directors
will also receive automatic annual stock option grants for the purchase of 5,000
shares of Common Stock at the then-current market price, and will be eligible to
receive discretionary stock option grants, under the Option Plan. Employees of
the Company receive no additional compensation for serving on the Board of
Directors.
43
<PAGE>
Executive Compensation
The following table sets forth the aggregate compensation paid or
accrued by the Company for services rendered in all capacities to the Company
during the fiscal year ended December 31, 1997 by Joseph G. Pozo, Jr., its Chief
Executive Officer. No other executive officer's compensation exceeded $100,000
during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
Name and Principal Position Year Salary Bonus All Other Compensation
--------------------------- ---- ------ ----- ----------------------
<S> <C> <C> <C> <C>
Joseph G. Pozo, Jr.,
Chairman of the Board, President
and Chief Executive Officer............ 1997 $212,400 --- $ --- (1)(2)
</TABLE>
- -----------
(1) Perquisites and other personal benefits did not exceed the lesser of
$50,000 or 10% of salary compensation for the named executive officer.
(2) Does not include a stockholder distribution in the amount of $45,000 for
the payment of stockholder tax liabilities in connection with the Company's
S Corporation status.
No stock options were granted to the named executive officer during the fiscal
year ended December 31, 1997. See "-Stock Options."
Employment Agreements
The Company has entered into a three-year employment agreement
effective upon the consummation of the Offering with Joseph G. Pozo, Jr., the
Company's Chairman, President and Chief Executive Officer, which provides for an
annual salary of $200,000. The Company has also entered into a three-year
employment agreement effective upon the consummation of the Offering with Gary
E. Stein, the Company's Executive Vice President and Secretary, which provides
for an annual salary of $150,000. The Company has also entered into a three-year
employment agreement, effective upon the consummation of the Offering, with
Melven R. Nehleber, the Company's Chief Financial Officer and Treasurer, which
provides for an annual salary of $120,000. Each of the employment agreements
provide that the executive will be eligible to receive short-term incentive
bonus compensation, the amount of which, if any, will be determined by the Board
of Directors based on the executive's performance, contributions to the
Company's success and on the Company's ability to pay such incentive
compensation. The employment agreements also provide for termination based on
death, disability, voluntary resignation or material failure in performance and
for severance payments upon termination in the event that the executive is
terminated without cause, as described in the agreements, or the executive
terminates his employment for a good reason as described in the agreements, or
in the event of a change in control of the Company as described in the
agreements. The agreements contain non-competition provisions that will preclude
each executive from competing with the Company for a period of two years from
the date of termination of employment.
44
<PAGE>
Stock Options
Effective August 1, 1998, the Company adopted the 1998 Stock Option
Plan (the "Option Plan") for the purpose of attracting, retaining and maximizing
the performance of its executive officers, key employees and consultants. The
Company has reserved 410,000 shares of Common Stock for issuance under the
Option Plan. The Option Plan has a term of ten years. The Option Plan provides
for the grant of "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended, and non-statutory stock options.
The Option Plan is currently administered by the Board of Directors but will,
commencing upon the consummation of this Offering, be administered by the
Compensation Committee. The exercise price for incentive stock options may not
be less than 100% of the fair market value of shares of Common Stock on the date
of grant (110% of fair market value in the case of incentive stock options
granted to employees who hold more than 10% percent of the voting power of the
Company's issued and outstanding shares of Common Stock). The exercise price of
non-statutory stock options may be equal to or less than 100% of the fair market
value of shares of Common Stock on the date of grant.
Options granted under the Option Plan may not have a term of more than
a ten-year period (five years in the case of incentive stock options granted to
employees who hold more than 10% percent of the voting power of the Company's
Common Stock). Options generally terminate three months after the optionee's
termination of employment by the Company for any reason other than death,
disability or retirement, and are not transferable by the optionee other than by
will or the laws of descent and distribution.
In August 1998, the Company granted options to purchase an aggregate of
315,000 options effective upon the consummation of the Offering, each of which
will be exercisable commencing 90 days following the consummation of the
Offering. Of such options, options to purchase 42,000 shares of Common Stock
were granted to Hampstead Equities, Inc. for consulting services rendered to the
Company, options to purchase 75,000 and 25,000 shares of Common Stock were
granted to Marcelo Pozo, the Company's Vice President, and Melven R. Nehleber,
the Company's Chief Financial Officer, respectively, options to purchase 5,000
shares of Common Stock were granted to each of the director nominees and the
balance were granted to various of the Company's non management employees. See
"- Directors' Compensation" and "Principal Stockholders." The exercise price of
the options is equal to the initial public offering price per share and the
options expire in August 2008. See "Legal Matters."
45
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth (i) as of the date of this Prospectus
and (ii) as adjusted to reflect the exercise of the Regal Option, the
consummation of the Marine America Acquisition, and the sale of the 2,180,000
shares of Common Stock offered hereby, certain information concerning the
beneficial ownership of the Common Stock by: (a) each person known by the
Company to beneficially own more than 5% of the outstanding Common Stock, (b)
each of the Company's directors and each person who will become a director
immediately following the consummation of the Offering, (c) the executive
officer named in the Summary Compensation Table, and (d) all executive officers
and directors of the Company as a group:
<TABLE>
<CAPTION>
Percentage
of Outstanding
Shares Beneficially
Number of Owned (2)
Shares ----------------------------
Name and Address of Beneficially Before After
Beneficial Owner(1) Owned (2) Offering Offering
- ------------------- -------------- -------- --------
<S> <C> <C> <C> <C>
Joseph G. Pozo, Jr............................. 1,239,080 (3) 82.8% 30.1%
Gary E. Stein.................................. 116,667 (4) * 2.8%
Marcelo Pozo................................... 70,336 (5) 4.3% 1.7%
Melven R. Nehleber............................. --- (6) * *
Brady Churches................................. --- (7) * *
James Gregory Humphries........................ --- (8) * *
Jeffrey Schottenstein.......................... --- (9) * *
James W. Traweek............................... --- (10) * *
Sir Brian Wolfson.............................. --- (11) * *
Regal Marine Industries, Inc................... 303,825 (12) * 7.4%
All executive officers and directors
as a group (nine persons )................... 1,426,083 87.1% 34.6%
</TABLE>
- ------------------
* Denotes less than 1%
(1) The address of Brady Churches is c/o Mazel Stores, Inc., 4310 E. Fifth
Avenue, Columbus, OH 43219. The address of James Gregory Humphries is 20
North Orange Avenue, Suite 1000, Orlando, Florida 32801. The address of
Jeffrey Schottenstein is c/o Schottenstein Realty, 1201 Brickell Avenue,
Miami, Florida 33131. The address of James W. Traweek is c/o Pro Source,
Inc., 2411 Coit Road, Suite 100, Plano, TX 75075. The address of Sir Brian
Wolfson is c/o Global Health Alternatives, 44 Welbeck Street, London W1M
7HF, England. The address of Regal Marine Industries, Inc. is 2300 Jetport
Drive, Orlando, FL 32809. The address of each other beneficial owner
identified is c/o American Marine Recreation, Inc., 1924 33rd Street,
Orlando, Florida 32834.
(2) Except as indicated in the footnotes to this table, the Company believes
that all the persons named in the table have sole voting and investment
power with respect to all shares shown as beneficially owned by them,
subject to community property laws where applicable. In accordance with the
rules of the Commission, a person or entity is deemed to be the beneficial
owner of securities that can be acquired by such person or entity within 60
days from the date of this Prospectus upon the exercise of options. Each
beneficial owner's percentage ownership is determined by assuming that
options that are held by such person (but not those held by any other
person) and which are exercisable within 60 days of the date of this
Prospectus have been exercised. The inclusion herein of such shares listed
as beneficially owned does not constitute an admission of beneficial
ownership. Percentages herein assume a base of 1,637,075 shares of
Common Stock outstanding as of the date of this Prospectus and a base of
4,122,000 shares of Common Stock outstanding immediately after the
consummation of the Offering.
46
<PAGE>
(3) The number of shares of Common Stock owned by Joseph G. Pozo, Jr. before
the Offering includes these shares as well as an additional 116,667 shares
of Common Stock (based on an assumed offering price of $9.00 per share, the
midpoint of the currently anticipated range of the initial public offering
price) which Gary E. Stein is purchasing from Mr. Pozo upon the
consummation of the Offering. See "Certain Transactions."
(4) Represents shares of Common Stock which Mr. Stein is purchasing from Joseph
G. Pozo, Jr. (based on an assumed offering price of $9.00 per share, the
midpoint of the currently anticipated range of the initial public offering
price) upon the consummation of the Offering. See "Certain Transactions."
(5) Does not include 75,000 shares of Common Stock issuable to Mr. Pozo
pursuant to options granted under the Option Plan, effective upon the
consummation of the Offering, which are not exercisable within 60 days of
the date of this Prospectus.
(6) Does not include 25,000 shares of Common Stock issuable to Mr. Nehleber
pursuant to options granted under the Option Plan, effective upon the
consummation of the Offering, which are not exercisable within 60 days from
the date of this Prospectus.
(7) Does not include 5,000 shares of Common Stock issuable to Mr. Churches
pursuant to options granted under the Option Plan, effective upon the
consummation of the Offering, which are not exercisable within 60 days from
the date of this Prospectus.
(8) Does not include 5,000 shares of Common Stock issuable to Mr. Humphries
pursuant to options granted under the Option Plan, effective upon the
consummation of the Offering, which are not exercisable within 60 days of
the date of this Prospectus.
(9) Does not include 5,000 shares of Common Stock issuable to Mr. Schottenstein
pursuant to options granted under the Option Plan, effective upon the
consummation of the Offering, which are not exercisable within 60 days from
the date of this Prospectus.
(10) Does not include 5,000 shares of Common Stock issuable to Mr. Traweek
pursuant to options granted under the Option Plan, effective upon the
consummation of the Offering, which are not exercisable within 60 days from
the date of this Prospectus.
(11) Does not include 5,000 shares of Common Stock issuable to Sir Brian
pursuant to options granted under the Option Plan, effective upon the
consummation of the Offering, which are not exercisable within 60 days from
the date of this Prospectus.
(12) Represents shares of Common Stock to be issued in connection with the
exercise of the Regal Option upon the consummation of the Offering.
CERTAIN TRANSACTIONS
On April 1, 1997, Boat Tree entered into a lease with JCJ Family
Partnership, Ltd. for 1.5 acres adjacent to the Company's property in Orlando,
Florida. The general partner of the partnership is Joseph G. Pozo, Jr., the
Chairman, President, Chief Executive Officer and majority stockholder of the
Company. The rent pursuant to the lease through July 31, 1998 was equal to $100
per retail boat sold by the Company at the Orlando, Florida dealership. In 1997,
the rent paid under the lease was $43,467. From August 1, 1998 through the
consummation of the Offering, the rent will be equal to $4,000 per month. Upon
the consummation of the Offering, the Company will purchase such parcel for a
purchase price of $400,000, payable pursuant to a promissory note in the amount
of $400,000 which bears interest at the prime rate and is payable 18 months from
the consummation of the Offering.
In May 1998, Mr. Pozo guaranteed a line of credit from Regal to the
Company with a maximum borrowing availability of $300,000. The Company intends
to repay all amounts outstanding under this line of credit from the proceeds,
and upon the consummation, of the Offering. In addition, Mr. Pozo has guaranteed
a floor plan financing line of credit in an amount up to $10,000,000 from
TransAmerica. Outstanding borrowings under the TransAmerica line of credit
totaled $6,644,550 as of June 30, 1998 and bear interest at the prime rate and
are due upon the sale of the boats which secure such borrowings. Mr. Pozo has
also guaranteed
47
<PAGE>
a floor plan financing line of credit in an amount up to $5,000,000 from
Deutsche Financial Services Corp. Outstanding borrowings under this line of
credit totaled $978,132 as of June 30, 1998 and bear interest at the prime rate
and are due upon the sale of the boats which secure such borrowings. Mr. Pozo
has guaranteed the first mortgage loan from AmSouth Bank of Florida ("AmSouth")
on the Company's property in Orlando, Florida in the original principal amount
of $1,150,000, which loan had an outstanding principal balance of $1,101,524 as
of June 30, 1998, bears interest at the rate of 7.71% per annum and is due in
May 2001. Mr. Pozo has also guaranteed a line of credit from AmSouth in the
amount of $500,000 secured by the Company's used boat inventory, with an
outstanding principal balance of $500,000 as of June 30, 1998, which the Company
intends to repay from the proceeds of the Offering, and a series of installment
notes payable to AmSouth with interest rates ranging from 7.5% to 9%
collateralized by certain vehicles and equipment of the Company, with an
aggregate outstanding principal balance of $101,088 as of June 30, 1998.
The Company made distributions to Boat Tree's stockholders for the
payment of taxes of $185,000 for the year ended December 31, 1996, $45,000 for
the year ended December 31, 1997 and $150,000 for the six months ended June 30,
1998. The Company is paying the Final S Corporation Distribution of $550,000 to
the current (pre-Boat Tree Exchange) stockholders of Boat Tree out of the net
proceeds of the Offering. In connection with the Boat Tree Exchange, all of the
stockholders of Boat Tree will exchange, immediately following the exercise of
the Regal Option, upon the consummation of the Offering, all of the outstanding
shares of common stock of Boat Tree for 1,940,900 shares of the Company's
Common Stock.
During the year ended December 31, 1997, the Company repaid $320,483 to
Joseph G. Pozo, Jr. for advances he made to the Company for the repayment of a
third mortgage on the Orlando, Florida superstore in the amount of $194,948 and
for working capital loans he made to the Company totaling $125,535.
Joseph G. Pozo, Jr. owns 51% of the capital stock of Bob's Boats, a
corporation which operates an approximately 10,000 square foot retail boat
dealership in Orlando, Florida and primarily sells boats under the Bayliner
brand name. On January 8, 1998, Bob's Boats purchased the assets of H&J Sales,
Inc., an unaffiliated third party which operated the dealership, for a purchase
price of $1,806,150, financed in part by loans collateralized by Bob's Boats'
inventory and guaranteed by the Company, Mr. Pozo, Jr. and the other stockholder
of Bob's Boats, including floor plan borrowings of $1,173,234 and $470,347
borrowed from South Trust, N.A. On or prior to the consummation of the Offering,
Mr. Pozo, Jr. is selling his 51% interest in Bob's Boats to Bob's Boats' other
stockholder for $1,000,000 pursuant to a note. In connection with such transfer
of ownership, the guarantee by the Company of Bob's Boats' debt will be
terminated.
Concurrently, with the consummation of the Offering, the Company will
acquire all of the outstanding capital stock of Marine America, a corporation
owned 40% by Joseph G. Pozo, Jr., 10% by Joseph J. Pozo (Mr. Pozo, Jr.'s son)
and 50% by Lakewood, an unaffiliated third party, for 1,100 shares of Common
Stock valued at $10,000, the approximated net book value of the Marine America.
In January 1998, Marine America acquired certain of Lakewood's assets, as well
as a five-year lease relating to its 8,000 square foot retail boat dealership in
Belmont, North Carolina, for a purchase price of $130,858. As part of such
acquisition, the Company purchased Lakewood's new and used boat and trailer
inventory for a purchase price of $998,634 and agreed to provide Marine America
with new and used boat inventory, as needed, at the Company's invoice cost plus
freight. In addition, the Company entered into a management agreement with
Marine America to manage the operations of Marine America's newly acquired
Lakewood dealership. Immediately prior to the consummation of the Marine America
Acquisition, Marine America intends to borrow $125,000 from the Company in order
to redeem the shares of capital stock of Marine America held by Lakewood.
On June 6, 1992, Boat Tree granted Regal a ten-year option to purchase
25% of its capital stock for an aggregate purchase price of $10. On September 1,
1998, Regal agreed to (i) reduce the number of shares issuable upon the exercise
of the Regal Option to the number of shares equal to 15.65% of Boat Tree's
outstanding capital stock, which, after giving effect to the Boat Tree Exchange,
represents 303,825 shares of Common Stock (7.4% of the number of shares of
Common Stock that will be outstanding immediately following the consummation of
the Offering) and (ii) to the exercise of such option effective upon the
consummation of the Offering. In May 1998, Regal provided the Company with a
line of credit with maximum borrowings of $300,000 which bears interest at the
prime rate plus .5% and is due on the earlier of one year from the date of the
initial advance or August 31, 1999. As of June 30, 1998, the Company had not
drawn on the line of credit. The Company intends to utilize the Offering
proceeds to repay any amounts outstanding under the line of credit upon the
consummation of the Offering. See "Principal Stockholders."
48
<PAGE>
In November 1997, Joseph G. Pozo, Jr. agreed to sell to Gary E. Stein,
for a purchase price of $1,050,000, the number of shares of Common Stock equal
to $1,050,000 divided by the initial public offering price per share, and Mr.
Stein has agreed to purchase such shares (a total of 116,667 shares based on an
assumed offering price of $9.00 per share, the midpoint of the currently
anticipated range of the initial public offering price per share) from Mr. Pozo,
Jr. upon the consummation of the Offering partly in cash and partly pursuant to
a promissory note.
Future transactions, if any, between the Company and any of its officers,
directors and/or 5% stockholders will be on terms no less favorable to the
Company than would be obtained from independent third parties and will be
approved by a majority of the independent, disinterested directors of the
Company.
49
<PAGE>
DESCRIPTION OF SECURITIES
General
The following statements do not purport to be complete and are
qualified in their entirety by reference to the detailed provisions of the
Company's Certificate of Incorporation and By-Laws, copies of which have been
filed as exhibits to the Registration Statement of which this Prospectus forms a
part.
The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, $.01 par value, and 1,500,000 shares of Preferred Stock,
$.01 par value. As of the date of this Prospectus, there are 1,637,075 shares of
Common Stock issued and outstanding and held of record by five stockholders. No
shares of Preferred Stock are outstanding. In addition, an aggregate of 315,000
shares of Common Stock are issuable upon the exercise of outstanding options
granted under the Option Plan, effective upon the consummation of the Offering.
Common Stock
Holders of Common Stock are entitled to one vote for each share held of
record on each matter submitted to a vote of stockholders. There is no
cumulative voting for the election of directors. Subject to the prior rights of
any series of Preferred Stock which may from time to time be outstanding, if
any, holders of Common Stock are entitled to receive ratably, dividends when, as
and if declared by the Board of Directors out of funds legally available
therefor and, upon the liquidation, dissolution, or winding up of the Company,
are entitled to share ratably in all assets remaining after payment of
liabilities and payment of accrued dividends and liquidation preferences on the
Preferred Stock, if any. Holders of Common Stock have no preemptive rights and
have no rights to convert their Common Stock into any other securities. The
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable.
Preferred Stock
The Board of Directors of the Company is authorized, without further
stockholder action, to issue a maximum of 1,500,000 shares of Preferred Stock,
in one or more series and containing such rights, privileges and limitations,
including voting rights, dividend rates, conversion privileges, redemption
rights and terms, redemption prices and liquidation preferences, as the Board
may, from time to time, determine. The issuance of shares of Preferred Stock
pursuant to the Board's authority could decrease the amount of earnings and
assets available for distribution to holders of Common Stock, and otherwise
adversely affect the rights and powers, including voting rights, of such holders
and may have the effect of delaying, deferring or preventing a change in control
of the Company or make removal of management more difficult. Additionally, the
issuance of Preferred Stock could have the effect of decreasing the market price
of the Common Stock.
Transfer Agent and Registrar
The Company has appointed Continental Stock Transfer & Trust Company, 2
Broadway, New York, New York 10004, as transfer agent and registrar for the
Common Stock.
Certificate of Incorporation and Bylaws
Pursuant to Delaware Law, the power to adopt, amend and repeal By-Laws
is conferred solely upon the stockholders unless the corporation's certificate
of incorporation also confers such power upon the board of directors. Under the
Company's Certificate of Incorporation, the Board of Directors is granted the
power to amend the Bylaws of the Company. Such Bylaws provide that each director
has one vote on each matter for which directors are entitled to vote. The
By-Laws also provide that the directors will hold office until the next annual
meeting of stockholders and until their respective successors are elected and
qualified, and special meetings of stockholders may only be called by the Board
of Directors, the President of the Company or the Chairman or Vice Chairman of
the Board of Directors. These provisions,
50
<PAGE>
in addition to the existence of authorized but unissued capital stock, may have
the effect, either alone or in combination with each other, of making more
difficult or discouraging an acquisition of the Company deemed undesirable by
the Board of Directors.
Section 203 of the Delaware Law
Section 203 of the Delaware Law prohibits a publicly held Delaware
corporation 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 (i) prior to the date
of the business combination, the transaction is approved by the board of
directors of the corporation; (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owns at least 85% of the outstanding voting stock, or (iii) on or
after such date the business combination is approved by the board of directors
and by the affirmative vote of at least 66 2/3% of the outstanding voting stock
that is not owned by the interested stockholder. A "business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the stockholder. An "interested stockholder" is a person, who,
together with affiliates and associates, owns (or within three years, did own)
15% or more of the corporation's voting stock. This provision of law could
discourage, prevent or delay a change in management or stockholder control of
the Company, which could have the effect of discouraging bids for the Company
and thereby prevent stockholders from receiving the maximum value for their
shares, or a premium for their shares in a hostile takeover situation.
Indemnification of Officers and Directors
The Certificate of Incorporation of the Company provides that the
Company shall indemnify to the fullest extent permitted by Delaware law any
person whom it may indemnify thereunder, including directors, officers,
employees and agents of the Company. Such indemnification (other than as ordered
by a court) shall be made by the Company only upon a determination that
indemnification is proper in the circumstances because the individual met the
applicable standard of conduct. Advances for such indemnification may be made
pending such determination. In addition, the Certificate of Incorporation
provides for the elimination, to the extent permitted by Delaware law, of
personal liability of directors to the Company and its stockholders for monetary
damages for breach of fiduciary duty as directors. The Company intends to obtain
directors' and officers' liability insurance coverage in the amount of
$10,000,000.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company 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
Company, 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 of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this Offering, 4,122,000 shares of Common
Stock will be issued and outstanding, of which the 2,180,000 shares offered
hereby will be freely tradeable without restriction or further registration
under the Securities Act, except that any shares purchased by "affiliates" of
the Company (as defined in Rule 144 promulgated under the Securities Act) will
be subject to the resale limitations of Rule 144, as described below.
The remaining 1,942,000 shares of Common Stock outstanding are deemed
"restricted securities," as that term is defined under Rule 144, and may only be
sold pursuant to an effective registration statement under the Securities Act,
in compliance with the exemption provisions of Rule 144 or pursuant to another
exemption under the Securities Act. Such
51
<PAGE>
restricted shares of Common Stock will become eligible for sale, under Rule 144,
subject to certain volume and manner of sale limitations prescribed by Rule 144
and to the contractual restrictions described below, at various times commencing
90 days following the date of this Prospectus. All of the Company's officers,
directors and stockholders have agreed with the Representatives that until 12
months after the date of this Prospectus, they will not, without the prior
written consent of BlueStone, directly or indirectly, sell, offer for sale,
transfer, pledge or otherwise dispose of, any securities of the Company or
exercise any registration rights relating to any securities of the Company.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are required to be aggregated), including a person who may be
deemed an "affiliate" of the Company, who has beneficially owned restricted
securities for at least one year may sell, within any three-month period, a
number of shares that does not exceed the greater of (i) 1% of the then
outstanding shares of Common Stock (approximately 41,220 shares immediately
following the consummation of this Offering) or (ii) the average weekly trading
volume of the Common Stock during the four calendar weeks preceding the date on
which notice of such sale was filed under Rule 144. Sales under Rule 144 are
also subject to certain requirements as to the manner of sale, notice and
availability of current public information about the Company. A person who is
not deemed to have been an affiliate of the Company at any time during the 90
days preceding a sale by such person, and who has beneficially owned the
restricted shares for at least two years, is entitled to sell such shares under
Rule 144(k) without regard to any of the restrictions described above.
UNDERWRITING
The underwriters named below (collectively, the "Underwriters") for
which BlueStone Capital Partners, L.P. ("BlueStone") and Royce Investment Group,
Inc. are acting as representatives (the "Representatives"), have agreed
severally, not jointly, subject to the terms and conditions contained in the
underwriting agreement between the Company and the Underwriters (the
"Underwriting Agreement"), to purchase from the Company, and the Company has
agreed to sell to the several Underwriters, the 2,180,000 shares of Common Stock
offered hereby. The number of shares of Common Stock that each Underwriter has
agreed to purchase is set forth opposite its name below:
Number
Underwriter of Shares
- ----------- ---------
BlueStone Capital Partners, L.P....................
Royce Investment Group, Inc........................
---------
Total.......................................... 2,180,000
=========
The Underwriters are committed on a "firm commitment" basis to purchase
and pay for all of the shares of Common Stock offered hereby (other than shares
offered pursuant to the over-allotment option) if any shares are purchased. The
shares of Common Stock are being offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters and subject
to approval of certain legal matters by counsel and to certain other conditions.
Through the Representatives, the several Underwriters have advised the
Company that they propose to offer the shares of Common Stock to the public at
the initial public offering price set forth on the cover page of this
Prospectus. The Underwriters may allow to certain dealers, who are members of
the National Association of Securities Dealers, Inc. ("NASD") concessions, not
in excess of $____ per share, of which not in excess of $____ per share may be
reallowed to other dealers who are members of the NASD. After the commencement
of the Offering, the initial public offering price, concessions and reallowance
may be changed.
The Company has granted the Representatives an option, exercisable for
45 days following the date of this Prospectus, to purchase up to 327,000
additional shares of Common Stock at the initial public offering price set forth
on
52
<PAGE>
the cover page of this Prospectus, less the underwriting discounts and
commissions. The Representatives may exercise this option in whole or, from time
to time, in part, solely for the purpose of covering over-allotments, if any,
made in connection with the sale of the shares of Common Stock offered hereby.
The Company has agreed to reimburse BlueStone for the costs, fees and
expenses customarily incurred by the underwriters during the registration
process, not to exceed $325,000, including for their legal fees and costs
associated with marketing and selling the Offering, of which $50,000 has been
reimbursed to BlueStone as of the date of this Prospectus. The Company has also
agreed to pay all expenses in connection with qualifying the shares of Common
Stock offered hereby for sale under the laws of such states as the
Representatives may designate, including expenses of counsel retained for such
purpose by the Representatives.
The Company has agreed to issue to the Representatives and their
designees, for an aggregate of $218, the Representatives' Warrants to purchase
up to 218,000 shares of Common Stock, at an exercise price of $_____ per share
(120% of the initial public offering price per share). The Representatives'
Warrants may not be transferred for one year following the date of this
Prospectus, except to the officers and partners of the Representatives' or the
Underwriters or members of the selling group, and are exercisable at any time,
and from time to time, during the four-year period commencing one year following
the date of this Prospectus (the "Warrant Exercise Term"). During the Warrant
Exercise Term, the holders of the Representatives' Warrants are given, at
nominal cost, the opportunity to profit from a rise in the market price of the
Common Stock. To the extent that the Representatives' Warrants are exercised or
exchanged, dilution to the interests of the Company's stockholders will occur.
Further, the terms upon which the Company will be able to obtain additional
equity capital may be adversely affected since the holders of the
Representatives' Warrants can be expected to exercise them at a time when the
Company would, in all likelihood, be able to obtain any needed capital on terms
more favorable to the Company than those provided in the Representatives'
Warrants. Any profit realized by the Representatives on the sale of the
Representatives' Warrants or the underlying shares of Common Stock may be deemed
additional underwriting compensation. Subject to certain limitations and
exclusions, the Company has agreed to register, at the request of the holders of
a majority of the Representatives' Warrants and at the Company's expense, the
Representatives' Warrants and the shares of Common Stock underlying the
Representatives' Warrants under the Securities Act on one occasion during the
Warrant Exercise Term and to include such Representatives' Warrants and such
underlying shares in any appropriate registration statement that is filed by the
Company during the seven years following the date of this Prospectus.
All of the Company's current (giving effect to the Boat Tree Exchange)
officers and directors and stockholders have agreed that, for the 12-month
period following the date of this Prospectus, they will not, without the prior
written consent of BlueStone, directly or indirectly sell, offer for sale,
transfer, pledge or otherwise dispose of any securities of the Company or
exercise any registration right relating to any securities of the Company.
The Representatives have informed the Company that the Underwriters do
not intend to confirm sales in excess of 3% of the number of shares of Common
Stock offered hereby to discretionary accounts.
The Company has agreed to indemnify the Underwriters against certain
civil liabilities in connection with the Registration Statement of which this
Prospectus forms a part, including liabilities under the Securities Act.
Prior to the Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price of the shares of Common
Stock offered hereby has been determined by negotiation between the Company and
the Representatives and is not necessarily related to the Company's asset value,
net worth or other established criteria of value. Among the factors considered
in determining the initial public offering price are the Company's financial
53
<PAGE>
condition and prospects, management, market prices of similar securities of
comparable publicly-traded companies, certain financial and operating
information of companies engaged in activities similar to those of the Company
and the general condition of the securities market.
In connection with the Offering, the Underwriters may purchase and sell
the Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created by the Underwriters in connection with the Offering.
Stabilizing transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of the Common Stock; and
syndicate short positions created by the Underwriters involve the sale by the
Underwriters of a greater number of securities than they are required to
purchase from the Company in the Offering. The Underwriters may impose a penalty
bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the securities sold in the Offering for their
account may be reclaimed by the syndicate Underwriters if such shares of Common
Stock are repurchased by the syndicate Underwriters in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Common Stock, which may be higher than the price that might
otherwise prevail in the open market; and these activities, if commenced, may be
discontinued at any time. These transactions may be effected on Nasdaq or
otherwise.
The Underwriters may also place bids or purchase shares to reduce a
short position created in connection with the Offering. Short positions are
created by persons who sell shares which they do not own in anticipation of
purchasing shares at a lower price in the market to deliver in connection with
the earlier sale. Short positions tend to place downward pressure on the market
price of a stock.
The Representatives and/or the Underwriters may impose a penalty bid by
reclaiming the selling concession to be paid to an Underwriter or selected
dealer when the securities sold by the Underwriter or selected dealer are
purchased to reduce a short position created in connection with the Offering.
BlueStone was organized and registered as a broker-dealer with the
Commission and the NASD in March, 1996. Although, since its organization,
BlueStone has engaged in the investment banking business and its principals have
had significant experience in the underwriting of securities in their capacities
with other broker-dealers, the Offering will constitute one of the first public
offerings for which BlueStone has acted as lead manager.
LEGAL MATTERS
Certain legal matters with respect to the issuance of the Shares
offered hereby will be passed upon for the Company by McLaughlin & Stern, LLP,
New York, New York. Certain legal matters in connection with this Offering will
be passed upon for the Underwriters by Tenzer Greenblatt LLP, New York, New
York. In August 1998, Hampstead Equities, Inc., a corporation owned by Martin C.
Licht, was issued options to purchase 42,000 shares of Common Stock, at the
initial public offering price per share, in consideration of consulting services
rendered to the Company by Martin C. Licht, a partner of McLaughlin & Stern,
LLP.
EXPERTS
The financial statements of Boat Tree at December 31, 1997 and for the
two years then ended, have been included herein and in the Registration
Statement in reliance upon the report of BDO Seidman, LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of such
firm as experts in accounting and auditing.
54
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on
Form SB-2 under the Securities Act with respect to the shares of Common Stock
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, omits certain information contained in the Registration Statement,
and reference is made to the Registration Statement and the exhibits and
schedules thereto for further information with respect to the Company and the
shares of Common Stock offered hereby. Statements contained herein concerning
the provisions of any documents are not necessarily complete; and in each
instance reference is made to the copy of such document filed as an exhibit to
the Registration Statement. Each such statement is qualified in its entirety by
such reference. As of the date of this Prospectus, the Company will become
subject to the informational requirements of the Exchange Act and the rules and
regulations thereunder, and, in accordance therewith, will file reports, proxy
and information statements, and other information with the Commission. The
Registration Statement, including exhibits and schedules filed therewith, and
the Company's reports, proxy and information statements, and other information
filed by the Company with the Commission, may be inspected without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and the Commission's regional offices
located at 7 World Trade Center, 13th Floor, New York, New York 10048, and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Electronic
reports and other information filed through the Electronic Data Gathering,
Analysis, and Retrieval system are publicly available through the Commission's
Web site (http://www.sec.gov). Copies of such material also may be obtained from
the public reference section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, reports and other
information concerning the Company may be inspected at the offices of the NASD,
1735 K Street, N.W., Washington, D.C. 20006.
55
<PAGE>
Boat Tree, Inc.
Index to Financial Statements
================================================================================
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 1997 and
June 30, 1998 (unaudited) F-3 - F-4
Statements of Income for the years ended December 31, 1996
and 1997 and the six months ended June 30, 1997
and 1998 (unaudited) F-5
Statements of Stockholders' Equity for the years ended
December 31, 1996 and 1997 and the
six months ended June 30, 1998 (unaudited) F-6
Statements of Cash Flows for the years ended
December 31, 1996 and 1997 and the
six months ended June 30, 1997 and 1998 (unaudited) F-7
Notes to Financial Statements F-8 - F-28
F-1
<PAGE>
Report of Independent Certified Public Accountants
Boat Tree, Inc.
Orlando, Florida
We have audited the accompanying balance sheet of Boat Tree, Inc. as of December
31, 1997, and the related statements of income, stockholders' equity, and cash
flows for the years ended December 31, 1996 and 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Boat Tree, Inc. at December 31,
1997, and the results of its operations and its cash flows for the years ended
December 31, 1996 and 1997 in conformity with generally accepted accounting
principles.
BDO SEIDMAN, LLP
Orlando, Florida
July 14, 1998, except for Notes 5, 9 and 10,
as to which the date is September 1, 1998
F-2
<PAGE>
Boat Tree, Inc.
Balance Sheets
================================================================================
<TABLE>
<CAPTION>
June 30, 1998
----------------------------
Pro
December 31, Actual Forma
1997 (unaudited) (unaudited)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Current: <C>
Cash and cash equivalents $ 307,463 $ 1,307,886 $ 1,307,886
Accounts receivable, less allowance for possible losses of 426,972 1,606,419 1,606,419
$42,000
Inventories 6,748,035 8,584,026 8,584,026
Prepaid expenses 10,825 - -
Deferred income taxes - - 82,000
- ------------------------------------------------------------------------------------------------------------------
Total current assets 7,493,295 11,498,331 11,580,331
Property and equipment, less accumulated depreciation and
amortization 2,132,231 2,571,518 2,571,518
Other assets 54,983 278,431 278,431
- ------------------------------------------------------------------------------------------------------------------
$ 9,680,509 $ 14,348,280 $ 14,430,280
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
Boat Tree, Inc.
Balance Sheets
================================================================================
<TABLE>
<CAPTION>
June 30, 1998
-----------------------------
Pro
December 31, Actual Forma
1997 (unaudited) (unaudited)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Floorplan payable $ 6,250,903 $ 8,964,376 $ 8,964,376
Line of credit 500,000 500,000 500,000
Accounts payable 226,988 600,563 600,563
Customer deposits 16,631 227,018 227,018
Accrued expenses 225,525 382,344 382,344
Dividend payable - - 550,000
Current maturities of long-term debt 102,104 126,031 126,031
- -----------------------------------------------------------------------------------------------------------------
Total current liabilities 7,322,151 10,800,332 11,350,332
- -----------------------------------------------------------------------------------------------------------------
Long-term debt, less current maturities 1,220,251 1,525,752 1,525,752
- -----------------------------------------------------------------------------------------------------------------
Commitments and contingencies - - -
Stockholders' equity:
Common stock, $1 par - 7,500 shares authorized;
7,495 shares outstanding 7,495 7,495 7,495
Additional paid-in capital 47,605 47,605 47,605
Retained earnings 1,083,007 1,967,096 1,499,096
- -----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,138,107 2,022,196 1,554,196
- -----------------------------------------------------------------------------------------------------------------
$ 9,680,509 $ 14,348,280 $ 14,430,280
================================================================================================================
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
Boat Tree, Inc.
Statements of Income
================================================================================
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, June 30,
---------------------------- ----------------------------
1996 1997 1997 1998
(unaudited) (unaudited)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales and service revenue $ 13,058,313 $ 20,183,674 $ 10,445,303 $ 13,359,045
Finance and insurance income 591,014 1,042,795 516,454 638,802
- ------------------------------------------------------------------------------------------------------------------
Total revenue 13,649,327 21,226,469 10,961,757 13,997,847
Cost of sales and service revenue 10,544,193 16,327,484 7,869,712 10,567,889
- -----------------------------------------------------------------------------------------------------------------
Gross profit 3,105,134 4,898,985 3,092,045 3,429,958
Selling, general and administrative expenses 2,492,775 4,084,993 1,829,046 2,063,411
- ------------------------------------------------------------------------------------------------------------------
Income from operations 612,359 813,992 1,262,999 1,366,547
Other income 10,115 33,481 12,205 25,775
Interest expense (239,362) (333,958) (195,969) (358,233)
- ------------------------------------------------------------------------------------------------------------------
Net income $ 383,112 $ 513,515 $ 1,079,235 $ 1,034,089
=================================================================================================================
Pro forma net income (unaudited):
Historical income before taxes on income $ 513,515 $ 1,034,089
Pro forma taxes on income (198,000) (401,000)
- ----------------------------------------------------- ------------ -------------
Pro forma net income $ 315,515 $ 633,089
===================================================== ============ ==============
Pro forma earnings per share (unaudited):
Basic $ 42.10 $ 84.47
Diluted $ 35.51 $ 71.25
===================================================== ============ ==============
Pro forma weighted average number of shares (unaudited):
Basic 7,495 7,495
Diluted 8,886 8,886
===================================================== ============ ==============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
Boat Tree, Inc.
Statements of Stockholders' Equity
================================================================================
<TABLE>
<CAPTION>
Common Stock Additional
--------------------- Paid-in Retained
Shares Amount Capital Earnings
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 7,500 $ 7,500 $ 47,600 $ 416,380
Net income - - - 383,112
Stockholder distributions - - - (185,000)
- -------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 7,500 7,500 47,600 614,492
Repurchase and retirement of minority shares
(5) (5) (3,195) -
Capital contribution - - 3,200 -
Net income - - - 513,515
Stockholder distributions - - - (45,000)
- -------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 7,495 7,495 47,605 1,083,007
Net income, six months ended June 30, 1998
(unaudited) - - - 1,034,089
Stockholder distributions, six months ended
June 30, 1998 (unaudited) - - - (150,000)
- -------------------------------------------------------------------------------------------------------------
Balance, June 30, 1998 (unaudited) 7,495 $ 7,495 $ 47,605 $ 1,967,096
=============================================================================================================
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
Boat Tree, Inc.
Statements of Cash Flows
================================================================================
<TABLE>
<CAPTION>
Year Ended Six Month Ended
December 31, June 30,
------------------------- ---------------------------
1996 1997 1997 1998
(unaudited) (unaudited)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 383,112 $ 513,515 $ 1,079,235 $ 1,034,089
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation 32,692 100,129 47,116 58,698
Amortization 7,670 7,670 3,055 3,835
Reserve for inventory - 36,500 - -
Bad debts - 67,893 21,000 -
Loss on disposal of property and equipment 15,158 - - -
Cash provided by (used for):
Accounts receivable 168,351 (374,176) (911,805) (1,179,447)
Inventories (199,875) (1,868,008) (84,895) (1,835,991)
Prepaid expenses 3,633 (10,825) (9,725) 10,825
Accounts payable (194,092) 198,704 19,730 373,575
Customer deposits (368) (46,969) 20,879 210,387
Accrued expenses 85,253 125,321 298,590 156,819
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) operating activities 301,534 (1,250,246) 483,180 (1,167,210)
- --------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (371,137) (167,001) (59,049) (140,264)
Change in other assets 2,780 (8,905) (4,206) (911)
- --------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (368,357) (175,906) (63,255) (141,175)
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings on floorplan 201,037 1,618,172 (166,007) 2,713,473
Net borrowings (repayments) on line of credit 250,000 250,000 (100,000) -
Repayment of long-term debt (72,192) (108,667) (24,009) (28,293)
Repayment of related party long-term debt - (320,483) (125,535) -
Payments for deferred offering costs - - - (226,372)
Payment of stockholder distributions (185,000) (45,000) - (150,000)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities 193,845 1,394,022 (415,551) 2,308,808
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 127,022 (32,130) 4,374 1,000,423
Cash and cash equivalents, beginning of period 212,571 339,593 339,593 307,463
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 339,593 $ 307,463 $ 343,967 $ 1,307,886
====================================================================================================================
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
1. Summary of Business Description
Significant --------------------
Accounting
Policies Boat Tree, Inc. (the "Company") currently operates a chain
of dealerships in Florida engaged in the retail sales and
service of new and used boats and boat parts and
accessories. The dealerships offer a full line of new and
used boats and most of the dealerships maintain a parts,
service and body repair facility. The Company also manages
a boat dealership in Belmont, North Carolina (see Note
10). Boat Tree, Inc. was incorporated under the laws of
the State of Florida in 1992.
Interim Financial Information
-----------------------------
In the opinion of management, the interim financial
information as of June 30, 1998 and for the six months
ended June 30, 1997 and 1998 contains all adjustments,
consisting only of normal recurring adjustments, necessary
for a fair presentation of the results for such periods.
Results for interim periods are not necessarily indicative
of results to be expected for an entire year.
Proposed Public Offering and Reorganization
-------------------------------------------
Subsequent to December 31, 1997, the Company engaged
attorneys and investment bankers to assist it in an
initial public offering of the common stock of American
Marine Recreation, Inc., a newly formed corporation. The
Company has initiated certain events (the
"Reorganization") in connection with the initial public
offering of common stock which would result in the Company
becoming a wholly-owned subsidiary of American Marine
Recreation, Inc. as of the closing of the public offering.
The Reorganization would be accomplished through a
stock-for-stock exchange between American Marine
Recreation, Inc. and the Company and certain other
affiliated companies (see Note 10). Consequently, upon
completion of the initial public offering, the
consolidated group will include the operations of American
Marine Recreation, Inc. and its wholly-owned subsidiaries,
Boat Tree, Inc. and Marine America, Inc. In
F-8
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
the stock-for-stock exchange, all of the outstanding
shares of the Company and Marine America, Inc. would be
exchanged for 1,940,900 (giving effect to the exercise of
the manufacturer's option described in Note 5) and 1,100
shares of common stock of American Marine Recreation,
Inc., respectively.
Fees, costs and expenses related to the proposed public
offering are capitalized and will be charged against the
proceeds therefrom. If the proposed offering is not
consummated, the deferred costs will be charged to
expense.
Balance Sheet Pro Forma Adjustments
-----------------------------------
In connection with the Reorganization, the Company will
declare a dividend to the stockholders representing
$550,000 of earned but undistributed earnings through the
closing date of the Reorganization. The pro forma balance
sheet as of June 30, 1998 reflects a liability for the
$550,000 dividends payable.
Concurrently with the Reorganization, the Company will
terminate its Subchapter S corporation status and will
become subject to federal and state income taxes. The
accompanying statements of income reflect a pro forma
provision for income taxes in accordance with Statement
for Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS 109"). SFAS 109 is an asset and
liability approach that requires the recognition of
deferred tax assets and liabilities for the expected
future tax consequences of events that have been
recognized in the Company's financial statements or tax
returns. Measurement of a deferred income tax is based on
enacted tax laws including tax rates, with the measurement
of deferred income tax assets being reduced by available
tax benefits not expected to be realized.
In connection with termination of its Subchapter S
corporation status, the Company will record a net deferred
tax asset and an accompanying tax benefit to reflect the
differences in the financial statement and income tax
basis of certain assets and liabilities. The
F-9
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
pro forma balance sheet as of June 30, 1998 reflects an
adjustment as if the Subchapter S corporation status had
terminated on June 30, 1998. As of that date, a net
deferred tax asset of approximately $82,000 would have
been recognized as follows:
---------------------------------------------------------
Current deferred tax assets:
Inventory reserves $ 14,000
Accrued expenses 52,000
Allowance for possible losses 16,000
---------------------------------------------------------
82,000
Long-term deferred tax asset - intangible assets 4,000
Long-term deferred tax liability - depreciation (4,000)
---------------------------------------------------------
Net current deferred tax asset $ 82,000
========================================================
Statement of Income Pro Forma Adjustments
-----------------------------------------
Pro forma net income for the year ended December 31, 1997
and for the six months ended June 30, 1998 are based upon
pretax income as if the Company had been subject to
federal and state income taxes at an estimated effective
tax rate of approximately 38%. The difference between the
federal statutory rate of 34% and the estimated effective
tax rate is due to state income taxes, nondeductible
expenses and the effect of a deferred tax asset.
Pro Forma Earnings per Share
----------------------------
In 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128,
Earnings Per Share ("SFAS 128"). SFAS 128 provides for the
calculation of basic and diluted earnings per share. Basic
earnings per share includes no dilution and is computed by
dividing income available to common stockholders by the
weighted average number of
F-10
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
common shares outstanding for the period. Diluted earnings
per share reflects the potential dilution of securities
that could share in the earnings of an entity. Pro forma
earnings per share is based upon the weighted average
number of common shares outstanding and potential common
shares outstanding during each period.
Recent Accounting Pronouncements
--------------------------------
In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS No. 130"),
and No. 131, "Disclosures about Segments of an Enterprise
and Related Information" ("SFAS No. 131"). SFAS 130
establishes standards for reporting and displaying
comprehensive income, its components and accumulated
balances. SFAS 131 establishes standards for the way that
public companies report information about operating
segments in annual financial statements and requires
reporting of selected information about operating segments
in interim financial statements issued to the public. Both
SFAS 130 and SFAS 131 are effective for periods beginning
after December 15, 1997. The Company adopted these new
accounting standards in 1998, and their adoption had no
effect on the Company's financial statements and
disclosures.
In June 1998, the Financial Accounting Standards Board
issued SFAS 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS 133
requires companies to recognize all derivatives contracts
as either assets or liabilities in the balance sheet and
to measure them at fair value. If certain conditions are
met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of
gain or loss recognition on the hedging derivative with
the recognition of (i) the changes in the fair value of
the hedged asset or liability that are attributable to the
hedged risk or (ii) the earnings effect of the hedged
forecasted transaction. For a derivative not designated as
a hedging instrument, the gain or loss is recognized in
income in the
F-11
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
period of change. SFAS 133 is effective for all fiscal
quarters or fiscal years beginning after June 15, 1999.
Historically, the Company has not entered into derivatives
contracts to hedge existing risks or for speculative
purposes. Accordingly, the Company does not expect
adoption of the new standard on January 1, 2000 to affect
its financial statements.
Risks and Uncertainties
-----------------------
The recreational boat industry is highly competitive. The
Company competes for boat sales with single location boat
dealers and national or regional chains. With respect to
sales of marine parts, accessories and equipment, the
Company competes with national specialty marine stores,
catalog retailers, sporting goods stores and mass
merchants. Many of the Company's larger competitors are
well-capitalized companies which seek to increase market
share through price reductions. The recreational boat
industry is dependent upon discretionary consumer
spending. Increasing interest rates and periods of
economic downturn have historically reduced consumer
spending on non-essential goods. The risk to the Company
of increased competition or a reduction in consumer
spending on non-essential goods may ultimately lead to
reduced profits and affect the ability of the Company to
expand operations.
The Company derives a substantial portion of its income
from the origination and placement of customer financing
and sale of extended service contracts and insurance
products, collectively, "F&I Products" (see Note 9). F&I
Products accounted for approximately 4% and 5% of the
sales and 19% and 21% of the Company's gross profit for
the years ended December 31, 1996 and 1997, respectively.
The Company's lenders may choose to pursue this business
directly, rather than through intermediaries, such as the
Company. Moreover, such lenders may impose terms in their
retail dealer financing arrangements with the Company that
may be materially unfavorable to the Company or its
customers. For these
F-12
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
and other reasons, the Company could experience a
significant reduction in income resulting from reduced
demand for its customer financing programs. In addition,
if profit margins are reduced on sales of F&I products, or
if these products are no longer available, it would have a
material adverse effect on the Company's business,
financial condition and operating results.
The recreational boating industry is highly seasonal and
the Company has significantly lower sales in the fourth
quarter of the calendar year, resulting in operating
losses during this period. Weather patterns or prolonged
winter conditions and unseasonably cool weather may lead
to a shorter selling season in affected locations. The
Company's results of operations may fluctuate as a result
of these or other conditions.
The Company is dependent upon a limited number of major
boat manufacturers for inventory to sell to customers. The
Company deals with each of its manufacturers pursuant to
annually renewable, non-exclusive, dealer agreements. The
Company purchased 52%, 65%, 62% and 62% of its new boats
from one manufacturer during the years ended December 31,
1996 and 1997 and the six months ended June 30, 1997 and
1998, respectively.
The Company faces the uncertainty of the continued
availability of increases in its borrowing capacity.
Adequate working capital is essential to a boat retailer
due to the significant cash investment in new and used
boat inventory. The Company believes that it has an
excellent relationship with its floorplan lenders and that
it will be able to obtain sufficient working capital to
finance its requirements.
Due to the nature of its business and the volume of sales
activity, the Company often accumulates bank balances in
excess of the insurance provided by Federal and/or other
insurance sources.
F-13
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Inventories
-----------
Inventories consist of boats, motors, trailers and related
water sport parts and accessories and are valued at the
lower of cost or market. The cost of boats, motors and
trailers is determined using the specific identification
method. The cost of parts and accessory inventories is
determined using the first-in, first-out (FIFO) method.
Property, Equipment and Depreciation
------------------------------------
Property and equipment are stated at cost. Depreciation is
computed over the estimated useful lives of the assets by
the straight-line and accelerated methods for financial
reporting purposes. Amortization of leasehold improvements
is computed by the straight-line method over the estimated
useful lives of the assets. Interest of $16,345 was
incurred in conjunction with the construction of the
Orlando facility during 1996. This amount has been
capitalized as buildings and improvements and amortized on
a straight-line basis.
Revenue Recognition
-------------------
Retail sales of boats, parts and services are recognized
in operations upon delivery of products or services to the
customer or, in the case of boats, when title passes to
the customer.
F-14
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
Advertising Costs
-----------------
Advertising costs, included in selling expenses, are
expensed as incurred and were $201,541, $254,051,
$167,648, and $301,306 for the years ended December 31,
1996 and 1997 and six months ended June 30, 1997 and 1998,
respectively.
Impairment of Long-Lived Assets
-------------------------------
The Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," ("SFAS 121") during 1996. SFAS 121 requires
impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount.
The adoption of SFAS 121 did not impact the financial
statements of the Company.
Fair Value of Financial Instruments
-----------------------------------
The respective carrying value of certain on-balance-sheet
financial instruments approximated their fair values. Fair
value estimates discussed herein are based upon certain
market assumptions and pertinent information available to
management. These financial instruments include cash and
cash equivalents, accounts receivables, accounts payable
and accrued expenses. Fair values were assumed to
approximate carrying values for these financial
instruments since they are short term in nature and their
carrying amounts approximate fair values or they are
receivable or payable on demand. The fair value of the
Company's long-term debt is estimated based upon the
quoted market prices for the same or similar issues or on
the current rates offered to the Company for debt of the
same remaining maturities.
F-15
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
<TABLE>
<CAPTION>
2. Inventories Inventories are summarized as follows:
December 31, June 30,
1997 1998
-------------------------------------------------------------------------------
<S> <C> <C>
New boats, motors and trailers $ 6,036,114 $ 7,685,342
Used boats 519,977 662,881
Parts and accessories 228,444 272,303
-------------------------------------------------------------------------------
6,784,535 8,620,526
Reserve for obsolescence (36,500) (36,500)
-------------------------------------------------------------------------------
$ 6,748,035 $ 8,584,026
===============================================================================
3. Property and Property and equipment are summarized as follows:
Equipment
Useful December 31, June 30,
Lives 1997 1998
-------------------------------------------------------------------------------
Land - $ 400,000 $ 748,100
Buildings and improvements 8-31 yrs. 1,623,180 1,665,937
Machinery and equipment 6-8 yrs. 70,977 94,245
Office equipment and furniture 6-8 yrs. 112,269 163,118
Vehicles 6-12 yrs. 146,189 176,318
Signs 6 yrs. 20,000 22,882
-------------------------------------------------------------------------------
2,372,615 2,870,600
Less accumulated depreciation and
amortization 240,384 299,082
-------------------------------------------------------------------------------
$ 2,132,231 $ 2,571,518
===============================================================================
</TABLE>
Depreciation expense for the years ended December 31, 1996
and 1997 was $32,692 and $100,129, respectively, and
$47,116 and $58,698 for the six months ended June 30, 1997
and 1998, respectively.
F-16
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
4. Borrowings Floorplan Contracts
-------------------
The Company finances substantially all of its new boat
inventory through floorplan financing arrangements. The
floorplan contracts are due upon the sale of the related
boat and are collateralized by the Company's new boat
inventory, accounts receivable, equipment and a personal
guarantee from the majority stockholder. The outstanding
balances on the floorplan financing arrangements at
December 31, 1997 and June 30, 1998 were $6,250,903 and
$8,964,376, respectively.
The Company has arranged for a free floorplan period
whereby the floorplan interest is paid by boat
manufacturers for a period lasting from the date the boat
is received and continues for a predetermined period of
time. As a result of the free floor arrangement and
certain floorplan interest rebates received from
manufacturers, the weighted average interest rate during
the period on floorplan debt was approximately 4.5%.
The maximum borrowing available under the floorplan
contracts was $8,750,000 and $15,250,000 as of December
31, 1997 and June 30, 1998. The following summarizes
certain information about the borrowings under the
floorplan contracts:
<TABLE>
<CAPTION>
Six Months
Year Ended Ended
December 31, June 30,
1997 1998
-------------------------------------------------------------------
<S> <C> <C>
Maximum borrowing outstanding at the
end of any month $6,391,821 $8,964,376
Average borrowing outstanding during
the period $5,199,581 $7,607,640
==================================================================
</TABLE>
F-17
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
Line of Credit
--------------
The Company has a $500,000 revolving bank line of credit.
Advances on the line of credit carry an interest rate of
prime plus .5% (9% at December 31, 1997). Interest is
payable monthly with all principal and accrued interest
being due September 1998. The outstanding balance on the
line of credit at December 31, 1997 and June 30, 1998 was
$500,000. The line of credit is collateralized by the
Company's used boat inventory.
The following summarizes certain information about the
borrowings under the line of credit:
Six Months
Year Ended Ended
December 31, 1997 June 30,
1998
----------------------------------------------------------
Maximum amount outstanding at
the end any month $500,000 $500,000
Average amount outstanding
during the period $108,333 $500,000
Weighted average interest rate
during the period 8.88% 9.0%
==========================================================
Unused Borrowing Facility
-------------------------
The Company has a 10% line of credit from a manufacturer
which is guaranteed by the majority stockholder. All
principal and accrued interest is payable at the earlier
of one year from the date total advances under the note
aggregate $300,000 or August 31, 1999. The Company has yet
to borrow under this line of credit. However, the Company
may draw on this facility to fund future working capital
needs.
F-18
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
Long-Term Debt
--------------
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
-----------------------------------------------------------------------------
<S> <C> <C> <C>
7.71% mortgage note payable, principal and
interest of $9,488 due monthly through May
27, 2001, at which time the interest rate
shall be adjusted and fixed at the average
T-Bill rate plus 2% and principal and
interest will continue to be payable
monthly through May 2016, collateralized by
certain real and tangible property of the
Company and guaranteed by the majority
stockholder of the Company $ 1,115,212 $ 1,101,524
8% mortgage note payable, principal and
interest of $2,954 due monthly through June
15, 2003, with a balloon payment due on
July 15, 2003, secured by real property of - 299,171
the Company
5.0% mortgage note payable, principal of
$50,000 plus interest due December 1998,
then all remaining principal and interest
due December 1999, collateralized by a
second lien on certain real and tangible
property of the Company 150,000 150,000
Installment loans payable to banks bearing
interest at rates from 7.5% to 9%,
principal and interest payable monthly
through October 2002, collateralized by
certain vehicles and equipment of the
Company and guaranteed by the majority
stockholder of the Company 57,143 101,088
-----------------------------------------------------------------------------
1,322,355 1,651,783
Less current maturities 102,104 126,031
-----------------------------------------------------------------------------
Total long-term debt $ 1,220,251 $ 1,525,752
=============================================================================
</TABLE>
F-19
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
Aggregate maturities of long-term debt over future years
as of December 31, 1997 are as follows:
December 31,
1997
-------------------------------------------------------
1998 $ 102,104
1999 148,542
2000 41,164
2001 38,564
2002 38,764
Thereafter 953,217
=======================================================
Interest rates and interest expense related to the floor
plan contracts, line of credit, and long-term debt are as
follows:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
------------------------------------------- ------------------------------------------
December 31, December 31, June 30, June 30,
1996 1997 1997 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Floor plan contracts:
Interest rates 8.25% - 11.75% 8.60% - 12.45% 8.60% - 12.45% 8.60% - 12.45%
Interest expense $181,544 $226,011 $98,354 $109,784
Line of credit:
Interest rates 8.75% 8.75% - 9.00% 8.75% - 9.00% 9.00%
Interest expense $790 $11,535 $5,809 $18,875
Long-term debt:
Interest rates 5.00% - 12.00% 5.00% - 9.00% 5.00% - 9.00% 5.00% - 9.00%
Interest expense $57,028 $96,412 $91,806 $229,574
=================================================================================================================
</TABLE>
F-20
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
5. Stock Options The Company entered into a stock option agreement in 1992
with its major boat manufacturer as part of a financing
agreement. The agreement granted the manufacturer the
right to purchase common stock of the Company sufficient
to equal a 25% ownership interest for $10. The option
expires June 30, 2002.
In December 1995, the manufacturer agreed not to exercise
its option as long as the Company, or any other entity
managed, owned or controlled by the Company or its major
stockholder, refrains from selling any new boat product
line that directly competes with the manufacturer.
As of September 1, 1998, the manufacturer has agreed to
reduce their option to purchase stock in Boat Tree, Inc.
from a 25% interest to a 15.65% interest. This agreement
results in a reduction in the value of the manufacturer's
original option. Thus, no remeasurement of the option
value is required. Pursuant to this agreement, the
manufacturer notified the Company of its intent to
exercise its option, contingent on the Company
successfully completing their public offering. Diluted
earnings per shares presented in these financial
statements have been adjusted to give retroactive effect
of the change in this option.
6. Employee Benefit On January 1, 1997, the Company adopted a 401(k) profit
Plan sharing plan which covers substantially all employees
meeting certain minimum age and service requirements. The
plan provides for the Company to match 50% of the
participant's contributions to the plan up to a maximum of
four percent of each participant's compensation. The
Company's contribution to the plan is included in selling,
general and administrative expenses and approximated
$6,600, $22,600, $10,300 and $9,800 for the years ended
December 31, 1996 and 1997 and the six months ended June
30, 1997 and 1998, respectively.
F-21
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
7. Election Under The Company has elected, and the stockholders have
Subchapter S consented, to include their respective share of taxable
income of the Company in their individual tax returns. As
a result, no federal or state income tax is imposed on the
Company. Substantially all of the balance of retained
earnings at December 31, 1997 represents previously taxed
income which may be distributed tax-free to the
stockholders (see Note 1, Balance Sheet Pro Forma
Adjustments.
8. Net Income per The following table sets forth basic and diluted net
Common Share income per common share. The weighted average number of
common shares outstanding for purposes of calculating
basic and diluted net income per common share was 7,495
and 8,886 shares, respectively, for all periods presented
(representing 1,637,075 and 1,940,900 shares,
respectively, on a post-exchange basis; see Note 1,
Proposed Public Offering and Reorganization). Potential
dilutive securities include 1,391 shares (representing
303,825 shares on a post-exchange basis) related to the
manufacturer's stock option (see Note 5).
Net Income per
Common Share
------------------------
Basic Diluted
--------------------------------------------------------
Years ended December 31,:
1996 $51.12 $43.11
1997 $68.52 $57.79
Six months ended June 30,:
1997 $143.99 $121.45
1998 $137.97 $116.37
========================================================
F-22
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
9. Commitments and Leases
Contingencies ------
The Company conducts its operations partially from leased
facilities. These leases are classified as operating
leases and expire on various dates through March 2003.
On April 1, 1997, the Company began leasing a boat storage
area from a company owned, in part, by the majority
stockholder. The related monthly rent is based on the
number of boats sold by the Company. Beginning in August
1998, the monthly rent will become fixed at $4,000. This
lease expires March 31, 2006. The Company paid $43,407
under this lease in 1997. As of September 1, 1998, the
Company has agreed to purchase the boat storage area upon
the closing of the public offering for a $400,000 note
payable. The note payable will bear interest at the prime
rate payable monthly with all principal and unpaid
interest due 18 months from the date of transfer of the
ownership.
Rental expense under all operating leases was
approximately $7,000, $158,000, $61,000 and $116,000 for
the years ended December 31, 1996 and 1997, and the six
months ended June 30, 1997 and 1998, respectively.
The future minimum rental payments required under
operating leases that have initial or remaining
non-cancelable lease terms in excess of one year are as
follows:
December 31,
1997
---------------------------------------------------------
1998 $ 223,800
1999 217,300
2000 169,000
2001 119,600
2002 48,200
Thereafter 156,000
---------------------------------------------------------
Total minimum lease payments $ 933,900
=========================================================
F-23
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
Dealer Financing Agreements
---------------------------
The Company has entered into finance agreements with
independent financial institutions including banks and
finance companies to assist the Company's customers in
obtaining financing for boat purchases. The process
consists of the Company referring the customer to one or
more of the organizations offering the financing services.
The Company does not perform any credit approvals of the
applicant, does not service the collection of the loan,
nor does the Company provide any warranties concerning the
lender. The Company's involvement is limited to making the
financial institutions available to the customer for the
customer's consideration, the gathering of information to
obtain a credit report and such other information as
required by the financing institution(s) referred by the
Company.
Under the terms of the finance agreements, the Company may
receive a participation fee or "commission" from the
financing institution. The financial institutions
typically base the amount of the commission earned by the
Company on the difference between the customer's interest
rate as contracted with the financial institution and the
interest buy rate of the institution. The interest rate
normally varies from institution to institution and may be
affected by the customer's credit report standing. The buy
rate is published by the financial institution
specifically for the Company and is considered the base
for the commission calculation.
The lender could charge the Company back all or part of
the commission if the loan is paid off or foreclosed on
within a specified period of time. The "chargeback" period
is generally limited to the first six months of the term
of the loan.
The Company records commission income based upon the
amount earned less an amount for chargebacks. In
determining the allowance for chargebacks, the Company
takes into consideration the total customer loans
outstanding and estimates of the exposure
F-24
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
for potential chargebacks associated with these loans.
This process includes an estimate on the probability for
loan payoffs based on historical information,
consideration for current and future economic conditions,
the effects of changes in consumer interest rates and the
aging of all loans outstanding as they relate to the
chargeback period. Based on the analysis of these
conditions, the Company has determined that an allowance
for chargebacks is unnecessary at December 31, 1997 and
June 30, 1998. Finance chargebacks were approximately
$4,000 and $13,200 for 1996 and 1997, respectively.
Beginning in 1996 and ceasing in April 1998, the Company's
use of a "dealer rebate" by certain customers as part of,
or in lieu of, a customer down payment resulted in a
breach of certain provisions of the third-party finance
agreements. Under the terms of these agreements, the use
of dealer rebates obligates the Company to indemnify the
finance company against foreclosure losses for those
specific customers. The indemnification by the Company
would include repayment of the customer's defaulted
obligation and receipt by assignment of the customer's
loan contract. Should this occur, the Company would
attempt to collect on the customer loan or repossess the
underlying collateral. Repossessed boats would be sold in
the normal course of business through the Company's retail
sales centers. As of December 31, 1997 and June 30, 1998,
the Company has accrued liabilities of approximately
$86,000 and $119,000, respectively, for estimated
foreclosure losses related to such loans. During the six
months ended June 30, 1998, the Company charged earnings
approximately $33,000 related to these foreclosure losses.
F-25
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
Loan Guarantee
--------------
The Company has guaranteed the borrowings of a certain
company affiliated through common ownership with the
majority stockholder. As of June 30, 1998, aggregated
borrowings guaranteed by the Company totaled approximately
$1,575,000. On September 1, 1998, the majority stockholder
agreed to sell his interest in the affiliated company on
or prior to the consummation of the offering. In
connection with such transfer of ownership, the guarantee
by the Company will be terminated.
10. Proposed Marine America, Inc. Proposed Acquisition
Acquisition -----------------------------------------
Marine America, Inc. ("MAI") is a corporation that
commenced operations on January 30, 1998 by purchasing
equipment and certain intangible assets and assuming
certain equipment operating lease obligations from
Lakewood Marine International, Ltd. ("Lakewood") which
operated a retail boat dealership in Belmont, North
Carolina, for $130,858. MAI is owned 50% by the majority
stockholder of the Company and his son and 50% by
Lakewood. As part of the acquisition, the Company
purchased the new and used boat and trailer inventory from
Lakewood for $998,364. The new boat inventory purchased
was financed through borrowings under the Company's
floorplan agreements.
MAI executed a five-year lease with Lakewood which
included an option to purchase the dealership land and
buildings and a provision to terminate the lease before
its expiration date. As of June 30, 1998, MAI had given
notice of its intent to terminate the lease as of January
1999 and agreed to continue the lease on a month-to-month
basis thereafter. The Company plans to construct a new
facility on land it acquired on May 15, 1998 for $348,100.
The land is located in the same market and was acquired in
part through the issuance of an 8% mortgage note payable
for $300,000 (see Note 4).
At the acquisition date, the Company entered into a
management agreement with MAI, under which the Company
agreed to manage all of MAI's dealership operations. The
Company also agreed to provide MAI with new and used boat
inventory at the Company's invoice
F-26
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
cost plus freight. For its services, the Company receives
a monthly management fee and reimbursement of its
operating expenses incurred on behalf of MAI. The
management fee is based on five percent of the
dealership's gross finance and insurance income and one
percent of the month-end balance of the new and used boat
inventories. For the six months ended June 30, 1998, the
Company earned management fees of $63,178, which have been
included in Sales and Service Revenue.
American Marine Recreation, Inc. entered into a stock
purchase agreement on September 1, 1998 to acquire all of
the outstanding common stock of MAI in exchange for 1,100
shares of American Marine Recreation, Inc.'s common stock
valued at approximately $10,000 (based on $9.00 per share,
the midpoint of the currently anticipated range of the
initial public offering price), which approximates MAI's
net book value. MAI expects to borrow $125,000 from Boat
Tree, Inc. in order to redeem the shares of common stock
held by Lakewood prior to the reorganization. The
acquisition will be accounted for using the purchase
method. Under the terms of the agreement, the acquisition
will occur as of the closing of American Marine
Recreation, Inc.'s public offering (see Note 1, Proposed
Public Offering and Reorganization).
11. Subsequent Tierra Verde/Pinellas Park, Florida Sales Centers Opened
Event --------------------------------------------------------
In June 1998, the Company entered into a five-year lease
for two new and used boat sales centers located in Tierra
Verde, Florida and Pinellas Park, Florida. The lease
provides for base monthly lease payments of $8,000, $9,000
and $10,000 for the first 12, 13 to 24 and 25 to 60
months, respectively, plus real estate taxes and insurance
related to the property. The lease provides the landlord
the right to change the rent from a fixed monthly amount
to a variable amount equal to nine percent of the gross
profit on the sale of boats and merchandise after the
first 12-month lease period.
F-27
<PAGE>
Boat Tree, Inc.
Notes to Financial Statements
Information as of June 30, 1998 and for the Six Months Ended
June 30, 1997 and 1998 is Unaudited
================================================================================
The Company purchased inventory for these locations in
June 1998 which was funded primarily through borrowings
under a floorplan agreement totaling approximately
$890,000.
12. Supplemental Cash For purposes of the statements of cash flows, the
Flow Information Company considers all highly liquid debt instruments
purchasedwith a maturity of three months or less to be
cash equivalents.
The following summarizes noncash investing and financing
transactions:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, June 30,
------------------------- ---------------------------
1996 1997 1997 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash paid for interest $ 196,315 $ 377,005 $ 239,016 $ 358,233
==================================================================================================================
Noncash investing and financing activities:
Purchase of fixed assets through the assumption
of long-term debt $ 1,173,559 $ 53,269 $ 27,177 $ 357,721
Loan costs paid by majority stockholder 24,948 - - -
Capital contribution - 3,200 - -
Reduction in capital through repurchase and
retirement of common stock - 3,200 - -
==================================================================================================================
</TABLE>
F-28
<PAGE>
================================================================================
No dealer, sales representative or other person has been autho rized to give any
information or to make any representations in connection with this Offering
other than those contained in this Prospectus, and, if given or made, such
information or representations 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 securities other than
the securities offered by this Prospectus, or an offer to sell, or a
solicitation of an offer to buy, any securities by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to anyone to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any time
subsequent to the date hereof.
---------------------------
TABLE OF CONTENTS
Page
Prospectus Summary.....................................................
Risk Factors...........................................................
Use of Proceeds .......................................................
Dividends..............................................................
Dilution...............................................................
Capitalization.........................................................
Selected Financial Information.........................................
Management's Discussion and Analysis of
Financial Condition and Results of Operations .......................
Business...............................................................
Management.............................................................
Principal Stockholders.................................................
Certain Transactions...................................................
Description of Securities..............................................
Shares Eligible for Future Sale........................................
Underwriting...........................................................
Legal Matters..........................................................
Experts................................................................
Additional Information.................................................
Index to Financial Statements.......................................... F-1
---------------------------
Until _______, 1998 (25 days after the date of this Prospectus), 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 obligation of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
================================================================================
<PAGE>
================================================================================
2,180,000 Shares
AMERICAN MARINE
RECREATION, INC.
Common Stock
--------------
PROSPECTUS
--------------
BlueStone Capital Partners, L.P.
Royce Investment Group, Inc.
,1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Officers and Directors.
Section 145 of the Delaware General Corporation Law ("DGCL") permits,
in general, a Delaware corporation to indemnify any person made, or threatened
to be made, a party to an action or proceeding by reason of the fact that he or
she was a director or officer of the corporation, or served another entity in
any capacity at the request of the corporation, against any judgment, fines,
amounts paid in settlement and expenses, including attorney's fees actually and
reasonably incurred as a result of such action or proceeding, or any appeal
therein, if such person acted in good faith, for a purpose he or she reasonably
believed to be in, or, in the case of service for another entity, not opposed
to, the best interests of the corporation and, in criminal actions or
proceedings, in addition had no reasonable cause to believe that his or her
conduct was unlawful. Section 145(e) of the DGCL permits the corporation to pay
in advance of a final disposition of such action or proceeding the expenses
incurred in defending such action or proceeding upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount as, and to the
extent, required by statute. Section 145(f) of the DGCL provides that the
indemnification and advancement of expense provisions contained in the DGCL
shall not be deemed exclusive of any rights to which a director or officer
seeking indemnification or advancement of expenses may be entitled.
The Company's Certificate of Incorporation provides, in general, that
the Company shall indemnify, to the fullest extent permitted by Section 145 of
the DGCL, any and all persons whom it shall have power to indemnify under said
section from and against any and all of the expenses, liabilities or other
matters referred to in, or covered by, said section. The Certificate of
Incorporation also provides that the indemnification provided for therein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to actions taken in his or her official capacity
and as to acts in another capacity while holding such office.
In accordance with that provision of the Certificate of Incorporation,
the Company shall indemnify any officer or director (including officers and
directors serving another corporation, partnership, joint venture, trust, or
other enterprise in any capacity at the Company's request) made, or threatened
to be made, a party to an action or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he or she was
serving in any of those capacities against judgments, fines, amounts paid in
settlement and reasonable expenses (including attorney's fees) incurred as a
result of such action or proceeding. Indemnification would not be available if a
judgment or other final adjudication adverse to such director or officer
establishes that (i) his or her acts were committed in bad faith or were the
result of active and deliberate dishonesty or (ii) he or she personally gained
in fact a financial profit or other advantage to which he or she was not legally
entitled.
The Form of Underwriting Agreement filed as Exhibit 1.1 hereto also
contains, among other things, provisions whereby the Underwriters agree to
indemnify the Company, each officer and director of the Company who has signed
the Registration Statement, and each person who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, liabilities,
claims or damages arising out of alleged untrue statements or alleged omissions
of material facts with respect to information furnished to the Company by the
Underwriters for use in the Registration Statement or Prospectus.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses (other than
underwriting commissions and discounts payable to the Underwriters) payable by
the Company in connection with the issuance and distribution of the securities
being registered hereby. With the exception of the registration fee, the NASD
filing fee and the NASDAQ listing fees, all amounts shown are estimates.
II-1
<PAGE>
Registration fee.............................................. 7,389
NASDAQ listing fees........................................... 48,750
NASD filing fee............................................... 3,005
Printing and engraving expenses............................... *
Legal fees and expenses (other than Blue Sky)................. *
Accounting fees and expenses.................................. *
Blue Sky fees and expenses (including legal and filing)....... *
Transfer agent fees and expenses.............................. *
Underwriters' expenses........................................ *
Miscellaneous expenses........................................ *
--------
Total......................................................... $950,000
========
* To be provided by amendment.
Item 26. Recent Sales of Unregistered Securities.
In the past three years, the Company has not made any sales of
unregistered securities.
Item 27. Exhibits.
The following documents (unless indicated) are filed herewith and made
a part of this Registration Statement.
<TABLE>
<CAPTION>
Number Description of Exhibit
- ------ ----------------------
<S> <C>
1.1 -- Form of Underwriting Agreement between the Company and the Underwriters.
2.1 -- Exchange Agreement dated as of September 1, 1998 by and among Joseph G. Pozo, Jr. and Joseph John Pozo
and American Marine Recreation, Inc.
2.2 -- Exchange Agreement dated as of September 1, 1998 by and among Joseph G. Pozo, Jr., Joseph John Pozo,
Christine Pozo, Jennifer Jo Pozo and Marcelo A. Pozo and American Marine Recreation, Inc.
3.1 -- Certificate of Incorporation of the Company.
3.2 -- By-Laws of the Company.
4.1 -- Specimen Certificate of the Company's Common Stock.*
4.2 -- Form of Representatives' Warrant Agreement, including Form of Representatives Warrant.
5.1 -- Opinion of McLaughlin & Stern, LLP counsel to the Company.*
10.1 -- 1998 Stock Option Plan.
10.2 -- Second Mortgage and Security Agreement dated November 28, 1998 between Boat Tree, Inc. as Mortgagor
and Danis Properties Limited Partnership as Mortgagee.
10.3 -- Promissory Note dated November 28, 1995 for $250,000 between Boat Tree, Inc. as Maker and Danis
Properties Limited Partnership as Holder.
10.4 -- Promissory Note dated November 28, 1995 for $1,150,000 between Boat Tree, Inc. as Maker and AmSouth
Bank of Florida as Payee.
10.5 -- Mortgage and Security Agreement dated November 28, 1995 between Boat Tree, Inc. as Borrower and
AmSouth Bank of Florida as Lender.
10.6 -- Commercial Lease dated November __, 1996 for property located in Melbourne, Florida between Boat Tree,
Inc. as Tenant and 340 North, Inc. as Landlord.
10.7 -- Lease dated December 16, 1996 for property located in Jacksonville, Florida between Boat Tree, Inc. as
Lessee and Rose & Ken, Inc. as lessor, as amended.
10.8 -- Lease dated December 10, 1997 for property located in Clay County, Florida between Boat Tree, Inc. as
Lessee and Doctors Lake Marina, Inc. as Lessor.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Number Description of Exhibit
- ------ ----------------------
<S> <C>
10.9 -- Lease dated January 30, 1998 for property Located in Gaston County, North Carolina between Lakewood
Marine International, Ltd. as Landlord and Marine America, Inc. as Tenant.
10.10 -- Master Note for Business and Commercial Loans dated September 24, 1997 for $500,000 between Boat Tree,
Inc. as Borrower and AmSouth Bank of Florida as Holder.
10.11 -- Inventory Security Agreement dated July 2, 1992 between Boat Tree, Inc. and TransAmerica Commercial
Finance Corporation, as amended.
10.12 -- Agreement for Wholesale Financing (Security Agreement - Arbitration) dated August 1, 1993 between ITT
Commercial Finance Corp. and Boat Tree, Inc., as amended.
10.13 -- Lease dated June 16, 1998 by and between Marina Opportunity I (Tierra Verme) L.P., as landlord and Boat
Tree, Inc., as tenant.
10.14 -- Employment Agreement by and between Joseph G. Pozo, Jr. and the Company.
10.15 -- Employment Agreement by and between Gary E. Stein and the Company.
10.16 -- Employment Agreement by and between Melven R. Nehleber and the Company.
10.17 -- Agreement dated September 1, 1998 among Regal Marine Industries, Inc., the Company and
Joseph G. Pozo, Jr.
10.18 -- Sales and Service Agreement dated September 1, 1998 between Regal Marine Industries Incorporated doing business
as Regal Boats and American Marine Recreation, Inc., doing business as the Boattree.**
10.19 -- Contract of Sale dated as of September 1, 1998 between JCJ Family Partners L.P., Ltd. and the Company.*
23.1 -- Consent of BDO Seidman, LLP
24.1 -- Power of Attorney (included on the signature page of this Registration Statement).
27.1 -- Financial Data Schedule
99.1 -- Consent to Identification as Director Nominee Brady Churches
99.2 -- Consent to Identification as Director Nominee J. Gregory Humphries
99.3 -- Consent to Identification as Director Nominee of Jeffrey Schotteinstein
99.4 -- Consent to Identification as Director Nominee James W. Trawek
99.5 -- Consent to Identification as Director Nominee of Sir Brian Wolfson.
99.6 -- Consent of McLaughlin & Stern, LLP (contained in Exhibit 5.1)*
</TABLE>
* To be filed by Amendment.
** To be filed by amendment in redacted form pursuant to a confidentiality
request under Rule 406.
Item 28. Undertakings.
1. The Company hereby undertakes:
(a) To file, during any period in which the Company offers or
sells securities, a post-effective amendment(s) to this Registration
Statement:
(1) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(2) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement; and
(3) To include any additional or changed material
information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement;
(b) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering; and
(c) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered
in such names as required by the Underwriters to permit prompt delivery
to each purchaser.
II-3
<PAGE>
(d) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
2. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company 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
Company 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 of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
3. If the Company relies on Rule 430A under the Securities Act, the
Company will:
(a) For determining any liability under the Securities Act, treat
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 Company under Rule 424(b)(1), or (4), or
497(h) under the Securities Act as part of this Registration Statement as
of the time the Commission declared it effective; and
(b) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration
Statement and treat the offering of such securities at that time as the
initial bona fide offering of those securities.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this Form SB-2 and has authorized this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Orlando, Florida, on September 1, 1998.
AMERICAN MARINE RECREATION, INC.
By: /s/ Joseph G. Pozo, Jr.
--------------------------------------------
Joseph G. Pozo, Jr., Chairman of the Board,
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints JOSEPH G. POZO, JR. his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or either of them or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph G. Pozo, Jr. Chairman of the Board, President, Chief
- ------------------------------- Executive Officer and Director September 1, 1998
Joseph G. Pozo, Jr.
/s/ Gary E. Stein Executive Vice President, Secretary and
- ------------------------------- Director September 1, 1998
Gary E. Stein
/s/ Melven R. Nehleber Chief Financial Officer and Treasurer
- ------------------------------- (principal accounting officer) September 1, 1998
Melven R. Nehleber
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description of Exhibit
- ------ ----------------------
<S> <C>
1.1 -- Form of Underwriting Agreement between the Company and the Underwriters.
2.1 -- Exchange Agreement dated as of September 1, 1998 by and among Joseph G. Pozo, Jr. and Joseph John Pozo
and American Marine Recreation, Inc.
2.2 -- Exchange Agreement dated as of September 1, 1998 by and among Joseph G. Pozo, Jr., Joseph John Pozo,
Christine Pozo, Jennifer Jo Pozo and Marcelo A. Pozo and American Marine Recreation, Inc.
3.1 -- Certificate of Incorporation of the Company.
3.2 -- By-Laws of the Company.
4.1 -- Specimen Certificate of the Company's Common Stock.*
4.2 -- Form of Representatives' Warrant Agreement, including Form of Representatives Warrant.
5.1 -- Opinion of McLaughlin & Stern, LLP counsel to the Company.*
10.1 -- 1998 Stock Option Plan.
10.2 -- Second Mortgage and Security Agreement dated November 28, 1998 between Boat Tree, Inc. as Mortgagor
and Danis Properties Limited Partnership as Mortgagee.
10.3 -- Promissory Note dated November 28, 1995 for $250,000 between Boat Tree, Inc. as Maker and Danis
Properties Limited Partnership as Holder.
10.4 -- Promissory Note dated November 28, 1995 for $1,150,000 between Boat Tree, Inc. as Maker and AmSouth
Bank of Florida as Payee.
10.5 -- Mortgage and Security Agreement dated November 28, 1995 between Boat Tree, Inc. as Borrower and
AmSouth Bank of Florida as Lender.
10.6 -- Commercial Lease dated November __, 1996 for property located in Melbourne, Florida between Boat Tree,
Inc. as Tenant and 340 North, Inc. as Landlord.
10.7 -- Lease dated December 16, 1996 for property located in Jacksonville, Florida between Boat Tree, Inc. as
Lessee and Rose & Ken, Inc. as lessor, as amended.
10.8 -- Lease dated December 10, 1997 for property located in Clay County, Florida between Boat Tree, Inc. as
Lessee and Doctors Lake Marina, Inc. as Lessor.
10.9 -- Lease dated January 30, 1998 for property Located in Gaston County, North Carolina between Lakewood
Marine International, Ltd. as Landlord and Marine America, Inc. as Tenant.
10.10 -- Master Note for Business and Commercial Loans dated September 24, 1997 for $500,000 between Boat Tree,
Inc. as Borrower and AmSouth Bank of Florida as Holder.
10.11 -- Inventory Security Agreement dated July 2, 1992 between Boat Tree, Inc. and TransAmerica Commercial
Finance Corporation, as amended.
10.12 -- Agreement for Wholesale Financing (Security Agreement - Arbitration) dated August 1, 1993 between ITT
Commercial Finance Corp. and Boat Tree, Inc., as amended.
10.13 -- Lease dated June 16, 1998 by and between Marina Opportunity I (Tierra Verme) L.P., as landlord and Boat
Tree, Inc., as tenant.
10.14 -- Employment Agreement by and between Joseph G. Pozo, Jr. and the Company.
10.15 -- Employment Agreement by and between Gary E. Stein and the Company.
10.16 -- Employment Agreement by and between Melven R. Nehleber and the Company.
10.17 -- Agreement dated September 1, 1998 among Regal Marine Industries, Inc., the Company and
Joseph G. Pozo, Jr.
10.18 -- Sales and Service Agreement dated September 1, 1998 between Regal Marine Industries Incorporated doing business
as Regal Boats and American Marine Recreation, Inc., doing business as the Boattree.**
10.19 -- Contract of Sale dated as of September 1, 1998 between JCJ Family Partners L.P., Ltd. and the Company.*
23.1 -- Consent of BDO Seidman, LLP
24.1 -- Power of Attorney (included on the signature page of this Registration Statement).
27.1 -- Financial Data Schedule
99.1 -- Consent to Identification as Director Nominee Brady Churches
99.2 -- Consent to Identification as Director Nominee J. Gregory Humphries
99.3 -- Consent to Identification as Director Nominee of Jeffrey Schotteinstein
99.4 -- Consent to Identification as Director Nominee James W. Trawek
99.5 -- Consent to Identification as Director Nominee of Sir Brian Wolfson.
99.6 -- Consent of McLaughlin & Stern, LLP (contained in Exhibit 5.1)*
</TABLE>
* To be filed by Amendment.
** To be filed by amendment in redacted form pursuant to a confidentiality
request under Rule 406.
<PAGE>
AMERICAN MARINE RECREATION, INC.
2,180,000 Shares of Common Stock
($.01 par value per share)
UNDERWRITING AGREEMENT
----------------------
New York, New York
________ __, 1998
BlueStone Capital Partners, L.P.
Royce Investment Group, Inc.
as Representatives of the
Several Underwriters named
in Schedule A hereto
c/o BlueStone Capital Partners, L.P.
575 Fifth Avenue
New York, New York 10017
Dear Sirs:
American Marine Recreation, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the underwriters (the "Underwriters")
named in Schedule A to this Underwriting Agreement (the "Agreement"), for whom
BlueStone Capital Partners, L.P. ("BlueStone") and Royce Investment Group, Inc.
are acting as representatives (hereinafter sometimes referred to together as the
"Representatives"), two million one hundred eighty thousand (2,180,000) shares
of common stock, $.01 par value per share (the "Offered Shares"), which Offered
Shares are presently authorized but unissued shares of the common stock, $.01
par value per share (individually a "Common Share" and collectively the "Common
Shares"), of the Company. In addition, the Representatives, in order to cover
over-allotments in the sale of the Offered Shares, may purchase from the
Company, for their own accounts, up to an aggregate of three hundred
twenty-seven thousand (327,000) Common Shares (the "Optional Shares"; the
Offered Shares and the Optional Shares are hereinafter sometimes collectively
referred to as the "Shares"). The Shares are described in the Registration
Statement, as defined below. The Company also proposes to issue and sell to the
Representatives for their own accounts and/or the accounts of their designees,
warrants to purchase an aggregate of two hundred eighteen thousand (218,000)
Common Shares (the "Warrant Shares") at an exercise price of $___ [120% of the
IPO price] per Warrant Share
<PAGE>
(the "Representatives' Warrants"), which sale will be consummated in accordance
with the terms and conditions of the form of Representatives' Warrant Agreement
filed as an exhibit to the Registration Statement.
The Representatives hereby warrant to the Company that they
have been authorized by each of the Underwriters to enter into this Underwriting
Agreement on their behalf and to act for them in the manner herein provided. The
Company hereby confirms its respective agreements with the Representatives and
each of the Underwriters, on whose behalf the Representatives are signing this
Agreement, as follows:
1. Purchase and Sale of Offered Shares. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company hereby agrees to sell the Offered
Shares to the Underwriters, severally, and each Underwriter agrees severally and
not jointly, to purchase from the Company, at a purchase price of $____ [7%
underwriter's discount] per share, the number of Offered Shares set forth
opposite the name of such Underwriter in Schedule A attached hereto, plus any
additional Offered Shares which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof. The Underwriters plan
to offer the Offered Shares to the public at a public offering price of $___ per
share.
2. Payment and Delivery.
(a) Payment for the Offered Shares will be made to
the Company by wire transfer against delivery of the Offered Shares to the
Representatives. Such payment and delivery will be made at 10:00 A.M. New York
City time, on the third business day following the Effective Date (the fourth
business day following the Effective Date in the event that trading of the
Offered Shares commences on the day following the Effective Date), the date and
time of such payment and delivery being herein called the "Closing Date." The
certificates representing the Offered Shares to be delivered will be in such
denominations and registered in such names as the Representatives may request
not less than two full business days prior to the Closing Date, and will be made
available to the Representatives for inspection, checking and packaging at the
offices of Continental Stock Transfer & Trust Company, the Company's transfer
agent, at 2 Broadway, New York, New York 10004, not less than one full business
day prior to the Closing Date.
(b) On the Closing Date, the Company will sell the
Representatives' Warrants to the Representatives or to their designees (limited
to officers and partners of the Representatives and Underwriters). The
Representatives' Warrants will be in the form of, and in accordance with, the
provisions of the
-2-
<PAGE>
Representatives' Warrant Agreement attached as an exhibit to the Registration
Statement. The aggregate purchase price for the Representatives' Warrants is
$214.50. The Representatives' Warrants will be restricted from sale, transfer,
assignment or hypothecation for a period of one year from the Effective Date,
except to officers or partners of the Representatives and Underwriters and
members of the selling group and/or their officers or partners. Payment for the
Representatives' Warrants will be made to the Company by check or checks payable
to its order on the Closing Date against delivery of the certificates
representing the Representatives' Warrants. The certificates representing the
Representatives' Warrants will be in such denominations and such names as the
Representatives may request prior to the Closing Date.
3. Option to Purchase Optional Shares.
(a) For the purposes of covering any overallotments
in connection with the distribution and sale of the Offered Shares as
contemplated by the Prospectus as defined below, the Representatives are hereby
granted an option to purchase for their own accounts, and not as representatives
of the Underwriters, all or any part of the Optional Shares from the Company.
The purchase price to be paid for the Optional Shares will be the same price per
Optional Share as the price per Offered Share set forth in Section 1 hereof. The
option granted hereby may be exercised by the Representatives as to all or any
part of the Optional Shares at any time within 45 days after the Effective Date.
The Representatives will not be under any obligation to purchase any Optional
Shares prior to the exercise of such option.
(b) The option granted hereby may be exercised by
the Representatives by giving oral notice to the Company, which must be
confirmed by a letter, telex or telegraph setting forth the number of Optional
Shares to be purchased, the date and time for delivery of and payment for the
Optional Shares to be purchased and stating that the Optional Shares referred to
therein are to be used for the purpose of covering over-allotments in connection
with the distribution and sale of the Offered Shares. If such notice is given
prior to the Closing Date, the date set forth therein for such delivery and
payment will not be earlier than either two full business days thereafter or the
Closing Date, whichever occurs later. If such notice is given on or after the
Closing Date, the date set forth therein for such delivery and payment will not
be earlier than two (2) full business days thereafter. In either event, the date
so set forth will not be more than 15 full business days after the date of such
notice. The date and time set forth in such notice is herein called the "Option
Closing Date." Upon exercise of such option, the Company will become obligated
to convey to the Representatives, and, subject to the terms and conditions set
forth in Section 3(d) hereof, the Representatives
-3-
<PAGE>
will become obligated to purchase, the number of Optional Shares specified in
such notice.
(c) Payment for any Optional Shares purchased will be
made to the Company by wire transfer against delivery of the Optional Shares
purchased to the Representatives. The certificates representing the Optional
Shares to be delivered will be in such denominations and registered in such
names as the Representatives request not less than two full business days prior
to the Option Closing Date, and will be made available to the Representatives
for inspection, checking and packaging at the aforesaid office of the Company's
transfer agent or correspondent not less than one full business day prior to the
Option Closing Date.
(d) The obligation of the Representatives to purchase
and pay for any of the Optional Shares is subject to the accuracy and
completeness (as of the date hereof and as of the Option Closing Date) of and
compliance in all material respects with the representations and warranties of
the Company herein, to the accuracy and completeness of the statements of the
Company or its officers made in any certificate or other document to be
delivered by the Company pursuant to this Agreement, to the performance in all
material respects by the Company of its obligations hereunder, to the
satisfaction by the Company of the conditions, as of the date hereof and as of
the Option Closing Date, set forth in Section 3(b) hereof, and to the delivery
to the Representatives of opinions, certificates and letters dated the Option
Closing Date substantially similar in scope to those specified in Sections 5 and
6(b), (c), (d) and (e) hereof, but with each reference to "Offered Shares" and
"Closing Date" to be, respectively, to the Optional Shares and the Option
Closing Date.
4. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full power and authority, corporate and other, and all Permits (defined
hereafter) to own or lease, as the case may be, and operate, its properties,
whether tangible or intangible, and to conduct its business as described in the
Registration Statement and to execute, deliver and perform this Agreement and
the Representatives' Warrant Agreement and to consummate the transactions
contemplated hereby and thereby. The Company has no subsidiaries as of the date
hereof and, as of the Closing Date, will have no subsidiaries other than Boat
Tree, Inc., a corporation duly organized and validly existing under the laws of
the State of Florida ("Boat Tree") and Marine America, Inc., a corporation duly
organized and validly existing under the laws of
-4-
<PAGE>
the State of Florida ("Marine") (together, the "Subsidiaries"). Unless the
context otherwise requires, all references to the "Company" in this Agreement
shall include the Subsidiaries.
(b) Each of the Subsidiaries has full power and
authority, corporate and other, and all Permits necessary to own or lease, as
the case may be, and operate, its properties, and to conduct its business as
described in the Registration Statement. Each of the Subsidiaries is also duly
qualified to do business as a foreign corporation, and is in good standing, in
all jurisdictions wherein such qualification is necessary and failure so to
qualify could have a material adverse effect on the financial condition, results
of operations, business or properties of the Company or any Subsidiary. On the
Closing Date, the Company will own all of the issued and outstanding shares of
capital stock of each of the Subsidiaries, free and clear of any security
interests, liens, encumbrances, claims and charges, and all of such shares have
been duly authorized and validly issued and are, and on the Closing Date will
be, fully paid and nonassessable. There are no options or warrants for the
purchase of, or other rights to purchase, or outstanding securities convertible
into or exchangeable for, any capital stock or other securities of any
Subsidiary other than those described in the Prospectus.
(c) This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of the
Company, and the Representatives' Warrant Agreement, when executed and delivered
by the Company on the Closing Date, will be the valid and binding obligation of
the Company, enforceable against the Company in accordance with their respective
terms. The execution, delivery and performance of this Agreement and the
Representatives' Warrant Agreement by the Company, the consummation by the
Company of the transactions herein and therein contemplated and the compliance
by the Company with the terms of this Agreement and the Representatives' Warrant
Agreement have been duly authorized by all necessary corporate action and do not
and will not, with or without the giving of notice or the lapse of time, or
both, (i) result in any violation of the Company's or of any Subsidiary's
Certificate of Incorporation, Articles of Incorporation or By-laws, each as
amended; (ii) result in a breach of or conflict with any of the terms or
provisions of, or constitute a default under, or result in the modification or
termination of, or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any Subsidiary pursuant to, any indenture, mortgage, note, contract,
commitment or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company, any Subsidiary or any of their
respective properties or assets are or may be bound or affected; (iii) violate
any existing applicable law, rule, regulation,
-5-
<PAGE>
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company, any Subsidiary or any of their
respective properties or business; or (iv) have any effect on any permit,
certification, registration, approval, consent, order, license, franchise or
other authorization (collectively, the "Permits") necessary for the Company or
any Subsidiary to own or lease and operate their respective properties or
conduct their respective businesses or the ability of the Company to make use
thereof.
(d) No Permits of any court or governmental agency or
body, other than under the Securities Act of 1933, as amended (the "Act"), the
Regulations (as hereinafter defined) and applicable state securities or Blue Sky
laws, are required for (i) the valid authorization, issuance, sale and delivery
of the Shares to the Underwriters or the Representatives' Warrants to the
Representatives, and (ii) the consummation by the Company of the transactions
contemplated by this Agreement and the Representatives' Warrant Agreement or, if
so required, all such Permits have been duly obtained and are in full force and
effect.
(e) The conditions for use of a registration
statement on Form SB-2 set forth in the General Instructions to Form SB-2 have
been satisfied with respect to the Company, the transactions contemplated herein
and in the Registration Statement. The Company has prepared in conformity with
the requirements of the Act and the rules and regulations (the "Regulations") of
the Securities and Exchange Commission (the "Commission") and filed with the
Commission a registration statement (File No. 333-_______) on Form SB-2 and has
filed one or more amendments thereto, covering the registration of the Shares
under the Act, including the related preliminary prospectus or preliminary
prospectuses (each thereof being herein called a "Preliminary Prospectus") and a
proposed final prospectus. Each Preliminary Prospectus was endorsed with the
legend required by Item 501(a)(5) of Regulation S-B of the Regulations and, if
applicable, Rule 430A of the Regulations. Such registration statement including
any documents incorporated by reference therein and all financial schedules and
exhibits thereto, as amended at the time it becomes effective, and the final
prospectus included therein are herein, respectively, called the "Registration
Statement" and the "Prospectus," except that, (i) if the prospectus filed by the
Company pursuant to Rule 424(b) of the Regulations differs from the Prospectus,
the term "Prospectus" shall mean the prospectus filed pursuant to Rule 424(b),
and (ii) if the Registration Statement is amended or such Prospectus is
supplemented after the date the Registration Statement is declared effective by
the Commission (the "Effective Date") and prior to the Option Closing Date, the
terms "Registration Statement" and "Prospectus" shall include the Registration
Statement as amended or supplemented.
-6-
<PAGE>
(f) Neither the Commission nor, to the best of the
Company's knowledge, any state regulatory authority has issued any order
preventing or suspending the use of any Preliminary Prospectus or has instituted
or, to the best of the Company's knowledge, threatened to institute any
proceedings with respect to such an order.
(g) The Registration Statement when it becomes
effective, the Prospectus (and any amendment or supplement thereto) when it is
filed with the Commission pursuant to Rule 424(b), and both documents as of the
Closing Date and the Option Closing Date referred to below, will contain all
statements which are required to be stated therein in accordance with the Act
and the Regulations and will in all material respects conform to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, on such
dates, will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company in connection with the Registration
Statement or Prospectus or any amendment or supplement thereto by the
Representatives, or by any Underwriter through the Representatives, expressly
for use therein.
(h) Based on the assumptions stated in the
Registration Statement and the Prospectus, the Company had at the date or dates
indicated in the Prospectus a duly authorized and outstanding capitalization as
set forth in the Registration Statement and the Prospectus and, on the Closing
Date, the Company will have the adjusted stock capitalization set forth therein.
Except as set forth in the Registration Statement or the Prospectus, on the
Effective Date and on the Closing Date, there will be no options to purchase,
warrants or other rights to subscribe for, or any securities or obligations
convertible into, or any contracts or commitments to issue or sell shares of the
Company's capital stock or any such warrants, convertible securities or
obligations. Except as set forth in the Prospectus, no holder of any of the
Company's securities has any rights, "demand," "piggyback" or otherwise, to have
such securities registered under the Act.
(i) The descriptions in the Registration Statement
and the Prospectus of contracts and other documents are accurate and present
fairly the information required to be disclosed, and there are no contracts or
other documents required to be described in the Registration Statement or
Prospectus or to be filed as
-7-
<PAGE>
exhibits to the Registration Statement under the Act or the Regulations which
have not been so described or filed as required.
(j) BDO Seidman, LLP, the accountants who have
certified certain of the financial statements filed and to be filed with the
Commission as part of the Registration Statement and the Prospectus, are
independent public accountants within the meaning of the Act and Regulations.
The financial statements and schedules and the notes thereto filed as part of
the Registration Statement and included in the Prospectus are complete, correct
and present fairly the financial position of Boat Tree, as of the dates thereof,
and the results of operations and changes in financial position of Boat Tree for
the periods indicated therein, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved except as otherwise stated in the Registration Statement and the
Prospectus. The selected financial data set forth in the Registration Statement
and the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited and unaudited financial
statements included in the Registration Statement and the Prospectus.
(k) The Company and each Subsidiary has filed with
the appropriate federal, state and local governmental agencies, and all
appropriate foreign countries and political subdivisions thereof, all tax
returns, including franchise tax returns, which are required to be filed or has
duly obtained extensions of time for the filing thereof and has paid all taxes
shown on such returns and all assessments received by it to the extent that the
same have become due; and the provisions for income taxes payable, if any, shown
on the financial statements filed with or as part of the Registration Statement
are sufficient for all accrued and unpaid foreign and domestic taxes, whether or
not disputed, and for all periods to and including the dates of such financial
statements. Except as disclosed in writing to the Representatives, neither the
Company nor any Subsidiary has executed or filed with any taxing authority,
foreign or domestic, any agreement extending the period for assessment or
collection of any income taxes and is not a party to any pending action or
proceeding by any foreign or domestic governmental agency for assessment or
collection of taxes; and no claims for assessment or collection of taxes have
been asserted against the Company or any Subsidiary.
(l) The outstanding Common Shares and outstanding
options and warrants to purchase Common Shares have been duly authorized and
validly issued. The outstanding Common Shares are fully paid and nonassessable.
The outstanding options and warrants to purchase Common Shares constitute the
valid and binding obligations of the Company, enforceable in accordance with
their terms. None of the outstanding Common Shares or options or
-8-
<PAGE>
warrants to purchase Common Shares has been issued in violation of the
preemptive rights of any shareholder of the Company. None of the holders of the
outstanding Common Shares is subject to personal liability solely by reason of
being such a holder. The offers and sales of the outstanding Common Shares and
outstanding options and warrants to purchase Common Shares were at all relevant
times either registered under the Act and the applicable state securities or
Blue Sky laws or exempt from such registration requirements. The authorized
Common Shares and outstanding options and warrants to purchase Common Shares
conform to the descriptions thereof contained in the Registration Statement and
Prospectus. Except as set forth in the Registration Statement and the
Prospectus, on the Effective Date and the Closing Date, there will be no
outstanding options or warrants for the purchase of, or other outstanding rights
to purchase, Common Shares or securities convertible into Common Shares.
(m) The Company has complied with the Regulations of
the Commission with respect to the disclosure in the Registration Statement of
sales of securities within the three years prior to the date hereof.
(n) The issuance and sale of the Shares and the
Warrant Shares have been duly authorized and, when the Shares and the Warrant
Shares have been issued and duly delivered against payment therefor as
contemplated by this Agreement and the Representatives' Warrant Agreement,
respectively, the Shares and the Warrant Shares will be validly issued, fully
paid and nonassessable, and the holders thereof will not be subject to personal
liability solely by reason of being such holders. Neither the Shares nor the
Warrant Shares will be subject to preemptive rights of any shareholder of the
Company.
(o) The issuance and sale of the Representatives'
Warrants have been duly authorized and, when issued, paid for and delivered as
contemplated by the Representatives' Warrant Agreement, the Representatives'
Warrants will constitute valid and binding obligations of the Company,
enforceable as to the Company in accordance with their terms. The Warrant Shares
have been duly reserved for issuance upon exercise of the Representatives'
Warrants in accordance with the provisions of the Representatives' Warrant
Agreement. The Representatives' Warrants conform to the description thereof
contained in the Registration Statement and the Prospectus.
(p) Neither the Company nor any Subsidiary is in
violation of, or in default under, (i) any term or provision of its Certificate
of Incorporation, Articles of Incorporation or By-Laws, each as amended; (ii)
any material term or provision or any financial covenants of any indenture,
mortgage, contract,
-9-
<PAGE>
commitment or other agreement or instrument to which it is a party or by which
it or any of its property or business is or may be bound or affected; or (iii)
any existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over the
Company, any Subsidiary or any of their respective properties or business. The
Company and each Subsidiary owns, possesses or has obtained all governmental and
other (including those obtainable from third parties) Permits necessary to own
or lease, as the case may be, and to operate its properties, whether tangible or
intangible, and to conduct its respective business and operations as presently
conducted, and all such Permits are outstanding and in good standing, and there
are no proceedings pending or to the best of the Company's knowledge, threatened
(nor, to the best of the Company's knowledge, is there any basis therefor),
which seek to cancel, terminate or limit such Permits.
(q) Except as set forth in the Prospectus, there are
no claims, actions, suits, proceedings, arbitrations, investigations or
inquiries before any governmental agency, court or tribunal, domestic or
foreign, or before any private arbitration tribunal, pending, or, to the best of
the Company's knowledge, threatened against the Company or any Subsidiary or
involving the Company's or any Subsidiary's properties or business which, if
determined adversely to the Company or any Subsidiary would, individually or in
the aggregate, result in any material adverse change in the financial position,
shareholders' equity, results of operations, properties, business, management or
affairs or business prospects of the Company or any Subsidiary or which question
the validity of the capital stock of the Company or this Agreement or of any
action taken or to be taken by the Company pursuant to, or in connection with,
this Agreement; nor, to the best of the Company's knowledge, is there any basis
for any such claim, action, suit, proceeding, arbitration, investigation or
inquiry. There are no outstanding orders, judgments or decrees of any court,
governmental agency or other tribunal naming the Company or any Subsidiary and
enjoining the Company or any Subsidiary from taking, or requiring the Company or
any Subsidiary to take, any action, or to which the Company or any Subsidiary or
the Company's or any Subsidiary's properties or business is bound or subject.
(r) Neither the Company nor any of its affiliates has
incurred any liability for any finder's fees or similar payments in connection
with the transactions herein contemplated.
(s) The Company and each Subsidiary owns or possesses
adequate and enforceable rights to use all patents, patent applications,
trademarks, service marks, copyrights, rights, trade secrets, confidential
information, processes and formulations used or proposed to be used in the
conduct of its business as
-10-
<PAGE>
described in the Prospectus (collectively the "Intangibles"); to the best of the
Company's knowledge, neither the Company nor any Subsidiary has infringed or is
infringing upon the rights of others with respect to the Intangibles; and,
except as set forth in the Prospectus, neither the Company nor any Subsidiary
has received any notice of conflict with the asserted rights of others with
respect to the Intangibles which could, singly or in the aggregate, materially
adversely affect its business as presently conducted or the prospects, financial
condition or results of operations of the Company or any Subsidiary and the
Company knows of no basis therefor; and, except as set forth in the Prospectus,
to the best of the Company's knowledge, no others have infringed upon the
Intangibles of the Company or any Subsidiary.
(t) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, neither
the Company nor any Subsidiary has incurred any material liability or
obligation, direct or contingent, or entered into any material transaction,
whether or not incurred in the ordinary course of business, or sustained any
material loss or interference with its business from fire, storm, explosion,
flood or other casualty, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there have not been, and prior to the Closing Date referred
to below there will not be, any changes in the capital stock or any material
increases in the long-term debt of the Company or any Subsidiary or any material
adverse change in or affecting the general affairs, management, financial
condition, shareholders' equity, results of operations or prospects of the
Company or any Subsidiary, other than as set forth or contemplated in the
Prospectus.
(u) The Company and each Subsidiary has good and
marketable title in fee simple to all real property and good title to all
personal property (tangible and intangible) owned by it, free and clear of all
security interests, charges, mortgages, liens, encumbrances and defects, except
such as are described in the Registration Statement and Prospectus or such as do
not materially affect the value or transferability of such property and do not
interfere with the use of such property made, or proposed to be made, by the
Company or any Subsidiary. The leases, licenses or other contracts or
instruments under which the Company and the Subsidiaries lease, hold or are
entitled to use any property, real or personal, are valid, subsisting and
enforceable only with such exceptions as are not material and do not interfere
with the use of such property made, or proposed to be made, by the Company or
any Subsidiary, and all rentals, royalties or other payments, if any, accruing
thereunder which became due prior to the date of this Agreement have been duly
paid, and neither the Company nor any
-11-
<PAGE>
Subsidiary, nor, to the best of the Company's knowledge, any other party is in
default thereunder and, to the best of the Company's knowledge, no event has
occurred which, with the passage of time or the giving of notice, or both, would
constitute a default thereunder. Neither the Company nor any Subsidiary has
received notice of any violation of any applicable law, ordinance, regulation,
order or requirement relating to its owned or leased properties. The Company and
each Subsidiary has adequately insured its properties against loss or damage by
fire or other casualty and maintains, in adequate amounts, such other insurance
as is usually maintained by companies engaged in the same or similar businesses
located in its geographic area.
(v) Each contract or other instrument (however
characterized or described) to which the Company or a Subsidiary is a party or
by which its respective properties or businesses are or may be bound or affected
and to which reference is made in the Prospectus has been duly and validly
executed, is in full force and effect in all material respects and is
enforceable against the parties thereto in accordance with its terms, and none
of such contracts or instruments has been assigned by the Company or any
Subsidiary, and neither the Company nor any Subsidiary, nor, to the best of the
Company's knowledge, any other party is in default thereunder and, to the best
of the Company's knowledge, no event has occurred which, with the lapse of time
or the giving of notice, or both, would constitute a default thereunder.
None of the material provisions of such contracts or
instruments violates any existing applicable law, rule, regulation, judgment,
order or decree of any governmental agency or court having jurisdiction over the
Company or any Subsidiary or any of their respective assets or businesses.
(w) The employment, consulting, confidentiality and
non-competition agreements between the Company and its officers, employees and
consultants and between the Subsidiaries and their respective officers,
employees and consultants, described in the Registration Statement, are binding
and enforceable obligations upon the respective parties thereto in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws or
arrangements affecting creditors' rights generally and subject to principles of
equity.
(x) Except as set forth in the Prospectus, the
Company has no employee benefit plans (including, without limitation, profit
sharing and welfare benefit plans) or deferred compensation arrangements that
are subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended.
-12-
<PAGE>
(y) To the best of the Company's knowledge, no labor
problem exists with any of the Company's employees or any of the Subsidiaries'
employees or is imminent which could adversely affect the Company or any
Subsidiary.
(z) Neither the Company nor any Subsidiary has,
directly or indirectly, at any time (i) made any contributions to any candidate
for political office, or failed to disclose fully any such contribution in
violation of law or (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than, in each case, payments or contributions
required or allowed by applicable law. The Company's internal accounting
controls and procedures are sufficient to cause the Company to comply in all
material respects with the Foreign Corrupt Practices Act of 1977, as amended.
(aa) The Shares have been approved for listing on the
Nasdaq National Market System ("Nasdaq NMS").
(ab) The Company has provided to Tenzer Greenblatt
LLP, counsel to the several underwriters ("Underwriters' Counsel"), all material
agreements, certificates, correspondence and other items, documents and
information requested by such counsel's Corporate Review Memorandum dated
____________________, 1998.
Any certificate signed by an officer of the Company
or by an officer of a Subsidiary and delivered to the Representatives or to
Underwriters' Counsel shall be deemed to be a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
5. Certain Covenants of the Company. The Company covenants
with the several Underwriters as follows:
(a) The Company will not at any time, whether before
the Effective Date or thereafter during such period as the Prospectus is
required by law to be delivered in connection with the sales of the Shares by
the Representatives or a dealer, file or publish any amendment or supplement to
the Registration Statement or Prospectus of which the Representatives have not
been previously advised and furnished a copy, or to which the Representatives
shall object in writing.
(b) The Company will use its best efforts to cause
the Registration Statement to become effective and will advise the
Representatives promptly, and, if requested by the Representatives, confirm such
advice in writing, (i) when the Registration Statement, or any post-effective
amendment to the Registration Statement or any supplemented Prospectus is filed
with the Commission; (ii)
-13-
<PAGE>
of the receipt of any comments from the Commission; (iii) of any request of the
Commission for amendment or supplementation of the Registration Statement or
Prospectus or for additional information; and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any Preliminary
Prospectus, or of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, or of the initiation of any proceedings for any of
such purposes. The Company will use its best efforts to prevent the issuance of
any such stop order or of any order preventing or suspending such use and to
obtain as soon as possible the lifting thereof, if any such order is issued.
(c) The Company will deliver to each Underwriter,
without charge, from time to time until the Effective Date, as many copies of
each Preliminary Prospectus as each Underwriter may reasonably request, and the
Company hereby consents to the use of such copies for purposes permitted by the
Act. The Company will deliver to each Underwriter, without charge, as soon as
the Registration Statement becomes effective, and thereafter from time to time
as requested, such number of copies of the Prospectus (as supplemented, if the
Company makes any supplements to the Prospectus) as each Underwriter may
reasonably request. The Company has furnished or will furnish to each of the
Representatives a signed copy of the Registration Statement as originally filed
and of all amendments thereto, whether filed before or after the Registration
Statement becomes effective, a copy of all exhibits filed therewith and a signed
copy of all consents and certificates of experts.
(d) The Company will comply with the Act, the
Regulations, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder so as to permit the continuance
of sales of and dealings in the Offered Shares and in any Optional Shares which
may be issued and sold. If, at any time when a prospectus relating to the Shares
is required to be delivered under the Act, any event occurs as a result of which
the Registration Statement and Prospectus as then amended or supplemented would
include 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, or if it shall be necessary to amend or
supplement the Registration Statement and Prospectus to comply with the Act or
the regulations thereunder, the Company will promptly file with the Commission,
subject to Section 5(a) hereof, an amendment or supplement which will correct
such statement or omission or which will effect such compliance.
(e) The Company will furnish such proper informa-
tion as may be required and otherwise cooperate in qualifying the
-14-
<PAGE>
Shares for offering and sale under the securities or Blue Sky laws relating to
the offering in such jurisdictions as the Representatives may reasonably
designate, provided that no such qualification will be required in any
jurisdiction where, solely as a result thereof, the Company would be subject to
service of general process or to taxation or qualification as a foreign
corporation doing business in such jurisdiction.
(f) The Company will make generally available to its
security holders, in the manner specified in Rule 158(b) under the Act, and
deliver to the Representatives and Underwriters' Counsel as soon as practicable
and in any event not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement meeting the requirements of Rule 158(a)
under the Act covering a period of at least 12 consecutive months beginning
after the effective date of the Registration Statement.
(g) For a period of three years from the Effective
Date, the Company will deliver to the Representatives, on a timely basis (i) a
copy of each report or document, including, without limitation, reports on Forms
8-K, 10-K (or 10-KSB) and 10-Q (or 10-QSB) and exhibits thereto, filed or
furnished to the Commission, any securities exchange or the National Association
of Securities Dealers, Inc. (the "NASD") on the date each such report or
document is so filed or furnished; (ii) as soon as practicable, copies of any
reports or communications (financial or other) of the Company mailed to its
security holders; (iii) as soon as practicable, a copy of any Schedule 13D, 13G,
14D-1 or 13E-3 received or prepared by the Company from time to time; (iv)
quarterly statements setting forth such information regarding the Company's
results of operations and financial position (including balance sheet, profit
and loss statements and data regarding backlog) as is regularly prepared by
management of the Company; and (v) such additional information concerning the
business and financial condition of the Company as the Representatives may from
time to time reasonably request and which can be prepared or obtained by the
Company without unreasonable effort or expense. The Company will furnish to its
shareholders annual reports containing audited financial statements and such
other periodic reports as it may determine to be appropriate or as may be
required by law.
(h) Neither the Company nor any person that con-
trols, is controlled by or is under common control with the Company will take
any action designed to or which might be reasonably expected to cause or result
in the stabilization or manipulation of the price of the Common Shares.
-15-
<PAGE>
(i) If the transactions contemplated by this
Agreement are consummated, BlueStone shall retain the $50,000 previously paid to
it, and the Company will pay or cause to be paid the following: all costs and
expenses incident to the performance of the obligations of the Company under
this Agreement, including, but not limited to, the fees and expenses of
accountants and counsel for the Company; the preparation, printing, mailing and
filing of the Registration Statement (including financial statements and
exhibits), Preliminary Prospectuses and the Prospectus, and any amendments or
supplements thereto; the printing and mailing of the Selected Dealer Agreement;
the issuance and delivery of the Shares to the Representatives; all taxes, if
any, on the issuance of the Shares; the fees, expenses and other costs of
listing the Shares on Nasdaq NMS and of qualifying the Shares for sale under the
"Blue Sky" or securities laws of those states in which the Shares are to be
offered or sold, including the fees and disbursements of Underwriters' Counsel
incurred in connection therewith, and the cost of printing and mailing the "Blue
Sky Survey"; the filing fees incident to securing any required review by the
NASD; the cost of furnishing to the several Underwriters copies of the
Registration Statement, Preliminary Prospectuses and the Prospectus as herein
provided; the costs of placing "tombstone advertisements" in any publications
which may be selected by the Representatives; and all other costs and expenses
incident to the performance of the Company's obligations hereunder which are not
otherwise specifically provided for in this Section 5(i).
In addition, at the Closing Date and the Option
Closing Date, the Representatives will deduct from the payment for the Shares an
amount equal to the Representatives' accountable out-of-pocket costs, fees and
expenses (up to an aggregate maximum of $325,000) incurred during the
registration process (less the sum of $50,000 previously paid to BlueStone),
including all accountable out-of-pocket expenses and relating to the
transactions contemplated hereby, which amount will include, among others, fees
and expenses of Underwriters' Counsel (other than those payable by the Company
in connection with "Blue Sky" qualifications referred to in the preceding
paragraph) and costs associated with the marketing and selling of the Shares.
(j) If the transactions contemplated by this
Agreement or related hereto are not consummated because the Company decides not
to proceed with the offering for any reason or if the Representatives decide not
to proceed with the offering because of a breach by the Company of its
representations, warranties or covenants in this Agreement or as a result of
adverse changes in the affairs of the Company, the Company will reimburse the
Representatives for all of their accountable out-of-pocket expenses incurred in
connection with the offering. If the Representatives decide not to proceed with
the offering for any other reason, the
-16-
<PAGE>
Company will reimburse the Representatives for their accountable expenses up to
the $50,000 previously paid to BlueStone. In no event, however, will the
Representatives, in the event the offering is terminated, be entitled to retain
or receive more than an amount equal to their actual accountable out-of-pocket
expenses.
(k) The Company intends to apply the net proceeds
from the sale of the Shares for the purposes set forth in the Prospectus.
(l) During the period of twelve (12) months following
the date hereof, neither the Company nor any of its officers, directors or
securityholders beneficially owning one percent (1%) or more of the outstanding
Common Shares will offer for sale, sell, transfer, pledge or otherwise dispose
of, directly or indirectly, any securities of the Company, in any manner
whatsoever, whether pursuant to Rule 144 of the Regulations or otherwise (other
than by bona fide gift, will or the laws of descent and distribution to the
securityholder's spouse, children or grandchildren, a trust for the benefit of
such securityholder's spouse, children or grandchildren, a partnership the
general partner of which is the securityholder (or a corporation, a majority of
whose outstanding stock is owned of record or beneficially by the securityholder
or any of the foregoing) or partners of the securityholder in connection with
the securityholder partnership's distribution of its Common Shares to its
partners; provided in each case that the transferee first executes and delivers
to the Underwriter an undertaking to be bound by the provisions of this Section
5(l)), and no holder of registration rights relating to securities of the
Company will execute any such registration rights, in either case, without the
prior written consent of BlueStone. The Company will deliver to the
Representatives the undertakings as of the date hereof of its officers,
directors, registration rights holders and securityholders, including the
securityholders and registration rights holders of Boat Tree and Marine, to this
effect.
(m) The Company will not file any registration
statement relating to the offer or sale of any of the Company's securities,
including any registration statement on Form S-8 (except for a Form S-8 filed
with respect to the Company's 1998 Stock Option Plan), during the twelve (12)
months following the date hereof without BlueStone's prior written consent.
(n) The Company maintains and will continue to
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary in order to permit preparation of financial statements in
accordance with generally
-17-
<PAGE>
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(o) The Company will use its best efforts to maintain
the listing of the Shares on the Nasdaq NMS for so long as the Shares are
qualified for such listing.
(p) The Company will, concurrently with the Effective
Date, register the class of equity securities of which the Shares are a part
under Section 12(g) of the Exchange Act and the Company will maintain such
registration for a minimum of five (5) years after the Effective Date.
(q) The Company shall retain a transfer agent for the
Common Shares, reasonably acceptable to BlueStone, for a period of three (3)
years following the Effective Date. In addition, for a period of three (3) years
following the Effective Date, the Company, at its own expense, shall cause its
transfer agent to provide BlueStone, if so requested in writing, with copies of
the Company's daily transfer sheets and when requested by BlueStone, a current
list of the Company's security holders, including a list of the beneficial
owners of securities held by a depository trust company and other nominees.
(r) The Company hereby agrees, at its sole cost and
expense, to supply and deliver to Underwriters' Counsel, within a reasonable
period from the date hereof, four bound volumes, including the Registration
Statement, as amended or supplemented, all exhibits to the Registration
Statement, the Prospectus and all other underwriting documents.
(s) The Company shall, within 10 days of the date
hereof, have applied for listing in Standard & Poor's Corporation Records
Service (including annual report information) or Moody's Industrial Manual
(Moody's OTC Industrial Manual not being sufficient for these purposes) and
shall use its best efforts to have the Company listed in such manual and shall
maintain such listing for a period of three (3) years following the Effective
Date.
(t) For a period of two (2) years from the Effective
Date, the Company shall provide BlueStone, on a not less than annual basis, with
internal forecasts setting forth projected results of operations for each
quarterly and annual period in the two (2) fiscal years following the respective
dates of such forecasts; provided, however, that BlueStone shall keep
-18-
<PAGE>
confidential and shall not disclose to any third party any material non-public
information. Such forecasts shall be provided to BlueStone more frequently than
annually if prepared more frequently by management, and revised forecasts shall
be prepared and provided to BlueStone when required to reflect more current
information, revised assumptions or actual results that differ materially from
those set forth in the forecasts.
(u) For a period of three (3) years following the
Effective Date, the Company shall continue to retain BDO Seidman, LLP (or such
other nationally recognized accounting firm as is acceptable to BlueStone) as
the Company's independent public accountants.
(v) For a period of three (3) years following the
Effective Date, the Company, at its expense, shall cause its independent
certified public accountants, as described in Section 5(u) above, to review (but
not audit) the Company's financial statements for each of the first three fiscal
quarters prior to the announcement of quarterly financial information, the
filing of the Company's 10-Q (or 10-QSB) quarterly report and the mailing of
quarterly financial information to shareholders.
(w) For a period of eighteen (18) months following
the Effective Date, the Company will not offer or sell any of its securities (i)
pursuant to Regulation S of the Act or (ii) at a discount from the then current
market price or in a discounted transaction, without the prior written consent
of BlueStone.
(x) For a period of twenty-five (25) days following
the Effective Date, the Company will not issue press releases or engage in any
other publicity without BlueStone's prior written consent, other than normal and
customary releases issued in the ordinary course of the Company's business or
those releases required by law.
(y) For a period of three (3) years following the
Effective Date, the Company will cause its Board of Directors to meet, either in
person or telephonically, a minimum of four (4) times per year and will hold a
shareholder's meeting at least once per annum.
6. Conditions of the Underwriters' Obligation to Purchase
Shares from the Company. The obligation of the several Underwriters to purchase
and pay for the Offered Shares which they have agreed to purchase from the
Company is subject (as of the date hereof and the Closing Date) to the accuracy
of, and the Company's compliance in all material respects with, the
representations and warranties of the Company herein, to the accuracy of the
statements of the Company and its officers made pursuant hereto, to the
-19-
<PAGE>
performance in all material respects by the Company of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement will have become
effective not later than 9:30 A.M., New York City time, on the day following the
date of this Agreement, or at such later time or on such later date as the
Representatives may agree to in writing; prior to the Closing Date, no stop
order suspending the effectiveness of the Registration Statement will have been
issued and no proceedings for that purpose will have been initiated or will be
pending or, to the best of the Representatives' or the Company's knowledge, will
be contemplated by the Commission; and any request on the part of the Commission
for additional information will have been complied with to the satisfaction of
Underwriters' Counsel.
(b) At the time that this Agreement is executed and
at the Closing Date, there will have been delivered to the Representatives a
signed opinion of McLaughlin & Stern, LLP, counsel for the Company ("Company
Counsel"), dated as of the date hereof or the Closing Date, as the case may be
(and any other opinions of counsel referred to in such opinion of Company
Counsel or relied upon by Company Counsel in rendering its opinion), reasonably
satisfactory to Underwriters' Counsel, to the effect that:
(i) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full power and authority, corporate and other, and with all
Permits necessary to own or lease, as the case may be, and operate its
properties, whether tangible or intangible, and to conduct its business as
described in the Registration Statement. The Company has no subsidiaries and, as
of the Closing Date, will have no subsidiaries other than the Subsidiaries. Each
of the Subsidiaries is a corporation duly organized and validly existing under
the laws of its state of incorporation. Unless the context otherwise requires,
all references to the "Company" in this opinion shall include the Subsidiaries.
The Company and each of the Subsidiaries is duly qualified to do business as a
foreign corporation, and is in good standing, in all jurisdictions wherein such
qualification is necessary and the failure to so qualify could have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company or any Subsidiary. Each of the Subsidiaries has full
power and authority, corporate and other, with all Permits necessary to own or
lease, as the case may be, and operate its properties and to conduct its
business as described in the Prospectus.
On the Closing Date, the Company will own all of the
issued and outstanding shares of capital stock of each of the Subsidiaries, free
and clear of any security interests, liens,
-20-
<PAGE>
encumbrances, claims and charges, and all of such shares have been duly
authorized and validly issued and are, and on the Closing Date will be, fully
paid and nonassessable.
(ii) The Company has full power and authority,
corporate and other, to execute, deliver and perform this Agreement and the
Representatives' Warrant Agreement and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and the Representatives' Warrant Agreement by the Company, the
consummation by the Company of the transactions herein and therein contemplated
and the compliance by the Company with the terms of this Agreement and the
Representatives' Warrant Agreement have been duly authorized by all necessary
corporate action, and this Agreement has been duly executed and delivered by the
Company. This Agreement is (assuming for the purposes of this opinion that it is
valid and binding upon the other party thereto), and the Representatives'
Warrant Agreement, when executed and delivered by the Company on the Closing
Date, will be, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and the discretion of courts in
granting equitable remedies and except that enforceability of the
indemnification provisions set forth in Section 7 hereof may be limited by the
federal securities laws or public policy underlying such laws.
(iii) The execution, delivery and performance of
this Agreement and the Representatives' Warrant Agreement by the Company, the
consummation by the Company of the transactions herein and therein contemplated
and the compliance by the Company with the terms of this Agreement and the
Representatives' Warrant Agreement do not, and will not, with or without the
giving of notice or the lapse of time, or both, (A) result in a violation of the
Certificate of Incorporation, Articles of Incorporation or ByLaws, each as
amended, of the Company or any Subsidiary, (B) result in a breach of or conflict
with any of the terms or provisions of, or constitute a default under, or result
in the modification or termination of, or result in the creation or imposition
of any lien, security interest, charge or encumbrance upon any of the properties
or assets of the Company or any Subsidiary pursuant to, any indenture, mortgage,
note, contract, commitment or other material agreement or instrument to which
the Company or any Subsidiary is a party or by which the Company, any Subsidiary
or any of their respective properties or assets are or may be bound or affected;
(C) violate any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company, any Subsidiary or any of their respective
properties or business;
-21-
<PAGE>
or (D) have any effect on any Permit necessary for the Company or any Subsidiary
to own or lease and operate its properties or conduct its business or the
ability of the Company to make use thereof.
(iv) No Permits of any court or governmental agency
or body (other than under the Act, the Regulations and applicable state
securities or Blue Sky laws) are required for the valid authorization, issuance,
sale and delivery of the Shares or the Representatives' Warrants, or the
consummation by the Company of the transactions contemplated by this Agreement
and the Representatives' Warrant Agreement or, if so required, all such Permits
have been duly obtained and are in full force and effect.
(v) The Registration Statement has become effective
under the Act; no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose have been
instituted or are pending, threatened or contemplated under the Act or
applicable state securities laws.
(vi) The Registration Statement and the Prospectus,
as of the Effective Date, and each amendment or supplement thereto as of its
effective or issue date (except for the financial statements and other financial
data included therein or omitted therefrom, as to which Company Counsel need not
express an opinion) comply as to form in all material respects with the
requirements of the Act and Regulations.
(vii) The descriptions in the Registration Statement
and the Prospectus of statutes, regulations, government classifications,
contracts and other documents (including opinions of such counsel), and the
response to Item 13 of Form SB-2, have been reviewed by Company Counsel, and,
based upon such review, are accurate in all material respects and present fairly
the information required to be disclosed, and there are no material statutes,
regulations or government classifications, material contracts or documents, of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement, which are
not so described or filed as required.
None of the material provisions of the contracts or
instruments described above violates any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court having
jurisdiction over the Company or any Subsidiary or any of their respective
assets or businesses.
(viii) The outstanding Common Shares and outstanding
options and warrants to purchase Common Shares have
-22-
<PAGE>
been duly authorized and validly issued. The outstanding Common Shares are fully
paid and nonassessable. The outstanding options and warrants to purchase Common
Shares constitute the valid and binding obligations of the Company, enforceable
in accordance with their terms. None of the outstanding Common Shares or options
or warrants to purchase Common Shares has been issued in violation of the
preemptive rights of any shareholder of the Company. None of the holders of the
outstanding Common Shares is subject to personal liability solely by reason of
being such a holder. The offers and sales of the outstanding Common Shares and
outstanding options and warrants to purchase Common Shares were at all relevant
times either registered under the Act and the applicable state securities or
Blue Sky laws or exempt from such registration requirements. The authorized
Common Shares and outstanding options and warrants to purchase Common Shares
conform to the descriptions thereof contained in the Registration Statement and
Prospectus. Except as set forth in the Prospectus, no holders of any of the
Company's securities has any rights, "demand", "piggyback" or otherwise, to have
such securities registered under the Act.
(ix) The issuance and sale of the Shares and the
Warrant Shares have been duly authorized and, when the Shares and the Warrant
Shares have been issued and duly delivered against payment therefor as
contemplated by this Agreement and the Representatives' Warrant Agreement,
respectively, the Shares and the Warrant Shares will be validly issued, fully
paid and nonassessable, and the holders thereof will not be subject to personal
liability solely by reason of being such holders. None of the Shares nor the
Warrant Shares are subject to preemptive rights of any shareholder of the
Company. The certificates representing the Shares are in proper legal form.
(x) The issuance and sale of the Representatives'
Warrants have been duly authorized and, when paid for, issued and delivered
pursuant to the terms of the Representatives' Warrant Agreement, they will
constitute the valid and binding obligations of the Company, enforceable as to
the Company in accordance with their terms. The Warrant Shares have been duly
reserved for issuance upon exercise of the Representatives' Warrants in
accordance with the provisions of the Representatives' Warrant Agreement. The
Representatives' Warrants conform to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(xi) Upon delivery of the Offered Shares to the
Underwriters against payment therefor as provided in this Agreement, the
Underwriters (assuming they are bona fide purchasers within the meaning of the
Uniform Commercial Code) will acquire good title to the Offered Shares, free and
clear of all liens, encumbrances, equities, security interests and claims.
-23-
<PAGE>
(xii) Assuming that the Representatives exercise the
over-allotment option to purchase any of the Optional Shares and make payment
therefor in accordance with the terms of this Agreement, upon delivery of the
Optional Shares so purchased to the Representatives hereunder, the
Representatives (assuming they are bona fide purchasers within the meaning of
the Uniform Commercial Code) will acquire good title to such Optional Shares,
free and clear of any liens, encumbrances, equities, security interests and
claims.
(xiii) To the best of Company Counsel's knowledge,
there are no claims, actions, suits, proceedings, arbitrations, investigations
or inquiries before any governmental agency, court or tribunal, foreign or
domestic, or before any private arbitration tribunal, pending or threatened
against the Company or any Subsidiary, or involving the Company's or any
Subsidiary's properties or business, other than as described in the Prospectus,
such description being accurate, and other than litigation incident to the kind
of business conducted by the Company which, individually and in the aggregate,
is not material.
(xiv) The Company and each Subsidiary owns or
possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, service marks, copyrights, rights, trade secrets,
confidential information, processes and formulations used or proposed to be used
in the conduct of its business as described in the Prospectus (collectively the
"Intangibles"); to the best of Company Counsel's knowledge, neither the Company
nor any Subsidiary has infringed nor is infringing upon the rights of others
with respect to the Intangibles; and to the best of Company Counsel's knowledge,
neither the Company nor any Subsidiary has received any notice that it has or
may have infringed, is infringing upon or is conflicting with the asserted
rights of others with respect to the Intangibles which might, singly or in the
aggregate, materially adversely affect its business, results of operations or
financial condition and such counsel is not aware of any licenses with respect
to the Intangibles which are required to be obtained by the Company or any
Subsidiary.
(xv) Company Counsel has participated in reviews and
discussions in connection with the preparation of the Registration Statement and
the Prospectus, and in the course of such reviews and discussions and such other
investigation as Company Counsel deemed necessary, no facts came to its
attention which lead it to believe that (A) the Registration Statement (except
as to the financial statements and other financial data contained therein, as to
which Company Counsel need not express an opinion), on the Effective Date,
contained any untrue statement of a material fact required to be stated therein
or omitted to state any material fact required to be stated therein or necessary
to
-24-
<PAGE>
make the statements therein, in light of the circumstances under which they were
made, not misleading, or that (B) the Prospectus (except as to the financial
statements and other financial data contained therein, as to which Company
Counsel need not express an opinion), contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering its opinion pursuant to this Section
6(b), Company Counsel may rely upon the certificates of government officials and
officers of the Company as to matters of fact, provided that Company Counsel
shall state that they have no reason to believe, and do not believe, that they
are not justified in relying upon such opinions or such certificates of
government officials and officers of the Company as to matters of fact, as the
case may be.
The opinion letters delivered pursuant to this
Section 6(b) shall state that any opinion given therein qualified by the phrase
"to the best of our knowledge" is being given by Company Counsel after due
investigation of the matters therein discussed.
(c) At the Closing Date, there will have been
delivered to the Representatives a signed opinion of Underwriters' Counsel,
dated as of the Closing Date, to the effect that the opinions delivered pursuant
to Section 6(b) hereof appear on their face to be appropriately responsive to
the requirements of this Agreement, except to the extent waived by the
Representatives, specifying the same, and with respect to such other related
matters as the Representatives may require.
(d) At the Closing Date (i) the Registration State-
ment and the Prospectus and any amendments or supplements thereto will contain
all material statements which are required to be stated therein in accordance
with the Act and the Regulations and will conform in all material respects to
the requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; (ii)
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, there will not have been any material adverse
change in the financial condition, results of operations or general affairs of
the Company from that set forth or contemplated in the Registration Statement
and the Prospectus, except changes which the Registration Statement and the
Prospectus indicate might occur
-25-
<PAGE>
after the Effective Date; (iii) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall have been no material transaction, contract or agreement entered into by
the Company, other than in the ordinary course of business, which would be
required to be set forth in the Registration Statement and the Prospectus, other
than as set forth therein; and (iv) no action, suit or proceeding at law or in
equity will be pending or, to the best of the Company's knowledge, threatened
against the Company which is required to be set forth in the Registration
Statement and the Prospectus, other than as set forth therein, and no
proceedings will be pending or, to the best of the Company's knowledge,
threatened against the Company before or by any federal, state or other
commission, board or administrative agency wherein an unfavorable decision,
ruling or finding would materially adversely affect the business, property,
financial condition or results of operations of the Company, other than as set
forth in the Registration Statement and the Prospectus. At the Closing Date,
there will be delivered to the Representatives a certificate signed by the
Chairman of the Board or the President or a Vice President of the Company, dated
the Closing Date, evidencing compliance with the provisions of this Section 6(d)
and stating that the representations and warranties of the Company set forth in
Section 4 hereof were accurate and complete in all material respects when made
on the date hereof and are accurate and complete in all material respects on the
Closing Date as if then made; that the Company has performed all covenants and
complied with all conditions required by this Agreement to be performed or
complied with by the Company prior to or as of the Closing Date; and that, as of
the Closing Date, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or, to the best of his knowledge, are contemplated or threatened. In
addition, the Representatives will have received such other and further
certificates of officers of the Company as the Representatives or Underwriters'
Counsel may reasonably request.
(e) At the time that this Agreement is executed and
at the Closing Date, the Representatives will have received a signed letter from
BDO Seidman, LLP, dated the date such letter is to be received by the
Representatives and addressed to them, confirming that it is a firm of
independent public accountants within the meaning of the Act and Regulations and
stating that: (i) insofar as reported on by it, in its opinion, the financial
statements of the Company included in the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the Act and the
applicable Regulations; (ii) on the basis of procedures and inquiries (not
constituting an examination in accordance with generally accepted auditing
standards) consisting of a reading of the unaudited interim financial statements
of the Company, if any, appearing in the Registration
-26-
<PAGE>
Statement and the Prospectus and the latest available unaudited interim
financial statements of the Company, if more recent than that appearing in the
Registration Statement and Prospectus, inquiries of officers of the Company
responsible for financial and accounting matters as to the transactions and
events subsequent to the date of the latest audited financial statements of the
Company, and a reading of the minutes of meetings of the shareholders, the Board
of Directors of the Company and any committees of the Board of Directors, as set
forth in the minute books of the Company, nothing has come to its attention
which, in its judgment, would indicate that (A) during the period from the date
of the latest financial statements of the Company appearing in the Registration
Statement and Prospectus to a specified date not more than three business days
prior to the date of such letter, there have been any decreases in net current
assets or net assets as compared with amounts shown in such financial statements
or decreases in net sales or decreases in total or per share net income compared
with the corresponding period in the preceding year or any change in the
capitalization or long-term debt of the Company, except in all cases as set
forth in or contemplated by the Registration Statement and the Prospectus, and
(B) the unaudited interim financial statements of the Company, if any, appearing
in the Registration Statement and the Prospectus, do not comply as to form in
all material respects with the applicable accounting requirements of the Act and
the Regulations or are not fairly presented in conformity with generally
accepted accounting principles and practices on a basis substantially consistent
with the audited financial statements included in the Registration Statement or
the Prospectus; and (iii) it has compared specific dollar amounts, numbers of
shares, numerical data, percentages of revenues and earnings, and other
financial information pertaining to the Company set forth in the Prospectus
(with respect to all dollar amounts, numbers of shares, percentages and other
financial information contained in the Prospectus, to the extent that such
amounts, numbers, percentages and information may be derived from the general
accounting records of the Company, and excluding any questions requiring an
interpretation by legal counsel) with the results obtained from the application
of specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter, and found them to be in
agreement.
(f) There shall have been duly tendered to the
Representatives certificates representing the Offered Shares to be sold on the
Closing Date.
(g) The NASD shall have indicated that it has no
objection to the underwriting arrangements pertaining to the sale
-27-
<PAGE>
of the Offered Shares by the Underwriters or the sale of the Shares
by the Representatives.
(h) No action shall have been taken by the Commission
or the NASD the effect of which would make it improper, at any time prior to the
Closing Date or the Option Closing Date, as the case may be, for any member firm
of the NASD to execute transactions (as principal or as agent) in the Shares,
and no proceedings for the purpose of taking such action shall have been
instituted or shall be pending, or, to the best of the Representatives' or the
Company's knowledge, shall be contemplated by the Commission or the NASD. The
Company represents at the date hereof, and shall represent as of the Closing
Date or Option Closing Date, as the case may be, that it has no knowledge that
any such action is in fact contemplated by the Commission or the NASD.
(i) The Common Shares have been approved for listing
on Nasdaq NMS.
(j) All proceedings taken at or prior to the Closing
Date or the Option Closing Date, as the case may be, in connection with the
authorization, issuance and sale of the Shares shall be reasonably satisfactory
in form and substance to the Representatives and to Underwriters' Counsel, and
such counsel shall have been furnished with all such documents, certificates and
opinions as they may request for the purpose of enabling them to pass upon the
matters referred to in Section 6(c) hereof and in order to evidence the accuracy
and completeness of any of the representations, warranties or statements of the
Company, the performance of any covenants of the Company, or the compliance by
the Company with any of the conditions herein contained.
(k) As of the date hereof, the Company will have
delivered to the Underwriters the written undertakings of its officers,
directors and security holders and/or registration rights holders, as the case
may be, to the effect of the matters set forth in Section 5(l).
If any of the conditions specified in this Section
6 have not been fulfilled, this Agreement may be terminated by the
Representatives on notice to the Company.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each Underwriter, including specifically each person that may be substituted for
an Underwriter as provided in Section 10 hereof, each officer, director,
partner, employee and agent of any Underwriter, and each person, if any, who
controls any of the Underwriters within the meaning of Section 15 of the Act or
Section
-28-
<PAGE>
20(a) of the Exchange Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several (and actions in respect thereof), to
which they or any of them may become subject under the Act or under any other
statute or at common law or otherwise, and, except as hereinafter provided, will
reimburse each of the Underwriters and each such person, if any, for any legal
or other expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions, whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained (i) in the Registration Statement, in any
Preliminary Prospectus or in the Prospectus (or the Registration Statement or
Prospectus as from time to time amended or supplemented) or (ii) in any
application or other document executed by the Company, or based upon written
information furnished by or on behalf of the Company, filed in any jurisdiction
in order to qualify the Shares under the securities laws thereof (hereinafter
"application"), or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, in light of
the circumstances under which they were made, unless such untrue statement or
omission was made in such Registration Statement, Preliminary Prospectus,
Prospectus or application in reliance upon and in conformity with information
furnished in writing to the Company in connection therewith by the Underwriter
or any such person through the Underwriter expressly for use therein; provided,
however, that the indemnity agreement contained in this Section 7(a) with
respect to any Preliminary Prospectus will not inure to the benefit of the
Underwriter (or to the benefit of any other person that may be indemnified
pursuant to this Section 7(a)) if (A) the person asserting any such losses,
claims, damages, expenses or liabilities purchased the Shares which are the
subject thereof from such Underwriter or other indemnified person; (B) such
Underwriter or other indemnified person failed to send or give a copy of the
Prospectus to such person at or prior to the written confirmation of the sale of
such Shares to such person; and (C) the Prospectus did not contain any untrue
statement or alleged untrue statement or omission or alleged omission giving
rise to such cause, claim, damage, expense or liability.
(b) Each Underwriter (including specifically each
person that may be substituted for an Underwriter as provided in Section 10
hereof) agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, from and against any and all
losses, claims, damages, expenses or liabilities, joint or several (and actions
in respect thereof), to which they or any of them may
-29-
<PAGE>
become subject under the Act or under any other statute or at common law or
otherwise, and, except as hereinafter provided, will reimburse the Company and
each such director, officer or controlling person for any legal or other
expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions, whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained (i) in the Registration Statement, in any
Preliminary Prospectus or in the Prospectus (or the Registration Statement or
Prospectus as from time to time amended or supplemented) or (ii) in any
application (including any application for registration of the Shares under
state securities or Blue Sky laws), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, in light of the circumstances under which they were made, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith by such Underwriter, or by the Representatives on behalf of such
Underwriter, expressly for use therein.
(c) Promptly after receipt of notice of the
commencement of any action in respect of which indemnity may be sought against
any indemnifying party under this Section 7, the indemnified party will notify
the indemnifying party in writing of the commencement thereof, and the
indemnifying party will, subject to the provisions hereinafter stated, assume
the defense of such action (including the employment of counsel satisfactory to
the indemnified party and the payment of expenses) insofar as such action
relates to an alleged liability in respect of which indemnity may be sought
against the indemnifying party. After notice from the indemnifying party of its
election to assume the defense of such claim or action, the indemnifying party
shall no longer be liable to the indemnified party under this Section 7 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that if, in the reasonable judgment of the
indemnified party or parties, it is advisable for the indemnified party or
parties to be represented by separate counsel, the indemnified party or parties
shall have the right to employ a single counsel to represent the indemnified
parties who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the indemnified parties thereof against the
indemnifying party, in which event the fees and expenses of such separate
counsel shall be borne by the indemnifying party. Any party against whom
indemnification may be sought under this Section 7 shall not be liable to
indemnify any person that might otherwise be indemnified pursuant hereto for any
-30-
<PAGE>
settlement of any action effected without such indemnifying party's
consent.
8. Contribution. To provide for just and equitable
contribution, if (i) an indemnified party makes a claim for indemnification
pursuant to Section 7 hereof (subject to the limitations thereof) and it is
finally determined, by a judgment, order or decree not subject to further
appeal, that such claim for indemnification may not be enforced, even though
this Agreement expressly provides for indemnification in such case; or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the Exchange
Act, or otherwise, then the Company (including, for this purpose, any
contribution made by or on behalf of any director of the Company, any officer of
the Company who signed the Registration Statement and any controlling person of
the Company) as one entity and the Underwriters (including, for this purpose,
any contribution by or on behalf of each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each officer, director, partner, employee and agent of any of
the Underwriters) as a second entity, shall contribute to the losses,
liabilities, claims, damages and expenses whatsoever to which any of them may be
subject, so that the Underwriters are responsible for the proportion thereof
equal to the percentage which the underwriting discount per Share set forth on
the cover page of the Prospectus represents of the initial public offering price
per Share set forth on the cover page of the Prospectus and the Company is
responsible for the remaining portion; provided, however, that if applicable law
does not permit such allocation, then, if applicable law permits, other relevant
equitable considerations such as the relative fault of the Company and the
Underwriters in connection with the facts which resulted in such losses,
liabilities, claims, damages and expenses shall also be considered. The relative
fault, in the case of an untrue statement, alleged untrue statement, omission or
alleged omission, shall be determined by, among other things, whether such
statement, alleged statement, omission or alleged omission relates to
information supplied by the Company or by the Underwriters, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement, alleged statement, omission or alleged omission. The
Company, on one hand, and the Underwriters, on the other hand, agree that it
would be unjust and inequitable if the respective obligations of the Company and
the Underwriters for contribution were determined by pro rata or per capita
allocation of the aggregate losses, liabilities, claims, damages and expenses or
by any other method of allocation that does not reflect the equitable
considerations referred to in this Section 8. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of
-31-
<PAGE>
this Section 8, each person, if any, who controls any of the Underwriters within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and
each officer, director, partner, employee and agent of any of the Underwriters
will have the same rights to contribution as the Underwriters, and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company who has signed
the Registration Statement and each director of the Company will have the same
rights to contribution as the Company, subject in each case to the provisions of
this Section 8. Anything in this Section 8 to the contrary notwithstanding, no
party will be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 8 is intended
to supersede, to the extent permitted by law, any right to contribution under
the Act or the Exchange Act or otherwise available.
9. Survival of Indemnities, Contribution, Warranties and
Representations. The respective indemnity and contribution agreements of the
Company and the Underwriters contained in Sections 7 and 8 hereof, and the
representations and warranties of the Company contained in this Agreement shall
remain operative and in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of the
Underwriters, the Company or any of its directors and officers or any
controlling person referred to in said Sections, and shall survive the delivery
of, and payment for, the Shares.
10. Substitution of Underwriters.
(a) If one or more Underwriters should default in its
or their obligation to purchase and pay for any Offered Shares hereunder and if
the aggregate number of such Offered Shares which all Underwriters so defaulting
have agreed to purchase does not exceed 10% of the total number of the Offered
Shares, the non-defaulting Underwriters will be obligated severally to purchase
and pay for (in addition to the number of Offered Shares set forth opposite
their names in Schedule A attached hereto) the full number of Offered Shares
agreed to be purchased by all defaulting Underwriters, and not so purchased, in
proportion to their respective commitments hereunder. In such event the
Representatives, for the accounts of the several nondefaulting Underwriters, may
take up and pay for all or any part of such additional Offered Shares to be
purchased by each such Underwriter under this Section 10(a), and may postpone
the Closing Date to a time not exceeding three full business days after the
Closing Date determined as provided in Section 2 hereof.
(b) If one or more Underwriters should default in its
or their obligation to purchase and pay for any Offered Shares
-32-
<PAGE>
hereunder and if the aggregate number of such Offered Shares which all
Underwriters so defaulting have agreed to purchase exceeds 10% of the total
number of Offered Shares, or if one or more Underwriters for any reason
permitted hereunder should cancel its or their obligation to purchase and pay
for Offered Shares hereunder, the non-cancelling and non-defaulting Underwriters
(hereinafter called the "remaining Underwriters") will have the right to
purchase such Offered Shares in such proportion as may be agreed among them at
the Closing Date determined as provided in Section 2 hereof. If the remaining
Underwriters do not purchase and pay for such Offered Shares at such Closing
Date, the Closing Date will be postponed for 24 hours and the remaining
Underwriters will have the right to purchase such Offered Shares, or to
substitute another person or persons to purchase the same, or both, at such
postponed Closing Date. If purchasers have not been found for such Offered
Shares by such postponed Closing Date, the Closing Date will be postponed for a
further 24 hours, and the Company will have the right to substitute another
person or persons, reasonably satisfactory to the Representatives to purchase
such Offered Shares at such second postponed Closing Date. If it shall be
arranged for the remaining Underwriters or substituted underwriters to take up
the Firm Shares of the defaulting Underwriter or Underwriters as provided in
this Section, (A) the Company shall have the right to postpone the time of
delivery for a period of not more than three (3) full Business Days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents or arrangements, and the
Company agrees promptly to file any amendments to the Registration Statement or
supplements to the Prospectus which may thereby be made necessary. If the
Company has not found such purchasers for such Offered Shares by such second
postponed Closing Date, then this Agreement will automatically terminate, and
neither the Company nor the remaining Underwriters will be under any obligation
under this Agreement (except that the Company and the Underwriters will remain
liable to the extent provided in Sections 7 and 8 hereof and the Company will
also remain liable to the extent provided in Section 5(j) hereof). As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10(b). Nothing in Section 11 hereof will relieve
a defaulting Underwriter from the liability for its default and nothing in this
Section 10(b) will obligate any Underwriter to purchase or find purchasers for
any Offered Shares in excess of those agreed to be purchased by such Underwriter
under the terms of Section 2 hereof.
11. Termination of Agreement.
(a) The Company, by written or telegraphic notice to
the Representatives, or the Representatives, by written or telegraphic notice to
the Company, may terminate this Agreement prior to the earlier of (i) 11:00
A.M., New York City time, on the first full business day after the Effective
Date; or (ii) the time when the Underwriters, after the Registration Statement
becomes
-33-
<PAGE>
effective, release the Offered Shares for public offering. The time when the
Underwriters "release the Offered Shares for public offering" for the purposes
of this Section 11 means the time when the Underwriters release for publication
the first newspaper advertisement, which is subsequently published, relating to
the Offered Shares, or the time when the Underwriters release for delivery to
members of a selling group copies of the Prospectus and an offering letter or an
offering telegram relating to the Offered Shares, whichever will first occur.
(b) This Agreement, including without limitation, the
obligation to purchase the Shares and the obligation to purchase the Optional
Shares after exercise of the option referred to in Section 3 hereof, is subject
to termination in the absolute discretion of the Underwriters, by notice given
to the Company prior to delivery of and payment for all the Offered Shares or
the Optional Shares, as the case may be, if, prior to such time, any of the
following shall have occurred: (i) the Company withdraws the Registration
Statement from the Commission or the Company does not or cannot expeditiously
proceed with the public offering; (ii) the representations and warranties in
Section 4 hereof are not materially correct or cannot be complied with; (iii)
trading in securities generally on the New York Stock Exchange, American Stock
Exchange or the Nasdaq Stock Market will have been suspended; (iv) limited or
minimum prices will have been established on either such Exchange; (v) a banking
moratorium will have been declared either by federal or New York State
authorities; (vi) any other restrictions on transactions in securities
materially affecting the free market for securities or the payment for such
securities, including the Offered Shares or the Optional Shares, will be
established by either of such Exchanges, by the Commission, by any other federal
or state agency, by action of the Congress or by Executive Order; (vii) trading
in any securities of the Company shall have been suspended or halted by any
national securities exchange, the NASD or the Commission; (viii) there has been
a materially adverse change in the condition (financial or otherwise), prospects
or obligations of the Company; (ix) the Company will have sustained a material
loss, whether or not insured, by reason of fire, flood, accident or other
calamity; (x) any action has been taken by the government of the United States
or any department or agency thereof which, in the judgment of the
Representatives, has had a material adverse effect upon the market or potential
market for securities in general; or (xi) the market for securities in general
or political, financial or economic conditions will have so materially adversely
changed that, in the judgment of the Representatives, it will be impracticable
to offer for sale, or to enforce contracts made by the Underwriters for the
resale of, the Offered Shares or the Optional Shares, as the case may be.
(c) If this Agreement is terminated pursuant to
Section 6 hereof or this Section 11 or if the purchases provided for herein are
not consummated because any condition of the
-34-
<PAGE>
Underwriters' obligations hereunder is not satisfied or because of any refusal,
inability or failure on the part of the Company to comply with any of the terms
or to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to or does not perform all of its obligations under this
Agreement, the Company will not be liable to any of the Underwriters for damages
on account of loss of anticipated profits arising out of the transactions
covered by this Agreement, but the Company will remain liable to the extent
provided in Sections 5(j), 7, 8 and 9 of this Agreement.
12. Information Furnished by the Underwriters to the Company.
It is hereby acknowledged and agreed by the parties hereto that for the purposes
of this Agreement, including, without limitation, Sections 4(f), 7(a), 7(b) and
8 hereof, the only information given by the Underwriters to the Company for use
in the Prospectus are the statements set forth in the last sentence of the last
paragraph on the cover page, the statement appearing in the last paragraph on
page 2 with respect to stabilizing the market price of Shares, the information
in the third paragraph of the "Underwriting" Section commencing on page [__]
with respect to concessions and reallowances, the table on page [__] regarding
the offering syndicate, and the information in the [________], [_____], [__],
and [__] full paragraphs of the "Underwriting" Section commencing on page [___]
with respect to discretionary accounts, the determination of the public offering
price, stabilizing the market price of the Shares and BlueStone, respectively,
as such information appears in any Preliminary Prospectus and in the Prospectus.
13. Notices and Governing Law. All communications hereunder
will be in writing and, except as otherwise provided, will be delivered at, or
mailed by certified mail, return receipt requested, or telecopied to, the
following addresses: if to BlueStone, the Representatives, or the Underwriters,
to BlueStone Capital Partners, L.P., 575 Fifth Avenue, New York, New York 10017,
Facsimile No. (212) 297-5695, with a copy to Tenzer Greenblatt LLP, Attention:
Robert J. Mittman, Esq., 405 Lexington Avenue, New York, New York 10174,
Facsimile No. (212) 885-5001; if to the Company at 1924 33rd Street, Orlando,
Florida, Attention: President, Facsimile No. (407) 316-0396, with a copy to
McLaughlin & Stern, LLP, Attention: Martin Licht, Esq., 260 Madison Avenue, New
York, New York 10016, Facsimile No. (212) 448-6260.
This Agreement shall be deemed to have been made and delivered
in New York City and shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of New York. The Company (1) agrees that any legal suit, action or proceeding
arising out of or relating to this Agreement shall be instituted exclusively in
New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, (2) waives any objection
which the Company may have now or hereafter to
-35-
<PAGE>
the venue of any such suit, action or proceeding, and (3) irrevocably consents
to the jurisdiction of the New York State Supreme Court, County of New York, and
the United States District Court for the Southern District of New York in any
such suit, action or proceeding. The Company further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York and
agrees that service of process upon the Company mailed by certified mail to the
Company's address shall be deemed in every respect effective service of process
upon the Company in any such suit, action or proceeding.
14. Parties in Interest. This Agreement is made solely for the
benefit of the several Underwriters, the Company and, to the extent expressed,
any person controlling the Company or the Underwriters, each officer, director,
partner, employee and agent of the Underwriters, the directors of the Company,
its officers who have signed the Registration Statement, and their respective
executors, administrators, successors and assigns, and, no other person will
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" will not include any purchaser of the Shares from any
of the Underwriters, as such purchaser.
-36-
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between the Company and the
Underwriters in accordance with its terms.
Very truly yours,
AMERICAN MARINE RECREATION, INC.
By:_____________________________
Confirmed and accepted in New York, N.Y., as of the date first above written:
BLUESTONE CAPITAL PARTNERS, L.P.
By: Bluestone Capital Management, Inc.,
General Partner
By:
---------------------------------
Kerry J. Dukes,
President
ROYCE INVESTMENT GROUP, INC.
By:
------------------------------
Anthony J. Sarkis,
Vice-President
Acting on behalf of themselves as the Representatives of the several
Underwriters named in Schedule A hereto.
-37-
<PAGE>
SCHEDULE A
TO THE UNDERWRITING AGREEMENT
Underwriter Number of Shares
- ----------- ----------------
BlueStone Capital Partners, L.P.
Royce Investment Group, Inc.
Total 2,180,000
-38-
<PAGE>
EXCHANGE AGREEMENT, dated as of the 1st day of September, 1998 by and among
Joseph G. Pozo, Jr. and Joseph John Pozo (individually, a "Shareholder" and
collectively, the "Shareholders") and American Marine Recreation, Inc., a
Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS, each of the Shareholders owns the number of shares of
common stock of Marine America, Inc., a Florida corporation ("MAI"), set forth
on Exhibit A opposite the name of such Shareholder; and
WHEREAS, each of the Shareholders desires to exchange the
number of shares of the Common Stock of MAI set forth on Exhibit A opposite the
name of such Shareholder in exchange for the number of shares of common stock,
par value $.01 per share of the Company (the "Company's Common Stock"), set
forth on Exhibit B opposite the name of such Shareholder, upon the terms and
conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the above premises and the
agreements set forth below, the parties hereto hereby agree as follows:
ARTICLE I
EXCHANGE OF SECURITIES
Section 1.1 (a) In reliance on the representations and warranties
contained herein, and subject to the terms and conditions hereinafter set forth,
each of the Shareholders hereby agrees to deliver and the Company hereby agrees
to accept delivery of, all of the common stock of MAI owned by each Shareholder
for and against delivery of the number of shares of the Company's Common Stock
set forth opposite each Shareholder's name on Exhibit B annexed hereto.
boattree\agr\exchma.01
-1-
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Shareholders as
follows:
Section 2.1 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
Section 2.2 Authorization. (a) The issuance of the Company's Common
Stock is in accordance with the provisions of this Agreement and has been duly
authorized by all necessary corporate action of the Company. The Company's
Common Stock, if and when issued to the Shareholders in accordance with the
provisions hereof, will be duly authorized and validly issued, fully paid and
nonassessable.
(b) The Company has full corporate power and authority to enter into
this Agreement and to perform all of its obligations hereunder. The execution,
delivery and performance of this Agreement by the Company has been duly
authorized by all necessary corporate action, and this Agreement constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the effect of equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application relating to or affecting the enforcement of
creditors' rights.
Section 2.3 Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of the Company's Common Stock, $.01 par value, of
which 1 share is issued and outstanding and 1,500,000 shares of preferred stock,
none of which are outstanding. All of the outstanding
boattree\agr\exchma.01
-2-
<PAGE>
shares of the Company's Common Stock are duly authorized, have been validly
issued and are fully paid and nonassessable.
Section 2.4 Securities Law. The Company's Common Stock is not being
registered under the Securities Act of 1933, as amended (the "Act"), or any
other securities laws but are being sold in reliance upon certain exemptions
from the registration requirements of the Act and such laws. The Company's
reliance upon such exemptions is predicated in large part upon the
representations of the Shareholders to the Company contained in Article III
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders, jointly and severally, represents and
warrants to the Company as follows:
Section 3.1 Ownership and Conveyance. Each Shareholder is the sole
beneficial and record owner of the number of shares of the Common Stock set
forth on Exhibit A annexed hereto and has the full right, and is duly
authorized, to exchange such shares which, upon conveyance, will be transferred
to the Company free and clear of any and all liens, claims, pledges, security
interests or other encumbrance of any kind.
Section 3.2 Capitalization. Except as otherwise indicated on Exhibit A,
the number of shares of MAI Common Stock set forth on Exhibit A constitutes all
of the issued and outstanding shares of Common Stock of MAI owned by each
Shareholder and the total constitutes all of the issued and outstanding shares
of MAI Common Stock. All of the outstanding shares of Common Stock of MAI are
duly authorized, have been validly issued and are fully paid and nonassessable.
Except as described in Exhibit A, there are no outstanding options, warrants,
rights (including preemptive rights and rights to
boattree\agr\exchma.01
-3-
<PAGE>
demand registration under the Act), calls, commitments, conversion rights, plans
or other agreements of any character providing for the purchase or issuance of
any shares of the capital stock of MAI or any agreements or understanding to
issue any of the foregoing.
Section 3.3 Purchase for Own Account. The Company's Common Stock is
being acquired by each of the Shareholders for such Shareholder's own account,
for investment and without any view to the distribution, assignment or resale to
others or fractionalization in whole or in part. Each Shareholder agrees not to
assign or in any way transfer such Shareholder's rights to the Company's Common
Stock or any interest therein and acknowledges that the Company will not
recognize any purported assignment or transfer. No other person has or will have
a direct or indirect beneficial interest in the Company's Common Stock. Each
Shareholder agrees not to sell, hypothecate or otherwise transfer the Company's
Common Stock unless the Company's Common Stock is registered under Federal and
applicable state securities laws or unless, in the opinion of counsel
satisfactory to the Company, an exemption from such laws is available.
Section 3.4 Accredited Investor. Each Shareholder is an
"Accredited Investor" as that term is defined in Regulation D ("Regulation D")
promulgated under the Act.
Section 3.5 Knowledge; Access to Information. Each Shareholder has
knowledge of the Company's activities, financial condition, plans and prospects,
and has carefully reviewed the risks of, and other considerations relating to,
the transactions contemplated herein. Each Shareholder has been given an
opportunity to ask questions of and to receive answers from representatives of
the Company concerning the terms and conditions of the offering and sale of the
Company's Common Stock and has received all information that such Shareholder
has requested from the Company. Notwithstanding the foregoing, the only
information upon which each such Shareholder has relied is such Shareholder's
independent
boattree\agr\exchma.01
-4-
<PAGE>
investigation and that no representations or warranties of any kind have been
made by the Company or its representatives or agents relating to such decisions
except as expressly set forth herein.
Section 3.6 Risk of Shareholder. Each Shareholder, either individually
or together with the representative on which such Shareholder has relied, has
such knowledge and experience in financial and business matters that each
Shareholder is capable of evaluating the merits and risks of an investment in
the Company's Common Stock.
Section 3.7 Securities Law. The Company's Common Stock is not being
registered under the Act, or any other securities laws but are being sold in
reliance upon certain exemptions from the registration requirements of the Act
and such laws. The Company's reliance upon such exemptions is predicated in
large part upon the representations of the Shareholders to the Company contained
in Article III hereof.
Section 3.8 Restriction on Transfer. Each Shareholder understands that
the Company's Common Stock has not been registered under the Act nor under any
other applicable securities laws in reliance on the representations and
warranties made by the Shareholders herein and that no securities administrator
of any state or jurisdiction or of the Federal government has made any finding
or determination relating to the Company's Common Stock. Each Shareholder
further understands that, upon issuance hereunder, the Company's Common Stock
will constitute "restricted securities" within the meaning of Rule 144 under the
Act. Each Shareholder understands that the Company's Common Stock may not be
sold or otherwise transferred unless subsequently registered under the Act or,
in the opinion of counsel for the Company, an exemption from registration is
available; that, except pursuant to subsection (k) of Rule 144, any routine
sales of the Company's Common Stock made in reliance on Rule 144 can only be
made if current information about the Company is publicly available and then
only in
boattree\agr\exchma.01
-5-
<PAGE>
limited amounts in accordance with that Rule; and that there is presently
neither any public market for the Company's Common Stock nor current information
publicly available with respect to the Company.
Section 3.9 Restrictive Legends. Until such time as the Company's
Common Stock has been registered under the Act or until such time as the Company
is provided by such Shareholder with an opinion of counsel satisfactory to the
Company to the effect that the transfer of the Company's Common Stock may be
made without registration, the certificates representing the Company's Common
Stock shall be imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
OR BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE
OFFERED, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
OTHER APPLICABLE LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH ACT OR
OTHER LAWS THAT, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
IS AVAILABLE UNDER THE CIRCUMSTANCES OF SUCH OFFER, SALE, PLEDGE,
TRANSFER OR OTHER DISPOSITION.
Section 3.10 Authorization. Each Shareholder has full power and
authority to enter into this Agreement and to fully perform the terms of this
Agreement. The execution, delivery and performance of this Agreement by each
Shareholder has been duly authorized by all necessary action of such
Shareholder, and this Agreement constitutes the legal, valid and binding
obligation of such Shareholder, enforceable in accordance with its terms, and
the execution and delivery of this Agreement and the purchase of the Company's
Common Stock contemplated hereby by such Shareholder will not violate any
applicable law, regulation or rule or any agreement or other document to which
such Shareholder is bound.
boattree\agr\exchma.01
-6-
<PAGE>
ARTICLE IV
INDEMNITY
Section 4.1 Indemnity. Each Shareholder does hereby indemnify and hold
harmless the Company against and from any and all loss, liability, claim, damage
and expense (including, without limitation, attorneys' fees and disbursements)
incurred as a direct or indirect result of a misrepresentation, or breach of an
agreement or warranty, made by such Shareholders to the Company, whether made
orally or contained herein or in any other document furnished by such
Shareholders in connection with this transaction. The Shareholders acknowledge
that this obligation will survive the consummation of the transactions
contemplated hereunder.
ARTICLE V
TERMINATION OF SHAREHOLDERS AGREEMENT
Section 5.1 Termination of Shareholders Agreement. Effective upon the
closing of the transactions contemplated herein, that certain shareholders
agreement entered into by the Shareholders and MAI on January 30, 1998 (the
"Shareholders Agreement") is hereby terminated. The Shareholders Agreement shall
be declared null and void and without any effect whatsoever, and shall be
superseded by the provisions set forth in this Agreement and other subsequent
agreements thereafter.
ARTICLE VI
CLOSING
Section 5.1 Condition Prior to Closing. Prior to the closing of the
transactions contemplated herein, MAI shall redeem all of the shares of MAI
Common Stock owned by Lakewood Marine International, Ltd.
boattree\agr\exchma.01
-7-
<PAGE>
Section 5.2 Closing. The closing of the transactions contemplated
herein shall occur immediately preceding or simultaneously with the consummation
of an initial public offering of the Company's Common Stock.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Shareholders with respect to the subject
matter hereof. There are no representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior agreements
between the parties with respect to the shares of Common Stock being issued
hereunder and the subject matter hereof.
Section 7.2 Governing Law. This Agreement shall be construed
and enforced in accordance with and governed by the internal laws of the State
of New York.
Section 7.3 Notices. All notices, requests, demands and other
communications called for or contemplated hereunder shall be in writing and
shall be deemed duly given three (3) days from the date such notice is deposited
in the United States mail, postage-paid, or immediately if by hand delivery or
facsimile transmission if receipt thereof is duly acknowledged, and addressed to
the proper parties at the address set forth in the first paragraph of this
Agreement with respect to the Company and, if to a Shareholder, at its address
set forth on Exhibit C attached hereto, or at such other address as the parties
may designate by written notice on the manner aforesaid, with a copy in each
case to Martin C. Licht, Esq., McLaughlin & Stern, LLP, 260 Madison Avenue, 18th
Floor, New York, New York 10022.
Section 7.4 Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement.
boattree\agr\exchma.01
-8-
<PAGE>
Section 7.5 Amendments and Waivers. At the option of the Company, this
Agreement may be deemed a separate bilateral agreement between the Company and
each Shareholder executing and delivering the same, notwithstanding that all of
the Shareholders do not become bound hereby or if all of the provisions hereof
are not identical for every investor. Neither this Agreement nor any provision
hereof may be modified, changed, discharged, waived or terminated except by an
instrument in writing signed by the party against whim the enforcement of any
such modification, change, discharge, waiver or termination is sought and the
same may be effected by each Shareholder separately if and when appropriate.
Section 7.6 Severability. If any provision of this Agreement or the
application thereof to any party or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to the other party or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by applicable
law.
Section 7.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company, the Shareholders and their
respective legal successors, assigns, heirs, executors and administrators, but
may not be assigned by any Shareholder without the express written consent of
the Company. Nothing contained herein, expressed or implied, is intended to
confer upon any person or entity other than the parties hereto and their legal
successors, any rights or remedies under or by reason of this Agreement unless
so stated herein to the contrary.
Section 7.8 Further Actions. At any time and from time to time, each
party agrees at its expense, to take all actions and to execute and deliver all
documents as may be necessary to effectuate the purposes of this Agreement.
boattree\agr\exchma.01
-9-
<PAGE>
Section 7.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument and may be executed by
facsimile signatures.
Section 6.10 Headings. The headings in the Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
/s/ Joseph G. Pozo, Jr.
JOSEPH G. POZO, JR.
/s/ Joseph John Pozo
JOSEPH JOHN POZO
AMERICAN MARINE RECREATION, INC.
By: /s/ Joseph G. Pozo, Jr.
Name: Joseph G. Pozo, Jr.
Title: President
boattree\agr\exchma.01
-10-
<PAGE>
EXHIBIT A
OWNERSHIP OF MAI COMMON STOCK
MARINE AMERICA, INC.
Shareholders Number of Shares of Common Stock
Joseph G. Pozo, Jr. 400
Joseph John Pozo 400
boattree\agr\exchma.01
<PAGE>
EXHIBIT B
OWNERSHIP OF COMMON STOCK
Shareholder Number of Shares of Common Stock
Joseph G. Pozo, Jr. 660
Joseph John Pozo 440
Total 1,100
boattree\agr\exchma.01
<PAGE>
EXHIBIT C
SHAREHOLDER ADDRESSES
Joseph G. Pozo, Jr.
Joseph John Pozo
boattree\agr\exchma.01
<PAGE>
EXCHANGE AGREEMENT, dated as of the 1st day of September, 1998 by and among
Joseph G. Pozo, Jr., Joseph John Pozo, Christine Pozo, Jennifer Jo Pozo and
Marcelo A. Pozo (individually, a "Shareholder" and collectively, the
"Shareholders") and American Marine Recreation, Inc., a Delaware corporation
(the "Company").
W I T N E S S E T H
WHEREAS, each of the Shareholders owns the number of shares of
common stock of Boat Tree, Inc., a Florida corporation ("Boat Tree"), set forth
on Exhibit A opposite the name of such Shareholder; and
WHEREAS, each of the Shareholders desires to exchange the
number of shares of the Common Stock of Boat Tree set forth on Exhibit A
opposite the name of such Shareholder in exchange for the number of shares of
common stock, par value $.01 per share of the Company (the "Company's Common
Stock"), set forth on Exhibit B opposite the name of such Shareholder, upon the
terms and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the above premises and the
agreements set forth below, the parties hereto hereby agree as follows:
ARTICLE I
EXCHANGE OF SECURITIES
Section 1.1 (a) In reliance on the representations and warranties
contained herein, and subject to the terms and conditions hereinafter set forth,
each of the Shareholders hereby agrees to deliver and the Company hereby agrees
to accept delivery of, all of the common stock of Boat Tree owned by each
Shareholder for and against delivery of the number of shares of the Company's
Common Stock set forth
boattree\agr\exchbt.01
-1-
<PAGE>
opposite each Shareholder's name on Exhibit B annexed hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Shareholders as
follows:
Section 2.1 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
Section 2.2 Authorization. (a) The issuance of the Company's Common
Stock is in accordance with the provisions of this Agreement and has been duly
authorized by all necessary corporate action of the Company. The Company's
Common Stock, if and when issued to the Shareholders in accordance with the
provisions hereof, will be duly authorized and validly issued, fully paid and
nonassessable.
(b) The Company has full corporate power and authority to enter into
this Agreement and to perform all of its obligations hereunder. The execution,
delivery and performance of this Agreement by the Company has been duly
authorized by all necessary corporate action, and this Agreement constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the effect of equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application relating to or affecting the enforcement of
creditors' rights.
Section 2.3 Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of the Company's Common Stock, $.01 par value, of
which 1 share is issued and outstanding and 1,500,000 shares of preferred stock,
none of which are outstanding. All of the outstanding
boattree\agr\exchbt.01
-2-
<PAGE>
shares of the Company's Common Stock are duly authorized, have been validly
issued and are fully paid and nonassessable.
Section 2.4 Securities Law. The Company's Common Stock is not being
registered under the Securities Act of 1933, as amended (the "Act"), or any
other securities laws but are being sold in reliance upon certain exemptions
from the registration requirements of the Act and such laws. The Company's
reliance upon such exemptions is predicated in large part upon the
representations of the Shareholders to the Company contained in Article III
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders, jointly and severally, represents and
warrants to the Company as follows:
Section 3.1 Ownership and Conveyance. Each Shareholder is the sole
beneficial and record owner of the number of shares of the Common Stock set
forth on Exhibit A annexed hereto and has the full right, and is duly
authorized, to exchange such shares which, upon conveyance, will be transferred
to the Company free and clear of any and all liens, claims, pledges, security
interests or other encumbrance of any kind.
Section 3.2 Capitalization. Except as otherwise indicated on Exhibit A,
the number of shares of Boat Tree Common Stock set forth on Exhibit A
constitutes all of the issued and outstanding shares of Common Stock of Boat
Tree owned by each Shareholder and the total constitutes all of the issued and
outstanding shares of Boat Tree Common Stock. All of the outstanding shares of
Common Stock of Boat Tree are duly authorized, have been validly issued and are
fully paid and nonassessable. Except as described in Exhibit A, there are no
outstanding options, warrants, rights (including preemptive rights and
boattree\agr\exchbt.01
-3-
<PAGE>
rights to demand registration under the Act), calls, commitments, conversion
rights, plans or other agreements of any character providing for the purchase or
issuance of any shares of the capital stock of Boat Tree or any agreements or
understanding to issue any of the foregoing.
Section 3.3 Purchase for Own Account. The Company's Common Stock is
being acquired by each of the Shareholders for such Shareholder's own account,
for investment and without any view to the distribution, assignment or resale to
others or fractionalization in whole or in part. Each Shareholder agrees not to
assign or in any way transfer such Shareholder's rights to the Company's Common
Stock or any interest therein and acknowledges that the Company will not
recognize any purported assignment or transfer. No other person has or will have
a direct or indirect beneficial interest in the Company's Common Stock. Each
Shareholder agrees not to sell, hypothecate or otherwise transfer the Company's
Common Stock unless the Company's Common Stock is registered under Federal and
applicable state securities laws or unless, in the opinion of counsel
satisfactory to the Company, an exemption from such laws is available.
Section 3.4 Accredited Investor. Each Shareholder is an "Accredited
Investor" as that term is defined in Regulation D ("Regulation D") promulgated
under the Act.
Section 3.5 Knowledge; Access to Information. Each Shareholder has
knowledge of the Company's activities, financial condition, plans and prospects,
and has carefully reviewed the risks of, and other considerations relating to,
the transactions contemplated herein. Each Shareholder has been given an
opportunity to ask questions of and to receive answers from representatives of
the Company concerning the terms and conditions of the offering and sale of the
Company's Common Stock and has received all information that such Shareholder
has requested from the Company. Notwithstanding the foregoing, the only
information upon which each such Shareholder has relied is such Shareholder's
independent
boattree\agr\exchbt.01
-4-
<PAGE>
investigation and that no representations or warranties of any kind have been
made by the Company or its representatives or agents relating to such decisions
except as expressly set forth herein.
Section 3.6 Risk of Shareholder. Each Shareholder, either individually
or together with the representative on which such Shareholder has relied, has
such knowledge and experience in financial and business matters that each
Shareholder is capable of evaluating the merits and risks of an investment in
the Company's Common Stock.
Section 3.7 Securities Law. The Company's Common Stock is not being
registered under the Act, or any other securities laws but are being sold in
reliance upon certain exemptions from the registration requirements of the Act
and such laws. The Company's reliance upon such exemptions is predicated in
large part upon the representations of the Shareholders to the Company contained
in Article III hereof.
Section 3.8 Restriction on Transfer. Each Shareholder understands that
the Company's Common Stock has not been registered under the Act nor under any
other applicable securities laws in reliance on the representations and
warranties made by the Shareholders herein and that no securities administrator
of any state or jurisdiction or of the Federal government has made any finding
or determination relating to the Company's Common Stock. Each Shareholder
further understands that, upon issuance hereunder, the Company's Common Stock
will constitute "restricted securities" within the meaning of Rule 144 under the
Act. Each Shareholder understands that the Company's Common Stock may not be
sold or otherwise transferred unless subsequently registered under the Act or,
in the opinion of counsel for the Company, an exemption from registration is
available; that, except pursuant to subsection (k) of Rule 144, any routine
sales of the Company's Common Stock made in reliance on Rule 144 can only be
made if current information about the Company is publicly available and then
only in
boattree\agr\exchbt.01
-5-
<PAGE>
limited amounts in accordance with that Rule; and that there is presently
neither any public market for the Company's Common Stock nor current information
publicly available with respect to the Company.
Section 3.9 Restrictive Legends. Until such time as the Company's
Common Stock has been registered under the Act or until such time as the Company
is provided by such Shareholder with an opinion of counsel satisfactory to the
Company to the effect that the transfer of the Company's Common Stock may be
made without registration, the certificates representing the Company's Common
Stock shall be imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
OR BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE
OFFERED, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
OTHER APPLICABLE LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH ACT OR
OTHER LAWS THAT, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
IS AVAILABLE UNDER THE CIRCUMSTANCES OF SUCH OFFER, SALE, PLEDGE,
TRANSFER OR OTHER DISPOSITION.
Section 3.10 Authorization. Each Shareholder has full power and
authority to enter into this Agreement and to fully perform the terms of this
Agreement. The execution, delivery and performance of this Agreement by each
Shareholder has been duly authorized by all necessary action of such
Shareholder, and this Agreement constitutes the legal, valid and binding
obligation of such Shareholder, enforceable in accordance with its terms, and
the execution and delivery of this Agreement and the purchase of the Company's
Common Stock contemplated hereby by such Shareholder will not violate any
applicable law, regulation or rule or any agreement or other document to which
such Shareholder is bound.
boattree\agr\exchbt.01
-6-
<PAGE>
ARTICLE IV
INDEMNITY
Section 4.1 Indemnity. Each Shareholder does hereby indemnify and hold
harmless the Company against and from any and all loss, liability, claim, damage
and expense (including, without limitation, attorneys' fees and disbursements)
incurred as a direct or indirect result of a misrepresentation, or breach of an
agreement or warranty, made by such Shareholders to the Company, whether made
orally or contained herein or in any other document furnished by such
Shareholders in connection with this transaction. The Shareholders acknowledge
that this obligation will survive the consummation of the transactions
contemplated hereunder.
ARTICLE V
TERMINATION OF SHAREHOLDERS AGREEMENT
Section 5.1 Termination of Shareholders Agreement. Effective upon the
closing of the transactions contemplated herein, that certain shareholders
agreement entered into by the Shareholders and Boat Tree, Inc., on January 1,
1997 (the "Shareholders Agreement") is hereby terminated. The Shareholders
Agreement shall be declared null and void and without any effect whatsoever, and
shall be superseded by the provisions set forth in this Agreement and other
subsequent agreements thereafter.
ARTICLE VI
CLOSING
Section 5.1 Closing. The closing of the transactions contemplated
herein shall occur immediately preceding or simultaneously with the consummation
of an initial public offering of the Company's Common Stock.
boattree\agr\exchbt.01
-7-
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.1 Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Shareholders with respect to the subject
matter hereof. There are no representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior agreements
between the parties with respect to the shares of Common Stock being issued
hereunder and the subject matter hereof.
Section 7.2 Governing Law. This Agreement shall be construed and
enforced in accordance with and governed by the internal laws of the State of
New York.
Section 7.3 Notices. All notices, requests, demands and other
communications called for or contemplated hereunder shall be in writing and
shall be deemed duly given three (3) days from the date such notice is deposited
in the United States mail, postage-paid, or immediately if by hand delivery or
facsimile transmission if receipt thereof is duly acknowledged, and addressed to
the proper parties at the address set forth in the first paragraph of this
Agreement with respect to the Company and, if to a Shareholder, at its address
set forth on Exhibit C attached hereto, or at such other address as the parties
may designate by written notice on the manner aforesaid, with a copy in each
case to Martin C. Licht, Esq., McLaughlin & Stern, LLP, 260 Madison Avenue, 18th
Floor, New York, New York 10022.
Section 7.4 Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement.
Section 7.5 Amendments and Waivers. At the option of the Company, this
Agreement may be deemed a separate bilateral agreement between the Company and
each Shareholder executing and delivering the same, notwithstanding that all of
the Shareholders do not become bound hereby or if all of the provisions hereof
are not identical for every investor. Neither this Agreement nor any provision
hereof
boattree\agr\exchbt.01
-8-
<PAGE>
may be modified, changed, discharged, waived or terminated except by an
instrument in writing signed by the party against whim the enforcement of any
such modification, change, discharge, waiver or termination is sought and the
same may be effected by each Shareholder separately if and when appropriate.
Section 7.6 Severability. If any provision of this Agreement or the
application thereof to any party or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to the other party or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by applicable
law.
Section 7.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company, the Shareholders and their
respective legal successors, assigns, heirs, executors and administrators, but
may not be assigned by any Shareholder without the express written consent of
the Company. Nothing contained herein, expressed or implied, is intended to
confer upon any person or entity other than the parties hereto and their legal
successors, any rights or remedies under or by reason of this Agreement unless
so stated herein to the contrary.
Section 7.8 Further Actions. At any time and from time to time, each
party agrees at its expense, to take all actions and to execute and deliver all
documents as may be necessary to effectuate the purposes of this Agreement.
Section 7.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument and may be executed by
facsimile signatures.
Section 6.10 Headings. The headings in the Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
boattree\agr\exchbt.01
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
/s/ Joseph G. Pozo, Jr.
JOSEPH G. POZO, JR.
/s/ Joseph John Pozo
JOSEPH JOHN POZO
/s/ Christine Pozo
CHRISTINE POZO
/s/ Jennifer Jo Pozo
JENNIFER JO POZO
Marcelo A.Pozo
MARCELO A. POZO
AMERICAN MARINE RECREATION, INC.
By: /s/ Joseph G. Pozo
Name: Joseph G. Pozo, Jr.
Title: President
boattree\agr\exchbt.01
-10-
<PAGE>
EXHIBIT A
OWNERSHIP OF BOAT TREE COMMON STOCK
BOAT TREE, INC.
Shareholders Number of Shares of Common Stock
Joseph G. Pozo, Jr. 6,207
Joseph John Pozo 322
Christine Pozo 322
Jennifer Jo Pozo 322
Marcelo A. Pozo 322
boattree\agr\exchbt.01
<PAGE>
EXHIBIT B
OWNERSHIP OF COMMON STOCK
Shareholder Number of Shares of Common Stock
Joseph G. Pozo, Jr. 1,355,747
Joseph John Pozo 70,332
Christine Pozo 70,332
Jennifer Jo Pozo 70,332
Marcelo A. Pozo 70,332
Total 1,637,075
boattree\agr\exchbt.01
<PAGE>
EXHIBIT C
SHAREHOLDER ADDRESSES
Joseph G. Pozo, Jr.
Joseph John Pozo
Christine Pozo
Jennifer Jo Pozo
Marcelo A. Pozo
boattree\agr\exchbt.01
<PAGE>
CERTIFICATE OF INCORPORATION
OF
AMERICAN MARINE RECREATION, INC.
The undersigned, for the purpose of forming a corporation pursuant to
Section 102 of the General Corporation Law of the State of Delaware, does hereby
certify as follows:
1. The name of the corporation is American Marine Recreation, Inc. (the
"Corporation").
2. The address of the Corporation's registered office in the
State of Delaware is 9 East Loockerman Street, City of Dover,
County of Kent, 19901, and its registered agent at such
address is National Registered Agents, Inc.
3. The purpose of the Corporation is to engage in any lawful act
or activities for which corporations may be organized under
the General Corporation Law of Delaware.
4. The total number of shares of stock which
the Corporation shall have authority to
issue is twenty-one and one-half million
(21,500,000) which shall consist of (i)
twenty million (20,000,000) shares of common stock, $.01 par
value per share (the "Common Stock"), and (ii) one million
five hundred thousand (1,500,000) shares of preferred stock,
$.01 par value per share (the "Preferred Stock").
PART A
COMMON STOCK
1. Each share of Common Stock issued and outstanding shall be identical in all
respects one with the other, and no dividends shall be paid on any shares of
Common Stock unless the same dividend is paid on all shares of Common Stock
outstanding at the time of such payment.
2. Except for and subject to those rights expressly granted to the holders of
the Preferred Stock, or except as may be provided by the General Corporation Law
of the State of Delaware, the holders of Common Stock shall have exclusively all
other rights of stockholders including, but not by way of limitation, (i) the
right to receive dividends, when, as and if declared by the Board of Directors
out of assets lawfully available therefor, and (ii) in the event of any
distribution of assets upon liquidation, dissolution or winding up of the
Corporation or otherwise, the right to receive ratably and equally all the
assets and funds of the Corporation remaining after payment to the holders of
the Preferred Stock of the specific amounts which they are entitled to receive
upon such liquidation, dissolution or winding up of the Corporation as herein
provided.
3. Each holder of shares of Common Stock shall be entitled to one vote for each
share of such Common Stock held by such holder, and voting power with respect to
all classes of securities of the Corporation shall be vested solely in the
Common Stock, other than as specifically provided in the Corporation's
Certificate of Incorporation, as it may be amended, or any resolutions adopted
by the Board of Directors pursuant thereto, with respect to the Preferred Stock.
boattree\misc\cert.inc
1
<PAGE>
PART B
PREFERRED STOCK
Authority is hereby vested in the Board of Directors of the Corporation
to provide for the issuance of Preferred Stock and in connection therewith to
fix by resolution providing for the issue of such series, the number of shares
to be included and such of the preferences and relative participating, optional
or other special rights and limitations of such series, including, without
limitation, rights of redemption or conversion into Common Stock, to the fullest
extent now or hereafter permitted by the General Corporation Law of the State of
Delaware.
Without limiting the generality of the foregoing paragraph, the
authority of the Board of Directors with respect to each series of Preferred
Stock shall include, without limitation, the determination of any of the
following matters:
a.the number of shares constituting such series and the designation
thereof to distinguish the shares of such series from the shares of all other
series;
b. the rights of holders of shares of such series to receive dividends thereon
and the dividend rates, the conditions and time of payment of dividends, the
extent to which dividends are payable in preference to, or in any other relation
to, dividends payable on any other class or series of stock, and whether such
dividends shall be cumulative or noncumulative;
c. the terms and provisions governing the redemption of shares of such series,
if such shares are to be redeemable;
d. the terms and provisions governing the operation of retirement or sinking
funds, if any;
e. the voting power of such series, whether full, limited or none;
f. the rights of holders of shares of such series upon the liquidation,
dissolution or winding up of, or upon distribution of the assets of, the
Corporation;
g. the rights, if any, of holders of shares of such series to convert such
shares into, or to exchange such shares for, any other class of stock, or of any
series thereof, and the prices or rates for such conversions or exchanges, and
any adjustments thereto; and
h. any other preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions of such series.
The shares of each series of Preferred Stock may vary from the shares
of any other series of Preferred Stock as to any of such matters.
5. No owner or holder of a security of the Corporation shall be
entitled as a matter of right to purchase or receive any security of the
Corporation now or hereafter authorized except as and to the extent that the
Board of Directors in its absolute discretion may determine. Any security of the
Corporation may be disposed of by the Corporation to such persons and upon such
terms as may be specified by the Board of Directors or as may be specified
pursuant to authority granted by the Board of Directors. The word
boattree\misc\cert.inc
2
<PAGE>
"security" means a share of any class, any evidence of indebtedness, any right
to purchase or receive any such share or evidence of indebtedness or any
instrument convertible into or containing a right to purchase or receive any
such share or evidence of indebtedness, or, without limiting the generality of
the foregoing, any instrument commonly known at the time as a "security".
6. In furtherance and not in limitation of the power conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the By-Laws of the Corporation, provided that any By-Laws made, altered,
amended or repealed by the Board of Directors may be altered, amended or
repealed, and any By-Laws may be made, by the stockholders of the Corporation.
7. A director of the Corporation shall not in the absence of fraud be
disqualified by his office from dealing or contracting with the Corporation
either as a vendor, purchaser or otherwise nor in the absence of fraud shall a
director of the Corporation be liable to account to the Corporation for any
profit realized by him from or through any transaction or contract of the
Corporation by reason of the fact that he, or any firm of which he is a member
or any corporation of which he is an officer, director or stockholder, was
interested in such transaction or contract if such transaction or contract has
been authorized, approved or ratified in the manner provided in the General
Corporation Law of Delaware for authorization, approval or ratification of
transactions or contracts between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest.
8. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of ss.291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of ss.279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
9. The Corporation shall, to the fullest extent permitted by Section
145 of the Delaware General Corporation Law, as amended from time to time and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expense,
liabilities,
boattree\misc\cert.inc
3
<PAGE>
or other matters referred to in or covered by said sections, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his or her official capacity and as to acts in another capacity while holding
such office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
10. The directors of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
any improper personal benefit. Any repeal or modification of the foregoing
sentence by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification with respect to acts or omissions occurring prior to
such repeal or modification.
11. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
12. The name and address of the incorporator is Alexandra Migoya
Freedman, McLaughlin & Stern LLP, 260 Madison Avenue, New York, New York 10016.
IN WITNESS WHEREOF, the undersigned have subscribed this document on
the date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained therein have been examined by the undersigned and
are true and correct.
Date: June 22, 1998
/s/ Alexander Migoya Freedman
Alexandra Migoya Freedman
Incorporator
boattree\misc\cert.inc
4
<PAGE>
BY-LAWS OF
AMERICAN MARINE RECREATION, INC.
(A Delaware Corporation)
ARTICLE I
Offices
SECTION 1. Principal Office. The principal office of American Marine
Recreation, Inc. (the "Corporation") shall be located at 1924 33rd Street,
Orlando, Florida 32834 or such other location as may be designated by the Board
of Directors from time to time.
SECTION 2. Registered Office and Agent. The registered office of the
Corporation in the State of Delaware is 9 East Loockerman Street, City of Dover,
County of Kent, 19901. The registered agent shall be National Registered Agents,
Inc. at such address.
SECTION 3. Other Offices. The Corporation may also have an office or
offices other than said principal office at such place or places, either within
or without the State of Delaware, as the Board of Directors shall from time to
time determine or the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 1. Place of Meetings. All meetings of the stockholders for the
election of directors or for any other purpose shall be held at such place as
may be fixed from time to time by the Board of Directors, or at such other
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors.
SECTION 2. Annual Meeting. The annual meeting of the stockholders of
the Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting, shall be designated from
time to time by the Board of Directors.
SECTION 3. Special Meetings. Special meetings of the stockholders, unless
otherwise prescribed by statute, may be called at any time by the Board of
Directors or the Chairman of the Board, if one shall have been elected, or the
Vice-Chairman of the Board, if one shall have been
boattree\misc\by-laws.01
-1-
<PAGE>
elected, or the President.
SECTION 4. Notice of Meetings. Notice of the place, date and hour of
holding of each annual and special meeting of the stockholders and, unless it is
the annual meeting, the purpose or purposes thereof, shall be given personally
or by mail in a postage prepaid envelope, not less than ten nor more than sixty
days before the date of such meeting, to each stockholder entitled to vote at
such meeting, and, if mailed, it shall be directed to such stockholder at his
address as it appears on the record of stockholders, unless he shall have filed
with the Secretary of the Corporation a written request that notices to him be
mailed at some other address, in which case it shall be directed to him at such
other address. Any such notice for any meeting other than the annual meeting
shall indicate that it is being issued at the direction of the Board of
Directors, the Chairman of the Board, the Vice-Chairman of the Board or the
President, whichever shall have called the meeting. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy and shall not, prior the conclusion of
such meeting, protest the lack of notice thereof, or who shall, either before or
after the meeting, submit a signed waiver of notice, in person or by proxy.
Unless the Board of Directors shall fix a new record date for an adjourned
meeting, notice of such adjourned meeting need not be given if the time and
place to which the meeting shall be adjourned were announced at the meeting at
which the adjournment is taken.
SECTION 5. Quorum. At all meetings of the stockholders the holders of a
majority of the shares of the Corporation issued and outstanding and entitled to
vote thereat shall be present in person or by proxy to constitute a quorum for
the transaction of business, except as otherwise provided by statute. In the
absence of a quorum, the holders of a majority of the shares of stock present in
person or by proxy and entitled to vote may adjourn the meeting from time to
time. At any such adjourned meeting at which a quorum may be present any
business may be transacted which might have been transacted at the meeting as
originally called.
SECTION 6. Organization. At each meeting of the stockholders, the
Chairman of the Board, if one shall have been elected, shall act as chairman of
the meeting. In the absence of the Chairman of the Board or if one shall not
have been elected, the Vice-Chairman of the Board, or in his absence or if one
shall not have been elected, the President shall act as chairman of the meeting.
The Secretary, or in his absence or inability to act, the person whom the
chairman of the meeting shall appoint secretary of the meeting, shall act as
secretary of the meeting and keep the minutes thereof.
SECTION 7. Order of Business. The order of business at all meetings of the
stockholders shall be determined by the chairman of the meeting.
SECTION 8. Voting. Except as otherwise provided by statute or the
Certificate of Incorporation, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for each share standing in his
boattree\misc\by-laws.01
-2-
<PAGE>
name on the record of stockholders of the Corporation:
(a) on the date fixed pursuant to the provisions of Section 6
of Article V of these By-Laws as the record date for the determination
of the stockholders who shall be entitled to notice of and to vote at
such meeting; or
(b) if no such record date shall have been so fixed, then at
the close of business on the day next preceding the day on which notice
thereof shall be given.
Each stockholder entitled to vote at any meeting of the stockholders may
authorize another person or persons to act for them by a proxy signed by such
stockholder or his attorney-in-fact. Any such proxy shall be delivered to the
secretary of such meeting at or prior to the time designated in the order of
business for so delivering such proxies. Except as otherwise provided by statute
or the Certificate of Incorporation or these By-Laws, any corporate action to be
taken by vote of the stockholders shall be authorized by a majority of the votes
cast at a meeting of stockholders by the holders of shares of stock present in
person or represented by proxy and entitled to vote on such action. Unless
required by statute, or determined by the chairman of the meeting to be
advisable, the vote on any question need not be by ballot. On a vote by ballot,
each ballot shall be signed by the stockholder acting, or by his proxy, if there
be such proxy, and shall state the number of shares voted.
SECTION 9. List of Stockholders. A list of stockholders as of the
record date, certified by the Secretary of the Corporation or by the transfer
agent for the Corporation, shall be produced at any meeting of the stockholders
upon the request of any stockholder made at or prior to such meeting.
SECTION 10. Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act or on the request of any stockholder entitled to vote at such
meeting, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares of stock outstanding and the voting power
of each, the number of shares of stock represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the results, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the chairman
of the meeting or any stockholder entitled to vote thereat, the inspector shall
make a report in writing of any challenge, request or matter determined by them
and shall execute a certificate of any fact found by him. No director or
candidate for the office of director shall act as an inspector of an
boattree\misc\by-laws.01
-3-
<PAGE>
election of directors. Inspectors need not be stockholders.
SECTION 11. Action by Consent. Whenever stockholders are required or
permitted to take any action by vote, such action may be taken without a meeting
on written consent, setting forth the action so taken signed by the holders of a
majority of the outstanding shares of stock of the Corporation entitled to vote
thereon.
ARTICLE III
Board of Directors
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. The Board of
Directors may exercise all such authority and powers of the Corporation and do
all such lawful acts and things as are not by statute or the Certificate of
Incorporation directed or required to be exercised or done by the stockholders.
SECTION 2. Number, Qualifications, Election and Term of Office. The
number of directors constituting the Board of Directors shall be determined by
the Board of Directors from time to time. Any decrease in the number of
directors shall be effective at the time of the next succeeding annual meeting
of the stockholders unless there shall be vacancies in the Board of Directors,
in which case such decrease may become effective at any time prior to the next
succeeding annual meeting to the extent of the number of such vacancies. All the
directors shall be at least eighteen years of age. Directors need not be
stockholders. Except as otherwise provided by statute or these By-Laws, the
directors (other than members of the initial Board of Directors) shall be
elected at the annual meeting of the stockholders. At each meeting of the
stockholders for the election of directors at which a quorum is present the
persons receiving a plurality of the votes cast at such election shall be
elected. Each director shall hold office until the next annual meeting of the
stockholders and until his successor shall have been elected and qualified, or
until his death, or until he shall have resigned, or have been removed, as
hereinafter provided in these By-Laws.
SECTION 3. Place of Meetings. Meetings of the Board of Directors shall
be held at the principal office of the Corporation in the State of Delaware or
at such other place, within or without such State, as the Board of Directors may
from time to time determine or as shall be specified in the notice of any such
meeting.
SECTION 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and place as the Board of Directors may fix. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which would otherwise be held on that
day shall be held at the same hour on the next succeeding business day. Notice
of regular meetings of the Board of Directors need not be given except as
boattree\misc\by-laws.01
-4-
<PAGE>
otherwise required by statute or these By-Laws.
SECTION 5. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman, Vice-Chairman, President or by a majority of the
directors.
SECTION 6. Notice of Meeting. Notice of each special meeting of the
Board of Directors ( and of each regular meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 6, in which notice shall be stated the time and place of the meeting.
Except as otherwise required by these By-Laws, such notice need not state the
purposes of such meeting. Notice of each such meeting shall be mailed, postage
prepaid, to each director, addressed to him at his residence or usual place of
business, by first-class mail, at least five days before the day on which such
meeting is to be held, or shall be sent addressed to him at such place by
telegraph, cable, telex, telecopier or other similar means, or be delivered to
him personally or be given to him by telephone, or other similar means, at least
forty-eight hours before the time at which such meeting is to be held. Notice of
any such meeting need not be given to any director who shall, either before or
after the meeting, submit a signed waiver of notice or who shall attend such
meeting without protesting, prior to or at its commencement, the lack of notice
to him.
SECTION 7. Quorum and Manner of Acting. A majority of the entire Board
of Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and, except as otherwise expressly required
by statute or the Certificate of Incorporation or these By-Laws, the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum at any
meeting of the Board of Directors, a majority of the directors present thereat
may adjourn such meeting to another time and place. Notice of the time and place
of any such adjourned meeting shall be given to the directors unless such time
and place were announced at the meeting at which the adjournment was taken, to
the other directors. At any adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called. The directors shall act only as a Board and the individual
directors shall have no power as such.
SECTION 8. Organization. At each meeting of the Board of Directors, the
Chairman of the Board, if one shall have been elected, shall act as the Chairman
of the meeting, or if one shall not have been elected, the Vice-Chairman of the
Board, or in his absence, or if one shall not have been elected, the President
(or, in his absence, another director chosen by a majority of the directors
present) shall act as Chairman of the meeting and preside thereat. The Secretary
(or, in his absence, any person -- who shall be an Assistant Secretary, if any
of them shall be present at such meeting -- appointed by the chairman) shall act
as secretary of the meeting and keep the minutes thereof.
boattree\misc\by-laws.01
-5-
<PAGE>
SECTION 9. Resignations. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors
or the Chairman of the Board or the Vice-Chairman of the Board or the President
or the Secretary. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt. Unless otherwise specified therein,
immediately upon its receipt. Unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
SECTION 10. Vacancies. Subject to any express provision of the
Certificate of Incorporation, any vacancy in the Board of Directors, whether
arising from death, resignation, removal (with or without cause), an increase in
the number of directors or any other cause, may be filled by the vote of a
majority of the directors then in office, though less than a quorum, or by the
stockholders at the next annual meeting thereof or at a special meeting thereof.
Each director so elected shall hold office until the next meeting of the
stockholders in which the election of directors is in the regular order of
business and until his successor shall have been elected and qualified.
SECTION 11. Removal of Directors. Except as otherwise provided by
statute, any director may be removed, either with or without cause, at any time,
by the stockholders at a special meeting thereof. Except as otherwise provided
by statute, any director may be removed for cause by the Board of Directors at a
special meeting thereof.
SECTION 12. Compensation. The Board of Directors shall have authority to
fix the compensation, including fees and reimbursement of expenses, of directors
for services to the Corporation in any capacity.
SECTION 13. Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or more
committees, including an executive committee, each committee to consist of three
or more of the directors of the Corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent member at any meeting of the committee. Except to the extent
restricted by statute or the Certificate of Incorporation, each such committee,
to the extent provided in the resolution creating it, shall have any may
exercise all the authority of the Board of Directors. Each such committee shall
serve at the pleasure of the Board of Directors and have such name as may be
determined from time to time by resolution adopted by the Board of Directors.
Each committee shall keep regular minutes of its meetings and report the same to
the Board of Directors.
SECTION 14. Action by Consent. Unless restricted by the Certificate of
Incorporation, any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board of Directors or such committee consent in writing to the adoption
of a resolution authorizing the action. The resolution and the
boattree\misc\by-laws.01
-6-
<PAGE>
written consents thereto by the members of the Board of Directors or such
committee shall be filed with the minutes of the proceedings of the Board of
Directors or such committee.
SECTION 15. Telephonic Meeting. Unless restricted by the Certificate of
Incorporation or by statute, any one or more members of the Board of Directors
or any committee thereof may participate in a meeting of the Board of Directors
or such committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
ARTICLE IV
Officers
SECTION 1. Number and Qualifications. The officers of the Corporation
shall be elected by the Board of Directors and shall include the President, one
or more Vice-Presidents, the Secretary, and the Treasurer. If the Board of
Directors wishes, it may also elect as officers of the Corporation a Chairman of
the Board and a Vice-Chairman of the Board and may elect other officers
(including one or more Assistant Treasurers and one or more Assistant
Secretaries, as may be necessary or desirable for the business of the
Corporation. Any two or more offices may be held by the same person, except the
offices of President and Secretary. Each officer shall hold office until the
first meeting of the Board of Directors following the next annual meeting of the
stockholders, and until his successor shall have been elected and shall have
qualified, or until his death, or until he shall have resigned or have been
removed, as hereinafter provided in these ByLaws.
SECTION 2. Resignations. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors
or the Chairman of the Board or the Vice-Chairman of the Board or the President
or the Secretary. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt. Unless otherwise specified therein, the
acceptance of any such resignation shall not be necessary to make it effective.
SECTION 3. Removal. Any officer of the Corporation may be removed, either
with or without cause, at any time, by the Board of Directors at any meeting
thereof.
SECTION 4. Chairman of the Board. The Chairman of the Board, if one
shall have been elected, and, if present, shall preside at each meeting of the
Board of Directors or the stockholders. He shall perform all duties incident to
the office of Chairman and shall perform such other duties as may from time to
time be assigned to him by the Board of Directors. The Board may, but need not,
designate the Chairman as the chief executive officer of the Corporation, in
which event he shall exercise all those general supervisory functions described
in Section 6
boattree\misc\by-laws.01
-7-
<PAGE>
below, and the President will thereupon act as chief operating officer of the
Corporation, subject to the direction of the Chairman and the Board.
SECTION 5. Vice-Chairman of the Board. The Vice-Chairman of the Board,
if one shall have been elected, shall be a member of the Board, an officer of
the Corporation and, if present, shall preside at each meeting of the Board of
Directors if no Chairman of the Board has been elected or if the Chairman of the
Board is absent, or is unable or refuses to act. He shall advise and counsel the
Chairman of the Board and the President, and, in the President's absence, other
executives of the Corporation, and shall perform such other duties as may from
time to time be assigned to him by the Board of Directors.
SECTION 6. The President. Unless the Board shall have designated the
Chairman as the chief executive officer of the Corporation, the President shall
be the chief executive officer of the Corporation and shall have general
supervision over the business of the Corporation, subject, however, to the
control of the Board and the Chairman, if any, and of any duly authorized
committee of directors. The President shall, if present, and in the absence of
the Chairman of the Board and the Vice-Chairman of the Board or if either shall
not have been elected, preside at each meeting of the Board of Directors or the
stockholders. He shall perform all duties incident to the office of President
and such other duties as may from time to time be assigned to him by the Board
of Directors.
SECTION 7. Vice-President. Each Vice-President shall perform all such
duties as from time to time may be assigned to him by the Board of Directors or
the President. At the request of the President or in his absence or in the event
of his inability or refusal to act, the VicePresident, or if there shall be more
than one, the Vice-Presidents in the order determined by the Board of Directors
(or if there be no such determination, then the Vice-Presidents in the order of
their election), shall perform the duties of the President, and, when so called,
shall have the power of and be subject to the restrictions placed upon the
President in respect of the performance of such duties.
SECTION 8. Treasurer. The treasurer shall
(a) have charge and custody of, and be responsible for, all the funds and
securities of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation;
(c) deposit all moneys and other valuables to the credit of the Corporation
in such depositaries as may be designated by the Board of Directors or pursuant
to its direction;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from
boattree\misc\by-laws.01
-8-
<PAGE>
any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investments of its funds, taking proper vouchers therefore;
(f) render to the Board of Directors, whenever the Board of
Directors may require, an account of the financial condition of the
Corporation; and
(g) in general, perform all duties incident to the office of
the Treasurer and such other duties as from time to time may be
assigned to him by the Board of Directors.
SECTION 9. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for
the purpose, the minutes of all meetings of the Board of Directors, the
committees of the Board of Directors and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all certificates for
shares of stock of the Corporation (unless the seal of the Corporation
on such certificates shall be a facsimile, as hereinafter provided) and
affix and attest the seal to all other documents to be executed on
behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and filed are
properly kept and filed; and
(e) in general, perform all duties incident to the office of
the Secretary and such other duties as from time to time may be
assigned to him by the Board of Directors.
SECTION 10. The Assistant Treasurer. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in the event
of his inability or refusal to act, perform the duties and exercise the powers
of the Treasurer and shall perform such other duties as from time to time may be
assigned by the Board of Directors.
SECTION 11. The Assistant Secretary. The Assistant Secretary, or if there
be more than one, the Assistant Secretaries in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Secretary
boattree\misc\by-laws.01
-9-
<PAGE>
or in the event of his inability or refusal to act, perform the duties and
exercise the powers of the Secretary and shall perform such other duties as from
time to time may be assigned by the Board of Directors.
SECTION 12. Officers' Bonds or Other Security. If required by the Board
of Directors, any officer of the Corporation shall give a bond or other security
for the faithful performance of his duties, in such amount and with such surety
or sureties as the Board of Directors may require.
SECTION 13. Compensation. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time to time
by the Board of Directors. An officer of the Corporation shall not be prevented
from receiving compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE V Stocks, etc.
SECTION 1. Stock Certificates. Each owner of shares of stock of the
Corporation shall be entitled to have a certificate, in such form as shall be
approved by the Board of Directors, certifying the number of shares of stock of
the Corporation owned by him. The certificates representing the stock shall be
signed in the name of the Corporation by the Chairman of the Board or the
Vice-Chairman of the Board or the President or a Vice-President and by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer, and
sealed with the seal of the Corporation (which seal may be a facsimile, engraved
or printed); provided, however, that where any such certificate is countersigned
by a transfer agent, or is registered by a registrar (other than the Corporation
or one of its employees), the signatures of the Chairman of the Board,
ViceChairman of the Board, President, Vice-President, Secretary, Assistant
Secretary, Treasurer or Assistant Treasurer upon such certificates may be
facsimiles, engraved or printed. In case any officer who shall have signed any
such certificate shall have ceased to be such officer before such certificate
shall be issued, it may nevertheless be issued by the Corporation with the same
effect as if such officer were still in office at the date of their issue. When
the Corporation is authorized to issue shares of stock of more than one class,
there shall be set forth upon the face or back of the certificate, (or the
certificate shall have a statement that the Corporation will furnish to any
stockholder upon request and without charge) a full statement of the
designation, relative rights, preferences, and limitations of the shares of
stock of each separate class, or of the different shares of stock within each
class, authorized to be issued and, if the Corporation is authorized to issue
any class of preferred stock in series, the designation, relative rights,
preferences and limitations of each such series so far as the same have been
fixed and the authority of the Board of Directors to designate and fix the
relative rights, preferences and limitations of other series.
SECTION 2. Books of Account and Record of Stockholders. There shall be kept
boattree\misc\by-laws.01
-10-
<PAGE>
correct and complete books and records of account of all the business and
transactions of the Corporation. There shall also be kept, at the office of the
Corporation, or at the office of its transfer agent, a record containing the
names and addresses of all stockholders of the Corporation, the number of shares
of stock held by each, and the dates when they became the holders of record
thereof.
SECTION 3. Transfer of Stock. Transfers of shares of stock of the
Corporation shall be made on the records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with a transfer agent, and on surrender of the certificate or certificates for
such shares of stock properly endorsed or accompanied by a duly executed stock
transfer power and the payment of all taxes thereon. The person in whose name
shares of stock shall stand on the record of stockholders of the Corporation
shall be deemed the owner thereof for all purposes as regards the Corporation.
Whenever any transfer of stock shall be made for collateral security and not
absolutely and written notice thereof shall be given to the Secretary or to a
transfer agent, such fact shall be noted on the records of the Corporation.
SECTION 4. Transfer Agents and Registrars. The Board of Directors may
appoint, or authorize any officer or officers to appoint, one or more transfer
agents and one or more registrars and may require all certificates for shares of
stock to bear the signature of any of them.
SECTION 5. Regulations. The Board of Directors may make such additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
stock of the Corporation.
SECTION 6. Fixing of Record Date. The Board of Directors may fix, in
advance, a date not more than sixty nor less than ten days before the date when
fixed for the holding of any meeting of the stockholders or before the last day
on which the consent or dissent of the stockholders may be effectively expressed
for any purpose without a meeting, as the time as of which the stockholders
entitled to notice of and to vote at such meeting or whose consent or dissent is
required or may be expressed for any purpose, as the case may be, shall be
determined, and all persons who were stockholders of record of voting shares at
such time, and no others, shall be entitled to notice of and to vote at such
meeting or to express their consent or dissent, as the case may be. The Board of
Directors may fix, in advance, a date not more than fifty nor less than ten days
preceding the date fixed for the payment of any dividend or the making of any
distribution or the allotment of rights to subscribe for securities of the
Corporation, or for the delivery of evidences of rights or evidences of
interests arising out of any change, conversion or exchange of stock or other
securities, as the record date for the determination of the stockholders
entitled to receive any such dividend, distribution, allotment, rights or
interests, and in such case only the stockholders of record at the time so fixed
shall be entitled to receive such dividend, distribution, allotment, rights or
interests.
boattree\misc\by-laws.01
-11-
<PAGE>
SECTION 7. Lost, Destroyed or Mutilated Certificates. The holder of any
certificate representing stock of the Corporation shall immediately notify the
Corporation of any loss, destruction or mutilation of such certificate, and the
Corporation may issue a new certificate in the place of any certificate
theretofore issued by it which the owner thereof shall allege to have been lost
or destroyed or which shall have been mutilated. The Board of Directors may, in
its discretion, require such owner or his legal representatives to give to the
Corporation a bond in such sum, limited or unlimited, and in such form and with
such surety or sureties as the Board of Directors in its absolute discretion
shall determine, to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate, or the issuance of such new certificate.
ARTICLE VI
Indemnification
The Corporation to the extent permitted by law may provide for
indemnification and advancement of expenses of directors in any civil or
criminal action or proceeding, including one in the right of the Corporation to
procure a judgment in its favor, for acts or decisions made by them in good
faith while performing services for the Corporation. Such indemnification may be
authorized by resolution of the Board of Directors or resolution of the
stockholders.
ARTICLE VII
General Provisions
SECTION 1. Dividends. Subject to statute and the Certificate of
Incorporation, dividends upon the shares of stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting. Dividends
may be paid in cash, in property or in stock of the Corporation, unless
otherwise provided by statute or the Certificate of Incorporation.
SECTION 2. Reserved. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors may, from time to time, in its absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors may think
conducive to the interests of the Corporation. The Board of Directors may modify
or abolish any such reserves in the manner in which it was created.
SECTION 3. Fiscal Year. The first fiscal year of the Corporation shall be
fixed, and once fixed, may thereafter be changed, by resolution of the Board of
Directors.
SECTION 4. Checks, Notes, Drafts, Etc. All checks, notes drafts or other
orders for the payment of money of the Corporation shall be signed, endorsed or
accepted in the name of the
boattree\misc\by-laws.01
-12-
<PAGE>
Corporation by such officer, officers, person or persons as from time to time
may be designated by the Board of Directors to make such designation.
SECTION 5. Execution of Contracts, Deeds, Etc. The Board of Directors
may authorize any officer or officers, agent or agents, in the name and on
behalf of the Corporation to enter into or execute and deliver any and all
deeds, bonds, mortgages, contracts and other obligations or instruments, and
such authority may be general or confined to specific instances.
SECTION 6. Voting of Stocks in Other Corporations. Unless otherwise
provided by resolution of the Board of Directors, the Chairman of the Board, the
Vice-Chairman of the Board, or the President, from time to time, may (or may
appoint one or more attorneys or agents to) cast the votes which the Corporation
may be entitled to cast as a stockholder or otherwise in any other corporation,
any of whose stock or securities may be held by the Corporation, at meetings of
the holders of the stock or other securities of such other corporations, or to
consent in writing to any action by any such other corporation. In the event one
or more attorneys or agents are appointed, the Chairman of the Board, the
Vice-Chairman of the Board, or the President may instruct the person or persons
so appointed as to the manner of casting such votes or giving such consent. The
Chairman of the Board, the Vice-Chairman of the Board, or the President may, or
may instruct the attorneys or agents appointed to, execute or cause to be
executed in the name and on behalf of the Corporation and under its seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper in the premises.
ARTICLE VIII
Force and Effect of By-Laws
These By-Laws are subject to the provisions of the Delaware General
Corporation Law and the Corporation's certificate of incorporation, as it may be
amended from time to time. If any provision in these By-Laws is inconsistent
with a provision in that Act or the certificate of incorporation, the provision
of that Act or the certificate of incorporation shall govern. Wherever in these
By-Laws references are made to more than one incorporator, director, or
stockholder, they shall, if this is a sole incorporator, director, stockholder
corporation, be construed to mean the solitary person; and all provisions
dealing with the quantum of majorities or quorums shall be deemed to mean the
action by the one person constituting the Corporation.
ARTICLE IX
Amendments
These By-Laws may be amended or repealed or new By-Laws may be adopted
at an annual or special meeting of stockholders at which a quorum is present or
represented, by the vote of the holders of stock entitled to vote in the
election of directors provided that notice of the proposed
boattree\misc\by-laws.01
-13-
<PAGE>
amendment or repeal or adoption of new By-Laws is contained in the notice of
such meeting. These By-Laws may also be amended or repealed or new By-Laws may
be adopted by the Board at any regular or special meeting of the Board of
Directors. If any By-Law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of the stockholders for the election of
directors the By-Law so adopted, amended or repealed, together with a concise
statement of the changes made. By-Laws adopted by the Board of Directors may be
amended or repealed by the stockholders.
boattree\misc\by-laws.01
-14-
<PAGE>
WARRANT AGREEMENT dated as of _______ __, 1998 between
American Marine Recreation, Inc., a Delaware corporation (the "Company"), on one
hand, and BlueStone Capital Partners, L.P. ("BlueStone") and Royce Investment
Group, Inc. (together with BlueStone collectively hereinafter referred to as the
"Representatives"), on the other hand.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company proposes to issue to the Representatives,
in their individual capacity and not as representatives of the several
Underwriters (defined below), warrants ("Warrants") to purchase up to 218,000
(as such number may be adjusted from time to time pursuant to Article 8 of this
Agreement) shares (the "Shares") of common stock, par value $.01 per share, of
the Company (the "Common Stock"); and
WHEREAS, the Representatives have agreed, pursuant to the
underwriting agreement (the "Underwriting Agreement") dated _______ __, 1998
between the Representatives, as representatives of the several underwriters
named in Schedule A to the Underwriting Agreement (the "Underwriters") and the
Company, to act as representatives of the several Underwriters in connection
with the Company's proposed public offering (the "Public Offering") of 2,180,000
shares of Common Stock (the "Public Shares") at an initial public offering price
of $____ per Public Share; and
WHEREAS, the Warrants issued pursuant to this Agreement are
being issued by the Company to the Representatives and/or to their designees who
are officers or partners of the Representatives and/or, at the Representatives'
direction, to members of the selling group or underwriting syndicate and/or
their respective officers or partners (collectively, the "Designees"), in
consideration for, and as part of the Representatives' compensation in
connection with, the Representatives' acting as representatives of the several
Underwriters pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment
by the Representatives to the Company of TWO HUNDRED FOURTEEN DOLLARS AND FIFTY
CENTS ($214.50), the agreements herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Grant.
The Representatives and/or their Designees are hereby granted
the right to purchase, at any time from ______ __, 1999 until 5:00 P.M., New
York City time, on ______ __, 2003, (the "Warrant Exercise Term"), up to 218,000
fully paid and non-assessable Shares at an initial exercise price (subject to
adjustment as provided in Article 8 hereof) of $_______ per Share.
<PAGE>
2. Warrant Certificates.
The warrant certificates delivered and to be delivered
pursuant to this Agreement (the "Warrant Certificates") shall be in the form set
forth as Exhibit A attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Warrants initially are
exercisable at a price of $______ per Share, payable in cash or by check to the
order of the Company, or any combination thereof, subject to adjustment as
provided in Article 8 hereof. Upon surrender of a Warrant Certificate with the
annexed Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Shares purchased, at the
Company's principal offices in Florida (currently located at 1924 33rd Street,
Orlando, Florida 32834) the registered holder of a Warrant Certificate ("Holder"
or "Holders") shall be entitled to receive a certificate or certificates for the
Shares so purchased. The purchase rights represented by each Warrant Certificate
are exercisable at the option of the Holder thereof, in whole or in part (but
not as to fractional shares of the Common Stock). In the case of the purchase of
less than all the Shares purchasable under any Warrant Certificate, the Company
shall cancel said Warrant Certificate upon the surrender thereof and shall
execute and deliver a new Warrant Certificate of like tenor for the balance of
the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant
Exercise Term, the Holder may, at the Holder's option, exchange, in whole or in
part, the Warrants represented by such Holder's Warrant Certificate (a "Warrant
Exchange"), into the number of Shares determined in accordance with this Section
3.2, by surrendering such Warrant Certificate at the principal office of the
Company or at the office of its transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of Warrants to be so
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new Warrant
Certificate of like tenor representing the Warrants which were subject to the
surrendered Warrant Certificate and not included in the Warrant Exchange, shall
be issued as of the Exchange Date and delivered to the Holder within three (3)
days following the Exchange Date. In connection with any Warrant Exchange, the
Holder shall be entitled to subscribe for and acquire (i) the number of Shares
(rounded to the next highest integer) which would, but for the Warrant Exchange,
then be issuable pursuant to the provision of Section 3.1
-2-
<PAGE>
above upon the exercise of the Warrants specified by the Holder in its Notice of
Exchange (the "Total Number") less (ii) the number of Shares equal to the
quotient obtained by dividing (a) the product of the Total Number and the
existing Exercise Price (as hereinafter defined) by (b) the Market Price (as
hereinafter defined) of a Public Share on the day preceding the Warrant
Exchange. "Market Price" at any date shall be deemed to be the last reported
sale price, or, in case no such reported sales takes place on such day, the
average of the last reported sale prices for the last three (3) trading days, in
either case as officially reported by the principal securities exchange on which
the Common Stock is listed or admitted to trading or as reported in the Nasdaq
National Market System, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on the NASDAQ National
Market System, the closing bid price as furnished by (i) the National
Association of Securities Dealers, Inc. through Nasdaq or (ii) a similar
organization if Nasdaq is no longer reporting such information.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of
certificates for the Shares purchased shall be made forthwith (and in any event
within three (3) business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificates shall (subject to the provisions of
Article 5 hereof) be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the
Shares shall be executed on behalf of the Company by the manual or facsimile
signature of the present or any future Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the
present or any future Secretary or Assistant Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
-3-
<PAGE>
The Warrant Certificates, and upon exercise of the Warrants,
in part or in whole, certificates representing the Shares shall bear a legend
substantially similar to the following:
"The securities represented by this certificate and the other
securities issuable upon exercise thereof have not been registered for
purposes of public distribution under the Securities Act of 1933, as
amended (the "Act"), and may not be offered or sold except (i) pursuant
to an effective registration statement under the Act, (ii) to the
extent applicable, pursuant to Rule 144 under the Act (or any similar
rule under such Act relating to the disposition of securities), or
(iii) upon the delivery by the holder to the Company of an opinion of
counsel, reasonably satisfactory to counsel to the Company, stating
that an exemption from registration under such Act is available."
5. Restriction on Transfer of Warrants.
The Holder of a Warrant Certificate, by the Holder's
acceptance thereof, covenants and agrees that the Warrants are being acquired as
an investment and not with a view to the distribution thereof, and that the
Warrants may not be sold, transferred, assigned, hypothecated or otherwise
disposed of, in whole or in part, for a period of one (1) year from the date
hereof, except to the Designees.
6. Price.
6.1. Initial and Adjusted Exercise Price. The
initial exercise price of each Warrant shall be $____ per Share. The adjusted
exercise price per Share shall be the price which shall result from time to time
from any and all adjustments of the initial exercise price in accordance with
the provisions of Article 8 hereof.
6.2. Exercise Price. The term "Exercise Price"
herein shall mean the initial exercise price or the adjusted exercise price,
depending upon the context.
7. Registration Rights.
7.1. Registration Under the Securities Act of
1933. None of the Warrants or Shares have been registered for purposes of public
distribution under the Securities Act of 1933, as amended (the "Act").
7.2. Registrable Securities. As used herein the
term "Registrable Security" means each of the Shares and any shares of Common
Stock issued upon any stock split or stock dividend in respect of such Shares;
provided, however, that with respect to any particular Registrable Security,
such security shall cease to be a
-4-
<PAGE>
Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Act and disposed of pursuant thereto, (ii)
registration under the Act is no longer required for the subsequent public
distribution of such security or (iii) it has ceased to be outstanding. The term
"Registrable Securities" means any and/or all of the securities falling within
the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be made in
the definition of "Registrable Security" as is appropriate in order to prevent
any dilution or enlargement of the rights granted pursuant to this Article 7.
7.3. Piggyback Registration. If, at any time during
the seven years following the effective date of the Public Offering, the Company
proposes to prepare and file one or more post-effective amendments to the
registration statement filed in connection with the Public Offering or any new
registration statement or post-effective amendments thereto covering equity or
debt securities of the Company, or any such securities of the Company held by
its shareholders (in any such case, other than in connection with a merger,
acquisition or pursuant to Form S-8 or successor form), (for purposes of this
Article 7, collectively, the "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at least thirty
(30) business days prior to the filing of each such Registration Statement, to
all holders of the Registrable Securities. Upon the written request of such a
holder (a "Requesting Holder"), made within twenty (20) business days after
receipt of the Notice, that the Company include any of the Requesting Holder's
Registrable Securities in the proposed Registration Statement, the Company
shall, as to each such Requesting Holder, use its best efforts to effect the
registration under the Act of the Registrable Securities which it has been so
requested to register ("Piggyback Registration"), at the Company's sole cost and
expense and at no cost or expense to the Requesting Holders.
Notwithstanding the provisions of this Section 7.3, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7.3 (irrespective of whether any written request
for inclusion of Registrable Securities shall have already been made) to elect
not to file any such proposed Registration Statement, or to withdraw the same
after the filing but prior to the effective date thereof.
7.4. Demand Registration.
(a) At any time during the Warrant Exercise Term, any
"Majority Holder" (as such term is defined in Section 7.4.(c) below) of the
Registrable Securities shall have the right (which right is in addition to the
piggyback registration rights provided for under Section 7.3 hereof),
exercisable by written notice to the Company (the "Demand Registration
Request"), to have
-5-
<PAGE>
the Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, at the sole expense of the Company (except as
provided in Section 7.5.(b) hereof, a Registration Statement and such other
documents, including a prospectus, as may be necessary (in the opinion of both
counsel for the Company and counsel for such Majority Holder), in order to
comply with the provisions of the Act, so as to permit a public offering and
sale of the Registrable Securities by the holders thereof. The Company shall use
its best efforts to cause the Registration Statement to become effective under
the Act, so as to permit a public offering and sale of the Registrable
Securities by the holders thereof. Once effective, the Company will use its best
efforts to maintain the effectiveness of the Registration Statement until the
earlier of (i) the date that all of the Registrable Securities have been sold or
(ii) the date that the holders of the Registrable Securities receive an opinion
of counsel to the Company that all of the Registrable Securities may be freely
traded (without limitation or restriction as to quantity or timing and without
registration under the Act) under Rule 144(k) promulgated under the Act or
otherwise.
(b) The Company covenants and agrees to give written
notice of any Demand Registration Request to all holders of the Registrable
Securities within ten (10) business days from the date of the Company's receipt
of any such Demand Registration Request. After receiving notice from the Company
as provided in this Section 7.4(b), holders of Registrable Securities may
request the Company to include their Registrable Securities in the Registration
Statement to be filed pursuant to Section 7.4(a) hereof by notifying the Company
of their decision to have such securities included within ten (10) days of their
receipt of the Company's notice.
(c) The term "Majority Holder" as used in Section 7.4
hereof shall mean any holder or any combination of holders of Registrable
Securities, if included in such holders' Registrable Securities are that
aggregate number of Shares (including Shares already issued and Shares issuable
pursuant to the exercise of outstanding Warrants) as would constitute a majority
of the aggregate number of Shares (including Shares already issued and Shares
issuable pursuant to the exercise of outstanding Warrants) included in all the
Registrable Securities.
7.5. Covenants of the Company With Respect to
Registration. The Company covenants and agrees as follows:
(a) In connection with any registration under Section
7.4 hereof, the Company shall file the Registration Statement as expeditiously
as possible, but in any event no later than thirty (30) business days following
receipt of any demand therefor, shall use its best efforts to have any such
Registration Statement declared effective at the earliest possible time, and
-6-
<PAGE>
shall furnish each holder of Registrable Securities such number of prospectuses
as shall reasonably be requested.
(b) The Company shall pay all costs, fees and
expenses (other than underwriting fees, discounts and nonaccountable expense
allowances applicable to the Registrable Securities and the fees and expenses of
counsel retained by the holders of the Registrable Securities) in connection
with all Registration Statements filed pursuant to Sections 7.3. and 7.4.(a)
hereof including, without limitation, the Company's legal and accounting fees,
printing expenses, and blue sky fees and expenses.
(c) The Company will take all necessary action which
may be required in qualifying or registering the Registrable Securities included
in the Registration Statement for offering and sale under the securities or blue
sky laws of such states as are reasonably requested by the holders of such
securities, provided that the Company shall not be obligated to execute or file
any general consent to service of process or to qualify as a foreign corporation
to do business under the laws of any such jurisdiction.
(d) The Company shall indemnify any holder of the
Registrable Securities to be sold pursuant to any Registration Statement and any
underwriter or person deemed to be an underwriter under the Act and each person,
if any, who controls such holder or underwriter or person deemed to be an
underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), against all loss,
claim, damage, expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to which
any of them may become subject under the Act, the Exchange Act or otherwise,
arising from such registration statement to the same extent and with the same
effect as the provisions pursuant to which the Company has agreed to indemnify
the Underwriters contained in Section 7 of the Underwriting Agreement and to
provide for just and equitable contribution as set forth in Section 8 of the
Underwriting Agreement.
(e) Any holder of Registrable Securities to be sold
pursuant to a Registration Statement, and such Holder's successors and assigns,
shall severally, and not jointly, indemnify, the Company, its officers and
directors and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage or expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
to which they may become subject under the Act, the Exchange Act or otherwise,
arising from information furnished by or on behalf of such Holder, or such
Holder's successors or assigns, for specific inclusion in such Registration
Statement to the same extent and with the same effect
-7-
<PAGE>
as the provisions pursuant to which the Underwriters have agreed to indemnify
the Company contained in Section 7 of the Underwriting Agreement and to provide
for just and equitable contribution as set forth in Section 8 of the
Underwriting Agreement.
(f) Nothing contained in this Agreement shall be
construed as requiring any Holder to exercise the Warrants held by such Holder
prior to the initial filing of any Registration Statement or the effectiveness
thereof.
(g) The Company shall promptly deliver copies of all
correspondence between the Commission and the Company, its counsel or auditors
and all memoranda relating to discussions with the Commission or its staff with
respect to the Registration Statement to each Holder of Registrable Securities
included for registration in such Registration Statement pursuant to Section 7.3
or Section 7.4 hereof that requests such correspondence and memoranda and to the
managing underwriter, if any, of the offering in connection with which such
Holder's Registrable Securities are being registered and shall permit each such
Holder and managing underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
Registration Statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company with its
officers and independent auditors, all to such reasonable extent and at such
reasonable times and as often as any such Holder or managing underwriter shall
reasonably request.
8. Adjustments of Exercise Price and Number of
Shares.
8.1 Computation of Adjusted Price. In case the
Company shall at any time after the date hereof pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, then upon such
dividend or distribution, the Exercise Price in effect immediately prior to such
dividend or distribution shall forthwith be reduced to a price determined by
dividing:
(a) an amount equal to the total number
of shares of Common Stock outstanding immediately prior to such dividend or
distribution multiplied by the Exercise Price in effect immediately prior to
such dividend or distribution, by
(b) the total number of shares of Common
Stock outstanding immediately after such issuance or sale.
For the purposes of any computation to be made
in accordance with the provisions of this Section 8.1, the Common Stock issuable
by way of dividend or other distribution on any stock of the Company shall be
deemed to have been issued immediately after the opening of business on the date
following the
-8-
<PAGE>
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution.
8.2. Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common Stock,
the Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
8.3. Adjustment in Number of Shares. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Article 8,
the number of Shares issuable upon the exercise of each Warrant shall be
adjusted to the nearest full number by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number of
Shares issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
8.4. Reclassification, Consolidation, Merger, etc. In
case of any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares of Common Stock issuable
upon exercise of the Holder's Warrants and (y) the Exercise Price in effect
immediately prior to the record date for such reclassification, change,
consolidation, merger, sale or conveyance as if such Holders had exercised the
Warrants.
8.5. Determination of Outstanding Shares of Common
Stock. The number of shares of Common Stock at any one time outstanding shall
include the aggregate number of shares of Common Stock issued and the aggregate
number of shares of Common Stock issuable upon the exercise of options, rights,
warrants and upon the conversion or exchange of convertible or exchangeable
securities.
8.6 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants make any
-9-
<PAGE>
distribution of its assets to holders of its Common Stock as a liquidating or a
partial liquidating dividend, then the holder of Warrants who exercises its
Warrants after the record date for the determination of those holders of Common
Stock entitled to such distribution of assets as a liquidating or partial
liquidating dividend shall be entitled to receive for the Warrant Price per
Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith) which would have been payable to such
holder had he been the holder of record of the Common Stock receivable upon
exercise of his Warrant on the record date for the determination of those
entitled to such distribution. At the time of any such dividend or distribution,
the Company shall make appropriate reserves to ensure the timely performance of
the provisions of this Subsection 8.6.
8.7 Subscription Rights for Shares of Common Stock or
Other Securities. In the case the Company or an affiliate of the Company shall
at any time after the date hereof and prior to the exercise of all the Warrants
issue any rights, warrants or options to subscribe for shares of Common Stock or
any other securities of the Company or of such affiliate to all the shareholders
of the Company, the Holders of unexercised Warrants on the record date set by
the Company or such affiliate in connection with such issuance of rights,
warrants or options shall be entitled, in addition to the shares of Common Stock
or other securities receivable upon the exercise of the Warrants, to receive
such rights, warrants or options shall be entitled, in addition to the shares of
Common Stock or other securities receivable upon the exercise of the Warrants,
to receive such rights at the time such rights, warrants or options that such
Holders would have been entitled to receive had they been, on such record date,
the holders of record of the number of whole shares of Common Stock then
issuable upon exercise of their outstanding Warrants (assuming for purposes of
this Section 8.7), that the exercise of the Warrants is permissible immediately
upon issuance).
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon
the surrender thereof by the registered Holder at the principal executive office
of the Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of Shares in
such denominations as shall be designated by the Holder thereof at the time of
such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses
-10-
<PAGE>
incidental thereto, and upon surrender and cancellation of the Warrant
Certificate, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests.
The Company shall not be required to issue certificates
representing fractions of Shares, nor shall it be required to issue scrip or pay
cash in lieu of fractional interests, it being the intent of the parties that
all fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of Shares.
11. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out
of its authorized shares of Common Stock, solely for the purpose of issuance
upon the exercise of the Warrants, such number of shares of Common Stock as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all Shares issuable upon such exercise shall be duly and validly issued, fully
paid, non-assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on the Nasdaq National Market or listed on such
national securities exchanges as the Common Stock is listed at such time.
12. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as
conferring upon the Holder or Holders the right to vote or to consent or to
receive notice as a shareholder in respect of any meetings of shareholders for
the election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
-11-
<PAGE>
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an entirety
shall be proposed; or
(d) reclassification or change of the outstanding
shares of Common Stock (other than a change in par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or a sale or conveyance to another corporation of the property of
the Company as an entirety is proposed; or
(e) The Company or an affiliate of the Company shall
propose to issue any rights to subscribe for shares of Common Stock or any other
securities of the Company or of such affiliate to all the shareholders of the
Company;
then, in any one or more of said events, the Company shall give written notice
to the Holder or Holders of such event at least fifteen (15) days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, options or
warrants, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken in connection
with the declaration or payment of any such dividend or distribution, or the
issuance of any convertible or exchangeable securities or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
13. Notices.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3
of this Agreement or to such other address as the Company may designate by
notice to the Holders.
-12-
<PAGE>
14. Supplements and Amendments.
The Company and BlueStone may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrant Certificates
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and BlueStone may deem necessary or desirable and which the
Company and the BlueStone deem not to adversely affect the interests of the
Holders of Warrant Certificates.
15. Successors.
All the covenants and provisions of this Agreement by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.
16. Termination.
This Agreement shall terminate at the close of business on
_______ __, 2006. Notwithstanding the foregoing, this Agreement will terminate
on any earlier date when all Warrants have been exercised and all the Shares
have been resold to the public; provided, however, that the provisions of
Section 7.5. hereof shall survive any termination pursuant to this Section 16
until the close of business on _______ __, 2009.
17. Governing Law.
This Agreement and each Warrant Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of New York
and for all purposes shall be construed in accordance with the laws of said
State.
18. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company and the Representatives and any
other registered holder or holders of the Warrant Certificates, Warrants or the
Shares any legal or equitable right, remedy or claim under this Agreement; and
this Agreement shall be for the sole and exclusive benefit of the Company and
the Representatives and any other holder or holders of the Warrant Certificates,
Warrants or the Shares.
19. Counterparts.
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes
-13-
<PAGE>
be deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
[SEAL] AMERICAN MARINE RECREATION, INC.
By:
---------------------------
Name:
Title:
Attest:
- -----------------------
BLUESTONE CAPITAL PARTNERS, L.P.
By: BlueStone Capital Management, Inc.,
General Partner
By:
---------------------------------
Kerry J. Dukes,
President
ROYCE INVESTMENT GROUP, INC.
By:
---------------------------------
Anthony J. Sarkis,
Vice President
-14-
<PAGE>
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, _______ __, 2003
No. W- _______ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that _______________
____________ or registered assigns, is the registered holder of _______ Warrants
to purchase, at any time from _______ __, 1999 until 5:00 P.M. New York City
time on ______ __, 2003 ("Expiration Date"), up to _____ fully-paid and
non-assessable shares (the "Shares") of common stock, par value $.01 per share
(the "Common Stock"), of American Marine Recreation, Inc., a Delaware
corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $____ per Share upon
surrender of this Warrant Certificate and payment of the Exercise Price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the warrant agreement dated as of ______ __, 1998 between the Company and
BlueStone Capital Partners, L.P. and Royce Investment Group, Inc. (the "Warrant
Agreement"). Payment of the Exercise Price may be made in cash, or by certified
or official bank check in New York Clearing House funds payable to the order of
the Company, or any combination thereof.
No Warrant may be exercised after 5:00 P.M., New York City
time, on the Expiration Date, at which time all Warrants evidenced hereby,
unless exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby
<PAGE>
referred to in a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax, or
other governmental charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
-2-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated: _______ __, 1998 American Marine Recreation, Inc.
[SEAL] By:__________________________
Name:
Title:
Attest:
- ----------------------
-3-
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase _________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of American Marine
Recreation, Inc. in the amount of $__________ , all in accordance with the terms
hereof. The undersigned requests that a certificate for such Shares be
registered in the name of , whose address is __________________, and that such
Certificate be delivered to __________________, whose address is _____________.
Dated: Signature:
------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
--------------------------------
--------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED
-------------------------------------------
hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________, Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature:
----------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate)
- -------------------------------
- -------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE>
AMERICAN MARINE RECREATION, INC.
1998 STOCK OPTION PLAN
1. Purpose. The purpose of this American Marine Recreation,
Inc. 1998 Stock Option Plan (the "Plan") is to provide a means whereby American
Marine Recreation, Inc. and any present or future subsidiaries (collectively
referred to as the "Company") may, through the grant of options to purchase
shares of the Company's common stock, $.01 par value per share (the "Common
Stock"), attract and retain persons of ability as key employees, members of the
Board of Directors and consultants and motivate such individuals to exert their
best efforts on behalf of the Company.
2. Shares Subject to the Plan. Options may be granted by the
Company from time to time to eligible individuals to purchase an aggregate of
410,000 shares of Common Stock and 410,000 of such shares shall be reserved for
options granted under the Plan (subject to adjustment as provided in Section
5(h) hereof). The shares issued upon exercise of options issued under the Plan
may be authorized and unissued shares or shares held by the Company in its
treasury. If any option granted under the Plan shall terminate or expire, new
options covering such shares may thereafter be granted to other eligible
individuals.
3. Eligibility. Options may be granted under the Plan to
employees of the Company, including officers, who are designated as key
employees by the Committee (as defined in Section 4 hereof). Members of the
Board of Directors and consultants of the Company selected by the Committee
shall also be eligible to receive options under the Plan.
4. Administration of the Plan. This Plan shall be administered
by a committee (the "Committee") of at least two members of the Board of
Directors, as appointed from time to time. Any action
boattree\misc\stk-opt.pln
1
<PAGE>
of the Committee with respect to administration of the Plan shall be taken
pursuant to (i) a majority vote at a meeting of the Committee (to be documented
by minutes), or (ii) the unanimous written consent of its members.
Subject to the provisions of the Plan, the Committee shall have the authority
to:
(a) determine and designate from time to time those
eligible individuals to whom options are to be granted and the number
of shares to be optioned to each individual; provided, however, that no
option shall be granted after the expiration of the period of ten years
from the effective date of the Plan specified in Section 10 hereof;
(b) determine the time or times and the manner in which
each option shall be exercisable and the duration of the exercise
period;
(c) extend the term of any option (including extension by
reason of any optionee's death, permanent disability or retirement);
and
(d) issue options under the Plan either as incentive stock
options in accordance with the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or as
nonstatutory options.
The Committee may interpret the Plan, prescribe, amend and
rescind any rules and regulations necessary or appropriate for the
administration of the Plan, and make such other determinations to take such
other action as it deems necessary or advisable. Any interpretation,
determination or other action made or taken by the Committee shall be final,
binding and conclusive.
boattree\misc\stk-opt.pln
2
<PAGE>
5. Terms and Conditions of Options. Each option granted under
the Plan shall be evidenced by an agreement, in form and substance approved by
the Committee from time to time, which shall be subject to the following express
terms and conditions and to such other terms and conditions as the Committee may
deem appropriate:
(a) Option Period. Each option agreement shall specify the
period for which the option thereunder is granted and shall provide
that the option shall expire at the end of such period. No option
granted under this Plan may be exercisable after the expiration of ten
years from the date the option is granted; provided, however, that any
incentive option granted to any person owning more than 10 percent of
the voting power of all classes of any member of the Company's stock
shall not be exercisable after the expiration of five years from the
date such option is granted.
(b) Option Price. The option price per share shall be
determined by the Committee at the time any option is granted, provided
that, to the extent that any options are intended to qualify as
incentive stock options, the option price per share shall not be less
than the fair market value of a share of Common Stock on the date the
option is granted, as determined by the Committee.
(c) Exercise of Option.
(1) In the case of an optionee who is an employee, no
part of any option may be exercised until the optionee shall
have remained in the employ of the Company for such period
after the date on which the option is granted as the Committee
may specify in the option agreement, and until such other
conditions as specified in the option agreement shall have
been satisfied. Subject in each case to the provisions of
paragraphs (a) through (c) and (e) of this Section 5, any
option may be exercised, to the extent exercisable by its
terms, at such time or times as may be determined by the
Committee at the time of grant.
boattree\misc\stk-opt.pln
3
<PAGE>
(2) In the case of an optionee who is a Member of the
Board of Directors or a consultant, the Committee may specify
in the option agreement any requirement as to the period of
time after the grant of the option that the optionee is
required to be a member of the Board of Directors or a
consultant to the Company or other conditions which shall be
satisfied before the option is exercisable, in whole or in
part. Any option may be exercised, to the extent exercisable
by its terms, at such time or times as may be determined by
the Committee at the time of grant. The option agreement may
also specify the extent to which the option is exercisable in
the event of the death or disability of the optionee, by whom
the option is exercisable, and the requirements for exercise
of the option in either of such events. (d) Payment of
Purchase Price upon Exercise. The purchase price of the shares
as to which an option shall be exercised shall be paid to the
Company in full at the time of exercise. (e) Termination of
Employment. Any option agreement with an employee under this
Plan shall provide that:
(1) If prior to the expiration date of the option
(the "expiration date") the employee shall for any reason
whatsoever, other than (i) his authorized retirement as
defined in (2) below, (ii) his permanent and total disability
as defined in (3) below, or (iii) his death, cease to be
employed by the Company, any unexercised portion of the option
granted shall automatically terminate;
(2) If prior to the expiration date, the employee
shall (i) retire upon or after reaching the age which at the
time of retirement is established as the normal retirement age
for employees of the Company (such normal retirement age now
being 65 years) or (ii) with the written consent of the
Company retire prior to such age on account of physical
boattree\misc\stk-opt.pln
4
<PAGE>
or mental disability (such retirement pursuant to (i) or (ii)
hereof being deemed an "authorized retirement") any
unexercised portion of the option shall expire at the end of
three months after such authorized retirement, and during such
three month period the employee may exercise all or any part
of the then unexercised portion of the option;
(3) If prior to the expiration date, the employee
shall become permanently and totally disabled (within the
meaning of Section 22 (e)(3) of the Code) any unexercised
portion of the option shall expire at the end of twelve months
after termination of employment from the Company due to such
permanent and total disability; and
(4) If prior to the expiration date, the employee
shall die (at a time when he is an employee of the Company or
within three months after his (i) authorized retirement or
(ii) termination due to permanent and total disability), the
legal representatives of his estate or a legatee or legatees
shall have the privilege, for a period of six months after his
death, of exercising all or any part of the then unexercised
portion of the option. Nothing in (2), (3) or (4) shall extend
the time for exercising any option granted pursuant
to the Plan beyond the expiration date.
(f) Transferability of Options. To the extent required by
applicable law including the Code, no option granted under the Plan and
no right arising under any such option shall be transferable other than
by will or by the laws of descent and distribution and during the
lifetime of the optionee an option shall be exercisable only by him.
(g) Investment Representation. Each option agreement may
contain an undertaking that, upon demand by the Committee for such a
representation, the optionee (or any person acting under Section 5(e)
hereof) shall deliver to the Committee at the time of any exercise of
an option a written representation that the shares to be acquired upon
such exercise are to be acquired for
boattree\misc\stk-opt.pln
5
<PAGE>
investment and not for resale or with a view to the distribution
thereof. Upon such demand, delivery of such representation prior to the
delivery of any shares issued upon exercise of an option and prior to
the expiration of the option period shall be a condition precedent to
the right of the optionee of such other person to purchase any shares.
(h) Adjustments in Event of Change in Common Stock. In the
event of any change in the Common Stock by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, or rights offering to
purchase Common Stock at a price substantially below fair market value,
or of any similar change affecting the Common Stock, the number and
kind of shares which thereafter may be optioned and sold under the Plan
and the number and kind of shares subject to option in outstanding
option agreements and the purchase price per share thereof shall be
appropriately adjusted consistent with such change in such manner as
the Committee may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for, participants in
the Plan.
(i) Optionees to Have No Rights as a Stockholder. No optionee
shall have any rights as a stockholder with respect to any shares
subject to his option prior to the date on which he is recorded as the
holder of such shares on the records of the Company.
(j) Plan and Option Not to Confer Rights with Respect to
Continuance of Employment. The Plan and any option granted under the
Plan shall not confer upon any optionee any right with respect to
continuance of employment by the Company, nor shall they interfere in
any way with the right of the Company to terminate his employment at
any time.
6. Limitation. Incentive stock options shall not be granted
under the Plan, which first become exercisable in any calendar year and which
permit the optionee to purchase shares of the Company
boattree\misc\stk-opt.pln
6
<PAGE>
having an aggregate value in excess of $100,000, determined at the time of the
grant of the options. No optionee may exercise incentive stock options during a
calendar year for the purchase of shares having an aggregate fair market value
(determined at the time of the grant of the options) exceeding $100,000, except
and to the extent that such options were first exercisable in preceding calendar
years.
7. Purchase Price. The purchase price for a share of the stock
subject to any option granted hereunder shall be determined by the Committee at
the time the option is granted, provided that, to the extent that any options
are intended to qualify as incentive stock options, the option price per share
shall not be less than the fair market value of the stock on the date of grant
of the option, said fair market value to be determined in good faith at the time
of grant of such option by decision of the Committee; and, further provided,
that in the case of an incentive option granted to any person then owning more
than 10 percent of the voting power of all classes of the Company's stock, the
purchase price per share of the stock subject to option shall be not less than
110 percent of the fair market value of the stock on the date of grant of the
option, determined in good faith as aforesaid.
8. Compliance with Laws and Regulations. The Plan, the grant
and exercise of options thereunder, and the obligation of the Company to sell
and deliver shares under such options, shall be subject to all applicable
federal and state laws, including any withholding tax requirements, rules and
regulations and to such approvals by any government or regulatory agency as may
be required. The Company shall not be required to issue or deliver any
certificates for shares of Common Stock prior to (i) the collection of an amount
from the optionee sufficient to satisfy any withholding tax requirements; (ii)
the listing of such shares on any stock exchange on which the Common Stock may
then be listed; and (iii) the completion of any registration or qualification of
such shares under any federal or state law, or any
boattree\misc\stk-opt.pln
7
<PAGE>
ruling or regulation of any government body which the Company shall, in its sole
discretion, determine to be necessary or advisable.
9. Amendment or Discontinuance of the Plan. The Board of
Directors of the Company may at any time amend, suspend or terminate the Plan;
provided however, that, subject to the provisions of Section 5(h) hereof, no
action of the Board may (i) increase the number of shares reserved for options
pursuant to Section 2 hereof, and (ii) permit the granting of any option at an
option price less than that determined in accordance with Section 5(b) hereof.
Without the written consent of an optionee, no amendment, discontinuance or
termination of the Plan shall alter or impair any option previously granted to
him under the Plan.
10. Effective Date of the Plan and Jurisdiction. The effective
date of the Plan shall be the date of its adoption by the Board of Directors,
subject to its approval by the shareholders within twelve months of the date of
its adoption. Notwithstanding the foregoing, if the Plan shall have been
approved by the Board prior to such stockholder approval, options may be granted
by the Committee as provided herein subject to such subsequent stockholder
approval. The Plan shall be governed by the laws of the State of Delaware.
11. Name. The Plan shall be known as the "American
Marine Recreation, Inc. 1998 Stock Option Plan."
boattree\misc\stk-opt.pln
8
<PAGE>
SECOND MORTGAGE AND SECURITY AGREEMENT
Executed the 28th day of November, A.D. 1995, by BOAT TREE, INC., a
Florida corporation, whose post office address is 2226 Paseo Avenue, Orlando, FL
32805, hereinafter called the Mortgagor, to DANIS PROPERTIES LIMITED
PARTNERSHIP, an Ohio limited partnership, whose post office address is 2
Riverplace, Suite 400, Dayton, OH 45405, hereinafter called the Mortgagee:
WITNESSETH, that for divers good and valuable considerations, and also
in consideration of the aggregate sum named in the Promissory Note of even date
herewith, hereinafter described, the Mortgagor does grant, bargain, sell, alien,
remise, release, convey and confirm unto the Mortgagee the following property,
hereinafter referred to as the Property or the Mortgaged Property:
THE MORTGAGED PROPERTY
A. The Real Property. All of the lands in the County of Orange,
Florida, described on Exhibit "A" attached hereto and incorporated herein (the
"Land") to have and to hold the same together with all the improvements now or
hereafter erected to have and to hold the same together with all the
improvements now or hereafter attached thereto together with each and every
tenements, hereditaments, easements, rights, powers, privileges, amenities, and
appurtenances thereunto belonging or in any way appertaining and the reversion
and reversions, remainder and remainders, also all the estate, right, title,
interest, homestead, right of dower, separate estate, property, possession and
claim whatsoever in law as well as in equity of Mortgagor of, in and to the same
in every part and parcel thereof unto Mortgagee in fee simple.
B. Improvements. All buildings, structures, betterments, and other
improvements of any nature now or hereafter situated in whole or in part upon
the Land, regardless of whether physically affixed thereto or severed or capable
of severance therefrom (the"Improvements").
C. Appurtenances. The benefit of all easements and other rights of any
nature whatsoever appurtenant to the Land or the Improvements, or both, and all
rights of way, streets, alleys, passages, drainage rights, sewer rights, and
rights of ingress and egress to the Land, and all adjoining property, whether
now existing or hereafter arising, together with the reversion or reversions,
remainder or remainders, rents, issues, incomes, and profits of any of the
foregoing.
D. Tangible Property. All of Mortgagor's interest in all fixtures and
equipment of any nature whatsoever now or hereafter (i) attached or affixed to
the Land or the Improvements, or both, regardless of whether physically affixed
thereto or severed or capable of severance therefrom, or (ii) regardless of
where situated, used, usable, or intended to be used in connection with any
present or future use or operation of or upon the Land. The foregoing includes
but is not limited to: all heating, air conditioning, lighting, incinerating,
and power equipment; compressors, pipes, conduits, wiring, and switchboards; all
plumbing, lifting, cleaning, fire prevention, fire extinguishing, refrigerating
and ventilating; all boilers, furnaces, oil burners, vacuum cleaning systems,
elevators, and escalators; all stoves, ovens, ranges, disposal units,
dishwashers, water heaters, exhaust systems, refrigerators, cabinets, and
partitions; all rugs and carpets; all laundry equipment; all building materials;
and all additions, accessions, renewals,
Misc\2ndmtg
1
<PAGE>
replacements, and
substitutions of any or all of the foregoing (the "Tangible Property").
Misc\2ndmtg
2
<PAGE>
E. Income. All rents, issues, incomes, and profits in any manner
arising from the Land, Improvements, or Tangible Property, or any combination,
including Mortgagor's interest in and to all leases, licenses, franchises, and
concessions of, or relating to, all or any portion of the Land, Improvements or
Tangible Property, whether now existing or hereafter made, including all
amendments, modifications, replacements, substitutions, extensions, renewals, or
consolidations. The foregoing items are jointly and severally called the "Rents"
in this instrument.
F. Proceeds. All proceeds of the conversion, voluntary or involuntary,
of any of the Mortgaged Property into cash or other liquidated claims, or that
are otherwise payable for injury to, or the taking or requisitioning of, any
such property, including all insurance and condemnation proceeds.
G. Contract Rights. All of Mortgagor's right, title and interest in
and to any and all contracts, written or oral, express or implied, now existing
or hereafter entered into or arising, in any manner related to the Improvements,
use, operation, sale, conversion, or other disposition of any interest in the
Land, Improvements, Tangible Property, or the Rents, or any combination,
including any and all deposits, prepaid items, and payments due and to become
due thereunder, and including construction contracts, service contracts,
advertising contracts, purchase orders, and equipment leases.
H. Additional Contract Rights. All contract rights, in any manner
related to the use, operation, sale, conversion, or other disposition (voluntary
or involuntary) of the Land, Improvements, or Rents, including all permits,
licenses, insurance policies, rights of action and other choses in action and,
in addition, any and all rights of the Mortgagor in and to any concurrency
certificates, building permit, construction permits, governmental approvals,
sanitary sewer capacity, sanitary sewer or water reservation agreements, impact
fees, prepaid sewer or water reservation fees, utility deposits, prepaid tap-on
fees or other deposits or any other deposits or prepaid fees associated with
obtaining an allocation of any governmental supplied service or utility
reservation agreements benefitting the Land or the Improvements.
I. Construction Documents. The foregoing types of property include
specifically all of the following: all contracts, plans and documents that
concern the design and construction of the improvements, including plans and
specifications, drawings and architectural and/or engineering contracts, and
construction contracts, together with all amendments, revisions, modifications
and supplements.
J.Other. Everything referred to in paragraphs A through I above is
herein referred to as the "Mortgaged Property."
This Mortgage is a self-operative security agreement with respect to
such personal property, but Mortgagor agrees to execute and deliver on demand
such other security agreements, financing statements and other instruments as
Mortgagee may, at any time hereafter, request in order to perfect its security
interest or to impose the lien hereof more specifically upon any such property.
Mortgagee shall have all the rights and remedies, in addition to those specified
herein, of a secured party under the Uniform Commercial Code.
TO HAVE AND TO HOLD the same, together with the tenements,
hereditaments and appurtenances thereto belonging, and the rents, issues and
profits thereof, unto the Mortgagee, in fee simple.
AND the Mortgagor covenants with the Mortgagee that the Mortgagor is
indefeasibly seized of said land in fee simple; that the Mortgagor has good
right and lawful authority to convey said land as aforesaid; that the Mortgagor
will make such further assurances to perfect the fee simple title to said land
in the Mortgagee as may reasonably be required; that the Mortgagor hereby fully
warrants the title to said land and will defend the same against the lawful
claims of all persons whomsoever; and that said land is free and clear of all
encumbrances except taxes accruing subsequent to December 31 of the year
immediately preceding the date of this Mortgage and a first mortgage to and in
Misc\2ndmtg
3
<PAGE>
favor of AmSouth Bank of Florida, a Florida banking corporation, in the face
amount of ONE MILLION ONE HUNDRED FIFTY THOUSAND ($1,150,000.00) DOLLARS, of
even date herewith, recorded in O.R. Book 4979, Page 4392 Public Records of
Orange County. Florida (the "First Mortgage").
PROVIDED ALWAYS, that if the Mortgagor shall pay unto the Mortgagee
the certain Promissory Note (hereinafter "Note") of even date herewith made by
the Mortgagor payable to the order of the Mortgagee in the face principal amount
of TWO HUNDRED FIFTY THOUSAND ($250,000.00) DOLLARS, and shall truly, promptly
and fully perform, discharge, execute, complete, comply with and abide by each
and every the stipulations, agreements, conditions and covenants of said Note
and of this Mortgage, then this Mortgage and the estate hereby created shall
cease and be null and void.
AND the Mortgagor, for himself, his heirs, legal representatives,
successors and assigns, hereby jointly and severally covenants and agrees to and
with the said Mortgagee, its successors and assigns:
1. Compliance with Note and Mortgage. To pay all and singular the
principal and interest and other sums of money payable by virtue of said Note
and this Mortgage, or either, promptly on the days respectively the same
severally come due.
2. Payment of Taxes and Liens. To pay all and singular the taxes,
assessments, levies, liabilities, obligations and encumbrances of every nature
on said described property each and every, and if the same be not promptly paid,
the Mortgagee may at any time pay the same without waiving or affecting the
option to foreclose or any right hereunder, and every payment so made shall bear
interest from the date thereof at the Default Rate.
3. Insurance. To keep the buildings now or hereafter constructed on
said land insured against casualty loss arising from all perils and hazards
included within the term "extended coverage", and such other hazards as the
First Mortgagee may require up to the principal amount of the Note in a company
or companies to be approved by the Mortgagee, and the policy or policies to be
held by and payable to the Mortgagee; and in the be approved by the Mortgagee,
and the policy or policies to be held by and payable to the Mortgagee; and in
the event any sum of money becomes payable under such policy or policies, the
Mortgagee shall have the option to receive and apply the same on account of the
indebtedness hereby secured or to permit the Mortgagor to receive and use it, or
any part thereof, for other purposes, without thereby waiving or impairing any
equity, lien or right under or by virtue of this Mortgage, and in the event the
Mortgagor shall for any reason fail to keep the said premises so insured, or
fail to deliver promptly any of the said policies of insurance to the Mortgagee,
or fail promptly to pay fully any premium therefore, the Mortgagee may place and
pay for such insurance or any part thereof without waiving or affecting the
option to foreclose or any right hereunder, and each and every such payment
shall bear interest from the date thereof until paid at the Default Rate.
4. Care of Mortgaged Property. Mortgagor shall not remove or demolish
any building or other property forming a part of the Mortgaged Property without
the written consent of Mortgagee; provided, however, that Mortgagor shall not be
prohibited by this paragraph from constructing its intended improvements on the
Mortgaged Property. Mortgagor shall not permit, commit, or suffer any waste,
impairment or deterioration of the Mortgaged Property or any part thereof, and
shall keep the same and improvements thereon in good condition and repair.
Mortgagor shall notify Mortgagee in writing within five (5) days of any damage
or impairment of the Mortgaged Property.
5. Mortgagee's Right to Make Certain Payments. If Mortgagor fails to
perform the covenants and agreements contained in this Mortgage, or if any
action or proceeding is commenced which materially affects Mortgagee's interest
in the Property, including, but not limited to, eminent domain, insolvency, code
enforcement, foreclosure of a lien on the property junior to the Mortgagee, or
arrangements or proceedings involving a bankrupt or
Misc\2ndmtg
4
<PAGE>
decedent, then Mortgagee at Mortgagee's option, upon notice to Mortgagor, may
make such appearances, disburse such sums and take such action as necessary to
protect Mortgagee's interest, including, but not limited to, disbursement of
reasonable attorney's fees and entry upon the Property to make repairs. If
Mortgagee required Mortgage insurance as a condition of making the loan secured
by this Mortgage, Mortgagor shall pay the premiums required to maintain such
insurance in effect until such time as the requirement for such insurance
terminates in accordance with Mortgagor's and Mortgagee's written agreement or
applicable law. Mortgagor shall pay the amounts of all Mortgage insurance
premiums in the manner provided under paragraph 3 hereof. Any amounts disbursed
by Mortgagee pursuant to this paragraph, with interest thereon, shall become
additional indebtedness of Mortgagor secured by this Mortgage. Unless Mortgagor
and Mortgagee agree to other terms of payment, such amounts shall be payable
upon notice from Mortgagee to Mortgagor requesting payment thereof, and shall
bear interest from the date of disbursement at the Default Rate. Nothing
contained in this paragraph shall require Mortgagee to incur any expense or take
any action hereunder.
6. Condemnation. The proceeds of any award or claim for damages,
direct or consequential, in connection with any condemnation or other taking of
the real property (but excluding the damages related to any taking of any
improvement to the real property), the Mortgaged Property, or part thereof, or
for conveyance in lieu of condemnation, are hereby assigned and shall be paid to
Mortgagee to the extent of its interest hereunder, and Mortgagor agrees to
execute such further assignments as Mortgagee may require. Any business damages
that may be received by Mortgagor are excluded from this paragraph.
In the event of a taking of all or any part of the Mortgaged Property,
the proceeds shall be applied to the sums secured by this Mortgage, with the
excess, if any, paid to Mortgagor.
If the Mortgaged Property is abandoned by Mortgagor, or if, after
notice by Mortgagee to Mortgagor that the condemnor offers to make an award or
settle a claim for damages, Mortgagor fails to respond to Mortgagee within
thirty (30) days after the date such notice is mailed, Mortgagee is hereby
appointed as attorney-in-fact and is authorized to collect and apply the
proceeds, at Mortgagee's option, either to restoration or repair of the
Mortgaged Property or to the sums secured by this Mortgage.
If a taking occurs which results in the Mortgagor recovering damages
related to the loss or destruction of physical improvements to the Mortgaged
Property, all awards received by the Mortgagee for any such damages shall be
utilized solely for the repair and re-construction of the improvements damaged
by any such taking.
7. Application of Payments. Any prepayments or advancements made on
the debt secured by the lien of this Mortgage shall be applied first to interest
accrued and then to the principal installment or installments last due or
maturing, the prepayments provided for herein shall include insurance and
condemnation or eminent domain proceeds.
8. Payment of Expenses. To pay all and singular the costs, charges and
expenses, including attorney's fees, reasonably incurred or paid at any time by
the Mortgagee because of the failure on the part of the Mortgagor to perform,
comply with and abide by each and every one of the stipulations, agreements,
conditions and covenants of said Note and this Mortgage, or either, and every
such payment shall bear interest from date at the Default Rate. Attorneys fees
shall include all which may be awarded pursuant to proceedings before an
Appellate Court.
9. Events of Default. Any one of the following shall constitute an
"Event of Default":
(a) Failure by Mortgagor to pay, as and when due and payable,
any installment of principal or interest due under the Note, any deposits or
taxes and assessments or insurance premiums due hereunder, or any other sums to
be paid by Mortgagor hereunder or under any other instrument securing the Note.
Misc\2ndmtg
5
<PAGE>
(b) Failure by Mortgagor to duly keep, perform and observe
any other covenant, condition or agreement in the Note, this Mortgage, any other
instrument collateral to the Note or executed in connection with the sum secured
hereby for a period of thirty (30) days after Mortgagee gives written notice
specifying the breach.
(c) Institution of foreclosure proceedings against the
Mortgaged Property as the result of any other lien or claim, whether alleged to
be superior or junior to the lien of this Mortgage, the Mortgagee may, at its
option, immediately upon institution of such suit or during the pendency
thereof, declare this Mortgage and the indebtedness secured hereby. due and
payable forthwith and may, at its option, proceed to foreclose this Mortgage.
(d) If either Mortgagor or any guarantor or endorser of the
Note; (i) files a voluntary petition in bankruptcy, or (ii) is adjudicated a
bankrupt or insolvent; or (iii) files any petition or answer seeking or
acquiescing in any reorganization, management, composition, readjustment,
liquidation, dissolution or similar relief for itself under any law relating to
bankruptcy, insolvency or other relief for debtors, or (iv) seeks or consents to
or acquiesces in the appointment of any trustee, receiver, master, or liquidator
of itself or of all or any substantial part of the Mortgaged Property or of any
or all of the rents, revenue issue, earnings, profits or income thereof, or (v)
makes any general assignment for the benefit of creditors, or (vi) makes any
admission in writing of its inability to pay its debts generally as they become
due; or (vii) a court of competent jurisdiction enters an order, judgment or
decree approve a petition filed against Mortgagor or any guarantor or endorser
of the Note, seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future federal,
state, or other statute, law or regulation relating to bankruptcy, insolvency or
other relief under the present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief for debtors, which
order, judgment or decree, remains unvacated and unstayed for an aggregate of
sixty (60) days whether or not consecutive.
(e) Any breach of any warranty or material untruth of any
representation of Mortgagor contained in the Note, this Mortgage or any other
instrument securing the Note.
(f) A default shall occur under the First Mortgage.
10. Acceleration. That in the event of any breach of this Mortgage or
event of default on the part of the Mortgagor, without demand or notice, the
said amount of Note mentioned in said Note then remaining unpaid, with interest
accrued, and all monies secured hereby, shall become due and payable forthwith,
or thereafter, at the option of said Mortgagee, anything in said Note or in this
Mortgage to the contrary notwithstanding; and thereupon or thereafter, at the
option of said Mortgagee, without notice or demand, suit at law or in equity
theretofore or thereafter begun, may be prosecuted as if all monies secured
hereby had matured prior to its institution. All such sums shall bear interest
from the due date thereof at the Default Rate. Failure by the Mortgagee to
exercise any of the rights or options herein provided shall not constitute a
waiver of any rights or options under said Note or this Mortgage accrued or
thereafter accruing.
11. No Transfer. If all or any part of the Mortgaged Property or an
interest therein is sold or transferred by Mortgagor or Mortgagor grants or
conveys a mortgage lien or encumbrance junior to the lien of this Mortgage
without Mortgagee's prior written consent, excluding (a) a transfer by devise,
descent or by operation of law upon the death of a joint tenant or (b) the grant
of any leasehold interest of three years or less not containing an option to
purchase, Mortgagee may, at Mortgagee's option, declare all the sums secured by
this Mortgage to be immediately due and payable.
If Mortgagee exercises such option to accelerate upon transfer,
Mortgagee shall mail Mortgagor notice of acceleration at the last known address
of Mortgagor. Such notice shall provide a period of not less than thirty (30)
days from the date the notice is mailed within which Mortgagor may pay the sums
declared due. If Mortgagor fails to pay such sums prior to the expiration of
such period, Mortgagee may, without further notice or demand on Mortgagor,
6
<PAGE>
invoke any remedies permitted by paragraph 10 hereof.
12. Late Charge. The Mortgagee shall have the right to charge, assess,
or impose, and to collect, a "late charge" in an amount not to exceed five (5%)
percent of the amount of any principal payment, interest payment or final
payment under said Note more than ten (10) days in arrears to cover the extra
expense in handling delinquent payments; and the Mortgagor shall pay said "late
charge" on the eleventh (11th) day following the due date of such payment and
the amount thereof shall be secured by the lien of this Mortgage.
13. Default Rate. As used herein, the Default Rate shall be the maximum
rate permitted under the law which sets maximum permissible rates of interest
for a loan of the type secured by this Mortgage.
14. Additional Documents. At all times this Mortgage is in effect, upon
Mortgagee's request, Mortgagor shall make, execute and deliver or cause to be
made, executed and delivered to Mortgagee and, where appropriate, shall cause to
be recorded or filed and thereafter to be re-recorded or refiled at such time
and in such places as shall be deemed desirable by Mortgagee any and all such
further Mortgages, instruments of further assurance, certificates and other
documents as Mortgagee may consider necessary or desirable in order to
effectuate, complete, enlarge, perfect, or to continue and preserve the
obligations of Mortgagor under the Note and this Mortgage and all other
instruments securing the Note, and the lien of this Mortgage as a first and
prior lien upon all the Mortgaged Property. Upon any failure by Mortgagor to do
so, Mortgagee may make, execute, record, file, re-record, or refile any and all
such Mortgages, instruments, certificates and document for and in the name of
Mortgagor. Mortgagor hereby irrevocably appoints Mortgagee agent and
attorney-in-fact of Mortgagor to do all things necessary to effectuate or assure
compliance with this paragraph.
15. Severability. That in the event any word, clause, term, phrase or
paragraph used in the aforesaid Note and/or this Mortgage should be held to be
unconstitutional or illegal by any court of competent jurisdiction, the same
shall not affect, alter or otherwise impair the meaning of any other word,
clause, term, phrase or paragraph in said Note and Mortgage, and the same shall
stand in full force and effect and shall be obligatory upon the assignees, heirs
and legal representatives of both respective parties hereto.
16. Miscellaneous. That in this Mortgage and the Note it secures, the
singular shall include the plural and the masculine shall include the feminine
and neuter. It is understood and agreed that whenever the term Mortgagor is used
herein, it shall also include the Mortgagor, their heirs, legal representatives
and assigns; and that whenever the term Mortgagee is used herein, it shall
include also the Mortgagee, its successors, legal representatives and assigns.
17. Receiver. That in the event that at the beginning of or any time
pending an action is commenced to foreclose the Mortgage, or to enforce payment
of any claims hereunder, the Mortgagee may apply to the Court having
jurisdiction thereof for the appointment of a Receiver such Court shall
forthwith and without notice to the Mortgagor or other defendants appoint a
Receiver of said Mortgaged Property and all and singular, including all and
singular the income, profits, issues and revenues from whatever source derived,
each and every of which, it being expressly understood, is hereby Mortgaged as
if specifically set forth and described in the granting and habendum clauses
hereof, and such Receiver shall have all the broad and effective functions and
powers in anyway entrusted by a court to a Receiver, and such appointment shall
be made by such Court as an admitted equity and matter of absolute right of said
Mortgagee, and without reference to the adequacy or inadequacy of the value of
the property Mortgaged or to the solvency or insolvency of said Mortgagor, or
the defendants, and that such rents, profits, income issues and revenues shall
be applied by such Receiver according to the lien or equity of said Mortgagee
and the practice of such Court.
18. Remedies After Default. When any amount of money to be paid by the
Mortgagor to the Mortgagee under the terms hereof shall be in default, or should
the Mortgagor default in any of the other terms, provisions or conditions of
this Mortgage, then and in that case the Mortgagee shall have the right, without
notice to the Mortgagor,
7
<PAGE>
to collect and receive from any tenant or lessee or said Mortgaged premises the
rents, issues and profits of the real estate hereby Mortgaged and the
improvements thereon, and to give proper receipts and acquittances therefor, and
after paying all commissions, of any rental agent collecting the same, and any
reasonable attorney's fees and other necessary expenses incurred in collecting
same, to apply the proceeds of such collection upon any indebtedness, obligation
or liability, of the Mortgagor hereunder. The right granted the Mortgagee under
this paragraph shall be in addition and shall not limit or restrict any other
rights or rights granted the Mortgagee in this Mortgage.
19. Consent to Alterations. The Mortgagor shall not erect or permit to
be erected any new building or buildings on the premises herein Mortgaged, or to
add to or permit to be added to any of the existing Improvements thereon without
the written consent of the Mortgagee, and in the event of any violation or
attempt to violate this stipulation this Mortgage and all sums secured hereby
shall immediately become due and payable and this Mortgage subject to
foreclosure at the option of the Mortgagee.
20. Hazardous Waste. Mortgagor hereby indemnifies Mortgagee against and
agrees to protect, save and keep harmless Mortgagee from any and all
liabilities, obligations charges, losses, damages, penalties, claims, actions,
suits, judgments, injuries, costs, disbursements and expenses of any kind
whatsoever including, without limitation, title insurance costs and premiums,
engineers, and professional fees, soil tests and chemical analysis, expenses as
described in Paragraph 9 hereof (all of which are hereinafter referred to
collectively as the "Expenses") of whatsoever kind and nature imposed on.
incurred by or asserted against any such indemnified party, in any way relating
to, arising out of, or in connection with any future use, handling, storage,
transportation or disposal of pollutants or hazardous or toxic materials.
In the event the Mortgagee is required to enforce its rights hereunder,
the Mortgagor shall pay all of the Mortgagee's costs and expenses in connection
therewith, including all attorney's fees incurred by the Mortgagee.
The exercise of the rights granted hereunder shall not constitute the
Mortgagee a mortgagee in possession with respect to the Mortgaged Property.
21. Covenant Against Future Advances. Mortgagor hereby covenants that
either (i) the First Mortgage shall not contain a clause granting the Mortgagee
thereunder the right to make future advances to the Mortgagor or (ii) if the
First Mortgage contains a future advance clause, the Mortgagee shall not seek,
request or obtain any future advance thereunder. A breach of this covenant shall
be deemed to constitute a material default hereunder.
22. Attorney's Fees. Should either party institute legal proceedings
against the other, founded upon a breach of this Mortgage, the prevailing party
shall be entitled to the award of its reasonable attorney's fees.
IN WITNESS WHEREOF, the Mortgagor has executed this instrument the day
and year first above written.
[This Space Intentionally Left Blank]
8
<PAGE>
Signed, sealed and delivered in the presence of: BOAT TREE, INC.
a Florida corporation
/s/ J. Gregory Humphries By: /s/ Joseph Pozo
Name: Joseph Pozo
Name:J. Gregory Humphries Title: President
/s/ Nancy O. Honsu
Name:Nancy O. Honsu
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 28th day of
November, 1995 by JOSEPH G. POZO, JR., as President of BOAT TREE, INC., a
Florida corporation, on behalf of the Corporation. He is personally known to me
or has produced
as identification.
NOTARY PUBLIC:
Sign /s/ Nancy O. Honsu
PrintNancy O. Honsu
State of Florida at Large (Seal)
My Commission Expires: July 22, 1998
9
<PAGE>
EXHIBIT "A"
Legal Description
Parcel 2
A PARCEL OF LAND LYING IN A PORTION OF THE NORTHWEST 1 /4 OF SECTION 10.
TOWNSHIP 23 SOUTH. RANGE 29 EAST. MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCE AT THE NORTHEAST CORNER OF THE NORTHWEST I /4 OF SECTION 10.
TOWNSHIP 23 SOUTH. RANGE 29 EAST. RUN N89o 49'l2'W. ALONG THE NORTH LINE OF THE
NORTHWEST 1/4 OF SAID SECTION 10. A DISTANCE OF 1669.60 FEET: THENCE DEPARTING
SAID NORTH LINE. RUN S00'04'13'E. A DISTANCE OF 50.00 FEET TO A POINT ON THE
SOUTH RIGHT-OF-WAY LINE OF 33RD STREET. SAID POINT ALSO BEING THE POINT OF
BEGINNING: THENCE DEPARTING SAID RIGHT- OF-WAYLINE. CONTINUE S00 04'l3'E. A
DISTANCE OF 400.00 FEET: THENCE N89 49'12'W. A DISTANCE OF 27.49 FEET: THENCE
S00 04'13'E. A DISTANCE OF 365.58 FEET. THENCE S89 5412'W. A DISTANCE OF
954.65 FEET: THENCE N00 0'58'E. A DISTANCE OF 40.08 FEET: THENCE N30o 35'08'E.
A DISTANCE OF 603.67 FEET: THENCE S59 24'52'E. A DISTANCE OF 108.48 FEET:
THENCE S895906E. A DISTANCE OF 220.95 FEET: THENCE N00o 04"13'W. A DISTANCE OF
263.72 FEET TO A POINT ON THE AFOREMENTIONED SOUTH RIGHT-OF-WAY LINE: THENCE
S89'49'12'E. ALONG SAID RIGHT-OF-WAY LINE. A DISTANCE OF 360.00 FEET TO THE
POINT OF BEGINNING.
TOGETHER WITH THOSE CERTAIN NONEXCLUSIVE EASEMENTS OF EVEN DATE HEREWITH AS
SET FORTH IN THE DECLARATION OF INGRESS-EGRESS EASEMENTS AND DECLARATION OF
EASEMENTS.
10
<PAGE>
PROMISSORY NOTE
Date of the Note: November 28, 1995
Amount of the Note: $250,000.00
Maturity Date: December 1, 1999
Throughout the term, this Note shall bear simple annual interest as follows:
(i) From the Date of the Note through December 1, 1996 ("No Interest
Period"), this Note shall bear no interest; and
(ii) From December 2, 1996 through the Maturity Date ("Interest Period"),
this Note shall bear interest at the rate of five (5.0%) percent per
annum.
Maker hereof reserves the right to prepay this Note in whole or in part any time
hereafter without penalty. In the event that the Maker elects to prepay the
Amount of the Note prior to the expiration of the No Interest Period, Maker
shall be entitled to a five (5.0%) percent reduction in the Amount of the Note
for payoff purposes.
FOR VALUE RECEIVED, the undersigned ("Maker") does hereby covenant and
promise to pay to the order of DANIS PROPERTIES LIMITED, PARTNERSHIP, an Ohio
limited partnership, ("Holder"), at 2 Riverplace, Suite 400, Dayton, OH 45405,
or at such other place as Holder may designate to Maker in writing from time to
time, in legal tender of the United States, installments of principal plus
interest (during the Interest Period) in accordance with the following schedule:
(i) On December 1, 1996 ("Initial Payment Date"), a principal
payment in the amount of Fifty Thousand ($50,000.00) Dollars
shall be due and payable; and Initials:
misc\pro.nte
1
<PAGE>
(ii) On each anniversary of the Initial Payment Date, a principal
payment of Fifty Thousand ($50,000.00) Dollars plus interest
at the Interest Rate accruing on the unpaid principal balance
during the Interest Period shall be due and payable; and
(iii) On the Maturity Date, the unpaid principal balance together
with accrued interest shall be due and payable in full.
The Holder may collect a late charge not to exceed an amount equal to
five percent (5%) of any installment of principal or interest which is not paid
within ten (10) days of the due date thereof, to cover the extra expense
involved in handling delinquent payments, provided that collection of said late
charge shall not be deemed a waiver by the Holder of any of its rights under
this Note.
Should any default occur in any payment, as stipulated above, and
continue for thirty (30) days thereafter then and in that event, the Amount of
the Note, or any unpaid part thereof, and all accrued interest thereon shall, in
the sole discretion of Holder at once become due and payable and may be
collected forthwith without notice to the undersigned, regardless of the
stipulated date of maturity. In the event of a default, as set forth above, the
then remaining principal balance shall bear interest at the highest rate
provided by law. Holder may, in the sole discretion of Holder, accept payments
made by Maker after any default has occurred, without waiving any of Holder's
rights herein. TIME BEING OF THE ESSENCE OF THIS NOTE.
It is agreed that the granting to Maker of this Note or any other party
of an extension or extensions of time for the payment of any sum or sums due
hereunder or under the accompanying Mortgage or for the performance of any
covenant or stipulation thereof or the taking of other or additional security
shall not in any way release or affect the liability of the Maker of this Note.
This Note may not be modified orally, but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
In the event that this Note is collected by law or through attorneys at
law, or under advice therefrom (whether such attorneys are employees of the
Holder or an affiliate of the Holder or are outside counsel), the Maker and any
endorser, guarantor or other person primarily or secondarily liable for Payment
hereof hereby, severally and jointly agree to pay all costs of collection,
including reasonable attorneys~ fees including charges for paralegals and others
working under the direction or supervision of the Holder's attorneys, whether or
not suit is brought, and whether incurred in connection with collection, trial,
appeal, bankruptcy or other creditors' proceedings or otherwise.
misc\pro.nte
2
<PAGE>
Nothing herein contained, nor any transaction related thereto, shall be
construed or so operate as to require Maker or any person liable for the
repayment of same, to pay interest in an amount or at a rate greater than the
maximum allowed by applicable law. Should any interest or other charges paid by
Maker, or any parties liable for the payment of the loan made pursuant to this
Note, result in the computation or earning of interest in excess of the maximum
legal rate of interest permitted under the law in effect while said interest is
being earned, then any and all of that excess shall be and is waived by Holder
of this Note, and all that excess shall be automatically credited against and in
reduction of the principal balance, and any portion of the excess that exceeds
the principal balance shall be paid by Holder to Maker and any parties liable
for the payment of the loan made pursuant to this Note that under no
circumstances shall the Maker, or any parties liable for the payment of the loan
hereunder, be required to Pay interest in excess of the maximum rate allowed by
applicable law.
All parties to this Note, whether Maker, principal, surety, guarantor
or endorser, hereby waive presentment for payment, demand, notice, protest,
notice of protest and notice of dishonor.
The Maker hereof acknowledges that the Holder shall have no obligation
whatsoever to renew, modify or extend this Note or to refinance the indebtedness
under this Note upon the maturity thereof.
Holder shall have the right to accept and apply to the outstanding
balance of this Note any and all payments or partial payments received from
Maker after the due date therefor whether the Note has been accelerated or not
without waiver of any and all of Holder's rights to continue to enforce the
terms of the Notes and to seek any and all remedies provided for herein or any
instrument securing the same including, but not limited to, the right to
foreclose on such security.
In the event that legal action is instituted to collect any amounts due under,
or to enforce any provision of, this instrument, Maker and any endorser,
guarantor or other person primarily or secondarily liable for payment hereof
consent to, and by execution hereof submit themselves to the jurisdiction of the
courts of the State of Florida, and, notwithstanding the place of residence of
any of them or the place of execution of this instrument, such litigation may be
brought in or transferred to a court of competent jurisdiction in or for Orange
County, Florida.
The term "Maker", as used herein, in every instance shall include the
makers, heirs, executors, administrators, successors, legal representatives and
assigns, and shall denote the singular and/or plural, the masculine and/or
feminine, and natural and/or artificial persons whenever and wherever the
context so requires or admits.
misc\pro.nte
3
<PAGE>
This Note is secured by a Mortgage of even date herewith, and is
subject to the provisions thereof, and is to be construed and enforced in
accordance with the laws of the State of Florida. The Mortgage specifies various
defaults, upon the happening of which, all sums owing on this Note may be
declared immediately due and payable.
BOAT TREE, INC., a Florida corporation
By:/s/ Joseph G. Pozo, Jr.
Name: JOSEPH G. POZO, JR.
Title: President
Maker's Address:
2226 Paseo Avenue
Orlando, FL 32805
DOCUMENTARY STAMPS IN THE AMOUNT OF $875.00 HAVE BEEN
AND ARE AFFIXED TO THE SECOND MORTGAGE OF EVEN DATE
HEREWITH.
misc\pro.nte
4
<PAGE>
PROMISSORY NOTE
("Note")
$1,150,000.00 Winter Park, Florida
November 28, 1995
THE UNDERSIGNED, ('Maker"), promises to pay to the order of AMSOUTH
BANK OF FLORIDA, a Florida banking corporation, ("Payee"), whose mailing address
is Post Office Box 588001, Orlando, Florida 32858, the principal sum of ONE
MILLION ONE HUNDRED FIFTY THOUSAND DOLLARS ($1,150,000.00), or so much thereof
as may be advanced and outstanding from time to time, with interest on the
unpaid principal from the date of each such advance at the following rate and
payable in the following manner:
(a) From the date hereof through and including May 27, 2001, the interest
rate shall be seven and seventy-one one hundredths percent (7.71%) per annum
simple interest ("Stated Rate").
(b) Interest on this Note, as calculated above in paragraph (a), shall be
payable monthly in arrears on the 28th day of each month commencing the 28th day
of December, 1995 and continuing thereafter on the same day of each successive
month including the month of May, 1996.
(c) Interest on this Note, as calculated above in paragraph (a), and
principal shall be paid in consecutive monthly installments of NINE THOUSAND
FOUR HUNDRED EIGHTY-EIGHT AND 56/100 DOLLARS ($9,488.56), on the 28th day of
each month commencing June 28, 1996, and including the month of May, 2001.
(d) On May 28, 2001 (the "Adjustment Date"), the interest rate shall be
adjusted prospectively to a fixed rate of interest equal to 200 basis points in
excess of the Current Index (the "Adjusted Rate"). As used herein, the Current
Index is the weekly average yield on United States Treasury Securities adjusted
to a constant maturity of five (5) years as published from time to time and made
available in Federal Reserve Statistical Release H. 15(519) using the Current
Index in effect on April 28, 2001. Should the Federal Reserve Board no longer
publish the Current Index, the Payee will select a new index based on comparable
information.
(e) Interest on this Note, as calculated above in paragraph (d), and
principal shall be paid in consecutive monthly installments of an amount
calculated by Payee by amortizing the unpaid principal balance of this Note on
the Adjustment Date at the Adjusted Rate over a period of one hundred eighty
(180) months (the
misc\prnte
1
<PAGE>
"Adjusted Payment"). The Adjusted Payment shall be paid monthly on the 28th
day of each
misc\prnte
2
<PAGE>
month commencing June 28, 2001 and including the month of April, 2006.
(f) The entire unpaid principal balance and all accrued interest shall be
due and payable on or before May 28, 2006 ("Maturity Date").
Default Rate. After the occurrence of an Event of Default, as hereinafter
defined or after maturity, this Note and all sums due hereunder shall bear
interest at the then current interest rate applicable to this Note plus two
percent (2%) per annum ("Penalty Rate") (but in no event at a rate which is
higher than the maximum allowable rate permitted by law) from the date of
default or maturity until paid.
Interest Basis. Interest shall be calculated on the basis of a three
hundred sixty (360) day year for actual days elapsed.
misc\prnte
3
<PAGE>
Late Charge. In order to cover the extra expense involved in handling
late payments, the Maker agrees to pay to Payee, on demand, a late charge equal
to five percent (5%) of any payment (other than the final payment) that is not
paid within fifteen (15) days after it is due and five percent (5%) of the
interest portion of any final payment that is not paid within fifteen (15) days
after it is due. This provisions shall not be deemed to excuse a late payment or
deemed a waiver of any other right Payee may have, including without limitation,
the right to declare the entire unpaid principal balance and interest
immediately due and payable.
Disbursement of Proceeds. Advances hereunder may be made upon the oral,
telephonic, or written request of any person authorized to borrow or any person
Payee reasonably believes is authorized to borrow. Any advance hereunder shall
be conclusively presumed to have been made to and at the request and for the
benefit of the Maker when the proceeds of such advance are deposited to the
credit of the Maker in any account of Maker with Payee regardless of the fact
that persons other than those authorized to borrow may have authority to draw
against such account.
Prepayment. Should the Maker prepay this Note in part or in full during
the first three (3) years from the date of this Note, the Maker shall pay to the
Lender a prepayment penalty, at the time of such prepayment, equal to one and
one-half percent (1.50%) of the prepaid amount. Thereafter, the Maker shall have
the privilege of prepaying this Note in part or in full, without penalty, at any
time. All such prepayments shall be applied to the installment or installments
of principal last maturing. No partial prepayment shall excuse or defer Maker's
subsequent payment obligations.
Security. This Note is secured by, among other things, a Mortgage (the
"Mortgage") upon real property (the "Property") in Orange County, Florida. This
Note, the Mortgage and other loan documents as may be now or hereafter executed
in connection therewith ("Loan Document(s)") shall together evidence the debt
and constitute the security for the Note.
Application of Payments. All payments made on the indebtedness
evidenced by this Note shall be applied first to repayment of monies paid or
advanced by Payee on behalf of the Maker in accordance with the terms of the
Loan Documents, and thereafter shall be applied to payment of accrued interest,
and lastly to payments of principal in the inverse order of their maturity. No
partial prepayment of principal will have the effect of postponing, satisfying,
reducing or otherwise affecting any scheduled installment before this Note is
paid in full.
Place and Manner of Payment. All payments of interest and principal are
payable in lawful money of the United States of America in cash or immediately
available funds, at the Payee's office at which the payment is made, or at such
other place as the Payee may designate in writing. At its option, the Payee may
elect to give the Maker credit for any payment made by check or other instrument
in accordance with the Payee's availability schedule in effect from time to time
for such items and instruments, which the Payee will make available to the Maker
on request.
misc\prnte
4
<PAGE>
Events of Default. Maker shall be in default in this Note upon the
occurrence of any of the following events, circumstances or conditions (each an
"Event of Default"):
(a) Maker's failure to make any payment of any sum due
hereunder on or before the due date thereof without further notice or demand, or
to make any other payment due, in accordance with its terms, by the Maker to the
Payee under any other promissory note or under any security agreement or other
written obligation of any kind now existing or hereinafter created.
(b) A good faith determination by Payee at any time that Payee
is insecure for any reason; provided, however, that Payee shall not be
unreasonable, arbitrary or capricious in making such determination.
misc\prnte
5
<PAGE>
(c) The existence of a default or breach of any of the terms
of this Note or any other Loan Document that is not cured within any applicable
grace and/or cure period without further notice or demand.
Remedies after Default. At the option of Payee, all or any part of the
principal and accrued interest on the Note, and all other obligations of the
Maker to the Payee shall become immediately due and payable without additional
notice or demand, upon the occurrence of an Event of Default or at any time
thereafter. Payee may exercise all rights and remedies provided by law, equity,
this Note or any other Loan Document or any other obligation of the Maker to the
Payee. All rights and remedies as set forth in the Loan Documents are cumulative
and concurrent and may be pursued singly, successively or together, at the sole
discretion of Payee, and may be exercised as often as occasion therefore shall
arise. Such remedies are not exclusive, and Payee is entitled to all remedies
provided at law or equity, whether or not expressly set forth therein. No act,
or omission or commission or waiver of Payee, including specifically any failure
to exercise any right, remedy or recourse, shall be effective unless set forth
in a written document executed by Payee and then only to the extent specifically
recited therein. A waiver or release with reference to one event shall not be
construed as continuing, as a bar to, or as a waiver or release of, any
subsequent right, remedy or recourse as to any subsequent event, nor shall any
single or partial exercise thereof preclude any other or further exercise or the
exercise of any other right, remedy or recourse. No notice to or demand on any
party liable for the payment of this Note in any case shall entitle any such
party to any other or further notice or demand in the same, similar or other
circumstances.
Right of Set-off. Neither the Maker, any co-signer, endorser, surety
nor guarantor shall have any right of set-off against the Payee under this Note
or under any Loan Document executed in connection with the loan evidenced by
this Note. In addition to the remedies provided for herein, the Maker, each
co-signer, endorser, surety or guarantor grants to the Payee a security interest
in any funds or other assets from time to time on deposit with or in possession
of the Payee, and the Payee may, at any time set-off the indebtedness evidenced
by this Note against any such funds or other assets, including but not limited
to, all money owed by Payee to Maker, each co-signer, endorser, surety or
guarantor whether or not due. Maker, each co-signer, endorser, surety or
guarantor acknowledge and agree that Payee may exercise its right of set-off to
pay all or any part of the outstanding principal balance and accrued interest
owed on this Note or on any other obligation of the Maker to the Payee against
any obligation Payee may have, now or hereafter, to pay money to Maker, each
co-signer, endorser, surety or guarantor. This right of set-off includes, but is
not limited to, the following:
(a) Any deposit, account balance, securities account balance
or certificate of deposit balance Maker has with Payee whether special, general,
time, savings, checking or NOW account; and
(b) Any money owing to Maker on an item presented to Payee or
in Payee's possession for collection or exchange; and
misc\prnte
6
<PAGE>
(c) Any repurchase agreement or any other non-deposit
obligation or any credit in favor of Maker.
If any such money is also owned by some other person who has not agreed to pay
this Note (such as another depositor on a joint account), Payee's right of
set-off will extend to the amount which could be withdrawn or paid directly to
Maker on Maker's request, endorsement or instruction alone. In addition, (where
Maker may obtain payment from Payee only with the endorsement or consent of
someone who has not agreed to pay this Note), Payee's right of set-off will
extend to Maker's interest in the obligation. Payee's right of set-off will not
apply to any account if it clearly appears that Maker's rights in the account
are solely as a fiduciary for another, such as security deposits that are
property of others but held by Maker in an account appropriately identified, or
to any account, which by its nature and applicable law (for example an IRA or
other tax deferred retirement account), must be exempt from the claims of
creditors.
Maker hereby appoints Payee as its attorney-in-fact and authorizes Payee to
redeem or obtain payment on any certificate of deposit in which Maker has an
interest in order to exercise Payee's right of set-off. Such authorization
applies to any certificate of deposit even if not matured. Maker further
authorizes Payee to assess and withhold any early withdrawal penalty without
liability against Payee in the event such penalty is applicable as a result of
Payee's set-off against a certificate of deposit prior to its maturity.
Payee's right of set-off may be exercised upon an Event of Default:
(a) Without prior demand or notice; and
(b) Without regard to the existence or value of any collateral securing
this Note; and
(c) Without regard to the number or creditworthiness of any other persons
who have agreed to pay this Note.
Payee will not be liable for dishonor of a check or other request for payment
where there is insufficient funds in the account (or other obligation) to pay
such request because of Payee's exercise of its right of set-off. Maker agrees
to indemnify and hold Payee harmless from any person's claims, arising as the
result of Payee's right of set-off and the costs and expenses, including without
limitation, attorneys' fees.
The Maker understands that the Payee may from time to time
enter into a participation agreement or agreements with one or more participants
pursuant to which such participant or participants shall be given participations
in the loan evidenced by this Note and that such participants may from time to
time similarly grant to other participants sub-participations in the loan
evidenced by this Note. The Maker agrees that any participant and any
sub-participant may exercise any and all rights of banker's lien or set-off,
whether arising by operation of law or
misc\prnte
7
<PAGE>
given to Payee by the provisions of this Note, with respect to the Maker as
fully as if such participant or sub-participant had made the loan directly to
the Maker. For the purposes of the paragraph only, the Maker shall be deemed to
be directly obligated to each participant or sub- participant in the amount of
its participating interest in the principal of, and the interest on, the loan
evidenced by this Note.
Taxes. All parties liable for the payment of this Note agree to pay all
documentary stamp tax, nonrecurring intangible tax, and all interest and
penalties, if any, on this Note and advances hereunder and on any instrument
securing the foregoing or any guaranty thereof.
Collection Expenses. All parties liable for the payment of the Note
agree to pay the Payee all costs incurred by the Payee, whether or not an action
be brought, in collecting the sums due under the Note, enforcing the performance
and/or protecting its rights under the Loan Documents and in realizing on any of
the security for the Note. Such costs and expenses shall include, but are not
limited to, filing fees, costs of publication, deposition fees, stenographer
fees, witness fees and other court and related costs. Sums advanced by the Payee
for the payment of collection costs and expenses shall accrue interest at the
Penalty Rate, from the time they are advanced or paid by the Payee, and shall be
due and payable upon payment by Payee without notice or demand and shall be
secured by the lien of the Mortgage.
Attorneys' Fees. All parties liable for the payment of the Note agree
to pay the Payee reasonable attorneys' fees incurred by the Payee, whether or
not an action be brought, in collecting the sums due under the Note, enforcing
the performance and/or protecting its rights under the Loan Documents and in
realizing on any of the security for the Note. Such reasonable attorneys' fees
shall include, but not be limited to, fees for attorneys, paralegals, legal
assistants, and expenses incurred in any and all judicial, bankruptcy,
reorganization, administrative, receivership, or other proceedings effecting
creditor's rights and involving a claim under the Note or any Loan Document,
which such proceedings may arise before or after entry of a final judgment. Such
fees shall be paid regardless whether suit is brought and shall include all fees
incurred by Payee at all trial and appellate levels including bankruptcy court.
Sums advanced by the Payee for the payment of attorneys' fees shall accrue
interest at the Penalty Rate, from the time they are advanced by the Payee, and
shall be due and payable upon payment by Payee without notice or demand and
shall be secured by the lien of the Mortgage.
Waiver and Consent. By the making, signing, endorsement or guaranty of this
Note:
(a) Maker and each co-signor, endorser, surety or guarantor
waive demand, presentment, protest, notice of protest, notice of dishonor, suit
against any party and all of the requirements necessary to hold any maker,
co-signer, endorser, surety or guarantor liable;
(b) Each co-signer, endorser, surety or guarantor consents to
any renewals or extensions of time for payment on this Note;
misc\prnte
8
<PAGE>
(c) Maker and each co-signor, endorser, surety or guarantor
consents to Payee's release of, agreement not sue, suspension of the right to
enforce this instrument against and discharge or compromise of any obligation of
any co-signer, endorser, surety or guarantor, all without notice to or further
reservations of rights against any of such parties, and all without m any way
affecting or releasing the liability of any of such parties;
(d) Maker and each co-signor, endorser, surety or guarantor
waive and consent to the release, substitution, impairment, exchange and other
dealing in any manner with all or any portion of any collateral securing this
Note and any right of set-off that may now or hereafter secure this Note, all
without notice to or further reservations of rights against any of such parties,
and all without in any way affecting or releasing the liability of any of such
parties, even though such release, substitution, impairment, exchange or other
dealing may in any manner and to any extent impair any such collateral, lien or
right of set-off;
(e) Each co-signer, endorser, surety or guarantor consents to
any modification of the terms of this Note or any other Loan Document;
(f) Maker and each co-signor, endorser, surety or guarantor
consent to any and all sales, repurchases, participations and sub-participations
of this Note to or by any person or entity in any amounts and waive notice of
such sales, repurchases, participations and sub- participations of this Note;
(g) Maker and each co-signor, endorser, surety or guarantor
consent to Payee's right of set-off as well as any participant's or
sub-participant's right of set-off.
Usury Limitation. The parties agree and intend to comply with the
applicable usury law, and notwithstanding anything contained herein or in any of
the Loan Documents, or other document related to the loan evidenced by this
Note, the effective rate of interest to be paid on this Note (including all
costs, charges and fees which are characterized as interest under applicable
law) shall not exceed the maximum contract rate of interest permitted under
applicable law, as it exists from time to time. Payee agrees not to knowingly
collect or charge interest (whether denominated as fees, interest or other
charges) which will render the interest rate hereunder usurious, and if any
payment of interest or fees by Maker to Payee would render this Note usurious,
Maker agrees to give Payee written notice of such fact with or in advance of
such payment. If Payee should receive any payment which constitutes interest
under applicable law in excess of the maximum lawful contract rate permitted
under applicable law (whether denominated as interest, fees or other charges),
the amount of interest received in excess of the maximum lawful rate shall
automatically be applied to reduce the principal balance, regardless of how such
sum is characterized or recorded by the parties.
Joint and Several. The obligations of this Note shall be joint and several.
No Obligation to Extend. On Maturity Date, Maker must repay the entire principal
balance of this Note and unpaid interest then due. The Payee is under no
obligation to refinance the Note at maturity.
misc\prnte
9
<PAGE>
Maker will therefore be required to make payment out of other assets Maker may
own, or Maker will have to find a lender willing to lend the money at prevailing
market rates, which may be considerably higher than the interest rate on this
Note.
Disclaimer of Relationship. The Maker and all co-signers, endorsers,
sureties and guarantors, if any, to this obligation acknowledge that:
(a) The relationship between the Payee, Maker and any co-signer, endorser,
surety or guarantor is one of creditor and debtor and not one of partner or
joint venturer;
(b) There exists no confidential or fiduciary relationship between Payee
and Maker and any co-signer, endorser, surety or guarantor imposing a duty of
disclosure upon the Payee; and
(c) The Maker and any co-signer, endorser, surety or guarantor
have not relied on any representation of the Payee regarding the merits of the
use of proceeds of the loan. Maker and any co-signer, endorser, surety or
guarantor waive any and all claims and causes of action which exist now or may
exist in the future arising out of any breach or alleged breach of a duty on the
part of the Payee to disclose any facts material to this loan transaction and
the use of the proceeds.
Choice of Law and Venue. This Note shall be governed by the Laws of the
State of Florida, and the United States of America, whichever the context may
require or permit. The Maker and all guarantors, if any, to this obligation
expressly agree that proper venue for any action which may be brought under this
Note in addition to any other venue permitted by law shall be any county in
which property encumbered by the Mortgage is located as well as Orange County,
Florida. Should Payee institute any action under this Note, the Maker and all
guarantors, if any, hereby submit themselves to the jurisdiction of any court
sitting in Florida.
Severability. If any provision of this Note shall be held unenforceable
or void, then such provision shall be deemed severable from the remaining
provisions and shall in no way affect the enforceability of the remaining
provisions nor the validity of this Note.
Maker and Payee Defined. The term "Maker" includes each and every
person or entity signing this Note and any co-signers, guarantors, their
successors and assigns; provided, however, that no party liable hereunder may
assign or transfer his, her or its obligation hereunder without the written
consent of the Payee. The term "Payee" shall include the Payee and any
transferee and assignee of Payee or other holder of this Note.
Captions and Pronouns. The captions and headings of the various
sections of this Note are for convenience only, and are not to be construed as
confining or limiting in any way the scope or intent of the provisions hereof.
Whenever the context requires or permits, the singular shall include the plural,
the plural shall include the singular, and the masculine, feminine and
misc\prnte
10
<PAGE>
neuter shall be freely interchangeable.
Receipt of Copy. By signing this Note, Maker acknowledges that it was
read by Maker prior to execution and a copy was received by Maker.
Time of the Essence. Time is of the essence with respect to each
provision in this Note where a time or date for performance is stated. All time
periods or dates for performance stated in this Note are material provisions of
this Note.
Documentary Stamps. Florida Documentary stamp tax as required by
Chapter 201 of the Florida Statutes in the amount required by Florida law have
been paid and are affixed to the original Mortgage and Security Agreement, of
even date herewith, which secures this Note.
misc\prnte
11
<PAGE>
Waiver of Trial by Jury. The Maker hereby, and the Payee by its
acceptance of this Note, knowingly, voluntarily and intentionally waive the
right either may have to a trial by jury in respect to any litigation arising
out of, under, or in connection with this Note and all Loan Documents and other
agreements executed or contemplated to be executed in connection herewith, or
arising out of, under, or in connection with any course of conduct, course of
dealing, statements (whether verbal or written) or action of either party,
whether in connection with the making of the loan, collection of the loan, or
otherwise. This provision is a material inducement for the Payee making the loan
evidenced by this Note.
IN WITNESS WHEREOF, Maker has executed and delivered this instrument
this day and year first above written.
BOAT TREE, INC., a Florida corporation
By:/s/ Joseph G. Pozo, Jr.
JOSEPH G. POZO, JR., President
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 28th day of
November, 1995, by JOSEPH G. POZO, JR. as President of BOAT TREE, INC., a
Florida corporation, on behalf of the corporation. He is personally known to me
or has produced as identification.
Notary Public:
Print Name:
My Commission Expires:
misc\prnte
12
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
("Mortgage")
THIS MORTGAGE AND SECURITY AGREEMENT (the 'Mortgage'), made this 28th
day of November, 1995, between BOAT TREE, INC., a Florida corporation, whose
mailing address is 2226 Paseo Avenue, Orlando, Florida 32805 (the "Borrower"),
and AMSOUTH BANK OF FLORIDA, a Florida banking corporation, whose mailing
address is Post Office Box 588001, Orlando, Florida 32858 (the "Lender");
W I T N E S S E T H:
WHEREAS, Borrower is indebted to Lender in the principal sum of ONE
MILLION ONE HUNDRED FIFTY THOUSAND DOLLARS ($1,150,000.00), together with
interest thereon, as evidenced by that certain promissory note of even date
herewith, executed by Borrower and delivered to Lender, (the "Note"), which by
reference is made a part hereof to the same extent as though set out in full
herein, which provides that all principal and accrued interest is due and
payable on or before May 28, 2006. The Note, this Mortgage and all other
documents executed in connection therewith, now or hereafter, are herein
referred to as the "Loan Document(s)".
NOW, THEREFORE, to secure the performance and observance by Borrower of
all covenants and conditions in the Note and all renewals, extensions and
modifications thereof and in this Mortgage and in all other Loan Documents, and
in order to charge the properties, interests and rights hereinafter described
with such payment, performance and observance, and for and in consideration of
the sum of ONE DOLLAR ($1.00) paid by Lender to Borrower this date, and for
other valuable considerations, the receipt of which is acknowledged, Borrower
does hereby grant, bargain, sell, alien, remise, release, convey, assign,
transfer, mortgage, hypothecate, pledge, deliver, set over, warrant and confirm
unto Lender, its successors and assigns forever:
THE MORTGAGED PROPERTY
(A) THE LAND. All the land located in the County of Orange, State of
Florida, (the "Land"), described as follows, to-wit:
A parcel of land lying in a portion of the Northwest 1/4 of Section 10, Township
23 South, Range 29 East, more particularly described as follows:
Commence at the Northeast corner of the Northwest 1/4 of Section 10, Township 23
South, Range 29 East, run N8949'12"W, along the North line of the Northwest 1/4
of said Section 10, a distance of 1669.60 feet; thence departing said North
line, run S00o 04'13"E, a distance of 50.00 feet to a point on the South
Right-of-Way line of 33rd Street, said point also being the Point of Beginning;
thence departing said Right-of-Way
Misc\mtg
1
<PAGE>
line, continue 50004' 13"E, a distance of 400.00 feet; thence N8949'12"W, a
distance of 27.49 feet; thence S00o 04'l3" E, a distance of 365.58 feet; thence
58954'12"W, a distance of 954.65 feet; thence N0001'58"E, a distance of 40.08
feet; thence N3035'08"E, a distance of 603.67 feet; thence 55924'52"E, a
distance of 108.48 feet; thence 589'59'06"E, a distance of 220.95 feet; thence
N00o 04'13"W, a distance of 263.72 feet to a point on the aforementioned South
Right-of-Way line; thence 58949'12"E, along said Right-of-Way line, a distance
of 360.00 feet to the Point of Beginning.
TOGETHER WITH all easement rights granted to the owner of the foregoing
described property by virtue of that certain Declaration of Easements executed
by DANIS PROPERTIES LIMITED PARTNERSHIP, an Ohio limited partnership dated
November 28, 1995, recorded ____________________ in Official Records Book ____,
Page ____, Public Records of Orange County, Florida and that certain Declaration
of Ingress-Egress Easements executed by DANIS PROPERTIES LIMITED PARTNERSHIP, an
Ohio limited partnership dated November 28, 1995, recorded ____________________
in Official Records Book ____ Page ____, Public Records of Orange County,
Florida.
(B) THE IMPROVEMENTS. TOGETHER WITH all buildings, structures and
improvements of every nature whatsoever now or hereafter situated on the Land,
and all fixtures, machinery, appliances, equipment, furniture, and personal
property of every nature whatsoever now or hereafter owned by Borrower and
located in or on, or attached to, or used or intended to be used in connection
with or with the operation of, the Land, buildings, structures or other
improvements, or in connection with any construction being conducted or which
may be conducted thereon, and owned by Borrower, including all extensions,
additions, improvements, betterments, renewals, substitutions, and replacements
to any of the foregoing and all of the right, title and interest of Borrower in
and to any such personal property or fixtures (subject to any lien, SECURITY
interest or claim) together with the benefit of any deposits or payments now or
hereafter made on such personal property or fixtures by Borrower or on its
behalf (the "Improvements").
(c) EASEMENTS OR OTHER INTERESTS. TOGETHER WITH all easements,
rights of way, gores of land, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights and powers, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances
whatsoever, in any way belonging, relating or appertaining to any of the
property hereinabove described, or which hereafter shall in any way belong,
relate or be appurtenant thereto, whether now owned or hereafter acquired by
Borrower, and the reversion and reversions, remainder and remainders, rents,
issues and profits thereof, and all the estate, right, title, interest,
property, possession, claim and demand whatsoever, at law as well as in equity,
of Borrower of, in and to the same, including but not limited to all judgments,
awards of damages and settlements hereafter made resulting from condemnation
proceedings or the taking of the property described in paragraphs (A), (B) and
(c) (the "Property") hereof or any part thereof under the power of eminent
domain, or for any damage (whether caused by such taking or otherwise) to the
Property hereof or any part thereof, or to any rights appurtenant thereto, and
all proceeds of any sales or other dispositions of the Property or any part
thereof.
Misc\mtg
2
<PAGE>
(D) ASSIGNMENT OF RENTS. TOGETHER WITH all rents, royalties, issues,
profits, revenue, income and other benefits from the Property to be applied
against the indebted ness and other sums secured hereby, provided, however, that
permission is hereby given to Borrower so long as no default has occurred
hereunder, to collect, receive, take, use and enjoy such rents, royalties,
issues, profits, revenue, income and other benefits as they become due and
payable, but not in advance thereof, to enforce all Borrower's rights under any
lease now or hereafter affecting the Property. The foregoing assignment shall be
fully operative without any further action on the part of either party and
specifically Lender shall be entitled, at its option upon the occurrence of a
default hereunder, to all rents, royalties, issues, profits, revenue, income and
other benefits from the Property whether or not Lender takes possession of the
Property. Upon any such default hereunder, the permission hereby given to
Borrower to collect such rents, royalties, issues, profits, revenue, income and
other benefits from the Property shall terminate and such permission shall not
be reinstated upon a cure of the default without Lender's specific consent.
Neither the exercise of any rights under this paragraph by Lender nor the
application of any such rents, royalties, issues, profits, revenue, income or
other benefits to the indebtedness and other sums secured hereby, shall cure or
waive any default or notice of default hereunder or invalidate any act done
pursuant hereto or to any such notice, but shall be cumulative of all other
rights and remedies.
(B) ASSIGNMENT OF LEASES. TOGETHER WITH all right, title and interest
of Borrower in and to any and all leases now or hereafter on or affecting the
Property together with all SECURITY therefor and all monies payable thereunder,
subject, however, to the conditional permission hereinabove given to Borrower to
collect the rentals and enforce its rights under any such lease. The foregoing
assignment of any lease shall not be deemed to impose upon Lender any of the
obligations or duties of Borrower provided in any such lease, and Borrower
agrees to fully perform all obligations of the lessor under all such leases.
Upon Lender's request, Borrower agrees to send to Lender a list, or copy, of all
leases covered by the foregoing assignment and as any such lease shall expire or
terminate or as any new lease shall be made, Borrower shall so notify Lender in
order that at all times Lender shall have a current list of all leases affecting
the Property. Lender shall have the right, at any time and from time to time, to
notify any lessee of the rights of Lender as provided by this paragraph. From
time to time, upon request of Lender, Borrower shall specifically assign to
Lender as additional SECURITY hereunder, by an instrument in writing in such
form as may be approved by Lender, all right, title and interest of Borrower in
and to any and all leases now or hereafter on or affecting the Mortgaged
Property, together with all SECURITY therefor and all monies payable thereunder,
subject to the conditional permission hereinabove given to Borrower to collect
the rentals and enforce its rights under any such lease Borrower shall also
execute and deliver to Lender any notification, financing statement or other
document reasonably required by Lender to perfect the foregoing assignment as to
any such lease. Upon the reasonable request of the Lender, the Borrower shall
provide the Lender with estoppel letters or certificates from the various
tenants, if any, occupying the Mortgaged Property, stating in detail, the
current status of their lease and/or occupancy of the Mortgaged Property.
This instrument constitutes an absolute and present assignment of the
rents, royalties,
Misc\mtg
3
<PAGE>
issues, profits, revenue, income and other benefits from the Mortgaged Property,
subject, however, to the conditional permission given to Borrower to collect,
receive, take, use and enjoy the same and enforce its rights as provided
hereinabove; provided, further, that the existence or exercise of such right of
Borrower shall not operate to subordinate this assignment to any subsequent
assignment, in whole or in part, by Borrower, and any such subsequent assignment
by Borrower shall be subject to the rights of Lender hereunder.
(F) FIXTURES AND PERSONAL PROPERTY. TOGETHER WITH a
SECURITY interest in (i) all property and fixtures affixed to or located on the
Property which, to the fullest extent permitted by law shall be deemed fixtures
and a part of the Property; (ii) all articles of personal property and all
materials delivered to the Property for use in any construction being conducted
thereon, and owned by Borrower; (iii) all proceeds, products, replacements,
additions, substitutions, renewals and accessions of any of the foregoing; (iv)
all contract rights, general intangibles, water and sewer payments, leases and
lease payments, eminent domain awards, insurance policies and proceeds, actions
and rights in action, as all of the same may relate to the Property; (v) all
contracts, agreements, licenses and permits, now or hereafter in existence, used
by the Borrower in connection with the operation of any business now, or
hereafter, operated on the Land; and (vi) all instruments and documents,
relating to the collateral described in this paragraph (F) and all cash and
non-cash proceeds and products thereof. The foregoing items (I), (ii) and (iii)
(hereinafter the "Tangible Property") include (a) all rights, title and interest
of Borrower in and to the minerals, soil, flowers, shrubs, crops, trees, timber
and other emblements now or hereafter on the Property or under or above the same
or any part or parcel thereof; (b) all machinery, apparatus, equipment,
fittings, fixtures, whether actually or constructively attached to the Property
and including all trade, domestic and ornamental fixtures now owned or hereafter
acquired by Borrower, including, but without limiting the generality of the
foregoing, all heating, air conditioning, freezing, lighting, laundry,
incinerating and power equipment; engines; pipes; pumps; tanks; motors;
conduits; switchboards; plumbing, lifting, cleaning, fire prevention, fire
extinguishing, refrigerating, ventilating and communications apparatus; boilers,
ranges, furnaces, oil burners or units thereof; appliances; air cooling and air
conditioning apparatus; vacuum cleaning systems; elevators; escalators; shades;
awnings; screens; storm doors and windows; stoves; wall beds; refrigerators;
attached cabinets; partitions; ducts and compressors; rugs and carpets;
draperies; together with all building materials and equipment now or hereafter
delivered to the Property and intended to be installed therein, including but
not limited to lumber, plaster, cement, shingles, roofing, plumbing, fixtures,
pipe, lath, wallboard, cabinets, nails, sinks, toilets, furnaces, heaters,
brick, tile, water heaters, screens, window frames, glass doors, flooring,
paint, lighting fixtures and unattached refrigerating, cooking, heating and
ventilating appliances; together with all proceeds, additions and accessions
thereto and replacements thereof specifically excluding any items of inventory
held for sale by Borrower; (c) all of the water, sanitary and storm sewer
systems now or hereafter owned by the Borrower which are now or hereafter
located by, over and upon the Property or any part and parcel thereof, and which
water system includes all water mains, service laterals, hydrants, valves and
appurtenances, and which sewer system includes all sanitary sewer lines,
including mains, laterals, manholes, sewer and water tap units, and
appurtenances thereto; and (d) all paving for streets, roads, walkways or
entrance ways now or hereafter owned by Borrower and which are now or hereafter
Misc\mtg
4
<PAGE>
located on the Property or any part or parcel thereof. The foregoing items (iv),
(v) and (vi) (hereinafter the "Intangible Collateral") include (an) all sewer
permits, connection fees, impact fees, reservation fees, and other deposits or
payments made in connection with the reservation, allocation, permitting or
providing of wastewater treatment and potable water to the Property and any and
all claims or demands relating thereto, now owned or which may hereafter be
acquired by Borrower, together with all right, title, interest, equity, estate,
demand or claim to the provision of wastewater treatment and potable water to
the Property, now existing or which may hereafter be acquired by Borrower; (bb)
all of Borrower's interest as lessor in and to all leases or rental arrangements
of the Property or any part thereof, heretofore made and entered into, and in
and to all leases or rental arrangements hereafter made and entered into by
Borrower with respect to the Property during the life of the SECURITY agreements
or any extension or renewal thereof, together with all rents and payments in
lieu of rents, together with any and all guarantees of such leases or rental
arrangements and including all present and future SECURITY deposits and advance
rentals; (cc) any and all awards or payments, including interest thereon and the
right to receive the same, as a result of (a) the exercise of the right of
eminent domain, (b) the alteration of the grade of any street, or (c) any other
injury to, taking of or decrease in the value of the Property; (dd) all of the
right, title and interest of the Borrower in and to all unearned premiums
accrued, accruing or to accrue under any and all insurance policies now or
hereafter provided pursuant to the terms of SECURITY agreements, and all
proceeds or sums payable for the loss of or damage to the Property herein, or
rents, revenues, income, profits or proceeds from leases, franchises,
concessions or licenses of or on any part of the Property; (ee) all contracts
and contract rights of Borrower arising from contracts entered into in
connection with development, construction upon or operation of the Property,
including but not limited to, all deposits held by or on behalf of the Borrower,
and all management, franchise and service agreements, related to the business
now or hereafter conducted by the Borrower on the Property; and (ff) all of
Borrower's interest in all utility security deposits or bonds on the Property or
any part or parcel thereof. Borrower (Debtor) hereby grants to Lender (Creditor)
a security interest in all of the foregoing items (i) through (vi).
(G) SECURITY AGREEMENT. To the extent any of the property described
encum bered by this Mortgage from time to time constitutes personal property
subject to the provisions of the Florida Uniform Commercial Code (the "Code"),
this Mortgage constitutes a "Security Agreement" for all purposes under the
Code. Without limitation, Lender, at its election, upon Borrower's default under
this Mortgage continuing beyond any applicable curative period, will have all
rights, powers, privileges, and remedies from time to time available to a
secured party under the provisions of the Code with respect to such property.
Notwithstanding any provision of this Mortgage to the contrary, Borrower and
Lender agree that, unless and until Lender affirmatively elects otherwise, all
property in any manner used, useful, or intended to be used for the improvement
of, or production of income from, the Land is, and at all times and for all
purposes and in all proceedings both legal or equitable shall be, regarded as
part of the real estate irrespective of whether (i) any such items are
physically attached to the Improvements; (ii) serial numbers are used for the
better identification of certain equipment; or (iii) any such item is referred
to or reflected in any financing statement filed or recorded at any time.
Similarly, the mention in any financing statement of the rights in, or the
proceeds of, any fire and/or hazard
Misc\mtg
5
<PAGE>
insurance policy, or any award in eminent domain proceedings for a taking or for
loss of value, or Borrower's interest as lessor in any present or future lease
or rights to income growing out of the use of the Mortgage Property, whether
pursuant to a lease or otherwise, shall not be construed as altering any of
Lender's rights as determined by this Mortgage, or otherwise available at law or
in equity, or impugning the priority of this Mortgage, or the Loan Documents, or
both, but such mention in any financing statement is declared to be for Lender's
protection if, as, and when any court holds that notice of Lender's priority of
interest, to be effective against a particular class of persons, including the
Federal government and any subdivisions or entity of the Federal government,
must be perfected in the manner required by the Code. Borrower agrees to execute
and deliver on demand such other security agreements, financing statements and
other instruments as Lender may request in order to perfect its security
interest or to impose the lien hereof more specifically upon any of such
property.
Everything referred to in paragraphs (A), (B), (C), (D), (E) (F) and
(G) hereof and any additional property hereafter acquired by Borrower to be used
in connection with the Property and subject to the lien of this Mortgage or
intended to be so is herein referred to as the "Mort gaged Property".
TO HAVE AND TO HOLD the same, together with all and singular the
tenements, hereditaments and appurtenances thereunto belonging or in anywise
appertaining, and the rever sion and reversions, remainder or remainders, rents,
issues, and profits thereof, and also all the estate, right, title, interest,
homestead, dower and right of dower, separate estate, possession, claim and
demand whatsoever, as well in law as in equity, of the said Borrower in and to
the same, and every part thereof, with the appurtenances of the said Borrower in
and to the same, and every part and parcel thereof unto the said Lender in fee
simple.
And the Borrower hereby covenants with the Lender, that the Borrower is
indefeasibly seized of the Land in fee simple; that the Borrower has full power
and lawful right to convey the same in fee simple as aforesaid; that the Land is
and will remain free from all encumbrances except taxes for the current year;
that said Borrower will make such further assurances to prove the fee simple
title to the Land in said Borrower as may be reasonably required, and that said
Borrower does hereby fully warrant the title to the Land, and every part
thereof, and will defend the same against the lawful claims of all persons
whomsoever.
PROVIDED ALWAYS, that if the Borrower shall well and truly pay said
indebtedness unto the Lender, and any renewals or extensions thereof, and the
interest thereon, together with all costs, charges and expenses, including a
reasonable attorney's fee, which the Lender may incur or be put to in collecting
the same by foreclosure, or otherwise, and shall duly, promptly, and fully
perform, discharge, execute, effect, complete, and comply with and abide by each
and every stipulation, agreement, condition, and covenant of the Note and of
this Mortgage, then this Mortgage and the estate hereby created shall cease and
be null and void.
And the Borrower hereby further covenants as follows:
Misc\mtg
6
<PAGE>
1. Payment. That Borrower will pay all and singular the principal and
interest and the various and sundry sums of money payable by virtue of the Note
and this Mortgage, each and every, promptly on the days respectively the same
severally become due. If any payment hereunder (other than the final payment) is
not made within fifteen (15) days after it is due, the Borrower shall pay to
Lender a late charge equal to five percent (5%) of the late payment. It is
further agreed that any sums, including without limitation payments of principal
and interest on said Note, which shall not be paid when due, subject to any
applicable grace and/or cure periods and whether becoming due by lapse of time
or by reason of acceleration under the provisions herein stated, shall bear
interest at the Penalty Rate, as defined in the Note, and shall be secured by
the lien of this Mortgage.
2. Taxes. etc. That Borrower will pay, when due and before any penalty
attaches, all real estate taxes, tangible personal property taxes, assessments,
water rates, and other govern mental or municipal charges, fines, or
impositions, on the Mortgaged Property for which provi sion has not been made
hereinbefore, and in default thereof the Lender may pay the same, and all such
sums so paid by the Lender shall be immediately due and payable, and shall be
secured by the lien of this Mortgage; and the Borrower will promptly deliver the
official receipts therefor to the Lender. On or before March 1st of each year
during the term of this Mortgage, the Borrower shall provide the Lender with
paid receipts evidencing the payment of all real estate and tangible personal
property taxes due with respect to the Mortgaged Property.
3. Waste: Repairs. That Borrower will permit, commit, or suffer no
waste, impair ment, or deterioration of the Mortgaged Property or any part
thereof; and in the event of the failure of the Borrower to keep any buildings
on said premises and those to be erected on the Mortgaged Property or
improvements thereon, in good repair, the Lender may, after giving the Borrower
written notice and ten (10) days to cure any such defects, make such repairs, as
in its discretion, it may deem necessary for the proper preservation thereof,
and the full amount of each and every such payment shall be immediately due and
payable, and shall be secured by the lien of this Mortgage. Borrower will notify
Lender in writing within five (5) of any injury, damage or impairment of or
occurring on the Mortgaged Property including, but not limited to, serious
injury or loss by death or otherwise occurring on the Mortgaged Property
4. Use and Alteration of Mortgaged Property. Unless required by
applicable law or unless Lender has otherwise agreed in writing, Borrower shall
not allow changes in the nature of the occupancy for which the Mortgaged
Property was intended at the time this Mortgage was executed. Borrower shall not
initiate or acquiesce in a change in the zoning classification of the Mortgaged
Property without Lender's written consent. Borrower shall not make any change in
the use of the Mortgaged Property which will create a fire or other hazard not
in existence on the date hereof, nor shall Borrower in any way increase any
hazard. Without the prior written consent of Lender, no building or improvement
may be erected on the Land, nor may Borrower structurally remove or demolish any
building or improvement, nor may Borrower materially structurally alter any
building or improvement that would change the use of the Mortgaged Property or
that would otherwise decrease its value, nor shall any fixture or chattel
covered by this Mortgage be removed at any time unless simultaneously replaced
by an article of equal kind,
Misc\mtg
7
<PAGE>
quality and value owned by Borrower, and which is unencumbered except by the
lien of this Mortgage and other instruments of security securing the Note.
5. Surface Alteration and Mineral Rights. Borrower shall not consent
to, permit or indulge in any entry, either by itself or by any others, upon the
surface of the Land for the purpose of exploration, drilling, prospecting,
mining, excavation or removal of any earth, sand, dirt, rock, minerals, oil or
any other substance without the Lender's approval and written consent.
6. Collection Expenses. All parties liable for the payment of the Note
agree to pay the Lender all costs incurred by the Lender, whether or not an
action be brought, in collecting the sums due under the Note, enforcing the
performance and/or protecting its rights under the Loan Documents and in
realizing on any of the security for the Note. Such costs and expenses
Misc\mtg
8
<PAGE>
shall include, but are not limited to, reasonable attorneys' fees, filing fees,
costs of publication, deposition fees, stenographer fees, witness fees, title
search or abstract costs and other court and related costs incurred or paid by
Lender in any action, proceeding or dispute in which Lender is made a part or
appears as a party plaintiff or party defendant because of the failure of the
Borrower promptly and fully to perform and comply with all conditions and
covenants of this Mortgage, the Note secured hereby, or any other Loan Document,
including but not limited to, the foreclosure of this Mortgage, condemnation of
all or part of the Mortgaged Property, or any action to protect the security
thereof. Sums advanced by the Lender for the payment of collection costs and
expenses shall accrue interest at the Penalty Rate, as defined in the Note, from
the time they are advanced or paid by the Lender, and shall be due and payable
upon payment by Lender without notice or demand and shall be secured by the lien
of the Mortgage.
7. Attorneys' Fees. All parties liable for the payment of the Note
agree to pay the Lender reasonable attorneys' fees incurred by the Lender,
whether or not an action be brought, in collecting the sums due under the Note,
enforcing the performance and/or protecting its rights under the Loan Documents
and in realizing on any of the security for the Note. Such reasonable attorneys'
fees shall include, but not be limited to, fees for attorneys, paralegals, legal
assistants, and expenses incurred in any and all judicial, bankruptcy,
reorganization, administrative receivership, or other proceedings affecting
creditor's rights and involving a claim under the Note or any Loan Document,
which such proceedings may arise before or after entry of a final judgment. Such
fees shall be paid regardless whether suit is brought and shall include all fees
incurred by Lender at all trial and appellate levels including bankruptcy court.
Sums advanced by the Lender for the payment of attorneys' fees shall accrue
interest at the Penalty Rate, as defined in the Note, from the time they are
advanced by the Lender, and shall be due and payable upon payment by Lender
without notice or demand and shall be secured by the lien of the Mortgage.
8. Insurance. Borrower shall keep the Mortgaged Property continuously
insured in such manner with such companies as may be satisfactory to Lender,
against loss by fire, vandalism, malicious mischief and other perils usually
covered by a hazard insurance policy with standard extended coverage
endorsement, and against loss by such other perils as Lender may from time to
time reasonably determine as prudent or has been required by applicable law,
with loss, if any, payable to Lender as its interest may appear. Such insurance
shall be in an amount at least equal to the full insurable value of the
Improvements unless Lender agrees in writing that such insurance may be in a
lesser amount. The original insurance policy and all replacements thereof shall
be delivered to Lender and must provide that they may not be cancelled without
the insurer giving at least fifteen (15) days prior written notice of such
cancellation to the Lender. In the event of loss, Borrower shall give immediate
notice by mail to Lender of such loss and Borrower's estimate of the amount of
such loss. Lender may make proof of loss if not made promptly by Borrower, and
each insurance company concerned is hereby authorized and directed to make
payments for such loss directly to Lender; and the insurance proceeds or any
part thereof may be applied by Lender at its option, after deducting therefrom
all its expenses including attorneys' fees, either to reduction of the
indebtedness or obligations hereby secured or to the restoration or repair of
the property damaged. Lender is hereby authorized, at its option, to settle and
compromise any claims, awards, damages, rights of action and proceeds, and any
other
Misc\mtg
9
<PAGE>
payment or relief under any insurance policy. In the event of foreclosure of
this Mortgage or other transfer of title to the Mortgaged Property in
extinguishment of the indebtedness or obligations secured hereby, all right,
title and interest of Borrower in and to any insurance policy then enforced
shall pass to the purchaser or grantee. Notwithstanding the foregoing, in the
event the Lender determines in Lender's sole discretion that the insurance
proceeds are sufficient to restore the improvements in accordance with the
original plans and specifications, that restoration or repair of the Mortgaged
Property is economically feasible and the security of this Mortgage is not
materially impaired, the Lender agrees to disburse the insurance proceeds in the
same manner as the disbursement of funds during the initial construction of the
improvements to the Mortgaged Property for reconstruction or repair. In such
event, the Lender shall be entitled to receive or deduct from the insurance
proceeds such fees and costs as it is then charging its borrowers for similar
construction loans.
9. Event of Default. The occurrence of any of the following constitutes
an Event of Default by Borrower under this Mortgage and, at the option of the
Lender, under the Loan Documents:
(a) Scheduled Payment. Subject to any applicable grace and/or
cure periods, Borrower's failure to make any payment required by the Note on or
before the date it is due, without further notice or demand.
(b) Monetary Default. Borrower's failure to make any other
payment required by this Mortgage, or the other Loan Documents, or both, within
fifteen (15) days after written demand therefor.
(c) Other. Borrower's continued failure to duly observe or
perform any other covenant, condition, agreement or obligation imposed upon
Borrower by any Loan Document, for a period of thirty (30) days after written
demand; provided (i) if Borrower reasonably cannot perform within such thirty
(30) day period and, in Lender's reasonable judgment, Lender's security will not
be impaired, Borrower may have such additional time to perform as Borrower
reasonably may require, provided and for so long as Borrower proceeds with due
diligence to cure said default; and (ii) if Lender's security reasonably will be
materially impaired if Borrower does not perform in less than thirty (30) days,
Borrower will have only such period following written demand in which to perform
as Lender reasonably may specify.
(d) Representation. Any verbal or written representation,
statement or warranty of Borrower, any co-signer, endorser, surety or guarantor
of the Note, contained in the Note, this Mortgage or any other Loan Document, or
in any certificate delivered pursuant hereto, or in any other instrument or
statement made or furnished in connection herewith, proves to be incorrect or
misleading in any material respect as of the time when the same shall have been
made, including, without limitation, any and all financial statements furnished
by Borrower to Lender as an inducement to Lender's making the loan evidenced by
the Note or pursuant to any provision of this Mortgage.
Misc\mtg
10
<PAGE>
(e) Death/Incompetency/Dissolution. The death, incompetency or
dissolution of the Borrower or any maker, co-signer, endorser, surety or
Guarantor of the Note or other obligation.
(f) Insolvency. If (i) a petition is filed by the Borrower or
any Guarantor of the Note seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any law relating to bankruptcy or insolvency, or (ii) a petition is
filed against the Borrower or any Guarantor of the Note, which is not dismissed
within thirty (30) days after filing, seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
law relating to bankruptcy or insolvency, or (iii) Borrower or any Guarantor of
the Note seeks or consents to or acquiesces in the appointment of any trustee,
receiver, master or liquidator of itself or of all of the rent, revenues,
issues, earnings, profits or income of any part of the Mortgaged Property, or
(iv) Borrower or any Guarantor of the Note makes any general assignment for the
benefit of creditor, or (v) Borrower makes any admission in writing of its
inability to pay its debts generally as they become due, or (vi) Borrower or any
Guarantor of the Note is "insolvent", as hereafter defined; or (vii) any
trustee, receiver or liquidator of Borrower or of all or any part of the
Mortgaged Property or of any or all of the Rents thereof is appointed who is not
discharged within thirty (30) days after its appointment. For purposes of this
paragraph, a person or entity shall be deemed to be insolvent, if they are
unable to pay their debts as they become due and/or if the fair market value of
their assets does not exceed their aggregate liabilities.
(g) Foreclosure Proceedings. The filing of a foreclosure
proceeding by the owner and holder of any mortgage or lien affecting the
Mortgaged Property, regardless of whether same is or is asserted to be prior or
inferior in dignity and enforceability to the lien and security interest of this
Mortgage.
(h) Organizational Change. Any change in the ownership,
management or control of the Borrower, without the Lender's prior written
consent.
10. Remedies. Upon the occurrence of any default continuing beyond any
applicable curative period under this Mortgage, as provided in the preceding
paragraph, Lender may exercise any one or more of the following rights and
remedies, in addition to all other rights and remedies otherwise available at
law or in equity:
(a) Other Documents. To pursue any right or remedy provided by the Loan
Documents including the right to sue for collection of all sums due and payable
of the indebted ness secured hereby.
(b) Collect Rents. To collect all rents, issues, profits, revenues, income,
proceeds or other benefits from the Mortgaged Property.
(c) Acceleration. To declare the entire unpaid amount of the indebtedness
Misc\mtg
11
<PAGE>
secured hereby immediately due and payable.
(d) Foreclosure. To foreclose the lien of this Mortgage, and obtain
possession of the Mortgaged Property, or either, by any lawful procedure.
(e) Code Rights. To exercise any right or remedy available to Lender as a
secured party under the Code, as it from time to time is in force and effect,
with respect to any portion of the Mortgaged Property or the Intangible
Collateral then constituting property subject to the provisions of the Code; or
Lender, at its option, may elect to treat the Mortgaged Property or the
Intangible Collateral, or any combination, as real property, or an interest
therein, for remedial purposes.
(f) Receiver. To apply, on ex parte motion to any court of competent juris
diction, for and obtain the appointment of a receiver to take charge of, manage,
preserve, protect, complete construction of, and operate the Mortgaged Property,
and any business or businesses situated thereon, or any combination; to collect
the rents; to make all necessary and needed repairs; to pay all taxes,
assessments, insurance premiums, and all other costs incurred in connection with
the Mortgaged Property; and, after payment of the expenses of the receivership,
including reasonable attorneys' and legal assistants' fees, and after
compensation to the receiver for management and completion of the Mortgaged
Property, to apply all net proceeds derived therefrom in reduction of the
indebtedness secured hereby or in such other manner as the court shall direct.
The appointment of such receiver shall be a matter of strict right to Lender,
regardless of the adequacy of the security or of the solvency of any party
obligated for payment of the indebtedness secured hereby. All expenses, fees,
and compensation incurred pursuant to any such receivership shall be secured by
the lien of this Mortgage until paid. The receiver, personally or through
agents, may exclude Borrower wholly from the Mortgaged Property and have, hold,
use, operate, manage, and control the Mortgaged Property, and may in the name of
Borrower exercise all of Borrower's rights and powers to maintain, construct,
operate, restore, insure, and keep insured the Mortgaged Property in such manner
as such receiver deems appropriate.
(g) Relief from Stay. In the event the Borrower and/or the Guarantor shall
default under the terms of Paragraph 9(f) of this Mortgage the Lender shall
thereupon be entitled to relief from any automatic stay imposed by Title XI of
the U.S. Code, as amended, or otherwise, on or against the exercise of the
rights and remedies otherwise available to the Lender as provided in the Loan
Documents and as otherwise provided by law
(h) Other Security. Lender may proceed to realize upon any and all other
security for the indebtedness secured hereby in such order as Lender may elect;
and no such action, suit, proceeding, judgment, levy, execution, or other
process will constitute an election of remedies by Lender, or will in any manner
alter, diminish, or impair the lien and security interest created by this
Mortgage, unless and until the indebtedness secured hereby is paid in full.
(i) Advances. To advance such monies, and take such other action, as is
Misc\mtg
12
<PAGE>
authorized by Paragraphs 2, 3 and 8 above. All such advances shall bear interest
at the Penalty Rate, as defined in the Note, and shall be immediately due and
payable by Borrower to Lender without demand therefor, and such advances
together with interest and costs accruing thereon shall be secured by this
Mortgage.
11. Exercise of Remedies. The remedies of Lender as provided in the
Loan Docu ments, shall be cumulative and concurrent and may be pursued singly,
successively or together, at the sole discretion of Lender, and may be exercised
as often as occasion therefor shall arise. No act, or omission or commission or
waiver of Lender, including specifically any failure to exercise any right,
remedy or recourse, shall be effective unless set forth in a written document
executed by Lender and then only to the extent specifically recited therein. A
waiver or release with reference to one event shall not be construed as
continuing, as a bar to, or as a waiver or release of, any subsequent right,
remedy or recourse as to any subsequent event.
12. Eminent Domain. If all or any material part of the Mortgaged shall
be damaged or taken through condemnation (which term when used herein shall
include any damage taking by any governmental authority or any other authority
authorized by applicable laws to so damage or take, and any transfer by private
sale in lieu thereof), either temporarily or permanently, then the entire
indebtedness and other sums secured hereby shall, at the option of the Lender,
become immediately due and payable. Lender shall be entitled to all compensation
awards, damages, claims, rights of action and proceeds of, or on account of any
damage or taking through condemnation and Lender is hereby authorized, at its
option, to commence, appear in and prosecute, in its own or Borrower's name, any
action or proceeding relating to any condemnation, and to settle or compromise
any claim in connection therewith. All such compensation awards, damages,
claims, rights of action and proceeds, and any other payments or relief, and the
right thereto are hereby assigned by Borrower to Lender, who, after deducting
therefrom all its expenses, including attorneys' fees, may release any money
received by it without affecting the lien of this Mortgage or may apply the
same, in such manner as Lender shall determine, to the reduction of the sum
secured hereby up to the entire amount owed to the Lender pursuant to the terms
of the Note and this Mortgage and thereafter, the balance, if any, shall be
disbursed to the Borrower.
13. Consent to Transfer. In the event the Borrower, without the prior
written consent of the Lender, (a) shall sell, convey, transfer (including a
transfer by agreement for deed or land contract) the Mortgaged Property or any
part thereof or any interest therein, or (b) shall be divested of tide or any
interest in the Mortgaged Property in any manner or way, whether voluntary or
involuntary, or (c) enters into an oral or written agreement to lease the entire
fee simple interest of the Mortgaged Property (and not simply the improvements
or buildings located thereon) not in the ordinary course of business or (d)
further encumbers the Mortgaged Property then the entire balance of the
indebtedness evidenced by the Note shall be accelerated and become immediately
due and payable, at the option of the Lender upon ten (10) days written notice
to the Borrower. In the event the Lender elects to accelerate the entire balance
of the indebtedness, the Lender shall have no obligation to allege or show any
impairment of its security and may pursue any legal or equitable remedies for
default in such payment without allegation or showing. It is
Misc\mtg
13
<PAGE>
specifically understood by the parties that as a condition of granting its
approval required by this paragraph, the Lender may adjust the interest rate
stated in the Note.
14. Financial Information. The Borrower will keep its books of account
in accordance with generally accepted accounting practices, or other recognized
accounting principles acceptable to Lender, and will, within one hundred twenty
(120) days after the close of the fiscal year of the Borrower, furnish the
Lender with the following:
(a) Borrower Annual Financial Statements. A balance sheet as
of the close of such fiscal year, a profit and loss statement and statement of
reconciliation of surplus for the Borrower compiled by independent certified
public accountants, satisfactory to the Lender, and certified as true and
correct by one of the principal executive officers of the Borrower.
(b) Borrower Tax Return. The federal income tax return of the
Borrower certified as true and correct by one of the principal executive
officers of the Borrower.
In addition, the Borrower will obtain and cause to be furnished to the
Lender the following:
(c) Guarantor Financial Statements. A personal financial statement of
JOSEPH G. POZO, JR., in form and content acceptable to Lender and certified as
true and correct by JOSEPH G. POZO, JR.
(d) Guarantor Tax Returns. The federal income tax return of JOSEPH G. POZO,
JR., certified as true and correct by JOSEPH G. POZO, JR.
The Borrower also, with reasonable promptness, will furnish to the
Lender such other data as the Lender may reasonably request.
15. Banking Relations. During the term of this Mortgage and for so long
as Borrower is obligated to the Lender under the Note, the Borrower shall
maintain all of its deposit, disbursement and liquid investment accounts,
including money market accounts, certificates of deposit and repurchase
agreements, with AmSouth Bank of Florida.
16. Assignment of Life Insurance. Prior to the first disbursement to be
made pursuant to the Note and for so long thereafter as Borrower is obligated to
the Lender under the Note, the Borrower shall cause to be obtained and assigned
to the Lender in form satisfactory to the Lender, a life insurance policy in the
face value of at least FIVE HUNDRED THOUSAND DOLLARS ($500,000.00). Such
insurance policy shall designate the Lender as beneficiary, as its interest may
appear, to guarantee payment of the indebtedness or liability of the Borrower to
the Lender. Such insurance shall provide that the Lender shall receive at least
thirty (30) days' prior written notice of any cancellation or modification of
the insurance.
Misc\mtg
14
<PAGE>
17. Environmental Agreement. Borrower hereby represents that neither
Borrower nor, to the best of Borrower's knowledge, any other person has ever
used the Mortgaged Property as a storage facility for any "Hazardous
Substances".
Borrower hereby agrees to indemnify Lender and hold Lender
harmless from and against any and all losses, liabilities, including strict
liability, damages, injuries, expenses, including reasonable attorneys' fees,
costs of any settlement or judgment and claims of any and every kind whatsoever
paid incurred or suffered by, or asserted against, Lender by any person or
entity or governmental agency for, with respect to, or as a direct or indirect
result of, the presence on or under, or the escape, seepage, leakage, spillage,
discharge, emission, discharging or release from the premises of any Hazardous
Substance (including, without limitation, any losses, liabilities, including
strict liability, damages, injuries, expenses, including reasonable attorneys'
fees, costs of any settlement or judgment or claims asserted or arising under
the Comprehensive Environmental Response, Compensation and Liability Act, any so
called federal, state or local "Superfund" "Superlien" laws, statutes, law
ordinance, code, rule, regulation, order or decree regulating, with respect to
or imposing liability, including strict liability, substances or standards of
conduct concerning any Hazardous Substance), regardless of whether within the
control of Lender, so long as the act or omission in question occurs prior to
the sale of the Mortgaged Property pursuant to the provisions of paragraph 10
hereof and complete dispossession of Borrower thereunder.
For purposes of this Mortgage, "Hazardous Substances" shall
mean and include those elements or compounds which are contained in the list of
hazardous substances adopted by the United States Environmental Protection
Agency ("EPA") and the list of toxic pollutants designated by Congress or the
EPA or defined by any other federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic or dangerous
waste, substance or material as now or at any time hereafter in effect.
If Borrower receives any notice of (i) the happening of any
material event involving the spill, release, leak, seepage, discharge or
clean-up of any Hazardous Substance on the Mortgaged Property or in connection
with Borrower's operations thereon or (ii) any complaint, order, citation or
material notice with regard to air emissions, water discharges, or any other
environmental, health or safety matter affecting Borrower (an "Environmental
Complaint") from any person or entity (including without limitation the EPA)
then Borrower shall immediately notify Lender orally and in writing of said
notice.
Lender shall have the right but not the obligation, and
without limitation of Lender's rights under this Mortgage, to enter onto the
Mortgaged Property or to take such other actions as it deems necessary or
advisable to clean up, remove, resolve or minimize the impact of, or otherwise
deal with, any such Hazardous Substance or Environmental Complaint following
receipt of any notice from any person or entity (including, without limitation,
the EPA) asserting the existence of any Hazardous Substance or an Environmental
Complaint pertaining to the Mortgaged Property or any part thereof which, if
true, could result in an order, suit or other
Misc\mtg
15
<PAGE>
action against Borrower and/or which, in the sole opinion of Lender, could
jeopardize its security under this Mortgage. All reasonable costs and expenses
incurred by Lender in the exercise of any such rights shall be secured by this
Mortgage and shall be payable by Borrower upon demand.
Lender shall have the right, in its reasonable discretion, to
require Borrower to periodically (but not more frequently than annually unless
an Environmental Complaint is then outstanding) perform (at Borrower's expense)
an environmental audit and, if deemed necessary by Lender, an environmental risk
assessment, each of which must be satisfactory to Lender, of the Mortgaged
Property, hazardous waste management practices and/or hazardous waste disposal
sites used by Borrower. Said audit and/or risk assessment must be by an
environmental consultant satisfactory to Lender. Should Borrower fail to perform
said environmental audit or risk
Misc\mtg
16
<PAGE>
assessment within 30 days of the Lender's written request, Lender shall have the
right but not the obligation to retain an environmental consultant to perform
said environmental audit or risk assessment. All costs and expenses incurred by
Lender in the exercise of such rights shall be secured by this Mortgage and
shall be payable by Borrower upon demand or charged to Borrower's loan balance
at the discretion of Lender.
Any breach of any warranty, representation or agreement
contained in this Section shall be a default hereunder and shall entitle Lender
to exercise any and all remedies provided in this Mortgage or otherwise
permitted by law. The provisions of this paragraph will survive the foreclosure
of this Mortgage or any deed in lieu of foreclosure delivered to Lender by
Borrower.
18. After Acquired Property. Without the necessity of any further act
of Borrower or Lender, the lien of, and security interest created by, this
Mortgage automatically will extend to and include (i) any and all renewals,
replacements, substitutions, accessions, proceeds, products, or additions of or
to the Mortgaged Property, the Rents, and the Intangible Collateral, and (ii)
any and all monies and other property that from time to time may, either by
delivery to Lender or by any instrument (including this Mortgage) be subjected
to such lien and security interest by Borrower, or by anyone on behalf of
Borrower, or with the consent of Borrower, or which otherwise may come into the
possession or otherwise be subject to the control of Lender pursuant to this
Mortgage, or the Loan Documents, or both.
19. Appraisal. Notwithstanding any term or provision hereof to the
contrary, if at any time the Lender in its sole discretion reasonably believes
that the value of the Mortgaged Property may have declined or that the value of
the Mortgaged Property is less than the value utilized by the Lender at the time
of loan approval or renewal, within thirty (30) days from Lender's written
request to Borrower therefor, Borrower shall provide Lender, at Borrower's sole
cost and expense, a current appraisal of the Mortgaged Property to be ordered by
the Lender from an appraiser designated by Lender and in form and content as
required by Lender. Borrower shall cooperate fully with any such appraiser and
provide all such documents and information as such appraiser may request in
connection with such appraiser's performance and preparation of such appraisal.
Borrower's failure to promptly and fully comply with Lender's requirements under
this paragraph shall, without further notice, constitute an Event of Default
under this Mortgage, the Note and the other Loan Documents.
20. Inspection. Lender shall be entitled to inspect the Mortgaged
Property at all reasonable times and Borrower agrees to permit Lender, or its
agents or employees, access to the Mortgaged Property for such purpose.
21. Construction Loan Agreement. This is a construction loan mortgage,
the proceeds of which are loaned for the purpose of financing the construction
of improvements upon the Land. This Mortgage is subject to the terms, provisions
and conditions of that certain Construction Loan Agreement of even date entered
into between the Borrower and the Lender herein, and said Construction Loan
Agreement is by reference incorporated herein and made a part hereof. Said
Construction Loan Agreement is available for inspection by all parties in
interest, at the office of the Lender herein. The maximum amount to be disbursed
pursuant to said
Misc\mtg
17
<PAGE>
Construction Loan Agreement, unless same is amended, shall be ONE MILLION ONE
HUNDRED FIFTY THOUSAND DOLLARS ($1,150,000.00).
22. Choice of Law and Venue. This Mortgage shall be governed by the
Laws of the State of Florida, and the United States of America, whichever the
context may require or permit. The Borrower and all Guarantors, if any,
expressly agree that proper venue for any action which may be brought under this
Mortgage in addition to any other venue permitted by law shall be any county in
which property encumbered by the Mortgage is located as well as Orange County,
Florida. Should Lender institute any action under this Mortgage, the Borrower
and all Guaran tors, if any, hereby submit themselves to the jurisdiction of any
court sitting in Florida.
23. Debtor-Creditor Relationship Only. It is understood by and between
Lender and its successors, or assigns, and the Borrower, that the funds received
on the Note which are secured by this Mortgage, create the relationship of
Lender and Borrower, and it is not the intention of the parties to create the
relationship of a partnership, a joint venture or syndicate, or mutual
enterprise or endeavor.
Misc\mtg
18
<PAGE>
to have been received by the party to whom it was addressed on the date that
such writing was initially placed in the United States Postal Service or courier
service by the sender.
30. Waiver of Trial By Jury. The Borrower and the Lender knowingly,
voluntarily and intentionally waive the right either may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under or in
connection with this Mortgage and any agreement contemplated to be executed in
conjunction herewith, or any course of conduct, course of dealing, statements
(whether verbal or written) or actions of either party. This provision is a
material inducement for the Lender entering into the loan evidenced by this
Mortgage.
The covenants herein contained shall bind, and the benefits
and advantages shall inure to, the respective heirs, executors, administrators,
successors, and assigns of the parties hereto. Whenever used, the singular
number shall include the plural, the plural the singular, and the use of any
gender shall include all genders.
IN WITNESS WHEREOF, the said Borrower has executed these presents the day and
year first above written in manner and form sufficient to be binding.
Signed, sealed and delivered
in the presence of: BOAT TREE, INC., a Florida corporation
By:/s/ Joseph G. Pozo
JOSEPH G. POZO, JR., President
NAME PRINTED
NAME PRINTED
Misc\mtg
19
<PAGE>
STATE OF CALIFORNIA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 28th day of
November, 1995, by JOSEPH G. POZO, JR. as President of BOAT TREE, INC., a
Florida corporation, on behalf of the corporation. He is personally known to me
or has produced______________________ as identification.
Notary Public
Print Name:
My Commission Expires:
Misc\mtg
20
<PAGE>
COMMERCIAL LEASE:
THIS LEASE AGREEMENT, [the "Lease"] made and entered into this ___ day of
November, 1996, by and between 340 NORTH, Inc., [hereinafter referred to as
"Landlord"], and Boat Tree, Inc., [hereinafter collectively referred to as
"Tenant"]
WITNES SETH:
Landlord does hereby lease to Tenant, and Tenant hereby takes from the Landlord,
the property commonly described as part of the structure and land space located
at 340 North Harbor City Boulevard, Melbourne, Florida, as hereinafter
described, [collectively the "Premises"], subject to the following terms and
conditions:
1. DEMISED PREMISES: The portion of the property hereby leased unto the
Tenant shall be known collectively as the "Premises" and is described as
follows:
1.1 The Tenant shall have the exclusive use, possession and occupancy
of the part of the property located at 340 North Harbor City Boulevard,
Melbourne, consisting of portions of the land and building as shown on the map
and drawing attached hereto and made a part hereof as Exhibits "A.l,
"A.2.l","A.2.2" and "A.3", which generally consists of all of Lots 24, 26, 27,
28, the easterly portions of Lot 9, 10, and 11, Annie Laurie Gardens, the Space
"A" and Space "B" consisting collectively of the entire downstairs of the
building and the northly apartment of the upstairs of the building, together
with any personal property, appliances, fixtures, or equipment located therein.
1.2 The Tenant shall have the non-exclusive use, jointly with all other
tenants of the property, to the entrance into the property from U. S. Highway 1,
and the parking lot area extending from the front of the building to U.S.
Highway 1 over Lot #25 and shall have access in common from Circle Avenue over
Lot 12 in the rear.
1.3 At the option of the Tenant, the Tenant shall have the right, at or
before the expiration of the end of the first six (6) months, to vacate the
Space designated as building Space "B" shown of Sheet "A.2.2" and the use of Lot
24 shown on Sheet "A.l", collectively known as Space "B". If tenant exercises
this option, this Lease shall continue with the remainder of the demised areas.
Tenant shall give the Landlord written notice at lest forty-five (45) days prior
to the expiration of said six month option period of Tenant's election to vacate
Space "B". If Tenant fails to give Landlord such written notice, Tenant shall be
deemed to have elected to continue in possession of. Space "B" for the entire
remainder of the this Lease, and all extensions exercised by Tenant.
2. TERM:
2.1 The initial term of this Lease shall be for a period of THREE (3)
years, ---------------
misc\lease.let
1
<PAGE>
commencing on January 1, 1997, the commencement date, and terminating on
December 31, 1999, unless terminated or extended as provided for herein.
2.2 The Landlord hereby grants to the Tenant the option and right to
renew and extend this Lease for an additional lease period or periods not
exceeding THREE (3) years additionally. If the Tenant elects to exercise this
option to renew and extend the term of this Lease, the Tenant shall deliver to
the Landlord a written notice of election to extend the Lease each time the
Tenant elects to renew this Lease, which such notice(s) shall be delivered on or
before sixty (60) days prior to the expiration of the then existing term of this
Lease. The optional period shall be for an additional period of three (3) years.
The renewed lease shall be on the same terms, conditions and rental as the
"base" lease, except that the rental for the option period shall be increased at
the rate of not more than 5% (five percent) using the final "base rental" for
computation of the new rental for each successive term. Provided however, that
notwithstanding any provision contained herein, the maximum term of this Lease,
together with all option periods, shall not exceed an aggregate of six (6)
years.
3. POSSESSION:
3.1 Landlord shall deliver the possession of the Premises to the Tenant
on or before the commencement date set forth herein. If the Landlord is unable
for any reason to deliver possession of the Premises to the Tenant on the
commencement date, Tenant's obligation to pay rent shall be abated until
possession is delivered to Tenant, and said abatement in rent shall be the full
extent of Landlord's liability to Tenant for any loss or damage on account of
said delay in delivery of possession of the Premises. provided however, if the
Landlord is unable to deliver possession of the Premises for a period more than
ninety (90) days after the commencement date, either the Tenant or the Landlord
shall have the option to cancel this Lease, in which event all deposits shall be
refunded and all parties shall be released from all and any further obligation
or liability to the other.
3.2 Tenant, upon the entry and taking of actual possession of the
Premises, hereby takes the Premises in the condition as they are on such date,
and Tenant waives and releases the Landlord for all defects in the Premises not
expressly noticed to the Landlord by Tenant prior to such possession, except for
and excluding from this clause the special improvements and alterations to be
performed by Landlord as shown in the addendum to this Lease. Tenant expressly
accepts the Premises, furniture, fixtures, appliances, equipment, and
appurtenances to the Premises as they are and agrees that all are in serviceable
and good repair. Tenant acknowledges that the Landlord has the following
appliances on the Premises which may be used by the Tenant, but which the Tenant
agrees to maintain in good repair: exterior perimeter fencing, outdoor lighting,
30 foot by 40 foot exterior canopy or shed [to be constructed by Landlord]
paving or surfaced parking areas. heating & air conditioning system hot water
heater.
3.3 Upon delivery of possession to the Tenant, the Tenant shall have
the rights of exclusive possession and quiet enjoyment of the Premises as to all
parties other than the Landlord and any mortgage holder on the Premises, and
Tenant's rights shall be subject and subordinate to
misc\lease.let
2
<PAGE>
the rights of the same in the Premises. Provided however, the Landlord shall
:retain the right at such times as necessary to enter upon the Premises to
perform necessary or desired repairs or additions, and to inspect the Premises
~for compliance with the covenants of this Lease by Tenant.
4. RENT:
4.l.A For and in consideration of this Lease and the use and occupancy
of the Premises for the initial term of this Lease, the Tenants shall pay to the
Landlord as the total rent the sum of ONE-HUNDRED-SEVENTY-FIVE-THOUSAND and
no/100 ($175,800.00) DOLLARS, due and payable without further notice or demand
in equal monthly installments of FOUR- THOUSAND-FOUR-HUNDRED and no 100
($4,400.00) DOLLARS each for the first six months, FOUR-THOUSAND-NINE-HUNDRED
and no/100 (84.900.00) DOLLARS each for the next eighteen (18) months, and
FIVE-THOUSAND-ONE-HUNDRED and no 100 ($5,100.00) DOLLARS each for the next
twelve (12) months, with the first installment due upon January 1, 1997, and
continuing on the first day of each month thereafter, until all sums due herein
under are paid in full and until termination of this Lease.
4.1.B Provided however, if the Tenant elects pursuant to Article 1.3
above, to vacate that portion of the Property known as Space "B", the above
rental shall be reduced and be on the following schedule: the rent for the first
six (6) months shall be FOUR-THOUSAND-FOUR- HUNDRED and no/100 ($4,400.00)
Dollars per month, from and after the Tenant vacates Space "B", the rent for
months seven (7) through and including month twenty-four (24) shall be
THREE-THOUSAND-SIX-HUNDRED and no/100 ($3,600.00) Dollars per month, and for
months twenty-five (25) through and including month thirty-six (36) shall be
THREE- THOUSAND-EIGHT HUNDRED and no/100 ($3.800.00) Dollars per month. The
aggregate total rental shall likewise be reduced in accordance with this
schedule monthly rental amounts.
4.2 Deleted per agreement.
4.3 In addition to any other remedies provided to Landlord in this
Lease, Tenant shall be required to pay Landlord a late charge of five percent
(5%) of any installment not paid on the date such installment comes due, plus
interest at the highest rate allowed by law on any rental which remains unpaid
for ten (10) days or more after its due date.
4.4 In addition to any other sums required to be paid by Tenant to
Landlord, and as additional rent, the Tenant shall pay as and when due all sales
and use taxes levied or attributable to the rental sums due hereunder.
5. PRE-PAID RENTAL:
5.1 Upon execution of this Lease as required herein, Tenant shall deliver
to Landlord, an amount of FOUR-THOUSAND-FOUR-HUNDRED and no/100 ($4,400.00)
Dollars which shall constitute and be held by Landlord as pre-paid rent for the
first month's lease installment. On
misc\lease.let
3
<PAGE>
or before January 1, 1997, the Tenant shall deliver to the Landlord the
additional sum of pre-paid rental of THREE-THOUSAND-EIGHT-HUNDRED and no/100
($3,800.00) Dollars as the rental due for month thirty-six (36), and the sum of
THREE-THOUSAND-SIX-HUNDRED and no/100 ($3,600.00) Dollars as security deposit.
If Tenant elects to remain in possession of Space "B" in accordance with Article
1.3 above, Tenant shall deliver to Landlord an additional pre-paid rental
deposit of ONE-THOUSAND-THREE-HUNDRED and no/100 ($1,300.00) Dollars on or
before July 1, 1997, as the balance due of the rental due in month thirty-six
(36) . Tenant shall be permitted to apply the aggregate per-paid rental to the
monthly rental due in month 36. Tenant shall be permitted to apply the security
deposit in partial payment 13th. month's rental.
5.2 Provided that the Tenant is not in default of any of the terms and
provisions hereof, Tenant may elect to have said pre--paid rent applied to the
last month's rent installment which will be due and owing hereunder, upon paying
to Landlord any and all other amounts which may be due hereunder, including all
late payments, interest, late fees, and other amounts which may be due
hereunder.
5.3 In the event that amounts are due and owing under this Lease for
rent, late payment, interest or penalties, the pre--paid rent shall first be
applied to the payment of amounts which are due for previous months, with all
remaining amounts being applied to the payment of the last month's rent
installment and Tenant shall pay to Landlord the difference between the amount
owed for the last month's rent installment and the amount of the pre--payment
which remains after payment of all delinquent monthly installments, late
payments, interest and penalties by Landlord in accordance herewith.
misc\lease.let
4
<PAGE>
6.1 On or before January 1, 1997, Tenant shall deposit with Landlord
the sum of THREE-THOUSAND-SIX-HUNDRED and no 100 DOLLARS ($3.600.00), which
shall be retained by Landlord at First Union Bank, 700 South Babcock Street,
Melbourne, Florida, as security for the faithful performance by Tenant of the
terms, provisions, covenants and conditions of this Lease, including Tenant's
covenant to maintain the Premises. Landlord, may at the time of default by
Tenant under any of the terms, provisions, covenants or conditions of the Lease
apply said sum or any part thereof toward the payment of the rents and all or
the sums payable by Tenant under this Lease, and towards the performance of each
and every one of the Tenant's covenants under this Lease, or any costs,
including attorney fees caused by Tenant's breach, but such covenants and
Tenant's liability under this Lease shall be discharged only pro tanto and the
Tenants's shall remain liable for any amounts that such sum shall be
insufficient to pay.
6.2 Deleted and omitted per agreement.
6.3 Deleted and omitted per agreement
6.4 Deleted and omitted per agreement.
6.5 Deleted and omitted per agreement.
7. MAINTENANCE. REPAIRS, AND ALTERATIONS:
7.1 Tenant shall at his/her own expense, maintain the Premises in a
clean and vermin free condition which includes, but is not limited to the
maintenance and care of all interior and exterior portions of the Premises,
including the lawn, yard, parking areas, fencing, signs, lighting, grass,
shrubs, plants and foliage for the Premises. Tenant shall take good and
reasonable care and maintenance of all appliances, fixtures, equipment, carpet
and other floor coverings, window coverings, blinds, all glass panels, and
window shades, including all filters, fuses, interior and exterior painting,
light bulbs, window screens, plumbing fixtures, electrical fixtures, switches
and outlets, fuses or circuit breakers, light fixtures, door keys and all
matters of routine maintenance of the foregoing. Tenant shall keep in good and
clean manner all areas of the Premises, shall not accumulate waste, refuse, or
debris, and shall exercise good house keeping standards at all times.
7.2 Landlord shall maintain the structural portions of the ceiling,
walls, floors, roof, stairs, and foundations, the electrical and plumbing
systems, installed wiring, circuit panels, meter bases, sewer drains, mains and
vent pipes, pipes and plumbing in the walls and under the floors, the heating
and air conditioning systems (excluding the filters, and the hot water heaters.
Provided however, in the event the repair is caused by or necessitated by
Tenant's, or Tenant's guests or invitees, misuse or negligence thereof, the
Tenant shall be solely liable for such repair or replacement. Landlord shall be
liable for all keys to the joint bathroom, if any.
7.3 Tenant shall not, without Landlord's express written prior consent,
paint or make
misc\lease.let
5
<PAGE>
any alterations, additions or improvements to the inside or outside of the
Premises or any part thereof. Unless otherwise stated in Landlord's written
consent, any alterations, additions or improvements made, including painting,
paneling, wallpaper, partitions, shelves, awnings, window treatments or window
coverings, affixed carpeting, and any shrubs or plantings shall immediately
become the Landlord's property upon the attachment to the Premises and the same
shall be left in good conditions at the end of the Lease.
misc\lease.let
6
<PAGE>
7.4 Tenant shall pay all costs and expenses for any repair or
replacement of any furniture, fixtures, plumbing and electrical components,
equipment, appliances, walls, carpets, or any other part or portion of the
leased Premises or any appurtenances thereto damaged by Tenant, family members,
guests, invitees any other person under Tenant's control, direction, or express
or implied invitation. All such sums shall be due and payable at once, shall be
deemed as additional rent.
7.5 No portion of the outside walls or eaves may be painted or altered
by the Tenant, nor shall the interior walls or ceilings of the Premises be
painted or altered by Tenant, without first obtaining the written approval of
Landlord.
7.6 The Tenant shall not drill holes in the ceiling or walls of the
Premises to install hanging lamps or other fixtures nor cause any punctures or
other attachments to be made in or on the ceiling or walls, without first
obtaining the written consent of Landlord. With or without Landlord's consent,
Tenant shall, prior to terminating the Lease and vacating the Premises remove
all such fasteners and patch all holes caused by such nails, screws, or
fasteners' and repaint the wall or ceiling with matching paint so as to leave
the Premises in as good condition as at the beginning of the Lease.
8. PLACE OF PAYMENT. NOTICES AND COMPLAINTS:
8.1 All rent payments, complaints and notices shall be forwarded to
Landlord at 502 East New Haven Avenue, Melbourne, Florida 32901 by U.S. Mail
postage prepaid, by certified or registered mail, return receipt requested
[other than rental payments which can be by regular postage], or at such other
address provided by Landlord.
8.2 Written notice mailed or delivered to Tenant at the leased Premises
as set forth above, shall constitute sufficient notice to Tenant as may be
required herein.
8.3 Rent shall be deemed made when actually received by Landlord in
good and sufficient funds, and not when mailed by Tenant and all penalties, late
fees, and interest charges shall be determined by the actual date rent is due
and received by Landlord, not when placed in the U. S. Mail or other courier
services.
9. NO ASSIGNMENT OR SUBLETTING: Tenant shall neither assign nor sublet
any part or all of the Premises without the prior written consent of the
Landlord, which consent may be denied or withheld at the sole and absolute
discretion of Landlord.
10. HOLD HARMLESS:
10.1 Tenant shall indemnify and hold harmless Landlord, its agents,
representatives, employees, assigns or successors, against and from any and all
claims, costs, losses, damages, judgments, expenses attorney fees or any other
liabilities arising from Tenant's use of the Premises
misc\lease.let
7
<PAGE>
or from any activity permitted or suffered by the Tenant or its employees,
guests or invitees in or about the Premises; against and from Tenant's failure
to comply with any law, rule, regulation or order of any governmental authority;
and, against and from any and all claims arising from any breach or default in
the performance of any obligation on Tenant's part to be performed under the
terms of this Lease. The Landlord shall not be liable to the Tenant or the
Tenant's family, agents, guests, invitees, employees or servants, for any
damages or losses to personal property caused by other residents of the complex
or by any other person. Tenant
misc\lease.let
8
<PAGE>
agrees to indemnify and hold the Landlord harmless from and against any and all
claims for damages to the property or persons arising from Tenant's use of the
Premises, or for any activity, work or thing done, permitted or suffered by
Tenant in or about the Premises. The Landlord shall be liable for personal
injury or damage or loss of Tenant's personal property (furniture, jewelry,
clothing, etc.) from theft, vandalism, fire, water, rainstorms, smoke, acts of
God, acts of other persons, or any other causes whatsoever even if such loss,
damage, or claims arise from or are in any way connected to the negligence of
the Landlord.
10.2 Tenant, as a material part of the consideration to the Landlord,
hereby assumes all risk of damage to the property or injury to persons in, upon
or about the Premises, from any cause other than Landlord's willful or
intentional acts; this indemnification and hold harmless agreement shall apply
to all claims against Landlord including claims attributable in whole or part to
Landlord's negligent acts or omission; and, Tenant hereby waives all claims in
respect thereof against Landlord.
10.3 Tenant shall give prompt, but not later than within 24 hours after
the occurrence of any event of casualty, written and oral notice to Landlord in
case or in the event or any casualty or accidents to any person or any property
or to the Premises.
11. OCCUPANCY AND COMPLIANCE WITH THE LAW:
11.1 Tenant shall use the Premises for the purposes of a retail boat
and boat accessory store and sales lot, the outfitting of new boats, boat
trailers, the repair of boats and boat engines, the storage of boats, and
related activities as permitted by the City of Melbourne land use regulations.
Tenant shall be solely responsible, at its costs, to obtain the appropriate
occupational licenses or permits to operate Tenant's business at the premises.
11.2 Tenant shall comply with all laws, rules and regulations of any
governmental agency which are applicable to the use of the Premises. In
particular, Tenant shall not conduct or permit any activity on or about the
premises which results in the contamination of the property from any substances,
including oils, petroleum products, paints, solvents, fuels, gas, fluids, or
other such containments. Tenant expressly indemnifies and holds the Landlord
harmless from all such contaminations, and Tenant remains liable for the removal
and restoration of the premises for such containments not withstanding the
termination or expiration of this Lease.
12. CONDEMNATION:
12.1 Tenant hereby waives any claim of loss or damage to Tenant or
right or claim to any part of the award as a result of the exercise of the power
of eminent domain of any governmental agency, whether such loss or damage
results from condemnation of part or portion of all of the Premises or any part
or portion of the parking area or of the entrances or exits of the Premises or
any part thereof, and Tenant hereby assigns to Landlord all such causes or
claims. Should any power of eminent domain or condemnation be exercised against
the Premises which
misc\lease.let
9
<PAGE>
measurably interferes with or diminishes the Tenant's actual occupancy of the
Premises, the sole and exclusive remedy of Tenant is that the rentals otherwise
due hereunder shall be abated in an amount proportionate with the actual loss or
diminishment of the occupancy of the Premises suffered by Tenant.
12.2 In the event of an entire or partial permanent taking or
condemnation that shall render the Premises clearly unsuitable for the uses
misc\lease.let
10
<PAGE>
stated in this Lease, the term of this Lease shall cease and terminate as of the
date of possession being required by the condemning authority, and the Tenant
shall have no claim against Landlord for the termination of the Lease, for
severance, moving, or relocation costs, the value of any unexpired term of this
Lease, for any increased costs of replacement property, or for any other claim
or cause of action.
12.3 Provided further, by mutual agreement between the parties, if
Landlord has additional exterior parking and access areas located immediately
adjacent and contiguous to the specific land space leased unto the Tenant as
described herein, the Landlord may substitute such other land space in place of
the portions taken by such condemning authority, in which event the Tenant shall
have the option to accept such substituted land space and shall have no
additional claim for damages or loss against the Landlord, nor shall Tenant have
any cause to terminate this lease, and this lease shall continue unabated,-with
the substituted land space.
13. RECONSTRUCTION - DAMAGES TO PREMISES AND PROCEEDS: In
the event or occurrence of the destruction, damage, or loss of any kind to the
Premises, or any part thereof, by reason of fire, rising water, floods, wind
storm, or other casualty, the following provisions shall apply and control:
13.1 Immediately, but no later than 24 hours after the occurrence of
any event of such damage or loss, Tenant shall notify the Landlord as to such
occurrence, giving such details as the event requires. Tenant shall immediately
take all steps necessary to protect and preserve the Premises and the Tenant's
own personal property.
13.2 In the event of the destruction or damage to less than the entire
leased building area, and as soon as practical but not later than ten (10) days
after the occurrence of such accident or casualty, the Landlord and Tenant shall
determine if the leased building area, or the undamaged portion thereof, are
capable of continued functional use by the Tenant notwithstanding such damage
and whether the leased building area is capable of being restored to full use
within ninety (90) days from the date of such damage and destruction. If the
leased building area, or the majority of thereof, remain functional for Tenant's
purposes, the damage is not in a critical area of the building, and the balance
of the leased building area remains functional and repairable within such
period, the Tenant's monthly obligation to pay rent shall be reduced by a factor
based upon a prorata amount considering the square feet of the leased building
areas which are damaged or rendered unusable by Tenant. The balance of the
rental otherwise due shall not abate or terminate and the Landlord shall
undertake with all due diligence all necessary repair and restoration work to
the Premises within said ninety (90) days. If the leased building area, or a
majority thereof, are not functional for Tenant's uses, or in the good faith
opinion of the Tenant the damage to the leased building area is in a critical
area to Tenant's use of the building, or the damage renders the leased building
area unusable to the Tenant, and at the option of the Tenant, the Tenant may
terminate the Lease and vacate the entire premises, including all leased ground
space, and this Lease shall terminate upon the date of the election by Tenant to
so terminate.
misc\lease.let
11
<PAGE>
13.3 In the event of the destruction or damage to a majority or the
entire Premises so as to render the entire Premises, or a majority thereof,
uninhabitable, or in the event the Premises cannot be repaired within ninety
(90) days, either the Landlord or the Tenant may elect to terminate this Lease.
Such notice of election to terminate the Lease shall be made by giving written
notice to the other of such election to terminate within ten (10) days of the
date of the casualty. Such termination, and the parties obligations under this
Lease shall terminate effective upon the date of the casualty and the rental due
for that month shall be prorated to the date of termination.
13.4 In the event of the destruction or casualty to the Premises, the
Landlord shall be entitled to any and all insurance proceeds payable by reason
of such damage or destruction to the Premises. The Tenant shall be entitled to
any insurance proceeds payable by reason of the damage or destruction to any
personal property owned by the Tenant which suffered damage or loss. Tenant
shall promptly execute or endorse to the Landlord all insurance checks or
payments due Landlord and shall fully cooperate with Landlord in the settlement
of all such claims.
13.5 If the Lease is not terminated as aforesaid, Landlord shall
promptly and with all due diligence proceed to restore and repair the Premises
to the condition as existed on the date of commencement of this Lease and all
insurance proceeds paid to Landlord as a result of such casualty shall be made
available for such restoration in the same manner and following the", same
procedure as for construction of improvements to the Premises. Landlord shall
not be required to restore or repair any additions, improvements, or alterations
made by the Tenant nor for the damage or loss to any personal property of
Tenant. So long as the Landlord is proceeding in a reasonable and diligent
manner to cause the necessary repairs and restoration to the Premises, this
Lease shall not terminate nor shall Tenant be relieved from any payment of rent
or from the performance of any of its obligations hereunder, except that there
shall be a temporary abatement and waiver of the rent for such period of time as
the Premises are not habitable by the Tenant as the result of such damage,
destruction or restoration work. During such restoration work, the rent shall be
prorated daily as to any fraction of a month during which the Premises, or a
majority thereof, are not habitable by the Tenant and the Tenant is required by
such damage to temporarily relocate. Landlord shall no't be liable for any
temporary housing, relocation expenses, or moving expenses incurred by Tenant.
Upon the completion of the restoration of the Premises, Tenant shall continue
its habitation of the Premises and the rent shall recommence, if abated as
aforesaid provided, on the date of the redelivery of the possession of the
restored Premises to the Tenant. Notwithstanding anything to the contrary
contained herein, the Tenant and the Landlord shall each have the right to
terminate this Lease if the Premises are not restored within ninety (90) days
from the date of the damage or destruction.
13.6 Notwithstanding anything set forth in Lease to the contrary, if it
is determined that the damage or destruction to the Premises was caused in part
or whole by the negligence and br intentional acts of Tenant then Tenant shall
be liable for the rent due for the remaining term of the Lease regardless of
whether Tenant is able to use the Premises or whether the Landlord restores and
repairs the Premises. In such event of Tenant's negligent or intentional damage
or destruction
misc\lease.let
12
<PAGE>
to Premises, the Tenant shall be fully liable to the Landlord for all such
damage and loss.
14. TENANT'S DEFAULT: The occurrence of any one or more, singularly or
collectively, of the following shall constitute an Event of Default and a breach
of this Lease by Tenant:
14.1 The vacating or abandonment of the Premises by the Tenant;
14.2 The subletting or assignment of the Lease or of any portion of the
Premises by the Tenant without the prior written consent of Landlord;
14.3 The alteration, improvement or addition to the Premises by the Tenant
without the prior written consent of the Landlord;
14.5 The failure by Tenant to make any payment of rent or any other payment
required to be made by Tenant hereunder including, but not limited to, all rent,
penalties, late payments, and all reimbursement owed to Landlord hereunder, as
and when due.
14.6 The intentional or negligent damage or destruction to the Premises by
the Tenant;
14.7 The failure by the Tenant to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by the
Tenant.
14.8 If the Tenant shall make an assignment for the benefit of creditors,
or file a voluntary petition in bankruptcy, or be adjudicated bankrupt by any
court and such adjudication shall not be vacated within thirty (30) days, or
Tenant takes the benefit of any insolvency act, or Tenant have a receiver of
Tenant's property appointed in any proceedings other than bankruptcy
proceedings, and such appointment shall not be vacated within thirty (30) days
after it has been made, or an involuntary petition in bankruptcy is filed and is
not dismissed within thirty (30) days.
14.9 The violation by the Tenant of any rules, laws, or regulation of any
governmental agency, including the commission by the Tenant of any act in
violation of any statute deemed to be a felony or of moral turpitude, or the
commission by the Tenant of acts of nuisance to neighbors.
14.10 Upon the happening of any one or more of the Events of Default set
forth above or otherwise contained in this Lease, and at the sole option of the
Landlord, this Lease and the right of Tenant to occupy the premises for the
remaining term hereof shall cease and terminate, but Tenant' shall remain liable
for the balance of the rent for such remaining term notwithstanding such
termination. Upon the election by Landlord to terminate this Lease, the Tenant
shall immediately vacate the Premises and the Landlord shall have the right to
re--enter the Premises and have exclusive possession thereof. The election or
failure by Landlord to not terminate this Lease upon the occasion of any Event
of Default shall not be deemed to be a waiver of Landlord's right to terminate
the Lease at a subsequent time for such Event of Default, nor a waiver of the
misc\lease.let
13
<PAGE>
violation of such Event of Default. The acceptance of rent by Landlord upon or
after the occurrence of an Event of Default shall not be deemed to be a waiver
or release of such Default, and the Landlord shall have the right,
notwithstanding the acceptance of such rent, to declare a termination of this
Lease.
15. LANDLORD'S REMEDIES: In the event of any Event of Default or breach
by Tenant, Landlord may at any time thereafter, in its sole discretion, with or
without notice or demand and without limiting Landlord in the exercise of a
right or remedy which Landlord may have by reason of such default or breach have
or pursue any one or all of the following remedies:
15.1 Terminate this Lease and Tenant's right to possession of the
Premises by providing Tenant with seven (7) days written notice to the Tenant
that the Lease is terminated, and upon such notice, this Lease shall terminate
and the Tenant shall immediately surrender possession of the Premises to the
Landlord. Notwithstanding such termination, the Tenant shall remain liable to
Landlord for the remaining unpaid portion of the total rental due under this
Lease, which such rental shall at once accelerate and become due and payable at
once.
misc\lease.let
14
<PAGE>
15.2 Notwithstanding the provisions of paragraph 15.2 above, and in the
event of the failure by Tenant to pay the rental or any other sums due hereunder
when due, the Landlord shall have the right to terminate this Lease upon the
giving of a three (3) day written notice to Tenant of such default.
15.3 Pursue all other remedies now or hereafter available to Landlord
under the laws or judicial decisions of the State of Florida.
15.4 Declare the Tenant to be default of the terms and conditions of
this Lease, and declare, in its sole option and at Landlord's sole discretion,
the remaining unpaid amounts of rental due under this Lease for the balance of
the term to be accelerated and due and payable at once.
15.5 Upon the election and the giving by Landlord of the notice of
termination to Tenant, this Lease and all rights of Tenant shall at once cease
and terminate. Upon such termination, the Tenant shall immediately vacate the
Premises, redeliver the same to the Landlord and pay to Landlord the entire
balance of the unpaid rental for the balance of the term. From and after the
termination of the Tenant's right to occupy the Premises, until such date. The
possession of the Premises are redelivered to Landlord, the Tenant shall be
liable for wrongful possession and for holding over in violation of this Lease.
Upon such termination, the Landlord shall be entitled to use all lawful means to
obtain possession of the Premises, including all remedies as provided by law, by
peaceful self-help, pre-judgment writs of possession without bond, writs of
possession and assistance, and injunctive relief without bond.
15.6 Upon the Event of any Default or the upon the termination of this
Lease, Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default including, by not limited to, the
accelerated balance of the unpaid rent for the remainder' of the term of this
Lease as if this Lease had not been terminated, the cost of recovering
possession of the Premises; all expenses of reletting the Premises, including
necessary renovation and alteration expenses, costs of advertisement brokerage
commissions and all other costs incurred; all attorney fees and court costs
incurred by Landlord, whether suit is file or not, and at pre-trial, trial, post
trial, on appeal, and for any mediation, arbitration, or alternative dispute
proceedings; and, unpaid installments of rent and other charges shall bear
interest from the date due until paid at 18% per annum.
15.7 Failure by Landlord to exercise any one of the remedies provided
in this Lease upon the Event of a Default, shall not constitute a waiver of the
right to exercise the same right, or any other rights, at any other time.
15.8 Tenant, and any sureties, guarantors or endorsers of this Lease,
hereby jointly and severally: (1) consent and stipulate that for purposes of any
motion or proceeding brought or maintained by Landlord under 11 United States
Code (U.S.C.) ss.361, ss.362, or ss.363, as amended, that Landlord shall be
entitled to the immediate and expedited relief from the automatic stay
provisions of 11 U.S.C. ss.362(a) by the termination, annulling, modification,
or conditioning of
misc\lease.let
15
<PAGE>
such stay with such remedy being at the sole option of the Landlord; (2) consent
and stipulate that cause, including lack of adequate protection of Landlord's
interests, exists for the granting of such immediate relief from the automatic
stay provisions of 11 U.S.C. ss.362(a); (3) consent and stipulate that the
Tenant does not have any equity in such property, notwithstanding the provisions
of 11 U.S.C. ss.362(g); and, (4) consent and stipulate that the premises are not
necessary for an effective reorganization of the Tenant.
15.9 Acceptance of any payment or partial payment after its due date
shall not be deemed a waiver of the right to require prompt payment when due of
all other sums, and acceptance of any payment after Landlord has declared an
misc\lease.let
16
<PAGE>
acceleration or default of this Lease and demanded the entire indebtedness due
and payable shall not cure any Event of Default or operate as a waiver of any
right of Landlord hereunder.
15.10 No waiver of any default or non-exercise of a right hereunder
shall waive any other default, or the same default on a future occasion, or
preclude exercising any other right or the same right on a future occasion.
15.20 Upon the Landlord giving any written notice of default, the
Tenant shall have a period of thirty (30) days to cure any such default.
16. OMITTED ON PURPOSE:
17. ATTORNEY FEES AND COSTS:
17.1 The prevailing party in any action under or concerning this Lease
shall recover from the other party reasonable attorney's fees and costs, whether
or not suit be brought, including attorney's fees and costs on appeal, plus all
other reasonable expenses incurred by the prevailing party in exercising any of
the rights and remedies hereunder, including, without limitation, court costs,
other legal expenses and attorney's fees incurred in connection with
consultation, arbitration, mediation, alternative dispute resolution, and
litigation, and such fees, costs, and expenses shall' bear interest at the rate
of 18% per annum until paid.
18. LIENS: Tenant shall not permit the Premises to become subject to
any lien, claim, notice, judgment, charge or encumbrance whatsoever, and Tenant
shall indemnify and hold the Landlord harmless from and against such liens,
claim, notice, judgment, charges and encumbrances. Tenant shall have no
authority, express or implied, to create or consent to 'any lien, charge or
encumbrance upon the Premises. All materialmen, contractors, artisans,
mechanics, workmen, laborers and other persons contracting with Tenant in
respect to the Premises or any part thereof, are hereby charged with notice that
they must look only to the Tenant and not to this Lease, the Landlord, or the
Premises to secure or obtain payment of any bill for work done or material
furnished or for any other purpose during the term of this Lease. In the event
that any lien, judgment, claim, charge, or encumbrance is filed against the
Premises for monies owed or contracted for by Tenant, Tenant shall cause such to
be released of record within twenty (20) days after filing of the same. Tenant's
violation of this provision or the failure by Tenant to comply with this
provision shall be an Event of Default.
19. PERSONAL PROPERTY REPAIR: In the event maintenance, repair, or
replacement of any furniture, equipment, appliances, fixtures, plumbing,
electrical or other component of the Premises shall be required, Tenant shall
first report such failure or need for repair in writing to Landlord. After
receipt of such notice, Landlord shall have fifteen (15) days to repair, restore
or replace such item. Landlord shall not be liable for any repairs or services
calls not authorized by Landlord or made in violation of this provision.
misc\lease.let
17
<PAGE>
20. USE OF PREMISES:
20.1 Tenant shall not use or permit the use of any part of the Premises
for any illegal, immoral or improper purpose, and shall not create or permit any
disturbance or nuisance on the Premises so as to disturb or harass the quiet and
peaceful enjoyment of other inhabitants in the vicinity of the leased Premises.
A written complaint of violation of this clause by Tenant, if substantiated by
Landlord, shall be an Event of Default.
misc\lease.let
18
<PAGE>
20.2 Tenant shall not commit or permit any waste or destruction to or
on the leased Premises.
20.3 Tenant shall not be permitted to keep or maintain any pets or
other animals in or about the Premises without the prior written consent of the
Landlord. In the event the Tenant elects to use a guard dog on the premises for
security purposes, the Tenant, as a condition to Landlord's approval of such
animal, shall obtain and maintain at its sole cost a special or additional
endorsement to the public liability insurance policy maintained by Tenant
covering all additional public liability risks occasioned by such guard dog. For
this purpose, prohibited pets shall include, but not be limited to, fish,
reptiles, birds, dogs, cats, or any other living creatures other than humans and
plants.
20.4 Tenant shall comply in all respects to the land use ordinances of
the City of Melbourne.
21. LOCKS: No substitute or additional locks of any kind whatsoever
shall be placed upon any doors or windows of the Premises by the Tenant, nor'.
may the present locks or tumblers be changed without the prior written consent
of the Landlord. If such additional locks or tumblers are changed without the
prior written consent of the Landlord, the Landlord has the right to remove the
same without any liability to Tenant and to restore the original locks or
tumblers with all costs of the same being charged to paid by the Tenant. Tenant
shall forthwith provide to the Landlord duplicate copies of all keys and a copy
of all combinations or security codes for all locks.
22. UTILITIES: Tenant shall pay and be responsible for all utilities
including electricity, gas, water, sewer, tv cable, telephone, trash and garbage
collection, pest control and lawn service. Landlord shall not be responsible or
liable for any delay in installation or interruption on the use or service of
any such utilities.
23. TENANT'S INSURANCE: Tenant agrees and stipulates that his/her
personal property and belongings placed on or about the Premises are not insured
or covered by landlord's insurance. Tenant hereby holds Landlord harmless from
any loss or damage to Tenant's personal property. Tenant, at no charge to
Landlord, shall name the Landlord an additional named insured in all policies
obtained by Tenant and shall provide a copy of the same to the Landlord.
23.1 Tenant shall obtain, and maintain in full force and effect at all
times, at its sole costs and expense, a policy or policies of insurance
providing public liability insurance for property damage, personal injury and
death, with full coverage from all causes and risks, including any extended
coverages, in an amount not less than $1,000,000.00, with a good and sufficient
rated company. Tenant shall obtain, and maintain in full force and effect at all
times, at its sole costs and expense, a policy or policies of insurance
providing workers compensation for its employees and sub-contractors, in an
amount not less than the amount required by Florida Statute, with a good and
sufficient rated company.
misc\lease.let
19
<PAGE>
23.2 Tenant shall cause each policy to show the Landlord as an
additional named insured, shall provide Landlord with a copy of each policy, and
shall cause a Certificate of Insurance to be provided to the Landlord for each
such policy. It shall be an Event of Default if any said policy is not
maintained in current status. Landlord shall have the right, but not the
obligation, to obtain insurance in the event the insurance obtained by Tenant is
not current, in which event, any sums advanced by Landlord shall be deemed rent
and shall be due and payable, without demand or notice, at once.
misc\lease.let
20
<PAGE>
24. TENANT'S OBLIGATION WHEN VACATING: Upon vacating the Premises, whether
at the end of the term of this Lease or at any other time, it shall be the
responsibility of the Tenant to:
24.1 Perform the following final cleaning requirements:
a. Clean all appliances, the floor, windows, cabinets, toilets, bathrooms,
closets, storage areas, and leave the Premises in a clean and neat condition.
b. Close and lock all windows and doors.
c. Dispose of all trash and garbage.
e. Return all keys directly to Landlord or Landlord's agent into and until
such time as the keys have been returned to Landlord, the Tenant's obligation to
pay rent s-hall continue. In the alternative, and 'at the sole option of the
Landlord, the Landlord shall have the doors and locks rekeyed, and shall be
authorized to deduct the costs thereof from the security deposit.
f. Remove all items of inventory ro equipment brought unto the premises by
Tenant.
g. Remove, and repair any damage caused by such removal, all exterior or
interior signs placed upon the premises by Tenant, except and excluding the
exterior over-head canopy at the front of the building, which canopy shall
remain property of Landlord.
24.2 Upon termination of the Lease, and if the Landlord detects or
finds the infestation of any fleas or other pests and vermin, whether am animal
was kept by the Tenant on the Premises with or without the consent of the
Landlord, Tenant shall be liable for the costs of treating and removing the
same. Tenant, at Tenant's sole cost, shall have a professional and licensed
pest control company to treat the Premises to eradicate such flea infestation,
and the costs of such treatment, if not paid by Tenant, shall be deducted from
the Security deposit. Tenant stipulates and agrees the use of consumer applied
pest control methods shall not satisfy this requirement.
25. GOVERNING LAWS AND VENUE:
25.1 This Lease shall be governed by and construed and enforced under
the laws of the State of Florida without regard to its conflict of laws
principles, and the venue of any action brought hereunder shall be limited to
the division of the appropriate Court, in and for Brevard County, Florida.
25.2 Tenant, and any sureties, guarantors or endorsers of this Lease,
hereby jointly and severally waive any right or privilege of venue, and consent
and subject itself to the personal
misc\lease.let
21
<PAGE>
jurisdiction of the appropriate Court, in and for Brevard County, Florida.
25.3 Deleted and omitted per agreement.
26. GENERAL PROVISIONS:
26.1 "Tenant" shall mean the party who signs this Lease as Tenant.
"Landlord" shall mean the owner of the Premises. The "Premises" shall mean the
improved real and personal property at the designated address, and all
appurtenances, fixtures, equipment and appliances attached or located thereon.
26.2 Deleted and omitted per agreement.
misc\lease.let
22
<PAGE>
26.3 The invalidity or unenforceability of any particular provision of
this Lease shall not affect the other provisions hereof, and the Lease shall be
construed in all respects as if such invalid or unenforceable provision were
omitted.
26.4 Notwithstanding any express or implied amount of interest charged
or due under this Lease which may by in excess of the highest rate allowable by
law for such amounts, shall be amended to be not more than the highest rate
allowable by law.
26.5 This Lease contains the entire agreement between Landlord and
Tenant. No representations, warranties, or agreements have been made by either
party except for those specifically set forth herein. This Lease may only be
modified, amended or supplemented by written instrument signed by both parties
which specifically refers to this Lease.
26.6 Time is of the essence of this Lease and each and all bf it
provisions in which some performance within a stated time is a factor or is
required.
26.7 Neither the Landlord nor the Tenant shall record this Lease hor
any memorandum or copy hereof. It shall be an Event of Default for Tenant to
violate this provision, and upon such violation, the tenant shall have seven (7)
days to record and full and complete release of the Lease in such public
records.
26.8 The waiver or nonenforcement by Landlord of any terms, covenant or
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent acceptance of rent hereunder by Landlord
shall bot be deemed to be a waiver of any preceding default by Tenant of any
term, covenant or condition of this Lease, other than the failure of the Tenant
to pay the particular rental so accepted, regardless of Landlord's knowledge of
such preceding default at the time of the acceptance of such rent.
26.9 This Lease has been drafted by counsel for Landlord as a
convenience to both parties and both parties have read and negotiated all of the
language used in this Lease. The parties acknowledge and agree that because all
parties participated in negotiating and drafting this Lease, no rule of
construction shall apply to this Lease which construes any language, whether
ambiguous, unclear or otherwise in favor of or against any party by reason of
that party's role in drafting this Lease.
26.10 The Tenants, if more than one named Tenant, acknowledge and agree
that each shall be jointly and severally liable to the Landlord for all
obligations due under this Lease and for any default of this Lease.
26.11 Tenant hereby waives and releases all rights of homestead with
respect to the Premises.
26.12 If the Tenant vacates or abandons the Premises and leaves any
personal property
misc\lease.let
23
<PAGE>
either in the Premises or anywhere about the building or its lawns or parking
areas, then Tenant shall be deemed to have abandoned the personal property and
it will be disposed of by Landlord, with liability to Landlord. The property
shall be deemed to be vacated or abandoned upon Tenant's failure to continuously
occupy the Premises for a period of thirty (30) days or more without the prior
written notice to Landlord of such intended absence.
26.13 Tenant shall not permit the accumulation of rubbish, refuse,
garbage, trash, or similar waste on the Premises. Upon the failure of Tenant to
remove any accumulation of such rubbish within three(3) day after receipt of
written notice to remove the same, Landlord shall have the right to remove the
same in which event the costs of removal incurred by Landlord shall be paid by
the Tenant as additional rent for the month immediately following the month such
expense is incurred by Landlord. At the option of the Landlord, the Landlord
shall have the right to declare the failure of Tenant to remove such rubbish as
an Event of Default.
26.14 Upon Tenant paying the rent reserved hereunder will and observing
and performing all of the covenants, conditions and provisions on Tenant's part
to be observed and performed hereunder, Tenant shall have the quiet possession
of the Premises for the term hereof, subject to all the provisions of this
Lease. Said right of quiet enjoyment shall terminate upon the occurrence of any
Event of Default, or upon the occurrence of any event, which would be an Event
of Default upon the giving of any notice required to be given. ~-.
26.15 No remedy or election herein shall be deemed exclusive but shall,
whenever possible, be cumulative with all other remedies at law or in equity.
The various rights and remedies contained in this Lease and reserved to the
Landlord shall not be exclusive of any right or remedy of Landlord, but shall be
construed as cumulative and shall be in addition to every other remedy now or
hereafter existing at law, in equity or by statute. No delay or omission of the
right to exercise any poser by Landlord shall impair any right or power or shall
be construed as a waiver of any subsequent or prior default or as acquiescence
in any default.
26.16 Landlord shall not be required to perform any covenant or
obligation under this Lease, or be liable fro damages to Tenant, so long as the
performance or non--performance of the covenant or obligation is delayed,
caused, or provided by an act of God, force majeure, war, civil unrest, or by
Tenant. For purposes of this Lease, an act of God or force majeure is defined as
strikes, lockouts, sit downs, material or labor restrictions by a governmental
authority, unusual transportation delays, riots, floods, washouts, explosions,
fires, storms, weather (including wet grounds or inclement weather which
prevents construction, settlement of the soils, sink--holes, rising waters,
lightning, electrical surges or brownouts, acts of the public enemy, wars,
insurrections, and or any other cause not reasonably within the control of
Landlord or by the exercise of due diligence Landlord is wholly or in part
unable to prevent or overcome.
27. SUBORDINATION. ATTORNMENT ESTOPPEL LETTERS:
27.1 Notwithstanding any provision of this Lease or of statute to the
contrary, all of
misc\lease.let
24
<PAGE>
Tenant's rights and privileges under this Lease, except as hereinafter expressly
provided, are and shall always be, subject and subordinate to the rights of the
Landlord and to any mortgage executed or assumed by Landlord encumbering the
Premises, whether currently existing or hereafter placed upon the Premises.
27.2 The holder of any such recorded mortgage, or the purchaser at any
foreclosure sale under a power of sale contained in any Mortgage, or any
assignee thereof shall the right to demand the Tenant to attorn to, and
recognize such mortgage holder or purchaser, as the case may be as Landlord
under this Lease for the balance then remaining of the term of this Lease,
subject to all terms of this Lease.
27.3 That the aforesaid provisions shall be self-operative and no
further instrument shall be necessary unless required by any such mortgage
holder or purchaser at foreclosure sale. By the execution of this Lease and the
acceptance of possession of the Premises, Tenant expressly consents to and
acknowledges the rights of the holder of such mortgage and of any purchaser at
misc\lease.let
25
<PAGE>
foreclosure sale. Notwithstanding anything to the contrary set forth above, any
mortgage holder may at any time subordinate its Mortgage to this Lease, without
Tenant's consent, by notice in writing to Tenant, and thereupon this Lease shall
be deemed prior to such Mortgage without regard to their respective dates of
execution, delivery and/or recording and in that event such Mortgagee shall have
the same rights with respect to this Lease as though this Lease had been
executed and a memorandum thereof recorded prior to the execution, delivery and
recording of the Mortgage and as though this Lease had been assigned to such
mortgage holder. Should Landlord or Mortgage holder or purchaser at foreclosure
sale desire confirmation of either such subordination or such attornment, as the
case may be, Tenant upon written request, and from time to time, shall promptly
execute and deliver without charge and in recordable form satisfactory to
Landlord, the Mortgage holder or to the purchaser at foreclosure sale all
instruments and/or other documents that may be requested to acknowledge such
subordination and/or agreement to attorn.
27.4 In the event Tenant fails to execute arid deliver in recordable
form the instruments and documents as required above, within twenty (20) days
after request in writing by Landlord or holder of such Mortgage or purchase'.r
at foreclosure sale, as the case may be, Tenant does hereby make, constitute and
appoint Landlord or such Mortgage holder or such purchaser at foreclosure sale,
as the case may be, as Tenant's attorney-in-fact and in its name, place and
stead to do so, or Landlord may treat such failure as a deliberate breach and an
Event of Default. The aforesaid power of attorney is given and coupled with an
interest and is irrevocable.
27.5 At any time, and from time to time, upon the written request of
Landlord or any mortgage holder, Tenant within twenty (20) days of the date of
such written request agrees to execute and deliver to Landlord and/or such
mortgage holder, without charge and in a form satisfactory to the person
requesting the same, a written statement: (a) ratifying this Lease; (b)
confirming the commencement and expiration date of the term of this Lease; (C)
certifying that Tenant is in occupancy of the Premises, and that the Lease is in
full force and effect and has not been modified, assigned, supplemented or
amended except by such writings as shall be stated; (d) certifying that all
conditions and agreements under this Lease to be satisfied or performed by
Landlord have 'been satisfied and performed except as shall be stated; (e)
certifying that Landlord is not in default under this Lease and there are no
defenses or offsets against the enforcement of this Lease by Landlord or stating
the defaults and/or defenses claimed by Tenant; (f) reciting the amount of
advance rent, if any, paid by Tenant and the date to which such rent has been
paid; (g) reciting the amount of security deposited with Landlord, if any; and
(h) any other information which Landlord or the mortgage holder shall require.
27.6 The failure or refusal of Tenant to execute, acknowledge and
deliver to Landlord or such mortgage holder a statement in accordance with the
provisions of Paragraph 27.5 above within said twenty (20) day period shall
constitute an acknowledgment by Tenant which may be relied upon by any person
holding or intending to acquire any interest whatsoever in the Premises that
this Lease had not been assigned, amended, changed, or modified, is in full
force and effect and that the Basic Rent and additional rent have been duly and
fully paid not beyond the respective due dates immediately preceding the date of
the request for such statement and shall
misc\lease.let
26
<PAGE>
constitute as to any persons entitled to rely on such statements a waiver of any
defaults by Landlord or defenses or offsets of the written request, and Landlord
at its option, may treat such failure as a deliberate Event of Default.
misc\lease.let
27
<PAGE>
28. SPECIAL PROVISIONS:
28.1 The Tenant shall be permitted to install and maintain such outdoor
or indoor signage as the Tenant so requires to advertise its business
activities, including the installation and maintenance of an exterior sign
located near the easterly boundary of the leased premises consisting of a
lighted sign similar to or the same as the sign Tenant currently has installed
at 990 North Harbor City Boulevard, Melbourne, Florida. This provision shall be
subject to and conditioned upon Tenant obtaining, at its sole cost and
initiative, any and all permits, variances, or governmental authorizations which
may be required to install and maintain such sign or signs.
28.2 Deleted and omitted per agreement.
28.3 Deleted and omitted per agreement.
28.4 This Lease is further subject to the terms and conditions of the
attached Addendum, which by reference is incorporated herein and made a part
hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals to this Lease the day and year first above written.
WITNESSES: LANDLORD:
340 NORTH, INC.
BY:
John W. Walden, President
Printed Name:
TENANT:
Printed Name: BOAT TREE, INC.
BY:
Printed Name:
misc\lease.let
28
<PAGE>
ADDENDUM OF ADDITIONAL IMPROVEMENTS TO BE COMPLETED BY LANDLORD:
The Landlord, at its sole cost and expense shall complete the following
renovations or improvements to the subject premises:
1. Clean and resurface front "porch" floor area with indoor-outdoor
carpeting, with the color to be selected by Tenant.
2. Install interior demising wall at location "A" on the floor plan to
divide the ground floor area from the "Snappy Car" area. Install one hour
fire-rated wall between the Boat Tree area and the Snappy Car area. If Tenant
elects to lease the entire ground floor area, this wall will not be installed.
3. Deleted.
4. Deleted.
5. Deleted.
6. Deleted.
7. Deleted.
8. Install and key an interior door to provide access to the "common
bathroom" to provide that Boat Tree controls access to the said "common
bathroom", by excluding other tenants from access to said bathroom except at
times of normal operation of Boat Tree and by a one-way door into the bathroom
area. Said installation to be at the satisfaction of Tenant. If Tenant elects to
lease the entire ground floor area, this requirement will be deleted.
9. Install an additional wall switch for the overhead light in the
middle office.
10. Remove easterly wall in front office. Extend south wall in front
office at height of 36 inch to front of building and install a plate glass
window in new wall section to the ceiling.
11. Install a 48 inch by 48 inch plate glass window in north wall of
front office at location indicated by Tenant.
12. Install a 6 foot high fence from north-east corner of building to
U.S. 1 boundary line, with a 40 foot sliding gate. Install a 6 foot high fence
along U.S. 1 boundary line. Install an 8 foot high fence along north boundary
line to Circle Avenue, continuing along Circle Avenue to south boundary line of
property, continuing along south line of property to a point due south of
southwest corner of building, and continuing to south--west corner of building.
Landlord shall
misc\lease.let
29
<PAGE>
provide a sliding gate at existing driveway entrance at rear of property from
Circle Avenue and in the fence on the south side of the building providing
access from the front to the rear of the property.
13. Install and erect a roofed canopy of approximately 30 foot by 40
foot, with an interior height as specified by Tenant, to be located on the
existing concrete slab at location "D" on plot plan. At the selection of Tenant,
and subject to cost differentials with the Landlord reserving the right to
decide, said roofed canopy will be either metal or canvas. If the roof is
canvas, the Tenant shall have the right to select the color of the fabric.
14. Deliver, install and grade to a common elevation, sufficient white
washed gravel, or river gravel, to cover the entire unpaved exterior areas at a
misc\lease.let
30
<PAGE>
depth of at least six (6) inch thickness. This is a one-time requirement on
Landlord, and should settlement or erosion of the installed gravel occur, or
should Tenant desire additional gravel, all such additional or replacement
gravel shall be at the cost of Tenant.
15. Close doorway in existing wall in upstairs apartment between two
apartments.
16. Install heating and air conditioning in upstairs apartment and
render electrical system fully operational. Other than as set forth in 15 and
16, the upstairs shall be leased and taken "as is".
17. In the event that Landlord leases portions of the rear ground~area
to a tenant or tenants other than Intercostal Marina, Landlord shall install an
8' high fence extending from the north-west corner of the building westerly to
the south-west corner of the service canopy structure with an installed
sl+/-ding gate, continuing around the westerly perimeter of the leased property
extending to the north boundary line of the property.
18. Chip, cut or remove the existing curb between the rear driveway
area into the leased property area.
19. Remove the existing concrete slab at location "E" on the plot plan.
20. Landlord shall provide a common and joint access from Circle Avenue
to the rear of the building for all tenants at 340 North, and shall implement
rules common to all tenants requiring that the gate be kept closed and locked at
all times other than while in use.
21. In the event that the Tenant should exercise the option provided in
Article 1.3 above, to vacate Space "B", Landlord agrees, at its cost, to install
and complete the interior improvements originally agreed to include:
a. A demising wall between Space "A" and Space "B";
b. Such doors or doors and one-way locks to be controlled by
Boat Tree to provide bathroom access to the "joint bathroom" for the future
tenants of Space "B";
c. Install a 3'0" door in existing wall between the "service
area" an the hallway at location "B".
d. Install a 3'0" door in existing wall between the 'service
area~~ and the middle office at location "C".
e. Install drop ceiling in hallway area and in service area".
f. Enclosed hot water heater located in "service area
misc\lease.let
31
<PAGE>
g. Install exterior plate glass window in rear wall of
"service area"
ADDITIONAL SPECIAL PROVISIONS OF LEASE:
1. Landlord hereby grants permission to the Tenant to install, at the
sole cost and expense of Tenant, and at Tenant's initiative, including obtaining
all required permits and governmental authorizations, a lighted canvas awning
along the east face of the building. Said awning shall be at the design of the
Tenant. Once installed, Tenant shall be solely responsible to at all times
maintain said awning and any interior lighting, in good working order. At the
termination of the lease, the awning shall remain and become property of the
Landlord. Prior to the installation of said awning, Tenant shall submit final
plans to the Landlord showing the proposed awning. Tenant shall be liable to
Landlord for any damages caused to the building by the said awning.
2.1 Notwithstanding any provision contained in the lease to the
contrary, specifically Article 4.2 above, Tenant's obligation for rent shall not
commence to and until January 1, 1997, even in the event Tenant commences actual
occupancy prior to said date.
2.2 Deleted and omitted per agreement.
3. Landlord grants permission to Tenant to make improvements to the
upstairs apartment, including moving interior walls and interior doors,
installing cabinets, installing plumbing and additional electrical fixtures and
outlets, installing carpet, and similar interior improvements as selected by
Tenant. Landlord retains the right to deny Tenant permission to construct such
imposements as proposed if such proposed imposements compromise the structure or
functionality of the building. Landlord shall pay the first ONE-THOUSAND and
no/100 ($1,000.00) Dollars of said improvements, and Tenant shall pay any
balance over the said $1,000.00. All such improvements shall attach to the
property and become the property of the Landlord.
4. At the request of the Tenant, and at the sole discretion of' the
Landlord, the Landlord may grant the Tenant permission to install for
advertising and promotional purposes a boat hull on the roof of the building.
Provided however, such approval and consent by Landlord is contingent upon the
Tenant obtaining such engineering or architectural studies,' reports and
opinions that demonstrate such display would not compromise the building. And
provided further, that Tenant, at its sole cost, shall pay for all costs and
expenses associated with installing and maintaining such display in a safe
manner at all times, the Tenant obtaining and maintaining such special
endorsements to the policy of public liability, the Tenant paying for any
additional premiums to the building insurance caused by or attributable to such
display, the Tenant being responsible to remove such boat display at the
termination of the lease, the Tenant being responsible to repair any roof leaks
or damage caused by such boat display, the Tenant to provide such additional
security deposit as may be required by Landlord, all in such form, manner and
content as is satisfactory to the Landlord. Tenant shall be liable to Landlord
for any damage caused by such display. All costs for such display shall be paid
by Tenant.
5. From time to time and at the request of Tenant, and so long as
Tenant is not in
misc\lease.let
32
<PAGE>
default of this Lease, the Landlord shall execute such lien waivers or
subordination agreements, estoppel letters, or similar documents as may be
required by Tenant's inventory, floor plan, or equipment lenders and financial
institutions.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals to this Lease the day and year first above written.
WITNESSES: LANDLORD:
340 NORTH, INC.
BY:
Printed Name John W. Walden, President
Printed Name: TENANT:
BOAT TREE, INC.
BY:
misc\lease.let
33
<PAGE>
LEASE
THIS LEASE made and entered into this 16th day of December, A.D., 1996,
by and between Rose & Ken, Inc., a Florida corporation, hereinafter called
"LESSOR," whose principal office is at 2315 Beach Boulevard, Jacksonville,
Beach, FL 32205, and Boat Tree, Inc., a Florida corporation, hereinafter called
"LESSEE."
1. PREMISES
LESSOR, for and in consideration of the covenants and
agreements hereinafter contained and made on the part of LESSEE, does hereby
demise and Lease to LESSEE the premises known as 2079 Beach Boulevard, in the
City of Jacksonville Beach, County of Duval, and State of Florida (hereinafter
the "Leased Premises"). Ingress, egress and parking areas will be for common use
of the LESSOR, LESSEE and all other tenants. LESSOR agrees, at its cost and
expense, and at all times in compliance with all applicable laws, to finish the
Leased Premises in accordance with the specifications dated
______________________ which have been initialed by the parties and attached
hereto as Composite Exhibit A. The LESSOR shall complete the improvements within
90 days from the execution of this Lease but this period shall be extended for
all delays in construction resulting from causes beyond the control of the
LESSOR. Notwithstanding any terms or conditions to the contrary or otherwise set
forth in this Lease, in the event that such construction is not completed in
accordance with the terms and conditions of this Lease, for any reason
whatsoever, within 150 days following the execution of this Lease, then the
LESSEE shall have the option to cancel and terminate this Lease, in which event
the Lease shall be deemed void and of no further force or effect between the
parties whatsoever. Any changes in the attached specifications requested or
required by the LESSEE shall be made only upon a written order signed by the
LESSEE and the LESSOR. All such change orders shall state the cost of the
change, which cost shall be paid by the LESSOR, unless otherwise agreed, within
30 days from the date of the written change order. With the exception of the
above-referenced change orders, if any, that may be requested or required by the
LESSEE, any and all expenditures necessary or required to complete construction
in accordance with the specifications that may result from additional or
concealed conditions, foreseen or unforeseen, relative to such construction
shall be borne by the LESSOR and not by the LESSEE.
2. TERM
2.1 Initial Term.
The initial term of this Lease shall be for a five (5) year
term commencing on the first day of the month in which the LESSEE first occupies
the Leased Premises, and terminating five (5) years thereafter. The parties
agree to confirm in writing the commencement and expiration dates in writing
upon occupancy by the LESSEE in the form attached hereto as Exhibit B.
<PAGE>
2.2 Options to Extend Term.
Provided that LESSEE shall have performed the terms and
conditions of this Lease including, but not limited to, the agreement to pay
rent, then and in that event, the LESSEE shall have the option to renew this
Lease, upon the same terms and conditions for two (2) successive terms of five
(5) years each. To exercise the option, the LESSEE shall give written notice to
LESSOR of the LESSEE's election to exercise the option not less than six (6)
months prior to the expiration of the then existing term.
2.3 Early Termination Option.
Provided that the LESSEE shall have performed the terms and condition of this
Lease including, but not limited to, the agreement to pay rent, then the LESSEE
shall have the option to terminate this Lease prior to its expiration at any
time after the first twenty-four (24) months of this Lease. The option to
terminate early shall L#e exercised by LESSEE giving written notice to the
LESSOR of its election to terminate early not less than three (3) months prior
to the early termination date. Such notice shall be accompanied by an early
termination fee of $30,000.00 payable at the time the notice of the election for
early termination is given to the LESSOR. Any early termination shall be without
prejudice to LESSOR's right to collect any sums due to LESSOR through the date
of termination.
3. RENT.
A. LESSEE shall pay no basic monthly rent for the first two months of the
term of this Lease.
B. Following the first two months and continuing during the remaining term
of this Lease, the LESSEE shall pay on the first day of each month to the LESSOR
rent and other charges, without demand or notice. During the term of this Lease
and during each option period, rent shall be $4,500.00 per month plus sales tax
plus an annual payment equal to two (2%) percent of LESSEE's Gross Sales
(hereinafter defined) in excess of $3,500,000.00 annually. Gross Sales include
the total of all sales of new and used boats and excludes the sale of other
merchandise or accessories and sales taxes. Installment sales shall be treated
as a sale for the full price in the month in which the sale is made. On or
before the 20th day of each lease year during the term and the year following
the expiration or termination of this Lease, LESSEE shall deliver to LESSOR a
statement of Gross Sales made during the preceding twelve-month period. For
purposes of this provision, lease years shall be successive, twelve-month
periods beginning with the first day of the month in which the Lease term
commences. If an accounting is required for a period less than the prescribed
twelve-month accounting period, the percentage rent due based on Gross Sales
shall be prorated for such shorter period. The LESSEE's statement of Gross Sales
shall be verified by a duly qualified officer or representative of the LESSEE.
The LESSEE shall maintain with respect to the business transacted at the Leased
Premises, sufficient information to permit a calculation of Gross Sales and the
LESSOR shall have the right to examine such books and records at any
<PAGE>
reasonable time.
C. LESSEE shall be liable for and shall pay all taxes levied
upon personal property and trade fixtures located in the Leased Premises whether
placed therein or owned by the LESSEE or the LESSOR.
D. In the event the rent is not received by the LESSOR on or
before the fifth day of the month, the LESSEE shall be liable for and shall pay,
as and for additional rent, a charge of 1 % of the normal monthly rent per day
late up to the fifteenth day following the due date. All such additional rent
shall be paid by the LESSEE not later than the fifth day of the following month
if not sooner paid.
E. In no event shall rent be subject to setoffs or deductions.
No payment by the LESSEE or receipt by the LESSOR of a lesser amount than
actually due, including, if appropriate, late charges, shall be deemed other
than a payment on account of the earliest rent or additional rent due, nor shall
any endorsement or statement on any check or on any letter accompanying any
check or payment as rent be deemed ~n accord and satisfaction and the LESSOR may
accept such check or payment without prejudice to the right to recover the
balance of the rent or additional rent, to terminate this Lease for LESSEE's
default or to pursue any other remedy provided for in this Lease.
F. In addition to the rent called for by Sub-Paragraph (B).
all other charges required to be paid by LESSEE under the provisions of this
Lease shall be deemed to be and become additional rent, whether or not the same
be designated as such; provided, however, all provisions dealing with abatement
of rent shall be construed to permit the abatement of the Sub- Paragraph (B)
rent component only and not any other sums due from LESSEE to LESSOR.
4. UTILITY CHARGES
LESSEE agrees to pay all utility charges which may be levied,
assessed or imposed upon said Leased Premises. Should LESSEE fail to pay any
billing for such charges when due, LESSOR may, but is not required to, pay such
billing in which event the amount so paid shall be additional rental then due
and owing. LESSOR shall not be liable for any interruption or failure whatsoever
in utility services or for any damage resulting to the LESSEE of the Leased
Premises therefrom.
5. PREPAID RENT
The LESSEE shall upon the execution of this Lease deposit with
the LESSOR as prepaid rent for the third month of the Lease the sum of $4,500.00
plus sales tax. LESSEE shall upon occupancy deposit with the LESSOR as prepaid
rent for the 36th month of the Lease, the sum of $4,500.00 plus sales tax.
<PAGE>
It is agreed by and between the parties that the amounts paid
hereunder shall be prepaid rent for the designated months. In the event the
LESSEE shall default in the payment of any monthly rental installment or any
other rental payment and such default remains uncured within the time allowed
under the terms of this Lease, then the LESSOR shall have the right but not the
obligation to apply sufficient sums from the prepaid rent for the payment of
said rent arrearage plus any interest which may be due. When such rent arrearage
is cured by the payment of appropriate sums due by the LESSEE, the LESSOR shall
credit the amount paid to the prepaid rent hereunder provided no other moneys
are then owing to LESSOR by LESSEE by virtue of any provision of this Lease.
6. PURPOSE
The Leased Premises shall be used only for the sale of new and
used boats and accessories. Sale of used boats shall be limited to used boats
taken as trade-ins related to sales of new boats made from the Leased Premises.
LESSOR agrees that during the term of this Lease including any extensions,
LESSEE shall have the exclusive right, within the marina of which the Leased
Premises are a part, to sell new boats and the rental of boats and the rental of
jet skis and jet boats. The LESSOR reserves the right to have other used boat
brokers and marine store facilities within the Marina of which the Leased
Premises are a part.
The LESSOR agrees to perform any and all necessary service
work on boats or vessels that may be required by the LESSEE or its customers.
LESSEE shall have the right to approve the mechanics assigned to work performed
for LESSEE, which approval shall not be unreasonably withheld. LESSOR will
charge LESSEE an hourly mechanic's fee of $25.00 per hour. The LESSOR reserves
the right to change the hourly mechanic's fee in the event the LESSOR changes
the hourly labor rates it generally charges all of its customers. LESSEE agrees
during the term of this Lease, including any extension, to sell to LESSOR parts
and materials for use in LESSOR's marine service business for an amount equal to
LESSEE's cost plus 5%. The LESSOR will not charge the LESSEE any lift charges
for the first 1 2 months of the Lease unless the LESSEE charges its customers
for a lift charge. In the event the LESSEE charges its customers for a lift
charge, the LESSOR shall be authorized and allowed to charge the LESSEE for lift
charges at 50% of the amount normally charged to customers. Following the first
1 2 months of the Lease, the LESSOR may charge the LESSEE for lift charges at a
rate to be agreed to by the parties.
7. ASSIGNMENT OR SUBLETTING
LESSEE shall not assign or sublet the Leased Premises in whole or in
part to any person, firm or corporation, without the prior written consent of
LESSOR, which consent shall not be unreasonably withheld. No subletting or
assignment of this Lease shall relieve the LESSEE from any of its obligations
hereunder.
8. INSURANCE
<PAGE>
LESSEE agrees to maintain the following insurance coverages:
A. Public liability insurance in such amounts as may be necessary to
indemnify against any loss and which insurance policy shall specifically cover
LESSOR as a named insured in amounts of $1,000,000.00 in case of injury to one
person and $1,000,000.00 in case of injury to more than one person and to the
limit of not less than $100,000.00 in respect to property damage, medical
payments of $250.00 each person and $10,000.00 each accident.
B. Broad form casualty coverage for the LESSEE's contents
(including any equipment which is included with this Lease) and signs including
extended coverage clauses.
C. Proof of all insurance required hereunder shall be
delivered to LESSOR prior to delivery of possession to the LESSEE and proof of
continuing coverage shall be delivered as and when the initial coverage expires
or is terminated.
D. LESSEE agrees that the LESSOR shall have no liability
whatsoever or to any extent for or on account of any injury to any property of
LESSEE or LESSEE at any time for or on account of the destruction of LESSEE's
property in or around the Leased Premises, it being the parties' agreement that
the LESSEE shall bear all risk of loss associated with its property.
LESSEE agrees to furnish LESSOR with a certificate or certificates of
such insurance policy or policies, stating therein the number of each such
policy and the date of expiration of each policy. Each of the policies must
contain a provision that the same may not be canceled without the giving of ten
days prior written notice to LESSOR herein. All insurance must be written with
carriers acceptable to LESSOR, which acceptance shall not be unreasonably
withheld. In the event LESSEE fails to obtain and maintain the required
insurance, LESSOR, or its representative, is hereby authorized (but not
required) to procure the foregoing insurance for LESSEE and LESSEE agrees to pay
the cost of the premium therefor on demand, and such sum shall be deemed to be
additional rent.
9. FIXTURES
All of LESSEE's trade fixtures and other fixtures and all
personal property, apparatus, machinery and equipment installed by LESSEE on the
Leased Premises (other than those provided by LESSOR) except such as have been
affixed thereto, shall be and remain the personal property of the LESSEE and the
same are herein referred to as "LESSEE's equipment." LESSEE's equipment may be
removed from time to time by LESSEE provided it is not in default under the
terms of this Lease and provided, if such removal shall injure or damage the
Leased Premises, that LESSEE shall repair the damage and place the Leased
Premises in the same condition as it would have been if such equipment had not
been installed and removed.
10. CONDITION OF THE PREMISES
<PAGE>
LESSEE's taking possession shall be conclusive evidence, as against
LESSEE, that the Leased Premises were in good order and satisfactory condition
when LESSEE took possession hereunder. LESSOR has made no promise to alter,
remodel, improve, repair, decorate or clean the Leased Premises or any part
thereof, except as stated in Paragraph One (1) of this Lease, and has made no
representation respecting the condition of the Leased Premises or the building.
At the termination of this Lease, by lapse of time or otherwise, LESSEE shall
return the Leased Premises in as good condition as when LESSEE took possession,
ordinary wear and tear and any approved alterations or other approved changes
excepted, failing which LESSOR may restore the Leased Premises to such condition
and LESSEE shall pay the cost thereof upon request. LESSEE's prepaid rent
balance, if any, shall be applied against these costs.
11. USE AND CARE OF PREMISES AND INDEMNITY
LESSEE covenants and agrees that he will not use or permit any person
to use said Leased Premises or any part thereof for any use or purpose in
violation of the laws of the United States of America, the State of Florida,
City of Jacksonville Beach, County of Duval or ordinances or other regulations
of the municipality in which said Leased Premises are situated or of any other
lawful authorities. During the term hereof LESSEE will keep the Leased Premises
and every part thereof in a clean and wholesome condition. LESSEE will in all
respects and at all times fully comply with all lawful health, fire and police
regulations.
LESSEE will save LESSOR harmless and indemnify the LESSOR from and
against any and all claims, actions, damages, liability and expenses, including
attorney's fees, in connection with loss of life, personal injury or loss or
damage of whatever nature, including property damage caused by or resulting from
or claimed to have been caused by or to have resulted from, wholly or in part,
any act, omission, or negligence of the LESSEE or anyone claiming under the
LESSEE including, but without limitation, invitees, agents, associates,
employees, servants, and contractors, occurring in, upon or at the Leased
Premises, or arising out of the occupancy or use by the LESSEE of the Leased
Premises or any part thereof. This indemnity and hold harmless agreement shall
include indemnity against all costs, expenses and liabilities incurred in
connection with any such injury, loss or damage, or any such claim, or any
proceeding brought thereon or the defense thereof. If LESSEE or anyone claiming
under LESSEE, or the whole or any part of the property of LESSEE, shall be
injured, lost or damaged by theft, fire, water or steam or in any other way or
manner, whether similar or dissimilar to the foregoing, no part of said injury,
loss or damage is to be borne by the LESSOR or its agents. The LESSEE agrees
that the LESSOR shall not be liable to the LESSEE or anyone claiming under the
LESSEE for any injury, loss or damage that may be caused by or result from any
act, omission, default or negligence of any persons occupying adjoining premises
or any other part of the building or property. In the event the LESSOR shall,
without fault on its part, be made a party to any litigation commenced by or
against the LESSEE, the LESSEE shall protect and hold LESSOR harmless from and
shall pay all costs, expenses, and reasonable attorney's fees that may be
incurred or paid by the LESSOR in enforcing this hold harmless and indemnity
agreement.
<PAGE>
LESSOR will save LESSEE harmless and indemnify the LESSEE from and
against any and all claims, actions, damages, liability and expenses, including
attorney's fees, in connection with loss of life, personal injury or loss or
damage of whatever nature, including property damage caused by or resulting from
or claimed to have been caused by or to have resulted from, wholly or in part,
any act, omission, or negligence of the LESSOR or anyone claiming under the
LESSOR including, but without limitation, LESSOR's invitees, agents, associates,
employees, servants, and contractors, occurring in, upon or at the Leased
Premises. This indemnity and hold harmless agreement shall include indemnity
against all costs, expenses and liabilities incurred in connection with any such
injury, loss or damage, or any such claim, or any proceeding brought thereon or
the defense thereof. The LESSOR agrees that the LESSEE shall not be liable to
the LESSOR or anyone claiming under the LESSOR for any injury, loss or damage
that may be caused by or result from any act, omission, default or negligence of
any persons occupying adjoining premises or any other part of the building or
property. In the event the LESSEE shall, without fault on its part, be
<PAGE>
made a party to any litigation commenced by or against the LESSOR, the LESSOR
shall protect and hold LESSEE harmless from and shall pay all costs, expenses,
and reasonable attorney's fees that may be incurred or paid by the LESSEE in
enforcing this hold harmless and indemnity agreement.
12. REPAIRS AND REPLACEMENTS
A. The LESSOR shall maintain the roof, exterior walls, air conditioning
and heating equipment and fire sprinkler systems of the building of which the
Leased Premises are a part in good repair and tenantable condition during the
continuance of the Lease, except in case of damage arising from the act or the
negligence of the LESSEE, its agents or employees. For the purpose of so
maintaining the Leased Premises, the LESSOR reserves the right at reasonable
times to enter and inspect the Leased Premises and to make any necessary repairs
to the building, including temporary cessation of services, including elevator,
heating, water, electricity or air conditioning. LESSEE shall be responsible for
the cost of all repairs necessitated by the intentional acts or negligence of
the LESSEE, its agents, servants, employees or invitees.
B. LESSEE covenants and agrees at LESSEE's own expense to keep the
interior of the Leased Premises and all plate glass and fixtures'and the doors,
doorjambs, and thresholds at all times in good repair, order and condition,
except for such repairs as are necessitated by fire or other perils provided for
by extended coverage clauses of policies of insurance carried by the LESSEE, and
except such repairs for damage or loss caused by the sole negligence of LESSOR.
Maintenance and repair of the air conditioning and heating equipment shall be
the LESSOR's responsibility; maintenance and repair of the plumbing and
electrical services in the Leased Premises shall be LESSEE's sole responsibility
throughout the entire term of this Lease and any extensions hereof. The LESSEE
agrees to maintain the Leased Premises and its systems and equipment in the same
condition, order and repair as they are at the commencement of this Lease.
LESSEE shall immediately make repair of any damage to the Lea~ed Premises, its
systems and equipment or the building of which it is a part caused by the
LESSEE, its agents or invitees.
C. If damage, which LESSEE is required to repair, is caused by perils
not covered by insurance, and LESSEE shall fail to commence repairing the damage
and complete same within a reasonable time, or if LESSEE shall fail to keep the
Leased Premises in a good state of maintenance and repair, LESSOR shall have the
right, but not the obligation, to repair and/or maintain, and any amounts so
expended by LESSOR shall be charges to LESSEE as additional rent due and payable
on the first day of the month following.
D. At any time or times LESSOR, either voluntarily or pursuant to
governmental requirement, may, at LESSOR's own expenses, make repairs,
alterations or improvements in or to the building in which the Leased Premises
are located, or any part thereof including the Leased Premises, and during
operations, may close entrances, doors, corridors, elevators or other
facilities, all without any liability to LESSEE by reason of interference,
inconvenience or annoyance. LESSOR shall not be liable to LESSEE for any
expense, injury, loss or damage
<PAGE>
resulting from work done in or upon, or the use of, any adjacent premises
or nearby building, land, street or alley. LESSEE shall pay LESSOR for overtime
and for any other expenses incurred in event repairs, alteration, decorating or
other work in the Leased Premises at LESSEE's request are not made during
ordinary business hours.
13. ALTERATIONS
LESSEE shall make no alterations, additions or improvements in or to
the Leased Premises without the prior written consent of LESSOR.
14. DESTRUCTION
In the event the Leased Premises shall be destroyed or so damaged or
injured by fire or other casualty during the term of agreement, whereby the same
shall be rendered untenantable, then LESSOR shall have the right, but not the
obligation, to render said Leased Premises tenantable by repairs within 180 days
therefrom. In the event the LESSOR elects to repair the Leased Premises, the
rent for the Leased Premises shall abate in proportion to the interference with
the LESSEE's use of the Leased Premises until the repairs are complete unless
the repairs are caused by the negligence or fault of the LESSEE in which event
rent shall continue in the full amount called for by this Lease. If said Leased
Premises are not rendered tenantable within said time, it shall be optional with
either party hereto to cancel this Lease, and in the event of such cancellation,
the proportionate rent shall be paid only to the date of such fire or casualty.
The cancellation herein mentioned shall be evidenced in writing.
15. CONDEMNATION
In the event that the whole or any substantial part of the Leased
Premises shall be permanently taken or condemned for a public or quasi-public
use or purpose by any competent authority, then and in that event the term of
this Lease and any interest of LESSEE in the Leased Premises shall terminate
from the date when possession of the Leased Premises shall be required for such
use or purpose. The then current basic rental shall in such case be apportioned
as of the date of termination of the Lease. If, however, only a portion of the
Leased Premises is so taken which only partially affects the occupancy or use of
the Leased Premises by LESSEE, then and in such event, the rent shall be
adjusted accordingly but this Lease shall otherwise continue in full force and
effect.
16. SIGNS
LESSEE shall not attach, affix or exhibit or permit to be attached,
affixed or exhibited, any sign in or upon any place in the Leased Premises
without the prior written consent of LESSOR, which shall not be unreasonably
withheld. The LESSEE shall be allowed from time to time to display messages on
the LESSOR's electronic message sign at no additional charge to the LESSEE.
LESSOR reserves the right to impose a reasonable charge for use of the
electronic sign but only in the event such a charge is being imposed on all
other tenants using the electronic sign. The use of the electronic message sign
shall be non-exclusive and shall be in conjunction with and
<PAGE>
coordinated with the LESSOR's use and the use of the other occupants of the
Marina of which the Leased Premises are a part. The LESSOR does not guarantee
any particular minimum amount of usage of the LESSOR's electronic sign.
17. SUBORDINATION
This Lease and all rights of LESSEE hereunder are and shall be subject
to the lien of any and all mortgages which may now or hereafter affect the
Leased Premises, and to all renewals, modifications and extensions thereof.
LESSEE shall, upon demand, execute, acknowledge and deliver to LESSOR without
expense to LESSOR, any and all instruments that may be necessary or proper to
subordinate this Lease and all rights hereunder to the lien of any such
mortgages and any renewals, modifications and extensions thereof. Should LESSEE
fail at any time to execute and deliver such subordination instruments, LESSOR
is hereby authorized to execute, acknowledge and deliver same as
attorney-in-fact of LESSEE and in LESSEE's name, place and stead, and LESSEE
hereby makes, constitutes and appoints LESSOR, its successor and assigns, such
attorney-in-fact for~said purpose.
18. LESSOR'S REMEDIES
LESSOR shall have the following nonexclusive remedies under this Lease:
A. If LESSEE defaults in the payment of rent, and does not
cure the default within ten (10) days after demand for payment of such rent, or
if LESSEE defaults in the prompt and full performance of any other provisions of
this Lease, and LESSEE does not cure the default within thirty (30) days
(forthwith if the default involves a hazardous condition) after written demand
by LESSOR that the default be cured (unless the default involves a hazardous
condition, which shall be cured forthwith upon the LESSOR's demand) or if the
Leasehold interest of LESSEE be levied upon under execution or be attached by
process of law, or if LESSEE makes an assignment for the benefit of creditors,
or if a receiver be appointed for any property of LESSEE, or if LESSEE abandons
the Leased Premises, then and in any such event LESSOR may, if LESSOR so elects
but not otherwise, and with or without notice of such election and with or
without any demand whatsoever either forthwith terminate this Lease and LESSEE's
right to possession of the Leased Premises or, without terminating this Lease,
re-enter the Leased Premises and re-let the Leased Premises for LESSEE's
account.
B. Upon any termination of this Lease whether by lapse of time
or otherwise, or upon any termination of LESSEE's right to possession without
termination of the Lease, LESSEE shall surrender possession and vacate the
Leased Premises immediately, and deliver possession thereof to LESSOR. LESSEE
hereby grants to LESSOR full and free license to enter into and upon the Leased
Premises in such event with or without process of law and to expel or remove
LESSEE and any others who may be occupying or within the Leased Premises and to
remove any and all property therefrom, using such force as may be necessary,
without being deemed in any manner guilty of trespass, eviction or forcible
entry or detainer, and without relinquishing LESSOR's rights to rent or any
other right given to LESSOR hereunder or by
<PAGE>
operation of law.
C. Upon the termination of this Lease or upon termination of
LESSEE's right of possession, LESSEE will at once surrender and deliver up said
Leased Premises to LESSOR, together with all fixtures attached to and becoming
part of the Leased Premises in as good condition as when LESSEE took possession,
ordinary wear and tear and any alterations and approved changes, and any damage
caused by perils covered by insurance, excepted. The improvements then standing
upon the Leased Premises shall belong to LESSOR, and no compensation shall be
allowed or paid therefor. In the event of the termination of this Lease prior to
its normal expiration, because of any default on the part of LESSEE, LESSEE
shall not be entitled to remove any of his trade fixtures and equipment until
all sums due LESSOR under this Lease shall have been paid in full for the full
remaining term thereof.
D. LESSEE shall pay to LESSOR as liquidated damages, double
the amount of rent, and interest thereon, for each month or portion thereof
during which LESSEE retains possession of the Leased Premises or any part
thereof after expiration of the term by lapse of time.
E. After the service of notice of default or for possession,
or the commencement of a suit, or after final judgment for the possession of
said Leased Premises, LESSOR may receive and collect the amount stipulated in
the'Lease as rent, at the time fixed in the Lease, as compensation for the use
and occupation of the Leased Premises, without waiver of the defaults or of the
right to recover possession of the Leased Premises.
F. Each and every installment of rent or additional rent
accruing under the covenants of this Lease which shall not be paid when due
shall bear interest at the maximum rate permitted by law from the day when the
same is payable under the terms of this Lease until the same shall be paid. All
sums advanced or paid by LESSOR shall become additional rent under the terms of
this Lease due and payable on the date of the advance or payment of said sums by
LESSOR.
G. LESSEE shall pay all costs and reasonable attorneys' fees
which may be incurred or paid by LESSOR in enforcing or interpreting the
covenants and agreements of this Lease, and in representing LESSOR in any
proceeding for bankruptcy relief filed by or against the LESSEE or any
individual guarantor of this Lease. All such costs and reasonable attorney's
fees when paid by LESSOR shall become at once a first and valid lien upon the
LESSEE's equipment and fixtures on said Leased Premises and upon the leasehold
estate hereby created.
H. Any and all property which may be removed from the Leased
Premises by LESSOR pursuant to the authority of the Lease or of law, to which
LESSEE is or may be entitled, may be handled, removed or stored by LESSOR at the
risk, cost and expense of LESSEE. LESSOR shall in no event be responsible for
the value, preservation or safekeeping thereof. LESSEE shall pay to LESSOR, as
and for additional rent, upon demand, any and all expenses incurred in such
removal and all storage charges against such property so long as the same shall
be in LESSOR's possession or under LESSOR's control, or LESSOR may at its
option, without notice, sell the said effects or any of the same for such price
as LESSOR may
<PAGE>
deem best and apply the proceeds of such sale upon any amounts due under
this Lease from LESSEE to LESSOR, including the expenses of the removal and
sale. Any property of LESSEE not removed from the Leased Premises or retaken
from storage by LESSEE within thirty (30) days after the end of the term,
however terminated, shall be conclusively deemed to have been conveyed or
transferred by LESSEE to LESSOR.
I. If LESSEE abandons the Leased Premises or otherwise
entitles LESSOR so to elect, and LESSOR so elects to terminate LESSEE's right to
possession only, without terminating the Lease, LESSOR may at LESSOR's option
enter into the Leased Premises, remove LESSEE's signs and other evidences of
tenancy, and take and hold possession thereof as in Paragraph (H) of this
Section, without such entry and possession terminating the Lease or releasing
LESSEE, in whole or in part, from LESSEE's obligation to pay the rent hereunder
for the full term. Upon and after entry into possession without termination of
the Lease, LESSOR may, but need not, relet the Leased Premises or any part
thereof for the account of LESSEE for such rent, for such time and upon such
terms as LESSOR in LESSOR's sole discretion shall determine. LESSOR shall not be
required to accept any tenant offered by LESSEE or to observe any instruction
given by LESSEE about such reletting. In any such case, LESSOR may make repairs,
alteration and additions in or to the Leased Premises, and redecorate the same
to the extent deemed by LESSOR necessary or desirable, and LESSEE shall, upon
demand, pay the cost thereof as additional rent, together with LESSOR's expenses
of the reletting. If the consideration collected by LESSOR upon any such
reletting for LESSEE's account is not sufficient to pay monthly the full amount
of the rent reserved in this Lease, together with the costs of repairs,
alterations, additions, redecorating and LESSOR's expenses, LESSEE shall pay to
LESSOR, as and for additional rent, the amount of each monthly deficiency upon
demand; and if the consideration so collected from any such reletting is more
than sufficient to pay the full amount of the rent reserved herein, together
with the costs and expenses of LESSOR, at the end of the stated terms of the
Lease, LESSOR shall account for the surplus to LESSEE.
19. PARKING
Parking spaces for LESSEE, its employees and customers shall be those
located in front of the Leased Premises. Employee parking may be controlled at
the reasonable discretion of the LESSOR to the mutual advantage of all tenants.
The LESSEE shall be allowed to use a portion of the existing fenced in area as
shown on the drawing of the Leased Premises, Exhibit A hereto. LESSEE shall be
allowed to use no more than 25% of the total fenced in area, at no additional
charge. LESSEE's use of the fenced area shall be solely at LESSEE's risk and
LESSOR shall have no responsibility whatsoever for any property stored therein.
LESSEE shall also have the right to display boats during hours of operation in
the parking lot immediately in front of the Leased Premises. All boats which may
be displayed in the parking lot must be removed at night and placed within the
Leased Premises or within the designated fenced area. The LESSEE shall not be
allowed to display boats at any time the LESSEE is not open for business. The
LESSEE's right to display boats shall be subject to the rules, regulations and
ordinances of all state and local governmental bodies.
<PAGE>
20. ENTRY
LESSOR, its agents, employees and contractors may enter the Leased
Premises during reasonable hours for the purpose of making inspections, repairs
or alterations or improvements connected with the Leased Premises or the
building of which it is a part.
21. ENTIRE AGREEMENT
This Lease contains the entire agreement and understanding between the
parties. There are no oral understandings, terms or conditions and neither party
has relied upon any representation, expressed or implied, not contained in this
Lease. All prior understandings, terms or conditions are deemed merged in this
Lease. This Lease may not be changed orally, but only by an agreement in writing
and signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
22. FURTHER ASSURANCES
The parties agree to execute and deliver any instruments in writing
reasonably necessary to carry out any agreement, term, condition or assurance in
this Lease whenever occasion shall arise and request for such instrument shall
be made in accordance with terms of this Lease.
23. SAVINGS CLAUSE
If any provision of this Lease shall be declared invalid or
unenforceable, the remainder of the Lease shall continue in full force and
effect.
24. COMPLIANCE WITH RULES
LESSEE shall observe and comply with such reasonable rules and
regulations as LESSOR may prescribe, on written notice to LESSEE, for the
safety, care and cleanliness of the building and the comfort, quiet and
convenience of other occupants of the building. LESSEE shall not permit the
accumulation of waste or refuse in the Leased Premises or anywhere in or near
the building.
25. NO WAIVER
The failure of either party to insist on a strict performance of any
covenant or condition hereof or to exercise any option, shall not be construed
as a waiver of such covenant, condition or option in any other instance.
26. CONDITIONS OF LESSOR'S LIABILITY
LESSEE shall not be entitled to claim a constructive eviction from the
Leased Premises
<PAGE>
unless LESSEE shall have first notified LESSOR in writing of the condition or
conditions giving rise thereto and, if the complaints be justified, unless
LESSOR shall have failed within a reasonable time after receipt of such notice
to remedy such conditions.
27. RIGHT TO SHOW PREMISES
LESSOR may show the Leased Premises to prospective purchasers and
mortgagees and, during the six (6) months prior to expiration of this Lease, to
prospective tenants, during business hours on reasonable notice to LESSEE.
28. NOTICE
If at any time it shall become necessary for one of the parties hereto
to serve any notice, demand or communication, it shall be in writing sent by
registered or certified mail, postage fully prepaid, and if intended for LESSOR
shall be addressed to: Rose & Ken, Inc., 2315 Beach Boulevard, Jacksonville
Beach, FL 32250, with copy to: Stephen A. Hould, Esquire, P. 0. Box 50457,
Jacksonville Beach, FL 32240-0457.
If intended for LESSEE, notice shall be deemed given when posted and
addressed to the LESSEE at the Leased Premises or to such other address~as
either party may direct in writing.
29. BINDING EFFECT
This Lease shall inure to the benefit of and be binding upon the
parties, their heirs, executors, administrators, successors and assigns.
IN WITNESS WHEREOF the parties hereto have set their hands and seals the day and
year first above written.
LESSOR
WITNESSES ROSE & KEN, INC.
/s/ Tanya A. Meaux /s/ Kendall Taylor
Print Name:Tanya A. Meaux By: KENDALL TAYLOR
Its: President
/s/ Joanne Pozo
Print Name: LESSEE: BOAT TREE, INC.
/s/ Joseph G. Pozo, Jr.
By: JOSEPH G. POZO, JR.
Print Name: Its: President
Print Name:
misc\lease
20
<PAGE>
EXHIBIT B
ROSE & KEN, INC., LESSOR, and BOAT TREE, INC., LESSEE, pursuant to the lease
dated December _______, 1996, confirms that the commencement date is
____________________________________ and the termination date is
- -----------------------------------.
ROSE & KEN, INC.:LESSOR
/s/ Kendall B.Taylor
By: KENDALL B. TAYLOR
Its: President
BOAT TREE, INC.: LESSEE
/s/ Joseph G.Pozo, Jr.
By: JOSEPH G. POZO, JR.
Its:
misc\lease
21
<PAGE>
ADDENDUM TO LEASE DATED
DECEMBER 16, 1996
Between: Rose & Ken, Inc. as Lessor
Boat Tree, Inc. as Lessee
The following here-by made a part of said lease effective December 1,
1997, through the original lease term and all extension periods.
The Lessor shall lease up to lessee six (6) boat slips south 1001,
S-1002, S-1003, S-1004, S-1005, S-1006 for $600.00 per month plus sales tax.
Lessee shall have the use of the fenced in area east of the showroom
until lessor develops this parcel of land. The consideration for this is that
Lessee at his expense will replace the fence with six(6) foot fence that will
match the green fence that the Lessor recently installed.
Lessee: Boat Tree, Inc. Lessor: Rose & Ken, Inc.
By:/s/Joseph G. Pozo, Jr. By:/s/ Kendall B. Taylor
Date: Date:
misc\addlease
1
<PAGE>
LEASE
THIS LEASE made and entered into this 1st day of September, A.D., 1
997, by and between Rose & Ken, Inc., a Florida corporation, hereinafter called
"LESSOR," whose principal office is at 2315 Beach Boulevard, Jacksonville,
Beach, FL 32205, and Boat Tree, Inc., a Florida corporation, hereinafter called
"LESSEE."
1. PREMISES
LESSOR, or and in consideration of the covenants and
agreements hereinafter contained and made c" the part of LESSEE, does hereby
demise and Lease to LESSEE the premises known as 2079-A_ Beach Boulevard, in the
City of Jacksonville Beach, County of Duval, and State of Florida (hereinafter
the "Leased Premises"). Ingress, egress and parking areas will be or common use
of the LESSOR, LESSEE and all other tenants. The leased premises also include
the Algonac lift and office/storage room about (15X20) feet. Also two boat slips
8- 7E & 9-7W.
2. TERM
2.1 Initial Term.
The initial term of this Lease shall be for a five (5) year
term commencing on the first day of the month in which the LESSEE first occupies
the Leased Premises, and terminating five (5) years thereafter. The parties
agree to confirm in writing the commencement and expiration dates in writing
upon occupancy by the LESSEE in the form attached hereto as Exhibit A.
2.2 Options to Extend Term.
Provided that LESSEE shall have performed the terms and conditions of this Lease
including, but not limited to, the agreement to pay rent., then and in that
event, the LESSEE shall have the option to renew this Lease, upon the same terms
and conditions for three (3) successive terms of five (5) years each. To
exercise the option, the LESSEE shall give written notice to LESSOR of the
LESSEE's election to exercise the option not less than three (3) months prior to
the expiration of the then existing term.
3. RENT.
A. During the initial term of this Lease, LESSEE shall pay on
the first day of each month to LESSOR rent and other charges, without demand or
notice. LESSEE will be given the first month (September) at no charge. The
initial term of this Lease, rent shall be $3,000.00 per month . When the new
service shop is built on the north side of the dry stack, then the rent will be
$2,500.00 for the first month and then it will increase there after to $5,000.00
per month
misc\addlease
2
<PAGE>
inclusive of sale tax. On every anniversary of this lease the rent shall be
increased by an amount equal to the change in Consumer Price Index (All Items)
measured from the beginning of the initial term of this Lease, not to exceed two
percent (2%).
B. LESSEE shall be liable for and shall pay all taxes levied
upon personal property and trade fixtures located in the Leased Premises whether
placed therein or owned by the LESSEE or the LESSOR. LESSOR shall pay all real
estate taxes and insurance costs on the leased premise.
C. In the event the rent is not received by the LESSOR on or
before the tenth day of the month, the LESSEE shall be liable for and shall pay,
as and for additional rent, a charge of 1 of the normal monthly rent per day
late up to the fifteenth day following the due date All such additional rent
shall be paid by the LESSEE not later than the tenth day of the following month
if not sooner paid.
D. In no event shall rent be subject to setoffs or deductions.
No payment by the LESSEE or receipt by the LESSOR of a lesser amount than
actually due, including, if appropriate, late charges, shall be deemed other
than a payment on account of the earliest rent or additional rent due, nor shall
any endorsement or statement on any check or on any letter accompanying any
check or payment as rent be deemed an accord and satisfaction and the LESSOR may
accept such check or payment without prejudice to the right to recover the
balance of the rent or additional rent, to terminate this Lease for LESSEE's
default or to pursue any other remedy provided for in this Lease.
E. In addition to the rent called for by Sub-Paragraph (B),
all other charges required to be paid by LESSEE under the provisions of this
Lease shall be deemed to be and become additional rent. whether or not the same
be designated as such; provided, however, all provisions dealing with abatement
of rent shall be construed to permit the abatement of the Sub- Paragraph (Bi
rent component only and not any other sums due from LESSEE to LESSOR.
4. UTILITY CHARGES
LESSEE agrees to pay all utility charges which may be levied, assessed
or imposed upon said Leased Premises. Should LESSEE fail to pay any billing for
such charges when due, LESSOR may, but is not required to, pay such billing in
which event the amount so paid shall be additional rental then due and owing.
LESSOR shall not be liable for any interruption or failure whatsoever in utility
services or for any damage resulting to the LESSEE of the Leased Premises
therefrom.
5. PURPOSE
The Leased Premises shall be used only for the establishment of a boat
service department. LESSOR agrees that during the term of this Lease, including
any extensions, LESSEE shall have the exhaustive right, within the Marina of
which the Leased Premises are a part, to establish a boat service business. This
provision shall not prohibit individual boat owners from using other persons
misc\addlease
3
<PAGE>
or entities for service on their individual vessels if LESSEE can not perform
the service that is needed. The LESSEE agrees to perform any and all necessary
service work on boats or vessels that may be requested by the LESSOR or any of
its marina customer. LESSEE agrees to charge LESSOR and its marina customers
hourly mechanic fees and prices for parts that are competitive with fees and
prices otherwise generally available in me market place. The LESSEE warrants and
agrees that the quality of service and the timeliness of service provided by
LESSEE to the general public, LESSOR's marina customers and to LESSOR shall at
all times be of the highest possible standards as to quality of work and
timeliness of performance. Further, the service shall not differ from or be less
beneficial than the service provided by the LESSEE to its independent customers
and the customers of the Boat Tree sales business operated by the LESSEE at 2079
Beach Boulevard. If LESSEE reeds boat pulled out for work to be done then LESSOR
will charge LESSEE $2.00 per foot LESSOR will let LESSEE park trailers on the
north side of the basin long enough for service to be done to the boat. LESSOR
will have the right to use the 20 ton Algnac Lift from time to time at no charge
as long as LESSEE is not using it. It is understood the this use is for marina
use only. Any service work performed for LESSOR will be billed at LESSEE's cost.
6. ASSIGNMENT OR SUBLETTING
LESSEE shall not assign or sublet the Leased Premises in whole
or in part to any person, firm or corporation, except to entities that are
controlled by Joe Pozo without the prior written consent of LESSOR. No
subletting or assignment of this Lease shall relieve the LESSEE from any of us
obligations hereunder.
7. INSURANCE
LESSEE agrees to maintain the following insurance coverages:
A. Public liability insurance in such amounts as may be
necessary to indemnify against any loss and which insurance policy shall
specifically cover LESSOR as a named insured in amounts of $1,000,000.00 in case
of injury to one person and $1,000,000.00 in case of injury to more than one
person and to the limit of not less than $100,000.00 in respect to property
damage, medical payments of $250.00 each person and $10,000.00 each accident.
B. Broad form casualty coverage for the LESSEE's contents
(including any equipment which is included with this Lease) and signs including
extended coverage clauses.
C. Proof of all insurance required hereunder shall be
delivered to LESSOR prior to delivery of possession to the LESSEE and proof of
continuing coverage shall be delivered as and when the initial coverage expires
or is terminated.
D. LESSEE agrees that the LESSOR shall have no liability
whatsoever or to any extent for or on account of any injury to any property of
LESSEE or LESSEE at any time for or on account of the destruction of LESSEE's
property in the Leased Premises, it being the
misc\addlease
4
<PAGE>
parties' agreement that the LESSEE shall bear all risk of loss associated with
its LESSEE agrees ~o furnish LESSOR with a certificate or certificates of such
insurance policy or policies, stating therein the number of each such policy and
the date of expiration of each policy. Each of the policies must contain a
provision that the same may not be canceled without the giving of ten days prior
written notice to LESSOR herein. All insurance must be written with carriers
acceptable to LESSOR, which acceptance shall not be unreasonably withheld. In
the event LESSEE fails to obtain and maintain the required insurance, LESSOR, or
its representative, is hereby authorized (but not required) to procure the
foregoing insurance for LESSEE and LESSEE agrees to pay the cost of the premium
therefor on demand, and such sum shall be deemed to be additional rent.
8. FIXTURES
All of LESSEE's trade fixtures and other fixtures and all
personal property, apparatus, machinery and equipment installed by LESSEE on the
Leased Premises (other than those provided by LESSOR) except such as have been
affixed thereto, shall be and remain the personal property of the LESSEE and the
same are herein referred to as "LESSEE's equipment." LESSEE's equipment may be
removed from time to time by LESSEE provided it is not in default under the
terms of this Lease and provided, if such removal shall injure or damage the
Leased Premises, that LESSEE shall repair the damage and place the Leased
Premises in the same condition as it would have been if such equipment had not
been installed and removed.
9. CONDITION OF THE PREMISES
LESSEE's taking possession shall be conclusive evidence, as
against LESSEE, that the Leased Premises were in good order and satisfactory
condition when LESSEE took possession hereunder LESSOR has made no promise to
alter, remodel, improve, repair, decorate or clean the Leased Premises or any
part thereof, and has made no representation respecting the condition of the
Leased Premises or the building. At the termination of this Lease, by lapse of
time or otherwise, LESSEE shall return the Leased Premises in as good condition
as when LESSEE took possession, ordinary wear and tear and any approved
alterations or other approved changes excepted, failing which LESSOR may restore
the Leased Premises to such condition and LESSEE shall pay the cost thereof upon
request.
10. USE AND CARE OF PREMISES AND INDEMNITY
A. LESSEE covenants and agrees that it will not use or permit
any person to use said Leased Premises or any part thereof for any use or
purpose in violation of the laws of the United States of America, the State of
Florida, City of Jacksonville Beach, County of Duval or ordinances or other
regulations of the municipality in which said Leased Premises are situated or of
any other lawful authorities. During the term hereof LESSEE will keep the Leased
Premises and every part thereof in a clean and wholesome condition. LESSEE will
in all respects and at all times fully comply with all lawful health, fire and
police regulations.
misc\addlease
5
<PAGE>
B. LESSEE shall indemnify and hold LESSOR, its
representatives, agents, successors and assigns, harmless from any and all
claims, proceedings, actions, penalties, fines, cleanup costs, medial expenses,
damages, losses, costs and expenses, including reasonable attorney's fees,
litigation expenses or expenses incurred related to litigation or administrative
proceedings and court costs incurred by LESSOR, in any way relating to or
arising from the LESSEE's generation, handling, manufacturing, treatment,
storage, use, transportation, spillage leakage, dumping, discharge or disposal
(whether legal or illegal, accidental or intentional) of any hazardous
substance. As used herein, hazardous substance means any hazardous or toxic
substance, material or waste which are or become regulated under any applicable
local, state or federal law including, but not limited to, any material, waste
or substance which is petroleum, asbestos, PCBs, designated as a hazardous
substance under the Clean Water Act or defined as a hazardous waste pursuant to
the Resource and Recovery Act or defined as a hazardous substance pursuant to
the Comprehensive Environmental Response Compensation and Liability Act. LESSEE
agrees to perform all necessary remedial activities to the satisfaction of the
Florida Department of Environmental Protection, the United States Environmental
Protection Agency, the United States Coast Guard and the local government as may
be necessary to e~valuate and remedy any environmental contamination on, below,
or around the Leased Premises resulting from the acts and/or omissions of the
LESSEE, its agents, employees, invitees or guests. All remedial activities
required by the LESSEE will be conducted in accordance with any and all
applicable environmental laws, including, but not limited to, regulations of
federal, state and local governments.
C. LESSEE will save LESSOR harmless and indemnify the LESSOR
from and against any and all claims, actions, damages, liability and expenses,
including attorney's fees, in connection with loss of life, personal injury or
loss or damage of whatever nature, including property damage caused by or
resulting from or claimed to have been caused by or to have resulted from,
wholly or in part, any act, omission, or negligence of the LESSEE or anyone
claiming under the LESSEE including, but without limitation, invitees, agents,
associates, employees, servants, and contractors, occurring in, upon or at the
Leased Premises, or arising out of the occupancy or use by the LESSEE of the
Leased Premises or any part thereof. This indemnity and hold harmless agreement
shall include indemnity against all costs, expenses and liabilities incurred in
connection with any such injury, loss or damage, or any such claim, or any
proceeding brought thereon or the defense thereof. If LESSEE or anyone claiming
under LESSEE, or the whole or any part of the property of LESSEE, shall be
injured, lost or damaged by theft, fire, water or steam or in any other way or
manner, whether similar or dissimilar to the foregoing, no part of said injury,
loss or damage is to be borne by the LESSOR or its agents. The LESSEE agrees
that the LESSOR shall not be liable to the LESSEE or anyone claiming under the
LESSEE for any injury, loss or damage that may be caused by or result from any
act, omission, default or negligence of any persons occupying adjoining premises
or any other part of the building or property. In the event the LESSOR shall,
without fault on its part, be made a party to any litigation commenced by or
against the LESSEE, the LESSEE shall protect and hold LESSOR harmless
misc\addlease
6
<PAGE>
from and shall pay all costs, expenses, and reasonable attorney's fees that may
be incurred or paid by the LESSOR in enforcing this hold harmless and indemnity
agreement.
D. LESSOR will save LESSEE harmless and indemnify the LESSEE
from and against any and all claims, actions, damages, liability and expenses,
including attorney's fees, in connection with loss of life, personal injury or
loss or damage of whatever nature, including property damage caused by or
resulting from or claimed to have been caused by or to have resulted from,
wholly or in part, any act, omission, or negligence of the LESSOR or anyone
claiming under the LESSOR including, but without limitation, LESSOR's invitees,
agents, associates, employees, servants, and contractors, occurring in, upon or
at the Leased Premises. The indemnity and hold harmless agreement shall include
indemnity against all costs, expenses and liabilities incurred in connection
with any such injury, loss or damage, or any sum claim, or any proceeding
brought thereon or the defense thereof. The LESSOR agrees that the LESSEE shall
not be liable to the LESSOR or anyone claiming under the LESSOR for any injury,
loss or damage that may be caused by or result from any act, omission, default
or negligence of any persons occupying adjoining premises or any other part of
the building or property. In the event the LESSEE shall, without fault on its
part, be made a party to any litigation commenced by or against the LESSOR, the
LESSOR shall protect and hold LESSEE harmless from and shall pay all costs,
expenses, and reasonable attorney's fees that may be incurred or paid by the
LESSEE in enforcing this hold harmless and indemnity agreement.
11. REPAIRS AND REPLACEMENTS
A. The LESSOR shall maintain the roof, exterior walls, and
fire sprinkler systems of the building of which the Leased Premises are a part
in good repair and tenantable condition during the continuance of the Lease,
except in case of damage arising from the act or the negligence of the LESSEE,
its agents or employees. For the purpose of so maintaining the Leased Premises,
the LESSOR reserves the right at reasonable times to enter and inspect the
leased Premises and to make any necessary repairs to the building, including
temporary cessation of services, including heating, water, electricity or air
conditioning. LESSEE shall be responsible for the cost of all repairs
necessitated by the intentional acts or negligence of the LESSEE, its agents,
servants, employees or invitees.
B. LESSEE covenants and agrees at LESSEE's own expense to keep
the interior of the Leased Premises and all plate glass and fixtures and the
doors, doorjambs, and thresholds at all times in good repair, order and
condition, except for such repairs as are necessitated by fire or other perils
provided for by extended coverage clauses of policies of insurance carried by
the LESSEE, and except such repairs for damage or loss caused by the sole
negligence of LESSOR. Maintenance and repair of the electrical services in the
Leased Premises shall be LESSEE's sole responsibility throughout the entire term
of this Lease and any extensions hereof. The LESSEE agrees to maintain the
Leased Premises and its systems and equipment in the same condition, order and
repair as they are at the commencement of this Lease. LESSEE shall immediately
make repair of any damage to the Leased Premises, its systems and equipment or
the
misc\addlease
7
<PAGE>
building of which it is a part caused by the LESSEE, its agents or invitees.
C. If damage, which LESSEE is required to repair, is caused by
perils not covered by insurance and LESSEE shall fail to commence repairing the
damage and complete same within a reasonable time, or if LESSEE shall fail to
keep the Leased Premises in a good state of maintenance and repair, LESSOR shall
have the right, but not the obligation, to repair and/or maintain, and any
amounts so expended by LESSOR shall be charges to LESSEE as additional rent due
and payable on the first day of the month following.
D. At any time or times LESSOR, either voluntarily or pursuant
to governmental requirement, may, at LESSOR's own expenses, make repairs,
alterations or improvements in or to the building in which the Leased Premises
are located, or any part thereof including the Leased Premises, and during
operations, may close entrances, doors, corridors, elevators or other
facilities, all without any liability to LESSEE by reason of interference,
inconvenience or annoyance. LESSOR shall not be liable to LESSEE for any
expense, injury, loss or damage resulting from work done in or upon, or the use
of, any adjacent premises or nearby building, land, street or alley. LESSEE
shall pay LESSOR for overtime and for any other expenses incurred in event
repairs, alteration, decorating or other work in the Leased Premises at LESSEE's
request are not made during ordinary business hours.
12. ALTERATIONS
LESSEE shall make no alterations, additions or improvements in
or to the Leased Premises without the prior written consent of LESSOR. LESSEE
shall have no power or authority to permit construction liens to be placed upon
the Leased Premises and in the event any liens are filed arising out of the
LESSEE's activities, the same shall be removed within ten (10 days from the date
LESSOR gives notice to LESSEE and LESSEE shall indemnify and hold LESSOR
harmless from any and all costs, including LESSOR's attorney's fees, as may be
incurred by LESSOR in enforcing the terms hereof and/or defending any
construction lien claims.
13. DESTRUCTION
In the event the Leased Premises shall be destroyed or so
damaged or injured by fire or other casualty during the term of agreement,
whereby the same shall be rendered untenantable, then LESSOR shall have the
right, but not the obligation, to render said Leased Premises tenantable by
repairs within 1 80 days therefrom. In the event The LESSOR elects to repair the
Leased Premises, the rent for the Leased Premises shall abate in proportion to
the interference with the LESSEE's use of the Leased Premises until the repairs
are complete unless the repairs are caused by the negligence or fault of the
LESSEE in which event rent shall continue in the full amount called for by this
Lease. If said Leased Premises are not rendered tenantable within said time, it
shall be optional with either party hereto to cancel
misc\addlease
8
<PAGE>
this Lease, and in the event of such cancellation, the proportionate rent shall
be paid only to the date of such fire or casualty. The cancellation herein
mentioned shall be evidenced in writing.
14. CONDEMNATION
In the event that the whole or any substantial part of the
Leased Premises shall be permanently taken or condemned for a public or
quasi-public use or purpose by any competent authority, then and in that event
the term of this Lease and any interest of LESSEE in the Leased premises shall
terminate from the date when possession of the Leased Premises shall be required
for such use or purpose. The then current basic rental shall in such case be
apportioned as of the date of termination of the Lease. If, however, only a
portion of the Leased Premises is so taken which only partially affects the
occupancy or use of the Leased Premises by LESSEE, then and in such event, the
rent shall be adjusted accordingly but this Lease shall otherwise continue in
full force and effect.
15. SIGNS
LESSEE shall not attach, affix or exhibit or permit to be
attached, affixed or exhibited, any sign in or upon any place in the Leased
Premises without the prior written consent of LESSOR, which shall not be
unreasonably withheld. The LESSEE shall be allowed from time to time to display
messages on the LESSOR's electronic message sign at no additional charge to the
LESSEE LESSOR reserves the right to impose a reasonable charge for use of the
electronic sign but only in the event such a charge is being imposed on all
other tenants using the electronic sign. The use of the electronic message sign
shall be non-exclusive and shall be in conjunction with and coordinated with the
LESSOR's use and the use of the other occupants of the Marina of which the
Leased Premises are a part. The LESSOR does not guarantee any particular minimum
amount of usage of the LESSOR's electronic sign.
16. SUBORDINATION
This Lease and all rights of LESSEE hereunder are and shall be
subject to the lien of any and all mortgages which may now or hereafter affect
the Leased Premises, and to all renewals, modifications and extensions thereof.
LESSEE shall, upon demand, execute, acknowledge and deliver to LESSOR without
expense to LESSOR, any and all instruments that may be necessary or proper to
subordinate this Lease and all rights hereunder to the lien of any such
mortgages and any renewals, modifications and extensions thereof. Should LESSEE
fail at any time to execute and deliver such subordination instruments, LESSOR
is hereby authorized to execute, acknowledge and deliver same as
attorney-in-fact of LESSEE and in LESSEE's name, place and stead, and LESSEE
hereby makes, constitutes and appoints LESSOR, its successor and assigns, such
attorney-in-fact for said purpose.
LESSOR shall have the following nonexclusive remedies under this Lease:
misc\addlease
9
<PAGE>
A. If LESSEE defaults in the payment of rent, and does not
cure the default within ten (10) days after written demand for payment of such
rent, or if LESSEE defaults in the prompt and full performance of any other
provisions of this Lease, and LESSEE does not cure the default within thirty
(30) days (forthwith if the default involves a hazardous condition) after
written demand by LESSOR that the default be cured (unless the default involves
a hazardous condition, which shall be cured forthwith upon the LESSOR's demand)
or if the Leasehold interest of LESSEE be levied upon under execution or be
attached by process of law, or if LESSEE makes an assignment for the benefit of
creditors, or if a receiver be appointed for any property of LESSEE, or if
LESSEE abandons the Leased Premises, then and in any such event LESSOR may, if
LESSOR so elects but not otherwise, and with or without notice of such election
and with or without any demand whatsoever either forthwith terminate this Lease
and LESSEE's right to possession of the Leased Premises or, without terminating
this Lease, re-enter the Leased Premises and re-let the Leased Premises for
LESSEE's account.
B. Upon any termination of this Lease whether by lapse of time
or otherwise, or upon any termination of LESSEE's right to possession without
termination of the Lease, LESSEE shall surrender possession and vacate the
Leased Premises immediately, and deliver possession thereof to LESSOR. LESSEE
hereby grants to LESSOR full and free license to enter into and upon the Leased
Premises in such event with or without process of law and to expel or remove
LESSEE and any others who may be occupying or within the Leased Premises and u
remove any and all property therefrom, using such force as may be necessary,
without being deemed in any manner guilty of trespass, eviction or forcible
entry or detainer, and without relinquishing LESSOR's rights to rent or any
other right given to LESSOR hereunder or by operation of law.
C. Upon the termination of this Lease or upon termination of
LESSEE's right of possession, LESSEE will at once surrender and deliver up said
Leased Premises to LESSOR, together with all fixtures attached to and becoming
part of the Leased Premises in as good condition as when LESSEE took possession,
ordinary wear and tear and any alterations and approved changes, and any damage
caused by perils covered by insurance, excepted. The improvements then standing
upon the Leased Premises shall belong to LESSOR, and no compensation shall be
allowed or paid therefor. In the event of the termination of this Lease prior to
its normal expiration, because of any default on the part of LESSEE, LESSEE
shall not be entitled to remove any of his trade fixtures and equipment until
all sums due LESSOR under this Lease shall have been paid in full for the full
remaining term thereof.
misc\addlease
10
<PAGE>
D. LESSEE shall pay to LESSOR as liquidated damages, 1 .25 the
amount of rent, and interest thereon, for each month or portion thereof during
which LESSEE retains possession of the Leased Premises or any part thereof after
expiration of the term by lapse of time.
E. After the service of notice of default or for possession,
or the commencement of a suit, or after final judgment for the possession of
said Leased Premises, LESSOR may receive and collect the amount stipulated in
the Lease as rent, at the time fixed in the Lease, as compensation for the use
and occupation of the Leased Premises, without waiver of the defaults or of the
right to recover possession of the Leased Premises.
F. Each and every installment of rent or additional rent
accruing under the covenants of this Lease which shall not be paid when due
shall bear interest at the maximum rate permitted by law from the day when the
same is payable under the terms of this Lease until the same shall be paid. All
sums advanced or paid by LESSOR shall become additional rent under the terms of
this Lease due and payable on the date of the advance or payment of said sums by
LESSOR.
G. LESSEE shall pay all costs and reasonable attorneys' fees
which may be incurred or paid by LESSOR in enforcing or interpreting the
covenants and agreements of this Lease, and in representing LESSOR in any
proceeding for bankruptcy relief filed by or against the LESSEE or any
individual guarantor of this Lease. All such costs and reasonable attorney's
fees when paid by LESSOR shall become at once a first and valid lien upon the
LESSEE's equipment and fixtures on said Leased Premises and upon the leasehold
estate hereby created.
H. Any and all property which may be removed from the Leased
Premises by LESSOR pursuant to the authority of the Lease or of law, to which
LESSEE is or may be entitled, may be handled, removed or stored by LESSOR at the
risk, cost and expense of LESSEE. LESSOR shall in no event be responsible for
the value, preservation or safekeeping thereof. LESSEE shall pay to LESSOR, as
and for additional rent, upon demand, any and all expenses incurred in such
removal and all storage charges against such property so long as the same shall
be in LESSOR's possession or under LESSOR's control, or LESSOR may at its
option, without notice, sell the said effects or any of the same for such price
as LESSOR may deem best and apply the proceeds of such sale upon any amounts due
under this Lease from LESSEE to LESSOR, including the expenses of the removal
and sale. Any property of LESSEE not removed from the Leased Premises or retaken
from storage by LESSEE within thirty (30) days after the end of the term,
however terminated, shall be conclusively deemed to have been conveyed or
transferred by LESSEE to LESSOR.
I. If LESSEE abandons the Leased Premises or otherwise
entitles LESSOR so to elect, and LESSOR so elects to terminate LESSEE's right to
possession only, without terminating the Lease. LESSOR may at LESSOR's option
enter into the Leased Premises, remove LESSEE's signs and other evidences of
tenancy, and take and hold possession thereof as in Paragraph (H) of this
Section, without such entry and possession terminating the Lease or
misc\addlease
11
<PAGE>
releasing LESSEE, in whole or in part, from LESSEE's obligation to pay the rent
hereunder for the full term. Upon and after entry into possession without
termination of the Lease, LESSOR may, but need not, relet the Leased Premises or
any part thereof for the account of LESSEE for such rent, for such time and upon
such terms as LESSOR in LESSOR's sole discretion shall determine. LESSOR shall
not be required to accept any tenant offered by LESSEE or to observe any
instruction given by LESSEE about such reletting. In any such case, LESSOR may
make repairs, alteration and additions in or to the Leased Premises, and
redecorate the same to the extent deemed by LESSOR necessary or desirable, and
LESSEE shall, upon demand, pay the cost thereof as additional rent, together
with LESSOR's expenses of the reletting. If the consideration collected by
LESSOR upon any such reletting for LESSEE's account is not sufficient to pay
monthly the full amount of the rent reserved in this Lease, together with the
costs of repairs, alterations, additions, redecorating and LESSOR's expenses,
LESSEE shall pay to LESSOR, as and for additional rent, the amount of each
monthly deficiency upon demand; and if the consideration so collected from any
such reletting is more than sufficient to pay the full amount of the rent
reserved herein, together with the costs and expenses of LESSOR, at the end of
the stated terms of the Lease, LESSOR shall account for the surplus to LESSEE.
18. PARKING
Parking spaces br LESSEE, its employees and customers shall be
at the reasonable discretion of the LESSOR to the mutual advantage of all
tenants.
19. ENTRY
LESSOR, its agents, employees and contractors may enter the
Leased Premises during reasonable hours for the purpose of making inspections,
repairs or alterations or improvements connected with the Leased Premises or the
building of which it is a part.
20. ENTIRE AGREEMENT
This Lease contains the entire agreement and understanding
between the parties. There are no oral understandings, terms or conditions and
neither party has relied upon any representation, expressed or implied, not
contained in this Lease. All prior understandings, terms or conditions are
deemed merged in this Lease. This Lease may not be changed orally, but only by
an agreement in writing and signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
21. FURTHER ASSURANCES
The parties agree to execute and deliver any instruments in
writing reasonably necessary to carry out any agreement, term, condition or
assurance in this Lease whenever
misc\addlease
12
<PAGE>
occasion shall arise an: request for such instrument shall be made in
accordance with terms of this Lease.
22. SAVINGS CLAUSE
If any provision of this Lease shall be declared invalid or
unenforceable, the remainder of the Lease shall continue in full force and
effect.
23. COMPLIANCE WITH RULES
LESSEE shall conserve and comply with such reasonable rules
and regulations as LESSOR may prescribe on written notice to LESSEE, for the
safety, care and cleanliness of the building and the comfort, quiet and
convenience of other occupants of the building. LESSEE shall not permit the
accumulation of waste or refuse in the Leased Premises or anywhere in or near
the building.
24. NO WAIVER
The failure of either party to insist on a strict performance
of any covenant or condition hereof or to exercise any option shall not be
construed as a waiver of such covenant, condition or option in any other
instance.
25. CONDITIONS OF LESSOR'S LIABILITY
LESSEE shall not be entitled to claim a constructive eviction
from the Leased Premises unless LESSEE shall have first notified LESSOR in
writing of the condition or conditions giving rise thereto and, if the
complaints be justified, unless LESSOR shall have failed within a reasonable
time after receipt of such notice to remedy such conditions.
26. RIGHT TO SHOW PREMISES
LESSOR may show the Leased Premises to prospective purchasers
and mortgagees and, during the three (3) months prior to expiration of this
Lease, to prospective tenants, during business hours on reasonable notice to
LESSEE.
27. NOTICE
If at any time it shall become necessary for one of the
parties hereto to serve any notice, demand or communication, it shall be in
writing sent by registered or certified mail, postage fully prepaid, and if
intended for LESSOR shall be addressed to: Rose & Ken, Inc., 231 5 Beach
Boulevard, Jacksonville Beach, FL 32250, with copy to: Stephen A. Hould,
Esquire, P. 0. Box 50457, Jacksonville Beach, FL 32240-0457.
misc\addlease
13
<PAGE>
If intended for LESSEE, notice shall be deemed given when
posted and addressed to the LESSEE at 1924 33rd strove Orlando FL 32839 with a
copy to Greg Humphris c\o shutts
misc\addlease
14
<PAGE>
and bowen, PA 20 North orange ave Orlando FL 32801 suit 1000. Or to such other
address as either party may direct in writing.
28. BINDING EFFECT
This Lease shall inure to the benefit of and be binding upon
the parties, their heirs, executors, administrators, successors and assigns.
29. Early termination option
After the first 24 months of this lease the LESSEE has the
option during the initial term and extension period to terminate this lease with
three months written notice and a $1 5,000.00 dollar early termination fee.
IN WITNESS WHEREOF the parties hereto have set their hands and seals
the day and year first above written.
LESSOR:
WITNESSES ROSE & KEN, INC.
Sign: /s/ Kendall Taylor
Print name: By: KENDALL TAYLOR
Its: President
Sign: LESSEE: BOAT TREE, INC.
Print name:
/s/ Joseph G. Pozo, Jr.
Sign: By: JOSEPH G. POZO, JR.
Print name: Its: President
misc\addlease
15
<PAGE>
EXHIBIT A
ROSE & KEN, INC., Lessor, and BOAT TREE, INC., Lessee, pursuant to the
lease dated ___ , 1997, confirm that the commencement date is, and the
termination date is January 1, 1998, and the termination date is December 31,
2003.
ROSE & KEN, INC.: LESSOR BOAT TREE, INC.: LESSEE
/s/ Kendall B.Taylor /s/ Joseph G. Pozo, Jr.
By: KENDALL B. TAYLOR By: J. G. POZO, JR.
Its: President Its: President
misc\addlease
16
<PAGE>
LEASE
THIS LEASE made this 10th day of December, 1997, between DOCTORS LAKE
MARINA, INC., a Florida Corporation, hereinafter called the "LESSOR", and BOAT
TREE, INC., a Florida Corporation, hereinafter called "LESSEE".
WITNESSETH:
The Lessor does by these presents lease and let unto the Lessee the real
property located in Clay County, Florida, described in Exhibit A attached hereto
and by reference made a part hereof, together with three (3) wet slips, known as
3107 US Highway 17 South, Orange Park, Florida.
TO HAVE AND TO HOLD the said leased property, including the access and
parking rights, for the purpose of operating a retail boat dealer sales parts
and service operation, for a lease term commencing on the 1~ day of January,
1998, and ending on the 31st day of December, 2002.
In consideration of the premises, it is mutually covenanted and agreed by
and between the Lessor and the Lessee as follows:
RENTAL PAYMENT AND DUE DATE
1. The Lessee shall pay to the Lessor as rent for the leased premises and
appurtenant rights, the sum of $4,700.00 per month as base rent, plus sales tax,
due and payable in advance, commencing February 1, 1998 and continuing on the
1st day of each month and every month of the demised term.
<PAGE>
TAXES
2. Lessee shall pay all personal property taxes and all taxes levied upon
its stock in trade kept on the leased premises and shall abide by all valid
laws, rules and regulations of governmental authorities have jurisdiction over
the operation of the type of business operated in the leased premises by Lessee.
Lessee shall pay to the Lessor the sum of $678.98 plus sales tax each quarter in
advance commencing January 1, 1998 for Lessee's share of real estate taxes. When
the actual tax bill is received each year in November, the real estate taxes
shall be prorated based upon the Lessee's 25% obligation for taxes.
MAINTENANCE AND REPAIRS
3. The Lessee shall keep the interior of the building, improvements,
plumbing, heating and air conditioning, now or hereafter erected upon the leased
land, the air compressor, as well as the boat hoist, in good condition and
repair, and the Lessee shall deliver up the leased premises at the end of the
lease term in good condition and repair, except for ordinary wear and tear. The
Lessor, at its expense, shall maintain the exterior walls, roof and foundation
of the building, as well as the paved parking area appurtenant to the building.
Lessee shall mow all its areas as well as the D.O.T. right of way adjacent to
Lessee area.
<PAGE>
UTILITIES
4. Lessee shall pay for all electricity, and other utilities used by it in
connection with the operation of its business, which shall be the meter behind
the sales office, as well as 50% of the meter for the rest of the building where
parts and service are located.
INSURANCE
5. Lessee shall be responsible and pay for the following coverages: (a)
Boat Dealer's Policy Lessee shall maintain in force a boat dealer's
comprehensive policy of insurance with a company and with limits acceptable to
the Lessor, naming the Lessor as an additional named insured and provide Lessor
with a certificate of insurance. (b) Fire etc. Lessee shall pay Lessor $200.00
per quarter, plus sales tax, in advance towards the premium for insuring the
property for all risks including fire, extended coverage, etc., for their full
insurable value. Lessee shall pay the aforesaid prorated premium each quarter in
advance.
REMOVAL OF EQUIPMENT. FIXTURES AND MERCHANDISE
6. All trade fixtures which are installed or placed on the leased premises
by or at the expense of Lessee shall remain on the property of Lessee, and
Lessee shall have the right to remove the same at any time when it is not in
default in any of its
<PAGE>
agreements herein contained. In the event such removal shall injure or
damage the building or premises, Lessee agrees to promptly repair such damage at
its own expense. Lessor agrees to execute a waiver, if requested to do so, in
favor of any legal owner, or secured party of such fixtures and merchandise
installed or placed in or on the leased premises permitting the removal of such
fixtures and merchandise by such legal owner, or secured party.
SUBLETTING OR ASSIGNMENT
7. Lessee may not assign this lease or sublet all of parts of the leased
property and rights leased to it hereunder without the prior written consent of
Lessor; however Lessee may assign this lease to a related party controlled by
Joseph Pozo with equal or better financial strength than the current Lessee. No
such assignment or subletting shall relieve the Lessee herein named of any of
its obligations under this lease, and all assignees and sublessees shall be
bound by the terms and provisions of this lease.
QUIET ENJOYMENT & SUBORDINATION OF MORTGAGE
8. Lessor covenants that if Lessee shall pay the rentals and perform its
agreements hereunder, Lessor shall and will protect and defend against any
interference with the Lessee's use and enjoyment of the leased property during
the life of this lease. Lessee agrees to and does hereby subordinate its
leasehold interest to the lien of any bona fide mortgage that may be procured by
Lessor on the leased premises, provided that the mortgagee of such mortgage
shall permit
<PAGE>
Lessee to remain in possession of the leased premises and to apply rental
payments against the debt secured by said mortgage in the event of default on
the part of the Lessor, as long as Lessee complies with and performs all of its
covenants and undertakings under this lease.
RESTORATION OR DAMAGED OR DESTROYED BUILDINGS
9. In case of total damage or destruction by fire or otherwise to the
building or other improvements on the leased premises, this lease shall
terminate.
EMINENT DOMAIN OR CONDEMNATION PROCEEDINGS
10. If any portion of the leased premises be taken under the exercise of
the power of eminent domain by any competent governmental or corporate authority
during the term of this lease, there shall be proportionate abatement of the
rent thereafter to be paid based upon what is taken, but Lessee shall not be
entitled to any award from the condemning authority provided. Provided, however,
Lessee shall have the option to terminate the Lease if a taking of a portion of
the leased property has a material adverse effect of the Lessee's continuing
business levels. The proposed condemnation for a bike path/walkway along U. S.
Highway 17 by the County shall not be grounds for the Lessee to terminate this
lease. The option to terminate shall be exercisible within thirty (30) days of
the entry of an "Order of Taking" and shall lapse thereafter.
REMEDIES ON DEFAULT
11. If any rent required by this lease shall not be paid when due, after
five (5) days after a written notice, the Lessor shall have the right to
terminate this lease, resume possession of the property for this own account,
and recover immediately from the Lessee the difference between the rent
specified in the lease and the fair rental value of the property for the
remainder of the term, and keep any security deposit as stated herein and
release or rent the property for the remainder of the term for the account of
the Lessee and pay to the Lessee, at the end of the term, the difference between
the rent specified in the Lease and the rent received on the releasing or
renting and keep all security deposit as stated herein. In such event, the
Lessor shall also recover all expenses incurred by reason of the breach,
including reasonable attorneys' fees. If either the Lessor or the Lessee shall
fail to perform, or shall breach any agreement of this lease, other than the
agreement of the Lessee to pay rent which is due without notice but shall not be
a Default unless paid after five (5) days after a written notice, for thirty
(30) days after a written notice specifying the performance required shall have
been given to the party failing to perform. The party so giving notice may
institute action in a court of competent jurisdiction to terminate this lease or
to compel performance of the agreement, and the prevailing party in that
litigation shall be paid by the losing party all expenses of such litigation,
including a reasonable attorney's fee.
BANKRUPTCY
12. In the event the Lessee shall be adjudged bankrupt or shall make
assignment for benefit of creditors or have its leasehold estate taken on
execution against Lessee, then the Lessor may, at his option, terminate this
lease.
NOTICES
13. All notices required to be given under this lease to Lessor shall be
given at or mailed to Lessor, P. 0. Box 57385, Jacksonville, Florida 32241, or
at such other place as Lessor from time to time shall specify by written notice
to Lessee. All notices given under this lease to Lessee shall be given at or
mailed to Lessee, 1924 33rd Street, Orlando, Florida 32389, or at such other
place as Lessee from time to time shall specify by written notice to Lessor. Any
such notice properly mailed by United States Registered or Certified Mail,
postage and fee prepaid, or hand delivered, shall be deemed delivered when
mailed or when handed except that notices of rent due and open accounts shall be
mailed by regular United States Mail postage prepaid and shall be payable at
3108 U. S. Highway 17 South, Orange Park, FL 32073.
SUCCESSORS AND ASSIGNS
14. In referring herein to Lessor and Lessee, the singular shall include
the plural and the use of the masculine gender shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. This lease shall constitute a Florida
contract and be construed according to the laws of that State.
<PAGE>
SECURITY DEPOSIT
RADON GAS
16. Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from the county public health
unit.
HAZARDOUS WASTE
17. Lessee represents and warrants that it will not, on or about the
premises, make, store, use, treat dispose of any (i) "hazardous substance" (as
that term is defined in the Comprehensive Environmental Response, Compensation,
and Liability Act, and the rules and regulations promulgated pursuant thereto,
as from time to time amended), or (ii) any other hazardous waste, containment,
oil, radioactive or other materials the removal of which is required or the
maintenance of which is prohibited, penalized or regulated by any local, state
or federal agency, authority or governmental unit provided however in the normal
course of business,
<PAGE>
Lessee may store oil and lubricants in connection with the service
operation. Lessee shall handle in an expert like manner, comply with all
government rules and regulations and Lessee shall and hereby does indemnify and
hold Lessor harmless from and against any and all loss, damage, cost of cleanup,
expense, fees, claims, costs, and liabilities, including, but not limited to,
attorneys' fees and costs of litigation arising out of or in any manner
connected with the "release" or "threatened release" of "hazardous substances"
(as those terms are defined in the Comprehensive Environmental Response,
Compensation, and Liability Act and the rules and regulations promulgated
pursuant thereto, as from time to time amended), containments, oil, radioactive
or other materials from the premises or any portion or portions thereof, arising
out of or in any manner connected with Lessee's occupancy of the Premises.
ALTERATIONS REPAIR AND MAINTENANCE
18. Lessee may at any time during the term, with the written consent of
Lessor, make additions, alterations, or improvements to the premises as Lessee
may from time to time deem necessary or desirable; provided, however, that the
Lessee shall not have the right to make any additions, alterations, or
improvements that affect the structure, structural strength or outward
appearance of the premises . Lessee shall submit to Lessor complete and detailed
plans and specifications for such work at the time approval is sought. Lessor
may withhold approval in its absolute discretion. Any additions, alterations, or
improvements made to the premises shall
<PAGE>
be in compliance with all insurance requirements and regulations and laws
of governmental authorities and shall, upon the expiration or sooner termination
of the lease term, become the property of Lessor; provided, however, Lessor may
at its option, require Lessee, at Lessee's sole cost and expense, to remove any
additions, alterations, or improvements at the expiration or sooner termination
of the lease term, and to repair any damages to the premises caused by such
removal. Lessee shall indemnify Lessor against, and shall keep the premises free
from any and all mechanics' liens or other liens arising from any work
performed, material furnished, or obligations incurred by Lessee in connection
with the premises, and agrees to discharge any lien which attaches as a result
of such work immediately after the lien attaches or payment for the labor or
materials is due. No mechanics', laborers, or materialsmen's lien arising from
any improvements made or work performed by or for Lessee shall attach to or
become a lien on Lessors s interest in the premises, but shall attach to and
become a lien only on Lessee's leasehold interest. Lessor hereby reserves the
rights at any time and from time to time during the lease term to make any
additions, alterations, changes or improvements (including without limitation,
building additional stores) to the building in which the premises are contained
as long as it does not interfere in good faith with Lessee's operation.
<PAGE>
INDEMNIFICATION
19. (a) Lessee shall indemnify and hold harmless Lessor against and from
any and all claims caused by the Lessee in or about the premises or arising from
any act or negligence of the Lessee, or any officer, agent, employee, guest, or
invitee of Lessee, and from all costs, attorney's fees (whether at trial or on
appeal), and liabilities incurred in or about the defense of any such claim or
any action or proceeding brought thereon. If any action or proceeding is brought
against Lessor by reason of such claims, Lessee, upon notice from Lessor, shall
defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor. (b) Lessor shall indemnify and hold harmless Lessee against and from any
and all claims arising from Lessor's use of the premises or from the conduct of
its business or from any activity, work, or other things done, permitted or
suffered by the Lessor in or about the premises, and shall further indemnify and
hold harmless Lessee against and from any and all claims arising from any breach
or default in the performance of any obligations on Lessor's part to be
performed under the terms of this lease, or arising from any act or negligence
of the Lessor, or any officer, agent, employee, guest, or invitee of Lessor, and
from all costs, attorney's fees (whether at trial or on appeal), and liabilities
incurred in or about the defense of any such claim or any action or proceeding
brought thereon. If
<PAGE>
any action or proceeding is brought against Lessee by reason of such
claims, Lessor, upon notice from Lessee, shall defend the same at Lessor's
expense by counsel reasonably satisfactory to Lessee. Lessor hereby assumes all
risk of damage to property or injury to persons in, upon or about the premises,
from any cause other than the Lessee's gross negligence or willful misconduct;
and Lessor hereby waives all claims in respect thereof against Lessee. Lessor
shall give prompt notice to Lessee in case of casualty or accidents in the
premises.
RULES
20. Lessee shall observe faithfully and comply strictly with the Rules and
Regulations, as Lessor may from time to time adopt for the safety, care and
cleanliness of the marina or the preservation of good order therein. Lessor
shall not be liable to Lessee for any violation of the Rules and Regulations or
for the breach of any covenant or condition in any lease by any other tenant in
the building. A copy of the current Rules and Regulations is attached as Exhibit
B. Lessee is exempt from paragraph 1 of Exhibit B except for its last sentence.
ATTORNEYS FEES
21. In the event of any action or proceeding brought by either party
against the other party under this lease, the prevailing party shall be entitled
to recover for the fees of its attorneys in such action of proceeding, including
costs of appeal, if any, in such amount as the court may adjudge reasonable as
attorneys' fees. Moreover,
<PAGE>
if either party without fault is made a party to any litigation instituted
by or against the other, the other party shall indemnify the other against and
save it harmless from all costs and expenses, including reasonable attorneys'
fees, incurred in connection therewith.
LATE FEES AND INTEREST ON PAST DUE OBLIGATIONS
22. Any amount due from Lessee to Lessor hereunder which is not paid within
five (5) days of when due shall bear interest at eighteen (18%) from the fifth
day of when due until paid, plus a five percent (5%) late fee, if not received
by the fifth day of when due, but the payment of such interest shall not excuse
or cure any default by Lessee under this lease.
TIME OF ESSENCE
23. Time is of the essence with respect to the performance of each of the
Lessee's covenants of this lease and the strict performance of each shall be a
condition precedent to Lessee's rights to remain in possession of the premises
or to have this Lease continue in effect.
HOLDING OVER
24. Should Lessee continue in occupancy of the premises after the
expiration of this lease, Lessee shall become a tenant from month-to-month only,
upon each and all of the terms herein provided as may be applicable to such
month-to-month tenancy, and any such holding over shall not constitute a renewal
or extension of this lease. During such holding over, Lessee shall pay rent at
twice the monthly
<PAGE>
rate provided for herein during the period immediately preceding the hold
over period.
PARTIAL INVALIDITY
25. Any provision of this lease which shall hold to be invalid, void or
illegal shall in no way affect, impair, or invalidate any other provisions
hereof and such other provisions shall remain in full force and effect.
BROKERS
26. Lessee warrants that it has had no dealings with any real estate broker
or agents in connection with the negotiations of this lease except as listed
below, and that it knows of no other real estate broker or agent who is or might
be entitled to a commission in connection with this lease, and Lessee agrees to
indemnify and hold Lessor harmless from and against any and all claims for any
such commissions.
WAIVER
27. No waiver by Lessor of any provision of this lease shall be deemed to
be a waiver of any other provision hereof or of any subsequent breach by Lessee
of the same or any other provision. Lessor s consent to or approval of any act
by Lessee requiring Lessor's consent to or approval shall not be deemed to
render unnecessary the obtaining of Lessor's consent to or approval of any act
by Lessee requiring Lessor's consent to or approval of any subsequent act of
Lessee, whether or not similar to the act consented to or approved. No act or
thing done by Lessor or by Lessor's agents during the term of this lease shall
be deemed an acceptance
<PAGE>
of a surrender of the premises, and no agreement to accept such surrender
shall be valid unless in writing and signed by Lessor. No employee of Lessor or
of Lessor's agents shall have any power to accept the keys to the premises prior
to the termination of this lease and the delivery of the keys to any such
employee shall not operate as a termination of the lease or surrender of the
premises.
HEADINGS: LESSOR AND LESSEE
28. The article and section captions contained in this lease are for
convenience only and do not in any way limit or amplify any terms or provisions
hereof. The terms "Lessor" and "Lessee" as used herein shall include the plural
as well as the singular, the neuter shall include the masculine and feminine
genders and, if there be more than one tenant, the obligations herein imposed
upon Lessee shall be joint and several.
NO ESTATE BY TENANT
29. This lease shall create the relationship of Lessor and Lessee between
Lessor and Lessee, and no estate shall pass out of Lessor. Lessee has only a
usufruct, no subject to levy or sale and not assignable by Lessee except as
expressly provided herein.
ENTIRE AGREEMENT
30. This lease and the Exhibits (if any) attached hereto constitute the
entire agreement between the parties with respect to the subject matter hereof,
and no prior agreement or understandings with regard to any such matter shall be
effective
<PAGE>
for any purpose. No provision of this lease may be amended except by an
agreement in writing signed by the parties or their respective successors in
interest.
GOVERNING LAW
31. This lease is made and accepted by the parties in the State of Florida,
with reference to the laws of such state and shall be construed, interpreted and
governed by and in accordance with the laws of the State of Florida. Lessee
agrees that Lessor may institute any legal proceedings with respect to this
lease of the premises in the Circuit Court of the county in which the premises
are located and submits itself to the jurisdiction of such court. If Lessee is a
corporation chartered other than in the State of Florida, Lessee acknowledges
and agrees that it is "doing business" in the State of Florida and appointed the
Secretary of State of Florida as registered agent.
SUBSTITUTION
32. If Lessor so elects, it shall have the discretion to substitute land
areas leased hereby, so long as Lessee 17 exposure.
OPTION
33. Provided the Lessee is not in default in the payment of rent or
performance hereunder, Lessee shall have the option to extend the term of this
lease by written notice to Lessor on or before September 30, 2002, for an
additional five years ending December 31, 2007 upon the same terms and
conditions except that the base rental shall be $5,170 per month, plus sales
tax.
<PAGE>
RIGHT TO TERMINATE
34. Lessee or Lessor shall have the right to terminate this lease during
the five year option period (paragraph 33) by giving written notice ninety days
prior to the desired termination date together with a termination fee of
$10,000. In addition, Lessee shall pay the rent and other payments due to the
end of the early termination term.
ADDITIONAL PROVISIONS
35. (a) Lessee shall have an open account for gasoline and oil and shall
pay when due each month. Lessee shall receive a $.10 per gallon discount from
the posted price for all fuel purchases, provided it is paid for by the
fifteenth of the following month. (b) Lessee shall pay $330 plus sales tax per
month commencing February 1, 1998, for the duration of the lease in addition to
the base rent for three wet slips designated by Lessor on Dock A or substituted
from time to time hereof by Lessor. Lessee shall also pay for electricity if
utilized, by any wet slip occupied boat. (c) Lessor shall repaint the building
white on or before February 1, 1998. (d) Lessor shall build a new display dock
where the current one exists to the mutually agreed specifications and
dimensions, similar to the existing
<PAGE>
dock.
(e) Lessor shall install additional fluorescent lighting in the showroom
area, as mutually agreed. (f) Lessee shall operate its maintenance department
(boat repair, boat wash down, or any maintenance work) in a clean and expert
workmanship manner. To do otherwise could result in a cancellation by Lessor of
this Lease. All areas must be kept clean of all debris and all environmental
records must be kept in accordance with County, State, and Federal government
requirements. Boat sales department shall operate in a way that will bring
credit to the parties hereto. Anything less would constitute a default under
this Lease. (g) If Lessor elects to develop new facilities (buildings, etc.) the
Lessee will agree to cooperate in that regard which may include relocating to
less square footage but comparable or better leased space with Highway 17
exposure at Lessor's Marina. The lease rate and other terms shall remain
unchanged. (h) Lessee understands Lessor may enter into a contract with a
billboard outdoor advertising sign company to construct and place a sign within
the leased area. (i) Lessor agrees to allow Lessee to charge gasoline and oil
purchases to an "open account". The Lessor shall bill the Lessee monthly and
Lessee
<PAGE>
shall pay the account within five (5) days ("due date"). Lessee shall
receive a ($.10) per gallon discount from the posed rate at the pump. (j) Lessee
shall provide materially accurate financial statements prepared in accordance
with generally accepted accounting principles every six months commencing within
thirty days of June 30, 1998, and continuing every six months thereafter during
the term of the lease. (k) Lessee has the exclusive lease for retail boat sales,
parts and service. Lessor is not restricted from consigning and/or brokeraging
boats for its rental customers.
BOAT HOIST
36. Lessor has a boat hoist (crane) located within the area leased to
Lessee. Lessor is not sure of the origin or structural integrity of the crane
and ordered an inspection of said crane prior to getting it "OSHA" certified.
The inspection was performed by Helmco Industrial Equipment Inc. Their report,
dated 3/1/95 is provided. Lessor elected (based on this report) not to use or be
responsible for crane. However, Lessee may use provided it accepts full
responsibility for said crane and continue to use it for light duty work. As a
consideration for Lessee's use of the crane: (a) Lessor is hereby released from
any and all responsibility for the maintenance of said crane.
<PAGE>
(b) Lessee agrees to indemnify and hold Lessor harmless for any and all
claims, liabilities, injuries, damages to any person or property, including
Lessor's property and employees, arising out of the use and operation of the
crane, including the hoist and related equipment and straps, caused by any
reason whatsoever, including court cost and attorneys' fees incurred by the
Lessor in defending any action or claim brought against the Lessor. (c) Lessee
agrees to maintain the crane in at least its present condition during the term
of the lease ordinary wear and tear excluded and to return the crane to the
Lessor in at least the present condition at the end of the term or any
extensions. (d) Should Lessee decide to upgrade said crane, it shall be at
Lessee's sole expense. Any upgrades must be approved in
<PAGE>
writing by Lessor. However, said upgrade approved shall not alter the
intent or terms above.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this lease as
of the day and year first above written.
Signed, sealed and delivered in LESSOR
our presence: DOCTORS LAKE MARINA, INC.
Emil Aramoonie
Vice President
/s/ John Connelly
LESSEE BOAT TREE INC.
/s/ D.B. Clicet
Joseph Pozo
President
<PAGE>
DOCTORS LAKE MARINA
RULES AND REGULATIONS
In an effort to provide an inviting atmosphere for Vessel Owners CoOwners) using
space at Doctors Lake Marina (~Manna') the following rules and regulations are
provided for your protection. Your, cooperation in observing the following rules
will be appreciated.
I. Al) VERTISING: Advertising or ~moljoitina of sales or leases of any
vesagI. appurtenances or propertY of whatever type shall not be permitted on any
vessel within the Marina without prior written approval ot Manna. All t'or sate
~.lgni must be approved by the Manna. Neither the vessel nor Marina's address
shall be used for business purposes. The Marina is authorized to remove any non
approved sign from the vessel or slip without notice to Owner. Similarly, owner
may not aflix or attach by screws, nails, bolts or any other object any article,
fixture, or equipment to the docks without the prior written permission of the
Marina.
2. CHECKING OUT: All owners shall leave a forwarding address prior to
leaving the Marina. All personal property must be removed when slip rental is
terminated. Owners leaving for an extended cruise shall notify Marina.
3. FIRES: Causing or permitting charcoal or any type of fire or the
maintenance of any other dangerous conditions, as determined by the Manna, on
the docks or on the vessels is prohibited.
4. WASTE: Refuse of any kind shall not be thrown overboard. Waste shall be
deposited in receptacles supplied for that purpose. No person shall discharge
oil, spiiits, inflammable liquid(s) treated or untreated sewage, oily bilges, or
contaminants of any kind into the Marina or Doctors Lake.
5. IMPROPER DISPLAYS: Laundry shall not be hung on vessels, docks, or
finger piers in the Marina.
6. NOISE: Noise shall be kept to a minimum at all tunes. Owners and guest
shall use discretion in operating engines. generators, radios and televisions
sets, etc. so as not to create a nuisance or disturbance. 7 PARKING: Daily users
of the parking lot will be allowed one parking space per slip. All trailers must
be parked in designated trailer parking area. Absolutely NO PRIVATE AUTOMOBILES
are allowed in the Manna Dry Storage Lot.
8. PETS: Pets shall be leashed within confines of the Marina and toileted
on grass areas. Pets shall not bc permitted to disturb the other Owners.
9. TRAILERS: All trailers must have jack, winch and all must be in good
working order before Manna will launch or retrieve vessel.
10. Owners shall keep his vessel clean and orderly at all times.
11.RAMPS: Absolutely NO CUSTOMERS OR PRIVATE INDIVIDUAL shall attempt to
launch or retrieve a vessel without Marina approval.
12. REPAIRS ON DOCKS: Painting, scraping, or repairing of vessel or gear
shall not be permuted on the docks or finger piers. The extent of repairs and
maintenance which shall be permitted shall be at the sole discretion of the
Marina.
<PAGE>
13. STORAGE ON PIERS: Owners shall not store supplies, materials, tenders,
dinghies, skiffs, accessories or debns on walkway, and shall not construct or
place thereon, any lockers, chests, cabinets or similar structures, except with
the prior written approval of the Marina. All dock boxes must be approved by
Marina prior to installation.
<PAGE>
14. GATES: Any time Owners enter or leave the Marina after normal Marina
operating hours, owners shall close and lock gates immediately after entry or
departure, regardless of how short a period the Owners anticipate being at the
Marina. This is for all Owner's and the Marinas protection.
15. No Non-fitted tarps, canvas or poly tents or temporary vinyl covers
shall be used to cover boats at any time.
16. COMPLIANCE: Owner shall comply with all city, county, state and federal
laws and regulations.
17. DRY STORAGE; Customers who desire to stay in the water overnight,
understand that space restrictions dictate that the Marina must have complete
control of this request.
18. MODIFICATION: Marina reserves the right to alter, amend, modify or
revoke any of these Rules and Regulations at any time in its sole discretion
which change shall be effective upon posting in Marina office.
<PAGE>
LEASE
THIS AGREEMENT, made this 30 day of January, 1998, by and between
Lakewood Marine International, Ltd., a North Carolina corporation, hereinafter
called "Landlord," and Marine America, Inc., a Florida corporation, hereinafter
called "Tenant."
1. PREMISES
a. Landlord leases and demises to Tenant for the purpose of
operating a new and used boat sales and service business, and such retail and
professional uses as are not inconsistent with the zoning for the Demised
Premises, and for no other purpose without Landlord's prior written consent and
Tenant hereby leases and rents from Landlord the following described premises,
hereinafter sometimes referred to as the "Demised Premises," located in Gaston
County, North Carolina, and more particularly described on Exhibit "A" attached
hereto and made a part hereof, together with all incidental rights and
privileges in and about the Demised Premises as may be necessary or convenient
to Tenant's business.
b. The above-described Demised Premises includes all
buildings, structures and other improvements constructed and to be constructed
thereon, and all easements, rights and appurtenances thereto.
2. TERM OF LEASE
a. The term and duration of this lease shall be for a five (5)
year term commencing from the commencement date herein provided.
b. Tenant is hereby granted the option to extend the original
term of this Lease for a five (5) year term on the terms and conditions set
forth herein and a rent to be agreed upon by the parties. To exercise such
option, Tenant must notify Landlord in writing not less than one hundred twenty
(120) days prior to the expiration of the original term or the preceding option
period, as the case may be.
c. The commencement date shall be the date of Closing as that
term is defined in that certain Agreement for Purchase and Sale between Lakewood
Marine International, Ltd. and Marine America, Inc., dated January 15, 1998. No
rent till March 1, 1998 - Rental payments shall commence 3/1/98.
3. RENT
a. Tenant's liability for rent shall commence to accrue on the
commencement date as defined in paragraph 2(c) above, provided that this lease
has not been terminated prior thereto. Rent is payable in advance. If the
Commencement Date begins on a date other than the
1
<PAGE>
first of the month, the rent for such partial initial month shall be prorated,
added to and paid with the rent due and payable on the first day of the first
full calendar month of the term hereof. The monthly rent to be paid by Tenant to
Landlord shall be Six Thousand and No/100 Dollars ($6,000.00). Such rental shall
be payable on the first day of each calendar month during the term hereof.
b. All payments of rent hereunder shall be made to Landlord as
the same become due in lawful money of the United States, at such places as
hereinafter may be designated. Nothing contained in this lease shall be
construed to be or create a partnership or joint venture between Landlord and
Tenant.
c. Landlord shall be responsible for the payment of real
estate taxes assessed against the Demised Premises. In no event shall Tenant be
liable for payment of any income, estate or inheritance taxes imposed upon the
Landlord or the estate of the Landlord with respect to the Demised Premises. In
the event of any special assessment with respect to the Demised Premises levied
during the term of this Lease, the Tenant shall have no obligation with respect
to payment of such assessment and Landlord shall be obligated to pay same.
Notwithstanding the foregoing, Tenant shall be responsible for the payment of
real estate taxes and other special assessments against the Demised Premises for
any fiscal year(s) in which Tenant's gross sales revenues (defined as revenues
from all business activities on the Demised Premises including, but not limited
to, revenues from service, repair, arranging of financing, sales of boats,
motors, accessories and trailers, but not including retail sales tax collected)
exceeds Four Million Dollars ($4,000,000.00).
4. CONSTRUCTION OF IMPROVEMENTS AND REPAIRS
a. Tenant shall be permitted to install and use on and about
the Demised Premises all such buildings, additions to buildings, equipment,
exterior and interior signs, trade fixtures, and other personal property, and
make such alterations and improvements in and about the Demised Premises as it
may desire, with the prior approval of Landlord, whose consent shall not be
unreasonably withheld.
b. Landlord shall maintain the Demised Premises in good
structural condition and repair, shall make all structural repairs and
replacements necessitated to the roof, foundation, walls, and other structural
elements of the Demised Premises by any cause other than Tenant's negligence,
and shall make all repairs or replacements necessitated by any peril covered by
a Standard Fire and Extended Coverage insurance policy to the extent of the
proceeds received from such insurance policy, whether or not caused by Tenant's
negligence.
c. Tenant may, with Landlord's written consent, which consent
shall not be unreasonably withhold, make-alterations, additions and improvements
to the Demised Premises from time to time during the term of this lease and
shall have the right to erect and install such other or additional improvements,
signs and equipment on the Demised Premises as Tenant may deem desirable for
conducting its business thereon or for such other business as Tenant may deem
2
<PAGE>
advisable consistent with the permissible uses as provided in Section 1 above.
Tenant hereby agrees to make certain improvements to the Demised Premises up to
a maximum of Fifteen Thousand Dollars ($15,000.00) in cost and receive an
allowance for such improvements from Landlord through a rental offset. The
allowance is to be used for fencing and other land and building improvements as
reasonably determined by Tenant. Actual paid invoices for work performed must be
provided by Tenant before deductions are made from the rent due.
5. TIME OF THE ESSENCE
It is agreed that time is of the essence in respect to the provisions
contained in this lease.
6. DELIVERY OF POSSESSION
The Landlord shall deliver possession of the Demised Premises
to the Tenant at the beginning of the lease term provided, however, that if the
Landlord cannot deliver possession of the leased property on the commencement
date, the Tenant shall be entitled to terminate this lease.
7. COVENANT OF QUIET ENJOYMENT
The Tenant, upon the payment of the rent herein reserved and
upon the performance of all of the terms of this lease, shall at all times
during the lease term and during any extension or renewal term peaceably and
quietly enjoy the Demised Premises without any disturbance from the Landlord or
from any other person claiming through the Landlord.
8. TERMINATION
The Tenant shall vacate the~Demised Premises in the good order
and repair in which such premises are at the time of commencement of the term
hereof, ordinary wear and tear, depreciation, damage and loss from the elements,
loss covered by insurance, and other occurrences beyond the reasonable control
of Tenant excepted. The Tenant may at any time, provided that Tenant is not in
default hereunder, prior to or upon the termination of this lease or any renewal
or extension thereof remove from the Demised Premises all materials, equipment
and property of every other sort or nature the cost of which was paid for by the
Tenant, provided that such property is removed without substantial injury to the
Demised Premises and that Tenant repairs any damage to the Buildings resulting
from such removal. No injury shall be considered substantial if it is promptly
corrected by restoration to the condition prior to the installation of such
property, if so requested by the Landlord.
9. INSURANCE
a. The Landlord shall, at its sole cost and expense, cause to
be placed in effect immediately upon commencement of the term of this lease, and
shall maintain in full force and
3
<PAGE>
effect during said term (i) fire and extended coverage insurance covering all
improvements and structures on the Demised Premises on a full replacement cost
basis, insuring all risks of direct physical loss, and excluding unusual perils
such as nuclear attack, earth movement, civil disturbance, riot, flood
4
<PAGE>
and war, with deductibles or self insurance consistent with insurance industry
practices. Tenant shall, at its sole cost and expense, cause to be placed in
effect upon commencement of the term of the Lease, and shall maintain in full
force and effect during said term, insurance for improvements, contents,
furniture, fixtures and inventory, as well as liability insurance consistent
with normal boat dealer insurance industry practices. Tenant shall not cause or
allow any condition to maintain upon the Demised Premises which would result in
Landlords s insurance obligation for insurance provided under this paragraph to
be at other than standard rates for a full-service marine dealership.
b. The Landlord and Tenant shall deliver to the other party a
duplicate original of each such policy, or in lieu thereof, a certificate issued
by the carrier. Each such policy or certificate shall provide that the same
shall not be canceled without at least thirty (30) days prior written notice to
Landlord, and shall name Landlord and any mortgagee as an additional insured
thereunder.
10. UTILITIES
The Tenant agrees to pay for all water, fuel, gas, oil, heat, electricity,
power, materials, and services which may be used by Tenant.
11. CONDEMNATION
In the event any portion or the whole of the Demised Premises
is taken or condemned by any competent authority for any public or quasi-public
use or purpose during the term of this lease, Tenant has the option to terminate
this Lease Agreement. Tenant reserves unto itself the right to prosecute its
claim for an award based upon its leasehold interest for such taking, without
impairing any rights of Landlord for the taking.
12. ASSIGNMENT AND SUBLEASING
Tenant may assign this Lease or let or sublet the whole or any
part of the Demised Premises to a party affiliated with Tenant without
Landlord's prior written consent. Tenant may not assign this Lease or let or
sublet the whole or any part of the Demised Premises to a party not affiliated
with Tenant without Landlord's prior written consent.
13. OPTION TO PURCHASE
In consideration of the amounts payable hereunder during the
initial term hereof, the Landlord and Tenant agree as-follows:
a. Grant of Option.-- Landlord hereby grants unto Tenant the
exclusive right to purchase the property set forth on Exhibit "A" hereto (the
"Property"), so long as Tenant is not in default under this Lease, on the terms
and conditions set forth below.
5
<PAGE>
b. Exercise of Option. If the Tenant elects to exercise the
option granted herein, it shall furnish at least thirty (30) days advance
written notice to Landlord.
c. Purchase Price and Method of Payment. In the event Tenant
elects to purchase the Property, the purchase price to be paid by the Tenant to
the Landlord shall be Four Hundred Fifty Thousand and No/100 Dollars
($450,000.00), provided the Tenant elects to purchase the Demised Premises
within two (2) years of the commencement of this Lease. In the event Tenant
elects to purchase the Property after two (2) years from the commencement of
this Lease, the purchase price shall be the fair market value of the Property,
as determined by an MM appraiser. The purchase price shall be paid to the
Landlord at the time of closing by cash, certified check, or by wire transfer of
funds.
d. Survey. At any time while this Lease is in effect, Tenant
may have the Property surveyed at Tenant's sole cost and expense. Landlord
agrees to deliver a copy of any surveys in Landlord's possession upon request by
Tenant.
e. Expenses. Proration and Conveyance. '-- The Landlord shall
pay for tax stamps and stamps on the Deed. At Closing Tenant shall deliver the
cash required to close and Landlord shall convey title to Tenant by General
Warranty Deed. Tenant shall pay other closing costs, including costs for title
insurance and for recording the deed. Real estate taxes shall be prorated as of
date of the Closing.
f. Representation of Ownership.-- The Landlord covenants that
Landlord is the fee simple owner of the Property subject to no liens or
encumbrances of any type, with the exception of a Deed of Trust which shall be
paid off at or prior to the Closing.
g. Closing Date. This Option shall be closed at the offices of
Landlord's attorney not later than one hundred twenty (120) days after notice of
exercise.
h. Closing Procedure. At the Closing, the parties shall
deliver the following duly executed documents and funds:
By Landlord:
(1) A statutory warranty deed conveying fee simple title to the Property to
Tenant.
(2) A no-lien affidavit in a form satisfactory to Tenant's attorney.
(3) Such other instruments and documents provided in this Option and
6
<PAGE>
as may be reasonably required in order to consummate the transaction herein
contemplated.
ii. By Tenant:
(1) A certified check or a cashier's check payable to the order of Landlord
for the cash to close or a wire transfer of said funds to a bank account
designated by Landlord.
14. HOLDING OVER
In the event Tenant continues to occupy the Demised Premises after the last
day of the term hereby created, or after the last day of any extension of said
term, and the Landlord elects to accept rent thereafter, a tenancy from month to
month only shall be created and not for any longer period.
15. DESTRUCTION OF PREMISES
In the event of a total or partial destruction of the Buildings or related
improvements to be located on the Demised Premises during said term from any
cause, both Landlord and Tenant have the option to terminate this Lease.
16. WAIVER OF SUBROGATION
Landlord and Tenant do hereby waive any and all claims against the other
for damage to or destruction of any improvements upon the Demised Premises
(whether or not resulting from the negligence of Tenant) which is covered by
insurance which Landlord and Tenant are obligated to carry under the terms of
this lease; provided, however, that this waiver shall not be applicable if it
has the effect of invalidating the Landlord's or Tenant's insurance coverage.
17. PERSONAL PROPERTY
Landlord agrees in the future to furnish the Tenant, upon request, such
Landlord's Waiver or Mortgagee's Waiver or similar document as may be reasonably
required by an institutional lender or equipment lessor in connection with the
Tenant's acquisition or financing respecting personal property, equipment,
furniture and fixtures provided such documents do not obligate the Landlord or
the Demised Premises. The Tenant shall have the right to remove same at the
termination of this lease provided it is not in Default, and shall be obligated
to repair any damage caused by removal.
18. DEFAULT BY TENANT AND REMEDIES
18.1 The following events shall be deemed to be~events of default by-Tenant
under this lease:
7
<PAGE>
(1) Tenant shall fail to pay any installment of rental or any other amount
payable to Landlord as herein provided and such failure shall continue for a
period often (10) days.
(2) Tenant shall fail to comply with any term, provision or covenant of
this lease, other than the payment of rental or any other amount payable to
Landlord and shall not cure such failure within thirty (30) days after written
notice thereof to Tenant.
(3) Tenant or any guarantor of Tenant's obligations under this lease shall
become insolvent, or shall make a transfer in fraud of creditors, or shall make
an assignment for the benefit of creditors.
(4) Tenant or any guarantor of Tenant's obligations under this lease shall
file a petition under any section or chapter of the National Bankruptcy Act, as
amended, or under any similar law or statute of the United States or any State
thereof; or Tenant or any guarantor of Tenant's obligations under this lease
shall be adjudged bankrupt or insolvent in proceedings filed against Tenant or
any guarantor of Tenant's obligations under this lease.
(5) A receiver or Trustee shall be appointed for all Premises or for all or
substantially all of the assets of Tenant or any guarantor of Tenant's
obligations under this lease.
(6) Tenant shall desert or vacate any portion of the Premises.
(7) Tenant shall do or permit to be done anything which creates a lien upon
the Premises.
(8) The business operated by Tenant shall be closed for failure to pay any
State sales tax as required or for any other reason.
Upon the occurrence of any such event of default, Landlord shall have the option
to pursue any one or more of the following remedies without any notice or demand
whatsoever:
a. Terminate this lease in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which Landlord may have for
possession or arrearage in rental, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be occupying
said premises or any part thereof, by force if necessary, without being liable
for prosecution or any claim of damages thereof.
b. Enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying said premises or any
part thereof, by force if necessary, without being liable for prosecution or any
claim for damages therefor with or without having terminated the lease.
8
<PAGE>
c. Do whatever Tenant is obligated to do under the terms of
this lease (and enter upon the Premises in connection therewith if necessary)
without being liable for prosecution or any claim for damages therefor, and
Tenant agrees to reimburse Landlord on demand for any expense which Landlord may
incur in thus effecting compliance with Tenant's obligations under this lease,
plus interest thereon at the lessor of the highest rate permitted by law or
eighteen percent (18%) per annum, and Tenant further agrees that Landlord shall
not be liable for any damages resulting to the Tenant from such action.
d. Alter all locks and other security devices at the Premises
without terminating this lease.
18.2 Exercise by Landlord of any one or more remedies hereunder granted
or otherwise available shall not be deemed to be an acceptance of surrender of
the Premises by Tenant, whether by agreement or by operation of law, it being
understood that such surrender can be effected only by the written agreement of
Landlord and Tenant. No such alteration of locks or other security devices and
no removal or other exercise of dominion by Landlord over the property of Tenant
or others at the Premises shall be deemed unauthorized or constitute a
conversion, Tenant hereby consenting, after any event of default, to the
aforesaid exercise of dominion over Tenant's property within the Premises. All
claims for damages by reason of such re-entry and/or repossession and/or
alteration of locks or other security devices are hereby waived, as are all
claims for damages by reason of any distress warrant, forcible detainer
proceedings, sequestration proceedings or other legal process. Tenant agrees
that any re-entry by Landlord may be pursuant to judgment obtained in forcible
detainer proceedings or other legal proceedings or without the necessity for any
legal proceedings, as Landlord may elect, and Landlord shall not be liable in
trespass or otherwise.
18.3 In the event Landlord elects to terminate the lease by reason of
an event of default, then notwithstanding such termination, Tenant shall be
liable for and shall pay to Landlord at the address specified for notice to
Landlord herein the sum of all rental and other amounts payable to Landlord
pursuant to the terms of this lease which have accrued to date of such
termination.
18.4 In the event of any default by Landlord, Tenant will give Landlord
written notice specifying such default with particularly, and Landlord shall
thereupon have thirty (30) days (or such longer period as may be required in the
exercise of due diligence) in which to cure any such default. Unless and until
Landlord fails to so cure any default after such notice, Tenant shall not have
any remedy or cause of action by reason thereof.
19. ESTOPPELS
Landlord and Tenant do each hereby agree at any time and from
time to time that within not more than ten (10) days after written request by
the other, to execute, acknowledge and deliver to Landlord a written statement
in such form as may be required by a potential or existing lender or buyer
certifying that its lease is unmodified and in full force and effect (or, if
there have
9
<PAGE>
been modifications, that the same are in full force and effect as modified and
stating the modifications) and the dates to which the rent and other charges
have been paid in advance, if any, it being intended that any such statement may
be relied upon by any prospective purchaser of the fee or mortgage or assignee
of any mortgage upon the fee of the Demised Premises.
20. ACCESS
Landlord hereby represents and warrants to Tenant that the
character, materials, design, construction and location of the improvements on
the Demised Premises, are in full compliance with all applicable building and
zoning laws and ordinances. Landlord further hereby represents and warrants to
Tenant that Tenant will have the unrestricted right, subject to deed
restrictions, and applicable governmental regulations, to place upon the Demised
Premises at the locations now in use a sign of a type selected by Tenant, and to
use all parking areas and all driveways and means of access to public roads and
adjoining rights-of-way.
21. LATE CHARGES
In the event Tenant fails to pay to Landlord when due any
installment of rental or other sum to be paid to Landlord which may become due
hereunder, Landlord will incur additional expenses in an amount not readily
ascertainable and which has not been elsewhere provided for between Landlord and
Tenant. If Tenant should fail to pay to Landlord when due any installment of
rental or other sum to be paid hereunder, Tenant will pay Landlord on demand a
late charge equal to the greater of (i) $100.00, or (ii) ten percent (10%) of
the past due amount. Failure to pay such late charge upon demand therefor shall
be an event of default hereunder. Provision for such late charge shall be in
addition to all other rights and remedies available to Landlord hereunder or at
law or in equity and shall not be construed as liquidated damages or limiting
Landlord's remedies in any manner.
22. ENTRY AND INSPECTION
The Tenant shall permit Landlord and its agents to enter the
Demised Premises at all reasonable times for any of the following purposes: to
inspect the same; to maintain the building in which the said Demised Premises
are located; to make such repairs to the Demised Premises as the Landlord is
obligated or may elect to make; to post notices of nonresponsibility for
alterations or additions or repairs.
23. NOTICES
All notices to be given to the Tenant shall be in writing,
deposited in the United States mail, certified or registered, return receipt
requested or by hand delivery or overnight courier service, with postage
prepaid, and addressed to the Tenant at 1924 33rd Street, Orlando, Florida
32839, Attn: with a copy to J. Gregory Humphries, Esq., Shutts & Bowen, LLP, 20
North Orange Ave., Suite 1000, Orlando, Florida 32801-4626. Notices by the
Tenant to Landlord shall
10
<PAGE>
be in writing, deposited in the United States mail, certified or registered,
return receipt requested, with postage prepaid, and addressed to the Landlord at
,Attn:., with a copy to Richard H. Tomberlin, 301 5. McDowell Street, #510,
Charlotte, North Carolina 28204. Notices shall be deemed delivered the day after
same are deposited in the United States mail or when delivered, as above
provided. Change of address by either party must be by notice given to the other
in the same manner as above specified.
24. LICENSING
The Landlord agrees upon request by Tenant to sign promptly
and without charge therefore to the Tenant, any application for occupational
licenses, permits, zoning, and building and other permits as may be required by
the Tenant for the conduct and operation of the business herein authorized or
for the proper use of the Demised Premises, and Landlord shall execute all such
petitions, requests and the like as Tenant shall reasonably request for such
purposes.
25. FORCE MAJEURE
Landlord or Tenant shall be excused for the period of any
delay in the performance of any obligation hereunder when prevented from so
doing by a cause or causes beyond its control, including, without limitation,
all labor disputes, civil commotion, war, war-like operations, invasion,
rebellion, hostilities, military or usurped power, sabotage, governmental
regulations or controls, fire or other casualty, inability to obtain any
material, services or financing, or through acts of God.
26. SUCCESSORS AND ASSIGNS
The covenants, terms, conditions, provisions, and undertakings
in this lease or in any renewals thereof shall extend to and be binding upon the
heirs, executors, administrators, successors, and assigns of the respective
parties hereto, as if they were in every case named and expressed, and shall be
construed as covenants running with the land; and wherever reference is made to
either of the parties hereto, it shall be held to include and apply also to the
heirs, executors, administrators, successors, and assigns of such party, as if
in each and every case so expressed.
27. DECLARATION OF GOVERNING LAW
This lease shall be governed by, construed and enforced in
accordance with the laws of the State of North Carolina.
28. GRAMMATICAL USAGE
In construing this lease, feminine or neuter pronouns shall be
substituted for those masculine in form and vice versa, and plural terms shall
be substituted for singular and singular for
11
<PAGE>
plural in any place in which the context so requires.
29. ADDITIONAL INSTRUMENTS
12
<PAGE>
The parties agree to execute and deliver any instruments in
writing necessary to carry out any agreement, term, condition, or assurance in
this lease whenever occasion shall arise and request for such instruments shall
be made.
30. MARGINAL NOTES
The captions and marginal notes of this lease are inserted
only as a matter of convenience and for reference and in no way define, limit,
or describe the scope or intent of this lease, nor in any way affect this lease.
31. ENTIRE AGREEMENT
This lease, together with any written agreements which shall
have been executed simultaneously herewith, contains the entire agreement and
understanding between the parties. There are no oral understandings, terms, or
conditions, and neither party has relied upon any representation, express or
implied, not contained in this lease or the simultaneous writings heretofore
referred to. All prior understandings, terms, or conditions are deemed merged in
this lease.
32. MODIFICATION
This lease may not be changed orally, but only by an agreement
in writing and signed by the party against whom enforcement of any waiver,
change, modifications, or discharge is sought.
33. SEVERABILITY
If any provision of this lease shall be declared invalid or
unenforceable, the remainder of the lease shall continue in full force and
effect.
34. ATTORNEYS' FEES.
In the event that it becomes necessary for either party to
bring suit to enforce the terms of this lease, then the prevailing party shall
be entitled to recover all costs, including reasonable attorneys' fees, against
the non-prevailing party.
35. CONSTRUCTION
Landlord and Tenant hereby acknowledge that each has
participated equally in the drafting of this lease and, accordingly, no court
construing this lease shall construe it more stringently against one party than
the other.
36. HOLD HARMLESS
13
<PAGE>
Landlord shall indemnify, defend and hold Tenant harmless from
any and all claims, liabilities, damages, costs and expenses, including
attorneys' fees, which Tenant may suffer or incur, arising out of or in
connection with any of Landlord's obligations under this Lease. Landlord shall
not be obligated to indemnify Tenant and hold it harmless from liability arising
from Tenant's own negligence or willful misconduct. Landlord further agrees that
in the case of any claim, action, demand, action or cause of action, with
respect to any claim indemnified herein against Tenant, then Landlord, upon
notice from Tenant, shall defend Tenant at Landlord's expense by counsel
satisfactory to Tenant. In the event Landlord does not provide such a defense
against any and all claims, demand, actions or causes of action, threatened or
actual, then Landlord shall, in addition to the above, pay Tenant the attorneys'
fees, legal expenses and costs incurred by Tenant in providing or preparing such
defense, and Landlord agrees to cooperate with Tenant in such defense,
including, but not limited to, the providing of affidavits and testimony upon
request of Tenant.
IN WITNESS WHEREOF, the parties have executed this lease as of the day
and year first above written.
Witnesses: Tenant:
Marine America, Inc., a Florida corporation
By:
Marine America, Inc.,a Florida corporation Print Name:
Title:
Witnesses: Landlord:
Lakewood Marine International, Ltd., a
North Carolina corporation
By:
Print Name:
Its:
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 30th day of
January, 1998, by Joseph Pozo, as V. President of Marine America, Inc., on
behalf of the corporation, who is personally known to me or who has produced ?
0626490730600 as identification and who did (did not) take an oath.
(Signature)
(Printed name)
NOTARY PUBLIC - STATE OF FLORIDA
SERIAL NO.:
PROVINCE ALBERTA
CANADA
The foregoing instrument was acknowledged before me this 2 day of February,
1998, by , as President of Lakewood Marine Internationals Ltd., on behalf of the
corporation, who is personally known to me or who has produced As identification
and who did (did not) take an oath.
(Signature)
(Printed name)
NOTARY PUBLIC - STATE OF
SERIAL NO.:
14
<PAGE>
Exhibit "A"
Legal Description of "Demised Premises"
15
<PAGE>
AFFIDAVIT VERIFYING CORPORATE
SIGNING AUTHORITY
CANADA ] I, Rajesh Mahajan, of the City of
PROVINCE OF ALBERTA ] Calgary, in the Province of Alberta
TO WIT: ]
] MAKE OATH AND SAY:
1. THAT I am an officer and director of Lakewood Marine International Ltd.
named in the within or annexed instrument.
2. THAT I am authorized by the corporation to execute the instrument
without affixing a corporate seal.
Sworn before me at the City of ]
Calgary, in the Province of ]
Alberta, this 2nd day of ]
February, A.D. 1998. ] Rajesh Mahajan
]
]
]
Theodore Schwartzberg
Barrister & Solicitor
Misc\lea
16
<PAGE>
January 30, 1998
Lakewood Marine International Ltd.
RE: Side Letter Agreement to Lease
Ladies and Gentlemen:
Reference is made to that certain Lease Agreement dated January 30,
1998 by and between Lakewood Marine International, Ltd., a North Carolina
corporation, as Landlord, and Marine America, Inc., a Florida corporation, as
Tenant. The Lease Agreement relates to the operation of a new and used boat
sales and service business located in Gaston County, North Carolina. The parties
execute this document subsequent to the Lease Agreement and hereby agree to
supplement and, to the extent inconsistent, supersede and modify the Lease
Agreement. Capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed to them in the Lease Agreement.
The Tenant is hereby granted the option to cancel the Lease Agreement
at any time after 12 months from the commencement date of the Lease upon 60 days
prior written notice to the Landlord.
If the foregoing accurately reflects our understanding, please
acknowledge our agreement by signing this letter agreement in the space
indicated below.
Very truly yours,
Marine America, Inc.
By:
Print Name:
Its:
APPROVED:
LAKEWOOD MARINE INTERNATIONAL, LTD.,
a North Carolina Corporation
17
<PAGE>
By:
Its:
MEMORANDUM OF LEASE AND OPTION TO PURCHASE
STATE OF NORTH CAROLINA
COUNTY OF GASTON
LAKE WOOD MARINE INTERNATIONAL, LTD., a North Carolina corporation,
having an address of 6000 Wilkinson Blvd Belmont N.C. (the"Landlord"), hereby
leases to MARINE AMERICA, INC., a Florida corporation having an address of 1924
33rd Street, Orlando, Florida 32839 (the "Tenant"), for a term beginning the
_____ day of__________ ______ 1998 and continuing for a maximum period of five
(5 ) years, including extensions and renewals, if any, that certain parcel of
land and improvements located thereon, described in Exhibit "A" attached hereto
and made a part hereof (the "Property").
There exists an option to purchase with respect to the Property, in
favor of the Tenant which expires the 30 day of January, 2002, the terms and
conditions of which option are contained in a written Lease Agreement between
Landlord and Tenant dated January 30, 1998 (the "Lease"), the terms and
conditions of which Lease are hereby incorporated in this Memorandum of Lease.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum of
Lease and Option to Purchase to be duly executed under seal, as of the 30 day of
January, 1998.
ATTEST: LAKEWOOD MARINE
INTERNATIONAL, LTD., a North Carolina
corporation
(Asst.) Secretary
(Corporate Seal)
MARINE AMERICA, INC., a Florida
corporation
ATTEST:
18
<PAGE>
(Asst.) Secretary
(Corporate Seal)
19
<PAGE>
PROVINCE OF ALBERTA
CANADA
I, a Notary Public of the Provence of Alberta, Canada aforesaid,
do hereby certify that , personally came before me this day and
acknowledged that he/she is the President of
LAKEWOOD MARINE INTERNATIONAL, LTD., a North Carolina corporation, and that by
authority duly given and as the act of the corporation, the foregoing instrument
was signed in its name by its President, sealed with its corporate seal and
attested by him/herself as its President, Witness my hand and official stamp or
seal, this the 2 day of February, 1998.
Notary Public
My Commission Expires:
(Affix Notarial Seal)
STATE OF FLORIDA
COUNTY OF ORANGE
I, a Notary Public of the County and State aforesaid, do hereby certify
that Joseph Pozo personally came before me this day and acknowledged that he/she
is the - ________________________ Secretary of MARINE AMERICA, INC., a Florida
corporation, and that by authority duly given and as the act of the corporation,
the foregoing instrument was signed in its name by its
__________________________ President, sealed with its corporate seal and
attested by him/herself as its _______________ Secretary. Witness my hand and
official stamp or seal, this the 30 day of January, 1998.
Notary Public
My Commission Expires:
(Affix Notarial - Seal)
20
<PAGE>
EXHIBIT "A"
TO
MEMORANDUM OF LEASE
AND
OPTION TO PURCHASE
LEGAL DESCRIPTION
21
<PAGE>
AFFIDAVIT VERIFYING CORPORATE
SIGNING AUTHORITY
CANADA ] I, Rajesh Mahajan, of the City of
PROVINCE OF ALBERTA ] Calgary, in the Province of Alberta
TO WIT: ]
] MAKE OATH AND SAY:
1. THAT I am an officer and director of Lakewood Marine International Ltd.
named in the within or annexed instrument.
2. THAT I am authorized by the corporation to execute the instrument
without affixing a corporate seal.
Sworn before me at the City of ]
Calgary, in the Province of ]
Alberta, this 2nd day of ]
February, A.D. 1998. ] Rajesh Mahajan
]
]
]
Theodore Schwartzberg
Barrister & Solicitor
22
<PAGE>
Consolidated
Master Note for Business
and Commercial Loans
$500,000 Orlando, Florida
September 24, 1999
FOR VALUE RECEIVED, the undersigned (hereinafter called, whether one or
more, the "Borrower"), jointly and severally (if more than one) promises to pay
to the order of AmSouth Bank of Florida (the "Bank"), its successors and assigns
(hereinafter sometimes, together with any other holder of this note, called
"Holder"), at any office of Holder or at such other place as Holder may from
time to time designate the sum of Five Hundred Thousand & 00/100, Dollars
($500,000.00), or so much thereof as the Bank, in its sole discretion, may elect
to advance to the Borrower hereunder (the "Loan"), plus interest from the date
hereof until maturity (whether by acceleration or otherwise) on the outstanding
unpaid principal balance of the Loan, at the rate of [check (1), (2) or (3)];
[ ] (1) % per annum.
[ ] (2) % per annum in excess of the prime rate of AmSouth Bank in
effect from time to time as designated by AmSouth Bank (the "Prime Rate"), with
changes in the interest rate on this note caused by changes in the Prime Rate to
take effect on the date the Primate Rate changes without notice to the Borrower
or any other action by Holder:
[ ] (3)
Interest will be computed on the basis of the actual number of days
elapsed over (check one) (x) an assumed 360-day year, [ ] a 365 (or 366, if leap
year) day year.
If none of the foregoing provisions for a rate of interest is checked,
the rate of interest payable on the Loan until maturity (whether by acceleration
or otherwise) shall be the Prime Rate of the Bank in effect from time to time,
or such lesser rate as shall be the maximum permitted by law, computed on the
basis of the actual number of days elapsed over an assumed 360-day year.
Notwithstanding anything to the contrary contained in this note, the
amount paid or agreed to be paid as interest on the principal amount of the Loan
shall never exceed the highest lawful rate allowed under applicable law. If at
any time, interest is due to be paid in an amount that exceeds such highest
lawful rate, then the obligation to pay interest hereunder shall be reduced to
such highest lawful rate. If at any time, interest is paid in an amount that is
greater than such highest lawful rate, then the amount that exceeds such highest
lawful rate shall be deemed to
1
<PAGE>
have a been a prepayment of principal of the Loan and applied to principal in
the manner hereinafter provided, or if such excessive amount of interest exceeds
the unpaid principal balance, such excess shall be refunded to the Borrower.
The Borrower hereby agrees to repay principal and interest as follows:
The Borrower will pay the principal amount of the Loan (check one and
complete if applicable):
[ ] on demand, [ ] Days after date, or
[x]
and will pay the principal amount of the Loan (check one and complete
if applicable):
[ ] at maturity, [ ] in monthly installments
[ ] in quarterly installments, or
[ ]
If interest, or principal and interest, are payable in installments,
the first installment will be due and payable on October 9, 1997, and the
remaining installments will be due and payable on the same day of every (check
one and complete if applicable) [x] month [ ] quarter (
, , and ) thereafter
until both the principal of and interest on the Loan have been paid in full
(except as different payment terms are stated above).
If none of the foregoing provisions for the repayment of principal
and/or interest is checked, the principal, if not checked, and interest, if not
checked, due hereunder shall be payable on demand of Holder.
|_| Unless the block is checked, the Borrower agrees to pay to Holder,
on demand, a late charge computed as follows to cover the extra expense involved
in handling late payments:
If interest or principal are payable in installments, the late charge
will be equal to 5% of any payment that is not paid within 15 days after it is
due.
If principal and interest are payable at maturity, the late charge will
be equal to 5% of the interest portion of the payment that is not paid within 15
days after it is due.
Notwithstanding the foregoing, the late charge shall never exceed a sum
which, when added to the amount paid or agreed to be paid as interest on the
principal amount of the Loan, shall cause the yield received by the Holder to
exceed the highest lawful rate for interest allowed
2
<PAGE>
under applicable law. This late charge provision shall not be deemed to excuse a
late payment or be deemed a waiver of any other right Holder may have,
including, without limitation, the right to declare the entire unpaid principal
and interest immediately due and payable.
Each payment on the indebtedness evidenced hereby will first reduce
charges owed by the Borrower that are neither principal nor interest. The
remainder of each such payment will be applied first to accrued but unpaid
interest and then to unpaid principal. Any partial prepayments of principal will
be applied to installments due in the inverse order of their maturity and no
such partial prepayment of principal will have the effect of postponing,
satisfying, reducing, or otherwise affecting any schedule installment before the
principal of and interest on the Loan is, and all other charges due hereunder
are, paid in full.
This note is a master note, and it is contemplated that the proceeds of
the Loan evidenced hereby will be advanced from time to time to the Borrower by
Holder in installments, as requested by the Borrower and agreed to by Holder. It
is further contemplated that any amounts advanced under this note may be prepaid
from time to time by the Borrower and subsequently re-advanced by Holder, up to
a maximum principal amount at any one time outstanding not exceeding the face
amount of this note. By reason of prepayments hereon there may be times when no
indebtedness is owing hereunder, and notwithstanding any such occurrence, this
note shall remain valid and shall be in full force and effect as to each
subsequent principal advance made hereunder. Each principal advance and each
payment made pursuant to this note shall be reflected by notations made by
Holder on the grid attached hereto, and Holder is hereby authorized to record on
such grid all such principal advances and payments. The aggregate unpaid amounts
reflected by the notations made by Holder on the attached grid shall be deemed
rebuttably presumptive evidence of the principal amount remaining outstanding
and unpaid on this note. No failure of Holder so to record any advance or
payment shall limit or otherwise affect the obligation of the Borrower hereunder
with respect to any advance, and no payment of principal by the Borrower shall
be affected by the failure of Holder so to record the same.
Nothing herein contained shall obligate or require Holder to make any
advances hereunder, and all advances shall be made at the option of Holder. This
note shall be valid and enforceable as to the aggregate amount advanced at any
time hereunder, whether or not the full face amount hereof is advanced.
If the Loan is payable on demand, the paragraph is inoperative and is
not applicable; otherwise, this paragraph is operative and applies to the Loan
in accordance with its terms, in the event of default in the payment of any one
or more installments of principal or interest which may become due hereunder,
when and as the same fall due, or the failure of any maker, endorser, surety or
guarantor hereof (hereinafter called the "Obligors") to pay when due or perform
any of the Obligations (meaning thereby this note and any and all renewals and
extensions thereof and all other liabilities and indebtedness of the Borrower to
Holder, now existing or hereafter incurred or arising, direct or indirect, and
however incurred) or any part thereof or the failure of any Obligor to pay when
due any other liability to Holder, in the event a default occurs under the terms
of any
3
<PAGE>
loan agreement or other instrument (other than this note) or other document
evidencing, securing, or executed in connection with all or any part of the
Obligations, or in the event Holder shall in good faith deem itself insecure for
any reason, or on the happening of any one or more of said events. Holder shall
have the right at its election and without notice to any Obligor to declare the
Obligations immediately due and payable with interest to date. No delay in
making such election shall be construed to waive the right to make such
election. Holder may note the fact of acceleration hereon without stating the
ground therefor, and whether or not noted hereon such election to accelerate
shall be effective.
In the event of death of, insolvency of, general assignment by,
judgment against, filing of petition of bankruptcy by or against filing a
petition for the reorganization of, filing of application in any court for
receiver for, or issuance of a writ of garnishment or attachment in a suit or
action against any Obligor or against any of the assets of any Obligor, or on
the happening of any one or more of said events, the Obligations shall, without
notice to or demand upon any Obligor, immediately become due and payable with
interest to date unless Holder shall on notice of such event elect to waive such
acceleration by written notation hereon.
Each of the Obligors hereby severally (a) waives as to this debt or any
renewal or extension thereof of all rights of exemption under the Constitution
of laws of Florida or any other state as to personal property; (b) waives demand
(unless this note is payable on demand), presentment, protest, notice of
protest, notice of dishonor, suit against any part and all other requirements
necessary to hold him; (c) agrees that time of payment may be extended one or
more times for any period of time (whether such period is shorter or longer than
the initial term of this note) or renewal notes taken or other indulgence
granted without notice of or consent to such action and without release of
liability as to any Obligor; (d) as to all or any part of the Obligations,
consents to Holder's releasing, agreeing not to sue, suspending the right to
enforce this instrument against or otherwise discharging or compromising any
Obligation of any Obligor or other person against whom any Obligor has to the
knowledge of Holder a right of recourse, all without notice to or further
reservations of rights against any Obligor, and all without in any way affecting
or releasing the liability of any Obligor; (e) consents to Holder's releasing,
exchanging or otherwise dealing in any manner with all or any portion of any
collateral, lien, or right of set-off which may now or hereafter secure this
note, all without notice to or further reservations of rights against any
Obligor, and all without in any way affecting or releasing the liability of any
Obligor, even though such release, exchange or other dealing may in any manner
and to any extent impair any such collateral, lien or right of set-off; (f)
agrees to pay all costs of collecting or securing or attempting to collect or
secure this note or defending any unsuccessful claim asserted against the Holder
in connection with this note, including reasonable attorneys' fees and (g)
warrants that this Loan is for business, commercial or agricultural purposes.
In addition to all liens upon, and rights of set-off against, any
monies, securities, or other property of any of the Obligors given to Holder by
law, Holder shall have a lien upon and a right of set-off against all monies,
securities and other property of any of the Obligors now or hereafter in the
possession of, or on deposit with Holder, whether held in a general or special
account or
4
<PAGE>
deposit for safekeeping, in trust or otherwise; and every such lien and right of
set-off may be exercised without demand upon or notice to any Obligor, and the
Bank shall have no liability with respect to any of Obligor's checks or other
name which may be returned or other funds transfers which may not be made due to
insufficient funds thereafter.
The Borrower understands that the Bank may from time to time enter into
a participation agreement or agreements with one or more participants pursuant
to which such participant or participants shall be given participation in the
Loan and that such participants may from time to time similarly grant to other
participants sub-participation in the Loan. The Borrower agrees that any
participant may exercise any and all rights of banker's lien or set-off, whether
arising by operation of law or given to Holder by the provisions of this note,
with respect to the Borrower as fully as if such participant had made the Loan
directly to the Borrower. For the purposes of the Paragraph only, the Borrower
shall be deemed to be directly obligated to each participant or subparticipant
in the amount of its participating interest in the principal of, and interest
on, the Loan.
Neither any failure nor any delay on the part of Holder in exercising
any right, power or privilege under this note shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. No
modification, amendment or waiver of any provisions of this note shall be
effective unless in writing and signed by a duly authorized officer of Holder,
and then the same shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any Obligor in any case shall
entitle any Obligor to any other or further notice or demand in the same,
similar or other circumstances.
Any provision of this role which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
The provisions of this note shall be bind upon the heirs, successors
and assigns of each Obligor, except that no Obligor may assign or transfer his,
her or its obligation hereunder without the written consent of Holder, and shall
inure to the benefit of Holder, its successors and assigns.
All rights, powers and remedies of Holder under this note and now or
hereafter existing at law, in equity or otherwise shall be cumulative and may be
exercised successively or concurrently.
This Master Note contains the entire understanding and agreement
between the Borrower and the Holder with respect to the Loan and supersedes any
and all prior agreements between them with respect to the Loan. This Master Note
may not be modified, amended, or supplemented in any manner except by a written
agreement executed by both the Borrower and the Holder.
5
<PAGE>
This note shall be construed in accordance with and governed by the
laws of the State of Florida.
This agreements is executed under seal by the Borrower of each of them.
CAUTION-IT IS IMPORTANT THAT YOU THOROUGHLY READ THIS CONTRACT BEFORE YOU
SIGN IT
Boat Tree, Inc.
Due Date: BY: (SEAL)
(Signature)
Due Date: BY: (SEAL)
(Signature)
6
<PAGE>
AMSOUTH
Continuing Guaranty Agreement Date: , 19 .
WHEREAS, the undersigned (hereinafter referred to as the "Guarantors,"
whether one or more) have agreed to guarantee, jointly and severally, the
payment of all credit heretofore or hereafter extended and all advances
heretofore or hereafter made by AmSouth Bank of Florida (hereinafter referred to
as the "Bank") to (hereinafter referred to as (the "Borrower"), and of all other
liability (as hereinafter defined) of the Borrower to the Bank.
NOW, THEREFORE, in consideration of the premises, the sum of ten
dollars to each of the Guarantors in hand paid by the Bank, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by each of the Guarantors, and in order to induce the Bank to
extend to the Borrower from time to time such extensions of credit, advances and
forbearances as the Bank in its sole discretion may deem prudent and wise, the
Guarantors, jointly and severally, unconditionally and absolutely hereby
guarantee the due and punctual payment to the Bank when and as the same shall
become due and payable (whether by acceleration or otherwise) of the following
(collectively, the "Liabilities"), all indebtedness, obligations and liabilities
of the Borrower to the Bank of every kind, character and description whatsoever,
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter incurred, contracted or arising, joint or several, liquidated or
unliquidated, regardless of how they arise or by what agreement or instrument
they may be evidenced or whether they are evidenced by any agreement or
instrument, and whether incurred as maker, drawer, endorser, surety, guarantor
or otherwise, including without limitation obligations of the Borrower purchased
by the Bank, Recovered Payments, as hereinafter defined, and obligations
incurred in connection with the issuance of a letter of credit, and any and all
extensions and renewals of all or any part of the same.
The Guarantors further jointly and severally agree that, in the event
the Bank grants to the Borrower one or more extensions or renewals of any of the
Liabilities, or any part thereof, or permits or requires any other modification
in any of the terms of the Liabilities, or any part thereof, in any manner which
may be acceptable to the Bank, with or without notice to the Guarantors, this
guaranty shall, and is hereby made to extend to and cover such extended, renewed
or modified Liabilities, on whatever terms and conditions the same may be
extended, renewed or modified, and without regard to the number of times or the
manner in which the same may have been or shall be extended, renewed or
modified.
The Guarantors further jointly and severally agree (a) to pay any and
all of the Liabilities upon demand at any time after maturity thereof (whether
or acceleration or otherwise); (b) to be bound by all of the terms and
provisions appearing on the face of any instrument or agreement evidencing,
securing, guaranteeing, or executed in connection with any of the Liabilities
and of any renewal instrument or agreement (the "Loan Documents") (including any
terms waiving
7
<PAGE>
notice and agreeing to pay costs and expenses of collection in the event of
default) just as though the Guarantors had signed such instrument or agreement;
(c) that the Bank will not be required first to resort to the Borrower or any
other maker, endorser, surely, guarantor or other Guarantor (each such Borrower,
maker, endorser, surety, guarantor, or other Guarantor being hereinafter
individually called an "Obligor") or to the security pledged or granted to it by
any instrument or agreement, or otherwise assigned or conveyed to it, but in
cases of default in the payment of any of the Liabilities the Bank may forthwith
look to the Guarantors jointly and severally for payment under the provisions
hereof; and (d) that the Bank's enforcement of the Guarantors' obligations
hereunder shall not be stayed or otherwise delayed by any claim (including
without limitation, a counterclaim) that any Obligor may have against the Bank.
The Guarantors hereby further jointly and severally agree that the
obligations of the Guarantors hereunder are absolute, unconditional, present and
continuing guaranties of payment and not collectibility and shall not be subject
to any counterclaim, recoupment, set-off, reduction or defense based upon any
claim that the Guarantors or any of them, may have against the Borrower or the
Bank and shall not be discharged, impaired, modified or otherwise affected by
(a) the unenforceability, non-existence, invalidity or non-perfection of (i) any
of the Liabilities, (ii) any Loan Documents, (iii) any renewal instrument or
agreement or (iv) any lien, pledge, assignment, security interest or conveyance
given as security therefor; (b) any understanding or agreement that any other
person, firm or corporation was or is to execute this agreement or any other
document evidencing, guaranteeing or securing the Liabilities, or any part
thereof; (c) Bank's resort or failure or refusal to resort to any other security
or remedy for the collection of the Liabilities, or any part thereof; (d) the
sale, exchange, release, surrender, or impairment of any collateral or other
security for the Liabilities, or any part thereof; (e) the death, insolvency or
bankruptcy of any Obligor or the failure of the Bank to file a claim against
such decreased or bankrupt Obligor's estate for such Obligor's liability or
obligation to the Bank; (f) any modification, amendment, supplement, or change
in the status or terms of any of the Liabilities or any collateral or other
security for the Liabilities, or any part thereof; (g) any default by the
Borrower in payment of any of the Liabilities; (h) any compromise, settlement,
release, discharge, termination, waiver, or extension of time for payment,
performance, or observance of, any obligation of any Obligor with respect to any
of the Liabilities; (i) the application of any payments, proceeds or collateral
or other sums to any of the Liabilities in such order as the Bank may elect; (j)
any exercise or non-exercise of any right, remedy, power, or privilege of the
Bank with respect to any of the Liabilities or any collateral or other security
thereof; (k) any failure, omission, delay, or lack of diligence on the part of
Bank to enforce, assert, or exercise any such right, power, privilege, or
remedy; (l) any claim (including, but not limited to a counterclaim) that any
Obligor may have against the Bank; or (m) any other event circumstance or
condition, whether or not the Guarantors, or any of them, shall have notice or
knowledge thereof.
The Guarantors further jointly and severally agree that it shall not be
necessary for the Bank to give any Guarantor notice of or to obtain consent or
approval of any Guarantor in connection with, (a) the making of any advances or
any extensions of credit or the terms thereof, or of any renewal or extension of
or other modification with respect to the Liabilities, or any part
8
<PAGE>
thereof; (b) any of the matters described in clauses (a) through (m) of the
preceding paragraph; or (c) the Bank's acceptance of and reliance on this
agreement and each Guarantor shall remain fully liable notwithstanding any such
lack of notice, consent or approval. The terms hereof shall inure to the benefit
of the successors and assigns the Bank and shall be binding, jointly and
severally, upon the Guarantors, their heirs, executors, administrators,
successors and assigns.
Neither any failure nor any delay on the part of the Bank in exercising
any right, power or privilege under this agreement shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right, power or privilege. No
modification, amendment or waiver of any provision of this agreement shall be
effective unless in writing and signed by a duly authorized officer of the Bank,
and then the same shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Guarantors in any case
shall entitle the Guarantors to any other or further notice or demand in the
same, similar or other circumstances.
The Guarantors jointly and severally hereby agree to indemnify and hold
the Bank harmless against any loss or expense, including reasonable attorneys'
fees and disbursements, that may result from any failure of any Obligor to pay
any of the Liabilities when and as due and payable or that may be incurred by or
on behalf of the Bank in enforcing payment of any of the Liabilities against any
of the Guarantors or any of the Obligors.
In addition to all liens upon, and rights of set-off against, any
moneys, securities, or other property of the Guarantors given to the Bank by
law, the Bank shall have a lien upon and a right of set-off against all
deposits, moneys, securities, and other property of any of the Guarantors now or
hereafter in the possession of, or on deposit with the Bank, whether held in a
general or special account of deposit, for safekeeping, or otherwise, and every
such lien and right of set-off may be exercised without demand upon or notice to
the Guarantors.
Each of the Guarantors who now is or hereafter becomes an "insider" as
defined in 11 U.S.C. ss.101 (or any amendment or successor thereto or
replacement thereof), of the Borrower hereby waives and relinquishes all rights
(including without limitation rights of subrogation) that such Guarantor now has
or hereafter may have to recover from or be reimbursed by the Borrower or the
Borrower's property, or from any person, firm, or corporation that may now or
hereafter have such a right to recover from or be reimbursed by the Borrower or
the Borrower's property, any amounts paid by such Guarantor to satisfy, in whole
or in part, the Liabilities. The provisions of this paragraph are made for the
express benefit of the Borrower as well as the Bank and may be enforced
independently by the Borrower.
The Guarantors further jointly and severally agree that this agreement
shall remain in full force and effect, until revoked or terminated by a written
instrument, signed by the Guarantors and delivered to the Bank and acknowledged
in writing by the Bank, and even after any such revocation or termination, shall
be and remain effective as to any Liabilities then outstanding; and that this
agreement shall not be construed as being terminated by payment in full of the
Liabilities
9
<PAGE>
to the Bank, if thereafter, in the absence of written revocation or termination
by the Guarantors acknowledged by the Bank, the Borrower obtains or incurs
additional or new Liabilities. Notwithstanding the foregoing sentence, this
Continuing Guaranty Agreement and the Grantors' obligations hereunder shall
continue to be effective or be automatically reinstated, as the case may be, any
time payment of all or any part of the Liabilities is recovered (a "Recovered
Payment") from the Bank as a result of a preference or other claim made under
any bankruptcy, insolvency, dissolution, liquidation, reorganization,
receivorship, or similar law or otherwise. The collaeral, if any, security this
Continuing Guaranty Agreement may be held by the Bank until it is satisfied that
all time periods during which the payment of all or any part of the Liabilities
may be recovered from the Bank as a result of a preference or other claim under
any bankruptcy, insolvency, dissolution, liquidation, reorganization,
receivership, or similar law or otherwise have elapsed.
Any act or circumstance that shall toll any statute of limitations
applicable to the Liabilities, or any of them, shall also toll the statute of
limitations applicable to the Guarantors' liability for the Liabilities under
this Continuing Guaranty Agreement.
The term "Guarantors" as used herein refers to the undersigned, whether
one or more natural persons, corporations, associations, partnerships, or other
entities.
This agreement shall be governed by, and construed in accordance with,
Florida law.
This agreement and the other Loan Documents contain the entire
understanding and agreement between the guarantors and the Bank with respect to
the obligations of the Guarantors hereunder and Supersede any prior agreements,
understandings, promises, and statements with respect to such obligations.
Witness the signatures and seals of the undersigned on the day and year
first written above.
NOTICE TO COSIGNER
You are being asked to guarantee all debt of the borrower to this bank,
including all future debts of the borrower entered into which this bank prior to
the time you revoke or terminate this agreement in writing as set forth in this
agreement. Think carefully before you do, if the borrower doesn't pay the debt,
you will have to. Be sure you can afford to pay if you have to, and that you
want to accept this responsibility.
You may have to pay up to the full amount of the debt if the borrower
does not pay. You may also have to pay late fees or collections costs, which
increase this amount.
The bank can collect this debt from you without first trying to collect
from the borrower. The bank can use the same collection methods against you that
can be used against the borrower, such as suing you, garnishing your wages, etc.
If this debt is ever in default, that fact may become a part of your credit
record.
This notice is not the contract that makes you liable for the debt.
10
<PAGE>
CAUTION- IT IS IMPORTANT THAT YOU THOROUGHLY
READ THIS CONTRACT BEFORE YOU SIGN IT.
Witness:
(L.S.)
(L.S.)
(L.S.)
11
<PAGE>
INVENTORY SECURITY AGREEMENT
THIS INVENTORY SECURITY AGREEMENT (as from time to time amended, "this ISA" and
together with the Program Letters and Change Notices, as hereinafter defined,
"the Agreement") is between Boat Tree, Inc., a (check box and specify
jurisdiction) |X| Florida Corporation |_| general partnership |_|
limited partnership |_| sole proprietorship ("Dealer"), and
TRANSAMERICA COMMERCIAL FINANCE CORPORATION ("TCFC"), with its chief executive
office and principal place of business at 225 North Michigan Avenue, Chicago,
Illinois 60601.
The parties agree that this ISA amends and restates in its entirety an
existing Inventory Security Agreement and Power of Attorney between the parties
dated prior to the date hereof. The parties further agree as follows:
1. Definitions. In addition to terms defined elsewhere herein, "accessions,"
"account", "chattel paper," "deposit account," "document," "equipment,"
"fixture," "general intangibles," "goods," "instrument," and "inventory" have
the meanings assigned to them in Article 9, and "person" has the meaning
assigned to it in Article 1, of the Illinois Uniform Commercial Code (the "UCC")
as of the date of this ISA. "Program Letter" means each written agreement
entitled "Program Letter," as from time to time amended, between TCFC and Dealer
which refers to this ISA; "Change Notice" means any notice sent by TCFC to
Dealer, whether or not part of a billing statement, increasing or decreasing the
rate or amount of Charges (as hereinafter defined), adding or deleting Charges
or making any other change respecting Charges or the time for payment of future
Advances or adding product lines to be financed and specifying the terms of such
financing; and "affiliate" means any person that (i) directly or indirectly
controls, is controlled by or is under common control with Dealer, (ii) directly
or indirectly owns 5% or more of Dealer, (iii) is a director, partner, manager,
or officer of Dealer or an affiliate of Dealer, or (iv) any natural person
related to Dealer or an affiliate of Dealer.
2. Advances and Approvals.
(a) Dealer may from time to time apply to TCFC, directly or in the
manner provided in paragraph (b) of this section, for an extension of credit
under the agreement (any such extension of credit, an "Advance").
(b) Whenever any person from whom Dealer purchases or may purchase
inventory or who advises TCFC that it has sold, or may sell, inventory to Dealer
(a "Seller") requests in any manner (e.g., orally, in writing, or by electronic
transmission) that TCFC finance, or confirm that it will finance (an
"Approval"), the acquisition of inventory by Dealer from such Seller, such
request shall be an application by Dealer for an Advance equal to the purchase
price of such inventory. Dealer shall be obligated for all obligations incurred
by TCFC on account of the issuance of each Approval. Whenever TCFC makes such an
Advance, it shall be paid by TCFC to such Seller, except that TCFC may offset
any amount owed by such Seller to TCFC, including
Misc\invsecag
<PAGE>
without limitation any discount, payment or other benefit owned by such Seller
to TCFC ("TCFC's Offset"). Dealer agrees that it has no right to any TCFC's
Offset.
(c) TCFC shall not be obligated to issue any Approval or make any
Advance. If TCFC decides in its discretion to issue an Approval or make an
Advance, the Approval or Advance may be in the amount requested or a lesser
amount, and made upon such conditions, as TCFC determined. Each Advance shall be
deemed made when it is entered by TCFC as a receivable on its books. All
Advances for all purposes shall be treated as a single loan.
(d) Any Invoice (which term shall include paper based or electronically
transmitted invoices) from a Seller received by TCFC, pertaining to inventory
shipped or to be shipped to Dealer, shall be rebuttably presumptive evidence
that TCFC has financed the acquisition of such inventory for Dealer and that the
amount of such invoice is the original principal amount of Dealer's obligation
to TCFC on account of such inventory.
3. Grant and Perfection of Security Interest.
(a) Dealer hereby grants to TCFC a security interest in all of the
Collateral as security for all indebtedness. Said security interest in any item
of Inventory shall be deemed a purchase money security interest to the extent of
the Advance made in connection with the acquisition of such inventory.
"Collateral" means the following property or interests in property of Dealer,
whether now or hereafter existing, owned, licensed, leased, consigned, acquired;
or arising and whenever located: (i) inventory, accounts, chattel paper,
documents, equipment, fixtures, general intangibles and instruments, (including
without limitation and whether or not included in the foregoing, Seller Credits,
deposit accounts, certificates of deposit) and books, records, disks, and tapes,
(ii) all accessions, accessories and replacements to or of the foregoing, and
(iii) all proceeds and products of the foregoing; "Indebtedness" means all
present and future indebtedness and obligations of Dealer to TCFC or to any
person that directly or indirectly controls, is controlled by or is under common
control with TCFC (a "TCFC Affiliate"), whether or not arising under the
Agreement, of whatever kind, now due or to become due, absolute or contingent,
and whether joint, several or joint and several, including without limitation
any indebtedness and obligations arising under guaranty agreements; and "Seller
Credits" means all of Dealer's rights to any price protection payments, rebates,
discounts, credits, factory holdbacks, incentive payments and other amounts
which at any time are due Dealer from a Seller with respect to, or in connection
with, any inventory acquired from such Seller.
(b) Dealer shall provide TCFC such financing statements, certificates
or originor title and other writings, in form and substance satisfactory to
TCFC, and take such other action as TCFC may request from time to time to
establish and maintain a perfected security interest in the Collateral.
4. Representations and Warranties of Dealer. Dealer represents and warrants that
at the time of execution of this ISA and at the time of each Approval and each
Advance, unless Dealer
Misc\invsecag
2
<PAGE>
has given written notice to the contrary to TCFC prior to such Approval or
Advance, that;
(a) Dealer, if not an individual, is the type of organization set forth
at the beginning of this ISA, is in good standing and has all the necessary
authority to enter into and perform the Agreement and Dealer does not and will
not violate its charter or bylaws if a corporation, or partnership agreement if
a partnership, or any law, regulation or agreement binding upon it, by entering
into and performing the Agreement.
(b) Dealer keeps its records respecting accounts and chattel paper at
its chief executive office and principal place of business identified below. The
only locations at which Collateral is located are listed in the section entitled
"Business and Warehouse Locations" (together with additional business and
warehouse locations of Dealer in the United States of which Dealer gives TCFC at
least 30 days prior written notice, the "Permitted Location").
(c) All information supplied by Dealer to TCFC, including any
financial, credit or accounting statements or application for credit, in
connection with the Agreement is true, correct and complete.
5. Covenants of Dealer.
(a) Until sold as permitted by the Agreement, Dealer shall own all
inventory which has been financed in whole or in part by an Advance, whether or
not such advance is outstanding ("Prime Inventory"), free and clear of all
liens, security interests, claims and other encumbrances, whether arising by
agreement or operation of law ("Liens"), other than the security interest
granted to TCFC in this ISA, other security interest subordinate thereto to
which TCFC has consented in writing and other Liens in favor of TCFC.
(b) Dealer shall (i) keep all Collateral at Permitted Locations and
keep all tangible Collateral in good order, repair and operating condition and
insured as required herein; (ii) promptly file all tax returns required by law
and promptly pay all taxes, fees, and other governmental charges for which it is
liable, including without limitation all governmental charges against the
Collateral; (iii) permit TCFC, without notice, to inspect the Collateral during
normal business hours and at any other time TCFC deems desirable; (iv) keep
complete and accurate records of its business, including inventory and sales,
and permit TCFC to inspect and copy such records upon request; (v) provide TCFC
with Dealer's year-end balance sheet and annual profit and loss statement for
each of its fiscal years prepared in accordance with generally accepted
accounting principles, consistently applied, within 20 days after the same are
prepared but in no event later than 120 days after the end of each fiscal year;
(vi) furnish TCFC with such additional information regarding the Collateral and
Dealer's business and financial condition as TCFC may from time to time
reasonably request; and (vii) immediately notify TCFC of any material adverse
change in Dealer's prospects, business, operations or condition (financial or
otherwise) or in the Collateral.
Misc\invsecag
3
<PAGE>
(c) Dealer shall not (i) use (except for demonstration for sale), rent,
lease, sell, transfer, consign or dispose of Collateral except for sales of
inventory at retail in the ordinary course of Dealer's business; (ii) sell
inventory to an affiliate; (iii) engage in any other material transaction not in
the ordinary course of Dealer's business; (iv) change its business in any
material manner or its structure or be a party to a merger or consolidation, (v)
change its name without at least 30 days prior written notice to TCFC; (vi)
change its chief executive office or office where it keeps its records with
respect to accounts or chattel paper; or (vii) finance on a secured basis with
any third party without the prior written consent of TCFC the acquisition of
inventory of the same brand as any inventory financed or to be financed by TCFC.
6. Payment by Dealer to TCFC
(a) Dealer shall pay TCFC the amount of any Advance made to finance the
acquisition of any item of inventory immediately upon the earlier of (i) the
sale of such item, and shall hold the entire sale proceeds therefrom in the same
form as received IN TRUST for TCFC until paid to TCFC and, on written request
from TCFC, separate and apart from Dealer's other funds and property, (ii) the
"Due in Full Date" with respect to such Advance, which shall be 210 days after
such Advance was made unless otherwise provided for in the Agreement, or (iii)
the date such item has been damaged or destroyed or without TCFC's consent is
returned to a Seller or is otherwise not located at a Permitted Location. Any
such payment shall be applied by TCFC to such Advance. An Advance made to
finance the acquisition of a number of items of Inventory shall be allocated
among such items in proportion to Seller's respective invoice prices therefor at
the time of sale to Dealer.
(b) TCFC in its discretion may by notice to Dealer authorize Dealer to
pay TCFC on a scheduled liquidation program in whole or in part or discontinue
any such program at any time. While a scheduled liquidation program is in
effect, payments on Advances shall be applied on Advances in the order billed.
(c) Anything in the Agreement to the contrary notwithstanding, at
TCFC's request, Dealer shall immediately pay TCFC the amount necessary to reduce
the sum of outstanding Approvals with respect to inventory received by Dealer,
Advances (excluding any Advance with respect to inventory not received by Dealer
if made on receipt by TCFC of an electronically transmitted invoice) and accrued
Charges to an amount which does not exceed the aggregate invoice price to Dealer
of Prime Inventory in Dealer's possession in which TCFC has a perfected first
priority Lien. An Approval shall be deemed outstanding to the extent of its face
amount, less the amount of Advances with respect thereto.
(d) Dealer shall pay fees, charges and interest (collectively,
"Charges") with respect to each Advance in accordance with the Agreement;
provided, however, TCFC may at any time with Dealer's agreement increase or
decrease the rate or amount of any Charges, add or delete Charges or make any
other change respecting Charges applicable to outstanding and future Advances by
giving Dealer a Change Notice specifying such change at least 15 days prior to
such change.
Misc\invsecag
4
<PAGE>
Dealer shall be deemed to have agreed to such change if, after the giving of
such Change Notice and before such change becomes effective, Dealer does not
give TCFC notice that no additional Advances which would be subject to such
change should be made. Dealer shall pay TCFC its customary Charge for any check
or other item which is returned unpaid to TCFC. Unless otherwise provided in the
Agreement, the following additional provisions shall be applicable to Charges:
(i) any reference to "rime Rate" shall mean for any calendar month the highest
of the following rates: (A) the highest "prime rate" published in the "Money
Rates" column of the Wall Street Journal on the first Business Day of such month
(a "Business Day" being any day the Federal Reserve Bank of Chicago is open for
the transaction of business); or (B) the highest of the rates publicly announced
on such date by Continental Bank, N.A., The First National Bank of Chicago or
The Northern Trust Company, as their respective reference, prime, corporate base
or similar benchmark rate, whether or not such announced rates are the lowest
rates charged by such banks; or (C) the highest of the commercial paper rates
for any term published in the Federal Reserve statistical release (H.15) for the
date coincident with or most recently preceding the first Business Day of such
month; (ii) all Charges shall be paid by Dealer monthly within 15 days after the
month in which such Charges accrue, (iii) if a monthly rate of interest is
provided for in the Agreement with respect to an Advance, interest on each
Advance and principal indebtedness related thereto shall be computed each
calendar month on the sum of the daily balances thereof during such month
divided by 30 and multiplied by the monthly rate provided for in the Agreement;
(iv) if an annual rate of interest is provided for in the Agreement with respect
to an Advance, interest on each Advance and principal indebtedness related
thereto shall be computed each calendar month on the sum of the daily balances
thereof during such month divided by 30 and multiplied by one-twelfth of the
annual rate provided for in the Agreement; (v) interest on an Advance made at
the request of a Seller shall begin to accrue on the earlier of the ship date
referred to in the Seller's invoice or the date such Advance is entered by TCFC
as a receivable on its books (the "Start Date"); provided, however, if there is
a free floor period with respect to such inventory, interest with respect to the
Advance shall begin to accrue the number of days after the Start Date equal of
the number of days in such free floor period; (vi) interest on any other Advance
shall begin to accrue on the date TCFC makes such Advance; (vii) for the purpose
of computing Charges, any payment shall be deemed credited 3 Business Days after
received by TCFC at the place for payment provided for in the Agreement or, if
paid to TCFC at any other place, 3 Business Days after deposited by TCFC,
provided, however, in either case, if TCFC has furnished Dealer a form of
remittance advice to be completed and returned with payments, such payment shall
not be deemed credited prior to the Business Day the completed remittance advice
with respect to such payment is received by TCFC; (viii) for the purpose of
computing Charges, any payment received by TCFC after noon where payment is to
be made shall be deemed received by TCFC on the next Business Day; and (ix)
Charges not paid when due, at the option of TCFC shall become principal
Indebtedness and shall bear interest at the Default Rate stated in the Agreement
or, if none, the highest rate applicable from time to time to any Advances after
the due date thereof (the "Default Rate").
(e) Unless otherwise provided in the Agreement (i) all payments shall
be made at such place as TCFC shall from time to time designate, and (ii) all
payments and other amounts received
Misc\invsecag
5
<PAGE>
by TCFC pursuant to the Agreement, including without limitation insurance
proceeds and proceeds of Seller Credits, shall be applied to Indebtedness,
whether or not due, in such order as TCFC in its discretion shall determine. All
payments stated to be due on a day which is not a Business Day shall be due on
the preceding Business Day.
(f) Subject to the section entitled "Savings Provisions", any statement
with respect to any indebtedness sent to Dealer by TCFC shall be subject to
subsequent adjustment by TCFC but shall be presumed accurate evidence of
indebtedness and information covered thereby, unless TCFC shall have received
written notice from Dealer specifying any error within 30 days after the date
such statement is received by Dealer. Notwithstanding such notice by Dealer to
TCFC, Dealer's obligation to make payments to TCFC with respect to such
statement shall not be waived or extended unless and until TCFC consents in
writing to such waiver or extension.
(g) All Advances not made to finance the acquisition of inventory shall
be paid on demand unless otherwise provided in the Agreement. TCFC may at any
time, at its discretion, change the time for payment of future Advances or add
product lines to be financed and the terms of such financing by giving Dealer a
Change Notice specifying such change.
7. Insurance. All risk of loss, damage to or destruction of Collateral shall at
all times be on Dealer. Dealer shall keep tangible Collateral insured for full
value against all insurable risks under policies delivered to TCFC and issued by
insurers satisfactory to TCFC with loss payable to TCFC under long-form
mortgagee endorsements as its interest may appear subject to cancellation or
change only upon 30 days (10 days for non-payment of premium) written notice to
TCFC. TCFC is authorized, but not required, to act as attorney-in-fact for
Dealer in adjusting and settling any insurance claim under any such policy and
in endorsing any checks or drafts drawn by insurers. Dealer shall promptly remit
to TCFC in the form received, with all necessary endorsements, all proceeds of
such insurance which Dealer may receive. TCFC, at its election, shall either
apply any proceeds of insurance it may receive toward payment of Indebtedness or
pay such proceeds to Dealer. If Dealer fails to obtain such insurance by the
time provided herein, TCFC may, but shall not be obligated to, procure such
insurance and the cost thereof shall be a part of the Indebtedness payable by
Dealer on demand.
8. Power of Attorney. Dealer authorizes TCFC to execute or endorse on behalf of
Dealer any instruments, chattel paper, financing statements and amendments
thereto, or other writings comprising Collateral or evidencing financings under
the Agreement or evidencing or perfecting the security interest granted hereby,
as attorney-in-fact for Dealer. This power of attorney and the other powers of
attorney granted herein are irrevocable and coupled with an interest.
9. Credit Information. Dealer authorizes TCFC to investigate or make inquiries
of former or current creditors or other persons and provide to any creditors or
other persons any and all financial, credit or other information regarding or
relating to Dealer, whether supplied by Dealer to TCFC or otherwise obtained by
TCFC, with such authority to continue throughout the term of the Agreement.
Misc\invsecag
6
<PAGE>
10. Default. The occurrence of one or more of the following events shall
constitute a default by Dealer (a"Default"), (a) Dealer shall fail to pay any
indebtedness when due; (b) any representation made to TCFC by Dealer or by any
guarantor, surety, issuer of a letter of credit or any person other than Dealer
primarily or secondarily liable with respect to any indebtedness (a"Guarantor")
shall not be true when made or Dealer or any Guarantor shall breach any warranty
or agreement to or with TCFC; (c) Dealer or any Guarantor shall die, become
insolvent or generally fail to pay its debts as they become due or, if a
business, shall cease to do business as a going concern; (d) any guaranty,
letter of credit, or other obligation of a Guarantor to TCFC with respect to any
indebtedness or Collateral shall terminate or not be renewed at least 30 days
prior to its stated expiration or maturity; (e) Dealer or any Guarantor shall
make an assignment for the benefit of creditors, or commence a proceeding with
respect to itself under any bankruptcy, reorganization, arrangement, insolvency,
receivership, dissolution or liquidation statute or similar law of any
jurisdiction, or any such proceeding shall be commenced against it or any of its
property (an "Automatic Default"); (f) a material adverse change shall occur in
the business, operations or condition (financial or otherwise) of Dealer or any
Guarantor or with respect to the Collateral; (g) any debt for borrowed money of,
or guaranteed by, Dealer or any Guarantor becomes due by acceleration or
otherwise prior to its due date by reason of a default; or (h) TCFC in good
faith believes the prospect of payment of any indebtedness is impair or deems
itself insecure.
11. TCFC's Rights and Remedies Upon Default. Upon the occurrence of a Default,
TCFC shall have all rights and remedies of a secured party under the UCC and
other applicable law and all the rights and remedies set forth in the Agreement.
TCFC may terminate the Agreement and any outstanding Approvals immediately
and/or declare any and all indebtedness immediately due and payable without
notice or demand. Dealer waives notice of intent to accelerate, and of
acceleration of, indebtedness. TCFC may enter any premises of Dealer, with or
without process of law, without force, to search for, take possession of, and
remove the Collateral, or any part thereof. If TCFC requests, Dealer shall cease
disposition of and shall assemble the Collateral and make it available to TCFC,
at Dealer's expense, at a convenient place or places designated by TCFC. TCFC
may take possession of the Collateral or any part thereof on Dealer's premises
and cause it to remain there at Dealer's expense, pending sale or other
disposition. Dealer agrees that the sale of inventory by TCFC to a person who is
liable to TCFC under a guaranty, endorsement, repurchase agreement or the like
shall not be deemed to be a transfer subject to Section 9-504(5) of the UCC or
any similar provision of any other applicable law, and Dealer waives any
provision to the contrary of such laws. Dealer agrees that repurchase of
inventory by a Seller pursuant to a repurchase agreement with TCFC shall be a
commercially reasonable method of disposition. Dealer shall be liable to TCFC
for any deficiency resulting from TCFC's disposition, including without
limitation a repurchase by Seller, regardless of any subsequent disposition
thereof. Dealer is not a beneficiary of, and has no right to require TCFC to
enforce, any repurchase agreement. Any notice of a disposition shall be deemed
reasonably and properly given if given to Dealer at least 10 days before such
disposition. If Dealer fails to perform any of its obligations under the
Agreement, TCFC may perform the same in any form or manner TCFC in its
discretion deems necessary of desirable, and all monies paid by TCFC in
connection therewith shall be additional
Misc\invsecag
7
<PAGE>
indebtedness and shall be immediately due and payable without notice together
with interest payable on demand at the Default Rate. All of TCFC's rights and
remedies shall be cumulative. At TCFC's request, or without request in the event
of an Automatic Default, Dealer shall pay all Seller Credits to TCFC as soon as
the same are received for application to indebtedness. Dealer authorizes TCFC to
collect such amounts directly from Sellers and, upon request of TCFC, shall
instruct Sellers to pay TCFC directly.
12. Dealer's Claims Against Sellers. Dealer shall not assert against TCFC any
claim or defense Dealer may have against any Seller whether for breach of
warranty, misrepresentation, failure to ship, lack of authority, or otherwise,
including without limitation claims or defenses based upon charge backs, credit
memos, rebates, price protection payments or returns. Any such claims or
defenses or other claims or defenses Dealer might have against a Seller shall
not affect Dealer's liabilities or obligations to TCFC. Except as provided in
the section entitled "Savings Provisions," Dealer's obligation to pay TCFC for
Advances and Charges is absolute and Unconditional.
13. Notices. All notices to be given under the Agreement shall be in writing and
shall be served either personally, by deposit with a reputable overnight courier
with charges prepaid, or by deposit in the United States mail, first-class
postage prepaid or provided for, addressed to Dealer at its chief executive
office shown below or to any office to which TCFC sends billing statements, or
to TCFC at its address shown in the preamble hereto, attention its Credit
Department, or at such other address designated by such party by notice to the
other. Any Change Notice may be included in a billing statement. Any notice
shall be deemed to have been given upon delivery in the case of personal
delivery, one Business Day after deposit with an overnight courier of 2 calendar
days after deposit in the United States mail except that any notice of change of
address shall not be effective until actually received.
14. Term and Termination. Unless sooner terminated as provided in the Agreement
or by at least 30 days prior written notice from either part to the other, the
tem of the Agreement shall be for one year after the date of this ISA and from
year to year thereafter; provided, however, TCFC may terminate the Agreement
immediately by notice to Dealer in whole or only with respect to certain product
lines if Dealer shall lose or relinquish any right to sell or deal in any
product line of Prime Inventory. Upon termination of the Agreement, all
indebtedness (or, if the Agreement is terminated only with respect to certain
product lines, the indebtedness relative to such product lines) shall become
immediately due and payable without notice or demand. Upon any termination,
Dealer shall remain fully liable to TCFC for all indebtedness, including without
limitation Charges, arising prior to or after termination, and all TCFC's rights
and remedies and its security interest shall continue until all indebtedness is
paid and all obligations of Dealer are performed in full. If TCFC makes Advances
in reliance on a repurchase agreement from a Seller, it may cease making such
Advances if it has any concern as to whether such repurchase Agreement will
cover future Advances or be performed by such Seller. No provision of the
Agreement shall be construed to obligate TCFC to make any Advances.
Misc\invsecag
8
<PAGE>
15. Submission to Jurisdiction: Waiver of Bond. Dealer hereby consents to the
jurisdiction of any local, state or federal court located within the State of
Illinois and waives any objection which Dealer may have based on improper venue
or forum no convniens to the conduct of any action or proceeding in any such
court and waives personal service of any and all process upon it, and consents
that all such service of process be made by mail or messenger directed to it in
the same manner as provided for notices to Dealer in this ISA and that service
so made shall be deemed to be completed upon the earlier or actual receipt or 3
days after the same shall have been posted to Dealer or Dealer's agent as set
forth below. Dealer hereby irrevocably appoints CT Corporation System as
Dealer's agent for the purpose of accepting the service of any process within
the State of Illinois. Nothing contained in this section shall affect the right
of TCFC to serve legal process in any other manner permitted by law or affect
the right of TCFC to bring any action or proceeding against Dealer or its
property in the courts of any other jurisdiction. Dealer waives, to the extent
permitted by law, any bond or surety or security upon such bond which might, but
for this waiver, be required of TCFC.
16. Governing Law. THE AGREEMENT SHALL BE CONSTRUED IN ALL RESPECTS IN
ACCORDANCE WITH, AND GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF
LAW PROVISIONS) OF THE STATE OF ILLINOIS, EXCEPT THAT QUESTIONS AS TO PERFECTION
OF TCFC'S SECURITY INTEREST AND THE EFFECT OF PERFECTION OR NON-PERFECTION SHALL
BE GOVERNED BY THE LAW WHICH WOULD BE APPLICABLE EXCEPT FOR THIS SECTION.
17. Jury Waiver. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO
EACH WAIVE ANY RIGHT TO A TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION, CAUSE OF
ACTION OR COUNTERCLAIM ARISING UNDER OR IN ANY WAY RELATED TO THE AGREEMENT, AND
UNDER ANY THEORY OF LAW OF EQUITY, WHETHER NOW EXISTING OR HEREAFTER ARISING.
18. Inconsistent Provisions. Except as provided in the section entitled "Savings
Provisions", in the event of an inconsistency between this ISA and any Program
Letter, such Program Letter shall control. All Program Letters shall be
cumulative. In the event of an inconsistency between two Program Letters or a
Program Letter and a Change Notice, the later dated of the two shall control.
19. Savings Provisions. All agreements between TCFC and Dealer, whether now
existing or thereafter arising, and whether written or oral, are hereby limited
by this section. In no contingency, whether by reason of acceleration of the
maturity of the amounts due hereunder or otherwise, shall Charges contracted
for, charged, received, paid or agreed to be paid to TCFC exceed the maximum
amount permissible under applicable law. If, from any circumstance whatsoever,
Charges would otherwise be payable to TCFC in excess of the maximum lawful
amount, the Charges shall be reduced to the maximum amount permitted under
applicable law; and, if from any circumstance, TCFC shall have received anything
of value deemed interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excess of
Misc\invsecag
9
<PAGE>
Interest shall be applied to the reduction of the principal amount of
indebtedness and not to the payment of Charges, or if such excessive interest
exceeds the unpaid balance of the principal amount of indebtedness, such excess
shall be refunded to Dealer. All Charges paid or agreed to be paid to TCFC, to
the extent permitted by applicable law, shall be amortized, prorated, allocated
and spread throughout the full term of the Agreement (including any free floor
periods) until payment in full of all principal obligations owing by Dealer so
that the Charges for such full term shall not exceed the maximum amount
permitted by applicable law.
20. Limitation of Remedies and Damages. TCFC and Dealer agree that in the event
there is any dispute under the Agreement, the aggrieved party's remedy in
connection with any action arising under or in any way related to the Agreement
shall be limited to a breach of contract action and any damages in connection
therewith are limited to actual and direct damages.
21. Miscellaneous.
(a) Time is of the essence in the performance of Dealer's obligations
under the Agreement. Any waiver by TCFC of a Default shall only be effective if
in writing signed by TCFC and any waiver of a Default in a particular instance
or of a particular Default shall not be a waiver of other Defaults or of the
same kind of Default at another time. No modification of the Agreement shall
bind TCFC unless in writing signed by TCFC.
(b) The Agreement shall insure to the benefit of TCFC and its
successors and assigns and may be assigned by TCFC in whole or in part.
References to TCFC shall be deemed to refer to TCFC and its successors and
assigns. Dealer may not assign the Agreement without the prior written consent
of TCFC. The Agreement shall be binding upon the parties hereto and their
respective heirs, personal representatives, successors and assigns.
(c) Dealer shall pay to TCFC on demand all reasonable attorneys' fees
and legal expenses and other costs and expenses incurred by TCFC in connection
with establishing, perfecting, maintaining perfection of, protecting and
enforcing its Lien in the Collateral and collecting indebtedness, or in
connection with any modification of the Agreement or any Default.
(d) Any provisions of the Agreement found upon judicial interpretation
or construction to be prohibited by law shall be ineffective to the extent of
such prohibition, without invalidating the remaining provisions hereof.
(e) All words used shall be understood and construed to be of such
number and gender as the circumstances may require. Headings are for reference
purposes only and shall not determine the meaning or interpretation of the
Agreement.
22. Business and Warehouse Locations. (Include whether owned(o) or Leased (L):
Misc\invsecag
10
<PAGE>
Address City County State Zip O/L
2226 Paseo Avenue Orlando Orange FL 32805 L
23. Effectiveness. This ISA shall not become a contract until accepted by TCFC
in Illinois. Acceptance may be by facsimile signature. Dealer waives notice of
acceptance.
24. Integration: Final Writing. THIS WRITTEN AGREEMENT AND THE OTHER WRITINGS
REFERRED TO HEREIN REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, EMBODY THE
ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR AGREEMENTS
AND UNDERSTANDINGS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY, AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. UNLESS EXPRESSLY PROVIDED IN THE AGREEMENT, THE AGREEMENT DOES NOT
TERMINATE ANY SECURITY AGREEMENT BETWEEN TCFC AND DEALER.
Dated: , 199 DEALER
ATTEST: BOAT TREE, INC.
(or witness) [Name of corporation, partnership or
individual]
By:
Title:
(Seal) Title:
Accepted in Illinois: Tax ID or S.S. No.:
TRANSAMERICA COMMERCIAL Dealer's Chief Executive Office and Principal
Place of Business
FINANCE CORPORATION
By: 2226 Paseo Avenue
Title: Orlando, FL 32805
If Dealer is sole proprietor, enter home address:
If Dealer is a partnership, enter General Partners' names, home addresses and
Tax ID or S.S.Nos.:
11
<PAGE>
RIDER TO INVENTORY AGREEMENT
This Rider is attached to and made a part of that certain Inventory
Security Agreement (the "ISA") by and between Boat Tree, Inc. and TCFC dated
July 2, 1992. All terms defined in the ISA which are not defined in this Rider
shall have the same meaning in this Rider as in the ISA. The following Sections
(s) of the ISA are amended as follows:
1. Section 5(b) Covenants of the ISA is amended to add at the end thereof the
following subsection (vii):
Provide TCFC with unaudited semi-annual balance sheet and profit and
loss statements for the first six (6) months of each fiscal year
prepared in accordance with generally accepted accounting principles,
consistently applied, within 20 days after the same are prepared but in
no event later than 45 days after the end of the related fiscal period.
Dealer: Boat Tree, Inc.
By:
Title:
Date:
12
<PAGE>
RIDER FC TO INVENTORY AGREEMENT
All terms defined in the Inventory Security Agreement (the "ISA") by
and between Boat Tree, Inc. and TCFC to which this Rider is attached which are
not defined in this Rider shall have the same meaning in this Rider as in the
ISA. The following Section(s) of the ISA are amended as follows:
1. Section I Definitions of the ISA is hereby amended to add the
following definitions:
"Tangible Net Worth" as of any date means the sum of Dealer's
(x) net worth as reflected on its last twelve-month fiscal
financial statements, (y) net earnings since the end of the
fiscal year covered by such financial statements, both after
provision for taxes and with inventory determined on a first
in, first out basis and (z) debts owed to any guarantor,
affiliate or employee which are fully subordinated to TCFC's
satisfaction ("Subordinated Debt"); less the sum of: Dealer's
(i) intangible assets, including, without limitation,
unamortized leasehold improvements, goodwill, franchises,
licenses, patents, tradenames, copyrights, service marks,
brand names, and covenants not to compete; (ii) prepaid
expenses; (iii) franchise fees; (iv) notes, accounts
receivable and other amounts which are owed to it by any
guarantor, affiliate, or employee; (v) losses since the end of
the fiscal year covered by such financial statements; and (vi)
interest in the cash surrender value of any officer's or
shareholder's life insurance policies.
"Debt" means (i) debt for borrowed money or for the deferred
purchase price of property or services in respect of which
Dealer is liable, as obligor or otherwise or any commitment by
Dealer is liable, as obligor or otherwise or any commitment by
which Dealer assures a creditor against loss, (ii) obligations
under leases which shall have been or should be, in accordance
with generally accepted accounting principles ("GAAP"),
recorded as capitalized leases in respect of which obligations
Dealer is liable, and (iii) any unfunded obligation of Dealer
or any affiliate to a "multi-employer plan" as such term is
defined under the Employee Retirement Income Security Act of
1974, as amended, ("ERISA") required to be accrued by GAAP.
2. Section 5(b) Covenants of the ISA is amended to add at the end
thereof the following subsection(s):
(viii) provide TCFC with unaudited quarter-end balance sheet
and profit and loss statements for the first three (3)
quarters of each fiscal year prepared in accordance with
generally accepted accounting principles, consistently
applied,
mrosenberg/boattree/rider-fc.01
1
<PAGE>
within 20 days after the same are prepared but in no event
later than 45 days after the end of the related fiscal
quarter.
3. Section 5(b) Covenants of the ISA is hereby amended to add at
the end thereof the following paragraph (d):
(d) So long as any of the Indebtedness remains outstanding or as long
as this Agreement remains in effect, even if no Indebtedness is outstanding,
Dealer shall maintain a ratio of Debt To Tangible Net Worth to exceed 4.5 to
1.0.
mrosenberg/boattree/rider-fc.01
2
<PAGE>
AGREEMENT FOR WHOLESALE FINANCING
(SECURITY AGREEMENT - ARBITRATION)
This Agreement for Wholesale Financing ("Agreement") is made as of 8/1 , 1993
between ITT Commercial Finance Corp. ("ITT") and Boat Tree, Inc. , a |_| SOLE
PROPRIETORSHIP, |_| PARTNERSHIP, |X| CORPORATION (check applicable term)
("Dealer"), having a principal place of business located at 2226 Paseo Avenue.;
Orlando, FL 32805 .
1. Subject to the terms of this Agreement, ITT, in its sole discretion, may
extend credit to Dealer from time to time to purchase inventory from ITT
approved vendors. ITT may combine all of ITT's advances to Dealer or on Dealer's
behalf, whether under this Agreement or any other agreement, to make one debt
owed by Dealer. ITT's decision to advance funds on any inventory will not be
binding until the funds are actually advanced. Dealer agrees that ITT may, at
any time and without notice to Dealer, elect not to finance any inventory sold
by particular vendors who are in default of their obligations to ITT, or with
respect to which ITT reasonably feels insecure.
2. Dealer and ITT agree that certain financial terms of any advance made by ITT
under this Agreement, whether regarding finance charges, other fees, maturities,
curtailments or other financial terms, are not set forth herein because such
terms depend, in part, upon the availability from time to time of vendor
discounts or other incentives, prevailing economic conditions, ITT's floor
planning volume with Dealer and with Dealer's vendors, and other economic
factors which may vary over time. Dealer and ITT further agree that it is
therefore in their mutual best interest to set forth in this Agreement only the
general terms of Dealer's financing arrangement with ITT. Upon agreeing to
finance a particular item of inventory for Dealer, ITT will send Dealer a
Statement of Transaction identifying such inventory and the applicable financial
terms. Unless Dealer notifies ITT in writing of any objection within fifteen
(15) days after a Statement of Transaction is mailed to Dealer: (a) the amount
shown on such Statement of Transaction will be an account stated; (b) Dealer
will have agreed to all rates, charges and other terms shown on such Statement
of Transaction; (c) Dealer will have agreed that the items of inventory
referenced in such Statement of Transaction are being financed by ITT at
Dealer's request; and (d) such Statement of Transaction will be incorporated
herein by reference, will be made a part hereof as if originally set forth
herein, and will constitute an addendum hereto. If Dealer objects to the term so
of any Statement of Transaction, Dealer agrees to pay ITT for such inventory in
accordance with the most recent terms for similar inventory to which Dealer has
not objected (or, if there are no prior terms, at the lesser of 16% per annum or
at the maximum lawful contract rate of interest permitted under applicable law),
but Dealer acknowledged that ITT may then elect to terminate Dealer's financing
program pursuant to Section 12, and cease making additional advances to
CMF 1 AWF (A) 05/92
Misc\whslfin
<PAGE>
Dealer. Any termination for that reason, however, will not accelerate the
maturities of advances previously made unless Dealer shall otherwise be in
default of this Agreement.
3. To secure payment of all Dealer's current and future debts to ITT,
whether under this Agreement or any current or future guaranty or other
agreement, Dealer grants ITT a security interest in all Dealer's inventory,
equipment, fixtures, accounts, contract rights, chattel paper, instruments,
reserves, documents and general intangibles, whether now owned or hereafter
acquired, all attachments, accessories, accessions, substitutions and
replacements thereto and all proceeds thereof. All such assets are as defined in
the Uniform Commercial Code and referred to herein as the "Collateral". All
Collateral financed by ITT, and all proceeds thereof, will be held in trust by
Dealer for ITT, with such proceeds being payable in accordance with Section 7.
4. Dealer represents that all Collateral will be kept at Dealer's principal
place of business listed above, and, if any, the following other locations
Dealer will give ITT at least 30 days prior written notice of any change in
Dealer's identity, name, form of business organization, ownership, principal
place of business, Collateral locations or other business locations.
5. Dealer will: (a) only exhibit and sell Collateral financed by ITT to buyers
in the ordinary course of business; (b) not rent, lease, demonstrate, transfer
or use any Collateral financed by ITT without ITT's prior written consent; (c)
execute all documents ITT requests to perfect ITT's security interest in the
Collateral; (d) deliver to ITT immediately upon each request, and ITT may
retain, each Certificate of Title or Statement of Origin issued for Collateral
financed by ITT; and (e) immediately provide ITT with copies of Dealer's annual
financial statements upon their completion (which in no event shall exceed 120
days after the end of Dealer's fiscal year), and all other information regarding
Dealer that ITT requests from time to time. All financial information Dealer
delivers to ITT will accurately represent Dealer's financial condition either as
of the date of delivery, or, if different, the date specified therein, and
Dealer acknowledges ITT's reliance thereon.
6. Dealer will: (a) pay all taxes and fees assessed against Dealer or the
Collateral when due; (b) immediately notify ITT of any loss, theft or damage to
any Collateral; (c) keep the Collateral insured for its full insurable value
under a property insurance policy with a company acceptable to ITT, naming ITT
as a loss-payee and containing standard lender's loss payable and termination
provisions; and (d) provide ITT with written evidence of such insurance coverage
and loss-payee and lender's clauses. If Dealer fails to pay any taxes, fees or
other obligations which may impair ITT's interest in the Collateral, or fails to
keep the Collateral insured, ITT may pay such taxes, fees or obligations and pay
the costs to insure the Collateral, and the amounts paid will be: (i) an
additional debt owed by Dealer to ITT; and (II) due and payable immediately in
full. Dealer grants ITT an irrevocable license to enter Dealer's business
locations during normal business hours without notice to Dealer to: (A) account
for and inspect all Collateral; (B) verify Dealer's compliance with this
Agreement; and (c) examine and copy Dealer's books and records related to the
Collateral.
2
<PAGE>
7. Dealer will immediately pay ITT the principal indebtedness owed ITT on each
item of Collateral financed by ITT (as shown on the Statement of Transaction
identifying such Collateral) on the earliest occurrence of any of the following
events: (a) when such Collateral is lost, stolen or damaged; (b) for Collateral
financed under Pay-As-Sold ("PAS") terms (as shown on the Statement of
Transaction identifying such Collateral), when such Collateral is sold,
transferred, rented, leased, otherwise disposed of or matured; (c) in strict
accordance with any curtailment schedule for such collateral (as shown on the
Statement of Transaction identifying such Collateral); (d) for Collateral
financed under Scheduled Payment Program ("SPP") terms (as shown on the
Statement of Transaction identifying such Collateral), in strict accordance with
the installment payment schedule; and (e) when otherwise required under the
terms of any financing program agreed to in writing by the parties. Regardless
of the SPP terms pertaining to any Collateral financed by ITT, if ITT determines
that the current outstanding debt owned by Dealer to ITT exceeds the aggregate
wholesale invoice price of such Collateral in Dealer's possession, Dealer will
immediately upon demand pay ITT the difference between such outstanding debt and
the aggregate wholesale invoice price of such Collateral. If Dealer from time to
time is required to make immediate payment to ITT of any past due obligation
discovered during any Collateral audit, or at any other time, Dealer agrees that
acceptance of such payment by ITT shall not be construed to have waived or
amended the terms of its financing program. Dealer agrees that the proceeds of
any Collateral received by Dealer shall be held by Dealer in trust for ITT's
benefit, for application as provided in this Agreement. Dealer will send all
payments to ITT's branch office(s) responsible for Dealer's account. ITT may
apply: (i) payments to reduce finance charges first and then principal,
regardless of Dealer's instructions; and (ii) principal payments to the oldest
(earliest) invoice for Collateral financed by ITT, but, in any event, all
principal payments will first be applied to such Collateral which is sold, lost,
stolen, damaged, rented, leased, or otherwise disposed of or unaccounted for.
Any third party discount, rebate, bonus or credit granted to Dealer for any
Collateral will not reduce the debt Dealer owes ITT until ITT has received
payment therefor in cash. Dealer will: (i) pay ITT even if any Collateral is
defective or fails to conform to any warranties extended by any third party;
(ii) not assert against ITT any claim or defense Dealer has against any third
party; and (iii) indemnify and hold ITT harmless against all claims and defenses
asserted by any buyer of the Collateral relating to the condition of, or any
representations regarding, any of the Collateral. Dealer waives all rights of
offset Dealer may have against ITT.
8. Dealer will pay ITT finance charges on the outstanding principal debt Dealer
owes ITT for each item of Collateral financed by ITT at the rate(s) shown on the
Statement of Transaction identifying such Collateral, unless Dealer objects
thereto as provided in Section 2. The finance charges attributable to the rate
shown on the Statement of Transaction will: (a) be computed based on a 360 day
year, (b) be calculated by multiplying the Daily Charge (as defined below) by
the actual number of days in the applicable billing period; and (c) accrue from
the invoice date of the Collateral identified on such Statement of Transaction
until ITT receives full payment of the principal debt Dealer owes ITT for each
item of such Collateral. The "Daily Charge" is the product of the Daily Rate (as
defined below) multiplied by the Average Daily Balance (as defined below). The
"Daily Rate" is the quotient of the annual rate shown on the Statement of
3
<PAGE>
Transaction divided by 360, or the monthly rate shown on the Statement of
Transaction divided by 30. The "Average Daily Balance" is the quotient of (i)
the sum of the outstanding principal debt owed ITT on each day of a billing
period for each item of Collateral identified on a Statement of Transaction,
divided by (ii) the actual number of days in such billing period. Dealer will
also pay ITT $100 for each check returned unpaid for insufficient funds (an "NSF
check") (such $100 payment repays ITT's estimated administrative costs; it does
not waive the default caused by the NSF check). Dealer acknowledges that ITT
intends to strictly conform to the applicable usury laws governing this
Agreement and understands that Dealer is not obligated to pay any finance
charges billed to Dealer's account exceeding the amount allowed by such usury
laws, and any such excess finance charges Dealer pays will be applied to reduce
Dealer's principal debt owed to ITT. The annual percentage rate of the finance
charges relating to any item of Collateral financed by ITT shall be calculated
from the invoice date of such Collateral, regardless of any period during which
any finance charge subsidy shall be paid or payable by any third party. ITT will
send Dealer a monthly billing statement identifying all charges due on Dealer's
account with ITT. The charges specified on each billing statement will be: (A)
due and payable in full immediately on receipt, and (B) an account stated,
unless ITT receives Dealer's written objection thereto within 15 days after it
is mailed to Dealer. If ITT does not receive, by the 25th day of any given
month, payment of all charges accrued to Dealer's account with ITT during the
immediately preceding month, Dealer will (to the extent allowed by law) pay ITT
a late fee ("Late Fee") equal to the greater of $5 or 5% of the amount of such
finance charges (such Late Fee repays ITT's estimated administrative costs; it
does not waive the default caused by the late payment). ITT may adjust the
billing statement at any time to conform to applicable law and this Agreement.
9. Dealer will be in default under this Agreement if: (a) Dealer breaches any
terms, warranties or representations contained herein, in any Statement of
Transaction to which Dealer has not objected as provided in Section 2, or in any
other agreement between ITT and Dealer, (b) any guarantor of Dealer's debts to
ITT breaches any terms, warranties or representations contained in any guaranty
or other agreement between the guarantor and ITT; (c) any representation,
statement, report or certificate made or delivered by Dealer or any guarantor to
ITT is not accurate when made; (d) fails to pay any portion of Dealer's debts to
ITT when due and payable hereunder or under any other agreement between ITT and
Dealer, (e) Dealer abandons any Collateral; (f) Dealer or any guarantor is or
becomes in default in the payment of any debt owned to any third party; (g) a
money judgment issues against Dealer or any guarantor; (h) an attachment, sale
or seizure issues or is executed against any assets of Dealer or of any
guarantor; (i) the undersigned dies while Dealer's business is operated as a
sole proprietorship or any general partner dies while Dealer's business is
operated as a general or limited partnership; (j) any guarantor dies; (k) Dealer
or any guarantor shall cease existence as a corporation, partnership or trust;
(l) Dealer or any guarantor ceases or suspends business; (m) Dealer or any
guarantor makes a general assignment for the benefit or creditors; (n) Dealer or
any Guarantor becomes insolvent or voluntarily or involuntarily becomes subject
to the Federal Bankruptcy Code, any state insolvency law or any similar law; (o)
any receiver is appointed for any of Dealer's or any guarantor's assets; (p) any
guaranty of Dealer's debts to ITT is terminated; (q) Dealer loses any franchise,
permission, license or right to sell or deal in any Collateral which ITT
finances; (r)
4
<PAGE>
Dealer or any guarantor misrepresents Dealer's or such guarantor's financial
condition or organizational structure; or (s) any of the Collateral becomes
subject to any lien, claim, encumbrance or security interest prior or superior
to ITT's. In the event of a default:
(i.) ITT may at any time at ITT's election, without notice or demand to
Dealer, do any one or more of the following; declare all or any part of the debt
Dealer owes ITT immediately due and payable, together will all costs and
expenses of ITT's collection activity, including, without limitation, all
reasonable attorney's fees; exercise any or all rights under applicable law
(including, without limitation, the right to possess, transfer and dispose of
the Collateral); and/or cease extending any additional credit to Dealer (ITT's
right to cease extending credit shall not be construed to limit the
discretionary nature of this credit facility).
(ii.) Dealer will segregate and keep the Collateral in trust for ITT, and
in good order and repair, and will not exhibit, sell, rent, lease, further
encumber, otherwise dispose of or use any Collateral.
(iii.) Upon ITT's oral or written demand, Dealer will immediately deliver
the Collateral to ITT, in good order and repair, at a place specified by ITT,
together with all related documents; or ITT may, in ITT's sole discretion and
without notice or demand to Dealer, take immediate possession of the Collateral
together with all related documents.
(iv.) ITT may, without notice, apply a default finance charge to Dealer's
outstanding principal indebtedness equal to the default rate specified in
Dealer's financing program with ITT, if any, or if there is none so specified,
at the lesser of 3% per annum above the rate in effective immediately prior to
the default, or the highest lawful contract rate of interest permitted under
applicable law.
All ITT's rights and remedies are cumulative. ITT's failure to exercise any of
ITT's rights or remedies hereunder will not waive any of ITT's rights or
remedies as to any past, current of future default.
10. Dealer agrees that if ITT conducts a private sale of any Collateral by
requesting bids from 10 or more dealers or distributors in that type of
Collateral, any sale by ITT of such Collateral in bulk or in parcels within 120
days of: (a) ITT's taking possession and control of such Collateral; or (b) when
ITT is otherwise authorized to sell such Collateral; whichever occurs last, to
the bidder submitting the highest cash bid therefor, is a commercially
reasonable sale of such Collateral under the Uniform Commercial Code. Dealer
agrees that the purchase of any Collateral by a vendor, as provided in any
agreement between ITT and the vendor, is a commercially reasonable disposition
and private sale of such Collateral under the Uniform Commercial Code, and no
request for bids shall be required. Dealer further agrees that 7 or more days
prior written notice will be commercially reasonable notice of any public or
private sale (including any sale to a vendor). If ITT disposes of any such
Collateral other than as herein contemplated, the
5
<PAGE>
commercial reasonableness of sch disposition will be determined in accordance
with the laws of the state governing this agreement.
11. Dealer grants ITT an irrevocable power of attorney to: execute or endorse on
Dealer's behalf any checks, financing statements, instruments, Certificates of
Title and Statements of Origin pertaining to the Collateral; supply any omitted
information and correct errors in any documents between ITT and Dealer, do
anything Dealer is obligated to do hereunder, initiate and settle any insurance
claim pertaining to the Collateral; and do anything to preserve and protect the
Collateral and ITT's rights and interest therein. ITT may provide to any third
party any credit, financial or other information on Dealer that ITT may from
time to time possess.
12. Time is of the essence. This Agreement is deemed to have been entered into
at the ITT branch office executing this Agreement. Either party may terminate
this Agreement at any time by written notice received by the other party. If ITT
terminates this Agreement, Dealer agrees that if Dealer: (a) is not in default
hereunder, 30 days prior notice of termination is reasonable and sufficient
although this provision shall not be construed to mean that shorter periods may
not, in particular circumstances, also be reasonable and sufficient); or (b) is
in default hereunder, no prior notice of termination is required. Dealer will
not be relieved from any obligation to ITT arising out of ITT's advances or
commitments made before the effective termination date of this Agreement. ITT
will retain all of its rights, interests and remedies hereunder until Dealer has
paid all Dealer's debts to ITT. Dealer cannot assign Dealer's interest in this
Agreement without ITT's prior written consent, although ITT may assign or
participate ITT's interest, in whole or in part, without Dealer's consent. This
Agreement will protect and bind ITT's and Dealer's respective heirs,
representatives, successors and assigns. All agreements or commitments to extend
or renew credit or refrain from enforcing payment of a debt must be in writing.
Any oral or other amendment or waiver claimed to be made to this Agreement that
is not evidenced by a written document executed by ITT and Dealer (except for
each Statement of Transaction that Dealer does not object to in the manner
stated in Section 2) will be null, void and have no force or effect whatsoever.
If any provision of this Agreement or its application is invalid or
unenforceable, the remainder or this Agreement will not be impaired or affected
and will remain binding and enforceable. If Dealer previously executed any
security agreement with ITT. This Agreement will only amend and supplement such
Agreement. If due terms hereof conflict with the terms of any such prior
security agreement, be terms of this Agreement will govern. Dealer agrees to pay
all of ITT's reasonable attorneys fees and expenses incurred by ITT in enforcing
ITT's rights hereunder.
13. BINDING ARBITRATION, Except as otherwise specified below, all actions,
disputes, claims and controversies under common law, statutory law or in equity
of any type of nature whatsoever (including, without limitation, all torts,
whether regarding negligence, breach of fiduciary duty, restraint of trade,
fraud, conversion, duress, interference, wrongful replevin, wrongful
sequestration, fraud in the inducement, or any other tort, all contract actions,
whether regarding express or implied terms, such as implied covenants of good
faith, fair dealing, and the commercial reasonableness of any Collateral
disposition, or any other contract claim, all claims of
6
<PAGE>
deceptive trade practices or lender liability, and all claims questioning the
reasonableness or lawfulness of any act), whether arising before or after the
date of this Agreement, and whether directly or indirectly relating to: (a) this
Agreement and/or any amendments and addenda hereto, or the breach, invalidity or
termination hereof; (b) any previous or subsequent agreement between ITT and
Dealer; and/or (c) any other relationship, transaction or dealing between ITT
and Dealer (collectively the Disputes"), will be subject to and resolved by
binding arbitration.
13.1 All arbitration hereunder will be pursuant to either; (a) the Code of
Procedure in effect from time to time ("Code") of the National Arbitration forum
("NAF"), currently located at 2124 Dupont Avenue South, Minneapolis,
Minneapolis, Minnesota 55405; or (b) the Commercial Arbitration Rules ("Rules")
in effect from time to time of the American Arbitration Association ("AA"),
currently located at 140 West 51st Street, New York, New York 10020-1203. The
party first filing any claim for arbitration shall designate which arbitration
procedures are to be applied for all Disputes between Dealer and ITT, although
if either the NAF or AAA is dissolved, the procedures of the remaining
arbitration body must be used. A copy of the Code, Rules and any fee schedule of
the NAF or AAA may be obtained by contacting the NAF or AAA, as applicable. The
parties agree that all arbitrators selected shall be attorneys. The
arbitrator(s) will decide if any inconsistency exists between the Code, or
Rules, as applicable, and the arbitration provisions contained herein. If any
such inconsistency exists, the arbitration provisions contained herein will
control and supersede the Code, or Rules, applicable. The site of all
arbitration participatory bearings will be in the Division of the Federal
Judicial District of ITT's branch office closes to Dealer. The laws of the State
of Michigan will govern this Agreement; provided, however, that the Federal
Arbitration Act ("FAA"), to the extent inconsistent, will supersede the laws of
such state and govern. This Agreement concerns transactions involving commerce
among the several states. All arbitration proceedings, including testimony or
evidence at hearings, will be kept confidential, although any award or order
rendered by the arbitrator(s) or directors of arbitration pursuant to the terms
of this Agreement may be entered as a judgment or order and enforced by either
party in any state or federal court having competent jurisdiction.
13.2 Nothing herein will be construed to prevent ITT's or Dealer's use of
bankruptcy, receivership, injunction, repossession, replevin, claim and
delivery, sequestration, seizure, attachment, foreclosure, dation and/or any
other prejudgment or provisional action or remedy relating to any Collateral for
any current or future debt owned by either party to the other. Any such action
or remedy will not waive ITT's or Dealer's right to compel arbitration of any
Dispute. If either Dealer or ITT brings any other action for judicial relief
with respect to any Dispute, the party bringing the action will be liable for
and immediately pay all of the other party's costs and expenses (including
attorneys' fees) incurred to stay or dismiss such action and remove or refer
such Dispute to arbitration. If either Dealer or ITT brings or appeals an action
to vacate or modify an arbitration award and such party does not prevail, such
party will pay all costs and expenses, including attorneys' fees, incurred by
the other party in defending such action.
13.3 Any arbitration proceeding must be instituted: (a) with respect to any
Dispute for the collection of any debt owed by either party to the other, within
two (2) years after the date the
7
<PAGE>
last payment was received by the instituting party; and (b) with respect to any
other Dispute, within two (2) years after the date the incident giving rise
thereto occurred, whether or not any damage was sustained or capable of
ascertainment or either party knew of such incident. Failure to institute an
arbitration proceeding within such period will constitute an absolute bar and
waiver to the institution of any proceeding with respect to such Dispute. Except
as otherwise stated herein, all notices, arbitration claims, responses, requests
and documents will be sufficiently given or served if mailed or delivered: (i)
to Dealer at Dealer's principal place of business specified above; and (ii) to
ITT at 8251 Maryland Avenue, Clayton, Missouri 63105, Attention: General
Counsel, or such other address as the parties may specify from time to time in
writing. No arbitration hereunder will include, by consolidation, joinder or
otherwise, any third party, unless such third party agrees to arbitrate pursuant
to the arbitration provisions contained herein and the Code, or Rules, as
applicable.
14. If Section 13 of this Agreement or its application is invalid or
unenforceable, any legal proceeding with respect to any Dispute will be tried in
a court of competent jurisdiction by a judge without a jury. Dealer and ITT
waive any right to a jury trial in any such proceeding.
THIS CONTRACT CONTAINS BINDING ARBITRATION AND JURY WAIVER
PROVISIONS.
ITT COMMERCIAL FINANCE CORP. Boat Tree, Inc.
Dealer's Name
By: By:/s/ Joe Pozo
Print Name: Print Name:Joseph G. Pozo
Title: Title:Sole Corporate Officer
ATTEST: I hereby state that I am the
Sole Corporate Officer of Said
Corporation
(Assistant) Secretary
Print Name:
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth certain
resolutions of the Board of Directors of the corporation adopted at a special
meeting thereof held on due notice (and with shareholder
8
<PAGE>
approval, if required by law), at which meeting there was present a quorum
authorized to transact the business described below, and that the proceedings of
the meeting were in accordance with the certificate of incorporation, charter
and by-laws of the corporation, and that they have not been revoked, annulled or
amended in any manner whatsoever.
Upon motion duly made and seconded, the following resolution was unanimously
adopted after full discussion: "RESOLVED, That the several officers, directors,
and agents of this corporation, or any one or more of them, we hereby authorized
an empowered on behalf of this corporation: to obtain financing from ITT
Commercial Finance Corp. ("ITT") in such amounts and on such terms as such
officers, directors or agents deem proper; to enter into financing, security,
pledge and other agreements with ITT relating to the terms upon which such
financing may be obtained and security and/or other credit support is to be
furnished by this corporation therefor; from time to time to supplement or amend
any such agreements; and from time to time to pledge, assign, mortgage, grant
security interests, and otherwise transfer to ITT as collateral security for any
obligations of this corporation to ITT, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation on
the date stated below.
Dated: , 19
Assistant Secretary
Corporate Name
9
<PAGE>
ADDENDUM TO AGREEMENT FOR WHOLESALE FINANCING
This Addendum is made to that certain Agreement for Wholesale Financing
entered into by and between Boat Tree, Inc. ("Dealer") and Deutsche Financial
Services Corporation ("DFS") on August 1, 1993, as amended ("Agreement").
FOR VALUE RECEIVED, DFS and Dealer agree that the following paragraph
is incorporated into the Agreement as if fully and originally set forth therein:
"Dealer will maintain a Tangible Net Worth and Subordinated
Debt in the combined amount of not less than Five Hundred
Thousand Dollars ($500,000.00).
For purposes of this paragraph: (i) 'Tangible Net Worth" means
the book value of Dealer's assets less liabilities, excluding
from such assets all Intangibles; (ii) 'Intangibles' means and
includes general intangibles (as that term is defined in the
Uniform Commercial Code); accounts receivable and advances due
from officers, directors, employees, stockholders and
affiliates; leasehold improvements net of depreciation;
licenses; good will; prepaid expenses; escrow deposits;
covenants not to compete; the excess of cost over book value
of acquired assets; franchise fees; organizational costs;
finance reserves held for recourse obligations; capitalized
research and development costs; and such other similar items
as DFS may from time to time determine in DFS' sole
discretion; (iii) 'Debt' means all of Dealer's liabilities and
indebtedness for borrowed money of any kind and nature
whatsoever, whether direct or indirect, absolute or
contingent, and including obligations under capitalized
leases, guaranties or with respect to which Dealer has pledged
assets to secure performance, whether or not direct recourse
liability has been assumed by Dealer; (iv) 'Subordinated Debt'
means all of Dealer's Debt which is subordinated to the
payment of Dealer's liabilities to DFS by an agreement in form
and substance satisfactory to DFS; and (v) 'Current Tangible
Assets' means Dealer's current assets less, to the extent
otherwise included therein, all Intangibles. The foregoing
terms will be determined in accordance with generally accepted
accounting principles consistently applied, and, if
applicable, on a consolidated basis."
Dealer waives notice of DFS' acceptance of this Addendum.
mrosenberg/boattree/addendum.01
1
<PAGE>
All other terms and provisions of the Agreement, to the extent not
inconsistent with the foregoing, are ratified and remain unchanged and in full
force and effect.
IN WITNESS WHEREOF, Dealer and DFS have executed this Addendum on this
21st day of June, 1998.
BOAT TREE, INC.
/s/ Joseph G.Pozo, Jr.
ATTEST:
By:Joseph G. Pozo, Jr.
Title:President
- ----------------------------------
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By:
Title:
mrosenberg/boattree/addendum.01
2
<PAGE>
6/29/98
RETAIL SPACE LEASE
THIS LEASE ("Lease") is entered into as of the date set forth in
Article 1 by and between Landlord and Tenant.
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 Date of Lease: June 16, 1998
1.2 Landlord: Marina Opportunity I (Tierra Verde), L.P.
1.3 Tenant: Boat Tree, Inc.
1.4 Tenant's Trade Name: Boat Tree
(Article 11)
1.5 Shopping Center: Tierra Verde Marine Center;
(Article 2) located in Pinellas County, Florida
1.6 Premises: Approximately 4,800 square feet located in the
(Article 3) Shopping Center at 120 Pinellas Bayway, as shown
on Exhibit B-1 attached hereto, and approximately
1,200 square feet located on a tract adjacent to U.S.
19, as shown on Exhibit B-2 attached hereto
1.7 Floor Area: A total of approximately 6,000 square feet,
(Article 3) approximately 4,800 square feet being located in the
Shopping Center (as shown on
Exhibit B-1), and
approximately 1,200 square
feet being located on a tract
adjacent to U.S. 19 (as shown
on Exhibit B-2).
1.8 Term: Sixty (60) months
(Article 4)
boattree\misc\tierra.lse
1
<PAGE>
1.9 Minimum Annual Rental:
(Article 7)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Months Following
The Rental
Commencement Dollars Per Dollars Per Annum Dollars Per Month
Date Square Foot
1-12 $16 $96,000 $8,000
12-24 $18 $108,000 $9,000
25-60 $20 $120,000 $10,000
</TABLE>
1.10 Percentage Rate: Nine Percent (9%) (Article 7)
1.11 Use of Premises: Boat sales, showroom and office (with the exclusive
right to (Article 11) the sale or brokerage of boats, watercraft, boat motors or
boat trailers, as set forth in Article 15)
1.12 Security Deposit: $4,000 (Article 22)
1.13 Addresses for Notices and Payments: (Article 24)
LANDLORD TENANT
Notices To: Notices To The Premises:
Marina Opportunity I (Tierra
Verde), L.P.
6142 Campbell Road, Suite 200
Dallas, Texas 75248
Landlord's Address for Payments
and Reports:
Marina Opportunity I (Tierra
Verde), L.P.
110 Pinellas Bayway
Tierra Verde, Florida 33715
boattree\misc\tierra.lse
2
<PAGE>
This Article 1 is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article 1 and the balance of this
Lease, the balance of this Lease shall control.
ARTICLE 2
EXHIBITS
The following Exhibits and Addendum are attached to this Lease and, by
this reference, made a part of this Lease:
EXHIBIT A -- Site plan of a retail shopping center and/or commercial
development constructed on real property located in the County and State
specified in Article 1 (the "Shopping Center"). Exhibit A shows, among other
things, the principal improvements which currently comprise the Shopping Center,
as well as those additional improvements which Landlord currently contemplates
constructing in the Shopping Center. Landlord, at any time, may change the
shape, size, location, number and extent of the improvements shown on Exhibit A
and eliminate, add or relocate any improvements to any portion of the Shopping
Center, including, without limitation, buildings, parking areas, roadways, curb
cuts, temporary or permanent kiosks, displays or stands, and may add land to
and/or withdraw land from the Shopping Center, so long as such actions do not
(a) materially alter the access of Tenant and its customers to the Shopping
Center Premises, or (b) materially alter the visibility of Tenant's facility
from adjacent roadways, or (c) reduce the outside display area of Tenant.
EXHIBIT B-1 and B-2 -- Premises
EXHIBIT C -- Construction Provisions
EXHIBIT D -- Example of Tax and Insurance Increases in Respect of the Shopping
Center Premises
EXHIBIT E -- Rules and Regulations
EXHIBIT F -- Signage
EXHIBIT G -- Addendum - Special Provisions
ARTICLE 3
PREMISES
boattree\misc\tierra.lse
3
<PAGE>
3.1 PREMISES. Landlord leases to Tenant and Tenant leases from Landlord
for the Term (as defined in Article 4), and upon the covenants and conditions
set forth in this Lease, the premises described in Section 1.6 under "Premises"
(the "Premises"). The portion of the Premises shown on Exhibit B-1 are herein
referred to as the "Shopping Center Premises" and the portion of the Premises
shown on Exhibit B-2 are herein referred to as the "U.S. 19 Premises." The U.S.
19 Premises are not located in the Shopping Center, and, accordingly, references
in this Lease to Premises located in the Shopping Center shall refer only to the
Shopping Center Premises and not to the U.S. 19 Premises. The parties agree that
all existing furniture, displays, fixtures and equipment (including fax
machines, phone systems, computer equipment and printers, photocopying machines
and any office trailer) located in the Premises shall remain in the Premises and
may be used by Tenant without any additional cost; however, such items shall
remain the property of Landlord. As soon as practicable after the execution of
this Lease, Landlord and Tenant shall agree upon an inventory of items in the
Premises which Tenant will be allowed to use pursuant to the preceding sentence,
such inventory to be determined in good faith by the parties hereto.
Furthermore, it is agreed that so long as this Lease remains in effect (a)
Tenant, at no additional cost, shall have the right to use an area outside of
the Shopping Center Premises for the display of boats (the exact configuration
of such area to be agreed upon by the parties acting in good faith); (b) Tenant,
at no additional cost, shall have the right to use at least four (4) wet slips
in the marina adjacent to the Shopping Center in connection with its boat sales
operation; (c) Tenant, at no additional cost, shall have the right to use
eighteen (18) outdoor storage racks, as designated by Landlord from time to
time, for new and used boats in the proximity of the Shopping Center Premises;
and (d) Tenant shall have the right to utilize from time to time, as needed, the
forklifts owned by Landlord (with operators employed by Landlord) for the
purpose of moving and launching Tenant's boats; provided, however, that (i)
Tenant shall pay Landlord a charge of $2.50 per move for such services, and (ii)
Landlord shall not be required to provide such services to Tenant to the extent
that same unreasonably interfere with the operation of Landlord's business.
3.2 RESERVATION. Landlord reserves the right to use the exterior walls,
floor, roof and plenum in, above and below the Premises for the installation,
maintenance, use and replacement of pipes, ducts, conduits, wires, alarm lines,
heating, ventilating and air conditioning lines, fire protection lines and
systems, electric power, telephone and communication lines and systems, sanitary
sewer lines and systems, gas lines and systems, water lines and systems, and
structural elements serving the Shopping Center and for such other purposes as
Landlord deems necessary.
3.3 FLOOR AREA. The parties hereto stipulate that the Premises contain
the number of square feet of Floor Area specified as "Floor Area" in Section
1.7.
ARTICLE 4
TERM
boattree\misc\tierra.lse
4
<PAGE>
The term of this Lease (the "Term") shall commence on the Rental
Commencement Date (as defined in Section 7.1) and shall continue, unless sooner
terminated in accordance with the provisions of this Lease, for the number of
months specified in Section 1.8 as "Term", computed from the first day of the
month following the Rental Commencement Date.
ARTICLE 5
POSSESSION
5.1 DELIVERY OF POSSESSION. Except as otherwise provided herein,
Landlord and Tenant agree that it is a condition precedent to the obligations of
the parties in respect of this Lease that Landlord acquire the Premises.
Landlord shall tender possession of the Premises to Tenant no later than the
fifteenth (15th) business days after Landlord acquires the Premises; provided,
however, Landlord shall not be obligated to deliver possession of the Premises
to Tenant until Landlord has received from Tenant all of the following: (a) the
Security Deposit, the first monthly installment of Tenant's estimated share of
Taxes and Insurance Expenses and the first monthly installment of Minimum Annual
Rental (as each is defined in this Lease); (b) executed copies of policies of
insurance or certificates thereof as required under Article 16; and (c) copies
of governmental permits and authorizations as required under this Lease. Tenant
shall accept possession of the Premises at such time as Landlord tenders same to
Tenant.
ARTICLE 6
OPENING DATE
6.1 OPENING DATE. Tenant shall open for business to the public in the
Premises as soon as practicable after the Rental Commencement Date.
6.2 CERTIFICATES. Within ten (10) days after Tenant initially opens for
business to the public in the Premises, Tenant shall (a) execute and deliver to
Landlord a certificate substantially in accordance with the criteria set forth
in Section 21.3 of this Lease (the "Tenant's Certificate"), and (b) deliver to
Landlord the Certificate of Occupancy for the Premises issued by the appropriate
governmental agency.
ARTICLE 7
RENTAL
7.1 RENTAL COMMENCEMENT DATE. The term "Rental Commencement Date" as used
in this Lease shall mean the fifteenth (15th) business day after Landlord
acquires title to the Premises.
boattree\misc\tierra.lse
5
<PAGE>
7.2 MINIMUM ANNUAL RENTAL. Subject to the provisions of Section 7.3
below, Tenant shall pay the sum specified in Section 1.9 as "Dollars Per Annum"
(the Minimum Annual Rental") in the monthly installments so specified, in
advance, on or before the first (1st) day of each month, without prior demand,
offset or deduction, commencing on the Rental Commencement Date. Should the
Rental Commencement Date be a day other than the first day of a calendar month,
then the monthly installment of Minimum Annual Rental for the first fractional
month shall be equal to one-thirtieth (1/30th) of the monthly installment of
Minimum Annual Rental for each day from the Rental Commencement Date to the end
of the partial month.
7.3 PERCENTAGE RENTAL.
(a) After the first year of the Term, Landlord may, at
Landlord's sole election, require Tenant to pay, in lieu of the Minimum
Annual Rental specified in Section 1.9, an amount (the "Percentage
Rental") equal to the product obtained by multiplying the percent
specified as "Percentage Rate" in Section 1.10 (the "Percentage Rate")
by Tenant's Gross Profit (as defined in sub-paragraph (b) below). After
the first year of the Term, Landlord shall have the right to elect, on
an annual basis, whether Tenant is to pay Minimum Annual Rental or
Percentage Rental for the succeeding calendar year by sending written
notice to Tenant on or before January 31 of such succeeding calendar
year; provided, however, that Tenant has delivered to Landlord the
financial information required to be delivered by Tenant under this
Lease. During any year in which Tenant is paying Percentage Rental,
Tenant shall, on or before the tenth (10th) day of each month during
the Term, pay to Landlord the Percentage Rental for the preceding
calendar month. Within thirty (30) days following receipt by Landlord
of Tenant's annual statement certified by Tenant as provided in
sub-paragraph (c) below, Landlord shall determine the Gross Profit of
Tenant for the preceding calendar year and the amount paid to Landlord
as Percentage Rental and shall make an adjustment as follows: If Tenant
paid to Landlord an amount greater than the Percentage Rental required
to be paid for said year, Tenant shall be entitled to a credit against
Tenant's next payment(s) of rental for the amount of the overpayment.
If Tenant paid an amount less than the Percentage Rental required to be
paid, the difference shall be paid to Landlord with the submission of
said annual certified statement. Percentage Rental shall be computed
separately with respect to each calendar year. Notwithstanding anything
contained herein to the contrary, if Landlord elects that Tenant pay
Percentage Rental during a calendar year, Landlord shall have the right
to revoke such election and to require Tenant to pay Minimum Annual
Rental thereafter if during such calendar year (i) Tenant fails to
continuously and uninterruptedly conduct its business as required by
Article 11; or (ii) Tenant otherwise defaults in its obligations under
this Lease; or (iii) Tenant's business is interrupted by an event of
casualty, a Taking (as hereinafter defined), or for any other reason.
(b) The term "Gross Profit" as used in this Lease means the
positive difference between Gross Boat Sales and Qualified Boat Costs.
As used in this Lease, the term "Gross Boat Sales" means the total
gross selling price of all boats, watercraft and related
boattree\misc\tierra.lse
6
<PAGE>
merchandise sold or rented in or from the Premises by Tenant, its
subtenants, licensees and concessionaires, whether for cash or on
credit, excluding therefrom the following: (i) the selling price of all
boats, watercraft and related merchandise returned by customers and
accepted for full credit; (ii) interest or other charges paid by
customers or other charges paid by customers for extension of credit;
(iii) sales taxes, excise taxes, or gross receipts taxes imposed by
governmental entities upon the sale of boats, watercraft and related
merchandise, but only if collected from customers separately from the
selling price and paid directly to the respective governmental
entities; (iv) sums and credits received in the settlement of claims
for loss of or damage to boats, watercraft and related merchandise, to
the extent previously reported as gross sales; (v) the price allowed on
all boats, watercraft and related merchandise traded in by customers
for credit or the amount of credit for discounts and allowances made in
lieu of acceptance thereof; (vi) cash refunds made to customers in the
ordinary course of business; (vii) gift certificates, or like vouchers,
until such time as the same shall have been converted into a sale by
redemption; and (viii) revenues derived from the sale of finance and
insurance products. All sales originating at the Premises shall be
deemed made and completed from the Premises, even though bookkeeping or
payment of the account is transferred to another location for
collection, or filling of the sale order and actual delivery of the
boat, watercraft or other merchandise is made from a location other
than the Premises. Each installment sale, credit sale or layaway sale
shall be treated as a sale for the full cash price at the time of sale
or deposit. As used in this Lease, the term "Qualified Boat Costs"
means the sum of (1) the cost of boats, watercraft and related
merchandise sold at the Premises which is paid by Tenant to the dealer
thereof~ (2) the expenses paid by Tenant to make the boats, watercraft
and related merchandise sold at the Premises ready for sale; and (3)
the rigging costs paid by Tenant in respect of the boats, watercraft
and related merchandise sold at the Premises.
(c) Tenant shall furnish to Landlord a statement of Gross
Profit certified by Tenant within ten (10) days after the close of each
calendar month, and an annual statement certified by Tenant, including
a monthly breakdown of Gross Profit, on or before the twentieth (20th)
day of January of each calendar year. Statements shall include a
breakdown of Gross Boat Sales and Qualified Boat Costs, as well as the
Gross Profit of all subtenants, licensees and concessionaires. If
Tenant is required to pay Percentage Rental in respect of such calendar
year, the certified annual statement shall be accompanied by a payment
to Landlord of any underpayment of Percentage Rental as provided in
subparagraph (a) above.
7.4 ADDITIONAL RENTAL. Tenant shall pay, as "Additional Rental", all
sums required to be paid by Tenant to Landlord pursuant to this Lease in
addition to Minimum Annual Rental or Percentage Rental (as the case may be),
whether or not the same be designated "Additional Rental" (the "Additional
Rental").
7.5 PLACE OF PAYMENT. Tenant shall a Minimum Annual Rental or Percentage
Rental (as the case may be) and Additional Rental to Landlord at the address
specified as "Landlord's
boattree\misc\tierra.lse
7
<PAGE>
Address for Payments and Reports" in Section 1.13 or to such other address
and/or person as Landlord may from time to time designate in writing to Tenant.
7.6 LATE PAYMENTS. If Tenant fails to a when the same is due and
payable any Minimum Annual Rental or Percentage Rental (as the case may be) or
Additional Rental, the unpaid amounts shall bear interest at the maximum lawful
rate from the date due to the date of payment. Further, and without in any
manner waiving Tenant's default or limiting Landlord's remedies in equity or at
law, should Tenant fail to make a timely payment of Minimum Annual Rental or
Percentage Rental (as the case may be) or Additional Rental two (2) or more
times during the Term, Landlord, at its option, may require (a) Tenant to pay
Minimum Annual Rental or Percentage Rental (as the case may be) in quarterly
installments, in advance for the balance of the Term; or (b) the amount
specified in Section 1.17 as "Security Deposit" to be increased by one hundred
percent (100%).
ARTICLE 8
TENANT FINANCIAL DATA
8.1 RECORDATION OF SALES. At the time of a sale or other transaction,
Tenant shall record the sale or other transaction using Tenant's existing
accounting and recording system.
8.2 BOOKS AND RECORDS. For a period of at least three (3) years
following the close of each calendar year, Tenant shall keep at its corporate
headquarters (currently located in Orlando, Florida) full and accurate books of
account and records relative to transactions in the Premises in accordance with
generally accepted accounting principals consistently applied. Without limiting
the generality of the foregoing, the following records shall be kept by Tenant:
(a) federal and state income tax returns; (b) state and local sales taxes and
use tax returns; (c) copies of all sales slips; (d) bank statements and deposit
receipts; (e) paid invoices for the purchase of merchandise; (0 merchandising,
receiving and shipping records; (g) sales journal and general ledger; and (h)
any other financial information which Landlord reasonably deems necessary in
order to confirm Tenant's calculation of Gross Profit.
8.3 AUDITS. Landlord, at any time within sixty (60) days after receipt
of any statement and upon no less than thirty (30) days prior written notice to
Tenant, may cause an audit to be made of Tenant's Gross Profit and all Tenant's
books and records related to sales from the Premises. Tenant shall make
available for the audit these books and records at the office of Tenant in
Florida in which such books and records are located. If the audit discloses an
underpayment of Percentage Rental, Tenant shall immediately pay to Landlord the
amount of the underpayment with interest at the rate set forth in Section 27.17
from the date the payment should have been made. If the audit discloses an
under-reporting of Gross Profit in excess of five percent (5%) of Gross Profit,
then Tenant shall also immediately pay to Landlord all reasonable costs and
expenses incurred in the audit and in collecting the underpayment, including
auditing costs and attorneys' fees. If the audit
boattree\misc\tierra.lse
8
<PAGE>
discloses an under-reporting of Gross Profit in excess of ten percent (10%) of
Gross Profit, then, in addition to Landlord's other rights contained in this
Section 8.3, Landlord may terminate this Lease upon notice to Tenant.
8.4 FINANCIAL STATEMENTS. Within thirty (30) days after Landlord's
written request, Tenant shall furnish Landlord with the following documents: (a)
financial statements, including balance sheets, profit and loss statements and
changes to financial condition, reflecting Tenant's current financial condition,
and (b) written evidence of ownership of controlling stock interest if Tenant is
a corporation, or of ownership of interests in profits and losses if Tenant is a
partnership. Any information obtained from Tenant's financial statements shall
be confidential and shall not be disclosed other than to carry out the purposes
of this Lease; however, Landlord may divulge the contents of any financial
statements in connection with any financing arrangement or assignment of
Landlord's interest in the Premises or Shopping Center or in connection with any
administrative or judicial proceedings.
ARTICLE 9
TAXES AND INSURANCE PREMIUMS
9.1 REAL PROPERTY TAXES.
(a) As used in this Lease, the term "Taxes" shall include any
form of tax or assessment, license fee, license tax, tax or excise on
rent, or any other levy, charge, expense or imposition (individually
and collectively "impositions") imposed by any federal, state, county
or city authority having jurisdiction, or any political subdivision
thereof, or any school, agricultural, lighting, drainage or other
improvement or special assessment district (individually and
collectively "governmental agencies"), on any interest of Landlord or
Tenant (including any legal or equitable interest of Landlord or its
mortgagee, if any) in the Premises, the remainder of the Shopping
Center or the underlying realty, including but not limited to: (i) Any
impositions (whether or not such impositions constitute tax receipts to
governmental agencies) in substitution, partially or totally, of any
impositions now or previously included within the definition of real
property taxes including those imposed or required by governmental
agencies to increase tax increments to governmental agencies, and for
services such as fire protection, street, sidewalk and road
maintenance, refuse removal or other governmental services formerly
provided without charge to property owners or occupants; (ii) any
impositions allocable to or measured by the area of the Premises or any
rental payable under this Lease; and (iii) any impositions upon this
Lease transaction or any document to which Tenant is a party, creating
or transferring an interest or an estate in the Premises. The term
"Taxes" shall not include Landlord's general income taxes, inheritance,
estate or gift taxes.
boattree\misc\tierra.lse
9
<PAGE>
(b) As used in this Lease, the term "Insurance Premiums" shall
include premiums paid by Landlord for insurance policies in respect of
the Shopping Center, including specifically, without limitation, fire
and casualty insurance, liability insurance, and any insurance required
by any mortgagee of the Shopping Center.
(c) From and after the Rental Commencement Date, Tenant shall
pay to Landlord, as Additional Rental, Taxes and Insurance Premiums
pursuant to subparagraph (d) below. Taxes for any partial year shall be
prorated. Landlord, at its option, may collect Tenant's payment of its
share of Taxes and Insurance Premiums after the actual amount of Taxes
and Insurance Premiums are ascertained, or in advance monthly or
quarterly based upon estimated Taxes and Insurance Premiums. If
Landlord elects to collect Tenant's share of Taxes and Insurance
Premiums based upon estimates, Tenant shall pay to Landlord from and
after the Rental Commencement Date, and thereafter on the first day of
each month or quarter during the Term (as determined by Landlord), an
amount estimated by Landlord to be the monthly or quarterly Taxes and
Insurance Premiums payable by Tenant. Landlord may periodically adjust
the estimated sum on the basis of Landlord's reasonable judgment. If
Landlord collects Taxes and Insurance Premiums based upon estimated
amounts, then within sixty (60) days following the end of each calendar
year, or at Landlord's option, its fiscal year, Landlord shall furnish
Tenant a statement covering the year just expired showing the total
Taxes and Insurance Premiums payable by Tenant for that year and the
payments made by Tenant with respect to that year as set forth above.
If the actual Taxes and Insurance Premiums payable for that year exceed
Tenant's payments for that year, Tenant shall pay to Landlord the
deficiency within ten (10) days after receipt of the statement. If the
payments exceed the actual Taxes and Insurance Premiums payable for
that year, Tenant shall be entitled to offset the excess against the
next payment(s) for Taxes and Insurance Premiums that become due to
Landlord.
(d) Tenant shall pay: (i) Taxes on rent due under this Lease;
(ii) Taxes and Insurance Premiums becoming due in respect of the U.S.
19 Premises; and (iii) Tenant's share (as calculated pursuant to
subparagraph (e) below) of Taxes and Insurance Premiums due in respect
of the Shopping Center Premises; provided, however, that the obligation
of Tenant to pay Taxes and Insurance Premiums in respect of the
Shopping Center Premises shall be limited as follows: (A) during the
period from the date of this Lease to December 31, 1998, Tenant's
payment of Taxes and Insurance Premiums in respect of the Shopping
Center Premises shall be limited to the annual amount of Ten Thousand
Dollars ($10,000), prorated for the partial year (it being agreed that
such proration results in Tenant being obligated to pay $5,000 for
Taxes and Insurance Premiums in respect of the Shopping Center from
July 1, 1998 to December 31, 1998); (B) for the 1999 calendar year, the
J obligation of Tenant to pay Taxes and Insurance Premiums in respect
of the Shopping Center Premises shall be the sum of Ten Thousand
Dollars ($10,000) plus a percentage of such amount equal to the
percentage by which the total amount of Taxes and Insurance Premiums
payable with respect to the Shopping Center Premises increases during
such period; and (C) after the
boattree\misc\tierra.lse
10
<PAGE>
1999 calendar year, the obligation of Tenant to pay Taxes and Insurance
Premiums in respect of the Shopping Center Premises shall increase by a
percentage equal to the percentage by which the total amount of Taxes
and Insurance Premiums payable with respect to the Shopping Center
Premises increases. An example of the manner in which the amount of
Taxes and Insurance Premiums payable by Tenant in respect of the
Shopping Center Premises may increase is attached hereto as Exhibit D.
(e) If the Premises and underlying realty are part of a larger
parcel for assessment or insurance purposes (the "larger parcel"),
Tenant's share of the Taxes and Insurance Premiums shall be determined
by multiplying all of the Taxes or Insurance Premiums, as the case may
be, on the larger parcel by a fraction, the numerator of which is the
Floor Area of the Premises and the denominator of which is the Floor
Area of all areas available for exclusive use and occupancy by retail
tenants of the larger parcel, exclusive of the Common Facilities (as
defined in Section 13.5).
9.2 PERSONAL PROPERTY TAXES. Tenant shall pay, prior to delinquency,
all taxes, assessments, license fees and public charges levied, assessed or
imposed upon its business operation, trade fixtures, leasehold improvements,
merchandise and other personal property in, on or upon the Premises (including,
without limitation, the furniture, displays, fixtures and equipment owned by
Landlord and used by Tenant pursuant to Section 3.1). If any such items of
property are assessed with property of Landlord (other than the property
described in the immediately preceding sentence), then the assessment shall be
equitably divided between Landlord and Tenant. Landlord shall determine the
basis of prorating and dividing any of these assessments and its determination
shall be binding. No taxes, assessments, fees or charges referred to in this
paragraph shall be considered Taxes under the provisions of Section 9.1.
9.3 CONTESTING TAXES. If Landlord contests any Taxes levied or assessed
during the Term and such contest is successful, then Tenant shall pay to
Landlord that portion of all costs incurred by Landlord in connection with the
contest pursuant to the formula set forth in Section 9.1(d) for the allocation
of Taxes. If Landlord contests any Taxes levied or assessed during the Term and
such contest is unsuccessful, Landlord shall be solely responsible for the costs
incurred by Landlord in connection with the contest.
ARTICLE 10
UTILITIES
10.1 TENANT UTILITY FACILITIES. For purposes of this Lease, the term
"Tenant Utility Facilities" shall mean and be deemed to include, but not be
limited to, sanitary sewer lines and systems, gas lines and systems, heating,
ventilating and air conditioning lines and systems, water lines and systems,
fire protection lines and systems, electric power, and telephone and
communication lines and systems exclusively serving the Premises.
boattree\misc\tierra.lse
11
<PAGE>
10.2 UTILITY CHARGES. Tenant agrees to pay directly to the appropriate
utility company all charges for utility services supplied to Tenant for which
there is a separate meter and/or submeter to the Premises. Tenant agrees to pay
to Landlord its share of all charges for utility services supplied to the
Premises for which there is no separate meter or submeter upon billing by
Landlord of its share as reasonably estimated by Landlord.
10.3 UTILITY SERVICES PROVIDED BY LANDLORD. Landlord, at any time
during the Term, may provide any utilities to the Premises. In that event,
Tenant shall pay to Landlord, monthly in advance, on the first day of the month,
as Additional Rental, a sum to reimburse Landlord for the cost of the utilities.
The sum may be estimated from time to time by Landlord and, if estimated, shall
be subject to adjustment at the end of each calendar quarter or year, or, at
Landlord's option, each fiscal quarter or year. If Landlord discontinues
furnishing any of the utilities for any reason, Tenant shall obtain its own
utility service for the Premises. Any utilities supplied by Landlord shall be at
competitive rates.
10.4 WAIVER OF LIABILITY. Regardless of the entity which supplies any
of the Tenant Utility Facilities or provides any service referred to in this
Article 10, Landlord shall not be liable in damages for any failure or
interruption of any utility or service. No failure or interruption of any
utility or service shall entitle Tenant to terminate this Lease or discontinue
making payments of Minimum Annual Rental, Percentage Rental or Additional
Rental.
10.5 TENANT'S NONPAYMENT. If Tenant fails to pay any charges referred
to in this Article 10 when due as provided for in this Article 10, Landlord may
pay the charge, and Tenant agrees to reimburse Landlord for any amount paid by
Landlord.
ARTICLE 11
TENANT'S CONDUCT OF BUSINESS
11.1 PERMITTED USE AND TRADE NAME. Tenant shall use the Premises solely
for the use and under the trade name specified in Sections 1.4 and 1.11,
respectively, as "Use of Premises" and "Tenant's Trade Name".
11.2 COVENANT TO OPERATE. From and after initially opening for business
to the public in the Premises, Tenant shall operate continuously and
uninterruptedly in the entire Premises the business which it is permitted to
operate under the provisions of this Lease, and, at all times, shall keep and
maintain within the Premises an adequate stock of merchandise and trade fixtures
to service and supply the usual and ordinary requirements of its customers.
11.3 HOURS OF BUSINESS. Tenant shall keep the entire Premises continuously
open for business during the hours of 9:00 a.m. to 6:00 p.m. (or later, at
Tenant's option), excluding the
boattree\misc\tierra.lse
12
<PAGE>
week from Christmas Day to New Year's Day and nationally recognized holidays;
provided, however, that Tenant may elect to close its business on Sundays.
11.4 RULES AND REGULATIONS. Tenant shall keep the Premises in a neat
and clean condition, free from any objectionable noises, odors or nuisances and
shall comply with all health and police regulations. Tenant shall not sell
merchandise from vending machines or allow any coin or token operated vending
machine or telephones on the Premises, except those exclusively used by
employees and customers of Tenant. Tenant shall deposit trash and rubbish only
within receptacles approved by Landlord. Landlord shall cause trash receptacles
to be emptied at Tenant's cost and expense; provided, however, at Landlord's
option, Landlord may provide trash removal services, the cost of which shall be
paid for by Tenant pursuant to an equitable proration of said costs by Landlord.
Tenant shall not erect any aerial or antenna on the roof or exterior walls of
the Premises. Tenant shall not solicit or distribute materials in the Common
Area. Tenant has read the Rules and Regulations attached hereto as Exhibit E and
agrees to abide by the terms thereof.
11.5 ADVERTISING MEDIA. Tenant shall not affix upon the Premises any
sign, advertising placard, name, insignia, trademark, descriptive material or
other like item without obtaining the prior written approval of Landlord, which
approval shall not be unreasonably withheld. The parties acknowledge that
Landlord has approved the signs (and the location thereof) set forth on Exhibit
F attached hereto. No advertising medium shall be utilized by Tenant which can
be heard or seen outside the Premises, including without limitation, flashing
lights, search lights, loudspeakers, phonographs, radios or televisions, without
the prior written approval of Landlord. Tenant shall not display, paint or place
any handbill, bumper sticker or other advertising devices on any vehicle parked
in the Common Area. Tenant shall not distribute any handbills or other
advertising matter in the Shopping Center.
11.6 RADIUS RESTRICTION. During the Term, neither Tenant nor any entity
owned by or controlled directly or indirectly by or under common control with
Tenant, nor any shareholder or partner holding more than fifty percent (50%) of
the shares or partnership interest, as the case may be, of Tenant shall own,
operate or have any financial interest in any business similar to or in
competition with the business of Tenant (with respect to the franchises of
Tenant at the time of the Rental Commencement Date), as described in Section
1.11 of this Lease under "use of Premises~~ if the other business is opened
after the date of this Lease and is located within five (5) miles of the
Shopping Center. Without limiting Landlord's remedies if Tenant violates this
covenant, Landlord, for so long as Tenant is operating the other business, may
include the Gross Profit of the other business in the Gross Profit made from the
Premises for the purpose of computing Percentage Rental. Landlord or its
authorized representative, at all reasonable times during the Term, and for a
period of at least one (1) year after expiration or earlier termination of this
Lease, shall have the right to inspect, audit, copy and make extracts of the
books, records and accounts pertaining to such other business in the manner set
forth in Section 8.3 of this Lease, for the purpose of determining and verifying
the Additional Rental due to Landlord pursuant to this Section 11.7.
boattree\misc\tierra.lse
13
<PAGE>
11.7 SHOPPING CENTER NAME. Tenant shall not use the name of the
Shopping Center except in its advertising as the address reference for the
Premises. Landlord reserves the right, in its sole discretion, to change the
name and logo of the Shopping Center at any time.
ARTICLE 12
MAINTENANCE, REPAIRS AND ALTERATIONS
12.1 LANDLORD'S MAINTENANCE OBLIGATIONS. Landlord shall maintain in
good condition and repair the foundations, roofs and exterior surfaces of the
exterior walls of all buildings (exclusive of doors, door frames, door checks,
windows, window frames, and storefronts). Notwithstanding anything contained
herein to the contrary, if any repairs or replacements are necessitated by the
negligence, gross negligence, or willful acts of Tenant or anyone claiming under
Tenant or by reason of Tenant's failure to observe or perform any conditions or
agreements contained in this Lease or caused by alterations, additions or
improvements made by Tenant, or anyone claiming under Tenant, the cost of same
shall be the sole responsibility of Tenant. Furthermore, notwithstanding
anything to the contrary contained in this Lease, Landlord shall not be liable
for failure to make repairs required to be made by Landlord under the provisions
of this Lease unless Tenant has previously notified Landlord in writing of the
need for such repairs and Landlord has failed to commence and complete the
repairs within a reasonable period of time following receipt of Tenant's written
notification. To the extent permitted by law, Tenant waives the benefit of any
law permitting Tenant to make repairs at Landlord's expense.
12.2 LANDLORD'S RIGHT OF ENTRY. Landlord, its agents, contractors,
servants and employees, may enter the Premises at all reasonable times (a) to
examine the Premises; (b) to perform any obligation of, or exercise any right or
remedy of, Landlord under this Lease; (c) to make repairs, alterations,
improvements or additions to the Premises or to other portions of the Shopping
Center as Landlord deems necessary or desirable; (d) to perform work necessary
to comply with laws, ordinances, rules or regulations of any public authority or
of any insurance underwriter; and (e) to perform work that Landlord deems
necessary to prevent waste or deterioration in connection with the Premises
should Tenant fail to commence to make, and diligently pursue to completion, its
required repairs within three (3) days after written demand by Landlord. If
Landlord makes any repairs required to be made by Tenant, Tenant shall pay the
cost of the repair to Landlord, as Additional Rental, promptly upon receipt of a
bill.
12.3 TENANT'S MAINTENANCE OBLIGATIONS. Tenant, at its expense, shall
keep the Premises and the HVAC facilities and phone lines serving the Premises
in first class order, condition and repair and shall make repairs necessary to
keep the Premises in this condition. All repairs shall be of a quality equal to
or exceeding that of the original. If Tenant fails to make these repairs and
replacements or otherwise maintain the Premises within thirty (30) days after
written demand by Landlord, or if Tenant commences but fails to complete any
repairs or replacements within a reasonable time after written demand by
Landlord, Landlord may make the repairs or
boattree\misc\tierra.lse
14
<PAGE>
replacements without liability to Tenant for any loss or damage that may accrue
to Tenant's stock or business, and Tenant shall pay to Landlord the costs
incurred by Landlord in the making of any repairs or replacements together with
interest at the maximum lawful rate from the date of commencement of the work.
Tenant shall repair promptly at its expense any damage to the Shopping Center
caused by Tenant or its agents or employees or caused by the installation or
removal of Tenant's personal property.
12.4 ALTERATIONS.
(a) Landlord agrees that Tenant may, at its own expense and
after giving Landlord notice in writing of its intention to do so, from
time to time during the term hereof, make alterations, additions,
improvements and changes (collectively referred to in this article as
"improvements") in and to the interior of the Premises (except those of
a structural nature) as it may find necessary or convenient for its
purposes, provided that the value of the Premises is not thereby
diminished; provided, however, no improvements costing in excess of Two
Thousand Five Hundred Dollars ($2,500.00) may be made without first
procuring the approval in writing of Landlord. In addition, no
improvements shall be made to any store front, mechanical system, the
exterior wall or roof of the Premises, nor shall Tenant erect any
mezzanine or increase the size of same, if one be initially
constructed, unless and until the written consent and approval of
Landlord shall first have been obtained. In no event shall Tenant make
or cause to be made any penetration into or through the roof or floor
of the Premises without the prior written approval of Landlord. Tenant
shall be directly responsible for any and all damages resulting from
any violation of the provisions of this Article. All improvements to be
made to the Premises which require the approval of Landlord shall be
under the supervision of a competent architect or competent licensed
structural engineer and made in accordance with plans and
specifications with respect thereto, approved in writing by Landlord
before the commencement of work, where such approval is required
pursuant to the provisions of this Article. All work with respect to
any improvements must be done in a good and workmanlike manner and
diligently prosecuted to completion to the end that the Premises shall
at all times be a complete unit except during the period of work. Upon
completion of such work, Tenant shall file for record in the office of
the County Recorder where the Shopping Center is located a Notice of
Completion, as required or permitted by law, and Tenant shall deliver
to Landlord, within ten (10) days after completion of said work, a copy
of the building permit with respect thereto. Upon termination of this
lease, such improvements shall not be removed by Tenant but shall
become a part of Premises. Any such improvements shall be performed and
done strictly in accordance with the laws and ordinances relating
thereto. In performing the work of any such improvements, Tenant shall
have the work performed in such a manner as not to obstruct the access
to the premises of any other tenant in the Shopping Center.
(b) In the event that Tenant shall make any permitted
improvements to the Premises under the provisions of this Section 12.4,
Tenant agrees to carry such insurance as
boattree\misc\tierra.lse
15
<PAGE>
required by Article 16.1(e) covering any such improvements, it being
expressly understood and agreed that none of such improvements shall be
insured by Landlord under the insurance it may carry upon the building
of which the Premises are a part, nor shall Landlord be required under
any provisions for reconstruction of the Premises to reinstall any such
improvements.
(c) Any trade fixtures, signs and other personal property of
Tenant which Tenant places in the Premises and is not permanently
affixed to the Premises shall remain the property of Tenant and
Landlord agrees that Tenant shall have the right, provided Tenant is
not in default under the terms of this Lease, to remove any and all of
its trade fixtures, signs and other personal property which it may have
stored or installed in the Premises, including without limitation,
counters, shelving, showcases, mirrors and other movable personal
property. Tenant shall, at its expense, immediately repair any damage
occasioned to the Premises by reason of the removal of any such trade
fixtures, signs, and other personal property, and upon the last day of
the Lease Term or the date of earlier termination of this Lease, shall
leave the Premises in a neat and clean condition, free of debris. All
trade fixtures, signs and other personal property installed in or
attached to the Premises by Tenant must be in good condition when so
installed or attached.
(d) All improvements to the Premises by Tenant, including but
not limited to mechanical systems, light fixtures, floor coverings and
partitions and other items comprising Tenant's Work pursuant to Exhibit
C but excluding removable trade fixtures and signs, shall become the
property of Landlord upon expiration or earlier termination of this
Lease.
12.5 MECHANICS' LIENS.
(a) Tenant agrees that it will pay or cause to be paid all
costs for work done by it or caused to be done by it on the Premises,
and Tenant will keep the Premises free and clear of all mechanics'
liens and other liens on account of work done for Tenant or persons
claiming under it. Tenant agrees to and shall indemnify, defend and
save Landlord free and harmless against any and all liability, loss,
damage, costs, attorneys' fees and all other expenses on account of
claims of lien of laborers or materialmen or others for work performed
or materials and supplies furnished for Tenant or persons claiming
under it. In addition, Tenant shall keep Tenants' leasehold interest
and any of those improvements to the Premises which are or become
property of Landlord pursuant to this Lease free and clear of all liens
of attachment or judgment liens.
(b) If Tenant shall desire to contest any claim of lien, it
shall furnish Landlord adequate security of the value or in the amount
of the claim, plus estimated costs and interest, or a bond of a
responsible corporate surety in such amount conditioned on the
discharge of the lien. If a final judgment establishing the validity or
existence of a lien for any amount is entered, Tenant shall immediately
pay and satisfy the same.
boattree\misc\tierra.lse
16
<PAGE>
(c) If Tenant shall default in paying any charge for which a
mechanics' lien claim and suit to foreclose the lien have been filed,
and shall not have given Landlord security to protect the property and
Landlord against such claim of lien, Landlord may (but shall not be so
required to) pay the said claim and any costs, and the amount so paid,
together with reasonable attorneys' fees incurred in connection
therewith, shall be immediately due and owing from Tenant to Landlord,
and Tenant shall pay the same to Landlord with interest at the maximum
lawful rate from the dates of Landlord's payments.
(d) Should any claim of lien be filed against the Premises or
any action affecting the title to such property be commenced, the party
receiving notice of such lien or action shall forthwith give the other
party written notice thereof. Landlord or its representatives shall
have the right to go upon and inspect the Premises at all reasonable
times and shall have the right to post and keep posted thereon notices
of non-responsibility, or such other notices which Landlord may deem to
proper for the protection of Landlord's Interest in the Premises.
Tenant shall, before the commencement of any work which might result in
any such lien, give to Landlord written notice of its intention to do
so in sufficient time to enable the posting of such notices.
ARTICLE 13
COMMON AREA
13.1 DEFINITION OF COMMON AREA. The term "Common Area", as used in this
Lease, shall mean all areas, including all parking areas, within the exterior
boundaries of the Shopping Center now or later made available for the general
use of Landlord and other persons entitled to occupy Floor Area in the Shopping
Center. Without limiting the generality of the foregoing, Landlord may include
in Common Area those portions of the Shopping Center presently or later sold or
leased to purchasers or tenants, as the case may be, until the commencement of
construction of the building(s) thereon, at which time there shall be withdrawn
from the Common Area those areas not provided by the owner or lessee for common
use. Common Area shall not include (i) the entry way to a tenant's premises,
(ii) any improvements installed by a tenant outside of a tenant's premises,
whether with or without Landlord's knowledge or consent, or (iii) any areas or
facilities that could be considered as Common Area except that the areas or
facilities are included in the description of premises leased to a tenant.
13.2 MAINTENANCE AND USE OF COMMON AREA. The manner in which the
Shopping Center shall be maintained shall be determined by Landlord in its sole
discretion. If any owner or tenant of any portion of the Shopping Center
maintains its own Common Area (Landlord shall have the right to allow any
purchaser or tenant to so maintain its own Common Area), then Landlord shall not
have responsibility for the maintenance of that portion of the Common Area. The
use and occupancy by Tenant of the Premises shall include the use of the Common
Area (except those portions of the Common Area on which have been constructed or
placed permanent or
boattree\misc\tierra.lse
17
<PAGE>
temporary kiosks, displays, carts and stands and except areas used in the
maintenance or operation of the Shopping Center), in common with Landlord and
other tenants of the Shopping Center and their customers and invitees, subject
to rules and regulations concerning the use of the Common Area established by
Landlord from time to time.
13.3 CONTROL OF AND CHANGES TO COMMON AREA. Landlord shall have the
sole and exclusive control of the Common Area, as well as the right to make
changes to the Common Area. Landlord's rights shall include, but not be limited
to, the right to (a) restrain the use of the Common Area by unauthorized
persons; (b) cause Tenant to remove or restrain persons from any unauthorized
use of the Common Area if they are using the Common Area by reason of Tenant's
presence in the Shopping Center; (c) utilize from time to time any portion of
the Common Area for promotional, entertainment and related matters; (d) place
permanent or temporary kiosks, displays, carts and stands in the Common Area and
to lease same to tenants; (e) temporarily close any portion of the Common Area
for repairs, improvements or alterations, to discourage non-customer use, to
prevent dedication or an easement by prescription, or for any other reason
deemed sufficient in Landlord's judgment; and (f) change the shape and size of
the Common Area, add, eliminate or change the location of improvements to the
Common Area, including, without limitation, buildings, parking areas, roadways
and curb cuts, and construct buildings on the Common Area. Landlord may
determine the nature, size and extent of the Common Area and whether portions of
the same shall be surface, underground or multiple-deck; as well as make changes
to the Common Area from time to time which in its opinion are deemed desirable
for the Shopping Center, except to the extent that such modifications of the
Common Area violate the provisions of Article II.
13.4 PARKING. Tenant and its employees shall park their vehicles only
in the parking areas from time to time designated for that purpose by Landlord.
Landlord may, in its sole discretion, allocate certain portions of the parking
area for the exclusive use of one or more tenants of the Shopping Center.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 NO ASSIGNMENT. Tenant shall not transfer, assign, sublet, enter
into franchise, license or concession agreements, change ownership or voting
control (as hereinafter defined), mortgage, encumber, pledge or hypothecate this
Lease or Tenant's interest in the Premises or Tenant's business (collectively
"Assignment" or "Assign") without the prior written consent of Landlord, which
consent shall not be unreasonably withheld. If Tenant is a partnership or
corporation, any cumulative change in excess of twenty-five percent (25%) of the
partnership interest or of the voting stock of Tenant shall constitute a change
of ownership or voting control and shall constitute an assignment for purposes
of this Lease.
14.2 PROCEDURES.
boattree\misc\tierra.lse
18
<PAGE>
(a) Should Tenant desire to enter into an Assignment, Tenant
shall request in writing Landlord's consent to the Assignment at least
sixty (60) days before the effective date of the Assignment, providing
the following: (i) the full particulars of the proposed Assignment,
including its nature, effective date, terms and conditions, copies of
any offers, draft agreements, subleases, letters of commitment or
intent, and other documents pertaining to the proposed Assignment; (ii)
a description of the identity, net worth and previous business
experience of the proposed transferee, including, without limitation,
copies of the proposed transferee's latest income, balance sheet and
changes in position statements (with accompanying notes and disclosures
of all material changes thereto) in audited form, if available, and
certified as accurate by the proposed transferee; (iii) a detailed
description of the proposed use of the Premises together with the
proposed trade name of the transferee; and (iv) any further information
relevant to the proposed Assignment which Landlord shall have requested
within fifteen (15) days after receipt of Tenant's request for consent.
(b) Within fifteen (15) days after receipt of Tenant's request
for consent, together with all of the above-required information,
Landlord shall respond as follows: (i) consent to the proposed
Assignment, subject to Section 14.6 below; (ii) refuse to consent to
the proposed Assignment, or (iii) refuse to consent to the proposed
Assignment and, at any time within thirty (30) days thereafter, elect
to terminate this Lease on ten (10) days written notice to Tenant. In
the event Landlord proceeds pursuant to the foregoing clause (iii),
Landlord shall pay to Tenant the unamortized book value of Tenant's
leasehold improvements at the Premises, exclusive of removable trade
fixtures (to the extent said leasehold improvements were paid for by
Tenant as evidenced by copies of invoices and proof of payment)
amortized on a straight line basis over the Term; whereupon Tenant
shall provide Landlord with a bill of sale for said leasehold
improvements.
14.3 LANDLORD CONSENT. If Tenant requests Landlord's consent to an
Assignment, Landlord and Tenant agree (by way of example and without limitation)
that Landlord shall have the right to withhold its consent if any of the
following situations exist or may exist: (a) the proposed transferee's use of
the Premises conflicts with the "Use of Premises" as set forth in Section 1.11
or the "Trade Name" as set forth in Section 1.4; (b) in Landlord's reasonable
business judgment, the proposed transferee lacks sufficient business reputation
or experience to operate a successful business of the type and quality permitted
under this Lease; (c) Tenant is in default pursuant to this Lease; (d) In
Landlord's reasonable business judgment, the present net worth of the proposed
transferee is less than the greater of Tenant's net worth as of the date of this
Lease or Tenant's net worth at the date of Tenant's request for consent; (e) in
Landlord's reasonable business judgment, the Percentage Rental that Landlord
anticipates receiving from the proposed transferee is less than the Percentage
Rental which Landlord has received from Tenant; and/or (0 the Assignment would
breach any covenant of Landlord respecting radius, location, use or exclusivity
in any other lease, financing agreement or other agreement relating to the
Shopping Center. Any attempted or purported Assignment without Landlord's prior
written consent shall be void and of no force or
boattree\misc\tierra.lse
19
<PAGE>
effect, and shall not confer any estate or benefit on anyone. A consent to one
(1) Assignment by Landlord shall not be deemed to be a consent to any subsequent
Assignment to any other party.
14.4 NO RELEASE. No Assignment, whether with or without Landlord's
consent, shall relieve Tenant or any guarantor of Tenant's obligations under
this Lease from its covenants and obligations under this Lease or any guaranty
of this Lease.
14.5 FORM. Any Assignment shall be evidenced by an instrument in
writing in form satisfactory to Landlord and shall be executed by the
transferor, assignor, sublessor, licensor, concessionaire, hypothecator or
mortgagor and the transferee, assignee, sublessee, licensee, concessionaire or
mortgagee in each instance, as the case may be. Further, Landlord shall be
entitled to prorate Minimum Annual Rental or Percentage Rental (as the case may
be) and Additional Rental to the effective date of the Assignment and bill
Tenant for all such costs, which costs must be paid by Tenant to Landlord within
five (5) days of receipt of a bill, but in no event later than the effective
date of the Assignment.
14.6 PROFITS. Any assignment or sublease rentals and any other economic
consideration received by Tenant as a result of or in consideration of any
assignment or subletting, whether denominated as rent under the assignment or
sublease or otherwise, which in the aggregate exceeds the total sums which
Tenant is obligated to pay Landlord under this Lease (prorated to reflect
obligations allocable to that portion of the leased Premises subject to such
assignment or sublease) shall become the property of Landlord and shall be paid
by Tenant to Landlord within ten (10) days after receipt thereof.
Notwithstanding the foregoing provisions of this Section 14.6, however, if an
assignment of this Lease is consummated in accordance with the terms of this
Lease as a part of the sale of Tenant's entire business (including inventory) in
the Premises, Tenant shall not be required to pay Landlord any proceeds from
such sale which are not expressly allocated to the sale of Tenant's leasehold
interest. This provision for payment shall apply to any subsequent assignee or
subtenant and the Landlord's recapture rights herein shall prevail over any
inconsistent provision in any such sublease or assignment to which Landlord has
consented. The Landlord's right of recapture herein is expressly reserved by the
Landlord from the grant of the Tenant's leasehold estate contained in this
Lease.
14.7 FEES. Tenant agrees to reimburse Landlord for Landlord's
reasonable attorneys' fees incurred in conjunction with the processing and
documentation of any requested Assignment. In addition, Tenant shall pay to
Landlord concurrently with the request for consent referred to in Section 14.2
the sum of Five Hundred Dollars ($500.00) as reimbursement to Landlord for its
review and processing of the application.
14.8 Assignment to an Affiliate. For purposes of this Section 14.8, the
term "Pozo Person" refers to one or more of the following: (a) Joe Pozo; (b) a
member of the immediate family of Joe Pozo; or (c) a trust established for the
benefit of Joe Pozo or members of his immediate family. Notwithstanding anything
contained herein to the contrary, Tenant may assign the entirety of this
boattree\misc\tierra.lse
20
<PAGE>
Lease to (i) a nonpublic entity in which a Pozo Person owns fifty-one percent (5
1%) or more of the ownership interests, or (ii) a corporation whose stock is
publicly traded in which a Pozo Person owns twenty percent (20%) or more of the
outstanding stock entitled to vote for members of the board of directors;
provided that (A) written notice of such assignment is sent to Landlord at least
thirty (30) days prior to the effective date of such assignment; (B) the
assignee executes an instrument reasonably satisfactory to Landlord pursuant to
which such assignee assumes all obligations of Tenant under this Lease; and (C)
Tenant shall remain liable for the covenants and obligations of Tenant under
this Lease.
ARTICLE 15
EXCLUSIVE RIGHT OF TENANT
So long as this Lease remains in effect, Landlord shall not use or
permit the use of any portion of the Shopping Center for the sale or brokerage
of boats, watercraft, boat motors or boat trailers. Nothing contained in the
preceding sentence shall be construed to prohibit Landlord from selling
replacements of boat motors within the boat repair facility operated by Landlord
in the proximity of the Shopping Center Premises. In the event of any breach of
the covenant set forth in the preceding sentence, Tenant may either (a)
terminate this Lease, in which event Landlord shall have no further liability
for such breach, or (b) pursue its other remedies at law or in equity.
ARTICLE 16
INSURANCE
16.1 TENANT'S INSURANCE. Tenant, at its sole cost and expense,
commencing on the earlier of (i) the date of Substantial Completion of the
Premises, or (ii) the date Tenant is given earlier access to the Premises, and
continuing during the Term, shall procure, pay for and keep in full force and
effect the following types of insurance, in at least the amounts and in the form
specified below:
(a) Comprehensive liability insurance with coverage limits of
not less than One Million Dollars ($1,000,000.00) combined single limit
bodily injury, personal injury, death and property damage liability per
occurrence, or current limit carried by Tenant, whichever is greater,
insuring against any and all liability of the insureds with respect to
the Premises or arising out of the maintenance, use or occupancy of the
Premises or related to the exercise of any rights of Tenant pursuant to
this Lease, subject to increases in amount as Landlord may reasonably
require from time to time. All such comprehensive liability insurance
shall specifically insure the performance by Tenant of the indemnity
agreement as to liability for injury to or death of persons and injury
or damage to property in Section 16.6 below. Further, all comprehensive
liability insurance shall include, but not be limited to, personal
injury, blanket contractual, cross liability and severability of
interest clauses,
boattree\misc\tierra.lse
21
<PAGE>
products/completed operations, broad form property damage, independent
contractors, and owned, non-owned and hired vehicles insurance.
(b) Worker's compensation coverage as required by law,
together with employer's liability coverage, and waiver by Tenant's
insurer of any right of subrogation against Landlord by reason of any
payment pursuant to such coverage.
(c) Insurance covering all of the items specified as Tenant's
Work in Exhibit C, Tenant's leasehold improvements, Alterations
permitted under Article 12; trade fixtures, merchandise and personal
property from time to time in, on or about the Premises, in an amount
not less than their full replacement value including replacement cost
endorsement cost from time to time, providing protection against any
peril included within the classification Fire and Extended Coverage,
sprinkler damage, vandalism, malicious mischief, and such other
additional perils as covered in an "all risk" standard insurance
policy. Any policy proceeds shall be used for the repair or replacement
of the property damaged or destroyed unless this Lease shall cease and
terminate under the provisions of Article 17. In addition,
comprehensive boiler and machinery coverage on all heating, air
conditioning and ventilation equipment, electrical, mechanical and
other such systems serving the Premises in an amount not less than the
replacement value of such equipment, systems and improvements.
(d) Any insurance policies designated necessary by Landlord
with regard to Tenant's or Tenant's contractors, construction of
Tenant's Work pursuant to Exhibit C, as well as with regard to the
construction of Alterations pursuant to Section 12.4 of this Lease,
including but not limited to contingent liability and "all risks"
builders' risk insurance, in amounts as acceptable to Landlord.
16.2 POLICY FORM. All policies of insurance provided for herein shall
be issued by insurance companies with general policy holder's rating of not less
than A and a financial rating of not less than Class X as rated in the most
current available "Best's Key Rating Guide" and which are qualified to do
business in the state where the Shopping Center is situated. All such policies
shall name Landlord, Tenant and Landlord's mortgagee(s) or beneficiary(ies) as
additional named insureds and shall be for the mutual and joint benefit and
protection of Landlord, Tenant and Landlord's mortgagee(s) or beneficiary(ies).
Executed copies of the policies of insurance or certificates thereof shall be
delivered to Landlord prior to Tenant, its agents or employees, entering the
Premises for any purpose. Thereafter, executed copies of renewal policies or
certificates thereof shall be delivered to Landlord within thirty (30) days
prior to the expiration of the term of each policy. All policies of insurance
delivered to Landlord must contain a provision that the company writing the
policy will give to Landlord thirty (30) days notice in writing in advance of
any cancellation or lapse or the effective date of any reduction in the amounts
of insurance. All public liability, property damage and other casualty policies
shall be written as primary policies and any insurance carried by Landlord shall
not be contributing with such policies.
boattree\misc\tierra.lse
22
<PAGE>
16.3 BLANKET POLICIES. Notwithstanding anything to the contrary
contained in this Article 16, Tenant's obligations to carry insurance may be
satisfied by coverage under a so-called blanket policy of insurance; provided,
however, Landlord and Landlord's mortgagee(s) or beneficiary(ies) shall be named
as additional insureds as their interests may appear, the coverage afforded
Landlord will not be reduced or diminished, and the requirements set forth in
this Lease are otherwise satisfied.
16.4 INCREASED PREMIUMS DUE TO USE OF PREMISES. Tenant shall not do any
act in or about the Premises which will tend to increase the insurance rate upon
the building of which the Premises are a part. Tenant agrees to pay to Landlord
upon demand the amount of any increase in premiums for insurance resulting from
Tenant's use of the Premises, whether or not Landlord shall have consented to
the act on the part of Tenant. If Tenant installs upon the Premises any
electrical equipment which constitutes an overload of the electrical lines
servicing the Premises, Tenant, at its own expense, shall make whatever charges
are necessary to comply with the requirement of the insurance underwriters and
any appropriate governmental authority.
16.5 REIMBURSEMENT OF INSURANCE PREMIUMS BY TENANT. Landlord, at
all times from and after the Rental Commencement Date, shall maintain in effect
a policy or policies of insurance covering the building of which the Premises
are a part, in an amount equal to the full replacement cost (exclusive of the
cost of excavations, foundations and footings) during the Term, or the amount of
insurance Landlord's mortgagee(s) or beneficiary(ies) may require Landlord to
maintain, whichever is the greater, providing protection against any peril
generally included in the classification "Fire and Extended Coverage", and such
other additional insurance as covered in an "all risk" standard insurance
policy, with earthquake coverage insurance if deemed necessary by Landlord in
Landlord's sole judgment or if required by Landlord's mortgagee(s) or the
beneficiary(ies), or by any federal, state, county, city or local authority.
Landlord's obligation to carry this insurance may be brought within the coverage
of any so-called blanket policy or policies of insurance carried and maintained
by Landlord. Tenant agrees to pay to Landlord, as Additional Rental, its share
of the cost to Landlord of this insurance as provided in Section 9.1.
16.6 INDEMNITY. To the fullest extent permitted by law, Tenant
covenants with Landlord that Landlord shall not be liable for any damage or
liability of any kind or for any injury to or death of persons, or damage to
property of Tenant or any other person occurring from and after the Rental
Commencement Date (or such earlier date if Tenant is given earlier access to the
Premises), from any cause whatsoever, related to the use, occupancy or enjoyment
of the Premises by Tenant or any person thereon or holding under Tenant,
including, but not limited to, damages resulting from any labor dispute, and
Tenant shall defend, indemnify and save Landlord harmless from all liabilities
whatsoever on account of any real or alleged damage or injury and from liens,
claims and demands related to the use of the Premises and its facilities, or any
repairs, alterations or improvements (including original improvements and
fixtures specified in Exhibit C as Tenant's Work) which Tenant may make or cause
to be made upon the Premises; but Tenant shall not be liable for damage or
injury ultimately determined to be occasioned by the negligence of Landlord
boattree\misc\tierra.lse
23
<PAGE>
or its designated agents, servants or employees. This obligation to indemnify
shall include reasonable attorneys' fees and investigation costs and all other
reasonable costs, expenses and liabilities incurred by Landlord or its counsel
from the first notice that any claim or demand is to be made or may be made.
16.7 EXCULPATION. Tenant hereby agrees that Landlord shall not be
liable for injury to Tenant's business or any loss of income therefrom or for
damage to goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers, or any other person in or about the Premises,
nor shall Landlord be liable for injury to the person of Tenant, Tenant's
employees, agents or contractors, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether the said damage or injury results from conditions arising upon the
Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Tenant. Landlord shall not be liable for any damages arising from any act or
neglect of any other tenant, if any, of the building in which the Premises are
located.
16.8 WAIVER OF SUBROGATION. Landlord and Tenant each waive any rights
it may have against the other on account of any loss or damage occasioned to
Landlord or Tenant, as the case may be, their respective property, the Premises
or its contents, or to other portions of the Shopping Center, arising from any
risk covered by property insurance required to be carried by them pursuant to
this Lease; and each of the parties, on behalf of their respective insurance
companies insuring the property of either Landlord or Tenant against any such
loss, waives any right of subrogation that it may have against the other.
16.9 FAILURE BY TENANT TO MAINTAIN INSURANCE. If Tenant refuses or
neglects to secure and maintain insurance policies complying with the provisions
of this Article, Landlord may secure the appropriate insurance policies and
Tenant shall pay upon demand the cost of same to Landlord, as Additional Rental.
ARTICLE 17
DAMAGE
17.1 DUTY TO RESTORE. If the Premises are partially or totally damaged
by fire or other casualty so as to become partially or totally untenantable,
which damage is insured against under any policy of fire and extended coverage
insurance then covering the damaged improvements, this Lease shall not terminate
and said improvements shall be rebuilt by Landlord with reasonable diligence at
Landlord's expense, unless Landlord shall elect to terminate this Lease, as
provided in Section 17.2 or Section 17.5.
boattree\misc\tierra.lse
24
<PAGE>
17.2 ELECTION TO TERMINATE. If the Premises are damaged by an insured
casualty to the extent of at least twenty-five (25%) percent of the replacement
cost (cost to repair or replace at the time of loss without deduction for
physical depreciation) prior to the last three (3) lease years of the Term
hereof, to the extent of at least ten (10%) percent thereof during the last
three (3) lease years of said Term or to any extent by an uninsured cause at any
time during the lease Term, Landlord shall, within not more than ninety (90)
days after such damage notify Tenant of Landlord's election (a) to terminate
this Lease or (b) to restore the Premises. If Landlord elects to repair or
restore the damaged improvements, then, with respect to the Premises, Landlord
and Tenant each shall restore them in the same manner and to the same extent as
work was done by each of them in the original construction and fixturizing of
the improvements. If Landlord elects not to restore, as aforesaid, this Lease
shall terminate effective as of the date of such damage upon the giving of
notice of election by Landlord, as aforesaid. If Landlord elects to restore or
fails to give notice of its election, as aforesaid, then this Lease shall remain
in full force and effect. If Landlord elects to restore the Premises but fails
to complete such restoration within ninety (90) days after the occurrence of
damage to the Premises (or such longer period of time as may be required to
complete such restoration in the exercise of due diligence by Landlord), then
Tenant may terminate this Lease by written notice to Landlord.
17.3 RENT ADJUSTMENT. If this Lease is not terminated, as provided in
this Article 17, then, during the period of repair and restoration, the Minimum
Annual Rental shall be equitably adjusted.
17.4 TIME LIMITATION. If the damage is such that in reasonable
contemplation it cannot be repaired within six (6) months from the date of its
occurrence (force majeure excepted) then either party shall have the right to
terminate this Lease on sixty (60) days notice to the other.
17.5 RIGHT OF MORTGAGEE. Notwithstanding anything contained herein to
the contrary, if a mortgagee of the Shopping Center requires that insurance
proceeds in respect of a casualty be applied to payment of its mortgage,
Landlord shall have the right to elect not to restore the Premises and to
terminate this Lease, in which event this Lease shall terminate effective as of
the date of such damage upon the giving of notice of election by Landlord.
ARTICLE 18
EMINENT DOMAIN
18.1 TAKING. The term "Taking" as used in this Article 18 shall mean an
appropriation or taking under the power of eminent domain by any public or
quasi-public authority or a voluntary sale or conveyance in lieu of condemnation
but under threat of condemnation.
18.2 TOTAL TAKING. In the event of a Taking of the entire Premises, this
Lease shall terminate and expire as of the date possession is delivered to the
condemning authority, and
boattree\misc\tierra.lse
25
<PAGE>
Landlord and Tenant shall each be released from any liability accruing pursuant
to this Lease after termination.
18.3 PARTIAL TAKING. If there is a partial Taking of the Floor Area of
the Premises, or if a Taking results in a material impairment of access to, or
visibility of, the Premises or a reduction of the outside display area of
Tenant, then either Landlord or Tenant may terminate this Lease as of the
effective date of such taking, upon giving notice in writing of such election
within thirty (30) days after receipt by Tenant from Landlord of written notice
that a portion of the Premises have been so appropriated or taken.
18.4 TERMINATION OF LEASE. If this Lease is terminated as provided
above, Landlord shall be entitled to the entire award or compensation in such
condemnation proceedings, or settlement in lieu thereof relating to the
Premises, but the Minimum Annual Rental or Percentage Rental (as the case may
be) and Additional Rental for the last month of Tenant's occupancy shall be
prorated and Landlord shall refund to Tenant any Minimum Annual Rental or
Percentage Rental (as the case may be) and Additional Rental paid in advance.
Subject to the preceding provisions, Tenant shall be entitled to pursue its own
action for any damages sustained by Tenant as a result of a Taking of the
Premises.
18.5 CONTINUATION OF LEASE. In the event of a Taking, if Landlord and
Tenant elect not to so terminate this Lease as provided above (or have no right
to so terminate), Landlord agrees, at Landlord's cost and expense, as soon as
reasonably possible after the Taking to restore the Premises (to the extent of
the condemnation proceeds made available to Landlord) on the land remaining to a
complete unit of like quality and character as existed prior to the Taking; and
thereafter the Minimum Annual Rental shall be reduced on an equitable basis,
taking into account the relative value of the portion taken as compared to the
portion remaining; and Landlord shall be entitled to receive the total award or
compensation in such proceedings.
18.6 RIGHT OF MORTGAGEE. Notwithstanding anything contained herein to
the contrary, if a mortgagee of the Shopping Center requires that proceeds of a
Taking be applied to payment of its mortgage, Landlord shall have the right to
elect not to restore the Premises and to terminate this Lease, in which event
this Lease shall terminate effective as of the date of such Taking upon the
giving of notice of election by Landlord.
ARTICLE 19
DEFAULTS BY TENANT
19.1 EVENTS OF DEFAULT. Should Tenant at any time be in default with
respect to any payment of Minimum Annual Rental, Percentage Rental, Additional
Rental, or any other charge payable by Tenant pursuant to this Lease for a
period of ten (10) days after written notice from Landlord to Tenant; or should
Tenant be in default in the prompt and full performance of any other
boattree\misc\tierra.lse
26
<PAGE>
of its promises, covenants or agreements herein contained for more than thirty
(30) days after written notice thereof from Landlord to Tenant specifying the
particulars of the default; or should Tenant vacate or abandon the Premises; or
should Tenant make any general assignment for the benefit of creditors; or
should there be filed against Tenant a petition to have Tenant adjudged a
bankrupt or a petition for reorganization or arrangement under any law relating
to bankruptcy [unless, in the case of a petition field against Tenant, the same
is dismissed within sixty (60) days]; or should Tenant institute any proceedings
under the Bankruptcy code or any similar or successor statute, code or act; or
should an appointed trustee or receiver take possession of substantially all of
Tenant's assets located at the Premises, or of Tenant's interest in this Lease,
where possession is not restored to Tenant within thirty (30) days; or should
substantially all of Tenant's assets located at the Premises or Tenant's
interest in this Lease have been attached or judicially seized, where the
seizure is not discharged within thirty (30) days; then Landlord may treat the
occurrence of any (1) or more of the foregoing events as a breach of this Lease,
and in addition to any or all other rights or remedies of Landlord and by law
provided, it shall be, at the option of Landlord, without further notice or
demand of any kind to Tenant or any other person: (a) The right of Landlord to
declare the Term ended and to re-enter and take possession of the Premises and
remove all persons therefrom; or (b) the right of Landlord without declaring
this Lease terminated to re-enter the Premises and occupy the whole or any part
for and on account of Tenant and to collect any unpaid rentals and other
charges, which have become payable, or which may thereafter become payable; or
(c) the right of Landlord, even though it may have reentered the Premises, to
thereafter elect to terminate this Lease and all of the rights of Tenant in or
to the Premises. Landlord shall not be deemed to have terminated this Lease, or
the liability of Tenant to pay any Minimum Annual Rental, Percentage Rental,
Additional Rental, or other charges later accruing, by any re-entry of the
Premises pursuant to Section 19.1(b) above, or by any action in unlawful
detainer or otherwise to obtain possession of the Premises, unless Landlord
shall have notified Tenant in writing that it has so elected to terminate this
Lease.
19.2 TERMINATION OF LEASE. Should Landlord elect to terminate this
Lease pursuant to the provisions of Section 19.1 (a) or (c) above, Landlord may
recover from Tenant, as damages, the following (in addition to any other damages
recoverable under applicable law): (a) the worth at the time of award of any
unpaid rental which had been earned at the time of the termination; plus (b) the
worth at the time of award of the amount by which the unpaid rental which would
have been earned after termination until the time of award exceeds the amount of
rental loss Tenant proves could have been reasonably avoided; plus (c) the worth
at the time of award of the amount by which the unpaid rental for the balance of
the Term after the time of award exceeds the amount of rental loss that Tenant
proves could be reasonably avoided; plus (d) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant's failure
to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not limited to any
costs or expenses incurred by Landlord in (i) retaking possession of the
Premises, including reasonable attorneys' fees therefor, (ii) maintaining or
preserving the Premises after any default, (iii) preparing the Premises for
reletting to a new tenant, including repairs or alterations to the Premises,
(iv) leasing commissions or (v) any other costs
boattree\misc\tierra.lse
27
<PAGE>
necessary or appropriate to relet the Premises; plus (e) at Landlord's election,
any other amounts in addition to or in lieu of the foregoing as may be permitted
from time to time by the laws of the State where the Shopping Center is
situated.
As used in subparagraphs (a) and (b) above, the "worth at the time of
award" is computed by allowing interest at the maximum lawful rate. As used in
subparagraph (c) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank
situated nearest to the location of the Shopping Center at the time of award
plus one percent (1%).
19.3 DEFINITION OF RENTAL. For purposes of this Article only, the term
"rental" shall be deemed to be the Minimum Annual Rental, Percentage Rental and
all other sums required to be paid by Tenant pursuant to the terms of this
Lease.
19.4 NON-MONETARY DEFAULTS. Notwithstanding any other provisions of
this Article, if the default complained of, other than a default for the payment
of monies , cannot be rectified or cured within the period requiring
rectification or curing as specified in the written notice relating to the
default, then, as to a default susceptible to being cured, the default shall be
deemed to be rectified or cured if Tenant within the notice period shall have
commenced the rectification and curing of the default and shall continue
thereafter to diligently complete the same.
ARTICLE 20
DEFAULTS BY LANDLORD
20.1 In the event Landlord shall neglect or fail to perform or observe
any of the covenants, provisions or conditions contained in this Lease on its
part to be performed or observed within thirty (30) days after written notice of
default or if more than thirty (30) days shall be required because of the nature
of the default, if Landlord shall fail to proceed diligently to cure such
default after written notice thereof, then in that event Landlord shall be
liable to Tenant for any and all damages sustained by Tenant as a result of
Landlord's breach; provided, however, it is expressly understood and agreed that
any money judgment resulting from any default or other claim arising under this
Lease shall be satisfied only out of the rents, issues, profits and other income
("income") actually received from the operation of the Shopping Center and the
U.S. 19 Premises, and no other real, personal or mixed property of Landlord (the
term "Landlord" for purposes of this Article 20 only shall mean any and all
partners, both general and/or limited, if any, which comprise Landlord),
wherever situated, shall be subject to levy on any such judgment obtained
against Landlord and if such income is insufficient for the payment of such
judgment, Tenant will not institute any further action, suit, claim or demand,
in law or in equity, against Landlord for or on the account of such deficiency.
Tenant hereby waives, to the extent waivable under law, any right to satisfy
said money judgment against Landlord except from income received by Landlord
from the operation of the Shopping Center and the U.S. 19 Premises. Tenant shall
have the right to set off damages incurred by Tenant as a result of Landlord's
boattree\misc\tierra.lse
28
<PAGE>
default against any sums due Landlord by Tenant pursuant to the terms of this
Lease; provided, however, that in no event shall Tenant be entitled to set off a
sum in excess of the amount of six (6) monthly installments of Minimum Annual
Rental.
20.2 If the Premises or any part thereof are at any time subject to a
first mortgage or a first deed of trust and this Lease or the rentals due from
Tenant hereunder are assigned to such mortgagee, trustee or beneficiary (called
Assignee for purposes of this Article only) and Tenant is given written notice
thereof, including the post office address of such Assignee, then Tenant shall
give written notice to such Assignee, specifying the default in reasonable
detail, and affording such Assignee a reasonable opportunity to make performance
for and on behalf of Landlord. If and when the said Assignee has made
performance on behalf of Landlord, such default shall be deemed cured.
ARTICLE 21
SUBORDINATION ATTORNMENT AND TENANT'S CERTIFICATE
21.1 SUBORDINATION. Upon written request of Landlord, or Landlord's
mortgagee, or the beneficiary of a deed of trust of Landlord, or lessor of
Landlord, Tenant will subordinate its rights pursuant to this Lease in writing
to the lien of any mortgage, deed of trust or the interest of any lease in which
Landlord is the lessee (or, in the alternative, cause the lien of said mortgage,
deed of trust or the interest of any lease in which Landlord is the lessee to be
subordinated to this Lease), or to the Agreements referred to in Article 25
hereof, and upon any building hereafter placed upon the land of which the
Premises are a part, and to all advances made or hereafter to be made upon the
security thereof.
21.2 ATTORNMENT. In the event any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by Landlord covering the Premises, or should the
lease in which Landlord is the lessee be terminated, Tenant shall attorn to the
purchaser or lessor under this Lease upon any foreclosure, sale or lease
termination and recognize the purchaser or lessor as Landlord under this Lease,
provided that the purchaser or lessor shall acquire and accept the Premises
subject to this Lease. Tenant agrees that no such purchaser or lessor shall be
liable for any default committed prior to foreclosure.
21.3 TENANT'S CERTIFICATE. Tenant, within ten (10) days from receipt of
Landlord's written request, shall execute, acknowledge and deliver to Landlord a
written statement certifying (i) that this Lease is in full force and effect,
without modification (or, if there have been modifications, that the same is in
full force and effect as modified, and stating the modification), (ii) that
there are no uncured defaults in Landlord's performance and that Tenant has no
right of offset, counterclaim or deduction against Minimum Annual Rental or
Percentage Rental (as the case may be) and Additional Rent, (iii) the dates to
which the Minimum Annual Rental or Percentage Rental (as the case may be) and
Additional Rental have been paid, and any other matters reasonably requested by
Landlord. Failure of Tenant to execute and deliver this statement shall
constitute, at
boattree\misc\tierra.lse
29
<PAGE>
Landlord's option, either (i) a breach of this Lease, or (ii) acceptance of the
Premises by Tenant and Tenant's acknowledgement that the statements referenced
above are true and correct, without exception. In addition, within ten (10) days
from receipt of Landlord's written request, Tenant shall execute, acknowledge
and deliver to any mortgagee or proposed mortgagee of Landlord a subordination,
non-disturbance and attornment agreement in such form as may be reasonably
required by such mortgagee or proposed mortgagee; provided, however, that such
subordination, non-disturbance and attornment agreement must provide that
Tenant's rights under this Lease shall not be infringed upon so long as Tenant
is not in default under this Lease.
ARTICLE 22
SECURITY DEPOSIT
22.1 SECURITY DEPOSIT. Tenant shall deposit with Landlord the sum
specified in Section 1.12 as "Security Deposit" (the "Security Deposit") on or
prior to the Rental Commencement Date. Unless otherwise required by applicable
law, the Security Deposit shall be held by Landlord without obligation or
liability for payment of interest thereon as security for the faithful
performance by Tenant of all of the terms of this Lease to be observed and
performed by Landlord. The Security Deposit shall not be mortgaged, assigned,
transferred or encumbered by Tenant without the prior written consent of
Landlord. Unless otherwise required by applicable law, Landlord shall not be
required to keep the Security Deposit separate from its general funds.
22.2 APPLICATION OF SECURITY DEPOSIT. Should Tenant at any time during
the Term hereof be in default of any provision of this Lease, Landlord may, at
its option and without prejudice to any other remedy which Landlord may have at
law or in equity, appropriate the Security Deposit, or the portion thereof as
may be deemed necessary, and apply same toward payment of Minimum Annual Rental,
Percentage Rental, Additional Rental, or to loss or damage sustained by Landlord
due to the default on the part of Tenant. Within five (5) days after written
demand by Landlord, Tenant shall deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to the original sum deposited.
22.3 REFUND. Should Tenant perform all of its obligations under this
Lease, the Security Deposit, or any balance thereof then remaining, shall be
returned to Tenant, within sixty (60) days of the expiration of the Term or the
earlier termination thereof, or as otherwise prescribed by law.
22.4 SALE OF PREMISES. Landlord may deliver the Security Deposit to the
purchaser of Landlord's interest in the Premises, and Landlord shall then be
discharged from any further liability with respect to the Security Deposit, and
this Section 22.4 shall also apply to any subsequent transfers of Landlord's
interest in the Premises.
ARTICLE 23
boattree\misc\tierra.lse
30
<PAGE>
QUIET ENJOYMENT
Upon Tenant's payment of Minimum Annual Rental or Percentage Rental (as
the case may be) and Additional Rental, and its observation and performance of
all the covenants, terms and conditions of this Lease to be observed and
performed by Tenant, Tenant shall peaceably and quietly hold and enjoy the
Premises from and after delivery thereof to Tenant; subject, however, to (a) the
rights of the parties as set forth in this Lease, (b) any mortgage or deed of
trust to which this Lease is subordinate, (c) any ground or underlying leases,
agreements and encumbrances to which this Lease is subordinate, and (d) all
matters of record.
ARTICLE 24
NOTICES
Except as otherwise required by law, any notice, information, request
or reply (the "Notice" for purposes of this Article only) required or permitted
to be given under the provisions of this Lease shall be in writing and shall be
given or served either personally or by mail. If given or served by mail, such
Notice shall be deemed sufficiently given if (a) deposited in the United States
mail, certified mail, return receipt requested, postage prepaid, or (b) sent by
express mail, or other similar overnight service, provided proof of service is
available, addressed to the addresses of the parties specified as "Addresses for
Notices and Payments" in Section 1.14. Any Notice given or served by mail shall
be deemed given or served as of the date of deposit in the mails. Either party
may, by written notice to the other in the manner specified herein, specify an
address within the United States for notices in lieu of the address specified in
Section 1.14.
ARTICLE 25
TITLE OF LANDLORD
Landlord covenants that if it acquires title to the Premises, there
will be no liens upon its estate other than (a) covenants, conditions,
restrictions, easements, ground leases, mortgages or deeds of trust
(collectively referred to as the "Agreements"); (b) any liens not preventing
Tenant from using the Premises as permitted by this Lease; (c) the effect of any
zoning laws of the city, county and state where the Shopping Center and the U.S.
19 Premises are situated, and (d) general and special taxes not delinquent.
Tenant agrees that (i) as to its leasehold estate, it, and all persons in
possession or holding under it, will conform to and will not violate the terms
of the Agreements or any matters of record and (ii) this Lease is subordinate to
the Agreements and any amendments or modifications thereto; provided, however,
if the Agreements are not of record as of the Rental Commencement Date, then
this Lease shall automatically become subordinate to the Agreements upon
recordation, provided the Agreements do not prevent Tenant from using the
Premises for the use set forth in Section 1.11.
boattree\misc\tierra.lse
31
<PAGE>
ARTICLE 26
SHOPPING CENTER EXPANSION
At any time during the Term, Landlord may expand, in any manner, the
existing Shopping Center, which expansion may include the addition of shops
and/or the addition of new buildings to the Shopping Center (collectively the
"Expanded Center"); provided, however, that such actions shall not (a)
materially alter the access of Tenant and its customers to the Shopping Center
Premises, or (b) materially alter the visibility of Tenant's facility from
adjacent roadways, or (c) reduce the outside display area of Tenant. If Landlord
deems it necessary for construction personnel to enter the Premises in order to
construct the Expanded Center, Landlord shall give Tenant no less than fifteen
(15) days prior notice, and Tenant shall allow such entry. Landlord shall use
reasonable efforts to complete the work affecting the Premises in an efficient
manner so as not to interfere unreasonably with Tenant's business. Tenant shall
not be entitled to any damages or to reduction in Minimum Annual Rental,
Percentage Rental or Additional Rental for any interference or interruption of
Tenant's business upon the Premises or for any inconvenience caused by such
construction work. Landlord shall have the right to use a portion of the
Premises to accommodate any structures required for the Expanded Center. If, as
a result of Landlord utilizing a portion of the Premises for such purpose, there
is a permanent increase or decrease in the Floor Area of the Premises of one
percent (1%) or more, there shall be a proportionate adjustment of Minimum
Annual Rental and all other charges based on Floor Area. During the course of
construction, Tenant shall continue to pay Minimum Annual Rental and Additional
Rental.
ARTICLE 27
MISCELLANEOUS
27.1 WAIVER. Any waiver by Landlord of a breach of a covenant-of this
Lease by Tenant shall not be construed as a waiver of a subsequent breach of the
same covenant. The consent or approval by Landlord to anything requiring
Landlord's consent or approval shall not be deemed a waiver of Landlord's right
to withhold consent or approval of any subsequent similar act by Tenant. No
breach by Tenant of a covenant of this Lease shall be deemed to have been waived
by Landlord unless the waiver is in writing signed by Landlord.
27.2 RIGHTS CUMULATIVE. Except as provided herein to the contrary, the
rights and remedies of Landlord specified in this Lease shall be cumulative and
in addition to any rights and remedies not specified in this Lease.
27.3 ENTIRE AGREEMENT. It is understood that there are no oral or
written agreements or representations between the parties hereto affecting this
Lease, and this Lease supersedes and cancels any and all previous negotiations,
arrangements, representations, brochures, agreements and
boattree\misc\tierra.lse
32
<PAGE>
understandings, if any, between Landlord and Tenant or displayed by Landlord to
Tenant with respect to the subject matter thereof, and none thereof shall be
used to interpret or construe this Lease.
27.4 NO REPRESENTATION. Landlord reserves the absolute right to effect
such other tenancies in the Shopping Center as Landlord, in the exercise of its
sole business judgment, shall determine to best promote the interests of the
Shopping Center. Tenant does not rely on the fact, nor does Landlord represent,
that any specified tenant or number of tenants shall, during the Term of this
Lease, occupy any space in the Shopping Center. This Lease is and shall be
considered to be the only agreement between the parties hereto and their
representatives and agents. All negotiations and oral agreements acceptable to
both parties have been merged into and are included herein. There are no other
representations or warranties between the parties and all reliance with respect
to representations is solely upon the representations and agreements contained
in this Lease.
27.5 AMENDMENTS IN WRITING. No provision of this Lease may be
amended except by an agreement in writing signed by Landlord and Tenant.
27.6 NO PRINCIPAL AGENT RELATIONSHIP. Nothing contained in this Lease
shall be construed as creating the relationship of principal and agent,
partnership or joint venture between Landlord and Tenant.
27.7 LAWS OF FLORIDA TO GOVERN. This Lease shall be governed by and
construed in accordance with the laws of the State of Florida.
27.8 SEVERABILITY. If any provision of this Lease or the application of
such provision to any person, entity or circumstances, is found invalid or
unenforceable by a court of competent jurisdiction, the determination shall not
affect the other provisions of this Lease and all other provisions of this Lease
shall be deemed valid and enforceable.
27.9 SUCCESSORS. All rights and obligations of Landlord and Tenant
under this Lease shall extend to and bind the respective heirs, executors,
administrators, and the permitted concessionaires, successors, subtenants and
assignees of the parties. If there is more than one (1) Tenant, each shall be
bound jointly and severally by the terms , covenants and agreements contained in
this Lease.
27.10 TIME OF ESSENCE. Except for the delivery of possession of the
Premises to Tenant, time is of the essence.
27.11 WARRANTY OF AUTHORITY. If Tenant is a corporation or partnership,
each individual executing this Lease on behalf of the corporation or partnership
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of the corporation or partnership, and that this Lease is
binding upon the corporation or partnership. If Tenant is a
boattree\misc\tierra.lse
33
<PAGE>
corporation, the persons executing this Lease on behalf of Tenant hereby
covenant and warrant that (i) Tenant is a duly qualified corporation and all
steps have been taken prior to the date hereof to qualify Tenant to do business
in the State where the Shopping Center is situated, (ii) all franchise and
corporate taxes have been paid to date, and (iii) all future forms, reports,
fees and other documents necessary to comply with applicable laws will be filed
when due.
27.12 MORTGAGEE CHANGES. Tenant shall not unreasonably withhold its
consent to changes or amendments to this Lease requested by the holder of a
mortgage or deed of trust, or such similar financing instrument, covering
Landlord's fee interest in the Premises so long as such changes do not alter the
economic terms of this Lease or otherwise diminish the rights, or increase the
obligations, of Tenant.
27.13 CAPTIONS AND TERMS. The captions of Articles of this Lease are
for convenience only, are not a part of this Lease and do not in any way limit
or amplify the terms and provisions of this Lease. Except as otherwise
specifically stated in this Lease, "the term" shall include the original term
and any extension, renewal or holdover thereof.
27.14 BROKERS. Tenant represents and warrants that it has not had any
dealings with any realtors, brokers or agents in connection with the negotiation
of this Lease.
27.15 RECORDING. Tenant shall not record this Lease or any short form
of this Lease. Tenant, upon the request of Landlord, shall execute and
acknowledge a short form memorandum of this Lease for recording purposes, upon
the expiration or earlier termination of this Lease for any reason, Tenant,
within-three (3) days of the date of request by Landlord, shall convey to
Landlord by quitclaim deed any and all interest Tenant may have under this
Lease.
27.16 TRANSFER OF LANDLORD'S INTEREST. Should Landlord sell, exchange
or assign this Lease (other than a conditional assignment as security for a
loan), then Landlord, as transferor, shall be relieved of any and all
obligations on the part of Landlord accruing under this Lease from and after the
date of the transfer. No holder of a mortgage or a deed of trust to which this
Lease is subordinate shall be responsible in connection with the Security
Deposit, unless the mortgagee or holder of a deed of trust actually receives the
Security Deposit.
27.17 INTEREST ON PAST DUE OBLIGATIONS. Unless otherwise specifically
provided in this Lease, any amount due from Tenant to Landlord under this Lease
which is not paid when due and any amount due as reimbursement to Landlord for
costs incurred by Landlord in performing obligations of Tenant upon Tenant's
failure to so perform shall bear interest at the lesser of (a) twelve percent
(12%) from the date originally due until paid; or (b) the maximum interest rate
allowed by applicable law.
boattree\misc\tierra.lse
34
<PAGE>
27.18 RIGHT TO SHOW PREMISES. During the last one hundred eighty (180)
days of the Term, Landlord shall have the right to go upon the Premises to show
same to prospective tenants or purchasers and to post appropriate signs.
27.19 INDEPENDENT CONTRACTORS. Whenever in this Lease it provides that
Landlord shall perform certain work or services, Landlord shall be entitled to
contract with an independent contractor to perform said work or services, or
provide the service itself.
27.20 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, judicial orders, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other causes
beyond the reasonable control of the party obligated to perform, shall excuse
the performance by that party for a period equal to the prevention, delay or
stoppage, except the obligations imposed with regard to Minimum Annual Rental
and Additional Rental to be paid by Tenant pursuant to this Lease; provided the
party prevented, delayed or stopped shall have given the other party written
notice thereof within thirty (30) days of such event causing the prevention,
delay or stoppage. Notwithstanding anything to the contrary contained in this
Section 27.20, in the event any work performed by Tenant or Tenant's contractor
results in a strike, lockout and/or labor dispute, the strike, lockout and/or
dispute shall not excuse the performance by Tenant of the provisions of this
Lease.
27.21 HOLDING OVER. This Lease shall terminate without further notice
upon the expiration of the Term, and should Tenant hold over in the Premises
beyond this date, the holding over shall not constitute a renewal or extension
of this Lease or give Tenant any rights under this Lease. In such event,
Landlord may, in its sole discretion, treat Tenant as a tenant at will, subject
to all of the terms and conditions in this Lease, except that Tenant shall pay
Minimum Annual Rental in an amount equal to the greater of (a) one and one-half
(1 1/2) times the sum of the Minimum Annual Rental or Percentage Rental (as the
case may be) which was payable for the twelve (12) month period immediately
preceding the expiration of the Lease, or (b) the then currently scheduled rent
for comparable space in the Shopping Center and the U.S. 19 Premises, as the
same is reasonably determined in Landlord's business judgment. In the event
Tenant fails to surrender the Premises upon the expiration of this Lease, Tenant
shall indemnify and hold Landlord harmless from all loss or liability which may
accrue therefrom, including, without limitation, any claims made by any
succeeding tenant founded or resulting from Tenant's failure to surrender.
Acceptance by Landlord of any Minimum Annual Rental, Percentage Rental or
Additional Rental after the expiration or earlier termination of this Lease
shall not constitute a consent to a hold over hereunder, constitute acceptance
of Tenant as a tenant at will or result in a renewal of this Lease.
27.22 ATTORNEYS' FEES. In the event that at any time after the date of
this Lease either Landlord or Tenant shall institute any action or proceeding
against the other relating to the provisions of this Lease, or any default
hereunder, the party not prevailing in the action or
boattree\misc\tierra.lse
35
<PAGE>
proceeding shall reimburse the prevailing party for the reasonable expenses of
attorneys' fees and all costs or disbursements incurred therein by the
prevailing party, including without limitation, any fees, costs or disbursements
incurred on any appeal from the action or proceeding.
27.23 NON-DISCRIMINATION. Tenant herein covenants by and for itself,
its heirs, executors, administrators and assigns and all persons claiming under
or through it, and this Lease is made and accepted upon and subject to the
following conditions: That there shall be no discrimination against or
segregation of any person or group of persons on account of race, sex, marital
status, color, creed, national origin or ancestry, in the leasing, subleasing,
transferring, use, occupancy, tenure or enjoyment of the Premises herein leased,
nor shall the Tenant itself, or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, sublessees, subtenants or vendees in the premises herein
leased.
27.24 RADON GAS. Radon is a naturally occurring gas which, when
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from the county public health
unit. (Pursuant to Section 404.056(8), Florida Statutes).
27.25 FINANCING BY TENANT. Tenant has advised Landlord that Tenant will
obtain financing for its inventory in the Premises from an institutional lender
("Institutional Lender Financing"). If requested by Tenant, Landlord will
execute such documents as are necessary to subordinate any liens conferred upon
Landlord to the liens and security interests imposed upon Tenant's inventory by
the Institutional Lender Financing.
27.26 INTERPRETATION. If more than one person or corporation is named
as Landlord or Tenant in this Lease and executes the same as such, then and in
such event, the words "Landlord" or "Tenant" wherever used in this Lease are
intended to refer to all such persons or corporations, and the liability of such
persons or corporations for compliance with and performance of all the terms ,
covenants and provisions of this Lease shall be joint and several. The masculine
pronoun used herein shall include the feminine or the neuter as the case may be,
and the use of the singular shall include the plural. The parties agree that
this Lease supersedes and replaces the lease dated in March of 1998 which
Landlord and Tenant previously executed in respect of the Premises.
[This space intentionally left blank]
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease
on the day and year first above written.
boattree\misc\tierra.lse
36
<PAGE>
LANDLORD:
MARINA OPPORTUNITY I (TIERRA VERDE), L.P.,
a Texas limited partnership
By: Marina Opportunity (Tierra Verde), L.L.C.,
a Texas limited liability company
Its General Partner
By: /s/ John Powers
Name: John Powers
Title: Sr. Vice President
TENANT:
BOAT TREE, INC.,
a Florida corporation
By: /s/ Joe Pozo
Name: Joseph G. Pozo, Jr.
Title: President
boattree\misc\tierra.lse
37
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into as of this 18th day of August, 1998
between American Marine Recreation, Inc., a Delaware corporation (the
"Corporation") having an address at 1924 33rd Street, Orlando, Florida 32834 and
Joseph G. Pozo, Jr. (the "Executive"), residing at 4414 Down Point Lane,
Windermere, Florida 34786.
W I T N E S S E T H:
WHEREAS, Executive is presently employed by the Corporation; and
WHEREAS, the Company and the Executive desire to set forth the terms of
Executive's employment with the Company, pursuant to the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree with each other as follows:
1. Term of Employment. The Corporation agrees to and does hereby employ
Executive, and Executive agrees to and does hereby accept employment by the
Corporation, as the Chairman, President and Chief Executive Officer of the
Corporation, subject to the supervision and direction of its Board of Directors,
for the three (3) year period commencing on the closing of the initial public
offering of the Corporation's securities (the "Term"). The Term shall be
automatically renewed on an annual basis (each such period, a "Renewal Period")
for an additional year (the "Renewal Term"), unless this Agreement is terminated
in writing by the Executive or the Corporation (the "Notice of Nonrenewal") not
less than one hundred and eighty (180) days prior to the expiration
<PAGE>
of the Term or any Renewal Period, unless otherwise terminated pursuant to the
provisions of this Agreement.
2. Duties of Executive. Executive shall devote such time, attention and
energy to the affairs of Corporation as shall be reasonably required to perform
his duties hereunder, and, in pursuance of the policies and directions of the
Board of Directors, Executive shall use his best efforts to promote the business
and affairs of the Corporation.
3. Base Compensation. In consideration of the Executive's services
pursuant to this Agreement, Corporation shall pay to Executive, during the
period of Executive's employment under this Agreement (the "Base Compensation"),
(i) a salary at the rate of Two Hundred Thousand Dollars ($200,000) per year
during the first year of this Agreement; and (ii) for each year thereafter,
annual compensation shall be determined by the Board of Directors, but in no
event less than $200,000. The Base Compensation shall be payable in equal
installments, in accordance with the Corporation's customary procedures for
executive employees but in no event less frequently than semi-monthly subject to
applicable tax and payroll deductions. The Board of Directors of the Corporation
may increase Executive's Base Compensation at such time or times and in such
amount or amounts as it may in its sole discretion determine.
4. Incentive Compensation. Provided Executive has duly performed his
obligations pursuant to this Agreement, Executive shall be eligible to receive,
as additional compensation for the services to be rendered by Executive under
this Agreement, incentive compensation. The amount of such incentive
compensation, if any, shall be determined by the Board of Directors in its sole
discretion based on the Executive's performance and contributions to the
Corporation's success.
- 2 -
<PAGE>
5. Other Benefits. During the term of this Agreement the Executive
shall be entitled to participate in any benefit plans adopted by the Corporation
for the general and overall benefit of all employees and/or for key executives
of the Corporation such as health care, life insurance, disability, stock option
plans, tax, legal and financial planning services, pension, profit sharing and
savings.
6. Vacation. Executive shall be entitled to a fully paid vacation of
four (4) weeks per calendar year, which vacation shall be scheduled at such time
or times as the Corporation in consultation with Executive may reasonably
determine.
7. Expenses. (a) The Corporation shall pay or reimburse Executive for
all reasonable and necessary expenses incurred by him in connection with his
duties hereunder, upon submission by Executive to the Corporation of such
reasonable evidence of such expenses as the Corporation may require.
(b) Throughout the term of this Agreement, the Corporation
will provide Executive with the use of a vehicle of a class equivalent to that
currently utilized by the Executive for purposes within the scope of his
employment with Corporation and shall pay all expenses for fuel, maintenance,
and insurance in connection with such use of the automobile.
8. Insurance. The Corporation may from time to time apply for policies
of life, health and accident insurance or disability insurance upon the
Executive in such amounts as the Corporation deems appropriate. The Executive
agrees to aid the Corporation in procuring such insurance, including submitting
to a physical examination, if required, and completing any and all forms
required for application for any insurance policy.
- 3 -
<PAGE>
9. Disclosure of Information. The Executive shall, during his
employment under this Agreement and thereafter, keep confidential and refrain
from disclosing to any unauthorized persons all data and information relating to
the respective businesses of the Corporation or any of its subsidiaries.
10. Intellectual Property Rights. (a) The Executive shall promptly
disclose to the Corporation in writing, any and all charts, layouts, maps,
inventions, improvements, techniques, markets, sales and advertising plans,
processes, concepts and plans, whether or not copyrightable or patentable,
secret processes and "know-how," conceived by the Executive during the term of
his employment by the Corporation (the "Executive's Work Product"), whether
alone or with others and whether during regular working hours and through the
use of facilities and property of the Corporation or otherwise, which directly
relates to the present business of the Corporation. Upon the Corporation's
request at any time or from time to time during the Term of the Executive's
employment, the Executive shall (i) deliver to the Corporation copies of the
Executive's Work Product that may be in his possession or otherwise available to
him, and (ii) execute and deliver to the Corporation such applications,
assignments and other documents as it may reasonably require in order to apply
for and obtain copyrights or patents in the United States of America and other
countries with respect to any Executive's Work Product that it deems to be
copyrightable or patentable, and/or otherwise to vest in itself full title
thereto.
(b) All documents that pertain to the Corporation, including
but not limited to the Executive's Work Product, shall be the sole and exclusive
property of the Corporation. Upon the termination of the Executive's employment,
all such documents that may be in his possession
- 4 -
<PAGE>
or otherwise available to him or shall thereafter come into his possession or
control shall be promptly returned to the Corporation without the necessity of a
request therefor.
11. Non-Competition Covenant. (a) The Executive shall not, during his
employment by the Corporation, engage, directly or indirectly, in any business
competitive with the business of the Corporation without the consent of the
Board of Directors.
(b) For a period of two years after the termination of the
Executive's employment hereunder (the "Non-Competition Period"), for any reason
whatsoever, other than a termination by the Corporation without good cause, or
by Executive for good reason (as hereinafter defined) the Executive shall not
(i) engage, directly or indirectly, 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 of selling, renting and leasing, boating, nautical and other
lifestyle entertainment products and services, and related activities throughout
the United States (the "Territory"), without the permission of the Board of
Directors, which permission shall not be unreasonably withheld or delayed or
(ii) induce or actively attempt to influence any other employee or consultant of
the Corporation to terminate his or her employment or consultancy with the
Corporation. Nothing herein contained shall be deemed to prevent ownership by
Executive and his associates (as said term is defined in regulation 14(A)
promulgated under the Securities Exchange Act of 1934 as in effect on the date
hereof), collectively, of not more than 5% of the outstanding capital stock of a
corporation listed on a national securities exchange.
(c) (i) The parties to this Agreement consider the
restrictions contained herein reasonable as to the duration of the
Non-Competition Period and the extent of the Territory.
- 5 -
<PAGE>
However, if the duration of the Non-Competition Period or the extent of the
Territory herein specified should be judged unreasonable by any Court or
arbitration proceeding, the validity and effect of the remaining provisions of
this Agreement shall not be affected thereby and, the duration of the
Non-Competition Period shall be reduced by such number of months and/or the area
of the Territory shall be reduced such that, the Territory and the
Non-Competition Period shall be deemed reasonable so that the foregoing covenant
not to compete may be enforced .
(ii) Executive agrees and recognizes that in the event of a breach or
threatened breach by Executive of the provisions of the aforegoing covenants,
the Corporation may suffer irreparable harm, and that money damages may not be
an adequate remedy. Therefore, the Corporation shall be entitled as a matter of
right to specific performance of the covenants of Executive contained herein by
way of temporary or permanent injunctive relief in a Court of competent
jurisdiction.
12. Termination. 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 Corporation may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the conclusion of such notice period.
- 6 -
<PAGE>
Also, Executive may terminate this 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 Corporation with a written statement from a
qualified doctor to such effect and provided, further, that, at the
Corporation'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
Corporation 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 (i) 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 greater of the time period then remaining under the term
of this Agreement or for one (1) year and (ii) the Corporation shall make the
insurance premium payments contemplated by COBRA for a period of eighteen (18)
months after such termination.
(c) Good Cause. The Corporation 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 Corporation which
materially and adversely affects the operations or reputation of the
Corporation; (4) Executive's conviction of a felony crime; or (5)
- 7 -
<PAGE>
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 but shall receive any accrued salary and benefits through the date
of termination.
(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 Corporation. Executive may
only be terminated without Good Cause by the Corporation during the Term hereof
if such termination is approved by a majority of the members of the Board of
Directors of the Corporation, excluding Executive if Executive is a member of
such Board of Directors. Should Executive terminate with Good Reason or in the
event that Executive is terminated without Good Cause during the Term, Executive
shall receive from the Corporation, on such dates as would otherwise be paid by
the Corporation, the base salary at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for three (3) years,
whichever amount is greater. Further, if Executive is terminated without Good
Cause or terminates his employment hereunder with Good Reason, (a) the
Corporation 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 the Corporation's 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 Corporation or termination by
the Executive with Good Reason shall operate to shorten the period set forth in
paragraph 11
- 8 -
<PAGE>
hereof 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 Corporation terminating his employment pursuant to this paragraph 12,
Executive shall receive no severance compensation.
Executive shall have "Good Reason" to terminate this Agreement and his
employment if the Executive is demoted by means of a reduction in authority,
responsibilities or duties to a position of less stature or importance within
the Corporation than the position described in paragraph 1 hereof, unless
Executive has agreed in writing to that demotion.
(e) Change in Control of the Corporation. In the event of a
"Change in Control" (as defined below) of the Corporation during the Term,
Executive may terminate this Agreement as provided herein.
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 13 hereof.
If termination of Executive's employment arises out of the
Corporation'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 Corporation, the Corporation 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
- 9 -
<PAGE>
his rights hereunder. Further, none of the provisions of paragraph 11 hereof
shall apply in the event this Agreement is terminated as a result of a breach by
the Corporation.
13. Change in Control.
(a) Unless Executive elects to terminate this Agreement
pursuant to subparagraph (c) below, Executive understands and acknowledges that
the Corporation may be merged or consolidated with or into another entity and
that such entity shall automatically succeed to the rights and obligations of
the Corporation hereunder or that the Corporation 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 shall be applicable.
(b) In the event of a pending Change in Control wherein the
Corporation 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 the Corporation's business and/or assets that such successor is willing as of
the closing to assume and agree to perform obligations under this Agreement in
the same manner and to the same extent that the Corporation is hereby required
to perform, then such Change in Control shall be deemed to be a termination of
this Agreement by the Corporation without Good Cause during the Term and the
applicable portions herein 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 12(d) hereof and the
non-competition provisions herein shall not apply whatsoever.
- 10 -
<PAGE>
(c) In any Change in Control situation, Executive may, at his
sole discretion, elect to terminate this Agreement by providing written notice
to the Corporation 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 12(d) hereof will apply as though the
Corporation 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 12(d) hereof and the non-competition provisions herein shall all apply
for a period of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 12 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 Corporation 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 shares of common stock of the Corporation,
such that he may convert the options to shares 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
- 11 -
<PAGE>
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 (A) the individuals who, as of the
closing date of the Corporation's initial public offering, constitute the Board
of Directors of the Corporation (the "Original Directors"); (B) the individuals
who thereafter are elected to the Board of Directors of the Corporation and
whose election, or nomination for election, to the Board of Directors of the
Corporation 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 the Corporation and whose election, or
nomination for election, to the Board of Directors of the Corporation 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 the Corporation, and such offer is
consummated for the equity securities of the Corporation representing twenty
percent (20%) or more of the combined voting power of the Corporation's then
outstanding voting securities;
(iii) the stockholders of the Corporation
shall approve a merger,
consolidation, recapitalization, or reorganization of the Corporation; 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
- 12 -
<PAGE>
(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 the Corporation 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 the Corporation
shall approve a plan of
complete liquidation of the Corporation or an agreement for the same or
disposition by the Corporation of all or a substantial portion of the
Corporation's assets to another person or entity which is not a wholly-owned
subsidiary of the Corporation (i.e., fifty percent (50%) or more of the total
assets of the Corporation).
(f) Sales of the Corporation's Common Stock beneficially owned
or controlled by the Corporation shall not be considered in determining whether
a Change in Control has occurred.
(g) Executive shall be notified in writing by the Corporation
at any time that the Corporation 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 Corporation 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
- 13 -
<PAGE>
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 Corporation 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.
14. 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
Corporation against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Corporation 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 Corporation are made a party to the same third-party action, complaint, suit
or proceeding, the Corporation agrees to engage competent legal representation,
and Executive agrees to use the same representation, provided that if counsel
selected by the Corporation shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Corporation 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 Corporation 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
Corporation.
- 14 -
<PAGE>
15. Effect of Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
16. Notices. Any notice permitted, required, or given hereunder shall
be in writing and shall be personally delivered; or delivered by any prepaid
overnight courier delivery service then in general use; or mailed, registered or
certified mail, return receipt requested, to the addresses designated herein or
at such other address as may be designated by notice given hereunder:
If to : Joseph G. Pozo, Jr.
4414 Down Point Lane
Windermere, Florida 34786
With a copy to: J. Gregory Humphries, Esq.
20 North Orange Avenue, Suite 1000
Orlando, Florida 32801
If to : American Marine Recreation, Inc.
1924 33rd Street
Orlando, Florida 32834
With a copy to: McLaughlin & Stern, LLP
260 Madison Avenue
New York, New York 10016
Attn: Martin C. Licht, Esq.
Delivery shall be deemed made when actually delivered, or if mailed,
three days after delivery to a United States Post Office.
17. Assignment. Executive shall not be entitled to assign his rights,
duties or obligations under this Agreement.
18. Amendments. The terms and provisions of this Agreement may be amended
or modified only by a written instrument executed by the party to be charged by
such amendment or modification.
- 15 -
<PAGE>
19. Governing Law. The terms and provisions herein contained and all
the disputes or claims relating to this Agreement shall be governed by,
interpreted and construed in accordance with the internal laws of the State of
Florida, without reference to its conflict of laws principles.
20. Arbitration. (a) In the event of a dispute between the parties
arising out of or relating to this Agreement, or the breach thereof, the parties
shall make every effort to amicably resolve, reconcile, and settle such dispute
between them. Should an amicable resolution not be possible, either party may
invoke arbitration.
(b) Subject to the provisions of Section 11(c)(ii) hereof, all
claims, disputes and other matters in controversy arising out of or related to
this Agreement or the performance or breach hereof, shall be decided by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA Rules"), by a panel of three (3) arbitrators,
in Orlando, Florida. One (1) such arbitrator shall be appointed by each of the
parties within three (3) weeks after being requested by the other party to make
such appointment and the third arbitrator shall be appointed by the two (2)
arbitrators appointed by the parties. In the event that a party does not appoint
its arbitrator within such three (3) week period, or the two (2) arbitrators
appointed by the parties shall fail to agree on the third arbitrator, such
appointed arbitrator or arbitrators shall be appointed by the American
Arbitration Association in accordance with the AAA Rules. The award shall state
the facts and findings and shall be rendered with reasons in writing. The
arbitrators shall have no authority or power to alter or modify any express
condition or provision of this Agreement, or to render any award which by its
terms shall have the effect of altering or modifying any express conditions or
provisions of this Agreement. The award rendered by the arbitrators shall be
final and judgement may be entered upon it in any court
- 16 -
<PAGE>
having jurisdiction thereof. The successful party to the arbitration shall be
entitled to an award for reasonable attorney's fees, as determined by the
arbitrators.
21. Captions. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
22. Merger and Severability. This Agreement shall constitute the entire
Agreement between the Corporation and Executive with respect to the subject
matter hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
23. 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.
IN WITNESS WHEREOF, the parties hereto have affixed their signatures
the day and year first above written.
AMERICAN MARINE RECREATION, INC.
By: /s/ Joseph G. Pozo, Jr.
--------------------------------
Name:Joseph G. Pozo, Jr.
Title:President
/s/ Joseph G. Pozo, Jr.
--------------------------------
Joseph G. Pozo, Jr.
- 17 -
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into as of this 18th day of August, 1998
between American Marine Recreation, Inc., a Delaware corporation (the
"Corporation") having an address at 1924 33rd Street, Orlando, Florida 32834 and
Gary E. Stein (the "Executive"), residing at 124 North Ardmore Road, Columbus,
Ohio 43209.
W I T N E S S E T H:
WHEREAS, Executive is presently employed by the Corporation; and
WHEREAS, the Company and the Executive desire to set forth the terms of
Executive's employment with the Company, pursuant to the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto agree with each other as follows:
1. Term of Employment. The Corporation agrees to and does hereby employ
Executive, and Executive agrees to and does hereby accept employment by the
Corporation, as the Executive Vice President and Secretary of the Corporation,
subject to the supervision and direction of its Board of Directors, for the
three (3) year period commencing on the closing of the initial public offering
of the Corporation's securities (the "Term"). The Term shall be automatically
renewed on an annual basis (each such period, a "Renewal Period") for an
additional year (the "Renewal Term"), unless this Agreement is terminated in
writing by the Executive or the Corporation (the "Notice of Nonrenewal") not
less than ninety (90) days prior to the expiration
<PAGE>
of the Term or any Renewal Period, unless otherwise terminated pursuant to the
provisions of this Agreement.
2. Duties of Executive. Executive shall devote such time, attention and
energy to the affairs of Corporation as shall be reasonably required to perform
his duties hereunder, and, in pursuance of the policies and directions of the
Board of Directors, Executive shall use his best efforts to promote the business
and affairs of the Corporation.
3. Base Compensation. In consideration of the Executive's services
pursuant to this Agreement, Corporation shall pay to Executive, during the
period of Executive's employment under this Agreement (the "Base Compensation"),
(i) a salary at the rate of One Hundred Fifty Thousand Dollars ($150,000) per
year during the first year of this Agreement; and (ii) for each year thereafter,
annual compensation shall be determined by the Board of Directors, but in no
event less than $150,000 Base Compensation shall be payable in equal
installments, in accordance with the Corporation's customary procedures for
executive employees, subject to applicable tax and payroll deductions. The Board
of Directors of the Corporation may increase Executive's Base Compensation at
such time or times and in such amount or amounts as it may in its sole
discretion determine.
4. Incentive Compensation. Provided Executive has duly performed his
obligations pursuant to this Agreement, Executive shall be eligible to receive,
as additional compensation for the services to be rendered by Executive under
this Agreement, incentive compensation. The amount of such incentive
compensation, if any, shall be determined by the Board of Directors in its sole
discretion based on the Executive's performance and contributions to the
Corporation's success.
- 2 -
<PAGE>
5. Other Benefits. (a) During the term of this Agreement the Executive
shall be entitled to participate in any benefit plans adopted by the Corporation
for the general and overall benefit of all employees and/or for key executives
of the Corporation such as health care, life insurance, disability, stock option
plans, tax, legal and financial planning services, pension, profit sharing and
savings.
(b) The Corporation shall pay all of the Executive's
relocation costs from Columbus, Ohio to the Orlando, Florida area including
travel and lodging expenses for the Executive and the Executive's family for a
reasonable number of trips.
(c) At the election of the Executive, the Corporation shall
provide the Executive first mortgage financing on the Executive's personal
residence in the Orlando, Florida area, an amount not to exceed $350,000, for a
two year period, based on a 30 year amortization schedule at an interest rate
equal to the current rate being offered by the institutional lenders in the
Orlando, Florida area for adjustable rate mortgages.
6. Vacation. Executive shall be entitled to a fully paid vacation of
four (4) weeks per calendar year, which vacation shall be scheduled at such time
or times as the Corporation in consultation with Executive may reasonably
determine.
7. Expenses. (a) The Corporation shall pay or reimburse Executive for
all reasonable and necessary expenses incurred by him in connection with his
duties hereunder, upon submission by Executive to the Corporation of such
reasonable evidence of such expenses as the Corporation may require.
- 3 -
<PAGE>
(b) Throughout the term of this Agreement, the Corporation
will provide Executive with the use of a vehicle of a class equivalent to that
currently utilized by the Executive for purposes within the scope of his
employment with Corporation and shall pay all expenses for fuel, maintenance,
and insurance in connection with such use of the automobile.
8. Insurance. The Corporation may from time to time apply for policies
of life, health and accident insurance or disability insurance upon the
Executive in such amounts as the Corporation deems appropriate. The Executive
agrees to aid the Corporation in procuring such insurance, including submitting
to a physical examination, if required, and completing any and all forms
required for application for any insurance policy.
9. Disclosure of Information. The Executive shall, during his
employment under this Agreement and thereafter, keep confidential and refrain
from disclosing to any unauthorized persons all data and information relating to
the respective businesses of the Corporation or any of its subsidiaries.
10. Intellectual Property Rights. (a) The Executive shall promptly
disclose to the Corporation in writing, any and all charts, layouts, maps,
inventions, improvements, techniques, markets, sales and advertising plans,
processes, concepts and plans, whether or not copyrightable or patentable,
secret processes and "know-how," conceived by the Executive during the term of
his employment by the Corporation (the "Executive's Work Product"), whether
alone or with others and whether during regular working hours and through the
use of facilities and property of the Corporation or otherwise, which directly
relates to the present business of the Corporation. Upon the Corporation's
request at any time or from time to time during the Term of the
- 4 -
<PAGE>
Executive's employment, the Executive shall (i) deliver to the Corporation
copies of the Executive's Work Product that may be in his possession or
otherwise available to him, and (ii) execute and deliver to the Corporation such
applications, assignments and other documents as it may reasonably require in
order to apply for and obtain copyrights or patents in the United States of
America and other countries with respect to any Executive's Work Product that it
deems to be copyrightable or patentable, and/or otherwise to vest in itself full
title thereto.
(b) All documents that pertain to the Corporation, including
but not limited to the Executive's Work Product, shall be the sole and exclusive
property of the Corporation. Upon the termination of the Executive's employment,
all such documents that may be in his possession or otherwise available to him
or shall thereafter come into his possession or control shall be promptly
returned to the Corporation without the necessity of a request therefor.
11. Non-Competition Covenant. (a) The Executive shall not,
during his employment by the Corporation, engage, directly or indirectly, in
any business competitive with the business of the Corporation without the
consent of the Board of Directors.
(b) For a period of two years after the termination of the
Executive's employment hereunder (the "Non-Competition Period"), for any reason
whatsoever, other than a termination by the Corporation without good cause, or
by Executive for good reason (as hereinafter defined) the Executive shall not
(i) engage, directly or indirectly, 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 of selling, renting and leasing, boating, nautical and other
lifestyle entertainment products
- 5 -
<PAGE>
and services, and related activities throughout the United States (the
"Territory"), without the permission of the Board of Directors, which permission
shall not be unreasonably withheld or delayed or (ii) induce or actively attempt
to influence any other employee or consultant of the Corporation to terminate
his or her employment or consultancy with the Corporation. Nothing herein
contained shall be deemed to prevent ownership by Executive and his associates
(as said term is defined in regulation 14(A) promulgated under the Securities
Exchange Act of 1934 as in effect on the date hereof), collectively, of not more
than 5% of the outstanding capital stock of a corporation listed on a national
securities exchange.
(c) (i) The parties to this Agreement consider the
restrictions contained herein reasonable as to the duration of the
Non-Competition Period and the extent of the Territory. However, if the duration
of the Non-Competition Period or the extent of the Territory herein specified
should be judged unreasonable by any Court or arbitration proceeding, the
validity and effect of the remaining provisions of this Agreement shall not be
affected thereby and, the duration of the Non-Competition Period shall be
reduced by such number of months and/or the area of the Territory shall be
reduced such that, the Territory and the Non-Competition Period shall be deemed
reasonable so that the foregoing covenant not to compete may be enforced .
(ii) Executive agrees and recognizes that in the
event of a breach or threatened breach by Executive of the provisions of the
aforegoing covenants, the Corporation may suffer irreparable harm, and that
money damages may not be an adequate remedy. Therefore, the Corporation shall
be entitled as a matter of right to specific performance of the covenants of
- 6 -
<PAGE>
Executive contained herein by way of temporary or permanent injunctive relief in
a Court of competent jurisdiction.
12. Termination. 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 Corporation 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 this
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 Corporation with a written statement from a qualified doctor to
such effect and provided, further, that, at the Corporation'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 Corporation 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
(i) receive from the Company, in a lump-sum payment due
- 7 -
<PAGE>
within ten (10) days of the effective date of termination, the base salary at
the rate then in effect for the greater of the time period then remaining under
the term of this Agreement or for one (1) year and (ii) the Corporation shall
make the insurance premium payments contemplated by COBRA for a period of
eighteen (18) months after such termination.
(c) Good Cause. The Corporation 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 Corporation which
materially and adversely affects the operations or reputation of the
Corporation; (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 Corporation. Executive may
only be terminated without Good Cause by the Corporation during the Term hereof
if such termination is approved by a majority of the members of the Board of
Directors of the Corporation, excluding Executive if Executive is a member of
such Board of Directors and provided that the Executive receives at least six
(6) months written notice. Should Executive terminate with Good Reason or in the
event that Executive is
- 8 -
<PAGE>
terminated without Good Cause during the Term, Executive shall receive from the
Corporation, on such dates as would otherwise be paid by the Corporation, the
base salary at the rate then in effect for a period of 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 Corporation 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 the Corporation's 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 Corporation or termination by the Executive with Good
Reason shall operate to shorten the period set forth in paragraph 11 hereof 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
Corporation terminating his employment pursuant to this paragraph 12, Executive
shall receive no severance compensation. Executive shall have "Good Reason" to
terminate this Agreement and his employment if the Executive is demoted by means
of a reduction in authority, responsibilities or duties to a position of less
stature or importance within the Corporation than the position described in
paragraph 1 hereof, unless Executive has agreed in writing to that demotion.
- 9 -
<PAGE>
(e) Change in Control of the Corporation. In the event of a
"Change in Control" (as defined below) of the Corporation during the Term,
Executive may terminate this Agreement as provided herein.
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 13 hereof.
If termination of Executive's employment arises out of the
Corporation'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 Corporation, the Corporation 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 11 hereof shall apply in the event this Agreement is
terminated as a result of a breach by the Corporation.
13. Change in Control.
(a) Unless Executive elects to terminate this Agreement
pursuant to subparagraph (c) below, Executive understands and acknowledges that
the Corporation may be merged or consolidated with or into another entity and
that such entity shall automatically succeed to the rights and obligations of
the Corporation hereunder or that the Corporation may undergo another type of
Change in Control. In the event such a merger or consolidation or other Change
- 10 -
<PAGE>
in Control is initiated prior to the end of the Term, then the provisions of
this paragraph shall be applicable.
(b) In the event of a pending Change in Control wherein the
Corporation 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 the Corporation's business and/or assets that such successor is willing as of
the closing to assume and agree to perform obligations under this Agreement in
the same manner and to the same extent that the Corporation is hereby required
to perform, then such Change in Control shall be deemed to be a termination of
this Agreement by the Corporation without Good Cause during the Term and the
applicable portions herein 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 12(d) hereof and the
non-competition provisions herein 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 Corporation 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 12(d) hereof will apply as though the
Corporation 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 12(d) hereof and the non-competition provisions herein shall all apply
for a period of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 12 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 Corporation 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 shares of common stock of the Corporation,
such that he may convert the options to shares 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 (A) the
individuals who, as of the closing date of the Corporation's initial public
offering, constitute the Board of Directors of the Corporation (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board of
Directors of
- 11 -
<PAGE>
the Corporation and whose election, or nomination for election, to the Board of
Directors of the Corporation 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 the Corporation and
whose election, or nomination for election, to the Board of Directors of the
Corporation 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 the Corporation, and such offer is
consummated for the equity securities of the Corporation representing twenty
percent (20%) or more of the combined voting power of the Corporation's then
outstanding voting securities;
(iii) the stockholders of the Corporation
shall approve a merger,
consolidation, recapitalization, or reorganization of the Corporation; 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 the Corporation 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
- 12 -
<PAGE>
(iv) the stockholders of the Corporation
shall approve a plan of
complete liquidation of the Corporation or an agreement for the same or
disposition by the Corporation of all or a substantial portion of the
Corporation's assets to another person or entity which is not a wholly-owned
subsidiary of the Corporation (i.e., fifty percent (50%) or more of the total
assets of the Corporation).
(f) Sales of the Corporation's Common Stock beneficially owned
or controlled by the Corporation shall not be considered in determining whether
a Change in Control has occurred.
(g) Executive shall be notified in writing by the Corporation
at any time that the Corporation 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 Corporation 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 Corporation or its successor within ten (10) days after Executive delivers a
written request
- 13 -
<PAGE>
for reimbursement accompanied by a copy of his tax return(s) showing the excise
tax actually incurred by Executive.
14. 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
Corporation against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Corporation 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 Corporation are made a party to the same third-party action, complaint, suit
or proceeding, the Corporation agrees to engage competent legal representation,
and Executive agrees to use the same representation, provided that if counsel
selected by the Corporation shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Corporation 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 Corporation 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
Corporation.
15. Effect of Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
- 14 -
<PAGE>
16. Notices. Any notice permitted, required, or given hereunder shall
be in writing and shall be personally delivered; or delivered by any prepaid
overnight courier delivery service then in general use; or mailed, registered or
certified mail, return receipt requested, to the addresses designated herein or
at such other address as may be designated by notice given hereunder:
If to : Gary E. Stein
124 North Ardmore Road
Columbus, OH 43209
If to : American Marine Recreation, Inc.
1924 33rd Street
Orlando, Florida 32834
With a copy to: McLaughlin & Stern L.P.
260 Madison Avenue, 18th Floor
New York, New York 10016
Attn: Martin C. Licht, Esq.
Delivery shall be deemed made when actually delivered, or if mailed,
three days after delivery to a United States Post Office.
17. Assignment. Executive shall not be entitled to assign his rights,
duties or obligations under this Agreement.
18. Amendments. The terms and provisions of this Agreement may
be amended or modified only by a written instrument executed by the party to be
charged by such amendment or modification.
19. Governing Law. The terms and provisions herein contained and all
the disputes or claims relating to this Agreement shall be governed by,
interpreted and construed in accordance with the internal laws of the State of
Florida, without reference to its conflict of laws principles.
- 15 -
<PAGE>
20. Arbitration. (a) In the event of a dispute between the parties
arising out of or relating to this Agreement, or the breach thereof, the parties
shall make every effort to amicably resolve, reconcile, and settle such dispute
between them. Should an amicable resolution not be possible, either party may
invoke arbitration.
(b) Subject to the provisions of Section 11(c)(ii) hereof, all
claims, disputes and other matters in controversy arising out of or related to
this Agreement or the performance or breach hereof, shall be decided by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA Rules"), by a panel of three (3) arbitrators,
in Orlando, Florida. One (1) such arbitrator shall be appointed by each of the
parties within three (3) weeks after being requested by the other party to make
such appointment and the third arbitrator shall be appointed by the two (2)
arbitrators appointed by the parties. In the event that a party does not appoint
its arbitrator within such three (3) week period, or the two (2) arbitrators
appointed by the parties shall fail to agree on the third arbitrator, such
appointed arbitrator or arbitrators shall be appointed by the American
Arbitration Association in accordance with the AAA Rules. The award shall state
the facts and findings and shall be rendered with reasons in writing. The
arbitrators shall have no authority or power to alter or modify any express
condition or provision of this Agreement, or to render any award which by its
terms shall have the effect of altering or modifying any express conditions or
provisions of this Agreement. The award rendered by the arbitrators shall be
final and judgement may be entered upon it in any court having jurisdiction
thereof. The successful party to the arbitration shall be entitled to an award
for reasonable attorney's fees, as determined by the arbitrators.
- 16 -
<PAGE>
21. Captions. The captions of the sections of this Agreement are
for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of thi Agreement.
22. Merger and Severability. This Agreement shall constitute the entire
Agreement between the Corporation and Executive with respect to the subject
matter hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
23. 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.
IN WITNESS WHEREOF, the parties hereto have affixed their signatures
the day and year first above written.
AMERICAN MARINE RECREATION, INC.
By: /s/ Joseph G. Pozo, Jr.
------------------------------
Name: Joseph G. Pozo, Jr.
Title: President
/s/ Gary E. Stein
------------------------------
GARY E. STEIN
- 17 -
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into as of this 31st day of August, 1998
between American Marine Recreation, Inc., a Florida corporation (the
"Corporation") having an address at 1924 33rd Street, Orlando, Florida 32839 and
Melven R. Nehleber (the "Executive"), residing at 13503 Kingsride Lane, Houston,
Texas 77079.
W I T N E S S E T H:
WHEREAS, Executive is presently employed by the Corporation; and
WHEREAS, the Company and the Executive desire to set forth the terms of
Executive's employment with the Company, pursuant to the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree with each other as follows: 1. Term of
Employment. The Corporation agrees to and does hereby employ Executive, and
Executive agrees to and does hereby accept employment by the Corporation, as the
Treasurer and Chief Financial Officer of the Corporation, subject to the
supervision and direction of its Board of Directors, for the three (3) year
period commencing on the consummation of the initial public offering of the
Corporation's securities (the "Term"). The Term shall be automatically renewed
on an annual basis (each such period, a "Renewal Period") for an additional year
(the "Renewal Term"), unless this Agreement is terminated in writing by the
Executive or the Corporation (the "Notice of Nonrenewal") not less than ninety
(90) days prior to the expiration
<PAGE>
of the Term or any Renewal Period, unless otherwise terminated pursuant to the
provisions of this Agreement.
2. Duties of Executive. Executive shall devote such time, attention and
energy to the affairs of Corporation as shall be reasonably required to perform
his duties hereunder, and, in pursuance of the policies and directions of the
Board of Directors, Executive shall use his best efforts to promote the business
and affairs of the Corporation.
3. Base Compensation. In consideration of the Executive's services
pursuant to this Agreement, Corporation shall pay to Executive, during the
period of Executive's employment under this Agreement (the "Base Compensation"),
(i) a salary at the rate of One Hundred Thousand Twenty Dollars ($120,000) per
year during the first year of this Agreement; and (ii) for each year thereafter,
annual compensation shall be determined by the Board of Directors, but not less
than $120,000 per year. The Base Compensation shall be payable in equal
installments, in accordance with the Corporation's customary procedures for
executive employees, subject to applicable tax and payroll deductions.
4. Incentive Compensation. (a) Provided Executive has duly performed
his obligations pursuant to this Agreement, Executive shall be eligible to
receive, as additional compensation for the services to be rendered by Executive
under this Agreement, incentive compensation. The amount of such incentive
compensation, if any, shall be determined by the Board of Directors in its sole
discretion based on the Executive's performance and contributions to the
Corporation's success.
- 2 -
<PAGE>
(b) Provided Executive has duly performed his obligations pursuant to
this Agreement, Executive shall be eligible to receive, as additional
compensation for the services to be rendered by Executive under this Agreement,
a minimum of 150,000 options to purchase shares of the Company's common stock,
at the discretion of the Board of Directors of the Company. Subject to the
discretion of the Board of Directors, the number of options to be awarded to the
Executive shall be based on performance criteria to be determined by the Board
of Directors. Subject to the discretion of the Board of Directors the options
shall be awarded to the Executive in three equal annual installments and each
installment shall vest over a three-year period.
5. Other Benefits. (a) During the term of this Agreement the Executive
shall be entitled to participate in any benefit plans adopted by the Corporation
for the general and overall benefit of all employees and/or for key executives
of the Corporation such as health care, life insurance, disability, stock option
plans, tax, legal and financial planning services, pension, profit sharing and
savings.
(b) During the term of this Agreement, Executive shall be
entitled to a monthly car allowance in the amount of $400.
6. Vacation. Executive shall be entitled to a fully paid vacation of
four (4) weeks per calendar year, which vacation shall be scheduled at such time
or times as the Corporation in consultation with Executive may reasonably
determine.
7. Expenses. (a) The Corporation shall pay or reimburse Executive for
all reasonable and necessary expenses incurred by him in connection with his
duties hereunder, upon submission
- 3 -
<PAGE>
by Executive to the Corporation of such reasonable evidence of such expenses as
the Corporation may require.
(b) Relocation Expenses. The Company shall reimburse Executive
for such reasonable relocation expenses incurred by him and his family in their
relocation from Houston, Texas to the Orlando, Florida area and travel expenses
from Houston, Texas to Orlando, Florida. In addition, the Corporation shall
reimburse the Executive for travel expenses for up to three trips to Orlando,
Florida from Houston, Texas.
8. Insurance. The Corporation may from time to time apply for policies
of life, health and accident insurance or disability insurance upon the
Executive in such amounts as the Corporation deems appropriate. The Executive
agrees to aid the Corporation in procuring such insurance, including submitting
to a physical examination, if required, and completing any and all forms
required for application for any insurance policy.
9. Disclosure of Information. The Executive shall, during his
employment under this Agreement and thereafter, keep confidential and refrain
from disclosing to any unauthorized persons all data and information relating to
the respective businesses of the Corporation or any of its subsidiaries.
10. Intellectual Property Rights. (a) The Executive shall promptly
disclose to the Corporation in writing, any and all charts, layouts, maps,
inventions, improvements, techniques, markets, sales and advertising plans,
processes, concepts and plans, whether or not copyrightable or patentable,
secret processes and "know-how," conceived by the Executive during the term of
his employment by the Corporation (the "Executive's Work Product"), whether
alone or with
- 4 -
<PAGE>
others and whether during regular working hours and through the use of
facilities and property of the Corporation or otherwise, which directly relates
to the present business of the Corporation. Upon the Corporation's request at
any time or from time to time during the Term of the Executive's employment, the
Executive shall (i) deliver to the Corporation copies of the Executive's Work
Product that may be in his possession or otherwise available to him, and (ii)
execute and deliver to the Corporation such applications, assignments and other
documents as it may reasonably require in order to apply for and obtain
copyrights or patents in the United States of America and other countries with
respect to any Executive's Work Product that it deems to be copyrightable or
patentable, and/or otherwise to vest in itself full title thereto.
(b) All documents that pertain to the Corporation, including
but not limited to the Executive's Work Product, shall be the sole and exclusive
property of the Corporation. Upon the termination of the Executive's employment,
all such documents that may be in his possession or otherwise available to him
or shall thereafter come into his possession or control shall be promptly
returned to the Corporation without the necessity of a request therefor.
11. Non-Competition Covenant. (a) The Executive shall not, during his
employment by the Corporation, engage, directly or indirectly, in any business
competitive with the business of the Corporation without the consent of the
Board of Directors.
(b) For a period of two years after the termination of the
Executive's employment hereunder (the "Non-Competition Period"), for any reason
whatsoever, other than a termination by the Corporation without good cause, or
by Executive for good reason (as hereinafter defined) the Executive shall not
(i) engage, directly or indirectly, as an officer,
- 5 -
<PAGE>
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 of selling, renting and leasing,
boating, nautical and other lifestyle entertainment products and services, and
related activities throughout the United States (the "Territory"), without the
permission of the Board of Directors, which permission shall not be unreasonably
withheld or delayed or (ii) induce or actively attempt to influence any other
employee or consultant of the Corporation to terminate his or her employment or
consultancy with the Corporation. Nothing herein contained shall be deemed to
prevent ownership by Executive and his associates (as said term is defined in
regulation 14(A) promulgated under the Securities Exchange Act of 1934 as in
effect on the date hereof), collectively, of not more than 5% of the outstanding
capital stock of a corporation listed on a national securities exchange.
(c) (i) The parties to this Agreement consider the
restrictions contained herein reasonable as to the duration of the
Non-Competition Period and the extent of the Territory. However, if the duration
of the Non-Competition Period or the extent of the Territory herein specified
should be judged unreasonable by any Court or arbitration proceeding, the
validity and effect of the remaining provisions of this Agreement shall not be
affected thereby and, the duration of the Non-Competition Period shall be
reduced by such number of months and/or the area of the Territory shall be
reduced such that, the Territory and the Non-Competition Period shall be deemed
reasonable so that the foregoing covenant not to compete may be enforced .
(ii) Executive agrees and recognizes that in the
event of a breach or threatened breach by Executive of the provisions of the
aforegoing covenants, the Corporation may
- 6 -
<PAGE>
suffer irreparable harm, and that money damages may not be an adequate remedy.
Therefore, the Corporation shall be entitled as a matter of right to specific
performance of the covenants of Executive contained herein by way of temporary
or permanent injunctive relief in a Court of competent jurisdiction.
12. Termination. 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 Corporation 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 this
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 Corporation with a written statement from a qualified doctor to
such effect and provided, further, that, at the Corporation'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 Corporation who is
reasonably acceptable to Executive or Executive's doctor and such doctor shall
have concurred in the
- 7 -
<PAGE>
conclusion of Executive's doctor. In the event this Agreement is terminated as a
result of Executive's disability, Executive shall (i) 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 greater of the
time period then remaining under the term of this Agreement or for one (1) year
and (ii) the Corporation shall make the insurance premium payments contemplated
by COBRA for a period of eighteen (18) months after such termination.
(c) Good Cause. The Corporation 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 Corporation which
materially and adversely affects the operations or reputation of the
Corporation; (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 Corporation. Executive may
only be terminated without Good Cause by the Corporation during the Term hereof
if such termination is approved by a majority of the members of the Board
- 8 -
<PAGE>
of Directors of the Corporation and provided that the Executive receives at
least six (6) months written notice. Should Executive terminate with Good Reason
or in the event that Executive is terminated without Good Cause during the Term,
Executive shall receive from the Corporation, on such dates as would otherwise
be paid by the Corporation, the base salary at the rate then in effect for a
period of one (1) year. Further, if Executive is terminated without Good Cause
or terminates his employment hereunder with Good Reason, (a) the Corporation
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 the Corporation's 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 Corporation or termination by the Executive with Good
Reason shall operate to shorten the period set forth in paragraph 11 hereof 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
Corporation terminating his employment pursuant to this paragraph 12, Executive
shall receive no severance compensation.
Executive shall have "Good Reason" to terminate this Agreement and his
employment if the Executive is demoted by means of a reduction in authority,
responsibilities or duties to a
- 9 -
<PAGE>
position of less stature or importance within the Corporation than the position
described in paragraph 1 hereof, unless Executive has agreed in writing to that
demotion.
13. 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
Corporation against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Corporation 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 Corporation are made a party to the same third-party action, complaint, suit
or proceeding, the Corporation agrees to engage competent legal representation,
and Executive agrees to use the same representation, provided that if counsel
selected by the Corporation shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Corporation 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 Corporation 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
Corporation.
14. Effect of Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
- 10 -
<PAGE>
15. Notices. Any notice permitted, required, or given hereunder shall
be in writing and shall be personally delivered; or delivered by any prepaid
overnight courier delivery service then in general use; or mailed, registered or
certified mail, return receipt requested, to the addresses designated herein or
at such other address as may be designated by notice given hereunder:
If to : Melven R. Nehleber
13503 Kingsride Lane
Houston, Texas 77079
If to : American Marine Recreation, Inc.
1924 33rd Street
Orlando, Florida 32839
With a copy to: McLaughlin & Stern L.P.
260 Madison Avenue, 18th Floor
New York, New York 10016
Attn: Martin C. Licht, Esq.
Delivery shall be deemed made when actually delivered, or if mailed,
three days after delivery to a United States Post Office.
16. Assignment. Executive shall not be entitled to assign his rights,
duties or obligations under this Agreement.
17. Amendments. The terms and provisions of this Agreement may be
amended or modified only by a written instrument executed by the party to be
charged by such amendment or modification.
18. Governing Law. The terms and provisions herein contained and all
the disputes or claims relating to this Agreement shall be governed by,
interpreted and construed in accordance with the internal laws of the State of
Florida, without reference to its conflict of laws principles.
- 11 -
<PAGE>
19. Arbitration. (a) In the event of a dispute between the parties
arising out of or relating to this Agreement, or the breach thereof, the parties
shall make every effort to amicably resolve, reconcile, and settle such dispute
between them. Should an amicable resolution not be possible, either party may
invoke arbitration.
(b) Subject to the provisions of Section 11(c)(ii) hereof, all
claims, disputes and other matters in controversy arising out of or related to
this Agreement or the performance or breach hereof, shall be decided by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA Rules"), by a panel of three (3) arbitrators,
in New York, New York. One (1) such arbitrator shall be appointed by each of the
parties within three (3) weeks after being requested by the other party to make
such appointment and the third arbitrator shall be appointed by the two (2)
arbitrators appointed by the parties. In the event that a party does not appoint
its arbitrator within such three (3) week period, or the two (2) arbitrators
appointed by the parties shall fail to agree on the third arbitrator, such
appointed arbitrator or arbitrators shall be appointed by the American
Arbitration Association in accordance with the AAA Rules. The award shall state
the facts and findings and shall be rendered with reasons in writing. The
arbitrators shall have no authority or power to alter or modify any express
condition or provision of this Agreement, or to render any award which by its
terms shall have the effect of altering or modifying any express conditions or
provisions of this Agreement. The award rendered by the arbitrators shall be
final and judgement may be entered upon it in any court having jurisdiction
thereof. The successful party to the arbitration shall be entitled to an award
for reasonable attorney's fees, as determined by the arbitrators.
- 12 -
<PAGE>
20. Captions. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
21. Merger and Severability. This Agreement shall constitute the entire
Agreement between the Corporation and Executive with respect to the subject
matter hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
22. 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.
IN WITNESS WHEREOF, the parties hereto have affixed their signatures
the day and year first above written.
AMERICAN MARINE RECREATION, INC.
By: /s/ Joseph G. Pozo, Jr.
------------------------------
Name: Joseph G. Pozo, Jr.
Title: President
/s/ MELVEN R. NEHLEBER
-------------------------------------
MELVEN R. NEHLEBER
- 13 -
<PAGE>
AGREEMENT
This Agreement, dated September 1, 1998, is made by and among Regal
Marine Industries, Inc., a Florida corporation ("Regal"), Boat Tree, Inc., a
Florida corporation ("Boat Tree"), American Marine Recreation, Inc., a Delaware
corporation (the "Company"), and Joseph G. Pozo, Jr., an individual resident of
the State of Florida ("Pozo").
RECITALS
A. On June 30, 1992, Boat Tree granted Regal an option (the "Option")
to purchase twenty-five percent (25%) of Boat Tree's outstanding shares for an
aggregate price of Ten Dollars ($10.00).
B. The Option expires on June 30, 2002.
C. Pozo and the other holders of issued and outstanding shares of Boat
Tree desire to exchange (the "Boat Tree Exchange") all of the issued and
outstanding common stock of Boat Tree for shares of common stock, $.01 par value
per share ("Company Common Stock") of the Company.
D. The Company desires to effect an initial public offering (the "IPO")
of Company Common Stock, pursuant to a Registration Statement on Form SB-2 to be
filed with the Securities Exchange Commission in accordance with the Securities
Act of 1933, as amended (the "Securities Act").
E. In order to consummate the IPO on favorable terms, Boat Tree, Pozo
and the Company have requested that the Option be exercised on and subject to
the terms and conditions described herein.
F. Regal desires to exercise the Option on and subject to the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
conclusively acknowledged, the parties agree as follows:
TERMS
1. Exercise of Option. Subject to and effective upon the consummation of the
Boat Tree Exchange and the IPO, (a) the Option shall be exercised; and (b) in
exchange for the twenty-five percent (25%) of Boat Tree's outstanding shares
upon the exercise of the Option, and in consideration of the Boat Tree Exchange,
the Company shall issue to Regal that number of shares
1
<PAGE>
of Company Common Stock equal to Fifteen and Sixty-Five One Hundredths Percent
(15.65%) of its issued and outstanding shares of Company Common Stock after
giving effect to such issuance and calculated after the Boat Tree Exchange and
immediately prior to the issuance of the shares of Company Common Stock sold in
the IPO.
2. Piggy-Back Registration Rights.
(a) General. If the Company proposes, at any time during the two year
period (the "Registration Period") commencing on the closing date of the IPO to
file a registration statement on a general form for registration under the
Securities Act and relating to securities issued or to be issued by it, then it
shall give written notice of such proposal to Regal. If, within 30 days after
the giving of such notice, Regal shall request in writing that all or any
Company Common Stock owned by or issuable to Regal be included in such proposed
registration, the Company will also register such securities as shall have been
requested in writing; provided, however, that:
(i) Regal shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish information
concerning such owners therein; and
(ii) the Company shall have the right at any such time after
it shall have given written notice pursuant to this Section 2 (irrespective of
whether a written request for inclusion of any Company Common Stock shall have
been made) to elect not to file any such proposed registration statement, or to
withdraw the same after the filing but prior to the effective date thereof. In
such event, Regal shall retain the piggy-back registration rights set forth in
this Section 2.
(b) Possible Reduction in Shares Required To be Registered.
Notwithstanding the provisions of Section 2(a) hereof, if in the written opinion
of the Company's managing underwriter, if any, for the offering contemplated by
such registration statement, the inclusion of all or a portion of the Company
Common Stock requested to be registered, when added to the securities being
registered by the Company will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to their then
current market value, or (ii) without otherwise materially adversely affecting
the entire offering, then the Company may exclude from such offering a pro rata
portion of the Company Common Stock requested to be registered as required by
the managing underwriter. If securities are proposed to be offered for sale
pursuant to such registration statement by other security holders of the Company
and the total number of securities to be offered by Regal and such other selling
security holders is required to be reduced pursuant to a request from the
managing underwriter (which request shall be made only for the reasons and in
the manner set forth above) the aggregate number of Company Common Stock to be
offered by Regal pursuant to such registration statement shall equal the number
which bears the same ratio to the maximum number of securities that the
underwriter believes may be included for all the selling security holders
(including Regal) as the
2
<PAGE>
original number of Company Common Stock proposed to be sold by Regal bears to
the total original number of securities proposed to be offered by Regal and the
other selling security holders. In the event the Company exercises the rights
granted under this Section 2(b), Regal shall retain piggy-back registration
rights for its Company Common Stock (to the extent not registered).
(c) Additional Terms. In connection with the filing of a registration
statement pursuant to Section 2 hereof, the Company shall:
(i) notify Regal as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(ii) notify Regal promptly after it shall have received notice
thereof, of the time when the registration statement becomes effective or any
supplement to any prospectus forming a part of the registration statement has
been filed;
(iii) prepare and file without expense to Regal any necessary
amendment or supplement to such registration statement or prospectus as may be
necessary to comply with section 10(a)(3) of the Securities Act or advisable in
connection with the proposed distribution of Company Common Stock by Regal (but
only during such period as the Company is required to keep the registration
statement effective);
(iv) use its reasonable best efforts to qualify the Company
Common Stock being so registered for sale under the securities or blue sky laws
in such reasonable number of states as Regal may designate in writing and to
register or obtain the approval of any federal or state authority which may be
required in connection with the proposed distribution, except, in each case, in
jurisdictions in which the Company must either qualify to do business or file a
general consent to service of process as a condition to the qualification of
such Company Common Stock;
(v) notify Regal of any stop order suspending the
effectiveness of the registration statement and use its reasonable best efforts
to remove such stop order.
(vi) undertake to keep said registration statement and
prospectus effective until such time as all the shares of Company Common Stock
are sold or become available for public sale without registration under the
Securities Act; and
(vii) furnish to Regal as soon as available, copies of any
such registration statement and each preliminary or final prospectus and any
supplement or amendment required to be prepared pursuant to the foregoing
provisions of Section 2 hereof, all in such quantities as Regal may from time to
time reasonably request. Upon written request, the Company shall also furnish to
Regal, without cost, one set of the exhibits to such registration statement.
3
<PAGE>
(d) Expenses. Regal agrees to pay all of the underwriting discounts and
commissions, and transfer taxes with respect to Company Common Stock owned by it
and being registered. The Company agrees that the costs and expenses which it is
obligated to pay in connection with a registration statement to be filed
pursuant to Section 2 hereof include, but are not limited to, the fees and
expenses of counsel for the Company, the fees and expenses of its accountants
and all other costs and expenses incident to the preparation, printing and
filing under the Securities Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such Shares for sale in a reasonable number
of states, including fees and disbursements of counsel for the Company,
registration fees and the costs of supplying a reasonable number of copies of
the registration statement, each preliminary prospectus, final prospectus and
any supplements or amendments thereto to Regal.
(e) Indemnification. The Company shall indemnify and hold harmless
Regal and each underwriter, within the meaning of the Securities Act, who may
purchase from or sell for any Regal any Company Common Stock, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in the registration statement, any other
registration statement under the Securities Act, any post-effective amendment to
the registration statement or any such registration statement, or any prospectus
included therein required to be filed or furnished by reason of this Section 2
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or alleged untrue statement or omission or alleged
omission based upon information furnished or required to be furnished in writing
to the Company by Regal or such underwriter expressly for use therein, which
indemnification shall include such person, if any, who controls any such
underwriter within the meaning of the Securities Act and each officer, director,
employee and agent of such underwriter; provided, however, that the Company
shall not be obligated to so indemnify any Regal or such underwriter or other
person referred to above unless Regal or such underwriter or other person, as
the case may be, shall at the same time indemnify the Company, its directors,
each officer signing the registration statement and each person, if any who
controls the Company within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or any prospectus required to be filed or furnished by
reason of this Section 2 or caused by any omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or alleged untrue statement or omission based
upon information furnished in writing to the Company by Regal or such
underwriter expressly for use therein. If for any reason the indemnification set
forth above is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
the indemnified party as a result of such loss,
4
<PAGE>
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations.
3. Notices. Unless otherwise specifically stated herein, all notices,
requests, demands and other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given, made,
and received when delivered against receipt, twelve (12) hours after being sent
by facsimile, or seventy-two (72) hours after being sent by registered or
certified mail, postage prepaid, addressed as set forth below:
(i) If to the Company, Boat Tree or Pozo:
American Marine Recreation, Inc.
1924 33rd Street
Orlando, Florida 32834
ATTN: Mr. Joseph G. Pozo, Jr., President
Facsimile: (407) 316-0396
Telephone: (407) 422-8141
With a copy to:
McLaughlin & Stern, LLP
260 Madison Avenue
New York, New York 10016
ATTN: Martin C. Licht, Esq.
Facsimile: (212) 448-6260
Telephone: (212) 448-1100
(ii) If to Regal:
Regal Marine Industries, Inc.
2300 Jetport Drive
Orlando, Florida 32809-7895
ATTN: Duane Kuck, President
Facsimile: (407) 855-5948
Telephone: (407) 851-7951, ext. 220
With a copy to:
Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
215 North Eola Drive
5
<PAGE>
Orlando, Florida 32802
ATTN: Bradford D. West, Esq.
Facsimile: (407) 423-4485
Telephone: (407) 843-4600, ext. 286
Any party may alter the address to which communications or
copies are to be sent by giving notice of that change of address in conformity
with the provisions of this Section for the giving of notice.
4. Applicable Law; Binding Effect; Jurisdiction and Venue. This
Agreement shall be construed under and governed by the laws of the State of
Florida and shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, legal representatives, successors and assigns.
Jurisdiction of and venue for any action or proceeding arising out of or
connected with this Agreement shall lie exclusively in the state courts of
competent jurisdiction in and for Orange County, Florida. Each party expressly
waives all other jurisdiction and venue and agrees that he or it shall be
subject personally to the jurisdiction of the agreed-upon court(s).
5. Severability. The provisions of this Agreement are independent of
and severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part. Further, if
a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable as written, such court may interpret,
construe, rewrite or revise such provision, to the fullest extent allowed by
law, so as to make it valid and enforceable consistent with the intent of the
parties hereto.
6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party hereto whose signature appears hereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
7. Entire Agreement. This Agreement contains the entire understanding
among the parties as to the subject matter hereof and supersedes any prior
understanding and agreements among them respecting the within subject matter.
8. Attorney Fees. In connection with any litigation arising out of,
concerning or related to this Agreement, the prevailing party or parties shall
be entitled to recover from the non-prevailing party or parties all reasonable
attorney fees, court costs and other expenses, even if they are not taxable as
court costs (including, without limitation, all such fees, costs and expenses
incident to appeals), incurred by the prevailing party or parties in connection
with such action or proceeding, in addition to any other relief to which such
prevailing party or parties may be entitled in such action or proceeding.
6
<PAGE>
9. Termination. If the Boat Tree Exchange and the IPO have not occurred
by the one year anniversary hereof, this Agreement shall terminate, and the
Option shall continue in full force and effect in accordance with its terms.
[SIGNATURES ON FOLLOWING PAGE]
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
REGAL MARINE INDUSTRIES, INC.
By: /s/ Duane Kuck
------------------------------------
Name: Duane Kuck
Title: President
BOAT TREE, INC.
By: /s/ Joseph G. Pozo, Jr.
------------------------------------
Name: Joseph G. Pozo, Jr.
Title: President
AMERICAN MARINE RECREATION, INC.
By: /s/ Joseph G. Pozo, Jr.
------------------------------------
Name: Joseph G. Pozo, Jr.
Title: President
/s/ Joseph G. Pozo, Jr.
------------------------------------
Joseph G. Pozo, Jr.
8
<PAGE>
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Boat Tree, Inc.
Orlando, Florida
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated July 14, 1998, except for Notes 5, 9
and 10 as to which the date is September 1, 1998, relating to the financial
statements of Boat Tree, Inc. which is contained in that Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
BDO Seidman, LLP
Orlando, Florida
September 1, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 307,463
<SECURITIES> 0
<RECEIVABLES> 468,972
<ALLOWANCES> 42,000
<INVENTORY> 6,748,035
<CURRENT-ASSETS> 7,493,295
<PP&E> 2,372,615
<DEPRECIATION> 240,384
<TOTAL-ASSETS> 9,680,509
<CURRENT-LIABILITIES> 7,322,151
<BONDS> 0
0
0
<COMMON> 7,495
<OTHER-SE> 1,130,612
<TOTAL-LIABILITY-AND-EQUITY> 9,680,509
<SALES> 21,226,469
<TOTAL-REVENUES> 21,259,950
<CGS> 16,327,484
<TOTAL-COSTS> 4,084,993
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 333,958
<INCOME-PRETAX> 513,515
<INCOME-TAX> 0
<INCOME-CONTINUING> 513,515
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 513,515
<EPS-PRIMARY> 68.52
<EPS-DILUTED> 43.11
</TABLE>
<PAGE>
CONSENT TO IDENTIFICATION AS DIRECTOR NOMINEE
The undersigned hereby consents to his identification as a director
nominee of American Marine Recreation, Inc. in the within Registration Statement
on Form SB-2.
/s/ Brady Churches
Brady Churches
boattree\misc\director.con
<PAGE>
CONSENT TO IDENTIFICATION AS DIRECTOR NOMINEE
The undersigned hereby consents to his identification as a director
nominee of American Marine Recreation, Inc. in the within Registration Statement
on Form SB-2.
/s/ J. Gregory Humphries
J. Gregory Humphries
boattree\misc\director.con
<PAGE>
CONSENT TO IDENTIFICATION AS DIRECTOR NOMINEE
The undersigned hereby consents to his identification as a director
nominee of American Marine Recreation, Inc. in the within Registration Statement
on Form SB-2.
/s/ Jeffrey Schottenstein
Jeffrey Schottenstein
boattree\misc\director.con
<PAGE>
CONSENT TO IDENTIFICATION AS DIRECTOR NOMINEE
The undersigned hereby consents to his identification as a director
nominee of American Marine Recreation, Inc. in the within Registration Statement
on Form SB-2.
/s/ James W. Traweek
James W. Traweek
boattree\misc\director.con
<PAGE>
CONSENT TO IDENTIFICATION AS DIRECTOR NOMINEE
The undersigned hereby consents to his identification as a director
nominee of American Marine Recreation, Inc. in the within Registration Statement
on Form SB-2.
/s/ Sir Brian Wolfson
Sir Brian Wolfson
boattree\misc\director.con
