<PAGE>
As filed with the Securities and Exchange Commission on February 3, 1999
Registration No. 333-62699
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
AMENDMENT NO. 1 TO FORM SB-2 ON FORM S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
-------------------
AMERICAN MARINE RECREATION, INC.
(Name of small business issuer in its charter)
<TABLE>
<CAPTION>
Delaware 5551 59-3518196
- --------------------------------- --------------------------------------------- --------------------
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial Classification (I.R.S. Employer
incorporation or organization) Code Number) Identification No.)
</TABLE>
2202 33rd Street
Orlando, Florida 32839
(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.
2202 33rd Street
Orlando, Florida 32839
(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>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
Proposed Proposed
maximum maximum
offering aggregate Amount of
Amount to be price per offering registration fee
Title of each class of securities to be registered registered security (1) price (1) (2)(3)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share................ 2,472,500(4) $ 7.00 $ 17,307,500 $ 4,811.49
- --------------------------------------------------------------------------------------------------------------------------------
Representatives' Warrants (5) ........................ 215,000 $ .001 $ 215.00 $ --(6)
- --------------------------------------------------------------------------------------------------------------------------------
Shares of Common Stock issuable upon
exercise of the Representatives' Warrants ........... 215,000(7) $ 8.40 $ 1,806,000 $ 502.07
- --------------------------------------------------------------------------------------------------------------------------------
Total Registration Fee ................................................................................... $ 5,313.56
================================================================================================================================
</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) A fee of $7,389.22 was paid upon the initial filing of the Registration
Statement.
(4) Includes 322,500 shares of Common Stock which the Representatives may
purchase to cover over-allotments, if any.
(5) 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.
(6) None, pursuant to Rule 457(g).
(7) 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 S-1 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 FEBRUARY 3, 1999
SUBJECT TO COMPLETION
2,150,000 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 "BOAT." It is currently
estimated that the initial public offering price of the Common Stock will be
between $6.00 and $7.00 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 13
AND "DILUTION" ON PAGE 22 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.
===============================================================================
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
- -------------------------------------------------------------------------------
Per Share ......... $ $ $
- -------------------------------------------------------------------------------
Total(3) .......... $ $ $
===============================================================================
(1) Does not include additional compensation to be received by BlueStone
Capital Partners, L.P. ("BlueStone") and Auerbach, Pollak & Richardson,
Inc., as representatives of the several Underwriters (the
"Representatives"), in the form of warrants to purchase up to 215,000
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.
(3) The Company has granted the Representatives an option, exercisable within
45 days from the date of this Prospectus, to purchase up to 322,500
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."
---------------------
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 , 1999.
---------------------
BlueStone Capital Partners, L.P.
Auerbach, Pollak & Richardson, Inc.
The date of this Prospectus is , 1999.
<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 TRANS-ACTIONS 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 322,500 additional shares of Common Stock. See "Underwriting."
As of the date of this Prospectus, 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 American Marine Recreation, Inc. ("AMRI") (which was formed
solely for such purpose on June 22, 1998), making Boat Tree a wholly-owned
subsidiary of AMRI (the "Reorganization"). As used in this Prospectus, unless
the context indicates otherwise, the term "AMRI" refers to American Marine
Recreation, Inc. and its subsidiaries after giving effect to the
Reorganization, and the historical financial statements for AMRI included in
this Prospectus have been retroactively adjusted to reflect the Reorganization.
Since AMRI had no operations during the periods presented and will have no
operations until the consummation of the Reorganization, the information
presented in such financials (other than the capital structure) relates solely
to Boat Tree.
On the consummation of the Offering, the following additional transactions
will occur: (i) the Company will acquire substantially all of the assets of
Treasure Coast Boating Center, Inc. ("Treasure Coast"), together with related
real estate of an affiliate of Treasure Coast (the "Treasure Coast
Acquisition"), and all of the outstanding capital stock of Marine America, Inc.
("Marine America") (the "Marine America Acquisition" and, together with the
Treasure Coast Acquisition, the "Closing Acquisitions") and (ii) Regal Marine
Industries, Inc. ("Regal") will exercise an option (the "Regal Option") to
purchase 341,451 shares of Common Stock. In this Prospectus, unless the context
indicates otherwise, the term "Company" refers to AMRI and its subsidiaries,
after giving effect to the Reorganization and, except with respect to the
financial statements and per share data and information relating to the number
of shares outstanding, the Closing Acquisitions. The pro forma combined
financial data presented herein is based on the historical financial statements
of AMRI and has been prepared to illustrate the effect on such financial
statements of the Treasure Coast Acquisition (but not the Marine America
Acquisition, as the effect of such acquisition on the information presented is
insignificant). See "--Concurrent Closing Transactions."
The Company
General
The Company is one of the largest retailers of recreational boats in
Florida where it currently operates ten retail locations. In addition, the
Company operates a retail location in Belmont, North Carolina, which it intends
to relocate to Cornelius, North Carolina following the consummation of the
Offering. 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 and water
sport equipment. 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's objective is to continue its growth
trend by leveraging its position as one of the premier operators of
recreational boat dealerships in the southeastern United States.
The Company has already experienced substantial growth as a result of both
acquisitions and internal growth. For the years ended December 31, 1997 and
1998, the Company had total pro forma combined revenue of $31.0 million and
$43.4 million, respectively, and total pro forma combined net income before
taxes of $468,000 and $1.4 million, respectively. For the years ended December
31, 1997 and 1998, the
3
<PAGE>
Company sold, on a pro forma combined basis, 802 and 1,032 new boats,
respectively, generating revenues of approximately $21.9 million and $31.7
million, respectively, and 366 and 449 used boats, respectively, for revenues
of approximately $4.8 million and $6.1 million, respectively.
The Company is the largest volume buyer of recreational boats sold under
the popular Regal and Wellcraft brand names and sells 11 other lines of high
quality recreational boats under the brand names Malibu, Hydra-Sport, Sailfish,
Carver, Stratos Bass Boats, Javelin Bass Boats, AquaSport, Larson, Legacy,
Mediterranean Yachts and Hurricane Deck Boats. The boats offered by the Company
range in size from 14 feet to 55 feet and in price from approximately $9,000 to
$1.2 million (with gross profit margins ranging between 15% and 28%). The
Company believes that it differentiates itself from its competitors by offering
13 different brand name product lines, with over 100 different models of new
cruisers, fishing boats, high performance boats, pontoon 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.
Based upon information compiled by the National Marine Manufacturer's
Association (the "NMMA"), the recreational boating industry has experienced
significant growth within the last six 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 $19.2 billion in 1998 as compared to
$10.3 billion in 1992. In 1998, the NMMA estimates that over 74 million people
participated in recreational boating and that new boat and motor sales alone
represented $8.5 billion of the $19.2 billion in total recreational boating
sales for that year. In addition, Florida generated $834 million, over 4% of
the nation's total recreational boating sales for 1998, 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 over $1.8 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.
Strategy
The Company intends to continue its growth trend as one of the leading
operators of recreational boat dealerships in the southeastern United States
through the continued implementation and maintenance of its growth and
operating strategies.
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 four additional stores within the next 18 months, using a
combination of the proceeds from this Offering, seller and inventory financing
and working capital. The Company may also finance future acquisitions in whole
or in part through the issuance of shares of Common Stock or securities
exercisable or convertible into shares of Common Stock. The Company intends to
4
<PAGE>
accomplish its growth strategy 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.
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 $1.2 million, 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
range from $4 million to $5 million per location, most of which will be
financed by floor plan financing arrangements and will result in little
additional capital investment.
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, which include (i) operating with
centralized management, (ii) increasing operating efficiencies, (iii)
maintaining a diverse product line, and (iv) focusing on consumer loyalty and
satisfaction.
----------------------
AMRI was incorporated under the laws of the State of Delaware on June 22,
1998. Boat Tree, which will become a wholly-owned subsidiary of AMRI in
connection with the Reorganization, 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. 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,
5
<PAGE>
which the Company is acquiring in connection with the Marine America
Acquisition. In addition, in February 1998, the Company opened a dealership in
Doctor's Lake, Florida; in June 1998, it opened dealerships in Tierra Verde and
Pinellas Park, Florida; and, upon the consummation of the Offering, it is
acquiring dealerships in Stuart, Jupiter, Pompano Beach and Vero Beach, Florida
in connection with the Treasure Coast Acquisition.
The Company maintains its principal executive offices at 2202 33rd Street,
Orlando, Florida 32839, and its telephone number is (407) 422-8141.
Concurrent Closing Transactions
Treasure Coast Acquisition
On January 22, 1999, the Company entered into an agreement with Treasure
Coast, Treasure Coast Boating Services, Inc. ("Treasure Services") and D.
Thomas Grane, unaffiliated third parties, to acquire substantially all of the
assets of Treasure Coast, together with certain real property in Stuart,
Florida owned by Treasure Services on which a retail boat dealership is
located. The Treasure Coast Acquisition will close upon the consummation of the
Offering, for an aggregate purchase price of $2.9 million, plus the cost of
Treasure Coast's inventory on such date. The Company intends to use
approximately $544,000 of the proceeds from this Offering to fund a portion of
such inventory costs and to obtain floor plan financing to fund the balance
(estimated to be approximately $6.5 million) of such anticipated inventory
costs. The Company has the option of paying $350,000 of the purchase price in
shares of Common Stock based upon the Offering price per share (the "Treasure
Coast Stock Payment Option"). Unless otherwise indicated, the information in
this Prospectus assumes the Company's exercise of such option. Treasure Coast
operates four retail boat dealerships in Stuart, Jupiter, Pompano Beach and
Vero Beach, Florida from which it offers recreational boats under the popular
Wellcraft brand name as well as boats sold under the brand names AquaSport,
Larson, Legacy and Mediterranean Yachts. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Marine America Acquisition
Upon the consummation of the Offering, the Company will acquire all of the
outstanding capital stock of Marine America, a corporation owned 80% by Joseph
G. Pozo, Jr., the Company's Chairman, President, Chief Executive Officer and
majority stockholder, and 20% by Joseph J. Pozo (Mr. Pozo, Jr.'s son). The
purchase price consists of 1,538 shares of Common Stock valued at $10,000,
together with the assumption of liabilities incurred by Marine America in
connection with its redemption of 50% of its capital stock from Lakewood Marine
International, Ltd. ("Lakewood"), an unaffiliated third party. Such liabilities
consist of a loan from the Company to Marine America in the amount of $25,000
(which will be eliminated upon the companies' consolidation) and a promissory
note in the amount of $100,000 payable to Lakewood, which the Company intends
to repay from the proceeds of the Offering. In January 1998, Marine America
acquired certain of Lakewood's assets, as well as a five-year lease (which
lease was amended to a month-to-month lease commencing January 1999) 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, AMRI 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 AMRI's invoice cost plus freight. In addition, AMRI entered into
a management agreement with Marine America pursuant to which AMRI agreed to
manage the operations of the Lakewood dealership. 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 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 11 of Notes to Financial
Statements.
6
<PAGE>
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 Reorganization, represents 341,451 shares of AMRI's Common Stock (7.8% 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 Reorganization, Boat Tree's status
as an S Corporation will be terminated and AMRI will become subject to Federal
and State income taxes at applicable C Corporation rates.
As of December 31, 1998, the undistributed S Corporation earnings of Boat
Tree totaled $1.4 million. In connection with the conversion of Boat Tree from
an S Corporation to a C Corporation, Boat Tree declared a final distribution of
$550,000 of its undistributed S Corporation earnings to its current (pre-
Reorganization) 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..... 2,150,000 shares
Common Stock to be
outstanding after
the Offering............ 4,385,641 shares (1)(2)
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
Closing Acquisitions, the payment of the Final S
Corporation Distribution, the upgrading of
management information systems, the repayment of
debt 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........... "BOAT"
- -------------
(1) Includes (i) 53,846 shares of Common Stock issuable upon exercise of the
Company's Treasure Coast Stock Payment Option, based upon an assumed price
of $6.50 per share (the midpoint of the currently anticipated range of the
initial public offering price), and (ii) 341,451 shares of Common Stock
which will be issued upon the consummation of the Offering in connection
with the exercise of the Regal Option.
(2) Does not include (i) 215,000 shares of Common Stock reserved for issuance
upon exercise of the Representatives' Warrants; (ii) 430,000 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 352,000 shares of Common Stock have been granted
effective upon the consummation of the Offering; and (iii) 1,538 shares of
Common Stock which will be issued in connection with the Marine America
Acquisition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Management -- Stock Options,"
"Certain Transactions" and "Underwriting."
8
<PAGE>
Summary Pro Forma Combined Financial Data
(Dollars in thousands, except per share data)
Set forth below is certain summary pro forma combined financial data for
the Company for the periods, and as of the dates, indicated. The summary pro
forma combined financial data for the Company for the years ended December 31,
1997 and 1998 is based on the historical financial statements of AMRI and has
been prepared to illustrate the effects on such historical financial data of the
Treasure Coast Acquisition and the Offering (including the exercise of the Regal
Option) as if such transactions had occurred as of January 1, 1997 with respect
to the statement of income data and as of December 31, 1998 with respect to the
balance sheet data. The Treasure Coast Acquisition is reflected using the
purchase method of accounting for business combinations. The pro forma financial
data is provided for comparative purposes only and does not purport to be
indicative of the results that actually would have been obtained if this
transaction had been effected on the dates indicated. The information presented
below is qualified in its entirety by, and should be read in conjunction with,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Pro Forma Financial Data," "Selected Financial Data" and the
financial statements and notes thereto included elsewhere in this Prospectus.
Pro Forma Combined Statement of Income Data:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------
1997 1998
------------- -------------
<S> <C> <C>
Revenue .............................................. $ 30,952 $ 43,364
Cost of sales ........................................ 24,142 32,840
---------- ----------
Gross profit ...................................... 6,810 10,524
Selling, general and administrative expenses ......... 5,889 8,515
---------- ----------
Income from operations ............................ 921 2,009
Other income ......................................... 33 67
Interest expense ..................................... (486) (726)
---------- ----------
Income before taxes .................................. 468 $ 1,350
Taxes on income(1) ................................... 194 526
---------- ----------
Net income ........................................ $ 274 $ 824
========== ==========
Net income per common share:
Basic ............................................. $ .06 $ .19
Diluted ........................................... $ .06 $ .19
Weighted average common shares outstanding:
Basic ............................................. 4,385,641 4,385,641
Diluted ........................................... 4,385,641 4,385,641
</TABLE>
Pro Forma Combined Balance Sheet Data (2):
December 31, 1998
------------------
Cash and cash equivalents ........................ 9,122
Working capital .................................. 8,390
Total assets ..................................... 36,385
Short-term debt .................................. 21,603
Long-term debt, less current maturities .......... 1,453
Total liabilities ................................ 23,742
Stockholders' equity ............................. 12,643
(Footnotes appear 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 has
been terminated as of the date of this Prospectus. Taxes on income reflect
a tax provision as if the Company had not been an S Corporation during the
indicated periods and represents a combined Federal and State tax rate of
approximately 39%. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Notes 1 and 8 of Notes to
Financial Statements.
(2) Adjusted to give retroactive effect to (i) the termination of Boat Tree's S
Corporation status and the net deferred tax asset of $104,000 associated
therewith, (ii) the Treasure Coast Acquisition, including the Company's
exercise of the Treasure Coast Stock Payment Option at an assumed price of
$6.50 per share (the midpoint of the currently anticipated range of the
initial public offering price), (iii) the exercise of the Regal Option,
and (iv) the sale of the 2,150,000 shares of Common Stock offered hereby
at an assumed price of $6.50 per share 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 stockholders of Boat Tree. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
10
<PAGE>
Summary Historical Financial Data
(Dollars in thousands, except per share data)
Set forth below is certain summary historical financial data for AMRI for
the periods, and as of the dates, indicated. The historical financial data is
derived from, and should be read in conjunction with, the financial statements
of AMRI, including the notes thereto, appearing elsewhere in this Prospectus.
The information presented below is qualified in its entirety by, and should be
read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Selected Financial Data" and the
financial statements and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------
1996 1997 1998
------------- ------------- -------------
<S> <C> <C> <C>
Statement of Income Data:
Sales and service revenue ............................ $ 13,058 $ 20,183 $ 24,229
Finance and insurance income ......................... 591 1,043 1,334
---------- ---------- ----------
Total revenue ..................................... 13,649 21,226 25,563
Cost of sales and service revenue .................... 10,544 16,327 19,083
---------- ---------- ----------
Gross profit ...................................... 3,105 4,899 6,480
Selling, general and administrative expenses ......... 2,493 4,085 5,418
---------- ---------- ----------
Income from operations ............................ 612 814 1,062
Other income ......................................... 10 33 67
Interest expense ..................................... (239) (333) (525)
---------- ---------- ----------
Net income ........................................ 383 514 604
Pro Forma Unaudited Statements of Income Data (1):
Pro forma taxes on income ............................ 150 198 232
---------- ---------- ----------
Pro forma net income ................................. $ 233 $ 316 $ 372
========== ========== ==========
Pro forma net income per common share:
Basic (2) ......................................... $ .12 $ .16 $ .19
Diluted (3) ....................................... $ .10 $ .14 $ .16
Pro forma weighted average common shares
outstanding:
Basic (2) ......................................... 1,925,459 1,924,959 1,924,959
Diluted (3) ....................................... 2,266,910 2,266,410 2,266,410
</TABLE>
Balance Sheet Data:
December 31,
--------------------------
1997 1998
-------- ----------
Cash and cash equivalents ....................... 307 1,139
Working capital ................................. 171 (542)
Total assets .................................... 9,681 18,975
Short-term debt ................................. 6,853 15,361
Long-term debt, less current maturities ......... 1,221 1,453
Total liabilities ............................... 8,543 17,498
Stockholders' equity ............................ 1,138 1,477
(Footnotes appear on following page)
11
<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 has
been terminated as of the date of this Prospectus. Pro forma taxes on
income reflect a tax provision as if the Company had not been an S
Corporation during the indicated periods and represents a combined Federal
and State tax rate of approximately 39%. 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 sale of 84,615 of the shares of Common Stock offered
hereby, which represents the approximate number of shares of the Common
Stock being sold by the Company to fund the payment of the Final S
Corporation Distribution of $550,000 at an assumed price of $6.50 per
share (the midpoint of the currently anticipated range of the initial
public offering price). See "Use of Proceeds" and Notes 1 and 5 of Notes
to Financial Statements.
(3) Gives effect to the exercise of the Regal Option. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Notes 1 and 6 of Notes to Financial Statements.
12
<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 five additional stores concurrently with the consummation of the
Offering in connection with the Closing Acquisitions. In addition, the Company
has allocated $5.9 million (52.6%) of the net proceeds of this Offering to the
acquisition, conversion and/or construction of at least four additional stores
during the next 18 months, as well as to the relocation and expansion (into a
superstore) of its Belmont, North Carolina store. See "Use of Proceeds."
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. Moreover, the Company may finance future
acquisitions in whole or in part through the issuance of shares of Common Stock
or securities exercisable or convertible into shares of Common Stock. To the
extent that the Company finances future acquisitions in whole or in part
through the issuance of shares of Common Stock or securities exercisable or
convertible into shares of Common Stock, existing stockholders may experience a
dilution in the voting power of their shares of Common Stock and earnings per
share may be negatively impacted. In addition, 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 $1.2 million,
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 Closing
Acquisitions. Consequently, there 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
13
<PAGE>
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 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. AMRI purchased 69% of its new boats in 1998 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 62.2% of AMRI's sales in 1998 and it did
not purchase more than 10% of its new boats from any other manufacturer in
1998. Substantially all of Treasure Coast's purchases and sales for the year
ended December 31, 1998 were boats sold under the Wellcraft brand name. 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 and Wellcraft. 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 and Wellcraft, 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 Wellcraft 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 and
Wellcraft 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 Wellcraft or
any other of its major manufacturers; the unanticipated failure of any
manufacturer or supplier to
14
<PAGE>
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."
As is typical in the recreational boating industry, the Company generally
deals with 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
The Company currently has ten retail stores in operation in Florida and
operates one store in North Carolina. 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
15
<PAGE>
local, regional, or national economic developments or by uncertainties
regarding future economic prospects that reduce consumer spending in the
markets served by the Company. Consumer spending on luxury goods can also be
adversely affected as a result of declines in consumer confidence levels, even
if prevailing economic conditions are favorable. In an economic downturn,
consumer discretionary spending levels generally decline, often resulting in
disproportionately large reductions in the sale of luxury goods. Similarly,
rising interest rates could have a negative impact on consumers' ability or
willingness to finance boat purchases, which could also adversely affect the
ability of the Company to sell its products. 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
AMRI 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 AMRI's origination of customer financing contracts. In fiscal 1998, F&I
Products accounted for 5.2% of AMRI's gross revenues
16
<PAGE>
and 20.6% of AMRI'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 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, AMRI'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."
17
<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 million, 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 34.8% 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 4,385,641 (not
including 1,538 shares to be issued in connection with the Marine America
Acquisition) shares of Common Stock issued and outstanding (4,708,141 if the
Representatives' over-allotment option is exercised in full), of which the
2,150,000 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
2,235,641 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/or to the contractual restriction of a 12-month "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
18
<PAGE>
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
49.0% of the then outstanding Common Stock for 97.2% of the total consideration
paid for the then outstanding Common Stock (based on an assumed price of $6.50
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 December 31, 1998, AMRI had a net
tangible book value of approximately $.80 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 AMRI at December 31, 1998
would have been $2.51 per share, representing an immediate dilution of $3.99
(61.4%) 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 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
19
<PAGE>
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. Management is in the process of
becoming compliant with the Year 2000 requirements and believes that its
management information system will comply with the Year 2000 requirements on a
timely basis at a minimal cost. 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.
20
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,150,000 shares of
Common Stock offered hereby are estimated to be approximately $11,262,250
($13,201,281 if the Representatives' over-allotment option is exercised in
full), assuming an initial public offering price of $6.50 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) ......... $ 5,925,000 52.6%
Closing Acquisitions (2) ................................ 3,205,000 28.5
Final S Corporation Distribution (3) .................... 550,000 4.9
Management information systems (4) ...................... 350,000 3.1
Repayment of indebtedness (5) ........................... 300,000 2.7
Working capital ......................................... 932,250 8.2
----------- -----
Total ................................................. $11,262,250 100.0%
=========== =====
</TABLE>
- ------------
(1) Represents $1.7 million to be used in connection with the Company's
relocation of the Belmont, North Carolina dealership to, and construction
of a new superstore on, property recently acquired by the Company in
Cornelius, North Carolina, as well as $4.2 million allocated to the
acquisition, conversion and/or construction of at least four additional
stores (including at least one additional superstore) during the next 18
months. The Company expects the average cost to construct a new 20,000
square foot superstore to be approximately $1.2 million, excluding the
cost of land. See "Business -- Strategy -- Growth Strategy."
(2) Represents $3.2 million ($2.6 million of the purchase price, plus $544,000
to fund the costs of a portion of Treasure Coast's inventory on the closing
date) payable in connection with the Treasure Coast Acquisition and $100,000
to repay a note issued in connection with the Marine America Acquisition. In
the event the Company chooses not to exercise its Treasure Coast Stock
Payment Option, an additional $350,000 of the proceeds currently allocated
to working capital will be added to this category. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
(3) Represents the amount of the Final S Corporation Distribution to be made to
the stockholders of Boat Tree upon the consummation of this Offering. See
"Prospectus Summary -- Pending S Corporation Termination."
(4) Represents amounts to be utilized to upgrade and expand the Company's
management information systems. See "Business -- Management Information
Systems."
(5) Represents repayment of 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 used in connection with certain pre-offering
expenses relating to this Offering and working capital. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and "Certain Transactions."
If the Representatives exercise their over-allotment option in full, the
Company will realize additional net proceeds of approximately $1.9 million.
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 those 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,
21
<PAGE>
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"), 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.
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 December 31, 1998, the net tangible book value of AMRI was $1,477,152,
or $.80 per share. After giving retroactive effect to (i) the termination of
Boat Tree's S Corporation status, (ii) the consummation of the Treasure Coast
Acquisition, (iii) the exercise of the Regal Option, and (iv) the sale of the
2,150,000 shares of Common Stock offered hereby at an assumed price of $6.50
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
AMRI at December 31, 1998 would have been $10,993,412 or $2.51 per share,
representing an immediate increase in net tangible book value of $1.71 per
share to existing stockholders and an immediate dilution of $3.99 (61.4%) 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:
<TABLE>
<S> <C> <C>
Assumed initial public offering price ........................ $ 6.50
Net tangible book value before the Offering ................. $ .80
Increase attributable to investors in the Offering .......... 1.71
-----
Adjusted net tangible book value after the Offering .......... 2.51
------
Dilution to investors in the Offering ........................ $ 3.99
======
</TABLE>
The following table sets forth, with respect to existing stockholders
(giving retroactive effect to the exercise of the Regal Option and the Treasure
Coast Acquisition) 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 ............. 2,235,641 51.0% $ 405,110 2.8% $ .18
Investors in the Offering ......... 2,150,000 49.0 13,975,000 97.2 $ 6.50(1)
--------- ----- ----------- -----
4,385,641 100.0% $14,380,110 100.0%
========= ===== =========== =====
</TABLE>
- ------------
(1) Based on the midpoint of the currently anticipated range of the initial
public offering price.
22
<PAGE>
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 $16,071,250 (based on an assumed offering price of $6.50 per
share, the midpoint of the currently anticipated range of the initial public
offering price) for 2,472,500 shares of Common Stock, representing
approximately 97.5% of the total consideration for 52.5% of the total number of
shares outstanding. In addition, the computations set forth in the above table
exclude (i) an aggregate of 430,000 shares 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 (ii) 215,000
shares of Common Stock reserved for issuance upon the exercise of the
Representatives' Warrants. See "Management -- Stock Options" and
"Underwriting."
DIVIDEND POLICY
From June 1992 through the date of this Prospectus, Boat Tree was 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. Moreover, certain of the Company's financing agreements restrict the
distribution of dividends.
23
<PAGE>
CAPITALIZATION
(Dollars in thousands, except per share data)
The following table sets forth the short-term debt and capitalization of
AMRI, as of December 31, 1998, on (i) an actual basis, (ii) a pro forma basis
to reflect the termination of the Company's S Corporation status and the
consummation of the Treasure Coast Acquisition (including the utilization of a
portion of the net proceeds from the Offering in connection therewith and the
exercise of the Company's Treasure Coast Stock Payment Option), and (iii) a pro
forma as adjusted basis to give retroactive effect to the exercise of the Regal
Option and the issuance and sale of the balance of the 2,150,000 shares of
Common Stock offered hereby at an assumed price of $6.50 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 "Pro Forma Financial Data" and
the financial statements, including the notes thereto, appearing elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
December 31, 1998
------------------------------------
Pro
Forma As
Actual Pro Forma Adjusted
---------- ----------- ---------
<S> <C> <C> <C>
Short-term debt:
Floor plan payable ................................ $13,221 $19,593 $19,593
Lines of credit ................................... 1,894 2,064 1,764
Current maturities of long-term debt .............. 246 246 246
------- ------- -------
Total short-term debt ........................... 15,361 21,903 21,603
======= ======= =======
Long-term debt, less current maturities ............ 1,453 1,453 1,453
======= ======= =======
Stockholders' equity(1):
Preferred Stock, $.01 par value; 1,500,000 shares
authorized; none issued ......................... -- -- --
Common Stock, $.01 par value: 20,000,000 shares
authorized; 1,840,344 shares issued and out-
standing (actual), 2,571,363 shares issued and
outstanding (pro forma)(2), and 4,385,641
shares issued and outstanding (as adjusted)(2)(3) 18 25 44
Additional paid-in capital ........................ 453 3,901 12,039
Retained earnings ................................. 1,006 1,110 560
------- ------- -------
Total stockholders' equity ...................... 1,477 5,036 12,643
------- ------- -------
Total capitalization ........................... $ 2,930 $ 6,489 $14,096
======= ======= =======
</TABLE>
- ------------
(1) Does not include (i) 215,000 shares of Common Stock reserved for issuance
upon exercise of the Representatives' Warrants and (ii) 430,000 shares of
Common Stock reserved for issuance upon exercise of stock options issuable
under the Option Plan, of which options to purchase 352,000 shares of
Common Stock have been granted effective upon the consummation of the
Offering. See "Management -- Stock Options" and "Underwriting."
(2) Includes 592,558 and 84,615 of the shares of Common Stock offered hereby
needed to finance the cash portion of the Treasure Coast Acquisition
purchase price and the payment of the Final S Corporation Distribution,
respectively, and 53,846 shares of Common Stock issuable upon exercise of
the Treasure Coast Stock Payment Option, in each case, based on assumed
price of $6.50 per share (the midpoint of the currently anticipated range
of the initial public offering price). See "Management's Discusssion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
(3) Includes 341,451 shares of Common Stock to be issued upon the consummation
of the Offering in connection with the exercise of the Regal Option. See
"Certain Transactions."
24
<PAGE>
PRO FORMA FINANCIAL DATA
Introduction
The following pro forma financial data is based upon the historical
financial statements of AMRI and has been prepared to illustrate the effects on
such historical financial data of the Treasure Coast Acquisition and the
Offering (including the exercise of the Regal Option). The effects of the
Offering proceeds have been isolated from the effects of the Treasure Coast
Acquisition, except to the extent that the Offering proceeds will be used to
finance the Treasure Coast Acquisition. The unaudited pro forma combined
statement of operations for the years ended December 31, 1997 and 1998 give
effect to the Treasure Coast Acquisition and the Offering as if they had been
completed as of January 1, 1997. The unaudited pro forma combined balance sheet
as of December 31, 1998 gives effect to the Treasure Coast Acquisition and the
Offering as if such transactions had been completed on December 31, 1998. The
Treasure Coast Acquisition is reflected using the purchase method of accounting
for business combinations.
The pro forma financial data is provided for comparative purposes only and
does not purport to represent the actual financial position or results of
operations of the Company that actually would have been obtained if the
Treasure Coast Acquisition had been consummated on the dates specified, nor is
it necessarily indicative of the results of operations that may be achieved in
the future.
The pro forma financial data is based on certain assumptions and
adjustments described in the notes thereto and should be read in conjunction
therewith. See "Management's Discussion and Analysis of Financial Condition and
results of Operations" and the financial statements, including the notes
thereto, appearing elsewhere herein.
25
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Historical
---------------------------
Treasure
AMRI Coast
------------- ------------
<S> <C> <C>
Total Revenue .................................... $ 21,226 $9,726
Cost of sales .................................... 16,327 7,815
----------- ------
Gross Profit .................................... 4,899 1,911
Selling, general and administrative expenses ..... 4,085 1,765
Income from operations .......................... 814 146
Other income ..................................... 33 --
Interest expense ................................. (333) (156)
----------- ------
Income before taxes ............................. 514 (10)
Pro forma taxes on income ........................ 198 (4)
----------- ------
Pro forma net income ........................... $ 316 $ (6)
----------- ------
Net income per common share:
Basic ........................................... $ .16
Diluted ......................................... $ .14
Weighted average common shares outstanding:
Basic ........................................... 1,924,959
Diluted ......................................... 2,266,410
<CAPTION>
Pro Forma
----------------------------------------------------------------
Acquisition Offering Combined
Adjustments Combined Adjustments as Adjusted
------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total Revenue .................................... $ -- $ 30,952 $ -- $ 30,952
Cost of sales .................................... -- 24,142 -- 24,142
----------- ----------- ----------- -----------
Gross Profit .................................... -- 6,810 -- 6,810
Selling, general and administrative expenses ..... (90)(A) 5,889 -- 5,889
19 (B)
110 (C)
-----------
Income from operations .......................... (39) 921 -- 921
Other income ..................................... -- 33 -- 33
Interest expense ................................. 3 (D) (486) -- (486)
----------- ----------- ----------- -----------
Income before taxes ............................. (36) 468 -- 468
Pro forma taxes on income ........................ -- 194 -- 194
----------- ----------- ----------- -----------
Pro forma net income ........................... $ (36) $ 274 $ -- $ 274
----------- ----------- ----------- -----------
Net income per common share:
Basic ........................................... $ .11 $ .06
Diluted ......................................... $ .09 $ .06
Weighted average common shares outstanding:
Basic ........................................... 646,404 (E) 2,571,363 1,814,278 4,385,641
Diluted ......................................... 646,404 (E) 2,912,814 1,472,827 4,385,641
</TABLE>
<PAGE>
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Historical
-------------------------
Treasure
AMRI Coast
------------- ----------
<S> <C> <C>
Total Revenue .................................... $ 25,563 $17,801
Cost of sales .................................... 19,083 13,757
----------- -------
Gross Profit .................................... 6,480 4,044
Selling, general and administrative expenses ..... 5,418 3,090
Income from operations .......................... 1,062 954
Other income ..................................... 67 --
Interest expense ................................. (525) (204)
----------- -------
Income before taxes ............................. 604 750
Pro forma taxes on income ........................ 232 294
----------- -------
Pro forma net income ........................... $ 372 $ 456
=========== =======
Net income per common share:
Basic ........................................... $ .19
Diluted ......................................... $ .16
Weighted average common shares outstanding:
Basic ........................................... 1,924,959
Diluted ......................................... 2,266,410
<CAPTION>
Pro Forma
----------------------------------------------------------------
Acquisition Offering Combined
Adjustments Combined Adjustments as Adjusted
------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total Revenue .................................... $ -- $ 43,364 $ -- $ 43,364
Cost of sales .................................... -- 32,840 -- 32,840
----------- ----------- ----------- -----------
Gross Profit .................................... -- 10,524 -- 10,524
Selling, general and administrative expenses ..... (75) (A) 8,515 -- 8,515
(11) (B)
110 (C)
(92) (F)
75 (G)
-----------
Income from operations .......................... (7) 2,009 -- 2,009
Other income ..................................... -- 67 67
Interest expense ................................. 3 (D) (726) -- (726)
------------- ----------- ----------- -----------
Income before taxes ............................. (4) 1,350 -- 1,350
Pro forma taxes on income ........................ -- 526 -- 526
------------- ----------- ----------- -----------
Pro forma net income ........................... $ (4) $ 824 $ -- $ 824
============= =========== =========== ===========
Net income per common share:
Basic ........................................... $ .32 $ .19
Diluted ......................................... $ .28 $ .19
Weighted average common shares outstanding:
Basic ........................................... 646,404 (E) 2,571,363 1,814,278 4,385,641
Diluted ......................................... 646,404 (E) 2,912,814 1,472,827 4,385,641
</TABLE>
(Footnotes appear on following page)
26
<PAGE>
- ------------
(A) To adjust rent expense to reflect the acquisition from Treasure
Services of the real property in Stuart, Florida on which a retail boat
dealership is located.
(B) To adjust depreciation expense to reflect a change in depreciation
expense attributable to (i) assets of Treasure Coast which were not
acquired by the Company and (ii) a recalculation of depreciation expense
based upon the fixed assets acquired by the Company.
(C) To reflect the amortization of goodwill acquired through the Treasure
Coast Acquisition over a period of 15 years.
(D) To adjust interest expense to reflect a reduction in long-term debt
not assumed by the Company.
(E) Represents 592,558 of the shares of Common Stock offered hereby needed
to finance (including a pro rata portion of the Offering costs) the cash
portion of the Treasure Coast Acquisition purchase price and 53,846
shares of Common Stock issuable upon exercise of the Treasure Coast
Stock Payment Option, in each case based on an assumed price of $6.50
per share (the midpoint of the currently anticipated range of the
initial public offering price).
(F) To adjust operating expenses to reflect a decrease in expenses
attributable to assets not acquired by the Company.
(G) To adjust compensation expense to reflect the terms of an employment
agreement with a principal of Treasure Coast as if the terms of the
employment agreement had been in effect commencing January 1, 1997.
Compensation expense would not have been effected in 1997 as a result of
the employment agreement.
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEETS
As of December 31, 1998
(in thousands)
<TABLE>
<CAPTION>
Historical
---------------------
Treasure
AMRI Coast
--------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents ....... $ 1,139 $ --
Accounts receivable ............. 642 200
Inventories ..................... 13,702 7,226
Prepaid expenses ................ 19 --
Deferred income taxes ........... -- --
------- ------
Total current assets ............. 15,502 7,426
Property and equipment, net ...... 2,744 246
Goodwill ......................... -- --
Other assets ..................... 729 165
------- ------
Total assets ..................... $18,975 $7,837
======= ======
Current liabilities:
Floorplan payable ............... $13,221 $6,372
Line of credit/Note payable ..... 1,894 170
Accounts payable ................ 368 282
Customer deposits ............... 6 --
Accrued expenses ................ 310 152
Current maturities of
long-term debt ................. 246 6
------- ------
Total current liabilities ........ 16,045 6,982
Long-term debt, less
current maturities .............. 1,453 26
Deferred income taxes ............ -- --
------- ------
Total liabilities ................ 17,498 7,008
------- ------
Stockholders' equity:
Common stock .................... 18 --
Additional paid-in-capital ...... 453 105
Retained earnings ............... 1,006 724
------- ------
Total stockholders' equity ...... 1,477 829
------- ------
Total liabilities and
stockholders equity ............ $18,975 $7,837
======= ======
<PAGE>
<CAPTION>
Pro Forma
-----------------------------------------------------------------------------
S-Corp
Termination Acquisition Offering Combined
Adjustment(A) Adjustments(B) Combined Adjustments(C) as Adjusted
--------------- ---------------- ---------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents . $ -- $ -- $ 1,139 $ 7,983 $ 9,122
Accounts receivable ....... -- (200) 642 -- 642
Inventories ............... -- (140) 20,788 -- 20,788
Prepaid expenses .......... -- -- 19 -- 19
Deferred income taxes ..... 106 -- 106 -- 106
------- ------- ------- ------- -------
Total current assets ....... 106 (340) 22,694 7,983 30,677
Property and equipment, net -- 1,015 4,005 -- 4,005
Goodwill ................... -- 1,650 1,650 -- 1,650
Other assets ............... -- (165) 729 (676) 53
------- ------- ------- ------- -------
Total assets ............... $ 106 $ 2,160 $29,078 $ 7,307 $36,385
======= ======= ======= ======= =======
Current liabilities:
Floorplan payable ......... $ -- $ -- $19,593 $ -- $19,593
Line of credit/Note payable -- -- 2,064 (300) 1,764
Accounts payable .......... -- (282) 368 -- 368
Customer deposits ......... -- -- 6 -- 6
Accrued expenses .......... -- (152) 310 -- 310
Current maturities of
long-term debt ........... -- (6) 246 -- 246
------- ------- ------- ------- -------
Total current liabilities .. -- (440) 22,587 (300) 22,287
Long-term debt, less
current maturities ........ -- (26) 1,453 -- 1,453
Deferred income taxes ...... 2 -- 2 -- 2
------- ------- ------- ------- -------
Total liabilities .......... 2 (466) 24,042 (300) 23,742
------- ------- ------- ------- -------
Stockholders' equity:
Common stock .............. -- 7 25 19 44
Additional paid-in-capital -- 3,343 3,901 8,138 12,039
Retained earnings ......... 104 (724) 1,110 (550) 560
------- ------- ------- ------- -------
Total stockholders' equity 104 2,626 5,036 7,607 12,643
------- ------- ------- ------- -------
Total liabilities and
stockholders equity ...... $ 106 $ 2,160 $29,078 $ 7,307 $36,385
======= ======= ======= ======= =======
</TABLE>
(Footnotes appear on following page)
27
<PAGE>
- ------------
(A) Records a net deferred tax asset of $104,000 that results from the
Reorganization and related termination of Boat Tree's S Corporation
status.
(B) Records the purchase of substantially all of the assets of Treasure
Coast and Treasure Services and related debt financing of a portion of
the inventory and eliminates assets not being purchased and liabilities
not assumed. Assuming the Company's exercise of its Treasure Coast Stock
Payment Option, the consideration paid upon the consummation of the
Treasure Coast Acquisition will consist of a cash payment of $3.1
million (based on pro forma inventory balances as of December 31, 1998)
and the issuance of 53,846 shares of Common Stock, valued at $350,000,
based upon an assumed offering price of $6.50 per share (the midpoint of
the currently anticipated range of the initial public offering price).
The $3.1 million cash payment will be funded by the sale of 592,558 of
the shares of Common Stock offered hereby at an assumed price of $6.50
per share net of assumed Offering costs. The balance of the purchase
price is anticipated to be funded through additional floor plan
financing of $6.5 million, Treasure Coast's outstanding floor plan and
note payable line of credit balance as of December 31, 1998.
The acquisition of assets and anticipated financing are as follows:
<TABLE>
<S> <C>
Inventory ........................................ $ 7,086,000
Equipment ........................................ 150,000
Land ............................................. 850,000
Buildings and improvements ....................... 261,000
Goodwill ......................................... 1,650,000
------------
Total purchase price ............................. 9,997,000
Less assumed floor plan financing ................ (6,542,000)
Less value of Offering shares issued ............. (350,000)
------------
Cash used for Treasure Coast Acquisition ......... $ 3,105,000
============
</TABLE>
(C) Records the (i) receipt and application of the net proceeds from the
sale of the 2,150,000 shares of Common Stock offered hereby (less the
592,558 shares referred to in footnote (B) above) based upon an assumed
offering price of $6.50 per share, and (ii) the issuance of 341,451
shares of Common Stock upon the consummation of the Offering in
connection with the exercise of the Regal Option.
28
<PAGE>
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
The following selected statement of income data and balance sheet data as
of and for each of the years in the five-year period ended December 31, 1998,
are derived from the financial statements of AMRI 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 Reorganization). The selected statement of income
data for the years ended December 31, 1996, 1997 and 1998 and the selected
statement of balance sheet data as of December 31, 1996, 1997 and 1998 have
been audited by BDO Seidman, LLP, independent auditors, whose report thereon is
included elsewhere herein. 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 AMRI, including the notes
thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------------------------
1994 1995 1996 1997 1998
------------- ------------ ------------- ------------- -------------
(unaudited) (unaudited)
------------- ------------
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Sales and service revenue ...................... $ 6,173 $ 10,026 $ 13,058 $ 20,183 $ 24,229
Finance and insurance income ................... 193 308 591 1,043 1,334
---------- ---------- ---------- ---------- ----------
Total revenue ................................ 6,366 10,334 13,649 21,226 25,563
Cost of sales and service revenue .............. 5,362 8,656 10,544 16,327 19,083
---------- ---------- ---------- ---------- ----------
Gross profit ................................. 1,004 1,678 3,105 4,899 6,480
Selling, general and administrative expenses ... 676 1,318 2,493 4,085 5,418
---------- ---------- ---------- ---------- ----------
Income from operations ....................... 328 360 612 814 1,062
Other income ................................... -- -- 10 33 67
Interest expense ............................... (77) (158) (239) (333) (525)
---------- ---------- ---------- ---------- ----------
Net income .................................. 251 202 383 514 604
Pro Forma Unaudited Statements of
Income Data (1):
Pro forma taxes on income ...................... 98 79 150 198 232
---------- ---------- ---------- ---------- ----------
Pro forma net income ........................... $ 153 $ 123 $ 233 $ 316 $ 372
========== ========== ========== ========== ==========
Pro forma net income per share:
Basic(2) .................................... $ .08 $ .06 $ .12 $ .16 $ .19
Diluted(3) .................................. $ .07 $ .05 $ .10 $ .14 $ .16
Pro forma weighted average shares
outstanding:
Basic(2) .................................... 1,925,459 1,925,459 1,925,459 1,924,959 1,924,959
Diluted(3) .................................. 2,266,910 2,266,910 2,266,910 2,266,410 2,266,410
</TABLE>
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------------------
1994 1995 1996 1997 1998
------------- ------------ -------- -------- ----------
(unaudited) (unaudited)
------------- ------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents ..................... 271 213 340 307 1,139
Working capital ............................... 291 579 18 171 (542)
Total assets .................................. 1,434 4,042 7,292 9,681 18,975
Long-term debt, less current maturities ....... 141 99 1,393 1,221 1,453
Total liabilities ............................. 1,185 3,571 6,622 8,543 17,498
Stockholders' equity .......................... 249 471 670 1,138 1,477
</TABLE>
(Footnotes appear on following page)
29
<PAGE>
- ------------
(1) Prior to the date of this Prospectus, AMRI was an S Corporation and
therefore was not subject to Federal or State corporate income taxes
(other than Florida franchise taxes). The S Corporation status has been
terminated as of the date of this Prospectus. 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 approximately 39%.
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 sale of 84,615 shares of the Common Stock offered
hereby, which represent the approximate number of shares of the Common
Stock being sold by the Company to fund the payment of the Final S
Corporation Distribution of $550,000 at an assumed price of $6.50 per
share (the midpoint of the currently anticipated range of the initial
public offering price). See "Use of Proceeds" and Notes 1 and 5 of Notes
to Financial Statements.
(3) Gives effect to the exercise of the Regal Option. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Notes 1 and 6 of Notes to Financial Statements.
30
<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 ten retail locations. In addition,
the Company operates a retail location in Belmont, North Carolina, which it
intends to relocate to Cornelius, North Carolina following the consummation of
the Offering. 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 and water sport equipment. 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 has experienced substantial growth as a result of both
acquisitions and internal growth. For the years ended December 31, 1997 and
1998, the Company had total pro forma combined revenue of $31.0 million and
$43.4 million, respectively, and total pro forma combined net income before
taxes of $468,000 and $1.4 million, respectively. For the years ended December
31, 1997 and 1998, the Company sold, on a pro forma combined basis, 802 and
1,032 new boats, respectively, generating revenues of approximately $21.9
million and $31.7 million, respectively, and 366 and 449 used boats,
respectively, for revenues of approximately, $4.8 million and $6.1 million,
respectively.
The Company is the largest volume buyer of recreational boats sold under
the popular Regal and Wellcraft brand names and sells 11 other lines of high
quality recreational boats under the brand names Malibu, Hydra-Sport, Sailfish,
Carver, Stratos Bass Boats, Javelin Bass Boats, AquaSport, Larson, Legacy,
Mediterranean Yachts and Hurricane Deck Boats. The boats offered by the Company
range in size from 14 feet to 55 feet and in price from approximately $9,000 to
$1.2 million (with gross profit margins ranging between 15% and 28%). The
Company believes that it differentiates itself from its competitors by offering
13 different brand name product lines, with over 100 different models of new
cruisers, high performance boats, pontoon boats, 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.
Results of Operations
AMRI (Pro Forma Combined)
Year Ended December 31, 1997 Compared to Year Ended December 31, 1998
Revenue
The Company's pro forma combined total revenue for the year ended December
31, 1997 was $31.0 million as compared to pro forma combined total revenue for
the year ended December 31, 1998 of $43.4 million, an increase of $12.4 million
or 40.1%. Of this increase, approximately $2.6 million was attributable to an
8.9% increase in comparable store sales. Management believes that the increase
during the year ended December 31, 1998 resulted primarily from the maturation
of the Jacksonville, Florida store, which opened in February 1997, and the
continued maturation of the Orlando, Florida store in its second full year of
operations. Management believes that the increase in comparable store sales was
also attributable to an increase in floor plan availability in 1998 for the
Treasure Coast stores, an increase in service revenues due to greater
reimbursements under manufacturer warranty programs, increased dockage at the
Stuart, Florida store and an increase in the number of used boats sold. The
balance of the increase in pro forma combined total revenue resulted primarily
from the opening of new locations in Doctors Lake, Pinellas Park, Tierra Verde
and Pompano Beach, Florida in 1998.
Gross Profit
The Company's pro forma combined cost of sales for the year ended December
31, 1997 was $24.1 million, or 78.0% as a percentage of pro forma combined
total revenue, as compared to $32.8 million for the year ended December 31,
1998, or 75.7% as a percentage of pro forma combined total revenue. The
Company's pro
31
<PAGE>
forma combined gross profit for the year ended December 31, 1997 was $6.8
million, or 22.0% as a percentage of pro forma combined total revenue, as
compared to $10.5 million for the year ended December 31, 1998, or 24.3% as a
percentage of pro forma combined total revenue. Management believes that the
increase in pro forma combined gross profit as a percentage of pro forma
combined total revenue was primarily attributable to higher sale prices on the
Company's products for the year ended December 31, 1998. The increase in pro
forma combined gross profit margin is primarily attributable to the increased
revenue.
Selling, General and Administrative Expenses
The Company's pro forma combined selling, general and administrative
expenses for the year ended December 31, 1997 were $5.9 million or 19.0% as a
percentage of pro forma combined total revenue, as compared to $8.5 million for
the year ended December 31, 1998, or 19.6% as a percentage of pro forma
combined total revenue. Management believes that the increase in selling,
general and administrative expenses as a percentage of pro forma combined total
revenues is primarily attributable to initial operating expenses associated
with the opening of new locations in Tierra Verde and Pinellas Park, Florida.
Interest Expense
The Company's pro forma combined interest expense was approximately
$486,000 for the year ended December 31, 1997, as compared to approximately
$726,000 for the year ended December 31, 1998, a percentage increase of 49.4%.
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 year ended December 31, 1998 and anticipated increases
in sales in the new locations. The Company's pro forma combined floor plan
payable balance was $9.6 million as of December 31, 1997 as compared to $19.6
million as of December 31, 1998, reflecting a percentage increase of 104.2%.
AMRI (Historical)
Year Ended December 31, 1997 Compared to Year Ended December 31, 1998
Sales and Service Revenue
AMRI's sales and service revenue for the year ended December 31, 1997 was
$20.2 million as compared to sales and service revenue for the year ended
December 31, 1998 of $24.2 million, an increase of $4.0 million or 20.0%. Of
this increase, approximately $931,000 was attributable to a 4.6% increase in
comparable store sales in 1998. During the year ended December 31, 1998, the
Jacksonville, Florida store and the Orlando, Florida store generated increases
of approximately $641,000 and $812,000, respectively, in sales and service
revenues as compared to the year ended December 31, 1997. Management believes
that the increase in comparable store sales during the year ended December 31,
1998 resulted primarily from the maturation of the Jacksonville, Florida store,
which opened in February 1997 and the continued maturation of the Orlando,
Florida store in its second full year of operations. The balance of the
increase in sales and service revenue resulted primarily from the opening of
new locations in Doctors Lake, Pinellas Park and Tierra Verde, Florida in 1998.
Finance and Insurance Income
AMRI's finance and insurance income for the year ended December 31, 1997
was $1.0 million (4.9% as a percentage of total revenue), as compared to $1.3
million for the year ended December 31, 1998 (5.2% as a percentage of total
revenue), an increase of 27.9%. Management believes that the increase in
finance and insurance income is primarily attributable to the increase in sales
and service revenue of 20.0% for the year ended December 31, 1998 as well as an
increased emphasis on the sale of finance and insurance products by AMRI .
Gross Profit
AMRI's cost of sales and service revenue for the year ended December 31,
1997 was $16.3 million or 76.9% as a percentage of total revenue, as compared
to $19.1 million for the year ended December 31, 1998, or 74.7% as a percentage
of total revenue. AMRI's gross profit for the year ended December 31, 1997 was
$4.9 million, or 23.1% as a percentage of total revenue, as compared to $6.5
million for the year ended December 31, 1998, or 25.3% as a percentage of total
revenue. AMRI's gross profit includes finance and insurance income;
32
<PAGE>
however, the cost of sales and service revenue is not attributable to finance
and insurance income. For the year ended December 31, 1997, AMRI's gross profit
on sales and service revenue was $3.9 million, or 19.1% as a percentage of
sales and service revenue. For the year ended December 31, 1998, AMRI's gross
profit on sales and service was $5.1 million, or 21.2% as a percentage of sales
and service revenue. Management believes that the increase in gross profit as a
percentage of total revenue and of sales and service revenue was primarily
attributable to higher sales prices on AMRI's products for the year ended
December 31, 1998. The increase in gross profit margin is primarily
attributable to the increased sales and service revenue.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the year ended December
31, 1997 were $4.1 million, or 19.2% as a percentage of total revenue, as
compared to $5.4 million for the year ended December 31, 1998, or 21.2% as a
percentage of total revenue. Management believes that the increase in selling,
general and administrative expenses as a percentage of total revenues is
primarily attributable to initial operating expenses associated with the
opening of new locations in Tierra Verde and Pinellas Park, Florida.
Other Income
Other income was $33,481 for the year ended December 31, 1997 as compared
to $66,480 for the year ended December 31, 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 year ended December 31, 1998
as compared to December 31, 1997.
Interest Expense
Interest expense was $333,958 for the year ended December 31, 1997 as
compared to $524,720 for the year ended December 31, 1998, a percentage
increase of 57.1%. Management believes that the increase in interest expense is
primarily attributable to the increase in balances on AMRI's floor plan
financing lines of credit used to support the inventory requirements for the
additional stores opened during the year ended December 31, 1998 and
anticipated increases in sales in the new locations. Floor plan payable balance
was $6.3 million as of December 31, 1997 as compared to $13.2 million as of
December 31, 1998, reflecting a percentage increase of 111.5%.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1997
Sales and Service Revenue
AMRI's sales and service revenue for the year ended December 31, 1996 was
$13.1 million as compared to sales and service revenue for the year ended
December 31, 1997 of $20.2 million, an increase of 54.6%. Of this increase,
approximately $2.0 million was attributable to a 15.5% 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 $5.1 million of sales and
service revenue.
33
<PAGE>
Finance and Insurance Income
AMRI'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 $1.0
million 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
AMRI's cost of sales and service revenue for the year ended December 31,
1996 was $10.5 million, or 77.3% as a percentage of total revenue, as compared
to $16.3 million for the year ended December 31, 1997, or 76.9% as a percentage
of total revenue. AMRI's gross profit for the year ended December 31, 1996 was
$3.1 million, 22.7% as a percentage of total revenue, as compared to $4.9
million 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, AMRI's gross profit on sales and
service revenue was $2.5 million, 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 $3.9 million, 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
AMRI's selling, general and administrative expenses for the year ended
December 31, 1996 were $2.5 million, or 18.3% as a percentage of total revenue,
as compared to $4.1 million for the year ended December 31, 1997, or 19.2% 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.
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 AMRI's floor
plan financing lines of credit in connection with AMRI's increased levels of
inventory requirements for additional stores and anticipated increases in
sales. Floor plan payables were $4.6 million at December 31, 1996 as compared
to $6.3 million at December 31, 1997, reflecting a percentage increase of
34.9%.
Termination of S Corporation Status
As a result of terminating Boat Tree's S Corporation status as of the date
of this Prospectus, AMRI 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 December 31, 1998, the amount would have been $104,000. AMRI expects that,
following the termination of Boat Tree's S Corporation status, its combined
Federal and State income tax rate will be approximately 39%.
34
<PAGE>
Liquidity and Capital Resources
AMRI 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 December 31, 1998, AMRI had working capital deficit
of $542,121 and a debt equity ratio of 11.85 to 1.
For the years ended December 31, 1997 and 1998, net cash flows used by
AMRI for operating activities were $1.3 million and $6.2 million, respectively.
The increase in cash used by operating activities was due primarily to a
decrease in inventory of $1.9 million for the year ended December 31, 1997 as
compared to an increase of $7.0 million for the year ended December 31, 1998.
The primary reason for the increase in inventory for the year ended December
31, 1998 was the increase in sales attributable to the initial purchase of
inventory at AMRI's new locations and to an increase in comparable store sales.
For the years ended December 31, 1997 and 1998, cash flows used by
investing activities by AMRI were $175,906 and $309,499, respectively. Cash
used in investing activities during 1997 and 1998 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 years ended December 31, 1997 and 1998, cash flows provided by
financing activities by AMRI were $1.4 million and $7.4 million, respectively.
Cash flows used by financing activities by AMRI during the years ended December
31, 1997 and 1998 were for the payment of stockholder distributions and the
repayment of long-term debt, including, for the year ended December 31, 1997,
for the repayment of related party long-term debt which was used by AMRI to
repay a third mortgage on the Orlando, Florida superstore in the amount of
$194,948 and working capital loans of $125,535. For the year ended December 31,
1998, cash used in financing activities also included deferred costs of
$676,031 which relate to the Offering. For the years ended December 31, 1997
and 1998, cash flows provided by financing activities for AMRI increased by net
borrowings on floor plan and net borrowings under line of credit. For the years
ended December 31, 1997 and 1998, stockholder distributions were made by AMRI
in the amounts of $45,000 and $264,528, respectively, for the payment of
stockholder tax liabilities acquired as a result of Boat Tree's S Corporation
status.
At December 31, 1998, AMRI had $1.5 million 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 as well as
installment loans payable relating to various vehicles.
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 December 31,
1998, the Company had drawn $300,000 on the line of credit from Regal. The
Company intends to utilize a portion of the net proceeds of the Offering to
repay such line of credit upon the consummation of the Offering. Trans-America
has provided the Company with a $2 million line of credit. Interest on the line
of credit from Trans-America is payable at the greater of the prime rate or 7%
and the principal is due upon the earliest of (i) 30 days after written notice,
(ii) the termination of the Company's floor plan financing agreement with
TransAmerica or (iii) December 31, 2000. The amount available under the line of
credit is based upon the Company's used boat inventory and parts and
accessories inventory. Mr. Pozo, Jr. has guaranteed the repayment of the
TransAmerica line of credit. See "Certain Transactions."
In January 1999, AMRI executed a promissory note payable to JCJ Family
Partnership, Ltd., in the principal sum of up to $400,000. The general partner
of the partnership is Mr. Pozo, Jr. Interest on the promissory note is payable
monthly at the rate of 12% per annum and the principal sum is payable on demand
after March 31, 2000. See "Certain Transactions."
AMRI 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 AMRI'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 1998 were $6.3
million and $13.2 million, respectively. The boat manufacturers generally
provide a
35
<PAGE>
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, 1998. The maximum borrowing allowable under the floor
plan financing arrangements was $8.8 million and $15.8 million as of December
31, 1997 and 1998, respectively.
Upon the consummation of the Offering, the Company will acquire all of the
outstanding capital stock of Marine America, a corporation owned 80% by Joseph
G. Pozo, Jr., the Company's Chairman, President, Chief Executive Officer and
majority stockholder, and 20% by Joseph J. Pozo (Mr. Pozo, Jr.'s son) for 1,538
shares of Common Stock valued at $10,000, together with the assumption of
liabilities previously incurred by Marine America in connection with its
redemption of 50% of its capital stock from Lakewood, an unaffiliated third
party. Such liabilities consist of a loan from the Company to Marine America in
the amount of $25,000 (which will be eliminated upon consolidation of the
Company and Marine America) and a promissory note in the amount of $100,000
payable to Lakewood, which the Company intends to repay from the proceeds of
the Offering. In January 1998, Marine America acquired certain of Lakewood's
assets, as well as a five-year lease (which lease was amended to a month to
month lease commencing January 1999) 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. 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 proceeds to construct a 20,000 square foot
superstore on such site. See "Use of Proceeds," "Certain Transactions" and Note
11 of Notes to Financial Statements.
Upon the consummation of the Treasure Coast Acquisition, the Company will
utilize a portion of the Offering proceeds to acquire substantially all of the
assets of Treasure Coast and certain related real estate for a purchase price
of $2.9 million plus the cost of Treasure Coast's inventory on such date. The
Company intends to use approximately $544,000 of the proceeds to fund a portion
of such inventory costs and to obtain floor plan financing in the amount of
approximately $6.5 million to fund the balance of such anticipated inventory
costs. Pursuant to the Treasure Coast Stock Payment Option, the Company has the
option of paying $350,000 of the purchase price with 53,846 shares of Common
Stock based upon an assumed price of $6.50 per share (the midpoint of the
currently anticipated range of the initial public offering price).
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 four additional stores (including at least one
additional superstore) during the next 18 months, to consummate the Treasure
Coast Acquisition 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 and/or acquisition of
at least four additional stores (in connection with which the Company may
choose to fund a portion through the utilization of seller and inventory
financing) 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
prod-
36
<PAGE>
uct 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, 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, 1997 and 1998 has accounted for 77.2%
and 77.3%, respectively, of the Company's pro forma combined 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 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 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. Management is in the process of
becoming compliant with the Year 2000 requirements and believes that its
management information system will be compliant on a timely basis at a minimal
cost. 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.
37
<PAGE>
BUSINESS
General
The Company is one of the largest retailers of recreational boats in
Florida where it currently owns and operates ten retail locations. In addition,
the Company operates a retail location in Belmont, North Carolina, which it
intends to relocate to Cornelius, North Carolina following the consummation of
the Offering. 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 and water sport equipment. 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's objective is to continue its growth trend by
leveraging its position as one of the premier operators of recreational boat
dealerships in the southeastern United States.
The Company has already experienced substantial growth as a result of both
acquisitions and internal growth. For the years ended December 31, 1997 and
1998, the Company had total pro forma combined revenue of $31.0 million and
$43.4 million, respectively, and total pro forma combined net income before
taxes of $468,000 and $1.4 million, respectively. For the years ended December
31, 1997 and 1998, the Company sold on a pro forma combined basis 802 and 1.032
new boats, respectively, generating revenues of approximately $21.9 million and
$31.7 million, respectively, and 366 and 449 used boats, respectively, for
revenues of approximately $4.8 million and $6.1 million, respectively.
The Company is the largest volume buyer of recreational boats sold under
the popular Regal and Wellcraft brand names and sells 11 other lines of high
quality recreational boats under the brand names Malibu, Hydra-Sport, Sailfish,
Carver, Stratos Bass Boats, Javelin Bass Boats, AquaSport, Larson, Legacy,
Mediterranean Yachts and Hurricane Deck Boats. The boats offered by the Company
range in size from 14 feet to 55 feet and in price from approximately $9,000 to
$1.2 million (with gross profit margins ranging between 15% and 28%). The
Company believes that it differentiates itself from its competitors by offering
13 different brand name product lines, with over 100 different models of new
cruisers, high performance boats, pontoon boats, 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 as one of the leading
operators of recreational boat dealerships in the southeastern United States
through the continued implementation and maintenance of its growth and
operating strategies.
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 four additional stores, using a combination of the proceeds
from this Offering, seller and inventory financing and working capital, within
the next 18 months. The Company may also finance future
38
<PAGE>
acquisitions in whole or in part through the issuance of Common Stock or
securities exercisable or convertible into shares of Common Stock. The Company
intends to accomplish its growth strategy 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.
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 $1.2 million, 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
range from $4 million to $5 million per location, most of which will be
financed by floor plan financing arrangements and will result in little
additional capital investment.
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 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.
39
<PAGE>
o Maintain a Diverse Product Line. The Company currently sells 13 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.
Recreational Boating Industry
Based upon information compiled by the NMMA, the recreational boating
industry has experienced significant growth within the last six 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
$19.2 billion in 1998 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.
In 1998, the NMMA estimates that over 74 million people participated in
recreational boating and that new boat and motor sales alone represented $8.5
billion of the $19.2 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 $834 million, over 4% of the nation's
total recreational boating sales for 1998, 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 $1.8 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 and Wellcraft brand names and sells 11 other lines of high
quality recreational boats under the brand names Malibu, Hydra-Sport, Sailfish,
Carver, Stratos Bass Boats, Javelin Bass Boats, AquaSport, Larson, Legacy,
Mediterranean Yachts and Hurricane Deck Boats. The boats offered by the Company
range in size from 14 feet to 55 feet and in price from approximately $9,000 to
$1.2 million (with gross profit margins ranging between 15% and 28%).
40
<PAGE>
The Company believes that it differentiates itself from its competitors by
offering 13 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.
For the years ended December 31, 1997 and 1998, the Company sold, on a pro
forma combined basis, 802 and 1,032 new boats, respectively, generating
revenues of approximately $21.9 million and $31.7 million, respectively. The
average sale price per new boat sold by the Company during the years ended
December 31, 1997 and 1998 was approximately $27,300 and $30,750, respectively.
The Company believes that its average sale price is higher than the industry
average as a result of its focus on the sale of cruisers sold under the Regal
and Wellcraft brand name and the high quality of products and customer service
offered by the Company. The Company believes that it accounted for
approximately 13% of Regal's recreational boat sales in 1998.
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 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 the years ended December 31, 1997 and 1998, the Company sold 366 and
449 used boats respectively, generating revenues of $4.8 million and $6.1
million respectively. The average sale price of the used boats sold by the
Company during the years ended December 31, 1997 and 1998 was approximately
$13,000 and $13,500, 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, 1998, the Company had accrued liabilities of
approximately $86,000 for estimated foreclosure losses related to such loans.
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.
41
<PAGE>
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.
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.
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 AMRI's
qualified advertising and marketing expenses are paid for by the boat, motor
and engine 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
42
<PAGE>
nominal incremental cost. The Company plans to organize exhibitions with other
area boat dealers. In fiscal 1998 approximately 10% of AMRI's sales were
generated at recreational boat shows. In addition, the Company believes that an
additional 25% of AMRI'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 December 31, 1998, AMRI's maximum borrowings
allowable under floor plan lines of credit was $15.8 million and the average
borrowings outstanding during the year ended December 31, 1998 was $8 million.
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 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. AMRI purchased 69% of its new boats in 1998 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 62.2% of AMRI's sales in 1998.
Substantially all of Treasure Coast's purchases and sales for the year ended
December 31, 1998 were boats
43
<PAGE>
sold under the Wellcraft brand name. The Company did not purchase more than 10%
of its new boats from any other manufacturer in 1998. 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 and Wellcraft.
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.
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.
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 million per occurrence and $5 million in the aggregate. The Company may
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
44
<PAGE>
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 December 31, 1998, AMRI employed 114 persons on a full-time basis of
which 13 were in store-level management, 57 were in sales and marketing, 24
were in parts and service and 20 were in corporate administration and
management. As of December 31, 1998, Treasure Coast employed 37 persons on a
full-time basis of which 8 were in store-level management, 8 were in sales and
marketing, 18 were in parts and service and 3 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
also owns the property upon which the Stuart, Florida dealership is located.
The balance of the Company's dealerships are leased facilities. Subsequent to
the consummation of the Offering, 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. The Company
and its various dealerships will occupy an aggregate of approximately 27 acres
of land and approximately 90,000 square feet of building space, of which
approximately 85,000 square feet are utilized for sales, services and parts and
5,000 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 2006 and in certain cases have renewal options. In fiscal 1998, the
Company made pro forma combined lease payments in the aggregate amount of
approximately $879,000.
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.
<TABLE>
<CAPTION>
Dealership/Facility Location Total Building/Square Ft. Total Land/Acres
- ---------------------------------------- --------------------------- -----------------
<S> <C> <C>
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 ................. 15,000 3.5
Pompano Beach, Florida (2) ............. 4,000 1.0
Stuart, Florida (2) .................... 5,000 1.0
Jupiter, Florida (2) ................... 13,575 3.0
Vero Beach, Florida (2) ................ 3,300 .6
</TABLE>
- ------------
(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.
(2) To be acquired in connection with the Treasure Coast Acquisition.
45
<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, James Gregory Humphries and James W. Traweek have agreed to
serve as directors of the Company and, upon the consummation of the Treasure
Coast Acquisition, D. Thomas Grane has agreed to serve as Vice President of the
South Florida Division of the Company.
Name Age Position with the Company
----- --- -------------------------
Joseph G. Pozo, Jr. .............. 51 Chairman, President and
Chief Executive Officer
Melven R. Nehleber ............... 48 Chief Financial Officer and
Treasurer
Marcelo Pozo ..................... 50 Vice President
D. Thomas Grane .................. 58 Vice President -- South Florida
Division
Brady Churches ................... 40 Director Nominee
James Gregory Humphries .......... 42 Director Nominee
Jeffrey Schottenstein ............ 57 Director Nominee
Gary E. Stein .................... 48 Director
James W. Traweek ................. 55 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.
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.
D. Thomas Grane will join the Company upon the consummation of the
Treasure Coast Acquisition as Vice President -- South Florida Division. Since
1992, Mr. Grane has been the sole shareholder and general manager of Treasure
Coast, the top Wellcraft dealership in the United States for 1998. Since 1984,
Mr. Grane has been a Wellcraft dealer in various owner/operator dealership
ventures. Prior to that, beginning in 1980, Mr. Grane was the owner and
operator of an automobile dealership. Mr. Grane has over 15 years experience in
the retail boating industry.
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.
46
<PAGE>
James Gregory Humphries has been a partner of the law firm of Shutts &
Bowen 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.
Gary E. Stein became a director of the Company in June 1998. Prior
thereto, from October 1997 to the present, Mr. Stein has 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.
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 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 for which he presently serves as Chairman.
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 million.
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.
47
<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 years ended December 31, 1997 and 1998 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, 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
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)
1998 $216,000 -- $ --(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 in
1997 and $264,528 in 1998 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, 1998. See "--Stock Options."
Employment and Consulting 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 $208,000. 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.
Upon the consummation of the Treasure Coast Acquisition, the Company will
enter into a three-year employment agreement with D. Thomas Grane, the
principal stockholder of Treasure Coast who will become Vice President of the
South Florida Division of the Company. The employment agreement provides for a
base salary of $78,000 per annum plus an amount equal to 10% of the net income
(before taxes and after a corporate overhead allocation) of the four locations
which were operated by Treasure Coast.
The Company has also entered into a six-month consulting agreement,
effective upon the consummation of the Offering, with Gary E. Stein, a director
of the Company, which provides for a consulting fee of $10,000 per month. In
addition, Mr. Stein will receive a consulting fee equal to 5% of the purchase
price, not to exceed $75,000, for consulting services rendered in connection
with any acquisitions consummated by the Company during the term of his
consulting agreement.
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 430,000 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"
48
<PAGE>
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
352,000 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 70,000 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."
49
<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 Treasure Coast Stock Payment
Option, the exercise of the Regal Option and the sale of the 2,150,000 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
Number of Shares Beneficially
Owned (2)
Shares ----------------------
Name and Address of Beneficially Before After
Beneficial Owner(1) Owned (2) Offering Offering
- --------------------------------------------------------- -------------------- ---------- ---------
<S> <C> <C> <C>
Joseph G. Pozo, Jr. ..................................... 1,524,084(3) 82.8% 34.8%
Brady Churches .......................................... --(4) * *
James Gregory Humphries ................................. --(5) * *
Jeffrey Schottenstein ................................... --(6) * *
Gary E. Stein ........................................... 116,667(7) * 2.7%
James W. Traweek ........................................ --(8) * *
Sir Brian Wolfson ....................................... --(9) * *
Regal Marine Industries, Inc. ........................... 341,451(10) * 7.8%
All executive officers and directors as a group
(ten persons ) ......................................... 1,656,995(11) 87.1% 37.8%
</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 Gary E. Stein is c/o Pinnacle
Technology Resources, Inc., 6649 High Street, Suite L-1, Worthington, Ohio
43085. 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. and Paul Kuck, Duane Kuck,
Jim Kuck, Gene Kandel and David Furlow, the directors, officers and
principal stockholders of Regal, is 2300 Jetport Drive, Orlando, FL 32809.
The address of each other beneficial owner identified is c/o American
Marine Recreation, Inc., 2202 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 1,840,344 shares
of Common Stock outstanding as of the date of this Prospectus and a base
of 4,385,641 shares of Common Stock outstanding immediately after the
consummation of the Offering.
(3) The number of shares of Common Stock owned by Joseph G. Pozo, Jr. before
the Offering includes 116,667 shares of Common Stock which Gary E. Stein
is purchasing from Mr. Pozo upon the consummation of the Offering. See
"Certain Transactions."
50
<PAGE>
(4) 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.
(5) 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.
(6) 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.
(7) Represents shares of Common Stock which Mr. Stein is purchasing from
Joseph G. Pozo, Jr. upon the consummation of the Offering. See "Certain
Transactions."
(8) 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.
(9) 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.
(10) Represents shares of Common Stock to be issued in connection with the
exercise of the Regal Option upon the consummation of the Offering.
(11) Includes 53,846 shares of Common Stock issuable to Treasure Coast and
beneficially owned by D. Thomas Grane, its sole stockholder, upon the
consummation of the Treasure Coast Acquisition, at which time Mr. Grane
will become the Company's Vice President -- South Florida Division.
51
<PAGE>
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. In 1998, the rent paid under the lease was $71,060. The monthly rent
through the consummation of the Offering is $4,000. Upon the consummation of
the Offering, the Company will purchase such parcel for a purchase price of
$400,000, which the Company believes is the approximate fair market value of
such parcel. The purchase price will be paid 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 January 1999, Boat Tree
executed a promissory note payable to JCJ Family Partnership Ltd. in the
principal sum of up to $400,000. Interest on the promissory note is at the rate
of 12% per annum and is payable, together with the principal sum, on demand
after March 31, 2000.
In May 1998, Mr. Pozo guaranteed a line of credit from Regal to the
Company with a maximum borrowing availability of $300,000. As of December 31,
1998, the entire line of credit was outstanding, which the Company intends to
repay from the proceeds of the Offering. In addition, Mr. Pozo has guaranteed a
floor plan financing line of credit and an additional line of credit in an
aggregate amount of up to $12 million from TransAmerica. Outstanding borrowings
under the TransAmerica floor plan financing line of credit totalled $9.4
million as of December 31, 1998, and are due upon the sale of the boats which
secure such borrowings. Outstanding borrowings under the other TransAmerica
line of credit totalled $1.6 million as of December 31, 1998 and are due upon
the earliest of (i) 30 days after written notice, (ii) the termination of the
TransAmerica floor plan financing line of credit or (iii) December 31, 2000.
Mr. Pozo has also guaranteed a floor plan financing line of credit in an amount
up to $5.8 million from Deutsche Financial Services Corp. Outstanding
borrowings under this line of credit totaled $3.8 million as of December 31,
1998 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 $1.2 million, which loan had an outstanding principal
balance of $1.1 million as of December 31, 1998 and is due in May 2016. Mr.
Pozo, Jr. has also guaranteed 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 $168,099 as of December 31, 1998, due at various times through October 2003.
Boat Tree made distributions to its stockholders for the payment of taxes
of $45,000 for the year ended December 31, 1997 and $264,528 for the year ended
December 31, 1998. The Company is paying the Final S Corporation Distribution
of $550,000 to the stockholders of Boat Tree out of the net proceeds of the
Offering. As of the date of this Prospectus, in connection with the
Reorganization, all of the stockholders of Boat Tree will exchange all of the
outstanding shares of common stock of Boat Tree for 1,840,344 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 75% 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 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 previously operated such
dealership, for a purchase price of $1.8 million, financed in part by loans
collateralized by Bob's Boats' inventory and guaranteed by Boat Tree (which
guarantee has been terminated), Mr. Pozo, Jr. and the other stockholder of
Bob's Boats. On or prior to the consummation of the Offering, Mr. Pozo, Jr. is
selling his 75% interest in Bob's Boats to Bob's Boats' other stockholder for
$1.3 million pursuant to a secured promissory note, secured by all of the
capital stock of Bob's Boats and guaranteed by such other stockholder.
Upon the consummation of the Offering, the Company will acquire all of the
outstanding capital stock of Marine America, a corporation owned 80% by Joseph
G. Pozo, Jr., the Company's Chairman, President, Chief Executive Officer and
majority stockholder, and 20% by Joseph J. Pozo (Mr. Pozo, Jr.'s son). The
purchase price consists of 1,538 shares of Common Stock valued at $10,000,
together with the assumption of liabilities incurred
52
<PAGE>
by Marine America in connection with its redemption of 50% of its capital stock
from Lakewood, an unaffiliated third party. Such liabilities consist of a loan
from the Company to Marine America in the amount of $25,000 (which will be
eliminated upon the consolidation of the Company and Marine America) and a
promissory note in the amount of $100,000 payable to Lakewood, which the
Company intends to repay from the proceeds of the Offering. In January 1998,
Marine America acquired certain of Lakewood's assets, as well as a five-year
lease (which lease was amended to a month-to-month lease commencing January
1999) relating to its 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.
On January 22, 1999, the Company entered into an agreement with Treasure
Coast, Treasure Services and D. Thomas Grane (the sole stockholder of Treasure
Coast), unaffiliated third parties, to acquire substantially all of the assets
of Treasure Coast, together with certain real property in Stuart, Florida owned
by Treasure Services on which a retail boat dealership is located. The Treasure
Coast Acquisition will close upon the consummation of the Offering, for an
aggregate purchase price of $2.9 million, plus the cost of Treasure Coast's
inventory on such date. In connection with the Treasure Coast Acquisition, Mr.
Grane is entering into a three-year-employment agreement with the Company and
upon the consummation of the Treasure Coast Acquisition he will become the
Company's Vice President -- South Florida Division. See "Management--Employment
and Consulting Agreement" and "Principal Stockholders."
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
Reorganization, represents 341,451 shares of AMRI's Common Stock (7.8% 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 rate of 10% and is due on August 31, 1999. As of December
31, 1998, $300,000 was outstanding under the line of credit. The Company
intends to utilize a portion of the Offering proceeds to repay any amounts
outstanding under the line of credit upon the consummation of the Offering. See
"Principal Stockholders."
In November 1997, Joseph G. Pozo, Jr. agreed to sell to Gary E. Stein, for
a purchase price of $1.1 million, the number of shares of Common Stock equal to
$1.1 million divided by the initial public offering price per share, and Mr.
Stein has agreed to purchase such shares from Mr. Pozo, Jr. upon the
consummation of the Offering pursuant to a promissory note. In December 1998,
Mr. Pozo and Mr. Stein amended the agreement to provide for the purchase of
116,667 shares of Common Stock for a promissory note in the amount of $758,335
which is due two years from the consummation of the Offering.
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.
53
<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 1,840,344 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 352,000
shares of Common Stock are issuable upon the exercise of outstanding options
granted under the Option Plan, effective upon the consummation of the Offering
and 341,451 shares of Common Stock are issuable upon exercise of the Regal
Option.
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, 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.
54
<PAGE>
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 662/3% 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 $5 million.
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, 4,385,641 shares (not including,
1,538 shares to be issued in connection with the Marine America Acquisition) of
Common Stock will be issued and outstanding, of which the 2,150,000 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 2,235,641 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 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
securityholders 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.
55
<PAGE>
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 43,856 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.
56
<PAGE>
UNDERWRITING
The underwriters named below (collectively, the "Underwriters") for which
BlueStone Capital Partners, L.P. ("BlueStone") and Auerbach, Pollak &
Richardson, 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 2,150,000 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. ............
Auerbach, Pollak & Richardson, Inc. .........
---------
Total .................................... 2,150,000
=========
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.
The Company has granted the Representatives an option, exercisable for 45
days following the date of this Prospectus, to purchase up to 322,500
additional shares of Common Stock at the initial public offering price set
forth on 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 $250,000, 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 $215, the Representatives' Warrants to purchase
up to 215,000 shares of Common Stock, at an exercise price of $ per share
(140% 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
57
<PAGE>
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.
In addition, the Company has agreed to enter into a consulting agreement
to retain BlueStone as a financial consultant for a period of two years from
the consummation of the Offering at an annual fee of $100,000 per year, payable
in advance upon consummation of this Offering. The consulting agreement will
not require the consultant to devote a specific amount of time to the
performance of its duties thereunder. In the event that Blue Stone originates a
financing or a merger, acquisition, joint venture or other transaction to which
the Company is a party, BlueStone will be entitled to receive a finder's fee in
consideration for origination of such transaction.
All of the Company's current officers, directors and securityholders 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 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.
58
<PAGE>
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 AMRI at December 31, 1998 and for the three
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.
The financial statements of Treasure Coast at December 31, 1998 and for
the two years then ended, have been included herein and in the Registration
Statement in reliance upon the report of Feldman Sherb Ehrlich & Co., P.C.,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 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.
59
<PAGE>
INDEX TO FINANCIAL STATEMENTS
American Marine Recreation, Inc. and Subsidiary Consolidated Financial
Statements
<TABLE>
<CAPTION>
Page
-----------
<S> <C>
Report of Independent Certified Public Accountants ....................................... F-2
Consolidated Balance Sheets as of December 31, 1997 and 1998 ............................. F-3
Consolidated Statements of Income for the years ended December 31, 1996, 1997 and 1998 ... F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996,
1997 and 1998 ............................................................................ F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1997 and F-6
1998
Notes to the Consolidated Financial Statements ........................................... F-7 - F-19
</TABLE>
Treasure Coast Boating Center, Inc.
<TABLE>
<CAPTION>
Page
------------
<S> <C>
Independent Auditors' Report .................................................. F-20
Balance Sheet as of December 31, 1998 ......................................... F-21
Statements of Operations for the years ended December 31, 1997 and 1998 ....... F-22
Statements of changes in shareholder's equity as of December 31, 1997 and 1998 F-23
Statements of Cash flows for the years ended December 31, 1997 and 1998 ....... F-24
Notes to Financial Statements ................................................. F-25 - F-28
</TABLE>
F-1
<PAGE>
Report of Independent Certified Public Accountants
(Upon completing the Reorganization as described in Note 1(B) to the
accompanying consolidated financial statements, which is to take place upon the
effectiveness of this Registration Statement, BDO Seidman, LLP will be in a
position to render the following opinion)
American Marine Recreation, Inc. and Subsidiary
Orlando, Florida
We have audited the accompanying consolidated balance sheets of American Marine
Recreation, Inc. and subsidiary as of December 31, 1997 and 1998, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the years ended December 31, 1996, 1997 and 1998. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Marine
Recreation, Inc. and subsidiary at December 31, 1997 and 1998, and the results
of its operations and its cash flows for the years ended December 31, 1996,
1997 and 1998 in conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
Orlando, Florida
January 8, 1999, except for Note 11 and Note 1(B),
as to which the dates are January 22, 1999 and
February , 1999, respectively.
F-2
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
------------------------------------------------
1998
1998 Pro Forma
1997 Actual (unaudited)
------------- --------------- --------------
<S> <C> <C> <C>
Assets
Current:
Cash and cash equivalents .................................. $ 307,463 $ 1,139,269 $ 1,139,269
Accounts receivable, less allowance for possible
losses of $42,000 and $27,000, respectively ............... 426,972 641,606 641,606
Inventories ................................................ 6,748,035 13,702,083 13,702,083
Prepaid expenses ........................................... 10,825 19,620 19,620
Deferred income taxes ...................................... -- -- 106,000
----------- ------------ ------------
Total current assets .......................................... 7,493,295 15,502,578 15,608,578
Property and equipment, less accumulated depreciation ......... 2,132,231 2,743,989 2,743,989
Other assets .................................................. 54,983 728,560 728,560
----------- ------------ ------------
$ 9,680,509 $ 18,975,127 $ 19,081,127
=========== ============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Floorplan payable .......................................... $ 6,250,903 $ 13,220,476 $ 13,220,476
Line of credit ............................................. 500,000 1,894,289 1,894,289
Accounts payable ........................................... 226,988 367,760 367,760
Customer deposits .......................................... 16,631 5,474 5,474
Accrued expenses ........................................... 225,525 310,272 310,272
Dividend payable ........................................... -- -- 550,000
Current maturities of long-term debt ....................... 102,104 246,428 246,428
----------- ------------ ------------
Total current liabilities ..................................... 7,322,151 16,044,699 16,594,699
----------- ------------ ------------
Long-term debt, less current maturities ....................... 1,220,251 1,453,276 1,453,276
----------- ------------ ------------
Deferred income taxes ......................................... -- -- 2,000
Commitments and contingencies ................................. -- -- --
Stockholders' equity:
Preferred stock, $.01 par (1,500,000 shares authorized,
no shares outstanding) .................................... -- -- --
Common stock, $.01 par (20,000,000 shares autho-
rized, 1,840,344 shares issued and outstanding) ........... 18,403 18,403 18,403
Additional paid-in capital ................................. 453,077 453,077 1,012,749
Retained earnings .......................................... 666,627 1,005,672 --
----------- ------------ ------------
Total stockholders' equity .................................... 1,138,107 1,477,152 1,031,152
----------- ------------ ------------
$ 9,680,509 $ 18,975,127 $ 19,081,127
=========== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Consolidated Statements of Income
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1996 1997 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Sales and service revenue ............................ $13,058,313 $20,183,674 $24,228,492
Finance and insurance income ......................... 591,014 1,042,795 1,334,164
----------- ----------- -----------
Total revenue ...................................... 13,649,327 21,226,469 25,562,656
Cost of sales and service revenue .................... 10,544,193 16,327,484 19,082,436
----------- ----------- -----------
Gross profit ....................................... 3,105,134 4,898,985 6,480,220
Selling, general and administrative expenses ......... 2,492,775 4,084,993 5,418,407
----------- ----------- -----------
Income from operations ............................. 612,359 813,992 1,061,813
Other income ......................................... 10,115 33,481 66,480
Interest expense ..................................... (239,362) (333,958) (524,720)
----------- ----------- -----------
Net income ........................................... $ 383,112 $ 513,515 $ 603,573
=========== =========== ===========
Pro forma net income (unaudited):
Historical income before taxes on income .......... $ 383,112 $ 513,515 $ 603,573
Pro forma taxes on income (unaudited) ............. 150,000 198,000 232,000
----------- ----------- -----------
Pro forma net income (unaudited) ..................... $ 233,112 $ 315,515 $ 371,573
----------- ----------- -----------
Pro forma net income per common share (unaudited):
Basic ............................................. $ .19
Diluted ........................................... $ .16
===========
Pro forma weighted average common shares outstanding
(unaudited):
Basic ............................................. 1,924,959
Diluted ........................................... 2,266,410
===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Common Stock
----------------------------- Paid-in Retained
Shares Amount Capital Earnings
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 ............ 1,840,844 $18,408 $453,072 $ --
Net income .......................... -- -- -- 383,112
Stockholder distributions ........... -- -- -- (185,000 )
--------- ------- -------- ------------
Balance, December 31, 1996 ............ 1,840,844 18,408 453,072 198,112
Repurchase and retirement of
minority shares ................... (500) (5) (3,195) --
Capital contribution ............... -- -- 3,200 --
Net income ......................... -- -- -- 513,515
Stockholder distributions .......... -- -- -- (45,000 )
--------- -------- -------- ------------
Balance, December 31, 1997 ......... 1,840,344 18,403 453,077 666,627
Net income ......................... -- -- -- 603,573
Stockholder distributions .......... -- -- -- (264,528)
--------- -------- -------- ------------
Balance, December 31, 1998 ............ 1,840,344 $18,403 $453,077 $1,005,672
========= ======== ======== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1996 1997 1998
------------ --------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income .................................................. $ 383,112 $ 513,515 $ 603,573
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation .............................................. 32,692 100,129 140,293
Amortization .............................................. 7,670 7,670 7,670
Reserve for inventory ..................................... -- 36,500 --
Bad debts ................................................. -- 67,893 65,163
Loss on disposal of property and equipment ................ 15,158 -- --
Cash provided by (used for):
Accounts receivable ...................................... 168,351 (374,176) (279,797)
Inventories .............................................. (199,875) (1,868,008) (6,954,048)
Prepaid expenses ......................................... 3,633 (10,825) (8,795)
Accounts payable ......................................... (194,092) 198,704 140,772
Customer deposits ........................................ (368) (46,969) (11,157)
Accrued expenses ......................................... 85,253 125,321 84,747
---------- ------------ ------------
Net cash provided by (used for) operating activities ......... 301,534 (1,250,246) (6,211,579)
---------- ------------ ------------
Cash flows from investing activities:
Purchase of property and equipment .......................... (371,137) (167,001) (304,283)
Change in other assets ...................................... 2,780 (8,905) (5,216)
---------- ------------ ------------
Net cash used for investing activities ....................... (368,357) (175,906) (309,499)
---------- ------------ ------------
Cash flows from financing activities:
Payment of deferred offering costs........................... -- -- (676,031)
Net borrowings on floorplan ................................. 201,037 1,618,172 6,969,573
Net borrowings on line of credit ............................ 250,000 250,000 1,394,289
Repayment of long-term debt ................................. (72,192) (108,667) (70,419)
Repayment of related party long-term debt ................... -- (320,483) --
Payment of stockholder distributions ........................ (185,000) (45,000) (264,528)
---------- ------------ ------------
Net cash provided by financing activities .................... 193,845 1,394,022 7,352,884
---------- ------------ ------------
Increase (decrease) in cash and cash equivalents ............. 127,022 (32,130) 831,806
Cash and cash equivalents, beginning of period ............... 212,571 339,593 307,463
---------- ------------ ------------
Cash and cash equivalents, end of period ..................... $ 339,593 $ 307,463 $ 1,139,269
========== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998
1. Summary of Significant Accounting Policies
(A) Business Description
American Marine Recreation, Inc. (through a reorganization with Boat Tree,
Inc., as described further in Note 1(B) and 1(C) below) (the "Company")
currently operates a chain of six 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 11). In connection with
the proposed acquisitions (see Note 11), which the Company expects to close
upon the consummation of the Offering (see Note 1[B]), the Company will acquire
four additional dealerships in Florida, as well as the North Carolina
dealership referred to above.
(B) Proposed Public Offering and Reorganization
During 1998, Boat Tree, Inc. engaged attorneys and investment bankers to
assist it in the effectuation of an initial public offering of the common stock
of American Marine Recreation, Inc., a newly formed corporation (the
"Offering"). Boat Tree, Inc. has also initiated certain events (the
"Reorganization") in connection with the Offering which will result in it
becoming a wholly-owned subsidiary of American Marine Recreation, Inc. as of
the effective date of the Offering. The Reorganization will be accomplished
through a stock-for-stock exchange between American Marine Recreation, Inc. and
Boat Tree, Inc.
All of the outstanding shares of Boat Tree, Inc. will be exchanged for
2,181,795 shares of the Company's common stock (giving effect to the exercise
of the manufacturer's stock option described in Note 6). Consequently, upon the
effective date of the Offering and the related Reorganization, the consolidated
group will include the operations of American Marine Recreation, Inc. and its
wholly-owned subsidiary, Boat Tree, Inc.
(C) Basis of Financial Statement Presentation
The financial statements and related notes presented herein have been
retroactively adjusted to reflect the reorganization of Boat Tree, Inc. with
American Marine Recreation, Inc. The capital structure presented in these
financial statements is that of American Marine Recreation, Inc., but all other
information presented relates to the operations of Boat Tree, Inc., as American
Marine Recreation, Inc. had no operations during the periods presented and will
have no operations until the consummation of the Reorganization. All references
herein to "the Company" refer to American Marine Recreation, Inc. as
consolidated with Boat Tree, Inc.
(D) Balance Sheet Pro Forma Adjustments
In connection with the Reorganization, Boat Tree, Inc. will declare a
dividend (payable upon the closing of the Offering) to its stockholders
representing $550,000 of earned but undistributed earnings through the closing
date of the Reorganization. The Company's pro forma balance sheet as of
December 31, 1998 reflects a liability for the $550,000 dividends payable.
Concurrently with the Reorganization, the Company will terminate Boat
Tree's 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 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.
F-7
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
1. Summary of Significant Accounting Policies -- (Continued)
In connection with the termination of Boat Tree's 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 pro forma balance sheet as of
December 31, 1998 reflects an adjustment as if the Subchapter S corporation
status had terminated on December 31, 1998. As of that date, a net deferred tax
asset of approximately $104,000 would have been recognized as follows:
Current deferred tax assets:
Inventory .............................................. $ 44,000
Accrued expenses ....................................... 52,000
Allowance for possible losses .......................... 10,000
---------
Deferred tax asset -- current ............................. 106,000
---------
Long-term deferred tax asset -- intangible assets ......... 6,000
Long-term deferred tax liability -- depreciation .......... (8,000)
---------
Deferred tax liability -- noncurrent ...................... (2,000)
---------
Net current deferred tax asset ............................ $ 104,000
=========
The retained earnings on the pro forma balance sheet as of December 31,
1998 reflects an adjustment as if the subchapter S Corporation status had
terminated on December 31, 1998. As of that date all remaining earnings were
reclassified to additional paid in capital.
(E) Statement of Income Pro Forma Adjustments
Pro forma net income for the years ended December 31, 1996 through 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 and nondeductible expenses.
(F) 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 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 computed by dividing pro forma net income by
the basic and diluted weighted average number of common shares (see Note 9).
(G) 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.
F-8
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
1. Summary of Significant Accounting Policies -- (Continued)
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 period of change.
SFAS 133 is effective for all fiscal quarters of 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.
(H) 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 10).
F&I Products accounted for approximately 4%, 5% and 5% of the revenues and 19%,
21% and 21% of the Company's gross profit for the years ended December 31, 1996
through 1998, 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 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 deals with each of its manufacturers pursuant to annually
renewable, non-exclusive, dealer agreements. The Company purchased 52%, 65%,
and 69% of its new boats from one manufacturer during the years ended December
31, 1996, 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 required for the purchase
of 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.
F-9
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
1. Summary of Significant Accounting Policies -- (Continued)
(I) 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.
(J) Cash and Cash Equivalents
For financial presentation purposes, the Company considers short-term,
highly liquid investments with original maturities of three months or less to
be cash and cash equivalents.
Due to the seasonality of the boat industry, the Company's bank balances
may periodically exceed amounts that are federally insured. This risk is
mitigated by the Company's use of only high quality financial institutions.
(K) Inventories
Inventories consist of boats, motors, trailers and related parts and
accessories and water sport equipment and accessories. The Company's
inventories 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.
(L) 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.
(M) 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.
(N) Advertising Costs
Advertising costs, included in selling expenses, are expensed as incurred
and were $201,541, $208,051 and $287,724 for the years ended December 31, 1996,
1997 and 1998, respectively.
(O) 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.
(P) 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
F-10
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
1. Summary of Significant Accounting Policies -- (Continued)
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, which approximates its carrying
value, is estimated based upon the quoted market prices for the same or similar
debt instruments or on the current rates offered to the Company for debt of the
same remaining maturities.
2. Inventories
Inventories are summarized as follows:
December 31,
---------------------------
1997 1998
---------- -----------
New boats, motors and trailers ......... $6,036,114 $12,220,940
Used boats ............................. 519,977 1,222,527
Parts and accessories .................. 228,444 295,116
---------- -----------
6,784,535 13,738,583
Reserve for obsolescence ............... (36,500) (36,500)
---------- -----------
$6,748,035 $13,702,083
========== ===========
3. Property and Equipment
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------
Useful
Lives 1997 1998
----------- -------------- --------------
<S> <C> <C> <C>
Land ................................... -- $ 400,000 $ 756,390
Buildings and improvements ............. 8-31 yrs. 1,623,180 1,712,724
Machinery and equipment ................ 6-8 yrs. 70,977 104,849
Office equipment and furniture ......... 6-8 yrs. 112,269 210,046
Vehicles ............................... 6-12 yrs. 146,189 264,585
Signs .................................. 6 yrs. 20,000 33,443
Leasehold improvements ................. 10 yrs. -- 35,629
----------- -----------
2,372,615 3,117,666
Less accumulated depreciation .......... 240,384 373,677
----------- -----------
$ 2,132,231 $ 2,743,989
=========== ===========
</TABLE>
Depreciation expense for the years ended December 31, 1996, 1997 and 1998
was $32,692, $100,129 and $140,293, respectively.
4. Other Assets
Included in other assets at December 31, 1998 is approximately $676,000 of
deferred costs incurred during 1998 which relates to the Offering (see Note
1[B]). These costs will be applied against additional paid-in capital upon the
receipt of the proceeds from the Offering. If the Offering is not consummated,
the deferred costs will be charged to operations.
F-11
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
5. Borrowings
Floorplan Contracts
The Company finances substantially all of its new boat inventory through
floorplan financing arrangements, which are collateralized by the Company's new
boat inventory, accounts receivable, equipment and are personally guaranteed by
the Company's majority stockholder. The floorplan contracts are due upon the
sale of the related boat.
The Company has arranged for a free floorplan period whereby the floorplan
interest is paid by boat manufacturers 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 rates on floorplan
debt for the years ending December 31, 1996 through 1998 approximates 5%.
As of December 31, 1997 and 1998, the maximum borrowings allowable under
the floorplan contracts were $8,750,000 and $15,750,000, respectively, and
there were outstanding balances under such contracts of $6,250,903 and
$13,220,476, respectively. The following table summarizes certain information
about the Company's borrowings under the floorplan contracts:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1997 1998
------------- --------------
<S> <C> <C>
Maximum month-end borrowings outstanding during the period ......... $6,391,821 $13,220,476
Average borrowings outstanding during the period ................... $5,199,581 $ 7,962,315
========== ===========
</TABLE>
Lines of Credit
The Company is currently a party to three different line of credit
agreements. The following table summarizes certain information about each of
these borrowing facilities:
<TABLE>
<CAPTION>
Balance at December 31,
----------------------------
1997 1998
----------- --------------
<S> <C> <C>
$1,000,000 revolving line of credit, monthly interest payable at prime plus
1/2% (8 1/4% at December 31, 1998), unpaid principal and interest due
September 1999, collateralized by the Company's used boat inventory and
personally guaranteed by the Company's majority stockholder .................... $ 500,000 $ --
$2,000,000 revolving line of credit available through a floorplan lender, inter-
est accruing at the greater of the prime lending rate (73/4% at December 31,
1998) or 7%, all unpaid principal and interest due the earlier of (1)
December 2000, (2) the termination of the related floorplan financing
agreement, or (3) a 30-day written notice, collateralized by the Company's
used boat and parts inventory and personally guaranteed by the Company's
majority stockholder ........................................................... -- 1,594,289
$300,000 unsecured line of credit available from the Company's primary
supplier (see Note 6), interest accruing at 10%, all unpaid principal and
interest due August 1999, personally guaranteed by the Company's major-
ity stockholder ................................................................ -- 300,000
--------- -----------
$ 500,000 $ 1,894,289
========= ===========
</TABLE>
F-12
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
5. Borrowings -- (Continued)
The following table provides certain additional information about the
lines of credit:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1997 1998
-------------- ---------------
<S> <C> <C>
Maximum month-end borrowings outstanding during the period ......... $ 500,000 $ 1,894,289
Average borrowings outstanding during the period ................... $ 108,333 $ 724,524
Weighted average interest rate during the period ................... 8.88% 5.94%
========== ===========
</TABLE>
Long-Term Debt
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1997 1998
-------------- --------------
<S> <C> <C>
7.71% $1,150,000 mortgage note payable dated November 1995, principal
and interest of $9,488 due monthly through May 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 in an
amount that will fully amortize the outstanding loan balance by May 2016,
collateralized by certain real and tangible property of the Company and
personally guaranteed by the majority stockholder of the Company ............ $ 1,115,212 $ 1,087,534
8.5% $300,000 mortgage note payable dated June 1998, principal and interest
of $2,954 due monthly through June 2003, balloon payment of $241,658 due
July 2003, collateralized by certain real property of the Company ........... -- 294,071
5.0% $250,000 mortgage note payable dated November 1995, yearly principal
payments of $50,000 plus interest due December 1996 through December
1998, with 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 2003,
collateralized by certain vehicles and equipment of the Company ............. 57,143 168,099
----------- -----------
1,322,355 1,699,704
Less current maturities ......................................................... 102,104 246,428
----------- -----------
Total long-term debt ............................................................ $ 1,220,251 $ 1,453,276
=========== ===========
</TABLE>
Aggregate maturities of long-term debt over future years as of December
31, 1998 are as follows:
December 31,
-------------
1998
-------------
1999 $246,428
2000 90,113
2001 87,572
2002 67,743
2003 290,912
Thereafter 916,936
F-13
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
5. Borrowings -- (Continued)
Interest rates and interest expense related to the floorplan contracts,
lines of credit, and long-term debt are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------
1996 1997 1998
------------------ ---------------- -----------------
<S> <C> <C> <C>
Floor plan contracts:
Interest rates ........... 8.25% - 11.75% 8.60% - 12.45% 8.72% - 14.93%
Interest expense ......... $181,544 $226,011 $362,881
Line of credit:
Interest rates ........... 8.75% 8.75% - 9.00% 7.75% - 10.00%
Interest expense ......... $ 790 $ 11,535 $ 43,040
Long-term debt:
Interest rates ........... 5.00% - 12.00% 5.00% - 9.00% 5.00% - 9.00%
Interest expense ......... $ 57,028 $ 96,412 $118,799
</TABLE>
Debt Covenants
Included in the Company's $2,000,000 line of credit agreement (see Note 5)
are certain loan covenants. Specifically, the Company must maintain a ratio of
debt to tangible net worth of no more than 9.75 to 1. By March 31, 1999, this
ratio may not exceed 6.0 to 1. Additionally, the Company must maintain a
minimum cash balance of $250,000 through February 26, 1999, at which time the
minimum required balance will be increased to $1,000,000.
As of December 31, 1998, the Company was in compliance with the minimum
cash balance requirement but was in violation of the minimum debt to tangible
net worth ratio. Subsequently, the Company obtained a waiver of such violation
from the lender until April 1, 1999. The Company expects that it will be in
compliance with the required minimum debt to tangible net worth ratio upon the
consummation of the Offering,.
The Company's floorplan financing arrangements have similar debt to net
worth ratio requirements, which the Company was in violation of as of December
31, 1998. The Company has also received waivers until April 1, 1999 of such
violations from its floorplan lenders and expects that it will be in compliance
with the required ratios upon the consummation of the Offering.
6. Stock Options
Manufacturer's Stock Option
The Company entered into a stock option agreement in 1992 with its major
boat manufacturer (see Note 1[H]) 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, refrained from selling any new boat product
line that was directly competitive with any of the manufacturer's product
lines.
On September 1, 1998, the manufacturer agreed to reduce the amount of
stock purchasable under its option from a 25% interest to a 15.65% interest in
the Company. 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 also notified the
Company of its intent to exercise its option, contingent on the successful
completion of the Offering. Diluted earnings per share numbers presented in
these financial statements have been adjusted to give retroactive effect to the
change in this option.
F-14
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
6. Stock Options -- (Continued)
1998 Stock Option Plan
Effective August 1, 1998, the Company adopted the 1998 Stock Option Plan
(the "Option Plan") for its executive officers, key employees and consultants
and has reserved 430,000 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 Company's Board of Directors but
will, commencing upon the consummation of the Offering, be administered by the
Board's Compensation Committee. The exercise price for incentive stock options
may not be less than 100% of fair market value of shares of the Company's
common stock on the date of grant (110% of the fair market value in the case of
incentive stock options granted to employees who hold more than 10% 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 the Company's common stock on the
date of grant.
Options granted under the Option Plan may not have a term of more than ten
years (five years in the case of incentive stock options granted to employees
who hold more than 10% of the voting power of the Company's common stock).
Options generally terminate three months after the termination of the
optionee's employment with 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.
The Company granted (effective upon the consummation of the Offering)
options to purchase an aggregate of 352,000 shares of the Company's common
stock, 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 and options to purchase 70,000 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 Company's director nominees, and the balance was granted to various
of the Company's non-management employees. The exercise price of the options is
equal to the initial public offering price per share, and the options expire in
August 2008.
7. Employee Benefit Plan
On January 1, 1997, the Company adopted a 401(k) profit 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 and $23,100 for the years ended December 31, 1996, 1997 and 1998,
respectively.
8. Election Under Subchapter S
Prior to the Reorganization, Boat Tree elected, and its stockholders
consented, to include their respective share of taxable income of Boat Tree in
their individual tax returns. As a result, no federal or state income tax has
been imposed on Boat Tree. Substantially all of the balance of the Company's
retained earnings at December 31, 1998 represents previously taxed income which
may be distributed tax-free to Boat Tree's stockholders (see Note 1[D]).
9. Earnings per Share
Pro forma basic weighted average shares outstanding include 1,840,344
actual shares outstanding plus 84,615 shares that represent the approximate
number of shares of common stock being sold by the Company in
F-15
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
9. Earnings per Share -- (Continued)
the Offering in order to fund the final S corporation distribution of $550,000
based upon the assumed price of $6.50 per share (the midpoint of the currently
anticipated range of the public offering price). Pro forma diluted weighted
average shares outstanding include the effect of 341,451 shares of the
Company's common stock to be issued upon the exercise of the manufacturer's
stock option (see Note 6).
The Company's pro forma supplemental earnings per share is $.16 per share.
Pro forma supplemental weighted average shares outstanding equal the pro forma
diluted weighted average number of shares outstanding plus 46,154 shares, the
approximate number of shares of common stock being sold by the Company in the
Offering in order to fund the reduction in line of credit borrowings upon the
closing of the Offering. Supplemental net income is equal to pro forma net
income, less interest expense (net of taxes) related to the reduced borrowings.
The following table sets forth historical basic and diluted earnings per
share. Potential dilutive securities include 341,451 shares related to the
manufacturer's stock option (see Note 6).
<TABLE>
<CAPTION>
Weighted Average Earnings per
Number of Shares Common Share
------------------------- --------------------
Years Ended December 31, Basic Diluted Basic Diluted
- -------------------------- ----------- ----------- --------- --------
<S> <C> <C> <C> <C>
1996 1,840,844 2,182,295 $ .21 $ .18
1997 1,840,344 2,181,795 $ .28 $ .24
1998 1,840,344 2,181,795 $ .33 $ .28
</TABLE>
10. Commitments and Contingencies
Leases
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 an
entity owned, in part, by the majority stockholder. The related monthly rent
was based on the number of boats sold by the Company. Beginning in August 1998,
the monthly rent became fixed at $4,000. This lease expires March 31, 2006. The
Company paid $71,060 under this lease in 1998. The Company has agreed to
purchase the boat storage area upon the closing of the Offering for a $400,000
note payable. The note payable will bear interest at the prime rate and is due
18 months from the date of transfer of the ownership.
Rental expense under all operating leases was approximately $118,000,
$158,000 and $419,000 for the years ended December 31, 1996, 1997 and 1998,
respectively.
F-16
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
10. Commitments and Contingencies -- (Continued)
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,
-------------
1998
-------------
1999 $ 408,573
2000 371,999
2001 349,186
2002 249,723
2003 110,880
Thereafter 114,480
----------
Total minimum lease payments $1,604,841
==========
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
allowance for chargebacks. In determining the amount of the allowance for
chargebacks, the Company takes into consideration the total customer loans
outstanding and estimates of the exposure for potential chargebacks associated
with these loans.
This process includes an estimate on the probability for loan payoffs
based on historical loan payoff 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 an analysis of these factors, the Company has determined that an
allowance for chargebacks is unnecessary at December 31, 1997 and 1998. Actual
finance chargebacks were approximately $4,000, $13,000 and $8,000 for the years
ended December 31, 1996, 1997 and 1998, respectively.
Beginning in 1996 and ceasing in April 1998, the Company's use of a
"dealer rebate" 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
F-17
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
10. Commitments and Contingencies -- (Continued)
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. During
1997, the Company accrued approximately $86,000 for estimated foreclosure
losses related to such loans. As of December 31, 1998, this accrual balance has
remained unchanged. During the years ended December 31, 1997 and 1998, the
Company charged earnings approximately $86,000 and $33,000 related to these
foreclosure losses.
11. Proposed Acquisitions
Marine America, Inc.
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
transaction, 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 December 31, 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 the Company 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 1/2% mortgage note payable for $300,000 (see Note 5).
Upon its inception, MAI entered into a management agreement with the
Company, 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 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 year ended
December 31, 1998, the Company earned management fees of approximately
$134,000, which have been included in Sales and Service Revenue.
MAI has agreed to redeem all of its common stock owned by Lakewood for
$125,000 prior to the closing of the Offering (see Note 1[B]). MAI intends to
borrow $25,000 from the Company and issue a note payable for $100,000 to
Lakewood to fund this stock redemption. After the redemption, the Company's
majority stockholder and his son will own 100% of MAI. The Company has agreed
to exchange 1,538 shares of its common stock valued at $10,000, based upon the
offering price of $6.50 per share, for all the outstanding common stock of MAI
as of the closing of the Offering and will repay the $100,000 note payable from
the proceeds of the Offering.
Treasure Coast Boating Center, Inc. and Related Real Estate
On January 22, 1999, the Company entered into an agreement with Treasure
Coast Boating Center, Inc. ("Treasure Coast") , an unaffiliated third party, to
acquire substantially all of the assets of Treasure Coast together with related
real property owned by an affiliate of Treasure Coast on which a retail boat
dealership is located. Treasure Coast operates four retail boat dealerships in
Florida. The Company will acquire substantially all of the
F-18
<PAGE>
American Marine Recreation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Information as of December 31, 1997 and 1998 and for the
Years Ended December 31, 1996, 1997 and 1998 -- (Continued)
11. Proposed Acquisitions -- (Continued)
assets of Treasure Coast upon the consummation of the Offering for an aggregate
purchase price of $2,911,000 plus the cost of Treasure Coast's inventory on
such date. The Company has the option of paying $350,000 of the purchase price
in shares of common stock based upon the initial public offering price per
share. The acquisition will be accounted for using the purchase method and the
purchase price includes goodwill estimated at $1,650,000. In connection with
the Treasure Coast acquisition, the Company is entering into a three-year
employment agreement with D. Thomas Grane, the principal of Treasure Coast,
which provides for a base salary of $78,000 plus an amount equal to 10% of the
net income of the four locations operated by Treasure Coast.
12. Subsequent Event
In January 1999, an entity owned in part by the Company's majority
stockholder agreed to advance the Company up to $400,000 under a promissory
note agreement for working capital purposes. Interest on the promissory note is
payable at the rate of 12% per annum and is payable, together with the
principal sum, on demand, commencing after March 31, 2000.
13. Supplemental Cash Flow Information
For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
The following summarizes noncash investing and financing transactions:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1996 1997 1998
------------- ------------ ------------
<S> <C> <C> <C>
Cash paid for interest ..................................... $ 196,315 $ 377,005 $ 494,719
========== ========= =========
Noncash investing and financing activities:
Purchase of fixed assets through the assumption of long-
term debt .............................................. $1,173,559 $ 53,269 $ 447,768
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-19
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Treasure Coast Boating Center, Inc.
Stuart, Florida
We have audited the accompanying balance sheet of Treasure Coast Boating
Center, Inc. as of December 31, 1998, and the related statements of operations,
shareholder's equity and cash flows for the years ended December 31, 1997 and
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Treasure Coast Boating Center,
Inc. at December 31, 1998, and the results of its operations and its cash flows
for the years ended December 31, 1997 and 1998, in conformity with generally
accepted accounting principles.
Feldman Sherb Ehrlich & Co.. P.C
Certified Public Accountants
New York, New York
January 15, 1999, except
for Note 10 as to which
the date is January 22, 1999
F-20
<PAGE>
TREASURE COAST BOATING CENTER, INC.
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Accounts receivable, less allowance for doubtfull accounts of $4,184 ................. $ 199,720
Inventories .......................................................................... 7,226,486
----------
Total current assets .............................................................. 7,426,206
PROPERTY AND EQUIPMENT, net ............................................................. 245,740
OTHER ASSETS:
Loan to shareholder .................................................................. 122,486
Deposits ............................................................................. 42,324
----------
$7,836,756
==========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Cash overdraft ....................................................................... $ 8,237
Accounts payable and accrued expenses ................................................ 317,737
Floor plan financing ................................................................. 6,371,979
Notes payable ........................................................................ 143,900
Other liabilities .................................................................... 107,393
Note payable to related party ........................................................ 26,325
Current portion of long-term debt .................................................... 5,820
----------
Total current liabilities ......................................................... 6,981,391
----------
LONG TERM DEBT .......................................................................... 26,224
SHAREHOLDER'S EQUITY:
Common stock, $.01 par value -- shares authorized 100,000 shares, issued and
outstanding 10,000 shares ........................................................... 100
Additional paid-in capital ........................................................... 105,291
Retained earnings .................................................................... 723,750
----------
Total shareholder's equity ........................................................ 829,141
----------
$7,836,756
==========
</TABLE>
See notes to financial statements.
F-21
<PAGE>
TREASURE COAST BOATING CENTER, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------
1997 1998
------------- --------------
<S> <C> <C>
NET SALES ............................................ $9,725,996 $17,800,853
COST OF SALES ........................................ 7,815,152 13,756,752
---------- -----------
GROSS PROFIT ......................................... 1,910,844 4,044,101
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ......... 1,745,761 3,041,504
DEPRECIATION ......................................... 18,982 48,653
---------- -----------
INCOME FROM OPERATIONS ............................... 146,101 953,944
INTEREST EXPENSE, net ................................ (156,270) (204,130)
---------- -----------
NET INCOME (LOSS) .................................... $ (10,169) $ 749,814
========== ===========
</TABLE>
See notes to financial statements.
F-22
<PAGE>
TREASURE COAST BOATING CENTER, INC.
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Common Stock
------------------- Additional Retained
Shares Amount Paid-in Capital Earnings Total
-------- -------- ----------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997 ........... 10,000 $100 $105,291 $ 82,453 $ 187,844
Net loss ........................ -- -- -- (10,169) (10,169)
Distributions ................... -- -- -- (17,604) (17,604)
------ ---- -------- --------- ---------
Balance, December 31, 1997 ......... 10,000 100 105,291 54,680 160,071
Net income ...................... -- -- -- 749,814 749,814
Distributions ................... -- -- -- (80,744) (80,744)
------ ---- -------- --------- ---------
Balance, December 31, 1998 ......... 10,000 $100 $105,291 $ 723,750 $ 829,141
====== ==== ======== ========= =========
</TABLE>
See notes to financial statements
F-23
<PAGE>
TREASURE COAST BOATING CENTER, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1997 1998
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) .......................................................... $ (10,169) $ 749,814
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation ............................................................ 18,982 48,653
Change in assets and liabilities:
(Increase) decrease in accounts receivable .............................. 25,162 (114,392)
Increase in inventories ................................................. (3,068,378) (2,128,183)
Increase in other assets ................................................ (15,000) (27,324)
Increase (decrease) in accounts payable and accrued expenses ............ 447,761 (354,066)
Increase in other liabilities ........................................... 4,243 33,565
------------ ------------
Net cash used in operating activities ......................................... (2,597,399) (1,791,933)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ....................................................... (201,744) (33,227)
------------ ------------
Net cash used in investing activities ......................................... (201,744) (33,227)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in floor plan financing ........................................... 3,041,476 2,039,507
Increase in overdraft ...................................................... -- 8,237
Increase in notes payable .................................................. 142,500 3,793
Repayments of debt ......................................................... (62,486) (413,550)
Increase in loan to shareholder ............................................ -- (119,097)
Distribution to shareholder ................................................ (17,604) (80,744)
------------ ------------
Net cash provided by financing activities ..................................... 3,103,886 1,438,146
------------ ------------
Net increase (decrease) in cash ............................................... 304,743 (387,014)
Cash, at beginning of year .................................................... 82,271 387,014
------------ ------------
Cash, at end of year .......................................................... $ 387,014 $ --
============ ============
SUPLEMENTARY CASH FLOW DISCLOSURE
Interest paid .............................................................. $ 156,270 $ 207,018
============ ============
</TABLE>
See notes to financial statements
F-24
<PAGE>
TREASURE COAST BOATING CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 and 1997
1. ORGANIZATION
Treasure Coast Boating Center, Inc. (the "Company") was incorporated in
1992 under the laws of the State of Florida. The Company operates a chain of
dealerships in Florida engaged in retail sales and service of new and used 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Recent Accounting Pronouncements -- In June 1997, the Financial
Accounting Standards Board issued "Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"), and No. 131,
Disclosures about Segments of an Enterprise and Related Information" ("SFAS
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. 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 "Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires companies
to recognize all derivative 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 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 the financial statements.
B. 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.
C. Inventories -- Inventories, consisting primarily of boats, motors,
trailers and related parts and accessories as well as water sport equipment and
accessories, are stated 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 accessories is determined using the first-in, first-out
(FIFO) method.
D. Property and Equipment -- Property and Equipment are stated at cost,
less accumulated depreciation. Depreciation is computed over the estimated
useful lives of the assets using the straight-line method which ranges from 3
to 5 years. Leasehold improvements are amortized on a straight-line basis over
the shorter of their useful lives or the term of the related lease.
E. Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
F. Long Lived Assets -- The Company has adopted "Statement of Financial
Accounting Standards No. 121, ("SFAS, No. 121"), Accounting for the Impairment
of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of. In
accordance with this statement, the Company evaluates the recovery of the
carrying amount of its long-lived assets, whenever events or changes in
circumstances indicate that the carrying amount of such assets
F-25
<PAGE>
TREASURE COAST BOATING CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 and 1997 -- (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)
may not be fully recoverable. If this review indicates that the carrying value
of the assets will not be recoverable, as determined based on the estimated
non-discounted cash flows of the Company over their remaining estimated useful
lives, the carrying amount is reduced by the estimated shortfall of cash flows.
The adoption of SFAS 121 did not impact the financial statements of the
Company.
G. Income Taxes -- The shareholders of the Company have elected to be
taxed as an S Corporation, as defined in the Internal Revenue Code. Such status
was also elected for state tax purposes. Under this status, taxable income is
passed through and taxed at the shareholder level, rather than at the corporate
level.
H. 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, which approximates its
carrying value, is estimated based upon the quoted market prices for the same
or similar debt instruments or on the current rates offered to the Company for
debt of the same remaining maturities.
I. Concentration of Risk -- 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 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 deals with each of its manufacturers pursuant to annually
renewable, non-exclusive, dealer agreements.
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 required for the purchase
of 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 it requirements.
3. INVENTORIES
At, December 31, 1998, inventories are comprised of the following:
New boats, motors and trailers ......... $ 6,375,599
Used boats ............................. 537,103
Parts and accessories .................. 313,784
-----------
$ 7,226,486
===========
F-26
<PAGE>
TREASURE COAST BOATING CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 and 1997 -- (Continued)
4. PROPERTY AND EQUIPMENT
At, December 31, 1998, property and equipment is comprised of the
following:
Airplane ............................... $ 167,324
Equipment .............................. 95,904
Vehicles ............................... 41,855
Leasehold improvements ................. 49,471
Furniture and fixtures ................. 6,260
----------
360,814
Less: Accumulated depreciation ......... (115,074)
----------
$ 245,740
==========
5. SHORT-TERM BORROWINGS
Floorplan Contracts
The Company finances substantially all of its new and used boat inventory
through floorplan financing arrangements which are collateralized by the
Company's boat inventory, accounts receivable, equipment and a personal
guaranty from the shareholder. The floorplan contracts are due upon the sale of
the related boat. The interest rates during the periods on floorplan debt
ranged from prime + .50% to prime plus 2.50%.
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.
The maximum borrowings allowable under the floorplan contracts was
$7,000,000, as of December 31, 1998, of which $6,371,979 was outstanding at
year end.
6. OPERATING LEASES
The Company leases property, vehicles and office equipment under
noncancelable operating leases expiring in various years through 2003. The
leases require the Company to pay maintenance, taxes and insurance. The Company
leases its primary operating facility from a corporation which is owned by its
shareholder. The lease extends through April 2003. Lease payments to the
corporation approximated $90,000 and $75,000 in 1997 and 1998 respectively.
During the years ended December 31, 1997 and 1998, rent expense were $345,778
and $535,303 respectively.
Future minimum rental commitments under long-term noncancelable operating
leases are as follows:
Year ending December 31,
- --------------------------
1999 ................... $ 345,437
2000 ................... 123,062
2001 ................... 70,604
2002 ................... 70,604
2003 ................... 17,651
---------
$ 627,358
=========
F-27
<PAGE>
TREASURE COAST BOATING CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 and 1997 -- (Continued)
7. NOTES PAYABLE
Notes payable are summarized as follows:
<TABLE>
<S> <C>
Demand loan payable with interest at 10.25%, collateralized by
the company's airplane ...................................... $125,000
Demand loan payable with interest at 10% ..................... 18,900
--------
$143,900
========
</TABLE>
8. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<S> <C>
Auto loan, payable in monthly principal payments of $694 including
interest at 8.1% with a balloon payment of $25,188 due on March
29, 2000 ........................................................ $ 32,044
--------
32,044
Less current maturities .......................................... 5,820
--------
$ 26,224
========
</TABLE>
Maturities on long-term debt are as follows:
1999 ................. $ 5,820
2000 ................. 26,224
9. RELATED PARTY TRANSACTIONS
The Company has an unsecured, interest free receivable from its
shareholder, of $122,486 payable on demand.
The Company has a loan payable on demand with interest rate of 15% from
its shareholder's wife in 1998 of $26,325.
10. PROPOSED ACQUISITION
On January 22, 1999 the Company entered into an agreement with American
Marine Recreation, Inc. ("AMRI") to sell substantially all its net assets for
$1,800,000 cash paid at closing. Under the terms of the agreement, the
acquisition will be consummated at the close of American Marine Recreation,
Inc.'s public offering. AMRI has also agreed to acquire real property owned by
an affiliate of the Company.
F-28
<PAGE>
===============================================================================
No dealer, sales representative or other person has been authorized 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 ....................... 3
Risk Factors ............................. 13
Use of Proceeds .......................... 21
Dilution ................................. 22
Dividend Policy .......................... 23
Capitalization ........................... 24
Pro Forma Financial Data ................. 25
Selected Financial Data .................. 29
Management's Discussion and Analysis
of Financial Condition and Results of
Operations ............................ 31
Business ................................. 38
Management ............................... 46
Principal Stockholders ................... 50
Certain Transactions ..................... 52
Description of Securities ................ 54
Shares Eligible for Future Sale .......... 55
Underwriting ............................. 57
Legal Matters ............................ 59
Experts .................................. 59
Additional Information ................... 59
Index to Financial Statements ............ F-1
-----------------------------------
Until , 1999 (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>
===============================================================================
2,150,000 Shares
American Marine
Recreation, Inc.
Common Stock
----------------------------------------
PROSPECTUS
----------------------------------------
BlueStone Capital Partners, L.P.
Auerbach, Pollak & Richardson, Inc.
, 1999
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. 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.
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......................................................... 1,664,625
=========
* To be provided by amendment.
Item 14. 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.
II-1
<PAGE>
Item 15. Recent Sales of Unregistered Securities.
In the past three years, the Company has not made any sales of
unregistered securities.
Item 16. Exhibits and Financial Statement Schedules.
The following documents (unless indicated) are filed herewith and made
a part of this Registration Statement.
<TABLE>
<CAPTION>
(a) Exhibits
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.
2.3 -- Asset Purchase Agreement dated January 22, 1999 by and among Treasure Coast Boating Center, Inc.,
Treasure Coast Boating Services, Inc., & Thomas D. Grane and American Marine of South Florida, Inc. &
American Marine Recreation, Inc.*
2.4 -- Amendment No. 1 to Exchange Agreement among Joseph G. Pozo, Jr., Joseph John Pozo and American
Marine Recreation, Inc.*
2.5 -- Amendment No. 1 to Exchange Agreement 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 Verde) 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 Melven R. Nehleber and the Company.*
10.16 -- Agreement dated September 1, 1998 among Regal Marine Industries, Inc., the Company and
Joseph G. Pozo, Jr.
10.17 -- Contract of Sale between JCJ Family Partnership L.P., Ltd. and the Company.*
10.18 -- Expanded Schedule Rider to the Inventory and Security Agreement dated July 1, 1992 between Boat Tree, Inc. and
TransAmerica Commercial Finance Corporation.*
10.19 -- Financial Consulting Agreement between the Company and the Underwriter.*
10.20 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing
business as Regal Boats, and American Marine Recreation, Inc. doing business as Boattree for Volusia and
Flagler Counties.*
10.21 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing business
as Regal Boats, and American Marine Recreation, Inc., doing business as Boattree for Brevard County.*
10.22 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing business
as Regal Boats, and American Marine Recreation, Inc., doing business as Boattree for Orange, Seminole, Osceola
and Lake Counties.*
10.23 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing business
as Regal Boats, and American Marine Recreation, Inc., doing business as Boattree for Hillsborough and Pinellas
Counties.*
10.24 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing business
as Regal Boats, and American Marine Recreation, Inc., doing business as Boattree for St. Johns, Duval, Nassau,
Clay and Putnam Counties.*
10.25 -- Lease and Right of First Refusal Agreement dated December 1, 1998 for property located in Pompano Beach, Florida
between Ronald L. Fedor as Lessor and Treasure Coast Boating Center, Inc. as Lessee.*
10.26 -- Lease dated December 1, 1998 for property located in Pinellas Park, Florida between James E. McFrederick and
Patsy McFrederick as Landlord and Boat Tree, Inc. as Tenant.*
10.27 -- Guarantee dated July 1, 1992 by Joseph G. Pozo, Jr. as Guarantor and Transamerica Commercial Finance Corporation
to any loan or other financial accommodation made by Transamerica Finance Corporation to Boat Tree, Inc.*
10.28 -- Guaranty (Arbitration) dated October 7, 1992 by Joseph G. Pozo, Jr. as Guarantor and ITT Commercial Finance
Corp. to any financing provided or to be provided to Boat Tree, Inc.*
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.29 -- Lease dated December 22, 1998 for property located in Tequesta, Florida by and between Seagate Land Trust as
Landlord and Treasure Coast Boating Center, Inc. as Tenant.*
10.30 -- Promissory Note between Boat Tree, Inc. as Maker and JCJ Family Partnership as Payee.*
10.31 -- Agreements between Gary E. Stein and Joseph G. Pozo, Jr.**
23.1 -- Consent of BDO Seidman, LLP*
23.2 -- Consent of Feldman Sherb Ehrlich & Co., P.C.*
23.3 -- Consent of McLaughlin & Stern, LLP (contained in Exhibit 5.1)**
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 -- Financial Schedules - Schedule II Valuation and Qualifying Accounts*
</TABLE>
* Filed herewith.
** To be filed by Amendment.
<PAGE>
Item 17. Undertakings.
1. The Company hereby undertakes:
(a) To file, during any period in which the Company offers or
sales are being made, 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 arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) 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 Amendment No. 1 to Form SB-2 on Form S-1 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
January 26, 1999.
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 January 26, 1999
Joseph G. Pozo, Jr.
/s/ Gary E. Stein Executive Vice President, Secretary and
- ------------------------------- Director January 26, 1999
Gary E. Stein
/s/ Melven R. Nehleber Chief Financial Officer and Treasurer
- ------------------------------- (principal accounting officer) January 26, 1999
Melven R. Nehleber
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
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.
2.3 -- Asset Purchase Agreement dated January 22, 1999 by and among Treasure Coast Boating Center, Inc.,
Treasure Coast Boating Services, Inc., & Thomas D. Grane and American Marine of South Florida, Inc. &
American Marine Recreation, Inc.*
2.4 -- Amendment No. 1 to Exchange Agreement among Joseph G. Pozo, Jr., Joseph John Pozo and American
Marine Recreation, Inc.*
2.5 -- Amendment No. 1 to Exchange Agreement 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 Verde) 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 Melven R. Nehleber and the Company.*
10.16 -- Agreement dated September 1, 1998 among Regal Marine Industries, Inc., the Company and
Joseph G. Pozo, Jr.
10.17 -- Contract of Sale between JCJ Family Partnership L.P., Ltd. and the Company.*
10.18 -- Expanded Schedule Rider to the Inventory and Security Agreement dated July 1, 1992 between Boat Tree, Inc. and
TransAmerica Commercial Finance Corporation.*
10.19 -- Financial Consulting Agreement between the Company and the Underwriter.*
10.20 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing
business as Regal Boats, and American Marine Recreation, Inc. doing business as Boattree for Volusia and
Flagler Counties.*
10.21 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing business
as Regal Boats, and American Marine Recreation, Inc., doing business as Boattree for Brevard County.*
10.22 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing business
as Regal Boats, and American Marine Recreation, Inc., doing business as Boattree for Orange, Seminole, Osceola
and Lake Counties.*
10.23 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing business
as Regal Boats, and American Marine Recreation, Inc., doing business as Boattree for Hillsborough and Pinellas
Counties.*
10.24 -- Sales and Service Agreements dated September 1, 1998 between Regal Marine Industries Incorporated, doing business
as Regal Boats, and American Marine Recreation, Inc., doing business as Boattree for St. Johns, Duval, Nassau,
Clay and Putnam Counties.*
10.25 -- Lease and Right of First Refusal Agreement dated December 1, 1998 for property located in Pompano Beach, Florida
between Ronald L. Fedor as Lessor and Treasure Coast Boating Center, Inc. as Lessee.*
10.26 -- Lease dated December 1, 1998 for property located in Pinellas Park, Florida between James E. McFrederick and
Patsy McFrederick as Landlord and Boat Tree, Inc. as Tenant.*
10.27 -- Guarantee dated July 1, 1992 by Joseph G. Pozo, Jr. as Guarantor and Transamerica Commercial Finance Corporation
to any loan or other financial accommodation made by Transamerica Finance Corporation to Boat Tree, Inc.*
10.28 -- Guaranty (Arbitration) dated October 7, 1992 by Joseph G. Pozo, Jr. as Guarantor and ITT Commercial Finance
Corp. to any financing provided or to be provided to Boat Tree, Inc.*
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.29 -- Lease dated December 22, 1998 for property located in Tequesta, Florida by and between Seagate Land Trust as
Landlord and Treasure Coast Boating Center, Inc. as Tenant.*
10.30 -- Promissory Note between Boat Tree, Inc. as Maker and JCJ Family Partnership as Payee.*
10.31 -- Agreements between Gary E. Stein and Joseph G. Pozo, Jr.**
23.1 -- Consent of BDO Seidman, LLP*
23.2 -- Consent of Feldman Sherb Ehrlich & Co., P.C.*
23.3 -- Consent of McLaughlin & Stern, LLP (contained in Exhibit 5.1)**
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 -- Financial Schedules - Schedule II Valuation and Qualifying Accounts*
</TABLE>
* Filed herewith.
** To be filed by Amendment.
<PAGE>
AMERICAN MARINE RECREATION, INC.
2,150,000 Shares of Common Stock
($.01 par value per share)
UNDERWRITING AGREEMENT
----------------------
New York, New York
________ __, 1999
BlueStone Capital Partners, L.P.
Auerbach, Pollak & Richardson, 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 Auerbach, Pollak &
Richardson, Inc. are acting as representatives (hereinafter sometimes referred
to together as the "Representatives"), two million one hundred fifty thousand
(2,150,000) 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-two thousand five hundred (322,500) 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 fifteen thousand (215,000) Common Shares (the "Warrant Shares") at an
exercise price of $___ [140% 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 $____ [7.5%
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
$215.00. 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 other than Boat Tree, Inc., a corporation duly organized and validly
existing under the laws of the State of Florida ("Boat Tree"), and, as of the
Closing Date, will have no subsidiaries other than 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 S-1 set forth in the General Instructions to Form S-1 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. 333-62699) on Form S-1 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 representations and warranties of the
Company, Treasure Coast Boating Center, Inc. ("Treasure Coast"), Treasure Coast
Boating Services, Inc. ("TCBS") and D. Thomas Grane contained in the agreement
dated January 22, 1999, by and among the Company, Treasure Coast, TCBS and D.
Thomas Grane are true, accurate and complete in all material respects as of the
date hereof and all conditions to the consummation of the Treasure Coast
Acquisition (as defined in the Prospectus) have been satisfied.
(ac) The representations and warranties of the
Company and Marine America, Inc. contained in the agreement dated __________ ,
1999 between the Company and Marine America, Inc., are true, accurate and
complete in all material respects as of the date hereof and all conditions to
the consummation of the Marine America Acquisition (as defined in the
Prospectus) have been satisfied.
(ad) The Reorganization (as defined in the
Prospectus) has been completed on the terms described in the Prospectus.
(ae) 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 $250,000) 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.
(z) On or prior to the Closing Date, the Company
will complete the Closing Acquisitions (as defined in the Prospectus) on the
terms described in the Prospectus.
(aa) The Company agrees to employ BlueStone or a
designee of BlueStone as a financial consultant on a non-exclusive basis for a
period of two years from the Closing Date, pursuant to a separate written
Consulting Agreement between the Company and BlueStone and/or such designee, at
an annual rate of One Hundred Thousand Dollars ($100,000) (exclusive of any
accountable out-of-pocket expenses), the entire Two Hundred Thousand Dollars
($200,000) payable in full, in advance, on the Closing Date. In addition, the
Consulting Agreement shall provide that the Company will pay BlueStone a
finder's fee in the event that BlueStone originates a merger, acquisition, joint
venture or other transaction to which the Company is a party. The Company
further agrees to deliver a duly and validly executed copy of said Consulting
Agreement, in form and substance acceptable to BlueStone, on the Closing Date.
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).
(l) On or prior to the Closing Date, the Company
shall have completed the Closing Acquisitions on the terms set forth in the
Prospectus.
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
AUERBACH, POLLAK & RICHARDSON, INC.
By:
------------------------------
Name:
Title:
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.
Auerbach, Pollak & Richardson, Inc.
Total 2,150,000
-38-
<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made this 22nd day of January, 1999, by and among
Treasure Coast Boating Center, Inc., a Florida corporation ("Boating"), Treasure
Coast Boating Services, Inc., a Florida corporation ("Services"),(Boating and
Services are sometimes collectively referred to as the "Seller") and D. Thomas
Grane ("Grane") American Marine of South Florida, Inc., a Florida Corporation
("Purchaser") and American Marine Recreation, Inc. ("AMRI").
WHEREAS, Seller now owns and operates four (4) boat dealerships (the
"Dealerships"; each a "Dealership") located in Florida for the sale and service
of new and used boats (the "Business"); and
WHEREAS, Buyer desires to purchase and receive from Seller, and Seller
desires to sell and assign to Buyer the Assets as more fully defined below;
NOW, THEREFORE, for and in consideration of good and valuable
consideration, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 List of Definitions. As used in this Agreement and in any
amendments, exhibits or schedules hereto unless otherwise defined therein, the
following capitalized terms shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
"Agreement" shall mean this Asset Purchase Agreement, including the
Exhibits and Schedules, as the same from time to time may be amended,
supplemented, modified or waived in writing.
"Assets" shall mean all assets, whether tangible or intangible, real or
personal, owned by Seller (or in any case in which Seller has some form of
property interest other than ownership and which are set forth in Schedule 1.1).
"Business" shall have the meaning set forth in the Recitals to this Agreement.
"Closing" shall refer to the closing to be held pursuant to Article 4 hereof.
"Closing Date" shall mean the date on which the Closing shall occur
which shall be agreed upon by the Parties, but which in no event shall be later
than February 28,1999 or the date on which Purchaser closes on its IPO,
whichever comes first.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE>
"Dealer's Internal Rate" shall mean (i) $30 per hour for labor and (ii)
parts at invoice cost plus 15%.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
amended to date.
"Exhibits" shall refer to the exhibits attached to this Agreement. Such
exhibits are hereby incorporated in this Agreement and made a part hereof by
this reference, and may be referred to in related instruments or documents
without being attached thereto.
"Financial Statements" shall mean the audited balance sheet and
statements of income, cash flow and retained earnings of Seller for the fiscal
years ended December 31, 1997 and 1998.
"GAAP"shall mean generally accepted accounting principles consistently
applied.
"IPO" shall mean the initial public offering of the capital stock of AMRI.
"Lease Assignments" shall mean assignments (in the form of Exhibit 1.1
hereto or in such other form as may be acceptable to the Parties and the other
parties to the respective leases) of the Leasehold Interests.
"Leasehold Interests" shall mean Seller's leasehold interests of real
property at: (x)18701 South Federal Highway, Jupiter, Florida 33469, (y) Vero
Beach, Florida (which is a month to month lease), and (z) 3101 North Federal
Highway, Pompano, Florida 33062.
"Manufacturer's Rebates and Co-Op Payments" are as described in the
retail dealer agreements between the Seller and the manufacturer's.
"Notice" shall mean actual written notice.
"Party" or "Parties" shall mean Purchaser and/or Seller.
"Purchase Price" shall mean the aggregate consideration to be paid by
Purchaser to Seller for the transfer of the Assets.
"Real Estate" shall mean that real estate located at 420 South Federal
Highway, Stuart Florida 34994, and described more fully in Schedule 1.1 hereto.
"Schedules" shall refer to the schedules attached to this Agreement.
Such schedules are hereby incorporated in this Agreement and made a part hereof
by this reference, and may be referred to in related instruments or documents
without being attached thereto.
"Stock Consideration" shall mean that many shares of AMRI's common
stock (rounded to the nearest whole number) such that when the number of shares
is multiplied by the price at which said stock is initially offered to the
public the product is Three Hundred Fifty Thousand Dollars ($350,000).
<PAGE>
"Transaction Documents" shall mean this Agreement and the agreements
and documents to be executed and delivered by one or both of the Parties
pursuant hereto.
1.2 Knowledge. Except as may be otherwise expressly specified herein,
the terms "information and belief" or "knowledge", or any similar phrase or term
shall mean the actual knowledge of the relevant Party (for the Seller, the
relevant Party shall be D. Thomas Grane), and the Parties confirm that they have
made due and diligent inquiry (specifically including inquiry of any persons
employed by the Party who are responsible for the matter in question) as to
matters that are the subject of such phrase or term.
ARTICLE 2
TERMS OF ACQUISITION
2.1 Sale and Transfer of Assets.
(a) Upon the terms and subject to the conditions of this
Agreement, at the Closing and effective as of the Closing
Date, Seller agrees to sell, convey, transfer, assign and
deliver to Purchaser, and Purchaser agrees to purchase from
Seller, the Assets.
(b) At the Closing, Seller shall transfer the Assets by delivering
a Bill of Sale and a Deed substantially in the form of
Exhibits 2.1a and 2.1b hereto.
(c) Seller and Purchaser agree that all of the Assets shall be
delivered to Purchaser, and Purchaser shall accept all of the
foregoing in "as is", "where is" condition on the Closing
Date, provided that, the foregoing shall not be deemed to
limit any express warranty or representation of Seller set
forth herein.
2.2 Risk of Loss. Risk of loss or damage to the Assets by fire or other
casualty shall be borne by Seller up to the time of the Closing and shall be
borne by Purchaser after the Closing.
ARTICLE 3
PURCHASE; PAYMENT
3.1 Purchase of Assets. The Purchase Price for the Assets shall be the sum
of the following:
(a) Two Million One Hundred Sixty One Thousand ($2,161,000) for
the Assets other than those described in ss.3.1(b)-(e), to be
paid as follows:
(i) $1,811,000 to be paid at the discretion of Purchaser, by certified
check or wire transfer at the Closing;
(ii) One of the following:
<PAGE>
A. In the event that as of the date of the Closing, the Purchaser has
closed the IPO the Stock Consideration; or
B. In the event that as of the date of the Closing, the Purchaser has not
closed the IPO a promissory note for $350,000 to be delivered at Closing in the
form of Exhibit 3.1 hereto, convertible by the Purchaser to the Stock
Consideration upon the occurrence of the IPO within one year of the Closing.
(i) The terms of the note shall be as follows: The note shall be secured by
the Assets to the extent of $350,000 and shall be payable 12 months from the
Closing.
(b) One Hundred Fifty Thousand Dollars ($150,000) for the Seller's
furniture, fixtures and equipment to be paid, at the
discretion of Purchaser, by certified check or wire transfer
at the Closing.
(c) The Inventory Component as defined in ss.3.2. to be paid, at
the discretion of Purchaser, by certified bank check, or wire
transfer at Closing.
(d) Six Hundred Thousand ($600,000) for the Real Estate to be
paid, at the discretion of Purchaser, by certified bank check,
or wire transfer at Closing or by the Purchaser taking the
Real Estate subject to the existing mortgage to the extent of
$600,000; and
(e) The amounts set forth below:
(i) the outstanding payments as of the Closing Date on the 1997 and 1999
Suburban; and
(ii) $8,000 for the 1992 Bronco.
3.2 Cost of Inventory.
(a) Prior to the Closing, Purchaser shall conduct a physical audit
of Seller's inventory to determine price to be paid for
Seller's inventory (the "Inventory Component") which shall be
calculated as follows:
(i) Seller's 1999 model new boat, motor and trailer
inventory will be valued at manufacturer's invoice
cost plus freight plus dealer installed options at
the Dealer's Internal Rate.
(ii) Seller's 1998 model new boat, motor and trailer
inventory will be valued at 92.5% of manufacturer's
invoice cost plus freight plus dealer installed
options at the Dealer's Internal Rate.
<PAGE>
(iii) Seller's 1997 model new boat, motor and trailer
inventory will be valued at 85% of manufacturer's
invoice cost plus freight plus dealer installed
options at the Dealer's Internal Rate.
(iv) The used boat, motor and trailer inventory will be
valued at 80% of the current low wholesale value as
published in the ABOS Marine Publishing Blue Book
published by Intertec Publishing, Overland Park, KS,
as reduced by Purchaser's cost of any repairs
necessary to bring the boat into salable condition.
(v) Parts shall be purchased under the following terms:
A. current parts as published in manufacturer's or distributor's latest
price books at manufacturer's invoice plus freight;
B. older parts and discontinued parts at 85% of manufacturer's invoice plus
freight;
C. obsolete parts, which Purchaser deems not functional for their intended
use, at liquidation value;
D. used parts shall be purchased at a mutually agreed upon price. Any used
part not purchased by the Purchaser may be sold by the Seller to a third party.
(vi) In determining the amount of the Inventory Component,
the parties shall deduct a figure equal to the sum of
all obligations assumed by Purchaser as contemplated
by ss.5.7.
At the Closing, the Parties shall execute a Schedule which shall set forth the
amount of the Inventory Component and its method of determination in reasonable
detail (the "Inventory Schedule").
(b) Within ten (10) days after written notice to Seller, Seller
hereby agrees to reimburse the Purchaser for any losses
incurred by the Purchaser on the sale of 1997 and 1998 new
boat, motor and trailer inventory. The amount of the
reimbursement shall be equal to the sales price less the sum
of (A) the cost of the unit sold, (B) all commissions paid by
the Purchaser on the sale of the unit (including salesman and
general manager), (C) interest on the cost of the unit at the
rate of 10% per annum, (D) dealer preparation and delivery
costs (based on the Dealer's Internal Rate) and (E) payroll
taxes related to the commissions.
(i) Section 3.2(b) shall not be applicable in the event
that Grane is not the president and does not have
authority over the sale of such inventory or hold a
similar office of Purchaser.
<PAGE>
3.3 Pending Purchases. The Purchaser shall be entitled to conclude any
transactions for which third party purchasers have entered into contracts with
Seller, but have not taken delivery and Purchaser shall receive all proceeds.
Notwithstanding the foregoing, within ten (10) days of the closing of such
transactions, the Purchaser shall pay to the Seller an amount equal to 50% of
the sales price less the sum of (A) the cost of the unit sold, (B) all
commissions paid by the Purchaser on the sale of the unit (including salesman
and general manager), (C) interest on the cost of the unit at the rate of 10%
per annum, (D) dealer preparation and delivery costs (based on the Dealer's
Internal Rate) and (E) payroll taxes related to the commissions.
3.4 Restriction on Transfer of Consideration Stock. Seller understands
that restrictions may be placed on its right to transfer the Stock Consideration
under Rule 144 promulgated under the Securities Act of 1933 as amended and/or
other provisions of Federal or state law, and Seller agrees to comply with all
such provisions. Seller understands and agrees that the certificate(s)
representing the Stock Consideration may bear a legend reflecting any applicable
restrictions. Such restrictions shall not limit the obligations of AMRI under
Section 3.7.
3.5 Allocation of Purchase Price. Each Party agrees that the allocation
of the Purchase Price among the Assets transferred under this Agreement shall be
as set forth herein and on Schedule 3.5, and not to make any statement to the
contrary to any third party, including, but not limited to, any governmental
authority, provided, however, that the Purchaser shall have the right to
reallocate the Purchase Price with respect to the portion of the purchase price
allocable to the Real Estate to the extent mutually agreeable.
3.6 Manufacturer Rebates and Co-Op Payments.
(a) Purchaser shall be entitled to any manufacturer rebates, co-op payments
or similar payments received or due from boat, motor or trailer manufacturers
(the "Manufacturer Rebates and Co-Op Payments") attributable to 1999 model
inventory, whether received prior to or after the date hereof. Purchaser
shall reimburse Seller for all Manufacturer Rebates and Co-Op Payments which are
received by the Purchaser after the Closing Date to the extent that such
Manufacturer Rebates and Co-Op Payments are attributable to 1999 model inventory
which was sold and delivered by the Seller to third-party purchasers prior to
the Closing Date.
(b) The Seller shall be entitled to the Manufacturer Rebates and Co-Op
Payments in the amount of approximately $57,000 due from OMC as an advance
against the Manufacturer Rebates and Co-Op Payments due to Seller under this
Section 3.6, In the event that such amount is in excess of the Manufacturer
Rebates and Co-Op Payments which Seller is due under this Section 3.6, the
Seller shall promptly deliver such excess to Purchaser within 10 days of
Purchaser's written request.
(c) The Seller agrees to deliver any checks received in connection with the
Manufacturer Rebates and Co-Op Payments applicable to the inventory endorsed to
the Purchaser and to cooperate with the Seller to collect all Manufacturer
Rebates and Co-Op Payments. Purchaser agrees to pay to the Seller any
Manufacturer Rebates and Co-Op Payments to which Seller is entitled to under
this Section 3.6 within ten (10) days of receipt of such
<PAGE>
payments. Purchaser agrees to use its best efforts to collect any
Manufacturer's Rebates and Co-Op Payments described herein.
3.7 Sale of Stock Consideration. In the event that the Seller sells all
of the Stock Consideration within 13 months of the later of the Closing Date or
the closing of the IPO to a bona fide third party based on a publicly quoted
price of the shares of common stock which sale shall occur through a qualified
broker/dealer and the aggregate amount received by Seller is less than $350,000,
then AMRI agrees to pay to the Seller the difference between $350,000 and the
amount received by the Seller in cash or certified check within three days of
receipt of notification of the difference between $350,000 and the amount
received by the Seller, which difference shall be supported by written
confirmation of such sale.
ARTICLE 4
CLOSING
4.1 Time; Place; Terms. The Closing will take place at such place as is
agreeable to the Parties. At the Closing (i) Seller shall sell, transfer, assign
and deliver the Assets to Purchaser; (ii) Purchaser shall deliver to Seller the
Purchase Price; and (iii) the parties shall perform such other acts and execute
and deliver such other documents which are contemplated to occur at the closing
by this Agreement or the agreements and documents entered into in accordance
herewith.
ARTICLE 5
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller and Grane represent and warrant to Purchaser as follows to
Seller's knowledge:
5.1 Organization and Qualification of Seller; Authorization of
Agreement. Boating and Services each are corporations, duly incorporated,
validly existing and in good standing under the laws of the State of Florida
each with the full corporate power and authority to carry on the business in
which it is engaged, to own and operate its properties and to execute and
deliver the Transaction Documents to which each is a party and to perform its
obligations hereunder and thereunder. The execution, delivery and performance of
the Transaction Documents to which Boating and Services each are a party and the
consummation of the transactions contemplated thereby have been duly and validly
authorized and approved by all requisite corporate action of Boating and
Services, as the case may be. The Transaction Documents to which Boating and
Services, as the case may be, are a party will be valid and binding obligations
of Boating and Services enforceable against each of Boating and Services, as the
case may be, in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, reorganization, insolvency, moratorium or other
similar laws currently or hereafter in effect affecting the enforcement or
creditors' rights generally and subject to general equity principles. All
persons who have executed or will execute any Transaction Document on behalf of
Boating or Services, as the case may be, have been or will be duly authorized to
do so by all necessary corporate action of each of Boating and Services, as the
case may be.
<PAGE>
5.2 No Breach; Consents. Seller has the absolute right to sell its
Assets hereunder. Except for the consents disclosed in Schedules 5.2, 5.14 and
5.15 the execution, delivery and performance of this Agreement by Seller and the
transfer of the Assets to Purchaser will not require Seller to obtain any
consent, approval or other action, except where such failure would not
individually or in the aggregate materially and adversely affect any Dealership,
the Business or the Assets.
5.3 Financial Statements and Business Records.
(a) Copies of the Financial Statements are attached as Schedule
5.3. The Financial Statements are accurate in all material
respects and fairly present the financial position, results of
operations and changes in financial position of Seller for the
periods described therein, were prepared in accordance with
GAAP, and have not been rendered materially inaccurate by
events subsequent to the date thereof.
(b) The books and records of Seller are in all material respects
complete and correct and have been maintained in accordance
with good business practices.
5.4 Absence of Undisclosed Liabilities. As of the date hereof, Seller
has no liabilities which are not reflected or provided for on the Financial
Statements except for liabilities or obligations arising in the ordinary course
of business which have not remained unpaid for more than sixty (60) days, which
liabilities or obligations do not, individually or in the aggregate, materially
affect any Dealership, the Business or the Assets.
5.5 Absence of Material Changes. Since December 31, 1998, except as
disclosed on Schedule 5.5, the Business has been operated in its ordinary course
and there has not been any material adverse change in the condition (financial
or otherwise) of Seller, any Dealership, the Business or the Assets or any
event, either occurring or threatened, which is likely to materially adversely
affect any Dealership, the Assets, Business or the condition, financial or
otherwise, or prospects of Seller.
5.6 Taxes and Tax Returns. Seller has duly and timely filed on the
correct form all Federal, state and local information returns and tax returns
affecting each Dealership, the Assets or the Business required to be filed by it
(all such returns, being accurate and complete in all material respects) and,
has duly and timely paid all Federal, state, local or foreign taxes. Seller
agrees to file any Federal, state and local information and tax returns which
are not yet due and pay the taxes due thereunder.
5.7 Title to and Use of Properties. Except as disclosed on Schedule
5.7, Seller has good and marketable title to the Assets and the Assets are not
subject to any mortgage, pledge, lien, objection to title, encumbrance or
charge, except (i) liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings (which proceedings have not been fully
determined) with appropriate reserves and which taxes are identified in Schedule
5.7; and (ii) liens to be released prior to or simultaneously with the Closing;
(iii) liens for which the Purchaser is willing to accept liability as evidenced
by Purchaser's signature on Schedule 5.7.
<PAGE>
5.8 Contracts and Other Agreements. Each contract or agreement
(collectively, for purposes of this ss.5.8., an "agreement") for the lease of
real property, for the lease or purchase of an automobile, dealer agreements and
any other agreement in which Seller's obligation is at least $20,000 in the
aggregate is listed on Schedule 5.8. Except as disclosed on Schedule 5.8, Seller
has not received or given any written notice of any material default or breach
of any such agreement, and Seller is not aware of any existing material default
or breach of any agreement.
5.9 Litigation. Except as disclosed on Schedule 5.9, there is no
litigation or similar proceedings against Seller, the Dealerships or the Assets
(all such matters to be disclosed pursuant ss.5.9 to be referred to as "Seller's
Litigation").
5.10 Employees.
(a) Except as set forth in Schedule 5.10, Seller is not party to
any employment contract with any individual not terminable at
will by Seller, its successors or assigns on less than 31 days
notice.
(b) Except as otherwise provided in the Employment Contract, the
Purchaser shall have no obligation to employ Seller's
personnel after the Closing.
(c) To Seller's knowledge, information and belief, there are no
claims against Seller which any employee has as a result of
his employment by Seller as of the date hereof, other than in
the ordinary course of business and involving not more than
$1,000 individually or $5,000 in the aggregate.
5.11 Employee Benefit Plans. The Seller has no employee benefit plans
except for group health insurance, vacation days, sick days and holidays.
5.12 Labor Matters.
(a) Seller is not a party to any collective bargaining agreement.
(b) Seller is in compliance in all material respects with all
federal, state or other applicable laws respecting employment
and employment practices, terms and conditions of employment
and wages and hours, and has not and is not engaged in any
unfair labor practices.
5.13 Hazardous Materials. Except as set forth is Schedule 5.13, Seller
has not wilfully violated any Federal, state or local environmental, health or
safety law and has received no notice of any violations or potential violations
of any such laws.
<PAGE>
5.14 Leases. All leases for real or personal property which are used in
the Business as presently conducted are listed on Schedule 5.14 and are in full
force and effect; there are no defaults by the Seller or any other party
thereunder and no event has occurred which would constitute a default
thereunder. Except as set forth in Schedule 5.14, no consent of any other party
to any of such leases is required as a condition of the assignment thereof to
the Purchaser or the assumption by the Purchaser of the obligations thereunder.
5.15 Pier Space.
(a) With respect to the Dealership in Stuart, Florida, the Seller
has received no written notices restricting or prohibiting the
use of the pier space and the waters adjacent thereto, but
makes no representation or warranty as to its use.
5.16 Investment Representation. The Stock Consideration is being
acquired by the Seller for investment for its own account and not with a view
to, or for, resale in connection with, the distribution thereof. Such
restrictions shall not limit the obligations of AMRI under Section 3.7.
5.17 Investigations. There are no formal or informal investigations
being conducted or which have been conducted by the Securities and Exchange
Commission or any other regulatory and civil authority within or without the
United States against Seller, its officers or directors, or principal
shareholders.
5.18 Sewer Hook-Up. There has been no notice received from any
governmental authority with respect to the sufficiency of the septic system at
the Stuart, Florida Dealership.
The documents and information so disclosed are complete and constitute all of
the documents and information required to be disclosed pursuant to the
provisions herein calling for disclosure and are accurate in all material
respects as of the date hereof. No representation or warranty made by Seller in
this Agreement or in any such document, certificate, exhibit, schedule or other
writing, insofar as such representation or warranty pertains to Seller, contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make such representation or warranty or any
such statement not misleading at the time made and on the Closing Date.
ARTICLE 6
COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees with Purchaser as follows:
6.1 Purchaser's Right of Inspection. Prior to Closing, Seller shall
grant Purchaser, and its counsel, accountants and other representatives
reasonably acceptable to Seller, access to the properties, contracts, books and
records of Seller related to the Business and the Assets, and shall furnish to
Purchaser all such information concerning the Assets and the Business that
Purchaser may reasonably request. Without limiting the foregoing, Seller shall
provide Purchaser with copies of all documents identified in Seller's Schedules
as well as all documentation and information reasonably relating to the
documents
<PAGE>
identified or information provided in Seller's Schedules. Purchaser may conduct
on-site visits, provided such visits shall be conducted in a manner reasonably
designed to minimize the interference with Seller's routine operations and to
minimize the attention attracted by such visits without unreasonably interfering
with the purpose of such visits.
6.2 Covenants of Seller Pending the Closing. Seller agrees that from
the date hereof to the Closing Date, Seller will satisfy its conditions
precedent to the consummation of this transaction to be performed by it and,
unless otherwise consented to in writing by Purchaser, to operate its business
diligently in the usual, regular and ordinary course, consistent with past
practice, and so as to maintain the goodwill it now enjoys, to use its best
efforts to preserve intact its present properties and its business organization,
keep available the services of its present employees, preserve its relationships
with suppliers, customers and others having business dealings with it, and not
make or institute any methods of management, accounting or operation materially
inconsistent with past methods. Seller will co-operate with Purchaser and shall
allow the disclosure of information regarding the Business to the extent
co-operation and disclosure is reasonably requested by Purchaser in order to
allow Purchaser to effect the IPO. The Seller shall take no action outside of
the ordinary course of its business or allow any alteration of its corporate
structure.
6.3 Going Out of Business Sale. Seller agrees through the Closing Date
not to hold a going out of business sale without the consent of the Purchaser.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser and AMRI represent and warrant to Seller as follows:
7.1 Organization and Qualification of Purchaser; Authorization of
Agreement. Purchaser is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Florida with the full corporate
power and authority to carry on the business in which it is engaged, to own and
operate its properties and to execute and deliver of the Transaction Documents
to which Purchaser is a party and to perform its obligations thereunder.
Purchaser is duly qualified and in good standing to transact business as a
foreign corporation in each jurisdiction where the ownership or use of its
property and the conduct of its business necessitates such qualification, except
such jurisdiction, if any, in which the failure to be so qualified will not have
a material adverse effect on its property or its business taken as a whole. The
execution, delivery and performance of the Transaction Documents to which
Purchaser is a party and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized and approved by all
requisite corporate action of Purchaser. The Transaction Documents, when
executed by Purchaser, will be valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with their respective terms, except
as enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws currently or hereafter in effect affecting the
enforcement or creditors' rights generally and subject to general equity
principles. All persons who have executed or will execute the Transaction
Documents on behalf of Purchaser have been or will be duly authorized to do so
by all necessary corporate action of Purchaser.
<PAGE>
7.2 No Breach; Consents. Purchaser's execution, delivery and
performance of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated thereby will not: (i) violate the
Certificate of Incorporation or By-Laws of Purchaser; (ii) result in a material
breach of or material default under any instrument or agreement to which
Purchaser is a party or is bound or to which any of its property or assets are
bound which breach or default is material to the business or properties of
Purchaser taken as a whole; (iii) violate any judgment, order, injunction,
decree or award against or binding upon Purchaser in a way which would have a
material adverse effect on the business or properties of Purchaser taken as a
whole; (iv) result in the creation of any material lien, charge or encumbrance
upon the material properties or assets of Purchaser; or (v) violate any law or
regulation relating to Purchaser.
7.3 Litigation. There is no action, suit or proceeding pending or, to
Purchaser's knowledge, threatened against or relating to Purchaser that: (i)
questions the validity of the Transaction Documents entered into by Purchaser;
or (ii) seeks to delay, prohibit or restrict in any manner any action taken or
contemplated to be taken by Purchaser under the Transaction Documents, which, in
each case, if adversely determined, would materially and adversely affect
Purchaser's ability to perform the Transaction Documents (all such matters to be
disclosed pursuant ss.7.3 to be referred to as "Purchaser's Litigation").
7.4 Inspection. Purchaser acknowledges and agrees that all Assets being
transferred are being transferred on an "as is, where is" basis, and that,
except as expressly set forth in this Agreement, Seller nor Grane is making no
representation or warranty of any kind, expressed or implied, respecting the
assets, as to merchantability, fitness for a particular purpose or any other
matter. Purchaser acknowledges that it has informed itself as to the Business,
and Purchaser further acknowledges and agrees that Seller nor Grane makes no
representation or warranty of any kind with respect to the Business except as
provided in this Agreement.
The documents and information so disclosed are complete and constitute all of
the documents and information required to be disclosed pursuant to the
provisions herein calling for disclosure and are accurate in all material
respects as of the date hereof. No representation or warranty made by Purchaser
in this Agreement or in any such document, certificate, exhibit, schedule or
other writing, insofar as such representation or warranty pertains to Purchaser,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make such representation or
warranty or any such statement not misleading at the time made and on the
Closing Date.
ARTICLE 8
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller as follows:
8.1 Covenants Pending Closing. Purchaser agrees that from the date
hereof to the Closing Date, Purchaser will satisfy its conditions precedent to
the consummation of this transaction
<PAGE>
8.2 Cooperation with Seller. Purchaser will cooperate with the Seller
to the extent cooperation on the part of the Purchaser is reasonably needed to
obtain the consents referred to in Article 5 of this Agreement.
ARTICLE 9
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller to consummate the purchase and sale of the
Assets under this Agreement are subject to the fulfillment of the following
conditions, unless waived by Seller in its sole discretion, prior to or at the
Closing:
9.1 Representations and Covenants. The representations and warranties
of Purchaser set forth in this Agreement shall be true and correct (except for
such changes expressly permitted hereunder or expressly consented to in writing
by Seller) on the Closing Date as if made on and as of such date, and Purchaser
shall have duly performed and complied, in all material respects, with all
covenants, agreements and conditions to be performed or satisfied by Purchaser
on or prior to the Closing Date. Seller shall have received a certificate of an
appropriate officer of Purchaser, dated the Closing Date, certifying as to the
fulfillment of the conditions specified in this ss.9.1.
9.2 Opinion of Counsel. Seller shall have received an opinion of
counsel of Purchaser dated the Closing Date in form and content reasonably
satisfactory to Seller.
9.3 Litigation. On the Closing Date there shall be no Purchaser's
Litigation pending or threatened which, in the reasonable opinion of Seller,
would have a material adverse effect on the benefits to be received by Seller as
a result of the consummation of the transactions contemplated hereby.
9.4 Absence of Adverse Governmental Action. No action shall have been
taken, proposed or threatened and no statute, rule, regulation or order shall
have been enacted or entered by any governmental body, agency or by any court
which shall prohibit or materially delay consummation of the transactions
contemplated herein on the terms and provisions herein set forth.
9.5 Proceedings. All proceedings to be taken in connection with this
Agreement and all documents related thereto shall be reasonably satisfactory in
all respects to Seller and their counsel.
9.6 Corporate Action. Seller shall have received certified copies of
Purchaser's Certificate of Incorporation, By-Laws and the resolutions evidencing
corporate approval of the execution, delivery and performance of the Transaction
Documents and the transactions contemplated thereby and incumbency certificates
with respect to the officers of Purchaser executing the Transaction Documents.
9.7 Good Standing; Tax Status. Seller shall have received certificates
of the Secretary of State of each state in which Purchaser is qualified to do
business to the effect that Purchaser is in good standing in such jurisdiction
and certificates as to the good tax status of Purchaser in each such
jurisdiction.
<PAGE>
9.8 Employment Contract. The Purchaser shall have executed and
delivered an employment contract with the Thomas Grane (for purposes of this
paragraph the "Employee") in the form of Exhibit 9.8 hereto (the "Employment
Contract").
9.9 Indemnification. Purchaser and AMRI shall assume the obligations of
Seller, indemnify, hold harmless and defend the Seller against liabilities under
the leases arising on or after the Closing Date.
ARTICLE 10
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the purchase and sale of the
Assets under this Agreement are subject to the fulfillment of the following
conditions, unless waived by Purchaser in its sole discretion, prior to or at
the Closing:
10.1 Representations and Covenants. The representations and warranties
of Seller set forth in this Agreement shall be true and correct (except for such
changes expressly permitted hereunder or expressly consented to in writing by
Purchaser) on the Closing Date as if made on and as of such date, and Seller
shall have duly performed and complied, in all material respects, with all
covenants, agreements and conditions to be performed or satisfied by Seller on
or prior to the Closing Date. Purchaser shall have been furnished with a
certificate executed by Seller, dated the Closing Date, certifying as to the
fulfillment of the conditions specified in this ss.10.1.
10.2 Opinion of Counsel. Purchaser shall have received an opinion of
counsel of Seller, dated the Closing Date, in form and substance reasonably
satisfactory to Purchaser.
10.3 Litigation. On the Closing Date there shall be no Seller's
Litigation pending or threatened which, in the reasonable opinion of Purchaser,
would have a material adverse effect on the benefits to be received by Purchaser
as a result of the consummation of the transactions contemplated hereby.
10.4 Absence of Governmental Action. No action shall have been
proposed, threatened or taken and no statute, rule, regulation or order shall
have been proposed, enacted or entered by any governmental body, agency or by
any court which would prohibit, materially delay or establish material
conditions to the consummation of the transactions contemplated hereby or which
would materially adversely affect any Dealership, the Business or the Assets.
10.5 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents relating thereto
shall be reasonably satisfactory in all respects to Purchaser and its counsel.
10.6 Corporate Action. Purchaser shall have received certified copies
of Seller's Certificate of Incorporation, By-Laws and the resolutions evidencing
corporate approval of the execution, delivery and performance of the Transaction
Documents and the transactions contemplated thereby and incumbency certificates
with respect to the officers of Seller executing the Transaction Documents.
<PAGE>
10.7 Lease Assignments. Seller shall have executed and delivered the Lease
Assignments.
10.8 Schedules and Documents Review. Purchaser shall have received the
Seller's Schedules, and the documents referred to therein, and the documents and
information contained therein shall be to the reasonable satisfaction and
approval of Purchaser.
10.9 Good Standing; Tax Status. Purchaser shall have received
certificates of the Secretary of State of each state in which Seller is
qualified to do business to the effect that Seller is in good standing in such
jurisdiction and certificates as to the good tax status of Seller in each such
jurisdiction.
10.10 No Material Adverse Changes. There shall not have been any
material adverse change in the condition (financial or otherwise) of the Seller,
any Dealership, the Business or the Assets.
10.11 Consent and Approvals. All permits, approvals and consents
required under ss.5.2, ss.5.14 and ss.5.15 shall have been obtained.
10.12 Title Search. Purchaser shall have received a title commitment by
a title company licensed to do business in the State of Florida showing no
encumbrances or objections to title other than those set forth in Schedule 5.7.
10.13 Environmental Review. Seller has satisfied Purchaser that the
Assets and the Business comply with the provisions of all federal, state and
local environmental, health and safety laws, codes and ordinances and all rules
and regulations promulgated thereunder, and Seller and each Dealership has all
necessary or advisable government permits, licenses, certificates and approvals
in relation thereto. Purchaser shall be satisfied with the Phase I environmental
study related to the Real Estate and the Leasehold Interests.
10.14 Title Insurance. The Seller shall obtain a title insurance policy
for the Purchaser as of the Closing Date at the Seller's expense for the Real
Estate.
10.15 Assignment of Lease. The Seller shall assign whatever interest,
if any, that the Seller may have to the Purchaser under the Sovereignty
Submerged Lands Lease between the Florida Board of Trustees of the Internal
Improvement Trust Fund and Treasure Coast Boating Services, Inc. with respect to
the Stuart, Florida dealership.
10.16 Additional Payments. Seller and Grane shall enter into an
agreement with respect to payments due to the Purchaser after the Closing Date
under Article 3.
<PAGE>
ARTICLE 11
TERMINATION
11.1 Right of Termination. This Agreement and the transactions
contemplated by this Agreement may only be terminated at any time prior to the
Closing Date:
(a) by the mutual consent of the Parties; or
(b) by one Party if the other Party: (i) shall have committed a
material misrepresentation or breached a material warranty; or
(ii) shall have breached its obligation to Close or breached
any covenant or agreement hereunder and not cured such breach
on ten (10) days written notice or, if earlier, on or prior to
the Closing Date.
11.2 Notice of Termination. Notice of termination of this Agreement, as
provided for in this Article 11, shall be given in accordance with the
provisions of ss.15.2 hereof and the terminating Party shall specify the
provisions under which termination is claimed. If more than one provision
applies, the terminating Party may elect the provision upon which it relies.
11.3 Effect of Termination.
(a) In the event this Agreement is terminated pursuant to
ss.11.1(a), then neither party shall have any liability to the
other.
(b) In the event a Party terminates this Agreement pursuant to
ss.11.1(b) and the breaching Party is determined to be
Purchaser then Seller's sole and exclusive remedy and
Purchaser's sole liability shall be to compel specific
performance from Purchaser.
(c) In the event a Party terminates this Agreement pursuant to
ss.11.1(b) and the breaching Party is determined to be Seller
then Purchaser's remedy shall be to compel specific
performance from Seller; provided that if specific performance
on the terms set forth herein is not possible, Purchaser shall
be entitled to collect all of its out of pocket expenses in
connection with this transaction.
ARTICLE 12
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
12.1 Survival of Representations and Warranties. Any right of action
arising from covenants, representations and warranties of the Parties contained
in, and their rights to claim indemnification under this Agreement or any
instrument, exhibit or certificate delivered pursuant hereto or in any writing
delivered in connection herewith shall not survive the Closing and no more,
regardless of any investigation made by the parties hereto, other than claims
for indemnification under ss.13.4 or ss.13.5, indemnification involving Taxes
and violations of relevant securities laws, which shall survive for periods
coterminous with the statute of limitations applicable to the right asserted by
the claiming Party.
<PAGE>
ARTICLE 13
INDEMNIFICATION
13.1 Losses. For the purpose of this Article 13 and when used elsewhere
in this Agreement, "Losses" shall mean and include any and all liability, loss,
costs, claims, damage or injury including, without limitation, those resulting
from any and all actions, suits, proceedings, demands, assessments and
judgments, together with reasonable costs and expenses including the reasonable
attorneys' fees relating to the defense thereto.
13.2 Indemnification by Seller. Seller agrees to and does hereby
indemnify and hold Purchaser harmless from and against Losses arising out of or
resulting from: (i) any breach of the covenants, representations and warranties
made by Seller in this Agreement; and (ii) Taxes to the extent Seller is
responsible therefor pursuant to ss.13.9; and (iii) Seller's violation of any
restrictions on transfer of stock imposed under ss.3.2 (iv) as provided in
ss.13.4.
13.3 Indemnification by Purchaser. Purchaser and AMRI agree to and do
hereby indemnify and hold Seller harmless from and against Losses arising out of
or resulting from: (i) any breach of the covenants, representations and
warranties made by Purchaser in this Agreement; (ii) the Purchaser's Litigation;
and (iii) as provided in ss.13.5.
13.4 Third Party Claims Against Purchaser. Seller agrees to and does
hereby indemnify and hold Purchaser harmless from and against any and all Losses
resulting from causes of action or claims of any kind asserted by unrelated
third parties arising from actions or omissions of Seller with respect to events
occurring in the operation of the Business or relating to the Assets prior to
the Closing Date; provided that for any such action or claim which shall become
known to Purchaser, Purchaser shall have given Seller prompt written notice of,
and an opportunity to defend, any and all such asserted liabilities.
13.5 Third Party Claims Against Seller. Purchaser agrees to and does
hereby indemnify and hold Seller harmless from and against any and all Losses
resulting from causes of action or claims of any kind asserted by unrelated
third parties arising from actions or omissions of Purchaser with respect to
events occurring in the operation of the Business on and after the Closing Date;
provided that the cause of such event(s) does not relate to actions of the
Seller prior to the Closing Date; and further provided that for any such action
or claim which shall become known to Seller, Seller shall have given Purchaser
prompt written notice of, and an opportunity to defend, any and all such
asserted liabilities.
13.6 Procedures for Third Party Indemnification. If any action, suit or
proceeding shall be commenced against, or any claim or demand be asserted
against, a Party, in respect of which such Party proposes to demand
indemnification under ss.13.4 or 13.5, as a condition precedent thereto, the
Party seeking indemnification ("Indemnitee") shall notify the other Party
("Indemnitor") to that effect within 15 days of learning the facts giving rise
thereto and the Indemnitor shall have the right to assume the entire control of,
including the selection of counsel, subject to the right of the Indemnitee to
participate (at its expense and with counsel of its choice) in, the defense,
compromise or settlement thereof. In connection therewith, the Indemnitee shall
cooperate fully in all respects with the Indemnitor in any such defense,
compromise or settlement thereof, and Indemnitee shall make available to the
Indemnitor all pertinent information and
<PAGE>
documents under the control of the Indemnitee. The Indemnitor will not
compromise or settle any such action, suit, proceeding, claim or demand without
the prior written consent of the Indemnitee; provided, however, that in the
event such approval is withheld, then the liability of the Indemnitor shall not
exceed the total sum representing the amount of the proposed compromise or
settlement and the amount of counsel fees accumulated at the time such approval
is withheld, and further provided, that from and after the time such approval is
withheld by the Indemnitee, the Indemnitee shall pay to the Indemnitor all of
Indemnitor's costs and expenses, including reasonable attorneys' fees, for all
costs of defense for any periods subsequent to the date on which such approval
is withheld. Notwithstanding anything to the contrary in the foregoing, the
Indemnitor shall be entitled to settle any matter with respect to itself and its
affiliates (whether as a codefendant with the Indemnitee or otherwise) without
the consent of the Indemnitee. So long as the Indemnitor is defending in good
faith any such claim or demand asserted by a third party against the Indemnitee,
the Indemnitee shall not settle or compromise such claims or demands without the
prior written consent of the Indemnitor.
13.7 Notice of Claims. Upon discovery of any breach of the covenants,
representations and warranties of Seller or Purchaser herein contained (other
than as a result of the bringing of any action, suit or proceeding or the
assertion of any claim or demand referred to in ss.13.6.), Seller or Purchaser,
as the case may be, shall give notice to the other promptly after the discovery
of such breach. The reciprocal obligations to indemnify set forth in ss.13.2 and
ss.13.3 above are conditioned as to any particular claim or liability for which
indemnification is sought upon full compliance by the party proposing to demand
indemnification with the requirements set forth in this ss.13.7 or ss.13.6 as
the case may be.
13.8 Period for Making Claims. No claim for indemnification under this
Agreement shall be brought after the end of the applicable period set forth in
Article 12 hereof and, at the end of said period, all liabilities of any nature
of the parties pertaining to claims thereunder shall terminate and cease to
exist except as to any liability asserted prior thereto in a written notice
containing sufficient detail to identify the nature and scope of said liability
which is received within said period by the proper recipient pursuant to ss.15.2
hereof.
13.9 Taxes. Seller shall pay and be fully responsible for any and all
federal, state and local income, franchise, sales, gross receipts, excise and
similar taxes, assessments and similar charges, as well as withholding and
social security taxes required to have been paid prior to the Closing, and
interest and penalties thereon which are required to be paid for any period
ending the day immediately before the Closing Date, as well as capital gains and
recapture taxes arising from the transfer and sale of the Assets to Purchaser
hereunder ("Taxes").
13.10 Recoveries. The amount of any Losses shall be reduced by the
amount of any insurance proceeds or any other cash receipts paid to the
Indemnitee. In addition, the amount of any Losses shall be further reduced by
the amount equal to the actual income tax benefits realized by the Indemnitee
attributable to such Losses.
<PAGE>
ARTICLE 14
NONCOMPETITION
14.1 Covenant Not to Compete. In order to insure to Purchaser the
benefits of the Business operated by Seller and the Assets owned by Seller and
acquired hereunder, Seller agrees that during the three (3) year period
following the Closing Date, neither Seller, nor Grane or Judy Grane will
directly or indirectly, whether as a consultant, agent, principal, partner,
shareholder (except as a shareholder in Purchaser ) or otherwise compete with
Purchaser for employees, customers, dealers or distributors by engaging or
participating in any business or activity in Florida which is the same as,
substantially similar to, or competitive with the Business or any business or
activity now engaged in by the Seller, or employ in any capacity any of the
current employees of the Seller, or contact or call on any of Seller's
employees, or any of the Seller's customers, dealers, or distributors for any
business purpose which would violate the foregoing clauses, either for its own
interest or for the interest of any other person without the approval of
Purchaser.
14.2 Separability. Seller and Purchaser intend that the covenant
contained in ss.14.1 shall be construed as a series of separate covenants, a
separate covenant for each state or subdivision thereof and, within each state,
one for each county or subdivision thereof. Except for geographic coverage, each
such separate covenant shall be deemed identical in terms to the covenant
contained in the preceding paragraph. It is specifically agreed and understood
that because of the nature of the Seller's business, the geographical scope of
this covenant not to compete is reasonable. If, however, in any judicial
proceeding, a court shall refuse to enforce any of the separate covenants deemed
included in this Article 14, then such unenforceable covenant shall be deemed
modified or eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
14.3 Confidentiality. Seller agrees not to divulge, communicate, use to
the detriment of Purchaser or misuse in any way, for its benefit or the benefit
of any other person, firm, corporation, association or other entity, any
proprietary or confidential information or trade secrets of Purchaser or the
Business, including, without limitation, the Trademark Rights, personnel
information, secret processes, know-how, customer lists, formulae, or other
technical data, except for information which is or becomes known to the public
other than as a result of violation of this ss.14.3. Seller acknowledges that
such information is valuable part of the Assets and the Business.
14.4 Remedies. Seller acknowledges that a breach of any provisions of
this Article 14 will cause irreparable damage to Purchaser and Seller, the exact
amount of which will be difficult to ascertain, and that the remedies at law for
any such breach would be inadequate. Accordingly, if Seller breaches any of the
provisions of this Article 14, Purchaser shall be entitled to injunctive relief
without posting bond or other security.
<PAGE>
ARTICLE 15
MISCELLANEOUS
15.1 Severability of Provisions. The invalidity or unenforceability of
any particular provision of this Agreement shall not affect the validity of any
other provision hereof, which shall remain in full force and effect. In such
case, such invalid or unenforceable provision shall be deemed modified to the
extent that it shall become valid and enforceable and remain within the original
spirit of the Agreement; or if the same is not permissible, then this Agreement
shall be construed in all respects as if such invalid and unenforceable
provision had been omitted from this Agreement.
15.2 Notices. Any notices or other communications required or permitted
under this Agreement shall be in writing and shall be sufficiently given if hand
delivered or if sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
IF TO SELLER:
D. Thomas Grane
24 North River Road
Stuart, Florida 34996
WITH A COPY TO:
Keith A. Lowe, P.A.
215 South Federal Highway, Suite 200
Stuart, FL 34994 IF TO PURCHASER:
American Marine of South Florida, Inc.
2202 33rd Street
Orlando FL 32839
Attn: Joseph G. Pozo, Jr.
WITH A COPY TO:
John E. Greenwood, Esq.
McLaughlin & Stern, LLP
260 Madison Avenue
New York, New York 10016
or such other address as shall be furnished in writing by any of the
Parties. Notice shall be deemed given upon receipt.
15.3 Amendment. This Agreement may be amended, supplemented, waived or
modified only by a subsequent writing signed by each of the Parties.
15.4 Waivers. Prior to or on the Closing Date, Purchaser shall have the
right to waive any default in the performance of any term of this Agreement by
Seller, to waive or extend the time for the fulfillment by Seller of any
obligation under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Purchaser under this Agreement, except any
condition that, if not satisfied, would result in the violation of any law or
applicable governmental regulation. Prior to or on the Closing Date, Seller
shall have the right to waive any default in the performance of any term of this
Agreement by
<PAGE>
Purchaser, to waive or extend the time for the fulfillment by Purchaser of any
obligation under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Seller under this Agreement, except any
condition that, if not satisfied, would result in the violation of any law or
applicable governmental regulation.
15.5 Broker's Fees. Each of Purchaser and Seller represent and warrant
to the other that no broker, finder, investment banker or other financial
consultant has acted on its behalf in connection with the transactions
contemplated by this Agreement.
15.6 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the Parties shall pay its own expenses and
costs incurred or to be incurred in negotiating, closing and carrying out this
Agreement and in consummating the transactions contemplated herein.
15.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be one and the same Agreement, and shall become
effective when one or more counterparts have been signed by each of the Parties
and delivered to each of the Parties.
15.8 Headings. The headings in this Agreement are for convenience only
and shall not affect the construction or interpretation of this Agreement.
15.9 Successors and Assigns. All terms and conditions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors and permitted assigns of the Parties.
15.10 Publicity. The Parties agree that no press release or other
public statement concerning the negotiation, execution and delivery of this
Agreement or the transactions contemplated by this Agreement or any matter
covered in this Agreement shall be issued or made without the prior written
approval of each of the Parties, except as a Party's counsel shall advise is
required by applicable law or regulations of any securities exchanges.
15.11 Entire Agreement. This Agreement together with the Exhibits and
schedules hereto, which are incorporated herein by this reference, constitutes
the entire understanding between and among the Parties with respect to the
subject matter hereof and shall supersede any prior agreement and understandings
among the Parties with respect to such subject matter. None of the Parties has
made, or is relying upon, any promises, representations, understandings,
warranties, agreements, pro-formas or anything else, whether of a similar or
dissimilar nature, except as is expressly set forth in this Agreement.
15.12 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of Florida without regard to the
principles of conflicts of laws thereunder. Any action arising from this
Agreement or the transactions contemplated herein shall be brought in a federal
or state court of competent jurisdiction in the State of Florida.
<PAGE>
15.13 Assignment. This Agreement may not be assigned by any Party
without the written consent of the other signatories to this Agreement.
15.14 Third Party Beneficiaries. Each Party intends that this Agreement
shall not benefit or create any right or obligation or cause of action in or on
behalf of any person or entity (except as provided in ss.15.9).
15.15 Attorney's Fees. In the event of any litigation hereunder, the
prevailing party shall be entitled to all costs and expenses, including
reasonable attorney's fees through all appeals.
15.16 Schedules. The parties acknowledge that the Schedules required by
the Agreement have not been affixed hereto. The parties agree to diligently
proceed to prepare such Schedules and to affix such Schedules to the Agreement
within ten (10) days of the date hereof. In the event that such mutually agreed
upon Schedules are not affixed to this Agreement within ten (10) days of the
date hereof, or such later date, if extended, then either party may terminate
this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Asset Purchase
Agreement to be duly executed and delivered as of the date first above written.
TREASURE COAST BOATING CENTER, INC.
By:_____________________________
Name:
Title: President
AMERICAN MARINE OF SOUTH FLORIDA, INC.
By:_____________________________
Name:
Title:
TREASURE COAST BOATING SERVICES, INC. AMERICAN MARINE RECREATION, INC.
By:_____________________________ By:_______________________________
Name: Name:
Title: Title:
- --------------------------------
D. THOMAS GRANE
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TABLE OF CONTENTS
Article 1
Definitions.................................................................................................1
1.1 List of Definitions.......................................................................1
1.2 Knowledge. ..............................................................................3
Article 2
Terms of Acquisition........................................................................................3
2.1 Sale and Transfer of Assets...............................................................3
2.2 Risk of Loss..............................................................................3
Article 3
Purchase; Payment...........................................................................................3
3.1 Purchase of Assets........................................................................3
3.2 Cost of Inventory.........................................................................4
3.4 Restriction on Transfer of Consideration Stock............................................6
3.5 Allocation of Purchase Price..............................................................6
3.6 Manufacturer Rebates and Co-Op Payments...................................................6
3.7 Sale of Stock Consideration...............................................................7
Article 4
Closing.....................................................................................................7
4.1 Time; Place; Terms........................................................................7
Article 5
Seller's Representations and Warranties.....................................................................7
5.1 Organization and Qualification of Seller; Authorization of Agreement......................7
5.2 No Breach; Consents.......................................................................8
5.3 Financial Statements and Business Records.................................................8
5.4 Absence of Undisclosed Liabilities........................................................8
5.5 Absence of Material Changes...............................................................8
5.6 Taxes and Tax Returns.....................................................................8
5.7 Title to and Use of Properties............................................................8
5.8 Contracts and Other Agreements............................................................9
5.9 Litigation................................................................................9
5.10 Employees.................................................................................9
5.11 Employee Benefit Plans....................................................................9
5.12 Labor Matters.............................................................................9
5.13 Hazardous Materials. ...................................................................9
5.14 Leases...................................................................................10
5.15 Pier Space...............................................................................10
5.16 Investment Representation. ..............................................................10
5.17 Investigations...........................................................................10
5.18 Sewer Hook-Up............................................................................10
-i-
<PAGE>
Article 6
Covenants and Agreements of Seller.........................................................................10
6.1 Purchaser's Right of Inspection..........................................................10
6.2 Covenants of Seller Pending the Closing. ................................................11
6.3 Going Out of Business Sale...............................................................11
Article 7
Representations and Warranties of Purchaser................................................................11
7.1 Organization and Qualification of Purchaser; Authorization of Agreement.
.................................................................................................11
7.2 No Breach; Consents......................................................................12
7.3 Litigation...............................................................................12
7.4 .........................................................................................12
Inspection.................................................................................................12
Article 8
Covenants of Purchaser.....................................................................................12
8.1 Covenants Pending Closing................................................................12
8.2 Cooperation with Seller. ...............................................................13
Article 9
Conditions to the Obligations of Seller....................................................................13
9.1 Representations and Covenants............................................................13
9.2 Opinion of Counsel.......................................................................13
9.3 Litigation...............................................................................13
9.4 Absence of Adverse Governmental Action...................................................13
9.5 Proceedings..............................................................................13
9.6 Corporate Action.........................................................................13
9.7 Good Standing; Tax Status................................................................13
9.8 Employment Contract......................................................................14
9.9 Indemnification..........................................................................14
Article 10
Conditions to the Obligations of Purchaser.................................................................14
10.1 Representations and Covenants............................................................14
10.2 Opinion of Counsel.......................................................................14
10.3 Litigation...............................................................................14
10.4 Absence of Governmental Action...........................................................14
10.5 Proceedings..............................................................................14
10.6 Corporate Action.........................................................................14
10.7 Lease Assignments........................................................................15
10.8 Schedules and Documents Review...........................................................15
10.9 Good Standing; Tax Status................................................................15
10.10 No Material Adverse Changes..............................................................15
10.11 Consent and Approvals....................................................................15
10.12 Title Search.............................................................................15
10.13 Environmental Review.....................................................................15
-ii-
<PAGE>
10.14 Title Insurance..........................................................................15
10.15 Assignment of Lease......................................................................15
10.16 Additional Payments......................................................................15
Article 11
Termination................................................................................................16
11.1 Right of Termination.....................................................................16
11.2 Notice of Termination....................................................................16
11.3 Effect of Termination....................................................................16
Article 12
Survival of Representations and Warranties.................................................................16
12.1 Survival of Representations and Warranties...............................................16
Article 13
Indemnification............................................................................................17
13.1 Losses...................................................................................17
13.2 Indemnification by Seller................................................................17
13.3 Indemnification by Purchaser.............................................................17
13.4 Third Party Claims Against Purchaser.....................................................17
13.5 Third Party Claims Against Seller........................................................17
13.6 Procedures for Third Party Indemnification...............................................17
13.7 Notice of Claims.........................................................................18
13.8 Period for Making Claims.................................................................18
13.9 Taxes....................................................................................18
13.10 Recoveries...............................................................................18
Article 14
Noncompetition.............................................................................................19
14.1 Covenant Not to Compete. ...............................................................19
14.2 Separability. ..........................................................................19
14.3 Confidentiality. ........................................................................19
14.4 Remedies.................................................................................19
Article 15
Miscellaneous..............................................................................................20
15.1 Severability of Provisions...............................................................20
15.2 Notices..................................................................................20
15.3 Amendment................................................................................20
15.4 Waivers..................................................................................20
15.5 Broker's Fees............................................................................21
15.6 Expenses.................................................................................21
15.7 Counterparts.............................................................................21
15.8 Headings.................................................................................21
15.9 Successors and Assigns...................................................................21
15.10 Publicity................................................................................21
15.11 Entire Agreement.........................................................................21
-iii-
<PAGE>
15.12 Governing Law............................................................................21
15.13 Assignment...............................................................................22
15.14 Third Party Beneficiaries................................................................22
15.15 Attorney's Fees..........................................................................22
15.16 Schedules................................................................................22
-iv-
</TABLE>
<PAGE>
AMENDMENT NO. 1 TO EXCHANGE AGREEMENT
Amendment No. 1 dated December , 1998 to the Exchange Agreement (the
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, the parties hereto hereby agree that it would be in
their mutual best interest to amend the Agreement in the manner set forth
herein;
NOW, THEREFORE, in consideration of the above premises and the
mutual promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree that the Agreement is amended as follows:
I. Modifications.
A. Exhibit B is hereby deleted in its entirety and replaced by
Exhibit B annexed hereto.
II. Confirmation. Except as expressly specified herein, all other
terms, conditions and provisions of the Agreement are hereby confirmed and shall
remain in full force and effect without modification.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
--------------------------------------
JOSEPH G. POZO, JR.
--------------------------------------
JOSEPH JOHN POZO
AMERICAN MARINE RECREATION, INC.
By:
-----------------------------------
Name: Joseph G. Pozo, Jr.
Title: President
<PAGE>
EXHIBIT B
OWNERSHIP OF COMMON STOCK
Shareholder Number of Shares of Common Stock
Joseph G. Pozo, Jr. 1,230
Joseph John Pozo 308
-----
Total 1,538
<PAGE>
AMENDMENT NO. 1 TO EXCHANGE AGREEMENT
Amendment No. 1 dated December , 1998 to the Exchange Agreement (the
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, the parties hereto hereby agree that it would be in
their mutual best interest to amend the Agreement in the manner set forth
herein;
NOW, THEREFORE, in consideration of the above premises and the
mutual promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree that the Agreement is amended as follows:
I. Modifications.
A. Exhibit B is hereby deleted in its entirety and replaced by
Exhibit B annexed hereto.
II. Confirmation. Except as expressly specified herein, all other
terms, conditions and provisions of the Agreement are hereby confirmed and shall
remain in full force and effect without modification.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
- ----------------------------- --------------------------------------
JOSEPH G. POZO, JR. JOSEPH JOHN POZO
- ----------------------------- --------------------------------------
CHRISTINE POZO JENNIFER JO POZO
- -----------------------------
MARCELO A. POZO
AMERICAN MARINE RECREATION, INC.
By:
-----------------------------------
Name: Joseph G. Pozo, Jr.
Title: President
<PAGE>
EXHIBIT B
OWNERSHIP OF COMMON STOCK
Shareholder Number of Shares of Common Stock
- ----------- --------------------------------
Joseph G. Pozo, Jr. 1,524,084
Joseph John Pozo 79,065
Christine Pozo 79,065
Jennifer Jo Pozo 79,065
Marcelo A. Pozo 79,065
----------
Total 1,841,344
<PAGE>
WARRANT AGREEMENT dated as of _______ __, 1999 between
American Marine Recreation, Inc., a Delaware corporation (the "Company"), on one
hand, and BlueStone Capital Partners, L.P. ("BlueStone") and Auerbach, Pollak &
Richardson, 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 215,000
(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 _______ __, 1999
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 2,150,000
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 FIFTEEN DOLLARS ($215.00),
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 ______ __, 2000 until 5:00 P.M., New
York City time, on ______ __, 2004, (the "Warrant Exercise Term"), up to 215,000
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 2202 33rd Street,
Orlando, Florida 32839) 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
_______ __, 2007. 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 _______ __, 2010.
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
AUERBACH, POLLAK & RICHARDSON, INC.
By:
---------------------------------
Name:
Title:
-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, _______ __, 2004
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 _______ __, 2000 until 5:00 P.M. New York City
time on ______ __, 2004 ("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 Auerbach, Pollak & Richardson, 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: _______ __, 1999 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>
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into as of this _____ day of ____________,
1999, 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
______________________________________.
W I T N E S S E T H:
WHEREAS, Executive is presently employed by the Corporation; and
WHEREAS, the Corporation and the Executive desire to set forth the
terms of Executive's employment with the Corporation, 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 ______________, 1999, and ending at
midnight on the _____ day of ______________________, 2003 (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 eighty (180) days prior to the expiration
of the Term or any Renewal Period, unless otherwise terminated pursuant
-1-
<PAGE>
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, (i) a salary at the rate of Two
Hundred Eight Thousand Dollars ($208,000.00) per year during the first year of
this Agreement (the "Base Compensation); and (ii) for each year thereafter,
annual compensation shall be determined by the Board of Directors, but in no
event less than $208,000.00. 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.
[Additionally on the first and each subsequent anniversary of the effective date
of this Agreement, by the same percentage increase (if any) in the CPI for the
twelve (12) month period immediately preceding such anniversary. The CPI shall
be defined as: "CPI" means for any period the Consumer Price Index for All Urban
Consumers--All Items Index for Orlando, Florida (or any substantially similar
index published for the same area), as published by the United States Department
of Labor, Bureau of Labor Statistics (or its successor) for that period.]
-2-
<PAGE>
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 shall be determined by the Board of Directors based on the
Executive's performance and contributions to the Corporation's success.
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.
Executive shall be entitled to receive at no cost full family coverage health
care insurance.
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 motor 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 motor vehicle.
-3-
<PAGE>
Executive shall also be entitled to the use of demonstrator watercraft as may be
selected by Executive from time to time.
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. Support. The Executive shall be provided by the Corporation at its
expense with office space, furnishings and facilities, reserved parking,
secretarial and administrative assistance, supplies and other support equipment
(including a computer, facsimile machine and photocopier).
10. No Forced Relocation. The executive shall not be required to move
his principal place of residence from the greater Orlando area or to perform
regular duties that could reasonably be expected to require either such move
against his wish or to spend amounts of time each week outside the greater
Orlando area which are unreasonable in relation to his duties and
responsibilities of the Executive hereunder, and the Corporation agrees that, if
it requests the Executive to make such a move and the Executive declines the
request, (i) that declination shall not constitute any basis for a determination
that Cause exists, and (ii) no animosity or prejudice will be held against
Executive.
11. 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.
-4-
<PAGE>
12. 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 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.
-5-
<PAGE>
13. 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 one (1) year 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 selling boating, nautical products and services, and directly
related activities as presently conducted by the Corporation 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 (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.
(ii) 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 if 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
-6-
<PAGE>
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.
(iii) Executive agrees and recognizes that in the
event of a breach of
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.
14. Termination. This Agreement and Executive's employment may be
terminated in any one of the following ways:
(a) Termination of Employment by the Corporation. The
Corporation shall be entitled, if acting at the direction of the Required Board
Majority, to terminate the Executive's employment at any time with or without
Good Cause. The Corporation's termination of the Executive's employment will be
effective on the date the Corporation delivers a notice of termination to the
Executive pursuant to this Section 14(a) (together with any required certified
Board resolution). If the Corporation terminates the Executive's employment for
Good Cause, the Corporation shall, within thirty (30) business days thereafter,
pay the Executive an amount equal to the Accrued Benefits and, when that payment
is made, the Corporation shall have no further obligation hereunder to
compensate the Executive. If the Corporation terminates the Executive's
employment without Good Cause, or elects not to renew Executive's employment
upon expiration
-7-
<PAGE>
of the original term or any renewal term, the Corporation shall, within thirty
(30) business days thereafter, pay the Executive an amount equal to the sum of
Accrued Benefits, plus the Severance Payment, and shall continue to provide
health insurance benefits for the Executive, his spouse and minor children, if
any (on the same terms in effect on the Termination date) for a period of three
(3) years after the termination date.
(b) Termination of Employment by the Executive. The Executive
shall be entitled to terminate his Employment, by delivery of a notice of
termination to the Corporation: (1) for Good Reason at any time within one
hundred eighty (180) days after the facts or circumstances constituting that
Good Reason first exist and are known to the Executive, (ii) in the event of his
Disability, as provided in Section 14(c), or (iv) without Good Reason and other
than for Disability at any time. If the Executive terminates his Employment for
Good Reason, the Corporation shall pay to the Executive in a cash lump sum
within five (5) business days after the date the Corporation receives the
Executive's notice of termination, an amount equal to the sum of Accrued
Benefits plus the Severance Payment, and shall continue to provide health
insurance benefits for the Executive, his spouse and minor children (on the same
terms in effect on the Termination date) for a period of three (3) years after
the termination date. If the Executive terminates his Employment without Good
Reason and other than for Disability, the Corporation shall pay to the
Executive, in a cash lump sum within five (5) business days after the
termination date, the Accrued Benefits.
(c) Termination by Reason of Disability. If the Executive
incurs any Disability prior to termination of this Agreement, either the
Executive or the Corporation may terminate the Executive's Employment effective
on the date the Nonterminating Party receives a notice of
-8-
<PAGE>
termination from the Terminating Party pursuant to this Section 14(c); provided,
however that the Corporation shall, within five (5) business days thereafter,
pay the Executive an amount equal to the sum of Accrued Benefits plus the
Termination Payment, and the Corporation shall continue to provide health
insurance benefits for the Executive, his spouse and minor children (on the same
terms in effect on the Termination date) for a period of three (3) years after
the Termination date.
(d) Termination of Employment by Death. The Executive's
Employment shall terminate automatically at the time of his death. If the
Executive's Employment is terminated by reason of the Executive's death, the
Corporation shall pay to the Executive's estate, in a cash lump sum within
thirty (30) days after the Termination date, an amount equal to the sum of the
Accrued Benefits plus the Termination Payment, and shall continue to provide
health insurance benefits for the Executive's spouse and minor children (on the
same terms in effect on the Termination date) for a period of three (3) years
after the Termination date.
(e) Return of Property. On termination of the Executive's
Employment, however brought about, the Executive (or his representatives) shall
promptly deliver and return to the Corporation all the Corporation's property
that is in the possession or under the control of the Executive.
(f) Stock Options. Notwithstanding any provision of this
Agreement to the contrary: (i) except in the case of a termination of the
Executive's Employment for Cause, all stock options previously granted to the
Executive under Incentive Plans that have not been exercised and are outstanding
as of the time immediately prior to the Termination date shall, notwithstanding
any contrary provision of any applicable Incentive Plan, automatically become
vested and immediately exercisable, and remain outstanding until exercised or
the expiration of their term, whichever is
-9-
<PAGE>
earlier; and (ii) in the case of a termination of the Executive's Employment for
Cause, all stock options previously granted to Executive under Incentive Plans
that have not been exercised and are outstanding as of the Termination date
shall automatically be terminated, unless the Compensation Committee determines
otherwise in its discretion, notwithstanding any contrary provision of any
applicable Incentive Plan.
(g) 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 5 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.
-10-
<PAGE>
15. 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 of 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 the amount of
the Severance Payment 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 Corporation shall pay to Executive the amount of the Severance Payment and
the
-11-
<PAGE>
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(c) 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 day
after 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
-12-
<PAGE>
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 if 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
(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
-13-
<PAGE>
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 Corporation, 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 for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Executive.
16. 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
-14-
<PAGE>
performing services under this Agreement, then the Corporation shall indemnify
Executive against all expenses (including attorney's 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.
17. 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.
18. 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.
P. O. Box 1371
Windermere, FL 34786
-15-
<PAGE>
With a copy to: J. Gregory Humphries, Esq.
Shutts & Bowen LLP
20 N. Orange Ave., Suite 1000
Orlando, FL 32801-4626
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.
19. Assignment. Executive shall not be entitled to assign his rights,
duties or obligations under this Agreement.
20. 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.
21. 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.
22. 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.
-16-
<PAGE>
23. 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.
24. 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.
25. Definitions
A. "Accrued Benefits" means an amount equal to the sum of (a)
the portion of the Base Salary payable through and including the Termination
date which has not yet been paid, (b) all compensation previously deferred by
the Executive (together with any accrued interest and earnings thereon) which
has not yet been paid, and (c) any accrued but unpaid expense reimbursements and
vacation pay.
B. Good Cause. "Good Cause," 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.
-17-
<PAGE>
C. "Good Reason" for the Executive's termination of his
Employment means: (a) any violation hereof in any material respect by the
Company; (b) without approval of 5/7 of the Board either (1) a failure of the
Company to continue in effect any Compensation Plan in which the Executive was
participating, or (2) the taking of any action by the Company which would
adversely affect the Executive's participation in or materially reduce the
Executive's benefits under, any such Compensation Plan; or (c) the assignment to
the Executive of duties inconsistent in any material respect with the
Executive's then current positions (including status, offices, titles and
reporting requirements), authority, duties or responsibilities or any other
action by the Company which results in a material diminution in those positions,
authority, duties or responsibilities.
D. "Required Board Majority" means at any time a majority of
the members of the entire Board then in office which shall include at least a
majority of the Outside Directors then in office.
E. "Severance Payment" means at any time an amount equal to
three (3) times the Executive's Average Annual Compensation during the term of
this Agreement.
F. "Termination Payment" means at any time an amount equal to
one and one-half (1.5) times the Executive's Average Annual Compensation during
the term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have affixed their signatures
the day and year first above written.
AMERICAN MARINE RECREATION, INC.
By: _______________________________________
Name:
Title:
-18-
<PAGE>
---------------------------------------------
JOSEPH G. POZO, JR.
ORL95 90225.3 - SMD
-19-
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into as of this ___ 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"). In the event the Term is
not renewed, the Executive shall be entitled to one year salary payable at
regular payment intervals commencing with the first pay period subsequent to the
expiration of the Term hereof.
<PAGE>
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.
(b) Provided Executive's employment continues during the term hereof
and he is in good standing with the Company, Executive shall be eligible to
receive, as additional
- 2 -
<PAGE>
compensation for the services to be rendered by Executive under this Agreement,
150,000 options to purchase shares of the Company's common stock pursuant to the
following schedule:
25,000 options Issued at the time of the Initial Public
Offering of the Company's stock;
25,000 options Issued at the end of first firscal year
provided the Company achieves 80% of the pre-tax
profit as set forth in its 1999 budget
25,000 options Issued at the beginning of the second year of
employment pursuant to this Agreement
25,000 options Issued at the end of second fiscal year
provided the Company achieves 80% of the pre-tax
profit as set forth in its 2000 budget
25,000 options Issued at the beginning of the third year of
employment pursuant to this Agreement
25,000 options Issued at the end of third fiscal year
provided the Company achieves 80% of the pre-tax
profit as set forth in its 2001 budget
150,000 options
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.
- 3 -
<PAGE>
6. Vacation. Executive shall be entitled to a fully paid vacation of
three (3) 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) 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 his family 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.
- 4 -
<PAGE>
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 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.
- 5 -
<PAGE>
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 one (1) year 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. However, if the duration of the Non-Competition Period
or the extent of the Territory herein
- 6 -
<PAGE>
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 foregoing 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 three (3) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
three (3) month period, but which shall not be effective earlier than the last
day of such three (3) month period), the Corporation may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the
- 7 -
<PAGE>
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 within thirty (30) days of the effective date of
termination, the base salary 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)
- 8 -
<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.
(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 and provided that the Executive receives at least
one (1) month 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 based upon the schedule set
forth in paragraph 4(b) 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
- 9 -
<PAGE>
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.
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
- 10 -
<PAGE>
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.
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 LLP
260 Madison Avenue, 18th Floor
New York, New York 10016
Attn: Marc G. Rosenberg, 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.
- 11 -
<PAGE>
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. 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
- 12 -
<PAGE>
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.
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.
- 13 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have affixed their signatures
the day and year first above written.
AMERICAN MARINE RECREATION, INC.
By: ____________________________________
Name:
Title:
------------------------------------------
MELVEN R. NEHLEBER
- 14 -
<PAGE>
CONTRACT FOR SALE AND PURCHASE
Florida Association of Realtors and the Florida Bar
Parties: JCJ Family Partnership, Ltd. ("Seller")
of 1924 - 33rd St., Orlando, Florida 32839 (Phone) 422-8141
and Boat Tree, Inc. ("Buyer"),
of 1924 - 33rd St., Orlando, Florida 32839 (Phone) 422-8141
hereby agree that Seller shall sell and Buyer shall buy the following Real
Property and Personal Property (collectively "Property") upon the following
terms and conditions, which INCLUDE Standards for Real Estate Transactions
("Standards") on the reverse side or attached hereto and riders and addenda to
this Contract for Sale and Purchase ("Contract").
I. DESCRIPTION:
(a) Legal description of Real Property located in Orange County, Florida
See Attached Exhibit
(b) Street address, city, zip, of the Property is:
(c) Personal Property:
II. PURCHASE PRICE: $400,000.00
PAYMENT:
(a) Deposit held in escrow by in the amount of $
(b) Additional escrow deposit within __ days after Effective Date
(as defined in Paragraph III) in the amount of $_________
(c) Subject to AND assumption of mortgage in good standing in favor of
(d) Purchase money mortgage and note (see addendum) in the amount of
$400,000.00
(e) Other: $_________
(f) Balance to close by U.S. cash LOCALLY DRAWN certified or cashier's
check or third-party loan, subject to adjustments and prorations $ -0-
III. TIME FOR ACCEPTANCE OF OFFER; EFFECTIVE DATE; FACSIMILE. If this offer is
not executed by and delivered to all parties OR FACT OF EXECUTION communicated
in writing between the parties on or before
1-15-99 the deposit(s) will, at Buyer's option, be returned to Buyer and this
offer withdrawn. The date of Contract ("Effective Date") will be the date when
the last one of the Buyer and Seller has signed this offer. A facsimile copy of
this Contract and any signatures hereon shall be considered for all purposes as
originals.
IV. FINANCING:
(a) If the purchase price or any part of it is to be financed by a
third-party loan, this Contract is conditioned on Buyer obtaining a written
commitment within ___ days after Effective Date for (CHECK ONE ONLY) |_| a
fixed; |X| an adjustable; or |_| a fixed or adjustable rate loan for the
principal amount of $______ at an initial interest rate not to exceed Prime Rate
discount and origination fees not to exceed _____% of the principal amount, and
a term of 18 months. Buyer will make application within ___ days after Effective
Date and use reasonable diligence to obtain the loan commitment and thereafter
to satisfy the terms and conditions of the commitment and close the loan. Buyer
shall pay all loan expenses. If Buyer fails to obtain the commitment or fails to
waive Buyer's rights under this subparagraph within the time for obtaining the
commitment or, after diligent effort, fails to meet the terms and conditions of
the commitment, then either party
<PAGE>
thereafter, by written notice to the other, may cancel this Contract and
Buyer shall be refunded the deposit(s); or
(b) The existing mortgage described in Paragraph II(c) above has (CHECK ONE
ONLY) |_| a variable interest rate; or |_| a fixed interest rate of ___% per
annum. At time of title transfer some fixed interest rates are subject to
increases. If increased, the rate shall not exceed ____% per annum. Seller
shall, within __ days after Effective Date, furnish a statement from each
mortgagee stating principal balance, method of payment, interest rate and status
of mortgage. If Buyer has agreed to assume a mortgage which requires approval of
Buyer by the mortgagee for assumption, then Buyer shall promptly obtain the
necessary application and diligently complete and return it to the mortgagee.
Any mortgage charge(s) not to exceed $______ shall be paid by Buyer. If
Buyer is not accepted by mortgagee or the requirements for assumption are not in
accordance with the terms of this Contract or mortgagee makes a charge in excess
of the stated amount, Seller or Buyer may rescind this Contract by written
notice to the other party unless either elects to pay the increase in interest
rate or excess mortgage charges.
V. TITLE EVIDENCE: At least 20 days before closing date, but no earlier than n/a
days after Seller receives written notification that Buyer has obtained the loan
commitment or been approved for the loan assumption as provided in Paragraph
IV(a) or (b) above, or if applicable, waived the financing requirements (CHECK
ONLY ONE) |_|Seller shall, at Seller's expense, deliver to Buyer or Buyer's
attorney, or |X| Buyer shall at Buyer's expense obtain, in accordance with
Standard A (CHECK ONLY ONE) |_| abstract of title; or |_| title insurance
commitment (with legible copies of instruments listed as exceptions) and, after
closing, an owner's policy of the insurance.
VI. CLOSING DATE: This transaction shall be closed and the deed and other
closing papers delivered on see addendum , unless extended by other provisions
of this Contract.
VII. RESTRICTIONS; EASEMENTS; LIMITATIONS: Buyer shall take title subject to
comprehensive land use plans, zoning restrictions, prohibitions and other
requirements imposed by governmental authority; restrictions and matters
appearing on the plan or otherwise common to the subdivision; public utility
easements of record (easements are to be located contiguous to Real Property
lines and not more than 10 feet in width as to the rear or front lines and 7 1/2
feet in width as to the side lines, unless otherwise stated herein); taxes for
year of closing and subsequent years, assumed mortgages and purchase money
mortgages, if any (if other matters, see Paragraph XV); provided, that there
exists at closing no violation of the foregoing and none of them prevents use of
the Property for boat storage purpose(s).
VII. OCCUPANCY: Seller warrants that there are no parties in occupancy other
than Seller, but, if Property is intended to be rented or occupied beyond
closing, the fact and terms thereof shall be stated herein and the tenant(s) or
occupants disclosed pursuant to Standard F. Seller shall deliver occupancy of
Property at time of closing unless otherwise stated herein. If occupancy is to
be delivered before closing, Buyer assumes all risk of loss to Property from
date of occupancy, shall be responsible and liable for maintenance from that
date, and shall be deemed to have accepted Property in its existing condition as
of time of taking occupancy unless otherwise stated herein.
IX. TYPEWRITTEN OR HANDWRITTEN PROVISIONS: Typewritten or handwritten
provisions, riders and addenda shall control all printed provisions of this
Contract in conflict with them.
X. RIDERS: (CHECK those riders which are applicable AND are attached to
the Contract): (a) |_| Coastal Construction Control Line Rider (e) |_|
Insulation Rider (b) |_| Condominium Rider (f) |X| "AS IS" Rider (c)
|_| FHA/VA Rider (g) |_| _______________________ (d) |_| FOREIGN
INVESTMENT IN REAL (h) |_| _______________________
<PAGE>
PROPERTY TAX ACT RIDER
XI. ASSIGNABILITY: (CHECK ONLY ONE) Buyer |_| may assign and thereby be released
from any further liability under this Contract; |_|may assign but not be
released from liability under this Contract; or |X| may not assign this
Contract.
<PAGE>
XII. TIME: Time is of the essence of this Contract.
XIII. DISCLOSURES: Buyer (CHECK ONLY ONE) |_| acknowledges; or |_| does not
acknowledge receipt of the Agency/Radon/Compensation, the Real Property Sales
Expense Disclosure Warning, and if, applicable, the Mandatory Homeowners
Association disclosures _____________________ BUYER'S INITIALS.
XIV. MAXIMUM REPAIR COSTS: Seller shall not be responsible for the payment
of costs in excess of (a) $ n/a for treatment and repair under Standard
D (if blank, then 2% of the Purchase Price). (b) $ n/a for repair and
replacement under Standard N (if blank, then 3% of the Purchase Price).
XV. SPECIAL CLAUSES: If additional space is required, attach addendum and CHECK
HERE |_|.
THIS IS INTENDED TO BE A LEGALLY BINDING CONTRACT, IF NOT FULLY UNDERSTOOD,
SEEK THE ADVICE OF AN ATTORNEY PRIOR TO SIGNING. THIS FORM HAS BEEN APPROVED BY
THE FLORIDA ASSOCIATION OF REALTORS AND THE FLORIDA BAR.
Approval does not constitute an opinion that any of the terms and conditions in
this Contract should be accepted by the parties in a particular transaction.
Terms and conditions should be negotiated based upon the respective interests,
objectives and bargaining positions of all interested persons.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
BOAT TREE, INC. JCJ FAMILY PARTNERSHIP, Ltd.
By: By:
- --------------------------- ---------- ---------------- -----------
(Buyer) Joseph G. Pozo, Jr., Pres. Date (Seller) Joseph G. Pozo, Jr., Gen. Partner Date
Social Security or Tax I.D.# 59-3131173 Social Security or Tax I.D. # 59-3416617
(Buyer) Date (Seller) Date
Deposit under Paragraph 11(a) received; IF OTHER THAN CASH, THEN SUBJECT TO CLEARANCE
(Escrow Agent)
BROKER'S FEE: The brokers named below, including listing and cooperating
brokers, are the only brokers entitled to compensation in connection with this
Contract.
Name:
Listing Broker Cooperating Brokers, if any
</TABLE>
<PAGE>
STANDARDS FOR REAL ESTATE TRANSACTIONS
A. EVIDENCE OF TITLE: (1) An abstract of title prepared or brought current by a
reputable and existing abstract firm (if not existing then certified as correct
by an existing firm) purporting to be an accurate synopsis of the instruments
affecting title to the Real Property recorded in the public records of the
county wherein Real Property is located through Effective Date and which shall
commence with the earliest public records, or such later date as may be
customary in the county. Upon closing of this transaction, the abstract shall
become the property of Buyer, subject to the right of retention thereof by first
mortgagee until fully paid. (2) A title insurance commitment issued by a Florida
licensed title insurer agreeing to issue to Buyer, upon recording of the deed to
Buyer, an owner's policy of title insurance in the amount of the purchase price
insuring Buyer's title to the Real Property, subject only to liens,
encumbrances, exceptions or qualifications as set forth in this Contract and
those which shall be discharged by Seller at or before closing. Seller shall
convey marketable title subject only to liens, encumbrances, exceptions or
qualifications specified in this Contract. Marketable title shall be determined
according to applicable Title Standards adopted by authority of The Florida Bar
and in accordance with law. Buyer shall, within 3 days, have 30 days, if
abstract, or 5 days, if title commitment, from date of receiving evidence of
title to examine it. If title is found defective, Buyer shall thereafter notify
Seller in writing specifying defect(s). If the defect(s) render title
unmarketable, Seller will have 30 days from receipt of notice to remove the
defects, failing which Buyer shall, within five (5) days after expiration of the
thirty (30) day period, deliver written notice to Seller either: (1) extending
the time for a reasonable period not to exceed 120 days within which Seller
shall use diligent effort to remove the defects; or (2) requesting a refund of
deposit(s) paid which shall immediately be returned to Buyer. If Buyer fails to
so notify Seller, Buyer shall be deemed to have accepted the title as it then
is. Seller shall, if title is found unmarketable, use diligent effort to correct
defect(s) in the title within the time provided therefor. If Seller is unable to
remove the defects within the times allowed therefor, Buyer shall either waive
the defects or receive a refund of deposit(s), thereby releasing Buyer and
Seller from all further obligation under this Contract.
B. PURCHASE MONEY MORTGAGE; SECURITY AGREEMENT. A purchase money
mortgage and mortgage note to Seller shall provide for a 30-day grace period in
the event of default if a first mortgage and a 15-day grace period if a second
or lesser mortgage; shall provide for right of prepayment in whole or in part
without penalty; shall permit acceleration in event of transfer of the Real
Property; shall require all prior liens and encumbrances to be kept in good
standing and forbid modifications of or future advances under prior mortgage(s);
shall require Buyer to maintain policies of insurance containing a standard
mortgagee clause covering all improvements located on the Real Property against
fire and all perils included within the term "extended coverage endorsements"
and such other risks and perils as Seller may reasonable require. In an amount
equal to their highest insurable value and the mortgage, note and security
agreement shall be otherwise in form and content required by Seller; but Seller
may only require clauses and coverage customarily found in mortgages, mortgage
notes and security agreements generally utilized by savings and loan
institutions or state or national banks located in the county
1
<PAGE>
wherein Real Property is located. All Personal Property and leases being
conveyed or assigned will, at Seller's options, be subject to the lien of a
security agreement evidenced by record financing statements. If a balloon
mortgage, the final payment will exceed the periodic payments thereon.
C. SURVEY. Buyer, at Buyer's expense, within time allowed to deliver evidence of
title and to examine same, may have the Real Property surveyed and certified by
a registered Florida surveyor. If survey shows encroachment on Real Property or
that Improvements located on Real Property encroach on setback liens, easements,
lands of others or violate any restrictions Contract covenants or applicable
governmental regulation, the same shall constitute a title defect.
D. TERMITES. Buyer, at Buyer's expense, within time allowed to deliver evidence
of title, may have the Property inspected by a Florida Certified Pest Control
Operator ("Operator") to determine if there is any visible active termite
infestation or visible damage from termite infestation in the Property. If
either or both are found, Buyer will have 4 days from date of written notice
thereof within which to have cost of treatment, if required, estimated by the
Operator and all damage, inspected and estimated by a licensed builder or
general contractor. Seller shall pay valid costs of treatment and repair of all
damage up to the amount provided in Paragraph XIV(a). Should estimated costs
exceed that amount, Buyer shall have the option of canceling Contract within 5
days after receipt of contractor's repair estimate by giving written notice to
Seller or Buyer may elect to proceed with the transaction. In which event Buyer
shall receive a credit at closing of the amount provided in Paragraph XIV(a).
"Termite" shall be deemed to include all wood destroying organisms required to
be reported under the Florida Pest Control Act.
E. INGRESS AND EGRESS. Seller warrants and represents that there is ingress and
egress to the Real Property sufficient for its intended use as described in
Paragraph VII hereof, title to which is in accordance with Standard A.
F. LEASES. Seller shall, not less than 15 days before closing, furnish to Buyer
copies of all written leases and estoppel letters from each tenant specifying
the nature and duration of the tenant's occupancy, rental rates, advanced rent
and security deposits paid by tenant. If Seller is unable to obtain such letter
from each tenant, the same information shall be furnished by Seller to Buyer
within that time period in the form of a Seller's affidavit, and Buyer may
thereafter contact tenants to confirm such information. Seller shall, at
closing, deliver and assign all original leases to Buyer.
G. LIENS. Seller shall furnish to Buyer at time of closing an affidavit
attesting to the absence, unless otherwise provided for herein, of any financing
statement, claims of lien or potential lienors known to Seller and further
attesting that there have been no improvements or repairs to the Property for 80
days immediately preceding date of closing. If Property has been improved or
repaired within that time, Seller shall deliver releases or waivers of
construction liens executed by all general contractors, subcontractors, supplier
and materialmen in addition to
2
<PAGE>
Seller's lien affidavit setting forth the names of all such general contractors,
subcontractors, suppliers and materialmen and further affirming that all charges
for improvements or repairs which could serve as a basis for a construction lien
or a claim for damages have been paid or will be paid at closing of this
Contract.
H. PLACE OF CLOSING. Closing shall be held in the county wherein the Real
Property is located at the office of the attorney or other closing agent
designated by Seller.
I. TIME PERIOD. In computing time periods of less than six (6) days, Saturdays,
Sundays and state or national legal holidays shall be excluded. Any time periods
provided for herein which shall end on a Saturday, Sunday or a legal holiday
shall extend to 5:00 p.m. of the next business day.
J. DOCUMENTS FOR CLOSING. Seller shall furnish the deed, bill of sale,
construction lien affidavit, owner's possession affidavit, assignments of
leases, tenant and mortgage estoppel letters and corrective instruments. Buyer
shall furnish closing statement, mortgage, mortgage note, security agreement and
financing statements.
K. EXPENSES. Documentary stamps on the deed and recording of corrective
instruments shall be paid by Seller. Documentary stamps and intangible tax on
the purchase money mortgage and any mortgage assumed and recording of purchase
money mortgage to Seller, deed and financing statements shall be paid by Buyer.
L. PRORATIONS; CREDITS. Taxes, assessments, rent, interest, insurance and other
expenses and revenue of Property shall be prorated through day before closing.
Buyer shall have the option of taking over any existing policies of insurance,
if assumable, in which event premiums shall be prorated. Cash at closing shall
be increased or decreased as may be required by prorations. Prorations will be
made through day prior to occupancy if occupancy occurs before closing, Advance
rent and security deposits will be credited to Buyer and escrow deposits held by
mortgages will be credited to Seller. Taxes shall be prorated based on the
current year's tax with due allowance made for maximum allowable discount,
homestead and other exemptions. If closing occurs at a date when the current
year's millage is not fixed and current year's assessment is available, taxes
will be prorated based upon such assessment and the prior year's millage. If
current year's assessment is not available, then taxes will be prorated on the
prior year's tax. If there are completed improvements on the Real Property by
January 1st of year of closing, which improvements were not in existence on
January 1st of the prior year, then taxes shall be prorated based upon the prior
year's millage and at an equitable assessment to be agreed upon between the
parties, failing which, request will be made to the County Property Appraiser
for an informal assessment taking into consideration available exemptions. Any
tax proration based on an estimate shall, at request of either Buyer or Seller,
be subsequently readjusted upon receipt of tax bill on condition that a
statement to that effect is in the closing statement.
3
<PAGE>
M. SPECIAL ASSESSMENT LIENS. Certified, confirmed and ratified special
assessment liens as of date of closing (not as of Effective Date) are to be paid
by Seller. Pending liens as of date of closing shall be assumed by Buyer. If the
improvement has been substantially completed as of Effective Date, any pending
lien shall be considered certified, confirmed or ratified and Seller shall, at
closing, be charged an amount equal to the last estimate of assessment for the
improvement by the public body.
N. INSPECTION, REPAIR AND MAINTENANCE. Seller warrants that, as of 10
days
prior to closing, the ceiling, roof (including the fascia and soffits) and
exterior and interior walls, foundation, seawalls (or equivalent) and dockage do
not have any VISIBLE EVIDENCE of leaks, water damage, or structural damage and
that the septic tank, pool, all appliances, mechanical items, heating, cooling,
electrical, plumbing systems and machinery are in WORKING CONDITION. The
foregoing warranty shall be limited to the items specified unless otherwise
provided in an addendum. Buyer may, at Buyer's expense, have inspections made of
those items by a firm or individual specializing in home inspections and holding
an occupational license for such purpose (if required) or by an appropriately
licensed Florida contractor. Buyer shall prior to Buyer's occupancy or not less
than 10 days prior to closing, whichever occurs first, report in writing to
Seller such items that do not meet the above standards as to defects. Unless
Buyer reports such defects within that time, Buyer shall be deemed to have
waived Seller's warrantee as to defects not reported. If repairs or replacements
are required to comply with this Standard, Seller shall cause them to be made
and shall pay up to the amount provided in Paragraph XIV(b). Seller is not
required to make repairs or replacements of a cosmetic nature unless caused by a
defect Seller is responsible to repair or replace. If the cost for such repair
or replacement exceeds the amount provided in Paragraph XIV(b), Buyer or Seller
may elect to pay such excess, failing which either party may cancel this
Contract. If Seller is unable to correct the defects prior to closing, the cost
thereof shall be paid into escrow at closing. Seller shall, upon reasonable
notice, provide utilities service and access to the Property for inspections,
including a walk-through prior to closing, to ensure that all items of Personal
Property are on the Real Property and, subject to the foregoing, that all
required repairs and replacements have been made and that the Property,
including, but not limited to, the lawn, shrubbery and pool, if any, has been
maintained in the condition existing as of the Effective Date, ordinary wear and
tear excepted.
O. RISK OF LOSS. If the Property is damaged by fire or other casualty before
closing and cost of restoration does not exceed 3% of the assessed valuation of
the Property so damaged, cost of restoration shall be an obligation of the
Seller and closing shall proceed pursuant to the terms of this Contract with
restoration costs escrowed at closing. If the cost of restoration exceeds 3% of
the assessed valuation of the improvements so damaged, Buyer shall have the
option of either taking Property as is, together with either the 3% or any
insurance proceeds payable by virtue of such loss or damage, or of canceling
this Contract and receiving return of deposit(s).
P. PROCEEDS OF SALE; CLOSING PROCEDURE. The deed shall be recorded upon
clearance of funds. If abstract of title has been furnished, evidence of title
shall be continued at Buyer's expense to show title in Buyer, without any
encumbrance or change which would render
4
<PAGE>
Seller's title unmarketable from the date of the last evidence. Proceeds of the
sale shall be held in escrow by Seller's attorney or by another mutually
acceptable escrow agent for a period of not more than 5 days after closing date.
If Seller's title is rendered unmarketable, through no fault of Buyer, Buyer
shall, within the 5-day period, notify Seller in writing of the defect and
Seller shall have 30 days from date of receipt of such notification to cure the
defect. If Seller fails to timely cure the defect, all deposit(s) and closing
funds shall, upon written demand by Buyer and within 5 days after demand, be
returned to Buyer and, simultaneously with such repayment, Buyer shall return
the Personal Property, vacate the Real Property and reconvey the Property to
Seller by special warranty deed and bill of sale. If Buyer fails to make timely
demand for refund, Buyer shall take title as is, waiving all rights against
Seller as to any intervening defect except as may be available to Buyer by
virtue of warranties contained in the deed or bill of sale. If a portion of the
purchase price is to be derived from institutional financing or refinancing,
requirements of the lending institution as to place, time of day and procedures
for closing, and for disbursement of mortgage proceeds shall control over
contrary provision in this Contract. Seller shall have the right to require from
the lending institution a written commitment that it will not withhold
disbursement of mortgage proceeds as a result of any title defect attributable
to Buyer-mortgagor. The escrow and closing procedure required by this Standard
shall be waived if title agent insures adverse matters pursuant to Section
627.7841, F.S. (1993), as amended.
Q. ESCROW. Any escrow agent ("Agent") receiving funds or equivalent is
authorized and agrees by acceptance of them to deposit them promptly, hold same
in escrow and, subject to clearance, disburse them in accordance with terms and
conditions of Contract. Failure of clearance of funds shall not excuse Buyer's
performance. If in doubt as to Agent's duties or liabilities under the
provisions of Contact, Agent may, at Agent's option, continue to hold the
subject matter of the escrow until the parties mutually agree to its
disbursement or until a judgment of a court of competent jurisdiction shall
determine the rights of the parties or Agent may deposit same with the clerk of
the circuit court having jurisdiction of the dispute. Upon notifying all parties
concerned of such action, all liability on the part of Agent shall fully
terminate, except to the extent of accounting for any liens previously delivered
out of escrow. If a licensed real estate broker, Agent will comply with
provisions of Chapter 475, F.S. (1993) as amended. Any suit between Buyer and
Seller wherein Agent is made a party because of acting as Agent hereunder or in
any suit wherein Agent interpleads the subject matter of the escrow, Agent shall
recover reasonable attorney's fees and costs incurred with the fees and costs to
be paid from and out of the escrowed funds or equivalent and charged and awarded
as court costs in favor of the prevailing party. Parties agree that Agent shall
not be liable to any party or person for misdelivery to Buyer or Seller of items
subject to this escrow, unless such misdelivery is due to willful breach of this
Contract or gross negligence of Agent.
R. ATTORNEY'S FEES; COSTS. In any litigation, including breach, enforcement or
interpretation, arising out of this Contract, the prevailing party in such
litigation which, for the purposes of this Standard, shall include Seller, Buyer
and any brokers acting in agency or nonagency relationships authorized by
Chapter 475, F.S. (1993) as amended, shall be entitled to recover reasonable
attorney's fees, costs and expenses.
5
<PAGE>
S. FAILURE OF PERFORMANCE. If Buyer fails to perform this Contract within the
time specified, including payment of all deposit(s), the deposit(s) paid by
Buyer and deposit(s) agreed to be paid, may be retained by or for the account of
Seller as agreed upon liquidated damages, consideration for the execution of
this Contract and in full settlement of any claims, whereupon, Buyer and Seller
shall be relieved of all obligations under the this Contract, or Seller, at
Seller's option, may proceed in equity to enforce Seller's rights under this
Contract. If for any reason other than failure of Seller to make Seller's title
marketable after diligent effort, Seller fails, neglects or refuses to perform
this Contract, the Buyer may seek specific performance or elect to receive the
return of Buyer's deposit(s) without thereby waiving any action for damages
resulting from Seller's breach.
T. CONTRACT NOT RECORDABLE; PERSONS BOUND; NOTICE. Neither the
Contract nor any notice of it shall be recorded in any public records. This
Contract shall bind and inure to the benefit of the parties and their successors
in interest. Whenever the context permits, singular shall include plural and one
gender shall include all. Notice given by or to the attorney for any party shall
be as effect as if given by or to that party.
U. CONVEYANCE. Seller shall convey title to the Real Property by statutory
warranty, trustee's, personal representatives or guardian's deed, as appropriate
to the status of Seller, subject only to matters contained in paragraph VII and
those otherwise accepted by Buyer. Personal Property shall, at request of Buyers
be transferred by an absolute bill of sale with warranty of title, subject only
in such matters as may be otherwise provided for herein.
V. OTHER AGREEMENTS. No prior or present agreements or representations shall be
binding upon Buyer or Seller unless included in this Contract. No modification
or change in this Contract shall be valid or binding upon the parties unless, in
writing and executed by the party or parties intended to be bound by it.
W. WARRANTY. Seller warrants that there are no facts known to Seller
materially affecting
the value of the Property which are not readily observable by Buyer or which
have not been disclosed to Buyer.
6
<PAGE>
ADDENDUM TO CONTRACT FOR SALE AND PURCHASE
This Addendum to Contract for Sale and Purchase is made by and between
JCJ Family Partnership, Ltd., as Seller and Boat Tree, Inc., as Buyer.
In the event of any conflict between the terms and provisions of this
Addendum to Contract for Sale and Purchase and the terms and provisions of the
printed Contract for Sale and Purchase to which this Addendum is annexed, the
terms and provisions of this Addendum shall take precedence.
1. AS-IS SALE. The Buyer acknowledges that by Closing, its
representatives will have inspected the Property and made any investigations
deemed necessary and appropriate with respect to the Property. Buyer further
acknowledges that except for the Seller's representations contained in this
Contract, the Seller makes no further representations or warranties concerning
the Property and Buyer has relied upon no statements or representations of
Seller or its agents or employees. Seller is selling the Property "AS IS" and
Buyer accepts the Property in its "AS IS" condition.
2. BINDING EFFECT. The Contract and this Addendum shall be binding upon
and inure to the benefit of the respective parties, their heirs, executors,
administrators, legal representatives and assigns, and may be altered, modified,
varied or amended except by subsequent formal agreement in writing, signed by
the parties hereto.
3. ENTIRE CONTRACT. This Contract, when signed by both Seller and
Buyer, will be the record of the complete agreement between Seller and Buyer
concerning the purchase and sale of the Property. No verbal agreements or
promises will be binding and no changes or amendments thereto will be effective
unless in writing and signed by both parties.
4. COUNTERPART AND FACSIMILE SIGNATURES. The parties hereto acknowledge
that this Contract may be executed in counterparts, each being deemed to be
originals, and facsimile signatures shall also be deemed as originals.
5. CLOSING. This transaction shall close contemporaneously with an
Initial Public Offering of the common stock of American Marine Recreation, Inc.
The Promissory Note will be guaranteed by American Marine Recreation, Inc. Buyer
shall pay all costs and expenses associated with the consummation of this
transaction.
<PAGE>
SELLER BUYER
JCJ Family Partnership, Ltd. Boat Tree, Inc.
By: By:
- ------------------------------- -----------------------
Joseph G. Pozo, Jr., General Partner Joseph G. Pozo, Jr., President
<PAGE>
<PAGE>
EXPANDED SCHEDULE RIDER
THIS RIDER is made a part of and amends and supplements the Inventory
Security Agreement dated July 1, 1992 (the "ISA") between Boat Tree, Inc.
("Dealer") and Transamerica Commercial Finance Corporation ("TCFC").
Dealer and TCFC agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Terms used in this Rider which are defined in the
ISA shall have the meanings assigned to them in the ISA.
2. THE CREDIT. This Rider is to provide an additional working capital
loan facility (the "Working Capital Facility") under the ISA in addition to
Dealer's current $10,000,000 inventory loan facility.
2.1 Loan Limits. TCFC shall make working capital cash Advances
("Working Capital Advances") to Debtor under this Facility. Such Working Capital
Advances shall be treated as Advances under the terms of the ISA except as
provided herein. The aggregate principal balance of Working Capital Advances and
Approvals under the Working Capital Facility shall not exceed the lesser of
$2,000,000 (the "Credit Limit") or the Borrowing Base. If at any time the
aggregate outstanding principal balance of Working Capital Advances and
Approvals exceeds the lesser of the Credit Limit or the Borrowing Base, Dealer
shall, unless TCFC otherwise consents, immediately and without notice or demand
of any kind, make such payments to TCFC as shall be necessary to eliminate such
excess.
2.2 (a) "Borrowing Base" means the sum of the following less
such reserves as TCFC in its sole discretion elects up to the percentage or
dollar amount, if less for each of the classes of Eligible Inventory (which
shall be mutually exclusive) determined pursuant to Schedule 2.2(a), valued on
the lower of cost (using first-in, first-out method of inventory accounting) or
market.
b) "Eligible Inventory" means any Inventory which
TCFC deems to be eligible in its sole discretion. Without limiting the above,
Inventory must: (i) be subject to a first perfected lien in favor of TCFC; (ii)
not be obsolete, be in good condition and currently useable or saleable in
<PAGE>
the ordinary course of Dealer's business; (iii) be acceptable to TCFC with
respect to age, type, category and quantity; (iv) be at a Permitted
Location. Dealer must have good title to and all licenses and rights required to
sell such Inventory.
2.3 Certificate of Accuracy. Dealer shall provide TCFC a certificate (the
"Certificate of Accuracy") in form satisfactory to TCFC as to
the accuracy of each report or schedule furnished by Dealer to TCFC pursuant to
Schedule 3.2 (i) when such reports or schedules are furnished to TCFC and (ii)
at such other times as TCFC may request. TCFC shall perform a Borrowing Base
calculation based upon the information provided by Dealer in the reports and
schedules furnished by Dealer pursuant to Schedule 3.2 and Dealer agrees that
such Borrowing Base calculation shall be controlling as to the determination of
the Borrowing Base.
2.3.1 Authorized Signers. Dealer shall provide TCFC with certified copies
of resolutions of Dealer's Board of Directors and other documents requested by
TCFC specifying the names of Persons authorized to sign Certificates of
Accuracy, to make requests for Advances and to otherwise act for Dealer, and
TCFC shall be entitled to rely upon such documentation until given notice in
writing by Dealer of any change. TCFC shall be entitled to act on instructions
of any Person identifying him or herself as such as authorized Person by
telephone, and Dealer
shall be bound thereby whether or not such Person is actually so authorized.
Dealer shall indemnify TCFC against any and all claims, losses, liabilities,
costs and expenses (including reasonable attorneys' fees) which may arise or be
created by the acceptance of instructions for making or paying Advances by
telephone.
2.4 Disbursement of Advances. TCFC, in its sole discretion, may make
Advances in excess of the Borrowing Base or the Credit Limit or issue further
Approvals without waiving any right of TCFC to demand payments, refuse to make
further Advances or issue Approvals.
2.5 Loan Accounts. TCFC shall maintain loan accounts in its
internal data control systems in which shall be recorded all Advances, payments,
and other appropriate debits and credits, including, without limitation, all
Charges and expenses ("Loan Accounts"). All entries in the Loan Accounts shall
be made in accordance with TCFC's customary practices in effect from time to
time. Dealer shall pay TCFC the amount reflected as owing by it under the Loan
Accounts and all other Indebtedness as such amounts become due or are
<PAGE>
demanded pursuant to the terms of the Agreement.
2.6 Statements. Until TCFC gives Dealer written statements of account as
provided herein, the balances in the Loan Accounts set forth on TCFC's most
recent printouts, shall be rebuttably presumptive evidence of the amounts due
and owing TCFC by Dealer at the time of such printouts. From time to time, TCFC
shall render to Dealer a statement or statements setting forth the balances of
the Loan Accounts, including principal, Charges and expenses. Each such
statement shall be subject to subsequent adjustment by TCFC but shall, absent
manifest errors or omissions, be presumed correct; and, unless within 30 days
after receipt Dealer shall deliver to TCFC written notice of the errors, if any,
contained in such statement, such statement shall constitute an account stated.
2.7 Principal repayment. All Advances shall be due and payable as stated on
Schedule 2.7, subject to other provisions of this Rider and ISA.
2.8 Interest. The outstanding principal balance of Advances shall bear
interest before maturity on the average daily outstanding balance thereof, at a
per annum rate equal to the from time to time Prime Rate (the "Pre-Default
Rate"). For the purpose of this Agreement the Prime Rate shall in no event be
less than 7%. Overdue principal (i.e. any payments of principal not paid when
required under the terms of this ISA) shall accrue interest at a rate equal to
the lesser of Prime plus 2% or the highest rate allowed by applicable law.
Interest will commence on the Start Date of each Advance hereunder. TCFC may
provide for the payment of any unpaid accrued interest by charging the Loan
Accounts.
2.9 Other Charges. Dealer shall pay TCFC other fees and charges with
respect to Advances in such amounts and as set forth on Schedule 2.9. TCFC may
charge the Loan Accounts for any unpaid accrued interest or other Charges.
2.10 Reaffirmation. Each request for an Advance made by Dealer and each
schedule or report furnished by Dealer to TCFC shall constitute a representation
and warranty by Dealer to TCFC that all of the representations and warranties of
Dealer in the Agreement are true and correct on the date of such Advance,
schedule or report to the same extent as if then made, unless Dealer has given
TCFC written notice to the contrary prior thereto.
2.11 Payments and Collections. All payments on Advances shall be made,
without setoff or counterclaim, to TCFC prior to 12:00 Noon, Chicago time, on
the date due at its office in immediately available funds at ,
or such other place as may be designated by TCFC to Dealer in writing or by
electronic transmission. Notwithstanding anything to the contrary in the ISA,
all items of payment on Advances for purposes of (i) determining the occurrence
of a Default shall be deemed received upon actual receipt by TCFC unless
subsequently dishonored for any reason; (ii) calculating the Borrowing Base
shall be applied by TCFC against the principal of and/or interest on such
Advances on the same Business Day of receipt by TCFC; and (iii) calculating
interest shall be deemed to have been applied by TCFC against the principal of
and/or interest on such Advances on the third Business Day after receipt by TCFC
provided that payments received by TCFC after noon where payment is to be made
shall be deemed received by TCFC on the next Business Day.
3. ACCOUNTS
3.1 Returns. Dealer shall promptly notify TCFC of all material returns of
inventory received by Dealer, in the reports to be provided to TCFC pursuant to
the Section of this Rider entitled "Reports." After a Default has occurred, no
material return of inventory shall be accepted, and no sale of returned
inventory shall be made, by Dealer without TCFC's prior written consent. After a
Default has occurred, TCFC shall have the right to accept the return of any
inventory directly fro an account debtor, without notice to or consent by
Dealer. Neither the delivery by Dealer of returned inventory to TCFC nor the
acceptance by TCFC of returns directly from an account debtor, shall in any way
affect Dealer's obligations to TCFC on account of Indebtedness.
3.2 Reports. Dealer shall furnish TCFC the reports required by Schedule 3.2
and such other reports as TCFC from time to time may reasonably request
regarding Dealer and the Collateral, all in form satisfactory to TCFC. Such
reports shall be for such periods, at such times and with such frequency as TCFC
may reasonably designate. Dealer shall immediately notify TCFC of previously
reported Eligible Accounts which cease to be Eligible Accounts. All reports
furnished TCFC shall be complete and accurate in all respects at
the time furnished.
4. COVENANTS.
4.1 Financial Covenants. Dealer shall comply with the financial covenants
in Schedule 4.1 (if any).
4.2 Corporate Structure. Dealer shall not (Except in connection with an
initial public offering as planned by Dealer or the infusion of additional
equity or Subordinated Debt (as defined in Schedule 4.1) into
Dealer and only to the extent necessary to effectuate carrying out such initial
public offering or infusion of equity): (i) recapitalize, dissolve or be party
to any merger or consolidation or acquire all or substantially all of the assets
of any other Person; (ii) amend its certificate or articles of incorporation or
bylaws, except to effect a change in its corporate name after it has notified
TCFC and provided TCFC with such financing statements as TCFC may request and an
exact copy of the amendment; (iii) redeem, purchase or otherwise retire declare
or pay any dividend, return capital to any of its shareholders or otherwise make
any other distribution on or in respect of any shares of stock (or any other
equity interest) of Dealer except that if Dealer is an S corporation, as such
term is used in the Internal Revenue Code (the "IRC"), prior to a Default Dealer
may distribute dividends to its shareholders in an amount equal to the federal
and state income tax liability of such shareholders arising from their
respective allocable shares of the earnings and profits of Dealer, with each
shareholder's federal; and state income tax liability computed on the basis of
the applicable tax rates under the IRC and relevant state law as such rates are
reduced by deduction for state income taxes with respect to the IRC and for
federal income taxes with respect to relevant state law; provided, however, that
no such distribution shall be made if, after giving effect thereto, the
aggregate amount sum distributed to shareholders in any period exceeds an amount
equal to the amount of regular state and federal income taxes that would be
assessed against Dealer for such period if Dealer were subject to the regular
tax provisions applicable to a C corporation, as such term is used in the IRC
but not including any penalty tax provisions such as provisions for accumulated
earnings taxes or personal holding company taxes; or (iv) issue or distribute
any stock or other securities for consideration.
4.3 Other Covenants. Dealer shall not (i) without TCFC's prior written
consent, accept any returns, or compromise, adjust, or grant any discount,
credit, allowance, or extension of time for payment to any account
debtor, except in good faith, in a commercially reasonable manner and in the
ordinary course of business; (ii) incur or permit to exist (except with respect
to a planned initial public offering by Dealer or an infusion of equity or
Subordinated Debt) into Dealer) any liabilities except for Indebtedness to TCFC,
deferred taxes, current accounts payable arising in the ordinary course of
business and not overdue, and non-current accounts payable which Dealer is
contesting in good faith by appropriate proceedings; or (iii) guarantee, endorse
or become responsible for obligations of any other person or incur any
contingent obligation other than endorsements of negotiable instruments for
collection in the ordinary course of business; or (iv) create or permit to exist
an affiliate who is not a natural person.
5. GENERAL.
5.1 Custody and Preservation of Collateral. TCFC shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if it takes such action for that purpose as Dealer shall request in
writing, but failure by TCFC to comply with any such request
shall not of itself be deemed a failure to exercise reasonable care, and no
failure by TCFC to preserve or protect any right with respect to such Collateral
against prior parties, or to do any act with respect to the preservation of such
Collateral not requested by Dealer, shall of itself be deemed a failure to
exercise reasonable care in the custody or preservation of such Collateral.
5.2 Revival. To the extent Dealer makes a payment to TCFC or TCFC enforces
its security interest or exercises a right of setoff, and such payment or the
proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other person under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or exercise had not occurred.
5.3 Indemnification. To the fullest extent not prohibited by applicable
Law, Dealer shall indemnify TCFC and each of its officers, directors, employees
and agents ("Indemnitees") from and against any and all claims, losses,
liabilities, costs (including, without limitation, all documentary, recording,
filing, mortgage or other stamp taxes or duties), and expenses (including
reasonable attorneys' fees) (irrespective of whether such Indemnitee
is a party to the action for which indemnification is sought) (the "Indemnified
Liabilities"), incurred by Indemnitees or any of them as a result or arising out
of or relating to (i) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Advance or involving any
Advance, or (ii) the execution, delivery, performance or enforcement of this
Agreement or the Other Agreements, except for any Indemnified Liabilities
finally determined by a court of competent jurisdiction to have arisen on
account of the relevant Indemnitee's gross negligence or willful misconduct.
Obligations provided for in this Section 5.3 and in Sections 2.3 and 2.3.1 shall
survive termination of this Agreement and shall not be reduced or impaired by
any investigation made by or on behalf of TCFC or any other Indemnitee.
5.4 Term and Termination. Unless sooner terminated as provided in the
Agreement or by at least 30 days prior written notice from either party to the
other, the term of the Agreement shall be for two years after the date of this
Rider 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 lin 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.
5.5 Limitation of Remedies and Damages. In the event there is any dispute
under this Agreement, the aggrieved party's remedy in connection with any action
arising under or in any way related to this Agreement shall be limited to a
breach of contract action and any damages in connection therewith are limited to
actual and direct damages, except that TCFC may seek equitable relief in
connection with the enforcement of this Agreement.
5.6 Inconsistent Provisions. Except as provided in the section entitled
"Savings Provisions" in the ISA, in the event of an inconsistency between this
Rider and any other portion of the Agreement which does not expressly state it
is amending this Rider, this Rider shall control.
5.7 Other Terms and Provision. Except as modified herein all other terms
and provisions of the Agreement shall remain in full force and effect.
5.8 Effectiveness. The Agreement shall not become an agreement between the
parties until accepted by TCFC in Illinois. Dealer waives notice of such
acceptance.
Attest (or witness):
DEALER
By:
(Seal)
Date:
Accepted in Illinois:
TRANSAMERICA COMMERCIAL FINANCE CORPORATION
By:
Title:
<PAGE>
SCHEDULE 2.2(a)
Borrowing Base Percentages Menu
For purposes of calculating the Borrowing Base with respect to the following
classes of Eligible Inventory pursuant to Section 2.2(a), the following
percentages shall apply:
Class U. Used Inventory Not In Factory Sealed Boxes. Used boat inventory
which, at the time of determination of the Borrowing Base, is Eligible and
located on Dealer's premises: Up to 92% of the value of such Class of Inventory
but not to exceed 75% of the lowest N.A.D.A. value for each such unit of used
boat inventory.
Class PA. Parts and Accessories. Parts and Accessories, which at the time
of determination of the Borrowing Base, are new and unused and located on
Dealer's premises: Up to 35% of the value of such Class of Inventory.
SCHEDULE 2.7
PRINCIPAL REPAYMENT
Principal Repayment: Working Capital Advances shall be due and payable
as follows, subject to other provisions of the ISA:
No principal payments shall be due as long as Dealer is in
compliance with the terms of the ISA, until the ISA is terminated at
which time all Working Capital Advances shall be due in full.
SCHEDULE 3. 2 REPORTS
Reports Menu
In addition to the reports required by the underlying ISA, Dealer shall provide
TCFC with the following reports, in form and substance satisfactory to TCFC, and
such other reports as TCFC may request from time to time:
Monthly Borrowing Base Certificate within 10 days after month end.
Monthly Inventory reports within 10 days after month end. Such
reports shall contain a schedule of Inventory by value, cost, type,
<PAGE>
availability, brand, model and location, and a schedule of changes in
Inventory, including sales or other dispositions, returns, additions
and credits issued.
Monthly financial statements (balance sheet and income
statement) as of the last day of each month due no later than 45 days
after the end of the month to which they pertain.
Annual FYE financial statements within 90 days after the
fiscal year end to which they pertain.
Annual Tax Returns within 30 days after the applicable filing
due date.
Business Plan for each fiscal year, submitted no later than
forty-five (45) days prior to the end of the prior fiscal year.
"Business Plan" shall mean the projected balance sheet, profit and loss
statement, and cash flow statement of Dealer, together with appropriate
supporting details and a statement of underlying assumptions, all
prepared by Dealer's chief financial officer. Dealer warrants each
Business Plan is and will be the best available good faith estimate of
Dealer's management regarding the course of Dealer's business for the
period covered thereby. Dealer also warrants each Business Plan, and
the assumptions on which such Business Plan is based, shall be
reasonable and realistic based on then current economic conditions.
SCHEDULE 4.1
FINANCIAL COVENANTS
1. Definitions. As used in the ISA the following terms shall have the
following meanings:
<PAGE>
"Tangible Net Worth" as of any date shall mean the sum of
Dealer's (a) net worth as reflected on its last twelve-month fiscal
financial statements, (b) net earnings since the end of such fiscal
year, both after provision for taxes and with inventory determined on a
first in, first out basis and (c) 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) losses since the end of such fiscal year; and (v) interest in the
cash surrender value of officer's or shareholder's life insurance
policies.
"Debt" shall mean (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 assures a creditor against
loss, (ii) obligations under any leases which have been or in
accordance with GAAP should be recorded as capitalized leases
("Capitalized Leases") upon which obligations Dealer or any Affiliate
is liable, and (iii) unfunded obligations of Dealer or any Affiliate
under a "multiemployer plan" as such term is defined under the
Employment Retirement Income Security Act of 1974, as amended
("ERISA"), required to be accrued by GAAP.
"Subordinated Debt" shall mean Debt of Dealer to any
Guarantor, Affiliate, or employee of Dealer which is fully subordinated to all
Indebtedness to TCFC in a manner satisfactory to TCFC.
2. Financial Covenants. So long as any Indebtedness to TCFC shall
remain outstanding and (even if no Indebtedness to TCFC is outstanding)
so long as this ISA remains in effect, Dealer shall comply with the
following financial covenants (The parties may agree to renegotiate
such covenants in the event that Dealer successfully completes an
initial public offering or capital infusion so as to reflect realistic
covenants in light of the changes in Dealer's financial condition such
events would cause-however unless the parties both agree to such
modifications these covenants shall remain in place):
Debt to Tangible Net Worth: Dealer shall maintain a ratio of Debt to
Tangible Net Worth not to exceed 9.75 to 1.0 at time of the execution of this
Rider; and not to exceed a ratio of 6.0 to 1.0 by March 31 1999. Such covenant
shall be measured monthly.
Minimum Cash Balance: Dealer shall at all times maintain a minimum cash
balance of $250,000 through February 27, 1999, increasing to $1,000,000 by
February 28, 1999. If Dealer cannot maintain this covenant, in addition to all
other remedies, TCFC may require Debtor to pay down the Revolving Loan Facility
balance to $1,000,000 within 120 days of TCFC's notice to such effect, which may
require 4 equal monthly payments of1/4of such excess over $1,000,000 assuming
TCFC does not enforce any other remedies under the ISA in
which case those remedies may, at TCFC's sole discretion, take priority over the
remedy set forth herein.
<PAGE>
EXHIBIT 10.19
CONSULTING AGREEMENT
____________, 1999
American Marine Recreation, Inc.
2202 33rd Street
Orlando, FL 32839
Attention: Mr. Joseph G. Pozo, Jr., President
Dear Mr. Poza:
This will confirm the arrangements, terms and conditions
pursuant to which BlueStone Capital Partners, L.P. (the "Consultant"), has been
retained to serve as a financial consultant and advisor to American Marine
Recreation, Inc., a Delaware corporation (the "Company"), on a non-exclusive
basis for a period of two (2) years commencing on ________________, 1999. The
undersigned hereby agrees to the following terms and conditions:
1. Duties of Consultant. Consultant shall, at the request of
the Company, upon reasonable notice, render the following services to the
Company from time to time:
(a) Consulting Services. Consultant will provide
such financial consulting services and advice pertaining to the Company's
business affairs as the Company may from time to time reasonably request.
Without limiting the generality of the foregoing, Consultant will assist the
Company in developing, studying and evaluating financing and merger and
acquisition proposals based upon documentary information provided to the
Consultant by the Company.
(b) Financing. Consultant will assist and represent
the Company in obtaining both short and long-term financing. The Consultant will
be entitled to additional compensation under certain circumstances in accordance
with the terms set forth in Section 3 hereof.
(c) Wall Street Liaison. Consultant will, when
appropriate, arrange meetings between representatives of the Company and
individuals and financial institutions in the investment community, such as
security analysts, portfolio managers and market makers.
<PAGE>
The services described in this Section 1 shall be rendered by
Consultant without any direct supervision by the Company and at such time and
place and in such manner (whether by conference, telephone, letter or otherwise)
as Consultant may determine.
2. Compensation. As compensation for Consultant's services
hereunder, the Company shall pay to Consultant an annual fee of One Hundred
Thousand Dollars ($100,000), the entire Two Hundred Thousand Dollars ($200,000)
payable in full, in advance, on __________________, 1999.
3. Additional Compensation in Certain Circumstances. In
addition to the financial consulting services described in Section 1 above,
Consultant may bring the Company in contact with persons, whether individuals or
entities, that may be suitable candidates for providing the Company with, or may
lead the Company to other individuals or entities that may provide the Company
with, debt or equity financing or that may be suitable candidates, or may lead
the Company to such suitable candidates, to purchase substantially all of the
stock or assets of the Company, to have substantially all of its stock or assets
purchased by the Company, merge with the Company, or enter into a joint venture
or other transaction with the Company. If, at any time up until the third
anniversary of the date hereof, the Company enters into an agreement with any
such persons or their affiliates, or with any persons introduced to the Company
by any such persons or their affiliates, pursuant to which the Company obtains
debt or equity financing or pursuant to which substantially all of the Company's
stock or assets is purchased, the Company purchases substantially all of the
stock or assets of another entity or the Company is merged with or into another
entity, or pursuant to which the Company enters into a joint venture or other on
or off balance sheet corporate finance transaction (each a "Transaction"), the
Company will pay to Consultant, in accordance with the formula set forth below,
additional compensation based on the aggregate value of the consideration,
whether in cash, securities, assumption of (or purchase subject to) debt or
liabilities (including, without limitation, indebtedness for borrowed money,
pension liabilities and guarantees), or other property, obligations or services,
paid or payable directly or indirectly (in escrow or otherwise) or otherwise
assumed in connection with such Transaction (the "Consideration"). For purposes
of this Section 3, the "Company" shall include its subsidiaries and any other
entity in which it owns (directly or indirectly) a majority interest.
-2-
<PAGE>
The additional compensation to be paid will be paid upon the
closing of the Transaction except that, if any part of the Consideration is in
the form of contingent payments to be calculated to reference to uncertain
future occurrences, such as future financial or business performance, then the
portion of the fees of Consultant relating to such part of the Consideration
shall be payable at the earlier of (i) the receipt or payment of such
Consideration; or (ii) the time that the amount of such Consideration can be
determined, by certified check, in the following amounts:
5% of the first $5,000,000 of the Consideration;
4% of the Consideration in excess of $5,000,000
and up to $6,000,000;
3% of the Consideration in excess of $6,000,000
and up to $7,000,000;
2% of the Consideration in excess of $7,000,000
and up to $8,000,000; and
1% of any Consideration in excess of $8,000,000.
4. Available Time. Consultant shall make available such time
as it, in its sole discretion, shall deem appropriate for the performance of its
obligations under this agreement and may in certain circumstances be entitled to
additional compensation in connection therewith.
5. Relationship. Nothing herein shall constitute Consultant as
an employee or agent of the Company, except to such extent as might hereinafter
be agreed upon for a particular purpose. Except as might hereinafter be
expressly agreed, Consultant shall not have the authority to obligate or commit
the Company in any manner whatsoever.
6. Confidentiality. Except in the course of the performance of
its duties hereunder, Consultant agrees that it shall not disclose any trade
secrets, know-how, or other proprietary information not in the public domain
learned as a result of this Agreement unless and until such information becomes
generally known.
7. Assignment and Termination. This Agreement shall not be
assignable by any party except to successors to all or substantially all of the
business of either party for any reason whatsoever without the prior written
consent of the other party, which consent may be arbitrarily withheld by the
party whose consent is required.
-3-
<PAGE>
8. Governing Law. This Agreement 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.
Very truly yours,
BLUESTONE CAPITAL PARTNERS, L.P.
BY: BLUESTONE CAPITAL MANAGEMENT,
INC.,
General Partner
By:
--------------------------------
Name:
Title:
AGREED AND ACCEPTED:
AMERICAN MARINE RECREATION, INC.
By:
------------------------------------
Name: Joseph G. Pozo, Jr.
Title: President
-4-
<PAGE>
SALES AND SERVICE AGREEMENT
THIS AGREEMENT made this 1st day of September, 1998 between Regal Marine
Industries Incorporated, doing business as Regal Boats, having its principal
place of business at 2300 Jetport Drive, Orlando, Florida 32809 (hereinafter
referred to as "Regal") and American Marine Recreation, Inc., doing business as
the Boattree with its principal place of business at 1924 33rd Steet, Orlando,
Florida 32834, being a corporation of the State of Delaware (hereinafter
referred to as "Dealer"), whereby in consideration of the mutual covenants
herein contained, it is agreed as follows:
1. Appointment of Dealer: Regal hereby appoints Dealer as its authorized
dealer for the retail sale, display and servicing of the following
Regal product(s) and repair parts (hereinafter "Products")*:
Product Dealer Regal
Sport Boat
Sport Cruiser
* Both parties are to initial the product descriptions to be included in
this Agreement.
The following geographic area (typically described by county) will be
the primary "Marketing Area" into which Dealer will promote, sell and
service Products (if not described, the Marketing Area is the area
local to Dealer) solely from the dealer location(s) contained in the
Marketing Area:
VOLUSIA AND FLAGLER COUNTIES
Regal agrees that it will not appoint another authorized dealer for the
retail or sale, display and service of the Products from a location
within the Marketing Area.
2. Location(s): Dealer shall sell at retail, display and service Products
only at the following locations(s) (designate if a sales only or service only
location):
FLORIDA WATERCRAFT (BOAT TREE-SUB DEALER) 177 NORTH CAUSEWAY,
NEW SMYRNA, FL 32169
1
<PAGE>
Dealer agrees to not delete, change, or add locations nor sell from
additional location(s) without the prior written consent of Regal (which consent
shall not be unreasonably withheld), nor will Dealer sell Products
internationally or to others for the purpose of resale without the prior written
consent of Regal.
Regal may upon the giving of at least ninety (90) days prior written
notice, and provided a cure does not occur during that notice period, delete
from this Agreement any dealer location and commensurate portion of the
Marketing Area where Dealer has failed to meet the obligations, performance
standards, annual program commitment, terms, conditions, representations,
warranties and covenants applicable to that dealer location as more particularly
described in this Agreement.
3. Performance Standards: Regal, after consultation with Dealer, may
establish fair and reasonable standards of sales performance for the Dealer in
the Marketing Area Such standards are based on such factors as population, sales
potential, economic conditions in the Marketing Area, competition from other
marine dealerships in the area, and any special circumstances that may affect
the sale of Products or the Dealer. Regal may from time to time revise such
standards as conditions may require and Regal may update at least annually sales
performance under this Agreement. Initially the performance standards shall be
as follows:
Time Period Product Category Unit Commitment
4. Purchase Program Elections: Regal may establish purchase programs during
each Product model year of the Agreement term. The purchase program for the 1999
model year is as follows:
Initial your appropriate election (Interest Support or Profit Plus) for
each product category and your interest support rebate bonus election as
outlined in the 1999 programs.
Product Category Interest Support Profit Plus
Sport Boat (1700-2150)
Sport Boat (6.8-2660)
Sport Cruiser (2800-4060)
Interest Support Rebate Bonus:
I will stock the 322, 402 and 4060 models to receive the
interest rebate bonus.
I do not plan to stock each of the following models: 322,
402, and 4060.
2
<PAGE>
5. Dealer's Responsibilities: Dealer agrees to:
A. Devote its best efforts to aggressively promote, display,
advertise, sell and service Products solely from the dealer
location(s) within Dealer's Marketing Area in accordance with
the terms of the Agreement and all applicable federal, state
and local laws. Dealer will display at each dealer
location(s), a sign in good taste with Regal's current trade
designations, subject to approval by Regal.
B. Purchase and carry on hand at all times a sufficient
inventory of current Products to meet the reasonable demand
of potential customers within the Marketing Area. Dealer will
protect inventory of Product against weathering and damage
and maintain inventory in like new condition.
C. Maintain at each dealer location(s) (unless a sales
location only and then service is to be provided at another
authorized location) a service department which is staffed.,
trained and equipped to service Products; and to maintain at
the dealer location(s), parts and supplies to properly
service Products on a timely basis.
D. Promptly, courteously and professionally perform any and
all necessary rigging, installation and inspection services
prior to delivery of the Product to the purchaser, and
perform post-sale service, including warranty service, of all
Products brought to Dealer for service, in accordance with
Regal's then current warranty policies.
E. Furnish purchaser with Regal's limited warranty on new
Products and with information and training as to the safe and
proper operation and maintenance of Products.
F. Complete and mail Regal's warranty registration card
immediately upon delivery of the Products to the purchaser
and assist Regal in performing Product service and recall
campaigns. In the event Dealer fails to mail the card to
Regal, Dealer agrees to indemnify Regal against any
liability, loss or damage which Regal may sustain which is
proximately caused by such failure.
G. Maintain complete sales and service records and to report
to Regal on a regular basis the name and address of
purchasers of Products, to the extent required by Regal's
then current policies and/or federal, state and local laws.
H. Achieve sales performance in accordance with the standards
described in Section 3.
I. Take steps necessary to become factory authorized to
repair power units supplied on Products, including attending
service school attendance.
J. (1) Provide complete financial statements for the Dealer
at mutually agreeable intervals, but at least on an annual
basis, and (2) consent to full and open disclosure of
financial information concerning Dealer, between Regal and
any financial institution or a company which finances Dealers
inventory of Products.
K. Conduct business in a manner that preserves and enhances
the reputation Regal, the Products and Dealer for providing
quality products and services.
3
<PAGE>
L. Maintain an ability to purchase Product inventory pursuant
to flooring and/or self financing in an amount which is
sufficient to meet the Dealer obligations described in the
Agreement.
M. Use its best efforts to maintain a CSI rating, based upon
Regal's then current CSI program, sufficient in Regal's
reasonable judgment to maintain Regal's image in the market
place, which minimum standard shall be established from time
to time by Regal and shall initially be 85 percent.
N. Maintain a financial condition which is adequate to
satisfy and perform its obligations under this Agreement.
0. Not directly or indirectly itself, or allow anyone else
to, solicit, inventory, marker or sell, from any dealer
location described in Section 2, any product which is
competitive with the Products. Such competitive products
shall include but not be limited to those products described
on Exhibit A, but shall not include those products delineated
as noncompetitive that are also described on Exhibit A.
P. Allow the application of any rebates or account credits
owed to Dealer to and as an offset against any debts or
monies owed to Regal by Dealer, including but not limited to
losses or debts applicable to open Product accounts, unpaid
retail show space, and to any losses relating to Dealer
flooring or financing;
Q. Indemnify and hold harmless Regal and its affiliated
credit agencies from any and all claims or losses whatsoever
and as a result of Dealer's failure to meet its obligations
to Regal or Regal affiliated credit agencies.
6. Order: Dealer agrees to submit orders to Regal in a manner and
format prescribed from time to time by Regal and which are applicable
to Regal's domestic dealers. Any order which does not comply with
Regal's terms and conditions need not be filled by Regal. Any
additional or different terms submitted by Dealer will be void and of
no effect. All orders are subject to acceptance by Regal. Product
availability shall be allocated on a reasonable basis established by
Regal, provided that Regal reserves the right to limit Product orders
to those based upon the previous year Product purchases made by the
Dealer and Regal's other dealers.
7. Prices: The Products (including accessories and parts) sold to the
Dealer by Regal will be on the basis of price lists published by Regal
from time to time applicable to Regal's domestic dealers selling
comparable Products. Regal will have the right to revise the price
lists or applicable discounts on programs at any time. Regal shall
have no obligation to reimburse Dealer for any loss which Dealer may
sustain by reason of any change in price, program or discount. Terms
of payment will be as specified from time to time by Regal. Dealer
will pay Regal the lesser of 1.5% late charges per month on any past
due invoice, or the maximum permitted by state law. Regal may refuse
shipment for any credit reason, including Dealer's failure to pay for
a prior shipment. Dealer will reimburse Regal for all necessary costs
and reasonable attorneys fees in collecting past due accounts. Regal
retains a security interest and lien on all Products sold to Dealer
and all proceeds arising out of the sale of Products until Products
are paid for in full in cash. The Product prices charged to Dealer
will be the lowest price then charged to other domestic dealers who
purchase, under similar programs, comparable products for at least
equal quantities of products ordered and to be delivered in the same
period as the Dealer order, provided Regal may, in good faith. charge
lesser prices to other dealers to meet competitive offer or sales by
other
4
<PAGE>
manufacturers, new dealer pricing, for unusual and nonordinary
business circumstances, or for limited duration promotional programs.
8. Shipments: All shipments of Products will be made FOB Regal's
factory or distribution center at which time title shall pass. Dealer
shall pay all applicable shipping, transportation, delivery and
handling charges for Products ordered. If Dealer fails to accept
delivery of any Products ordered, Dealer shall reimburse Regal for the
transportation of such Product. However, if Regal ships Products not
ordered by Dealer, and Regal cannot produce documentation to confirm
the order was placed by Dealer, Dealer will have the right to refuse
delivery. In such event, Regal will pay all costs incurred in
transportation of the Product. Shipments will be subject to Regal's
productions schedule and availability of transportation equipment. No
liability will be sustained by Regal by reason of its not filling any
order due to circumstances beyond its control such as, but not limited
to, labor disputes, natural disasters, accidents to machinery,
manufacturing delays, material shortages or regulations.
9. Risk of Loss: If Products ordered by Dealer are transported in
Regal's trucks, risk of loss shall pass to Dealer upon delivery to
Dealer. If Products are shipped by other means, risk of loss shall
pass to Dealer at the time the Products or parts are tendered to such
carrier. Regal will assist Dealer in the processing and collection of
any claims against the carrier
10. Payment - Claims: All sales to Dealer shall be paid for COD, by
cashier's check unless otherwise agreed between Regal and Dealer. All
claims for shortage or damages or unacceptable goods shall be made at
the time of arrival of the shipment. The failure of Dealer to give
such notification shall constitute a waiver of any such claim. Dealer
shall cause to be paid or shall make reimbursement to Regal in full
for any and all taxes, duties. or other charges imposed by federal,
state, municipal or other governmental authority upon any purchase or
sale under Agreement.
11. Product Modification: Regal shall have the right to discontinue
the sale of Products or to modify the design and components of
Products at any time; provided, however, that Regal shall notify
Dealer prior to shipment of any major design changes with respect to
Products previously ordered by Dealer, in which event Dealer shall
have the right to cancel such order.
12. Product Warranty:
A. Regal will furnish through Dealer to first-use purchasers its then
current standard written limited warranty in effect at the time of delivery of
Product to Dealer. Dealer shall have no authority to and agrees not to make any
representations, verbally or in writing, relating to Regal's warranty other than
those made by Regal in its written warranty. Dealer agrees to provide the
Product's "Operation and Maintenance" manuals to the purchaser at time of
delivery, and make Regal warranty known to the purchaser, including all
disclaimer and limitations, and to have purchaser acknowledge receipt of
warranty by obtaining his signature on the Owner Registration and System
checklist form.
B. Dealer agrees to provide timely warranty service on all Product located
within Dealer's Marketing Area regardless of where the Product was originally
purchased, in accordance with Regal's current warranty service program. Dealer
agrees to make all claims for reimbursement under Regal's warranty service
program in the manner prescribed by Regal. Regal may revise its warranty service
program from time to
5
<PAGE>
time, providing Dealer with written notification of all revisions and those
revisions will supersede all previous programs.
C. Regal agrees to promptly approve and fully honor all
legitimate warranty claims on Product when made by purchaser
through Dealer in the manner prescribed by Regal. Regal
agrees to credit or reimburse Dealer for all approved
warranty service performed at dealership on behalf of Regal.
Regal shall respond to all properly submitted warranty claims
by Dealer within one month after receipt of such claims.
Regal agrees to pay or credit all accepted claims.
D. It is the selling dealer's (including Dealer)
responsibility to insure that the retail purchaser receive
the proper service on Product that is to be primarily used
outside of the selling dealer's Marketing Area. Product sold
and used outside of the "selling dealer's" Marketing Area and
into an area serviced by another Regal dealer, should then be
serviced by that closer dealer. It will be the responsibility
of the selling dealer to negotiate in advance of the sale, a
reasonable financial arrangement with the Regal dealer in
whose market area the boat will be primarily used to insure
that the customer receives the proper warranty and other
necessary service. Product sold into an area void of a Regal
dealer should then be serviced by the selling dealer and or
the selling dealer should seek approval from Regal to make
arrangements for service with a non-Regal dealer convenient
to the purchaser.
If the selling dealer fails to negotiate a mutually
acceptable financial arrangement with the servicing Regal
dealer, or fails to provide or make arrangements for adequate
service, the selling dealer shall be responsible for any
additional costs that may be incurred in providing warranty
service to the purchaser. In addition, such failure may be
cause for cancellation of the selling dealer's Sales and
Service Dealer Agreement.
13. Trademarks and Service Marks: Dealer acknowledges that Regal or its
affiliated companies are the exclusive owners of various trademarks, service
marks, trade designations and trade dress (collectively "Identification:) which
Regal uses in connection with Products and its business. Dealer is authorized to
use Identification in a manner acceptable to Regal within the Marketing Area
only in connection with the promotion and sale of Products and only until the
expiration or termination of this Agreement. Dealer will not use Identification
as the whole or any part of the name or title of Dealer's business. Dealer
acquires no proprietary rights to Identification and this authorization will
terminate simultaneously with the expiration or termination of this Agreement.
In the event of expiration or termination of this Agreement, Dealer shall
immediately discontinue use of Identification in any way whatsoever.
14. No Agency Created: It is understood and agreed that Dealer is not, nor
shall it at any time represent itself to be, the agent, employee, representative
or franchisee of Regal. Dealer shall not enter into any contract or commitment
in the name of or on behalf of Regal.
15. Term of Agreement - Termination:
A. This Agreement shall commence on the date of its execution by
Regal and Dealer and shall remain in effect until it is
terminated at the end of a Regal Product Model Year (which
currently ends at 11:59 p.m. on June 30th) by either Dealer
or Regal giving the other party at least twenty-four (24)
months prior written notice (which notice may be given for
any reason and does not require good cause, and which
6
<PAGE>
notice may be for shorter period under the circumstances more
particularly described in Section 16.C). Notwithstanding
anything to the contrary described in this paragraph, this
Agreement may be terminated earlier under any of the
circumstances described below and in this Agreement.
B. This Agreement may be terminated at any time by the mutual consent
of the parties.
C. Either party may, upon the giving of at least forty-five (45) days
written notice to the other (10 days for credit reasons or nonpayment of sums
due) stating the reasons therefore, terminate this Agreement for cause due to a
material breach or default of this Agreement and provided that such breach or
default has not been cured during such notice period. Such material breach or
default shall include but not be limited to where Dealer does not agree to or
meet the performance standards or the annual program commitment described in
Sections 3 and 4 reasonably established yearly by Regal. If the breach or
default is not subject to cure, this Agreement may be terminated immediately,
effective upon the giving of notice to the breaching or defaulting party.
D. This Agreement may be immediately terminated by either party upon
written notice to the other if any of the following occur: (1) the other party,
if a corporation, ceases to exist; (2) the other party becomes insolvent or
takes or fails to take any action which constitutes an admission of inability to
pay debts as they mature; (3) the other party makes a general assignment for the
benefit of creditors to an agent authorized to liquidate any substantial amount
of assets; (4) the other party becomes a subject of an "order to relief" within
the meaning of the United States Bankruptcy Code; (5) the other party applies to
a court for the appointment of a received for any assets or properties; or, (6)
the other party makes a fraudulent misrepresentation that is material to this
Agreement.
E. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if Dealer defaults on any obligation to third party financing
institution.
F. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if all of the following events occur: Joseph G. Pozo, Jr. is no
longer a director and the chief executive officer of the Dealer's parent, and he
no longer owns at least 10 percent of the issued and outstanding capital stock
of Dealer.
16. Conduct Upon Termination:
A. Upon termination of this Agreement, Dealer shall offer to sell to Regal,
at Dealer's purchase price (not including transportation or financing costs),
Dealer's entire stock of current, originally packaged and new condition Product,
and if such termination is of a Dealer location or locations the offer shall be
applicable to Product maintained at such location or locations. Regal shall have
the option, but no obligation, to accept such offer, which acceptance shall be
communicated to Dealer by Regal in writing within thirty (30) days after Dealer
notifies Regal of the Product and applicable purchase price of such Product
which is subject to such purchase option. Dealer will make Product available to
Regal immediately upon acceptance of offer. Regal will pay Dealer all net
amounts due within thirty (30) days of receipt of Product, and proof that
Product is being transferred to Regal with good and marketable title, free of
all liens and encumbrances. Both parties agree to
7
<PAGE>
a waiver of lost profit or consequential damages as a result of termination
of this Agreement.
B. After the termination of this Agreement for those non good
cause reasons described in Section 15.A., Regal will continue
to sell parts and accessories for Product sold by Dealer
(subject to the terms of sale herein set forth) for twelve
(12) months in order that Dealer may continue to service any
Products which Dealer may have sold to customers prior to
termination.
C. Upon receipt of a notice of termination provided under Section
15.A.
(1.) If notice is provided by Dealer, Regal may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Dealer.
(2.) If notice is provided by Regal, Dealer may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Regal.
17. Governing Law: The Agreement has been signed by Dealer on the date
reflected below, and shall become binding upon the date this Agreement
is subsequently executed by Regal at its headquarters in Florida,
U.S.A. This Agreement shall be construed and enforced in accordance
with the laws of the state of Florida.
18. Assignment: This Agreement may not be assigned or transferred by
Dealer without prior written consent of Regal. Any assignment of this
Agreement without such consent, shall, at Regal's option,
automatically terminate this Agreement.
19. Notices: Any written notice given pursuant to this Agreement shall be
either hand delivered, sent by facsimile or mailed by Registered or
Certified Mail, return receipt requested, to the party at the
respective principal place of business first above written. If time
periods or methods of notice included in this Agreement are not in
compliance with applicable state law, then such periods contained in
the applicable state law will apply. Such notice shall be deemed to be
given upon first receipt. A change of address may be given by such
notice.
20. Entire Agreement - Non Waiver - Separability: This Agreement contains
the entire agreement and replaces all prior agreements between the parties
(provided that each party shall remain obligated to pay to the other any monies
owed under the ordinary course of business under such prior agreements) and may
be amended or modified only by written instrument signed by Regal and Dealer,
Failure on the part of Regal or Dealer to enforce any term of this Agreement
shall not constitute a waiver thereof. Any provision of this Agreement which in
any way contravenes or is unenforceable under applicable law shall not apply and
shall be deemed separable and not to be a part of this Agreement without
affecting the validity of the remaining provisions.
21. Binding Arbitration: All disputes, controversies or claims connected
with, arising out of, or relating to this Agreement, or any modification,
extension or renewal thereof, or to any causes of action that result from such
relationship, shall be subject exclusively to the remedy of arbitration
described herein, including but not limited to sums due under this Agreement,
the interpretation, performance or nonperformance of this Agreement, any claim
for damages or rescission, a breach or default of this Agreement, the creation,
termination or nonrenewal of this Agreement (such as a dispute regarding the
causes, validity or circumstances of the termination, nonextension, or
nonrenewal), and trade regulations or antitrust claims, whether such
controversies or claims are in law or equity or
8
<PAGE>
include claims based upon contract, statute, tort or otherwise. All
controversies shall be conducted in accordance with the American
Arbitration Association Commercial Arbitration Rules.
The arbitration shall be governed by the United States Arbitration
Act., 9 U.S.C. ss.1-16, as amended, and judgment upon the award
rendered by the arbitrator may be entered by any court having
jurisdiction thereof. The place of the arbitration shall be at
Orlando, Florida. Dealer consents to personal jurisdiction of such
court, including the federal and state courts located in the State of
Florida. The arbitrator is not empowered to and shall not award
damages in excess of actual damages and in no event shall the
arbitrator award punitive, special or consequential damages, or
prejudgment interest.
This Paragraph shall survive the expiration or termination of this
Agreement.
Except for sums owing to Regal, all arbitration claims and proceedings
must be instituted within one (1) year after the cause of action
arises, and the failure to institute arbitration proceedings within
such period shall constitute an absolute bar to the institution of any
proceedings and a waiver and relinquishment of all such claims.
22. Fees: If arbitration is instituted and Dealer prevails in an amount
which exceeds Dealer's most recent written demand prior to decision,
then Dealer shall be reimbursed its reasonable legal fees and
arbitration costs by Regal; otherwise, Regal shall be reimbursed its
reasonable legal fees and arbitration costs by Dealer.
23. Miscellaneous: Except as expressly described to the contrary in this
Agreement, the rights and remedies of each party are not exclusive.
Dealer hereby agrees to maintain in confidence all of the terms and
conditions of this Agreement.
IN WITNESS WHEREOF, Regal and Dealer have executed this Agreement as of the date
first written above.
REGAL MARINE INDUSTRIES AMERICAN MARINE RECREATION, INC.
INCORPORATED (Dealer)
By:____________________________ By:_____________________________
(Signature) (Signature)
Name:__________________________ Name:___________________________
Date:_________________ Date:_________________
9
<PAGE>
Competitive Products
Following are examples of competitive product categories and
companies:
Sportboats in bow rider and cuddy cabin configurations.
Deck Boats Express cruisers and or mid cabin cruisers.
Donzi-except fish models Baja-except High Performance
Maxum-except Flybridge Bryant Cobalt Cruisers Inc.-
except Flybridge Invader Excel Larson Wellcraft - except
Fish & High Performance Mainship - except Fly Bridge
Monterey Four Winns Penn Yan Powerquest Formula - except
High Performance Stingray Renken-except Fish models VIP
Baha Cruisers Bayliner - except fish models and Fly
Bridge Sea Ray Chaparral Crown line Doral Galaxie
Glastron Trojan Kal Kustom Mariah Chris Craft
Sunbird-except Fish/Ski Outboards Power Play Rinker
Silverton-except Flybridge Thompson Sea Sprite
10
<PAGE>
Non Competitive Products
Following are examples of non-competitive product categories and companies:
Outboard Motor Boats, Fish N Ski Boats (Inboard Powered)
Offshore fishing boats: Pro-line, Mako, Grady White
Bass fishing boats: Ranger, Gambler
Aluminum boats: Smokercraft, Sylvan
House boats: Gibson, Harbor Master
Inboard tournament ski boats: Tige', Mastercraft, Malibu
Personal watercraft: Sea Doo, Yamaha jet ski
High Performance: Cigarette, Fountain
Sailboats: Hunter, Catalina
Flats & bay fishing boats: Carolina skiff, Key West
Motor Yachts: Hatteras, Navigator, Carver*
Trawlers: Grand Banks
Pontoon Boats: Playbuoy Pontoon
Hurrican Deck Boats
11
<PAGE>
SALES AND SERVICE AGREEMENT
THIS AGREEMENT made this 1st day of September, 1998 between Regal Marine
Industries Incorporated, doing business as Regal Boats, having its principal
place of business at 2300 Jetport Drive, Orlando, Florida 32809 (hereinafter
referred to as "Regal") and American Marine Recreation, Inc., doing business as
the Boattree with its principal place of business at 1924 33rd Steet, Orlando,
Florida 32834, being a corporation of the State of Delaware (hereinafter
referred to as "Dealer"), whereby in consideration of the mutual covenants
herein contained, it is agreed as follows:
1. Appointment of Dealer: Regal hereby appoints Dealer as its authorized
dealer for the retail sale, display and servicing of the following
Regal product(s) and repair parts (hereinafter "Products")*:
Product Dealer Regal
Sport Boat
Sport Cruiser
* Both parties are to initial the product descriptions to be included in
this Agreement.
The following geographic area (typically described by county) will be the
primary "Marketing Area" into which Dealer will promote, sell and service
Products (if not described, the Marketing Area is the area local to Dealer)
solely from the dealer location(s) contained in the Marketing Area:
BREVARD COUNTY
Regal agrees that it will not appoint another authorized dealer for the retail
or sale, display and service of the Products from a location within the
Marketing Area.
2. Location(s): Dealer shall sell at retail, display and service Products
only at the following locations(s) (designate if a sales only or
service only location):
BOAT TREE, INC. - 340 N. HARBOR CITY BLVD. - U.S. ROUTE 1 - MELBOURNE, FL 32935
1
<PAGE>
Dealer agrees to not delete, change, or add locations nor sell from
additional location(s) without the prior written consent of Regal (which consent
shall not be unreasonably withheld), nor will Dealer sell Products
internationally or to others for the purpose of resale without the prior written
consent of Regal.
Regal may upon the giving of at least ninety (90) days prior written
notice, and provided a cure does not occur during that notice period, delete
from this Agreement any dealer location and commensurate portion of the
Marketing Area where Dealer has failed to meet the obligations, performance
standards, annual program commitment, terms, conditions, representations,
warranties and covenants applicable to that dealer location as more particularly
described in this Agreement.
3. Performance Standards: Regal, after consultation with Dealer, may
establish fair and reasonable standards of sales performance for the Dealer in
the Marketing Area Such standards are based on such factors as population, sales
potential, economic conditions in the Marketing Area, competition from other
marine dealerships in the area, and any special circumstances that may affect
the sale of Products or the Dealer. Regal may from time to time revise such
standards as conditions may require and Regal may update at least annually sales
performance under this Agreement. Initially the performance standards shall be
as follows:
Time Period Product Category Unit Commitment
4. Purchase Program Elections: Regal may establish purchase programs during
each Product model year of the Agreement term. The purchase program for the 1999
model year is as follows:
Initial your appropriate election (Interest Support or Profit Plus) for
each product category and your interest support rebate bonus election as
outlined in the 1999 programs.
Product Category Interest Support Profit Plus
Sport Boat (1700-2150)
Sport Boat (6.8-2660)
Sport Cruiser (2800-4060)
Interest Support Rebate Bonus:
I will stock the 322, 402 and 4060 models to receive the
interest rebate bonus.
I do not plan to stock each of the following models: 322,
402, and 4060.
2
<PAGE>
5. Dealer's Responsibilities: Dealer agrees to:
A. Devote its best efforts to aggressively promote, display,
advertise, sell and service Products solely from the dealer
location(s) within Dealer's Marketing Area in accordance with
the terms of the Agreement and all applicable federal, state
and local laws. Dealer will display at each dealer
location(s), a sign in good taste with Regal's current trade
designations, subject to approval by Regal.
B. Purchase and carry on hand at all times a sufficient
inventory of current Products to meet the reasonable demand
of potential customers within the Marketing Area. Dealer will
protect inventory of Product against weathering and damage
and maintain inventory in like new condition.
C. Maintain at each dealer location(s) (unless a sales
location only and then service is to be provided at another
authorized location) a service department which is staffed.,
trained and equipped to service Products; and to maintain at
the dealer location(s), parts and supplies to properly
service Products on a timely basis.
D. Promptly, courteously and professionally perform any and
all necessary rigging, installation and inspection services
prior to delivery of the Product to the purchaser, and
perform post-sale service, including warranty service, of all
Products brought to Dealer for service, in accordance with
Regal's then current warranty policies.
E. Furnish purchaser with Regal's limited warranty on new
Products and with information and training as to the safe and
proper operation and maintenance of Products.
F. Complete and mail Regal's warranty registration card
immediately upon delivery of the Products to the purchaser
and assist Regal in performing Product service and recall
campaigns. In the event Dealer fails to mail the card to
Regal, Dealer agrees to indemnify Regal against any
liability, loss or damage which Regal may sustain which is
proximately caused by such failure.
G. Maintain complete sales and service records and to report
to Regal on a regular basis the name and address of
purchasers of Products, to the extent required by Regal's
then current policies and/or federal, state and local laws.
H. Achieve sales performance in accordance with the standards
described in Section 3.
I. Take steps necessary to become factory authorized to
repair power units supplied on Products, including attending
service school attendance.
J. (1) Provide complete financial statements for the Dealer
at mutually agreeable intervals, but at least on an annual
basis, and (2) consent to full and open disclosure of
financial information concerning Dealer, between Regal and
any financial institution or a company which finances Dealers
inventory of Products.
K. Conduct business in a manner that preserves and enhances
the reputation Regal, the Products and Dealer for providing
quality products and services.
3
<PAGE>
L. Maintain an ability to purchase Product inventory pursuant
to flooring and/or self financing in an amount which is
sufficient to meet the Dealer obligations described in the
Agreement.
M. Use its best efforts to maintain a CSI rating, based upon
Regal's then current CSI program, sufficient in Regal's
reasonable judgment to maintain Regal's image in the market
place, which minimum standard shall be established from time
to time by Regal and shall initially be 85 percent.
N. Maintain a financial condition which is adequate to
satisfy and perform its obligations under this Agreement.
0. Not directly or indirectly itself, or allow anyone else
to, solicit, inventory, marker or sell, from any dealer
location described in Section 2, any product which is
competitive with the Products. Such competitive products
shall include but not be limited to those products described
on Exhibit A, but shall not include those products delineated
as noncompetitive that are also described on Exhibit A.
P. Allow the application of any rebates or account credits
owed to Dealer to and as an offset against any debts or
monies owed to Regal by Dealer, including but not limited to
losses or debts applicable to open Product accounts, unpaid
retail show space, and to any losses relating to Dealer
flooring or financing;
Q. Indemnify and hold harmless Regal and its affiliated
credit agencies from any and all claims or losses whatsoever
and as a result of Dealer's failure to meet its obligations
to Regal or Regal affiliated credit agencies.
6. Order: Dealer agrees to submit orders to Regal in a manner and
format prescribed from time to time by Regal and which are applicable
to Regal's domestic dealers. Any order which does not comply with
Regal's terms and conditions need not be filled by Regal. Any
additional or different terms submitted by Dealer will be void and of
no effect. All orders are subject to acceptance by Regal. Product
availability shall be allocated on a reasonable basis established by
Regal, provided that Regal reserves the right to limit Product orders
to those based upon the previous year Product purchases made by the
Dealer and Regal's other dealers.
7. Prices: The Products (including accessories and parts) sold to the
Dealer by Regal will be on the basis of price lists published by Regal
from time to time applicable to Regal's domestic dealers selling
comparable Products. Regal will have the right to revise the price
lists or applicable discounts on programs at any time. Regal shall
have no obligation to reimburse Dealer for any loss which Dealer may
sustain by reason of any change in price, program or discount. Terms
of payment will be as specified from time to time by Regal. Dealer
will pay Regal the lesser of 1.5% late charges per month on any past
due invoice, or the maximum permitted by state law. Regal may refuse
shipment for any credit reason, including Dealer's failure to pay for
a prior shipment. Dealer will reimburse Regal for all necessary costs
and reasonable attorneys fees in collecting past due accounts. Regal
retains a security interest and lien on all Products sold to Dealer
and all proceeds arising out of the sale of Products until Products
are paid for in full in cash. The Product prices charged to Dealer
will be the lowest price then charged to other domestic dealers who
purchase, under similar programs, comparable products for at least
equal quantities of products ordered and to be delivered in the same
period as the Dealer order, provided Regal may, in good faith. charge
lesser prices to other dealers to meet competitive offer or sales by
other
4
<PAGE>
manufacturers, new dealer pricing, for unusual and nonordinary
business circumstances, or for limited duration promotional programs.
8. Shipments: All shipments of Products will be made FOB Regal's
factory or distribution center at which time title shall pass. Dealer
shall pay all applicable shipping, transportation, delivery and
handling charges for Products ordered. If Dealer fails to accept
delivery of any Products ordered, Dealer shall reimburse Regal for the
transportation of such Product. However, if Regal ships Products not
ordered by Dealer, and Regal cannot produce documentation to confirm
the order was placed by Dealer, Dealer will have the right to refuse
delivery. In such event, Regal will pay all costs incurred in
transportation of the Product. Shipments will be subject to Regal's
productions schedule and availability of transportation equipment. No
liability will be sustained by Regal by reason of its not filling any
order due to circumstances beyond its control such as, but not limited
to, labor disputes, natural disasters, accidents to machinery,
manufacturing delays, material shortages or regulations.
9. Risk of Loss: If Products ordered by Dealer are transported in
Regal's trucks, risk of loss shall pass to Dealer upon delivery to
Dealer. If Products are shipped by other means, risk of loss shall
pass to Dealer at the time the Products or parts are tendered to such
carrier. Regal will assist Dealer in the processing and collection of
any claims against the carrier
10. Payment - Claims: All sales to Dealer shall be paid for COD, by
cashier's check unless otherwise agreed between Regal and Dealer. All
claims for shortage or damages or unacceptable goods shall be made at
the time of arrival of the shipment. The failure of Dealer to give
such notification shall constitute a waiver of any such claim. Dealer
shall cause to be paid or shall make reimbursement to Regal in full
for any and all taxes, duties. or other charges imposed by federal,
state, municipal or other governmental authority upon any purchase or
sale under Agreement.
11. Product Modification: Regal shall have the right to discontinue
the sale of Products or to modify the design and components of
Products at any time; provided, however, that Regal shall notify
Dealer prior to shipment of any major design changes with respect to
Products previously ordered by Dealer, in which event Dealer shall
have the right to cancel such order.
12. Product Warranty:
A. Regal will furnish through Dealer to first-use purchasers its then
current standard written limited warranty in effect at the time of delivery of
Product to Dealer. Dealer shall have no authority to and agrees not to make any
representations, verbally or in writing, relating to Regal's warranty other than
those made by Regal in its written warranty. Dealer agrees to provide the
Product's "Operation and Maintenance" manuals to the purchaser at time of
delivery, and make Regal warranty known to the purchaser, including all
disclaimer and limitations, and to have purchaser acknowledge receipt of
warranty by obtaining his signature on the Owner Registration and System
checklist form.
B. Dealer agrees to provide timely warranty service on all Product located
within Dealer's Marketing Area regardless of where the Product was originally
purchased, in accordance with Regal's current warranty service program. Dealer
agrees to make all claims for reimbursement under Regal's warranty service
program in the manner prescribed by Regal. Regal may revise its warranty service
program from time to
5
<PAGE>
time, providing Dealer with written notification of all revisions and those
revisions will supersede all previous programs.
C. Regal agrees to promptly approve and fully honor all
legitimate warranty claims on Product when made by purchaser
through Dealer in the manner prescribed by Regal. Regal
agrees to credit or reimburse Dealer for all approved
warranty service performed at dealership on behalf of Regal.
Regal shall respond to all properly submitted warranty claims
by Dealer within one month after receipt of such claims.
Regal agrees to pay or credit all accepted claims.
D. It is the selling dealer's (including Dealer)
responsibility to insure that the retail purchaser receive
the proper service on Product that is to be primarily used
outside of the selling dealer's Marketing Area. Product sold
and used outside of the "selling dealer's" Marketing Area and
into an area serviced by another Regal dealer, should then be
serviced by that closer dealer. It will be the responsibility
of the selling dealer to negotiate in advance of the sale, a
reasonable financial arrangement with the Regal dealer in
whose market area the boat will be primarily used to insure
that the customer receives the proper warranty and other
necessary service. Product sold into an area void of a Regal
dealer should then be serviced by the selling dealer and or
the selling dealer should seek approval from Regal to make
arrangements for service with a non-Regal dealer convenient
to the purchaser.
If the selling dealer fails to negotiate a mutually
acceptable financial arrangement with the servicing Regal
dealer, or fails to provide or make arrangements for adequate
service, the selling dealer shall be responsible for any
additional costs that may be incurred in providing warranty
service to the purchaser. In addition, such failure may be
cause for cancellation of the selling dealer's Sales and
Service Dealer Agreement.
13. Trademarks and Service Marks: Dealer acknowledges that Regal or its
affiliated companies are the exclusive owners of various trademarks, service
marks, trade designations and trade dress (collectively "Identification:) which
Regal uses in connection with Products and its business. Dealer is authorized to
use Identification in a manner acceptable to Regal within the Marketing Area
only in connection with the promotion and sale of Products and only until the
expiration or termination of this Agreement. Dealer will not use Identification
as the whole or any part of the name or title of Dealer's business. Dealer
acquires no proprietary rights to Identification and this authorization will
terminate simultaneously with the expiration or termination of this Agreement.
In the event of expiration or termination of this Agreement, Dealer shall
immediately discontinue use of Identification in any way whatsoever.
14. No Agency Created: It is understood and agreed that Dealer is not, nor
shall it at any time represent itself to be, the agent, employee, representative
or franchisee of Regal. Dealer shall not enter into any contract or commitment
in the name of or on behalf of Regal.
15. Term of Agreement - Termination:
A. This Agreement shall commence on the date of its execution by
Regal and Dealer and shall remain in effect until it is
terminated at the end of a Regal Product Model Year (which
currently ends at 11:59 p.m. on June 30th) by either Dealer
or Regal giving the other party at least twenty-four (24)
months prior written notice (which notice may be given for
any reason and does not require good cause, and which
6
<PAGE>
notice may be for shorter period under the circumstances more
particularly described in Section 16.C). Notwithstanding
anything to the contrary described in this paragraph, this
Agreement may be terminated earlier under any of the
circumstances described below and in this Agreement.
B. This Agreement may be terminated at any time by the mutual consent
of the parties.
C. Either party may, upon the giving of at least forty-five (45) days
written notice to the other (10 days for credit reasons or nonpayment of sums
due) stating the reasons therefore, terminate this Agreement for cause due to a
material breach or default of this Agreement and provided that such breach or
default has not been cured during such notice period. Such material breach or
default shall include but not be limited to where Dealer does not agree to or
meet the performance standards or the annual program commitment described in
Sections 3 and 4 reasonably established yearly by Regal. If the breach or
default is not subject to cure, this Agreement may be terminated immediately,
effective upon the giving of notice to the breaching or defaulting party.
D. This Agreement may be immediately terminated by either party upon
written notice to the other if any of the following occur: (1) the other party,
if a corporation, ceases to exist; (2) the other party becomes insolvent or
takes or fails to take any action which constitutes an admission of inability to
pay debts as they mature; (3) the other party makes a general assignment for the
benefit of creditors to an agent authorized to liquidate any substantial amount
of assets; (4) the other party becomes a subject of an "order to relief" within
the meaning of the United States Bankruptcy Code; (5) the other party applies to
a court for the appointment of a received for any assets or properties; or, (6)
the other party makes a fraudulent misrepresentation that is material to this
Agreement.
E. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if Dealer defaults on any obligation to third party financing
institution.
F. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if all of the following events occur: Joseph G. Pozo, Jr. is no
longer a director and the chief executive officer of the Dealer's parent, and he
no longer owns at least 10 percent of the issued and outstanding capital stock
of Dealer.
16. Conduct Upon Termination:
A. Upon termination of this Agreement, Dealer shall offer to sell to Regal,
at Dealer's purchase price (not including transportation or financing costs),
Dealer's entire stock of current, originally packaged and new condition Product,
and if such termination is of a Dealer location or locations the offer shall be
applicable to Product maintained at such location or locations. Regal shall have
the option, but no obligation, to accept such offer, which acceptance shall be
communicated to Dealer by Regal in writing within thirty (30) days after Dealer
notifies Regal of the Product and applicable purchase price of such Product
which is subject to such purchase option. Dealer will make Product available to
Regal immediately upon acceptance of offer. Regal will pay Dealer all net
amounts due within thirty (30) days of receipt of Product, and proof that
Product is being transferred to Regal with good and marketable title, free of
all liens and encumbrances. Both parties agree to
7
<PAGE>
a waiver of lost profit or consequential damages as a result of termination
of this Agreement.
B. After the termination of this Agreement for those non good
cause reasons described in Section 15.A., Regal will continue
to sell parts and accessories for Product sold by Dealer
(subject to the terms of sale herein set forth) for twelve
(12) months in order that Dealer may continue to service any
Products which Dealer may have sold to customers prior to
termination.
C. Upon receipt of a notice of termination provided under Section
15.A.
(1.) If notice is provided by Dealer, Regal may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Dealer.
(2.) If notice is provided by Regal, Dealer may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Regal.
17. Governing Law: The Agreement has been signed by Dealer on the date
reflected below, and shall become binding upon the date this Agreement
is subsequently executed by Regal at its headquarters in Florida,
U.S.A. This Agreement shall be construed and enforced in accordance
with the laws of the state of Florida.
18. Assignment: This Agreement may not be assigned or transferred by
Dealer without prior written consent of Regal. Any assignment of this
Agreement without such consent, shall, at Regal's option,
automatically terminate this Agreement.
19. Notices: Any written notice given pursuant to this Agreement shall be
either hand delivered, sent by facsimile or mailed by Registered or
Certified Mail, return receipt requested, to the party at the
respective principal place of business first above written. If time
periods or methods of notice included in this Agreement are not in
compliance with applicable state law, then such periods contained in
the applicable state law will apply. Such notice shall be deemed to be
given upon first receipt. A change of address may be given by such
notice.
20. Entire Agreement - Non Waiver - Separability: This Agreement contains
the entire agreement and replaces all prior agreements between the parties
(provided that each party shall remain obligated to pay to the other any monies
owed under the ordinary course of business under such prior agreements) and may
be amended or modified only by written instrument signed by Regal and Dealer,
Failure on the part of Regal or Dealer to enforce any term of this Agreement
shall not constitute a waiver thereof. Any provision of this Agreement which in
any way contravenes or is unenforceable under applicable law shall not apply and
shall be deemed separable and not to be a part of this Agreement without
affecting the validity of the remaining provisions.
21. Binding Arbitration: All disputes, controversies or claims connected
with, arising out of, or relating to this Agreement, or any modification,
extension or renewal thereof, or to any causes of action that result from such
relationship, shall be subject exclusively to the remedy of arbitration
described herein, including but not limited to sums due under this Agreement,
the interpretation, performance or nonperformance of this Agreement, any claim
for damages or rescission, a breach or default of this Agreement, the creation,
termination or nonrenewal of this Agreement (such as a dispute regarding the
causes, validity or circumstances of the termination, nonextension, or
nonrenewal), and trade regulations or antitrust claims, whether such
controversies or claims are in law or equity or
8
<PAGE>
include claims based upon contract, statute, tort or otherwise. All
controversies shall be conducted in accordance with the American
Arbitration Association Commercial Arbitration Rules.
The arbitration shall be governed by the United States Arbitration
Act., 9 U.S.C. ss.1-16, as amended, and judgment upon the award
rendered by the arbitrator may be entered by any court having
jurisdiction thereof. The place of the arbitration shall be at
Orlando, Florida. Dealer consents to personal jurisdiction of such
court, including the federal and state courts located in the State of
Florida. The arbitrator is not empowered to and shall not award
damages in excess of actual damages and in no event shall the
arbitrator award punitive, special or consequential damages, or
prejudgment interest.
This Paragraph shall survive the expiration or termination of this
Agreement.
Except for sums owing to Regal, all arbitration claims and proceedings
must be instituted within one (1) year after the cause of action
arises, and the failure to institute arbitration proceedings within
such period shall constitute an absolute bar to the institution of any
proceedings and a waiver and relinquishment of all such claims.
22. Fees: If arbitration is instituted and Dealer prevails in an amount
which exceeds Dealer's most recent written demand prior to decision,
then Dealer shall be reimbursed its reasonable legal fees and
arbitration costs by Regal; otherwise, Regal shall be reimbursed its
reasonable legal fees and arbitration costs by Dealer.
23. Miscellaneous: Except as expressly described to the contrary in this
Agreement, the rights and remedies of each party are not exclusive.
Dealer hereby agrees to maintain in confidence all of the terms and
conditions of this Agreement.
IN WITNESS WHEREOF, Regal and Dealer have executed this Agreement as of the date
first written above.
REGAL MARINE INDUSTRIES AMERICAN MARINE RECREATION, INC.
INCORPORATED (Dealer)
By:____________________________ By:_____________________________
(Signature) (Signature)
Name:__________________________ Name:___________________________
Date:_________________ Date:_________________
9
<PAGE>
Competitive Products
Following are examples of competitive product categories and
companies:
Sportboats in bow rider and cuddy cabin configurations.
Deck Boats Express cruisers and or mid cabin cruisers.
Donzi-except fish models Baja-except High Performance
Maxum-except Flybridge Bryant Cobalt Cruisers Inc.-
except Flybridge Invader Excel Larson Wellcraft - except
Fish & High Performance Mainship - except Fly Bridge
Monterey Four Winns Penn Yan Powerquest Formula - except
High Performance Stingray Renken-except Fish models VIP
Baha Cruisers Bayliner - except fish models and Fly
Bridge Sea Ray Chaparral Crown line Doral Galaxie
Glastron Trojan Kal Kustom Mariah Chris Craft
Sunbird-except Fish/Ski Outboards Power Play Rinker
Silverton-except Flybridge Thompson Sea Sprite
10
<PAGE>
Non Competitive Products
Following are examples of non-competitive product categories and companies:
Outboard Motor Boats, Fish N Ski Boats (Inboard Powered)
Offshore fishing boats: Pro-line, Mako, Grady White
Bass fishing boats: Ranger, Gambler
Aluminum boats: Smokercraft, Sylvan
House boats: Gibson, Harbor Master
Inboard tournament ski boats: Tige', Mastercraft, Malibu
Personal watercraft: Sea Doo, Yamaha jet ski
High Performance: Cigarette, Fountain
Sailboats: Hunter, Catalina
Flats & bay fishing boats: Carolina skiff, Key West
Motor Yachts: Hatteras, Navigator, Carver*
Trawlers: Grand Banks
Pontoon Boats: Playbuoy Pontoon
Hurrican Deck Boats
11
<PAGE>
SALES AND SERVICE AGREEMENT
THIS AGREEMENT made this 1st day of September, 1998 between Regal Marine
Industries Incorporated, doing business as Regal Boats, having its principal
place of business at 2300 Jetport Drive, Orlando, Florida 32809 (hereinafter
referred to as "Regal") and American Marine Recreation, Inc., doing business as
the Boattree with its principal place of business at 1924 33rd Steet, Orlando,
Florida 32834, being a corporation of the State of Delaware (hereinafter
referred to as "Dealer"), whereby in consideration of the mutual covenants
herein contained, it is agreed as follows:
1. Appointment of Dealer: Regal hereby appoints Dealer as its authorized
dealer for the retail sale, display and servicing of the following
Regal product(s) and repair parts (hereinafter "Products")*:
Product Dealer Regal
Sport Boat
Sport Cruiser
* Both parties are to initial the product descriptions to be included in
this Agreement.
The following geographic area (typically described by county) will be the
primary "Marketing Area" into which Dealer will promote, sell and service
Products (if not described, the Marketing Area is the area local to Dealer)
solely from the dealer location(s) contained in the Marketing Area:
ORANGE, SEMINOLE, OSCEOLA AND LAKE COUNTIES
Regal agrees that it will not appoint another authorized dealer for the retail
or sale, display and service of the Products from a location within the
Marketing Area.
2. Location(s): Dealer shall sell at retail, display and service Products
only at the following locations(s) (designate if a sales only or
service only location):
BOAT TREE, INC. - 1924 33RD STREET - ORLANDO, FL 32829
1
<PAGE>
Dealer agrees to not delete, change, or add locations nor sell from
additional location(s) without the prior written consent of Regal (which consent
shall not be unreasonably withheld), nor will Dealer sell Products
internationally or to others for the purpose of resale without the prior written
consent of Regal.
Regal may upon the giving of at least ninety (90) days prior written
notice, and provided a cure does not occur during that notice period, delete
from this Agreement any dealer location and commensurate portion of the
Marketing Area where Dealer has failed to meet the obligations, performance
standards, annual program commitment, terms, conditions, representations,
warranties and covenants applicable to that dealer location as more particularly
described in this Agreement.
3. Performance Standards: Regal, after consultation with Dealer, may
establish fair and reasonable standards of sales performance for the Dealer in
the Marketing Area Such standards are based on such factors as population, sales
potential, economic conditions in the Marketing Area, competition from other
marine dealerships in the area, and any special circumstances that may affect
the sale of Products or the Dealer. Regal may from time to time revise such
standards as conditions may require and Regal may update at least annually sales
performance under this Agreement. Initially the performance standards shall be
as follows:
Time Period Product Category Unit Commitment
4. Purchase Program Elections: Regal may establish purchase programs during
each Product model year of the Agreement term. The purchase program for the 1999
model year is as follows:
Initial your appropriate election (Interest Support or Profit Plus) for
each product category and your interest support rebate bonus election as
outlined in the 1999 programs.
Product Category Interest Support Profit Plus
Sport Boat (1700-2150)
Sport Boat (6.8-2660)
Sport Cruiser (2800-4060)
Interest Support Rebate Bonus:
I will stock the 322, 402 and 4060 models to receive the
interest rebate bonus.
I do not plan to stock each of the following models: 322,
402, and 4060.
2
<PAGE>
5. Dealer's Responsibilities: Dealer agrees to:
A. Devote its best efforts to aggressively promote, display,
advertise, sell and service Products solely from the dealer
location(s) within Dealer's Marketing Area in accordance with
the terms of the Agreement and all applicable federal, state
and local laws. Dealer will display at each dealer
location(s), a sign in good taste with Regal's current trade
designations, subject to approval by Regal.
B. Purchase and carry on hand at all times a sufficient
inventory of current Products to meet the reasonable demand
of potential customers within the Marketing Area. Dealer will
protect inventory of Product against weathering and damage
and maintain inventory in like new condition.
C. Maintain at each dealer location(s) (unless a sales
location only and then service is to be provided at another
authorized location) a service department which is staffed.,
trained and equipped to service Products; and to maintain at
the dealer location(s), parts and supplies to properly
service Products on a timely basis.
D. Promptly, courteously and professionally perform any and
all necessary rigging, installation and inspection services
prior to delivery of the Product to the purchaser, and
perform post-sale service, including warranty service, of all
Products brought to Dealer for service, in accordance with
Regal's then current warranty policies.
E. Furnish purchaser with Regal's limited warranty on new
Products and with information and training as to the safe and
proper operation and maintenance of Products.
F. Complete and mail Regal's warranty registration card
immediately upon delivery of the Products to the purchaser
and assist Regal in performing Product service and recall
campaigns. In the event Dealer fails to mail the card to
Regal, Dealer agrees to indemnify Regal against any
liability, loss or damage which Regal may sustain which is
proximately caused by such failure.
G. Maintain complete sales and service records and to report
to Regal on a regular basis the name and address of
purchasers of Products, to the extent required by Regal's
then current policies and/or federal, state and local laws.
H. Achieve sales performance in accordance with the standards
described in Section 3.
I. Take steps necessary to become factory authorized to
repair power units supplied on Products, including attending
service school attendance.
J. (1) Provide complete financial statements for the Dealer
at mutually agreeable intervals, but at least on an annual
basis, and (2) consent to full and open disclosure of
financial information concerning Dealer, between Regal and
any financial institution or a company which finances Dealers
inventory of Products.
K. Conduct business in a manner that preserves and enhances
the reputation Regal, the Products and Dealer for providing
quality products and services.
3
<PAGE>
L. Maintain an ability to purchase Product inventory pursuant
to flooring and/or self financing in an amount which is
sufficient to meet the Dealer obligations described in the
Agreement.
M. Use its best efforts to maintain a CSI rating, based upon
Regal's then current CSI program, sufficient in Regal's
reasonable judgment to maintain Regal's image in the market
place, which minimum standard shall be established from time
to time by Regal and shall initially be 85 percent.
N. Maintain a financial condition which is adequate to
satisfy and perform its obligations under this Agreement.
0. Not directly or indirectly itself, or allow anyone else
to, solicit, inventory, marker or sell, from any dealer
location described in Section 2, any product which is
competitive with the Products. Such competitive products
shall include but not be limited to those products described
on Exhibit A, but shall not include those products delineated
as noncompetitive that are also described on Exhibit A.
P. Allow the application of any rebates or account credits
owed to Dealer to and as an offset against any debts or
monies owed to Regal by Dealer, including but not limited to
losses or debts applicable to open Product accounts, unpaid
retail show space, and to any losses relating to Dealer
flooring or financing;
Q. Indemnify and hold harmless Regal and its affiliated
credit agencies from any and all claims or losses whatsoever
and as a result of Dealer's failure to meet its obligations
to Regal or Regal affiliated credit agencies.
6. Order: Dealer agrees to submit orders to Regal in a manner and
format prescribed from time to time by Regal and which are applicable
to Regal's domestic dealers. Any order which does not comply with
Regal's terms and conditions need not be filled by Regal. Any
additional or different terms submitted by Dealer will be void and of
no effect. All orders are subject to acceptance by Regal. Product
availability shall be allocated on a reasonable basis established by
Regal, provided that Regal reserves the right to limit Product orders
to those based upon the previous year Product purchases made by the
Dealer and Regal's other dealers.
7. Prices: The Products (including accessories and parts) sold to the
Dealer by Regal will be on the basis of price lists published by Regal
from time to time applicable to Regal's domestic dealers selling
comparable Products. Regal will have the right to revise the price
lists or applicable discounts on programs at any time. Regal shall
have no obligation to reimburse Dealer for any loss which Dealer may
sustain by reason of any change in price, program or discount. Terms
of payment will be as specified from time to time by Regal. Dealer
will pay Regal the lesser of 1.5% late charges per month on any past
due invoice, or the maximum permitted by state law. Regal may refuse
shipment for any credit reason, including Dealer's failure to pay for
a prior shipment. Dealer will reimburse Regal for all necessary costs
and reasonable attorneys fees in collecting past due accounts. Regal
retains a security interest and lien on all Products sold to Dealer
and all proceeds arising out of the sale of Products until Products
are paid for in full in cash. The Product prices charged to Dealer
will be the lowest price then charged to other domestic dealers who
purchase, under similar programs, comparable products for at least
equal quantities of products ordered and to be delivered in the same
period as the Dealer order, provided Regal may, in good faith. charge
lesser prices to other dealers to meet competitive offer or sales by
other
4
<PAGE>
manufacturers, new dealer pricing, for unusual and nonordinary
business circumstances, or for limited duration promotional programs.
8. Shipments: All shipments of Products will be made FOB Regal's
factory or distribution center at which time title shall pass. Dealer
shall pay all applicable shipping, transportation, delivery and
handling charges for Products ordered. If Dealer fails to accept
delivery of any Products ordered, Dealer shall reimburse Regal for the
transportation of such Product. However, if Regal ships Products not
ordered by Dealer, and Regal cannot produce documentation to confirm
the order was placed by Dealer, Dealer will have the right to refuse
delivery. In such event, Regal will pay all costs incurred in
transportation of the Product. Shipments will be subject to Regal's
productions schedule and availability of transportation equipment. No
liability will be sustained by Regal by reason of its not filling any
order due to circumstances beyond its control such as, but not limited
to, labor disputes, natural disasters, accidents to machinery,
manufacturing delays, material shortages or regulations.
9. Risk of Loss: If Products ordered by Dealer are transported in
Regal's trucks, risk of loss shall pass to Dealer upon delivery to
Dealer. If Products are shipped by other means, risk of loss shall
pass to Dealer at the time the Products or parts are tendered to such
carrier. Regal will assist Dealer in the processing and collection of
any claims against the carrier
10. Payment - Claims: All sales to Dealer shall be paid for COD, by
cashier's check unless otherwise agreed between Regal and Dealer. All
claims for shortage or damages or unacceptable goods shall be made at
the time of arrival of the shipment. The failure of Dealer to give
such notification shall constitute a waiver of any such claim. Dealer
shall cause to be paid or shall make reimbursement to Regal in full
for any and all taxes, duties. or other charges imposed by federal,
state, municipal or other governmental authority upon any purchase or
sale under Agreement.
11. Product Modification: Regal shall have the right to discontinue
the sale of Products or to modify the design and components of
Products at any time; provided, however, that Regal shall notify
Dealer prior to shipment of any major design changes with respect to
Products previously ordered by Dealer, in which event Dealer shall
have the right to cancel such order.
12. Product Warranty:
A. Regal will furnish through Dealer to first-use purchasers its then
current standard written limited warranty in effect at the time of delivery of
Product to Dealer. Dealer shall have no authority to and agrees not to make any
representations, verbally or in writing, relating to Regal's warranty other than
those made by Regal in its written warranty. Dealer agrees to provide the
Product's "Operation and Maintenance" manuals to the purchaser at time of
delivery, and make Regal warranty known to the purchaser, including all
disclaimer and limitations, and to have purchaser acknowledge receipt of
warranty by obtaining his signature on the Owner Registration and System
checklist form.
B. Dealer agrees to provide timely warranty service on all Product located
within Dealer's Marketing Area regardless of where the Product was originally
purchased, in accordance with Regal's current warranty service program. Dealer
agrees to make all claims for reimbursement under Regal's warranty service
program in the manner prescribed by Regal. Regal may revise its warranty service
program from time to
5
<PAGE>
time, providing Dealer with written notification of all revisions and those
revisions will supersede all previous programs.
C. Regal agrees to promptly approve and fully honor all
legitimate warranty claims on Product when made by purchaser
through Dealer in the manner prescribed by Regal. Regal
agrees to credit or reimburse Dealer for all approved
warranty service performed at dealership on behalf of Regal.
Regal shall respond to all properly submitted warranty claims
by Dealer within one month after receipt of such claims.
Regal agrees to pay or credit all accepted claims.
D. It is the selling dealer's (including Dealer)
responsibility to insure that the retail purchaser receive
the proper service on Product that is to be primarily used
outside of the selling dealer's Marketing Area. Product sold
and used outside of the "selling dealer's" Marketing Area and
into an area serviced by another Regal dealer, should then be
serviced by that closer dealer. It will be the responsibility
of the selling dealer to negotiate in advance of the sale, a
reasonable financial arrangement with the Regal dealer in
whose market area the boat will be primarily used to insure
that the customer receives the proper warranty and other
necessary service. Product sold into an area void of a Regal
dealer should then be serviced by the selling dealer and or
the selling dealer should seek approval from Regal to make
arrangements for service with a non-Regal dealer convenient
to the purchaser.
If the selling dealer fails to negotiate a mutually
acceptable financial arrangement with the servicing Regal
dealer, or fails to provide or make arrangements for adequate
service, the selling dealer shall be responsible for any
additional costs that may be incurred in providing warranty
service to the purchaser. In addition, such failure may be
cause for cancellation of the selling dealer's Sales and
Service Dealer Agreement.
13. Trademarks and Service Marks: Dealer acknowledges that Regal or its
affiliated companies are the exclusive owners of various trademarks, service
marks, trade designations and trade dress (collectively "Identification:) which
Regal uses in connection with Products and its business. Dealer is authorized to
use Identification in a manner acceptable to Regal within the Marketing Area
only in connection with the promotion and sale of Products and only until the
expiration or termination of this Agreement. Dealer will not use Identification
as the whole or any part of the name or title of Dealer's business. Dealer
acquires no proprietary rights to Identification and this authorization will
terminate simultaneously with the expiration or termination of this Agreement.
In the event of expiration or termination of this Agreement, Dealer shall
immediately discontinue use of Identification in any way whatsoever.
14. No Agency Created: It is understood and agreed that Dealer is not, nor
shall it at any time represent itself to be, the agent, employee, representative
or franchisee of Regal. Dealer shall not enter into any contract or commitment
in the name of or on behalf of Regal.
15. Term of Agreement - Termination:
A. This Agreement shall commence on the date of its execution by
Regal and Dealer and shall remain in effect until it is
terminated at the end of a Regal Product Model Year (which
currently ends at 11:59 p.m. on June 30th) by either Dealer
or Regal giving the other party at least twenty-four (24)
months prior written notice (which notice may be given for
any reason and does not require good cause, and which
6
<PAGE>
notice may be for shorter period under the circumstances more
particularly described in Section 16.C). Notwithstanding
anything to the contrary described in this paragraph, this
Agreement may be terminated earlier under any of the
circumstances described below and in this Agreement.
B. This Agreement may be terminated at any time by the mutual consent
of the parties.
C. Either party may, upon the giving of at least forty-five (45) days
written notice to the other (10 days for credit reasons or nonpayment of sums
due) stating the reasons therefore, terminate this Agreement for cause due to a
material breach or default of this Agreement and provided that such breach or
default has not been cured during such notice period. Such material breach or
default shall include but not be limited to where Dealer does not agree to or
meet the performance standards or the annual program commitment described in
Sections 3 and 4 reasonably established yearly by Regal. If the breach or
default is not subject to cure, this Agreement may be terminated immediately,
effective upon the giving of notice to the breaching or defaulting party.
D. This Agreement may be immediately terminated by either party upon
written notice to the other if any of the following occur: (1) the other party,
if a corporation, ceases to exist; (2) the other party becomes insolvent or
takes or fails to take any action which constitutes an admission of inability to
pay debts as they mature; (3) the other party makes a general assignment for the
benefit of creditors to an agent authorized to liquidate any substantial amount
of assets; (4) the other party becomes a subject of an "order to relief" within
the meaning of the United States Bankruptcy Code; (5) the other party applies to
a court for the appointment of a received for any assets or properties; or, (6)
the other party makes a fraudulent misrepresentation that is material to this
Agreement.
E. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if Dealer defaults on any obligation to third party financing
institution.
F. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if all of the following events occur: Joseph G. Pozo, Jr. is no
longer a director and the chief executive officer of the Dealer's parent, and he
no longer owns at least 10 percent of the issued and outstanding capital stock
of Dealer.
16. Conduct Upon Termination:
A. Upon termination of this Agreement, Dealer shall offer to sell to Regal,
at Dealer's purchase price (not including transportation or financing costs),
Dealer's entire stock of current, originally packaged and new condition Product,
and if such termination is of a Dealer location or locations the offer shall be
applicable to Product maintained at such location or locations. Regal shall have
the option, but no obligation, to accept such offer, which acceptance shall be
communicated to Dealer by Regal in writing within thirty (30) days after Dealer
notifies Regal of the Product and applicable purchase price of such Product
which is subject to such purchase option. Dealer will make Product available to
Regal immediately upon acceptance of offer. Regal will pay Dealer all net
amounts due within thirty (30) days of receipt of Product, and proof that
Product is being transferred to Regal with good and marketable title, free of
all liens and encumbrances. Both parties agree to
7
<PAGE>
a waiver of lost profit or consequential damages as a result of termination
of this Agreement.
B. After the termination of this Agreement for those non good
cause reasons described in Section 15.A., Regal will continue
to sell parts and accessories for Product sold by Dealer
(subject to the terms of sale herein set forth) for twelve
(12) months in order that Dealer may continue to service any
Products which Dealer may have sold to customers prior to
termination.
C. Upon receipt of a notice of termination provided under Section
15.A.
(1.) If notice is provided by Dealer, Regal may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Dealer.
(2.) If notice is provided by Regal, Dealer may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Regal.
17. Governing Law: The Agreement has been signed by Dealer on the date
reflected below, and shall become binding upon the date this Agreement
is subsequently executed by Regal at its headquarters in Florida,
U.S.A. This Agreement shall be construed and enforced in accordance
with the laws of the state of Florida.
18. Assignment: This Agreement may not be assigned or transferred by
Dealer without prior written consent of Regal. Any assignment of this
Agreement without such consent, shall, at Regal's option,
automatically terminate this Agreement.
19. Notices: Any written notice given pursuant to this Agreement shall be
either hand delivered, sent by facsimile or mailed by Registered or
Certified Mail, return receipt requested, to the party at the
respective principal place of business first above written. If time
periods or methods of notice included in this Agreement are not in
compliance with applicable state law, then such periods contained in
the applicable state law will apply. Such notice shall be deemed to be
given upon first receipt. A change of address may be given by such
notice.
20. Entire Agreement - Non Waiver - Separability: This Agreement contains
the entire agreement and replaces all prior agreements between the parties
(provided that each party shall remain obligated to pay to the other any monies
owed under the ordinary course of business under such prior agreements) and may
be amended or modified only by written instrument signed by Regal and Dealer,
Failure on the part of Regal or Dealer to enforce any term of this Agreement
shall not constitute a waiver thereof. Any provision of this Agreement which in
any way contravenes or is unenforceable under applicable law shall not apply and
shall be deemed separable and not to be a part of this Agreement without
affecting the validity of the remaining provisions.
21. Binding Arbitration: All disputes, controversies or claims connected
with, arising out of, or relating to this Agreement, or any modification,
extension or renewal thereof, or to any causes of action that result from such
relationship, shall be subject exclusively to the remedy of arbitration
described herein, including but not limited to sums due under this Agreement,
the interpretation, performance or nonperformance of this Agreement, any claim
for damages or rescission, a breach or default of this Agreement, the creation,
termination or nonrenewal of this Agreement (such as a dispute regarding the
causes, validity or circumstances of the termination, nonextension, or
nonrenewal), and trade regulations or antitrust claims, whether such
controversies or claims are in law or equity or
8
<PAGE>
include claims based upon contract, statute, tort or otherwise. All
controversies shall be conducted in accordance with the American
Arbitration Association Commercial Arbitration Rules.
The arbitration shall be governed by the United States Arbitration
Act., 9 U.S.C. ss.1-16, as amended, and judgment upon the award
rendered by the arbitrator may be entered by any court having
jurisdiction thereof. The place of the arbitration shall be at
Orlando, Florida. Dealer consents to personal jurisdiction of such
court, including the federal and state courts located in the State of
Florida. The arbitrator is not empowered to and shall not award
damages in excess of actual damages and in no event shall the
arbitrator award punitive, special or consequential damages, or
prejudgment interest.
This Paragraph shall survive the expiration or termination of this
Agreement.
Except for sums owing to Regal, all arbitration claims and proceedings
must be instituted within one (1) year after the cause of action
arises, and the failure to institute arbitration proceedings within
such period shall constitute an absolute bar to the institution of any
proceedings and a waiver and relinquishment of all such claims.
22. Fees: If arbitration is instituted and Dealer prevails in an amount
which exceeds Dealer's most recent written demand prior to decision,
then Dealer shall be reimbursed its reasonable legal fees and
arbitration costs by Regal; otherwise, Regal shall be reimbursed its
reasonable legal fees and arbitration costs by Dealer.
23. Miscellaneous: Except as expressly described to the contrary in this
Agreement, the rights and remedies of each party are not exclusive.
Dealer hereby agrees to maintain in confidence all of the terms and
conditions of this Agreement.
IN WITNESS WHEREOF, Regal and Dealer have executed this Agreement as of the date
first written above.
REGAL MARINE INDUSTRIES AMERICAN MARINE RECREATION, INC.
INCORPORATED (Dealer)
By:____________________________ By:_____________________________
(Signature) (Signature)
Name:__________________________ Name:___________________________
Date:_________________ Date:_________________
9
<PAGE>
Competitive Products
Following are examples of competitive product categories and
companies:
Sportboats in bow rider and cuddy cabin configurations.
Deck Boats Express cruisers and or mid cabin cruisers.
Donzi-except fish models Baja-except High Performance
Maxum-except Flybridge Bryant Cobalt Cruisers Inc.-
except Flybridge Invader Excel Larson Wellcraft - except
Fish & High Performance Mainship - except Fly Bridge
Monterey Four Winns Penn Yan Powerquest Formula - except
High Performance Stingray Renken-except Fish models VIP
Baha Cruisers Bayliner - except fish models and Fly
Bridge Sea Ray Chaparral Crown line Doral Galaxie
Glastron Trojan Kal Kustom Mariah Chris Craft
Sunbird-except Fish/Ski Outboards Power Play Rinker
Silverton-except Flybridge Thompson Sea Sprite
10
<PAGE>
Non Competitive Products
Following are examples of non-competitive product categories and companies:
Outboard Motor Boats, Fish N Ski Boats (Inboard Powered)
Offshore fishing boats: Pro-line, Mako, Grady White
Bass fishing boats: Ranger, Gambler
Aluminum boats: Smokercraft, Sylvan
House boats: Gibson, Harbor Master
Inboard tournament ski boats: Tige', Mastercraft, Malibu
Personal watercraft: Sea Doo, Yamaha jet ski
High Performance: Cigarette, Fountain
Sailboats: Hunter, Catalina
Flats & bay fishing boats: Carolina skiff, Key West
Motor Yachts: Hatteras, Navigator, Carver*
Trawlers: Grand Banks
Pontoon Boats: Playbuoy Pontoon
Hurrican Deck Boats
11
<PAGE>
SALES AND SERVICE AGREEMENT
THIS AGREEMENT made this 1st day of September, 1998 between Regal Marine
Industries Incorporated, doing business as Regal Boats, having its principal
place of business at 2300 Jetport Drive, Orlando, Florida 32809 (hereinafter
referred to as "Regal") and American Marine Recreation, Inc., doing business as
the Boattree with its principal place of business at 1924 33rd Steet, Orlando,
Florida 32834, being a corporation of the State of Delaware (hereinafter
referred to as "Dealer"), whereby in consideration of the mutual covenants
herein contained, it is agreed as follows:
1. Appointment of Dealer: Regal hereby appoints Dealer as its authorized
dealer for the retail sale, display and servicing of the following
Regal product(s) and repair parts (hereinafter "Products")*:
Product Dealer Regal
Sport Boat
Sport Cruiser
* Both parties are to initial the product descriptions to be included in
this Agreement.
The following geographic area (typically described by county) will be the
primary "Marketing Area" into which Dealer will promote, sell and service
Products (if not described, the Marketing Area is the area local to Dealer)
solely from the dealer location(s) contained in the Marketing Area:
HILLSBOROUGH AND PINELLAS COUNTIES
Regal agrees that it will not appoint another authorized dealer for the retail
or sale, display and service of the Products from a location within the
Marketing Area.
2. Location(s): Dealer shall sell at retail, display and service Products
only at the following locations(s) (designate if a sales only or
service only location):
BOAT TREE, INC. - 120 PINELLAS BAYWAY - TIERRA VERDE, FL 33715
BOAT TREE, INC. - 7085 U.S. 19 - PINELLAS PARK, FL 34665
1
<PAGE>
Dealer agrees to not delete, change, or add locations nor sell from
additional location(s) without the prior written consent of Regal (which consent
shall not be unreasonably withheld), nor will Dealer sell Products
internationally or to others for the purpose of resale without the prior written
consent of Regal.
Regal may upon the giving of at least ninety (90) days prior written
notice, and provided a cure does not occur during that notice period, delete
from this Agreement any dealer location and commensurate portion of the
Marketing Area where Dealer has failed to meet the obligations, performance
standards, annual program commitment, terms, conditions, representations,
warranties and covenants applicable to that dealer location as more particularly
described in this Agreement.
3. Performance Standards: Regal, after consultation with Dealer, may
establish fair and reasonable standards of sales performance for the Dealer in
the Marketing Area Such standards are based on such factors as population, sales
potential, economic conditions in the Marketing Area, competition from other
marine dealerships in the area, and any special circumstances that may affect
the sale of Products or the Dealer. Regal may from time to time revise such
standards as conditions may require and Regal may update at least annually sales
performance under this Agreement. Initially the performance standards shall be
as follows:
Time Period Product Category Unit Commitment
4. Purchase Program Elections: Regal may establish purchase programs during
each Product model year of the Agreement term. The purchase program for the 1999
model year is as follows:
Initial your appropriate election (Interest Support or Profit Plus) for
each product category and your interest support rebate bonus election as
outlined in the 1999 programs.
Product Category Interest Support Profit Plus
Sport Boat (1700-2150)
Sport Boat (6.8-2660)
Sport Cruiser (2800-4060)
Interest Support Rebate Bonus:
I will stock the 322, 402 and 4060 models to receive the
interest rebate bonus.
I do not plan to stock each of the following models: 322,
402, and 4060.
2
<PAGE>
5. Dealer's Responsibilities: Dealer agrees to:
A. Devote its best efforts to aggressively promote, display,
advertise, sell and service Products solely from the dealer
location(s) within Dealer's Marketing Area in accordance with
the terms of the Agreement and all applicable federal, state
and local laws. Dealer will display at each dealer
location(s), a sign in good taste with Regal's current trade
designations, subject to approval by Regal.
B. Purchase and carry on hand at all times a sufficient
inventory of current Products to meet the reasonable demand
of potential customers within the Marketing Area. Dealer will
protect inventory of Product against weathering and damage
and maintain inventory in like new condition.
C. Maintain at each dealer location(s) (unless a sales
location only and then service is to be provided at another
authorized location) a service department which is staffed.,
trained and equipped to service Products; and to maintain at
the dealer location(s), parts and supplies to properly
service Products on a timely basis.
D. Promptly, courteously and professionally perform any and
all necessary rigging, installation and inspection services
prior to delivery of the Product to the purchaser, and
perform post-sale service, including warranty service, of all
Products brought to Dealer for service, in accordance with
Regal's then current warranty policies.
E. Furnish purchaser with Regal's limited warranty on new
Products and with information and training as to the safe and
proper operation and maintenance of Products.
F. Complete and mail Regal's warranty registration card
immediately upon delivery of the Products to the purchaser
and assist Regal in performing Product service and recall
campaigns. In the event Dealer fails to mail the card to
Regal, Dealer agrees to indemnify Regal against any
liability, loss or damage which Regal may sustain which is
proximately caused by such failure.
G. Maintain complete sales and service records and to report
to Regal on a regular basis the name and address of
purchasers of Products, to the extent required by Regal's
then current policies and/or federal, state and local laws.
H. Achieve sales performance in accordance with the standards
described in Section 3.
I. Take steps necessary to become factory authorized to
repair power units supplied on Products, including attending
service school attendance.
J. (1) Provide complete financial statements for the Dealer
at mutually agreeable intervals, but at least on an annual
basis, and (2) consent to full and open disclosure of
financial information concerning Dealer, between Regal and
any financial institution or a company which finances Dealers
inventory of Products.
K. Conduct business in a manner that preserves and enhances
the reputation Regal, the Products and Dealer for providing
quality products and services.
3
<PAGE>
L. Maintain an ability to purchase Product inventory pursuant
to flooring and/or self financing in an amount which is
sufficient to meet the Dealer obligations described in the
Agreement.
M. Use its best efforts to maintain a CSI rating, based upon
Regal's then current CSI program, sufficient in Regal's
reasonable judgment to maintain Regal's image in the market
place, which minimum standard shall be established from time
to time by Regal and shall initially be 85 percent.
N. Maintain a financial condition which is adequate to
satisfy and perform its obligations under this Agreement.
0. Not directly or indirectly itself, or allow anyone else
to, solicit, inventory, marker or sell, from any dealer
location described in Section 2, any product which is
competitive with the Products. Such competitive products
shall include but not be limited to those products described
on Exhibit A, but shall not include those products delineated
as noncompetitive that are also described on Exhibit A.
P. Allow the application of any rebates or account credits
owed to Dealer to and as an offset against any debts or
monies owed to Regal by Dealer, including but not limited to
losses or debts applicable to open Product accounts, unpaid
retail show space, and to any losses relating to Dealer
flooring or financing;
Q. Indemnify and hold harmless Regal and its affiliated
credit agencies from any and all claims or losses whatsoever
and as a result of Dealer's failure to meet its obligations
to Regal or Regal affiliated credit agencies.
6. Order: Dealer agrees to submit orders to Regal in a manner and
format prescribed from time to time by Regal and which are applicable
to Regal's domestic dealers. Any order which does not comply with
Regal's terms and conditions need not be filled by Regal. Any
additional or different terms submitted by Dealer will be void and of
no effect. All orders are subject to acceptance by Regal. Product
availability shall be allocated on a reasonable basis established by
Regal, provided that Regal reserves the right to limit Product orders
to those based upon the previous year Product purchases made by the
Dealer and Regal's other dealers.
7. Prices: The Products (including accessories and parts) sold to the
Dealer by Regal will be on the basis of price lists published by Regal
from time to time applicable to Regal's domestic dealers selling
comparable Products. Regal will have the right to revise the price
lists or applicable discounts on programs at any time. Regal shall
have no obligation to reimburse Dealer for any loss which Dealer may
sustain by reason of any change in price, program or discount. Terms
of payment will be as specified from time to time by Regal. Dealer
will pay Regal the lesser of 1.5% late charges per month on any past
due invoice, or the maximum permitted by state law. Regal may refuse
shipment for any credit reason, including Dealer's failure to pay for
a prior shipment. Dealer will reimburse Regal for all necessary costs
and reasonable attorneys fees in collecting past due accounts. Regal
retains a security interest and lien on all Products sold to Dealer
and all proceeds arising out of the sale of Products until Products
are paid for in full in cash. The Product prices charged to Dealer
will be the lowest price then charged to other domestic dealers who
purchase, under similar programs, comparable products for at least
equal quantities of products ordered and to be delivered in the same
period as the Dealer order, provided Regal may, in good faith. charge
lesser prices to other dealers to meet competitive offer or sales by
other
4
<PAGE>
manufacturers, new dealer pricing, for unusual and nonordinary
business circumstances, or for limited duration promotional programs.
8. Shipments: All shipments of Products will be made FOB Regal's
factory or distribution center at which time title shall pass. Dealer
shall pay all applicable shipping, transportation, delivery and
handling charges for Products ordered. If Dealer fails to accept
delivery of any Products ordered, Dealer shall reimburse Regal for the
transportation of such Product. However, if Regal ships Products not
ordered by Dealer, and Regal cannot produce documentation to confirm
the order was placed by Dealer, Dealer will have the right to refuse
delivery. In such event, Regal will pay all costs incurred in
transportation of the Product. Shipments will be subject to Regal's
productions schedule and availability of transportation equipment. No
liability will be sustained by Regal by reason of its not filling any
order due to circumstances beyond its control such as, but not limited
to, labor disputes, natural disasters, accidents to machinery,
manufacturing delays, material shortages or regulations.
9. Risk of Loss: If Products ordered by Dealer are transported in
Regal's trucks, risk of loss shall pass to Dealer upon delivery to
Dealer. If Products are shipped by other means, risk of loss shall
pass to Dealer at the time the Products or parts are tendered to such
carrier. Regal will assist Dealer in the processing and collection of
any claims against the carrier
10. Payment - Claims: All sales to Dealer shall be paid for COD, by
cashier's check unless otherwise agreed between Regal and Dealer. All
claims for shortage or damages or unacceptable goods shall be made at
the time of arrival of the shipment. The failure of Dealer to give
such notification shall constitute a waiver of any such claim. Dealer
shall cause to be paid or shall make reimbursement to Regal in full
for any and all taxes, duties. or other charges imposed by federal,
state, municipal or other governmental authority upon any purchase or
sale under Agreement.
11. Product Modification: Regal shall have the right to discontinue
the sale of Products or to modify the design and components of
Products at any time; provided, however, that Regal shall notify
Dealer prior to shipment of any major design changes with respect to
Products previously ordered by Dealer, in which event Dealer shall
have the right to cancel such order.
12. Product Warranty:
A. Regal will furnish through Dealer to first-use purchasers its then
current standard written limited warranty in effect at the time of delivery of
Product to Dealer. Dealer shall have no authority to and agrees not to make any
representations, verbally or in writing, relating to Regal's warranty other than
those made by Regal in its written warranty. Dealer agrees to provide the
Product's "Operation and Maintenance" manuals to the purchaser at time of
delivery, and make Regal warranty known to the purchaser, including all
disclaimer and limitations, and to have purchaser acknowledge receipt of
warranty by obtaining his signature on the Owner Registration and System
checklist form.
B. Dealer agrees to provide timely warranty service on all Product located
within Dealer's Marketing Area regardless of where the Product was originally
purchased, in accordance with Regal's current warranty service program. Dealer
agrees to make all claims for reimbursement under Regal's warranty service
program in the manner prescribed by Regal. Regal may revise its warranty service
program from time to
5
<PAGE>
time, providing Dealer with written notification of all revisions and those
revisions will supersede all previous programs.
C. Regal agrees to promptly approve and fully honor all
legitimate warranty claims on Product when made by purchaser
through Dealer in the manner prescribed by Regal. Regal
agrees to credit or reimburse Dealer for all approved
warranty service performed at dealership on behalf of Regal.
Regal shall respond to all properly submitted warranty claims
by Dealer within one month after receipt of such claims.
Regal agrees to pay or credit all accepted claims.
D. It is the selling dealer's (including Dealer)
responsibility to insure that the retail purchaser receive
the proper service on Product that is to be primarily used
outside of the selling dealer's Marketing Area. Product sold
and used outside of the "selling dealer's" Marketing Area and
into an area serviced by another Regal dealer, should then be
serviced by that closer dealer. It will be the responsibility
of the selling dealer to negotiate in advance of the sale, a
reasonable financial arrangement with the Regal dealer in
whose market area the boat will be primarily used to insure
that the customer receives the proper warranty and other
necessary service. Product sold into an area void of a Regal
dealer should then be serviced by the selling dealer and or
the selling dealer should seek approval from Regal to make
arrangements for service with a non-Regal dealer convenient
to the purchaser.
If the selling dealer fails to negotiate a mutually
acceptable financial arrangement with the servicing Regal
dealer, or fails to provide or make arrangements for adequate
service, the selling dealer shall be responsible for any
additional costs that may be incurred in providing warranty
service to the purchaser. In addition, such failure may be
cause for cancellation of the selling dealer's Sales and
Service Dealer Agreement.
13. Trademarks and Service Marks: Dealer acknowledges that Regal or its
affiliated companies are the exclusive owners of various trademarks, service
marks, trade designations and trade dress (collectively "Identification:) which
Regal uses in connection with Products and its business. Dealer is authorized to
use Identification in a manner acceptable to Regal within the Marketing Area
only in connection with the promotion and sale of Products and only until the
expiration or termination of this Agreement. Dealer will not use Identification
as the whole or any part of the name or title of Dealer's business. Dealer
acquires no proprietary rights to Identification and this authorization will
terminate simultaneously with the expiration or termination of this Agreement.
In the event of expiration or termination of this Agreement, Dealer shall
immediately discontinue use of Identification in any way whatsoever.
14. No Agency Created: It is understood and agreed that Dealer is not, nor
shall it at any time represent itself to be, the agent, employee, representative
or franchisee of Regal. Dealer shall not enter into any contract or commitment
in the name of or on behalf of Regal.
15. Term of Agreement - Termination:
A. This Agreement shall commence on the date of its execution by
Regal and Dealer and shall remain in effect until it is
terminated at the end of a Regal Product Model Year (which
currently ends at 11:59 p.m. on June 30th) by either Dealer
or Regal giving the other party at least twenty-four (24)
months prior written notice (which notice may be given for
any reason and does not require good cause, and which
6
<PAGE>
notice may be for shorter period under the circumstances more
particularly described in Section 16.C). Notwithstanding
anything to the contrary described in this paragraph, this
Agreement may be terminated earlier under any of the
circumstances described below and in this Agreement.
B. This Agreement may be terminated at any time by the mutual consent
of the parties.
C. Either party may, upon the giving of at least forty-five (45) days
written notice to the other (10 days for credit reasons or nonpayment of sums
due) stating the reasons therefore, terminate this Agreement for cause due to a
material breach or default of this Agreement and provided that such breach or
default has not been cured during such notice period. Such material breach or
default shall include but not be limited to where Dealer does not agree to or
meet the performance standards or the annual program commitment described in
Sections 3 and 4 reasonably established yearly by Regal. If the breach or
default is not subject to cure, this Agreement may be terminated immediately,
effective upon the giving of notice to the breaching or defaulting party.
D. This Agreement may be immediately terminated by either party upon
written notice to the other if any of the following occur: (1) the other party,
if a corporation, ceases to exist; (2) the other party becomes insolvent or
takes or fails to take any action which constitutes an admission of inability to
pay debts as they mature; (3) the other party makes a general assignment for the
benefit of creditors to an agent authorized to liquidate any substantial amount
of assets; (4) the other party becomes a subject of an "order to relief" within
the meaning of the United States Bankruptcy Code; (5) the other party applies to
a court for the appointment of a received for any assets or properties; or, (6)
the other party makes a fraudulent misrepresentation that is material to this
Agreement.
E. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if Dealer defaults on any obligation to third party financing
institution.
F. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if all of the following events occur: Joseph G. Pozo, Jr. is no
longer a director and the chief executive officer of the Dealer's parent, and he
no longer owns at least 10 percent of the issued and outstanding capital stock
of Dealer.
16. Conduct Upon Termination:
A. Upon termination of this Agreement, Dealer shall offer to sell to Regal,
at Dealer's purchase price (not including transportation or financing costs),
Dealer's entire stock of current, originally packaged and new condition Product,
and if such termination is of a Dealer location or locations the offer shall be
applicable to Product maintained at such location or locations. Regal shall have
the option, but no obligation, to accept such offer, which acceptance shall be
communicated to Dealer by Regal in writing within thirty (30) days after Dealer
notifies Regal of the Product and applicable purchase price of such Product
which is subject to such purchase option. Dealer will make Product available to
Regal immediately upon acceptance of offer. Regal will pay Dealer all net
amounts due within thirty (30) days of receipt of Product, and proof that
Product is being transferred to Regal with good and marketable title, free of
all liens and encumbrances. Both parties agree to
7
<PAGE>
a waiver of lost profit or consequential damages as a result of termination
of this Agreement.
B. After the termination of this Agreement for those non good
cause reasons described in Section 15.A., Regal will continue
to sell parts and accessories for Product sold by Dealer
(subject to the terms of sale herein set forth) for twelve
(12) months in order that Dealer may continue to service any
Products which Dealer may have sold to customers prior to
termination.
C. Upon receipt of a notice of termination provided under Section
15.A.
(1.) If notice is provided by Dealer, Regal may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Dealer.
(2.) If notice is provided by Regal, Dealer may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Regal.
17. Governing Law: The Agreement has been signed by Dealer on the date
reflected below, and shall become binding upon the date this Agreement
is subsequently executed by Regal at its headquarters in Florida,
U.S.A. This Agreement shall be construed and enforced in accordance
with the laws of the state of Florida.
18. Assignment: This Agreement may not be assigned or transferred by
Dealer without prior written consent of Regal. Any assignment of this
Agreement without such consent, shall, at Regal's option,
automatically terminate this Agreement.
19. Notices: Any written notice given pursuant to this Agreement shall be
either hand delivered, sent by facsimile or mailed by Registered or
Certified Mail, return receipt requested, to the party at the
respective principal place of business first above written. If time
periods or methods of notice included in this Agreement are not in
compliance with applicable state law, then such periods contained in
the applicable state law will apply. Such notice shall be deemed to be
given upon first receipt. A change of address may be given by such
notice.
20. Entire Agreement - Non Waiver - Separability: This Agreement contains
the entire agreement and replaces all prior agreements between the parties
(provided that each party shall remain obligated to pay to the other any monies
owed under the ordinary course of business under such prior agreements) and may
be amended or modified only by written instrument signed by Regal and Dealer,
Failure on the part of Regal or Dealer to enforce any term of this Agreement
shall not constitute a waiver thereof. Any provision of this Agreement which in
any way contravenes or is unenforceable under applicable law shall not apply and
shall be deemed separable and not to be a part of this Agreement without
affecting the validity of the remaining provisions.
21. Binding Arbitration: All disputes, controversies or claims connected
with, arising out of, or relating to this Agreement, or any modification,
extension or renewal thereof, or to any causes of action that result from such
relationship, shall be subject exclusively to the remedy of arbitration
described herein, including but not limited to sums due under this Agreement,
the interpretation, performance or nonperformance of this Agreement, any claim
for damages or rescission, a breach or default of this Agreement, the creation,
termination or nonrenewal of this Agreement (such as a dispute regarding the
causes, validity or circumstances of the termination, nonextension, or
nonrenewal), and trade regulations or antitrust claims, whether such
controversies or claims are in law or equity or
8
<PAGE>
include claims based upon contract, statute, tort or otherwise. All
controversies shall be conducted in accordance with the American
Arbitration Association Commercial Arbitration Rules.
The arbitration shall be governed by the United States Arbitration
Act., 9 U.S.C. ss.1-16, as amended, and judgment upon the award
rendered by the arbitrator may be entered by any court having
jurisdiction thereof. The place of the arbitration shall be at
Orlando, Florida. Dealer consents to personal jurisdiction of such
court, including the federal and state courts located in the State of
Florida. The arbitrator is not empowered to and shall not award
damages in excess of actual damages and in no event shall the
arbitrator award punitive, special or consequential damages, or
prejudgment interest.
This Paragraph shall survive the expiration or termination of this
Agreement.
Except for sums owing to Regal, all arbitration claims and proceedings
must be instituted within one (1) year after the cause of action
arises, and the failure to institute arbitration proceedings within
such period shall constitute an absolute bar to the institution of any
proceedings and a waiver and relinquishment of all such claims.
22. Fees: If arbitration is instituted and Dealer prevails in an amount
which exceeds Dealer's most recent written demand prior to decision,
then Dealer shall be reimbursed its reasonable legal fees and
arbitration costs by Regal; otherwise, Regal shall be reimbursed its
reasonable legal fees and arbitration costs by Dealer.
23. Miscellaneous: Except as expressly described to the contrary in this
Agreement, the rights and remedies of each party are not exclusive.
Dealer hereby agrees to maintain in confidence all of the terms and
conditions of this Agreement.
IN WITNESS WHEREOF, Regal and Dealer have executed this Agreement as of the date
first written above.
REGAL MARINE INDUSTRIES AMERICAN MARINE RECREATION, INC.
INCORPORATED (Dealer)
By:____________________________ By:_____________________________
(Signature) (Signature)
Name:__________________________ Name:___________________________
Date:_________________ Date:_________________
9
<PAGE>
Competitive Products
Following are examples of competitive product categories and
companies:
Sportboats in bow rider and cuddy cabin configurations.
Deck Boats Express cruisers and or mid cabin cruisers.
Donzi-except fish models Baja-except High Performance
Maxum-except Flybridge Bryant Cobalt Cruisers Inc.-
except Flybridge Invader Excel Larson Wellcraft - except
Fish & High Performance Mainship - except Fly Bridge
Monterey Four Winns Penn Yan Powerquest Formula - except
High Performance Stingray Renken-except Fish models VIP
Baha Cruisers Bayliner - except fish models and Fly
Bridge Sea Ray Chaparral Crown line Doral Galaxie
Glastron Trojan Kal Kustom Mariah Chris Craft
Sunbird-except Fish/Ski Outboards Power Play Rinker
Silverton-except Flybridge Thompson Sea Sprite
10
<PAGE>
Non Competitive Products
Following are examples of non-competitive product categories and companies:
Outboard Motor Boats, Fish N Ski Boats (Inboard Powered)
Offshore fishing boats: Pro-line, Mako, Grady White
Bass fishing boats: Ranger, Gambler
Aluminum boats: Smokercraft, Sylvan
House boats: Gibson, Harbor Master
Inboard tournament ski boats: Tige', Mastercraft, Malibu
Personal watercraft: Sea Doo, Yamaha jet ski
High Performance: Cigarette, Fountain
Sailboats: Hunter, Catalina
Flats & bay fishing boats: Carolina skiff, Key West
Motor Yachts: Hatteras, Navigator, Carver*
Trawlers: Grand Banks
Pontoon Boats: Playbuoy Pontoon
Hurrican Deck Boats
11
<PAGE>
SALES AND SERVICE AGREEMENT
THIS AGREEMENT made this 1st day of September, 1998 between Regal Marine
Industries Incorporated, doing business as Regal Boats, having its principal
place of business at 2300 Jetport Drive, Orlando, Florida 32809 (hereinafter
referred to as "Regal") and American Marine Recreation, Inc., doing business as
the Boattree with its principal place of business at 1924 33rd Steet, Orlando,
Florida 32834, being a corporation of the State of Delaware (hereinafter
referred to as "Dealer"), whereby in consideration of the mutual covenants
herein contained, it is agreed as follows:
1. Appointment of Dealer: Regal hereby appoints Dealer as its authorized
dealer for the retail sale, display and servicing of the following
Regal product(s) and repair parts (hereinafter "Products")*:
Product Dealer Regal
Sport Boat
Sport Cruiser
* Both parties are to initial the product descriptions to be included in
this Agreement.
The following geographic area (typically described by county) will be the
primary "Marketing Area" into which Dealer will promote, sell and service
Products (if not described, the Marketing Area is the area local to Dealer)
solely from the dealer location(s) contained in the Marketing Area:
ST. JOHNS, DUVAL, NASSAU, CLAY AND PUTNAM COUNTIES
Regal agrees that it will not appoint another authorized dealer for the retail
or sale, display and service of the Products from a location within the
Marketing Area.
2. Location(s): Dealer shall sell at retail, display and service Products
only at the following locations(s) (designate if a sales only or
service only location):
BOAT TREE, INC. - 2079 BEACH BLVD. - JACKSONVILLE, FL 32250
BOAT TREE, INC. - 3108 U.S. HIGHWAY 19 SO. - ORANGE PARK, FL 32073
1
<PAGE>
Dealer agrees to not delete, change, or add locations nor sell from
additional location(s) without the prior written consent of Regal (which consent
shall not be unreasonably withheld), nor will Dealer sell Products
internationally or to others for the purpose of resale without the prior written
consent of Regal.
Regal may upon the giving of at least ninety (90) days prior written
notice, and provided a cure does not occur during that notice period, delete
from this Agreement any dealer location and commensurate portion of the
Marketing Area where Dealer has failed to meet the obligations, performance
standards, annual program commitment, terms, conditions, representations,
warranties and covenants applicable to that dealer location as more particularly
described in this Agreement.
3. Performance Standards: Regal, after consultation with Dealer, may
establish fair and reasonable standards of sales performance for the Dealer in
the Marketing Area Such standards are based on such factors as population, sales
potential, economic conditions in the Marketing Area, competition from other
marine dealerships in the area, and any special circumstances that may affect
the sale of Products or the Dealer. Regal may from time to time revise such
standards as conditions may require and Regal may update at least annually sales
performance under this Agreement. Initially the performance standards shall be
as follows:
Time Period Product Category Unit Commitment
4. Purchase Program Elections: Regal may establish purchase programs during
each Product model year of the Agreement term. The purchase program for the 1999
model year is as follows:
Initial your appropriate election (Interest Support or Profit Plus) for
each product category and your interest support rebate bonus election as
outlined in the 1999 programs.
Product Category Interest Support Profit Plus
Sport Boat (1700-2150)
Sport Boat (6.8-2660)
Sport Cruiser (2800-4060)
Interest Support Rebate Bonus:
I will stock the 322, 402 and 4060 models to receive the
interest rebate bonus.
I do not plan to stock each of the following models: 322,
402, and 4060.
2
<PAGE>
5. Dealer's Responsibilities: Dealer agrees to:
A. Devote its best efforts to aggressively promote, display,
advertise, sell and service Products solely from the dealer
location(s) within Dealer's Marketing Area in accordance with
the terms of the Agreement and all applicable federal, state
and local laws. Dealer will display at each dealer
location(s), a sign in good taste with Regal's current trade
designations, subject to approval by Regal.
B. Purchase and carry on hand at all times a sufficient
inventory of current Products to meet the reasonable demand
of potential customers within the Marketing Area. Dealer will
protect inventory of Product against weathering and damage
and maintain inventory in like new condition.
C. Maintain at each dealer location(s) (unless a sales
location only and then service is to be provided at another
authorized location) a service department which is staffed.,
trained and equipped to service Products; and to maintain at
the dealer location(s), parts and supplies to properly
service Products on a timely basis.
D. Promptly, courteously and professionally perform any and
all necessary rigging, installation and inspection services
prior to delivery of the Product to the purchaser, and
perform post-sale service, including warranty service, of all
Products brought to Dealer for service, in accordance with
Regal's then current warranty policies.
E. Furnish purchaser with Regal's limited warranty on new
Products and with information and training as to the safe and
proper operation and maintenance of Products.
F. Complete and mail Regal's warranty registration card
immediately upon delivery of the Products to the purchaser
and assist Regal in performing Product service and recall
campaigns. In the event Dealer fails to mail the card to
Regal, Dealer agrees to indemnify Regal against any
liability, loss or damage which Regal may sustain which is
proximately caused by such failure.
G. Maintain complete sales and service records and to report
to Regal on a regular basis the name and address of
purchasers of Products, to the extent required by Regal's
then current policies and/or federal, state and local laws.
H. Achieve sales performance in accordance with the standards
described in Section 3.
I. Take steps necessary to become factory authorized to
repair power units supplied on Products, including attending
service school attendance.
J. (1) Provide complete financial statements for the Dealer
at mutually agreeable intervals, but at least on an annual
basis, and (2) consent to full and open disclosure of
financial information concerning Dealer, between Regal and
any financial institution or a company which finances Dealers
inventory of Products.
K. Conduct business in a manner that preserves and enhances
the reputation Regal, the Products and Dealer for providing
quality products and services.
3
<PAGE>
L. Maintain an ability to purchase Product inventory pursuant
to flooring and/or self financing in an amount which is
sufficient to meet the Dealer obligations described in the
Agreement.
M. Use its best efforts to maintain a CSI rating, based upon
Regal's then current CSI program, sufficient in Regal's
reasonable judgment to maintain Regal's image in the market
place, which minimum standard shall be established from time
to time by Regal and shall initially be 85 percent.
N. Maintain a financial condition which is adequate to
satisfy and perform its obligations under this Agreement.
0. Not directly or indirectly itself, or allow anyone else
to, solicit, inventory, marker or sell, from any dealer
location described in Section 2, any product which is
competitive with the Products. Such competitive products
shall include but not be limited to those products described
on Exhibit A, but shall not include those products delineated
as noncompetitive that are also described on Exhibit A.
P. Allow the application of any rebates or account credits
owed to Dealer to and as an offset against any debts or
monies owed to Regal by Dealer, including but not limited to
losses or debts applicable to open Product accounts, unpaid
retail show space, and to any losses relating to Dealer
flooring or financing;
Q. Indemnify and hold harmless Regal and its affiliated
credit agencies from any and all claims or losses whatsoever
and as a result of Dealer's failure to meet its obligations
to Regal or Regal affiliated credit agencies.
6. Order: Dealer agrees to submit orders to Regal in a manner and
format prescribed from time to time by Regal and which are applicable
to Regal's domestic dealers. Any order which does not comply with
Regal's terms and conditions need not be filled by Regal. Any
additional or different terms submitted by Dealer will be void and of
no effect. All orders are subject to acceptance by Regal. Product
availability shall be allocated on a reasonable basis established by
Regal, provided that Regal reserves the right to limit Product orders
to those based upon the previous year Product purchases made by the
Dealer and Regal's other dealers.
7. Prices: The Products (including accessories and parts) sold to the
Dealer by Regal will be on the basis of price lists published by Regal
from time to time applicable to Regal's domestic dealers selling
comparable Products. Regal will have the right to revise the price
lists or applicable discounts on programs at any time. Regal shall
have no obligation to reimburse Dealer for any loss which Dealer may
sustain by reason of any change in price, program or discount. Terms
of payment will be as specified from time to time by Regal. Dealer
will pay Regal the lesser of 1.5% late charges per month on any past
due invoice, or the maximum permitted by state law. Regal may refuse
shipment for any credit reason, including Dealer's failure to pay for
a prior shipment. Dealer will reimburse Regal for all necessary costs
and reasonable attorneys fees in collecting past due accounts. Regal
retains a security interest and lien on all Products sold to Dealer
and all proceeds arising out of the sale of Products until Products
are paid for in full in cash. The Product prices charged to Dealer
will be the lowest price then charged to other domestic dealers who
purchase, under similar programs, comparable products for at least
equal quantities of products ordered and to be delivered in the same
period as the Dealer order, provided Regal may, in good faith. charge
lesser prices to other dealers to meet competitive offer or sales by
other
4
<PAGE>
manufacturers, new dealer pricing, for unusual and nonordinary
business circumstances, or for limited duration promotional programs.
8. Shipments: All shipments of Products will be made FOB Regal's
factory or distribution center at which time title shall pass. Dealer
shall pay all applicable shipping, transportation, delivery and
handling charges for Products ordered. If Dealer fails to accept
delivery of any Products ordered, Dealer shall reimburse Regal for the
transportation of such Product. However, if Regal ships Products not
ordered by Dealer, and Regal cannot produce documentation to confirm
the order was placed by Dealer, Dealer will have the right to refuse
delivery. In such event, Regal will pay all costs incurred in
transportation of the Product. Shipments will be subject to Regal's
productions schedule and availability of transportation equipment. No
liability will be sustained by Regal by reason of its not filling any
order due to circumstances beyond its control such as, but not limited
to, labor disputes, natural disasters, accidents to machinery,
manufacturing delays, material shortages or regulations.
9. Risk of Loss: If Products ordered by Dealer are transported in
Regal's trucks, risk of loss shall pass to Dealer upon delivery to
Dealer. If Products are shipped by other means, risk of loss shall
pass to Dealer at the time the Products or parts are tendered to such
carrier. Regal will assist Dealer in the processing and collection of
any claims against the carrier
10. Payment - Claims: All sales to Dealer shall be paid for COD, by
cashier's check unless otherwise agreed between Regal and Dealer. All
claims for shortage or damages or unacceptable goods shall be made at
the time of arrival of the shipment. The failure of Dealer to give
such notification shall constitute a waiver of any such claim. Dealer
shall cause to be paid or shall make reimbursement to Regal in full
for any and all taxes, duties. or other charges imposed by federal,
state, municipal or other governmental authority upon any purchase or
sale under Agreement.
11. Product Modification: Regal shall have the right to discontinue
the sale of Products or to modify the design and components of
Products at any time; provided, however, that Regal shall notify
Dealer prior to shipment of any major design changes with respect to
Products previously ordered by Dealer, in which event Dealer shall
have the right to cancel such order.
12. Product Warranty:
A. Regal will furnish through Dealer to first-use purchasers its then
current standard written limited warranty in effect at the time of delivery of
Product to Dealer. Dealer shall have no authority to and agrees not to make any
representations, verbally or in writing, relating to Regal's warranty other than
those made by Regal in its written warranty. Dealer agrees to provide the
Product's "Operation and Maintenance" manuals to the purchaser at time of
delivery, and make Regal warranty known to the purchaser, including all
disclaimer and limitations, and to have purchaser acknowledge receipt of
warranty by obtaining his signature on the Owner Registration and System
checklist form.
B. Dealer agrees to provide timely warranty service on all Product located
within Dealer's Marketing Area regardless of where the Product was originally
purchased, in accordance with Regal's current warranty service program. Dealer
agrees to make all claims for reimbursement under Regal's warranty service
program in the manner prescribed by Regal. Regal may revise its warranty service
program from time to
5
<PAGE>
time, providing Dealer with written notification of all revisions and those
revisions will supersede all previous programs.
C. Regal agrees to promptly approve and fully honor all
legitimate warranty claims on Product when made by purchaser
through Dealer in the manner prescribed by Regal. Regal
agrees to credit or reimburse Dealer for all approved
warranty service performed at dealership on behalf of Regal.
Regal shall respond to all properly submitted warranty claims
by Dealer within one month after receipt of such claims.
Regal agrees to pay or credit all accepted claims.
D. It is the selling dealer's (including Dealer)
responsibility to insure that the retail purchaser receive
the proper service on Product that is to be primarily used
outside of the selling dealer's Marketing Area. Product sold
and used outside of the "selling dealer's" Marketing Area and
into an area serviced by another Regal dealer, should then be
serviced by that closer dealer. It will be the responsibility
of the selling dealer to negotiate in advance of the sale, a
reasonable financial arrangement with the Regal dealer in
whose market area the boat will be primarily used to insure
that the customer receives the proper warranty and other
necessary service. Product sold into an area void of a Regal
dealer should then be serviced by the selling dealer and or
the selling dealer should seek approval from Regal to make
arrangements for service with a non-Regal dealer convenient
to the purchaser.
If the selling dealer fails to negotiate a mutually
acceptable financial arrangement with the servicing Regal
dealer, or fails to provide or make arrangements for adequate
service, the selling dealer shall be responsible for any
additional costs that may be incurred in providing warranty
service to the purchaser. In addition, such failure may be
cause for cancellation of the selling dealer's Sales and
Service Dealer Agreement.
13. Trademarks and Service Marks: Dealer acknowledges that Regal or its
affiliated companies are the exclusive owners of various trademarks, service
marks, trade designations and trade dress (collectively "Identification:) which
Regal uses in connection with Products and its business. Dealer is authorized to
use Identification in a manner acceptable to Regal within the Marketing Area
only in connection with the promotion and sale of Products and only until the
expiration or termination of this Agreement. Dealer will not use Identification
as the whole or any part of the name or title of Dealer's business. Dealer
acquires no proprietary rights to Identification and this authorization will
terminate simultaneously with the expiration or termination of this Agreement.
In the event of expiration or termination of this Agreement, Dealer shall
immediately discontinue use of Identification in any way whatsoever.
14. No Agency Created: It is understood and agreed that Dealer is not, nor
shall it at any time represent itself to be, the agent, employee, representative
or franchisee of Regal. Dealer shall not enter into any contract or commitment
in the name of or on behalf of Regal.
15. Term of Agreement - Termination:
A. This Agreement shall commence on the date of its execution by
Regal and Dealer and shall remain in effect until it is
terminated at the end of a Regal Product Model Year (which
currently ends at 11:59 p.m. on June 30th) by either Dealer
or Regal giving the other party at least twenty-four (24)
months prior written notice (which notice may be given for
any reason and does not require good cause, and which
6
<PAGE>
notice may be for shorter period under the circumstances more
particularly described in Section 16.C). Notwithstanding
anything to the contrary described in this paragraph, this
Agreement may be terminated earlier under any of the
circumstances described below and in this Agreement.
B. This Agreement may be terminated at any time by the mutual consent
of the parties.
C. Either party may, upon the giving of at least forty-five (45) days
written notice to the other (10 days for credit reasons or nonpayment of sums
due) stating the reasons therefore, terminate this Agreement for cause due to a
material breach or default of this Agreement and provided that such breach or
default has not been cured during such notice period. Such material breach or
default shall include but not be limited to where Dealer does not agree to or
meet the performance standards or the annual program commitment described in
Sections 3 and 4 reasonably established yearly by Regal. If the breach or
default is not subject to cure, this Agreement may be terminated immediately,
effective upon the giving of notice to the breaching or defaulting party.
D. This Agreement may be immediately terminated by either party upon
written notice to the other if any of the following occur: (1) the other party,
if a corporation, ceases to exist; (2) the other party becomes insolvent or
takes or fails to take any action which constitutes an admission of inability to
pay debts as they mature; (3) the other party makes a general assignment for the
benefit of creditors to an agent authorized to liquidate any substantial amount
of assets; (4) the other party becomes a subject of an "order to relief" within
the meaning of the United States Bankruptcy Code; (5) the other party applies to
a court for the appointment of a received for any assets or properties; or, (6)
the other party makes a fraudulent misrepresentation that is material to this
Agreement.
E. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if Dealer defaults on any obligation to third party financing
institution.
F. This Agreement may be terminated by Regal upon the giving of written
notice to Dealer if all of the following events occur: Joseph G. Pozo, Jr. is no
longer a director and the chief executive officer of the Dealer's parent, and he
no longer owns at least 10 percent of the issued and outstanding capital stock
of Dealer.
16. Conduct Upon Termination:
A. Upon termination of this Agreement, Dealer shall offer to sell to Regal,
at Dealer's purchase price (not including transportation or financing costs),
Dealer's entire stock of current, originally packaged and new condition Product,
and if such termination is of a Dealer location or locations the offer shall be
applicable to Product maintained at such location or locations. Regal shall have
the option, but no obligation, to accept such offer, which acceptance shall be
communicated to Dealer by Regal in writing within thirty (30) days after Dealer
notifies Regal of the Product and applicable purchase price of such Product
which is subject to such purchase option. Dealer will make Product available to
Regal immediately upon acceptance of offer. Regal will pay Dealer all net
amounts due within thirty (30) days of receipt of Product, and proof that
Product is being transferred to Regal with good and marketable title, free of
all liens and encumbrances. Both parties agree to
7
<PAGE>
a waiver of lost profit or consequential damages as a result of termination
of this Agreement.
B. After the termination of this Agreement for those non good
cause reasons described in Section 15.A., Regal will continue
to sell parts and accessories for Product sold by Dealer
(subject to the terms of sale herein set forth) for twelve
(12) months in order that Dealer may continue to service any
Products which Dealer may have sold to customers prior to
termination.
C. Upon receipt of a notice of termination provided under Section
15.A.
(1.) If notice is provided by Dealer, Regal may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Dealer.
(2.) If notice is provided by Regal, Dealer may terminate
this Agreement upon the giving of at least ninety
(90) days prior written notice to Regal.
17. Governing Law: The Agreement has been signed by Dealer on the date
reflected below, and shall become binding upon the date this Agreement
is subsequently executed by Regal at its headquarters in Florida,
U.S.A. This Agreement shall be construed and enforced in accordance
with the laws of the state of Florida.
18. Assignment: This Agreement may not be assigned or transferred by
Dealer without prior written consent of Regal. Any assignment of this
Agreement without such consent, shall, at Regal's option,
automatically terminate this Agreement.
19. Notices: Any written notice given pursuant to this Agreement shall be
either hand delivered, sent by facsimile or mailed by Registered or
Certified Mail, return receipt requested, to the party at the
respective principal place of business first above written. If time
periods or methods of notice included in this Agreement are not in
compliance with applicable state law, then such periods contained in
the applicable state law will apply. Such notice shall be deemed to be
given upon first receipt. A change of address may be given by such
notice.
20. Entire Agreement - Non Waiver - Separability: This Agreement contains
the entire agreement and replaces all prior agreements between the parties
(provided that each party shall remain obligated to pay to the other any monies
owed under the ordinary course of business under such prior agreements) and may
be amended or modified only by written instrument signed by Regal and Dealer,
Failure on the part of Regal or Dealer to enforce any term of this Agreement
shall not constitute a waiver thereof. Any provision of this Agreement which in
any way contravenes or is unenforceable under applicable law shall not apply and
shall be deemed separable and not to be a part of this Agreement without
affecting the validity of the remaining provisions.
21. Binding Arbitration: All disputes, controversies or claims connected
with, arising out of, or relating to this Agreement, or any modification,
extension or renewal thereof, or to any causes of action that result from such
relationship, shall be subject exclusively to the remedy of arbitration
described herein, including but not limited to sums due under this Agreement,
the interpretation, performance or nonperformance of this Agreement, any claim
for damages or rescission, a breach or default of this Agreement, the creation,
termination or nonrenewal of this Agreement (such as a dispute regarding the
causes, validity or circumstances of the termination, nonextension, or
nonrenewal), and trade regulations or antitrust claims, whether such
controversies or claims are in law or equity or
8
<PAGE>
include claims based upon contract, statute, tort or otherwise. All
controversies shall be conducted in accordance with the American
Arbitration Association Commercial Arbitration Rules.
The arbitration shall be governed by the United States Arbitration
Act., 9 U.S.C. ss.1-16, as amended, and judgment upon the award
rendered by the arbitrator may be entered by any court having
jurisdiction thereof. The place of the arbitration shall be at
Orlando, Florida. Dealer consents to personal jurisdiction of such
court, including the federal and state courts located in the State of
Florida. The arbitrator is not empowered to and shall not award
damages in excess of actual damages and in no event shall the
arbitrator award punitive, special or consequential damages, or
prejudgment interest.
This Paragraph shall survive the expiration or termination of this
Agreement.
Except for sums owing to Regal, all arbitration claims and proceedings
must be instituted within one (1) year after the cause of action
arises, and the failure to institute arbitration proceedings within
such period shall constitute an absolute bar to the institution of any
proceedings and a waiver and relinquishment of all such claims.
22. Fees: If arbitration is instituted and Dealer prevails in an amount
which exceeds Dealer's most recent written demand prior to decision,
then Dealer shall be reimbursed its reasonable legal fees and
arbitration costs by Regal; otherwise, Regal shall be reimbursed its
reasonable legal fees and arbitration costs by Dealer.
23. Miscellaneous: Except as expressly described to the contrary in this
Agreement, the rights and remedies of each party are not exclusive.
Dealer hereby agrees to maintain in confidence all of the terms and
conditions of this Agreement.
IN WITNESS WHEREOF, Regal and Dealer have executed this Agreement as of the date
first written above.
REGAL MARINE INDUSTRIES AMERICAN MARINE RECREATION, INC.
INCORPORATED (Dealer)
By:____________________________ By:_____________________________
(Signature) (Signature)
Name:__________________________ Name:___________________________
Date:_________________ Date:_________________
9
<PAGE>
Competitive Products
Following are examples of competitive product categories and
companies:
Sportboats in bow rider and cuddy cabin configurations.
Deck Boats Express cruisers and or mid cabin cruisers.
Donzi-except fish models Baja-except High Performance
Maxum-except Flybridge Bryant Cobalt Cruisers Inc.-
except Flybridge Invader Excel Larson Wellcraft - except
Fish & High Performance Mainship - except Fly Bridge
Monterey Four Winns Penn Yan Powerquest Formula - except
High Performance Stingray Renken-except Fish models VIP
Baha Cruisers Bayliner - except fish models and Fly
Bridge Sea Ray Chaparral Crown line Doral Galaxie
Glastron Trojan Kal Kustom Mariah Chris Craft
Sunbird-except Fish/Ski Outboards Power Play Rinker
Silverton-except Flybridge Thompson Sea Sprite
10
<PAGE>
Non Competitive Products
Following are examples of non-competitive product categories and companies:
Outboard Motor Boats, Fish N Ski Boats (Inboard Powered)
Offshore fishing boats: Pro-line, Mako, Grady White
Bass fishing boats: Ranger, Gambler
Aluminum boats: Smokercraft, Sylvan
House boats: Gibson, Harbor Master
Inboard tournament ski boats: Tige', Mastercraft, Malibu
Personal watercraft: Sea Doo, Yamaha jet ski
High Performance: Cigarette, Fountain
Sailboats: Hunter, Catalina
Flats & bay fishing boats: Carolina skiff, Key West
Motor Yachts: Hatteras, Navigator, Carver*
Trawlers: Grand Banks
Pontoon Boats: Playbuoy Pontoon
Hurrican Deck Boats
11
<PAGE>
LEASE AND RIGHT OF FIRST REFUSAL AGREEMENT
THIS LEASE AND RIGHT OF FIRST REFUSAL AGREEMENT is made and entered into as of
the 1st Day of December, 1998, by and between the following parties: Ronald L.
Fedor, hereinafter referred to as "Lessor" or "Landlord".
and
Treasure Coast Boating Center, Inc., a Florida corporation hereinafter
referred to as "Lessee" or "Tenant";
WITNESSETH:
In consideration of the covenants herein contained to be performed by the
Lessee. Lessor does hereby lease to the Lessee the following described land and
improvements situate, together with the appurtenances thereto, including the
parking areas, means of ingress and egress and service areas, lying and being in
Broward County, Florida, to-wit:
That certain facility in Pompano Beach (Broward County) Florida located on:
Parcel "A", less the Westerly 150 feet thereof of Cresthaven No. 4
according to the Flat thereof, recorded in Flat Book 38, page 10, of the Public
Records of Broward County. Florida.
SUBJECT TO the following exceptions:
(a) Taxes for 1998 and subsequent years, provided however that
said taxes are to be paid by Lessor.
(b) Facts that an accurate survey or personal inspection of the
property disclosed or would have disclosed.
(c) Zoning and or other restrictions and prohibitions imposed by
governmental authority excepting that such zoning and
restrictions shalt not prohibit or impair Lessee from using
the leased premises for the purpose of operating a
maintenance, repair, sales and brokerage of new and used
boats.
(d) Easements, restrictions, limitations and reservations of
record. However, none of such easements, restrictions,
limitations and reservations shall prohibit or impair Lessee
from using the leased premises for the purpose of operating a
maintenance, repair, sales and brokerage of new and used
boats. The above sometimes hereinafter referred to as the
"Property".
TO HAVE AND TO HOLD the same for a term beginning at 12 o clock noon on the 14th
day of November, 1998, and ending at 12 o clock noon on the 1st day of December,
1999, unless sooner terminated or extended pursuant to the terms and provisions
of this lease.
<PAGE>
THE LESSOR COVENANTS AND AGREES WITH THE LESSEE AS FOLLOWS:
1. Title. He is possessed of a marketable fee simple title to the above
described lands and improvements, subject only to the exceptions
hereinabove set forth, and the Lessor warrants and represents to the
Lessee that the property is free and clear of all encumbrances and
liens of whatsoever kind, and that the Lessor has the unrestricted full
right to execute and perform this for the term thereof, save and except
for the exceptions set forth above.
2. Rent. Lessee shall pay to Lessor at such place or places as Lessor
shall from time to time designate rent in accordance in the following
manner and amounts:
A. The monthly rent due and owing for the first 16 days of this lease (November
14, 1998 - December 1, 1998) is One ($1.00) Dollar. Monthly payments of Seven
Thousand ($7,000.00) Dollars plus applicable sales tax shall commence and be due
and owing each and every month thereafter, beginning on December 1, 1998.
Simultaneous with the execution of this Lease, Lessee shall remit to Lessor the
sum of Five Thousand One ($5,001.00) Dollars, representing rent for November
1998 in the amount of One ($1.00) Dollar, together with a security deposit in
the amount of Five Thousand ($5,000.00) Dollars. Monthly payments shall be made
on the 1st day of each month commencing on December 1, 1998 and hereafter for
the term of this Lease, together with applicable sales tax as set forth below,
subject to increases as hereinafter set forth.
Options to Extend Lease. Provided that Lessee is not in default of this lease,
Lessee shall have the option to extend the term of this Lease for an additional
period of Five years. Said option is exercisable at the sole discretion of
Lessee. Lessor having no right whatsoever to prevent Lessee from exercising such
options provided that Lessee is not in default of this lease. such extended term
to begin respectively upon the expiration of the term of this Lease or this
Lease as extended. If Lessee shall elect to exercise the aforesaid option. it
shall do so by giving notice to Lessor not less than three (3) months prior to
the expiration of the term of this Lease or of this Lease as extended. The same
terms and conditions as herein set forth shall apply to the extended term,
provided however that Lessee shall be responsible for rent in the following
amounts:
December 1, 1998 - November 1, 1999. Rent in the amount of Eighty Four Thousand
($84,000.00) Dollars per annum, payable in equal monthly installments of Seven
Thousand ($7,000.00) Dollars per month together with applicable sales tax
thereon payable on the 1st day of each month.
Option to Renew for Five Additional Years
Additional Rent increases to be re-negotiated Ninety (90) Days prior to
Lease expiration date each year.
3. Maintenance. Lessee shall keep all improvements now and hereafter located
upon the Leased premises in good repair and condition, subject only to ordinary
wear and depreciation in light of the
<PAGE>
age, construction and nature of the improvements and damage by fire and the
elements excepted, and to keep the premises in a clean and sanitary condition.
The Lessee shall make all repairs and replacements made necessary as a result of
its negligence and all interior nonstructural repairs and replacements
(including ordinary repairs to the heating system, air conditioning system.
electrical system, electrical system plumbing and sprinkler system) necessary to
keep and maintain the premises in good order and state of repair: provided that,
the Lessee shall not be obligated to make any repairs or replacements made
necessary as a result of damages caused by fire, the elements. or any cause
covered bx any extended coverage insurance carried by the Lessor. The Lessor
shall promptly make all repairs and replacements which are his responsibility
and covered by Lessor's insurance, Lessee shall be responsible for all other
repairs.
4. Alterations and improvements. Tenant may, from time to time, at itss expense,
make such material alterations, decorations, additions, or improvements
(including but not limited to initial leasehold improvements to the Premises)
(hereinafter collectively referred to as "Alterations") in and to the Premises,
excluding structural changes, as Tenant may reasonably consider necessary for
the conduct of his business in the Premises , provided, however, that written
consent of the Landlord has been first had and obtained. Landlord's consent
shall not be unreasonably withheld, provided, however, that: (a) The outside of
the Building shall not be affected; (b) the Alterations are non-structural and
the strength of the Building shall not be affected; (c) the Alterations are to
the interior of the Premises and no part of the Building outside of the Premises
shall be affected; (d) the proper functioning of the mechanical, electrical,
sanitary, and affected and the usage of such systems by Tenant shall not be
increased; (e) before proceeding with any material Alteration, Tenant shall
submit to Landlord for Landlord's approval, plans and specifications for the
work to be done and Tenant shall not proceed with such work until it has
received said approval. Tenant shall obtain and deliver to Landlord (if so
requested) either (i) a performance bond and a labor and materials payment bond
(issued by a corporate surety licensed to do business in Florida), each in an
amount equal to one hundred twenty-five percent (125%) of estimate of the cost
of Alterations and in form satisfactory to Landlord, or (ii) such other security
as shall be satisfactory to Landlord. Tenant, at it's expense, shall obtain all
necessary governmental permits and certificates for the commencement and
prosecution of Alterations and for the final approval thereof upon completion,
and shall cause the Alterations to be performed in compliance therewith and with
all applicable law and requirements of public authorities and with all
applicable requirements of insurance bodies. The Alterations shall be diligently
performed in lien free and a good and workmanlike manner, using new materials
and equipment satisfactory to Landlord and shall be performed by contractors
approved by Landlord, in writing. Tenant, at its expense, and with due diligence
and dispatch, shall procure the cancellation or discharge of all notices of
violation arising from or otherwise connected with Alterations, or any other
work, labor, services or material done for or supplied to Tenant, or any person
claiming through or under Tenant, which shall be issued by any public authority
having jurisdiction or asserting jurisdiction. Tenant shall have no authority to
create any liens for labor or materials on or against the Building and/or the
Premises and, accordingly, Tenant shall defend, indemnify, and save Landlord
harmless from and against any and all mechanic's and other liens and
encumbrances filed in connection with Alterations or any other work, labor,
services, or materials done for or supplied to Tenant, or any person claiming
through or under Tenant, including, without limitation, security interests in
any materials, fixtures or articles installed in and constituting a pail of the
Premises and against all costs, expenses, and liabilities (including reasonable
attorney's fees) incurred in connection
<PAGE>
with any such lien or encumbrance or any action or proceeding brought thereon.
Tenant, at its expense, shall procure the satisfaction or discharge of record of
all such liens and encumbrances within fifteen (15) days after the filing
thereof. In the event Tenant has not so performed, Landlord may, at his option,
pay and discharge such liens and Tenant shall be responsible to reimburse
Landlord for all costs and expenses incurred in connection therewith which
expenses shall include reasonable attorney's fees and any costs in posting bond
to effect discharge or release of the lien as an encumbrance against the
Premises, the Building, and or the Property. TENANT SHALL IN NO EVENT HAVE ANY
RIGHT TO CAUSE OR PERMIT ANY LIEN TO AFFECT THE FEE SIMPLE INTEREST OF LANDLORD
TO THE PREMISES OR THE PROPERTY. Notwithstanding anything to the contrary
hereinabove, Lessee may, at its expense, paint the interior and exterior of the
building(s), and seal and or pave the driveway and parking areas, provided that
the market value of the Leased premises shall not thereby be lessened, and that
the foregoing actions shall be performed in a good and workmanlike and lien free
manner, and provided that any exterior alterations and/or improvements are
approved by the Lessor.
5. Lessor's Interest not Subject to Mechanics Liens. ALL PERSONS TO WHOM THESE
PRESENTS MAY COME are put upon notice of the fact that the Lessee shall never,
under any circumstances, have the power to subject the interest of the Lessor in
the premises to any mechanic s or materialman s liens or liens of any kind, and
all persons dealing with the Lessee are hereby put upon notice that they must
look wholly to the interest of the Lessee in the demised premises and not to
that of the Lessor.
6. Liability Insurance. Lessee shall carry at Lessee's cost public liability
insurance insuring the Lessor for a coverage of not less than $500,000.00 for
(1) person with a coverage of not less than $l,000,000.00 for more than one (1)
person for a single occurrence and for $500,000.00 property damage. The policies
or certificates thereof shall be delivered to Lessor and will be renewed from
time to time so that at all times such insurance protection shall continuously
exist. All policies must designate the Lessor and any of Lessor's mortgagees as
co-insured. Evidence of payment of premiums thereon shall be furnished to Lessor
not less than ten (10) days prior to the due dates thereof.
7. Protection of Lessor. Lessor shall be under no obligation to make any
repairs, alterations or improvements, to or upon the leased premises, or any
part thereof, except as otherwise provided for in paragraphs 3, 20 and 21 of
this Lease. Accordingly, Lessee shall pay all costs and expenditures made for or
on account of the leased premises during the term of the Lease, except as
otherwise provided for in paragraphs 3, 20 and 21 of this lease, and shall save
the Lessor harmless therefrom, including among others, but not limited to, the
following:
A. The cost of all telephone, electricity, water. sewer, trash/garbage
collection and other utilities, rendered to or on behalf of the leased premises.
B. All claims and causes of action for personal injury, loss of life, or damage
to property sustained in or about the leased premises or the improvements
thereon, and the appurtenances thereto, and from all costs and reasonable
attorney's fees in connection therewith.
<PAGE>
C. All expenses and reasonable attorney' s fees on account of any default by the
Lessee in the performance of the terms of this Lease. In the event of any
litigation involving the rights of parties under this Lease, the prevailing
party shall be entitled in the discretion of the Court to an award of reasonable
attorney s fees, court costs, and expenses of the suit.
D. Lessee shall, at its own expense. at all times during the term of this Lease,
including any extensions thereof. maintain the leased premises, make repairs to
the buildings and appurtenances as provided for in paragraphs
8. Use. Lessee shall make no unlawful, improper or offensive use of the leased
premises; and to comply with all legal laws, zoning ordinances and regulations
of all governmental bodies having jurisdiction thereof.
9. Inspection. Lessee shall allow Lessor to inspect the premises upon request at
reasonable intervals during Lessee's hours of business.
10. Signs. Lessee shall have the option to erect, at its expense, upon any
portion of the Leased premises, signs of such height and other dimensions as
Lessee shall determine, bearing such legend or description as Lessee shall
determine. Notwithstanding anything to the contrary set forth above, Lessee's
option to erect a sign shall be subject to the approval of the Lessor, which
approval shall be in Lessor's discretion, as any signage must comply with all
requirements imposed by Lessor. Additionally, at the termination of the lease,
Lessee, at Lessor's option, shall be responsible for removing said sign at
Lessee's sole cost and expense. Lessor shall not permit any other signs,
billboards or posters to be displayed on any portion of the leased premises.
11. Default. If, during the term of this Lease, Lessor considers Lessee in
default of any of Lessee's obligations under the lease, Lessor shall give
written notice to Lessee of such, specifying the applicable provisions of the
lease that Lessor considers Lessee in default of, provided that, Lessor need not
give written notice to Lessee if Lessee is in default due to nonpayment of rent,
such that Lessee shall automatically be in default twenty (20) days after
nonpayment of rent. Upon receiving written notice from Lessor of a default under
the lease which does not involve payment of rent, Lessee shall have twenty (20)
days, or other such period as may be elsewhere provided for a particular
default, to cure said default. In the event a default cannot be reasonably cured
in twenty (20) days, then the conditions of this paragraph shall be satisfied if
such cure is commenced within the above twenty (20) day grace period, and
thereafter pursued with reasonable diligence to completion, which completion
shall be effected within not more than one hundred (100) additional days,
provided that if the nature of the default can not reasonably be cured within
one hundred (100) additional days. Lessee shall have an additional reasonable
period of time to cure the default, provided that, Lessee is diligently
proceeding to cure said default. In the event Lessee is in default of this Lease
and said default is not cured as set out hereinabove, and the default shall
continue to exist, then the Lessor may, at Lessor' s option, terminate this
Lease and re-enter upon the Property, whereupon the term hereby granted and all
right, title and interest under it shall end, and the Lessee shall become a
tenant at sufferance; or else Lessor may, at his option, under such
circumstances, elect to declare the entire rent for the balance of the term, or
any part thereof, due and payable forthwith. The Lessor may proceed to collect
such rent by distress or otherwise, provided that should the premises become
<PAGE>
vacant as a result of a default on Lessee's part. Lessor shall use reasonable
efforts to re-lease the same to a financially responsible tenant so as to
mitigate Lessee s liability hereunder. These remedies shall be cumulative to and
shall not preclude the rights of the Lessor under the landlord and tenant
statutes of the State of Florida. No waiver of a breach or any of the covenants
of this representation of warranties to the conditions or fitness of the
premises for any use or purpose have been made by the Lessor. Accordingly.
Lessee agrees to accept the leased premises in an "as is" condition. and
acknowledges that the condition of the premises is satisfactory to Lessee as of
the commencement date of this Lease.
12. Fitness of Premises. Lessee acknowledges that no representation of warranty
as to the conditions or fitness of the premises for any use or purpose have been
made by the Lessor. Accordingly, Lessee agrees to accept the leased premises in
an "as is" condition, and acknowledges that the condition of the premises is
satisfactory to Lessee as of the commencement date of this lease.
13. Protection of Title. Time title of Lessor to the Property will be protected
by Lessee from all claims on behalf of parties claiming under Lessee.
14. Notices. All notices required hereunder may be served personally, or at the
option of the giver, may be served by certified or registered mail, return
receipt requested, posted in the continental United States of America, and such
notice shall be effective from the date of mailing. Such notices to Lessor shall
be given to such addresses as Lessor shall furnish to Lessee from time to time,
and until further notice shall be as follows:
Ronald L. Fedor
2628 N.E.. 49th Street
Fort Lauderdale. Florida 33308
1-954-491-9456
Notices to time Lessee shall be given to such addresses as Lessee shall furnish
to Lessor from time to time, until further notice shall be as follows:
D. Thomas Grane
c/o Treasure Coast Boating Center
420 South Federal Highway
Stuart, Florida 34994
15. Assignment. The Lessee may not assign this Lease unless the prior written
consent of the Lessor has first been had and obtained, provided that Lessor
shall act in good faith and shall not unreasonably withhold said consent.
Lessor, in making his good faith determination of whether or not to consent to
assignment, has the right to investigate the financial stability of any
potential assignment, and if Lessor, in good faith, determines that assignee is
not financially sound, Lessor may refuse to give his consent to such assignment.
In the event that this lease is assigned, Lessee shall remain liable hereunder.
16. Advances by Lessor. In the event Lessee shall fail to make payment of
any sums required
-------------------
<PAGE>
to be paid by Lessee under this Lease other than the payment of rent, Lessor at
his option may pax such sums for Lessee, provided that any right of Lessor to
make such payments are conditioned on written notice to Lessee, and Lessee shall
have ten (10) days to perform on his own account, provided that, if immediate
payment is required, such that, to give Lessee written notice and ten (10) days
to perform would result in a penalty, fine or any other imposition being levied
against the Lessor. The Lessor may pay such sums for Lessee without first giving
written notice. All sums so advanced shall be paid by Lessee to Lessor on the
first day of the month following the advance; and Lessee will pay interest on
such advance at the rate of ten percent (10%) per annum until paid.
17. Lessee' s Right To Cure Defaults of Lessor. In the event that Lessor shall
fail, for whatsoever reason, to timely pay the property taxes levied on the
Leased premises, Lessee may, after ten (10) days prior written notice to Lessor,
at his sole option and discretion, pay such sums for Lessor, provided that, if
immediate payment is required, such that, to give Lessor written notice and ten
(10) days to perform would result in a penalty, fine or any other imposition
being levied against the Lessee. the Lessee may pay such sums for Lessor without
first giving written notice. Furthermore, upon ten (10) days prior written
notice to Lessor, Lessee has the right to remove any other lien or charge that
may restrict Lessee's use of the premises, provided that if immediate payment is
required such that, to give Lessor written notice and ten (10) days to perform
would result in a penalty, fine or any other imposition being levied against the
Lessee, the Lessee may pay such sums for Lessor without first giving written
notice. Lessor shall give to Lessee timely notice of any such defaults, so that
Lessee may pay said sums. All sums so advanced shall be paid by Lessor to Lessee
on the first day of the month following the advance.
18. Eminent Domain. If at any time during the term of this Lease, the demised
real estate or the improvements or buildings located thereon or any portion
thereof be taken or any portion or condemned by reason of eminent domain, there
shall be such division of the proceeds and awards in such condemnation
proceedings and such abatement of rent and other adjustments made as shall be
just and equitable under the circumstances. In general, it is the intent of this
paragraph that upon condemnation the parties hereto shall share their awards to
the extent that their interests respectively are depreciated, damaged, or
destroyed by the exercise of the right of eminent domain.
19. Insolvency of Lessee. The term is conditioned upon the continued solvency of
Lessee and shall be terminated by any act the result of which would be to pass
by operation of law or otherwise any interest or estate in the Leased premises
to any trustee or receiver in bankruptcy, liquidator, purchaser at any sheriff's
sale, or purchased at any sale held by any other judicial officer, including
sales by clerks of court or special masters in chancery amid all of the estate
hereby leased shall thereupon revert to the Lessor upon Lessor giving written
notice to Lessee and without further conveyance.
20. Compliance with Laws. Lessee shall give prompt notice to Lessor of any
notice it receives of the violation of any law or requirement of any public
authority with respect to the leased premises or the use or occupation thereof
Lessee shall, at Lessee's expense, comply with all laws and requirements of any
public authorities which shall, in respect of the Leased premises or the use and
occupation thereof, or the abatement of any nuisance in, on or about the
premises, impose any violation, order or duty on Lessor or Lessee arising from
(a) Lessee's use of the Premises; (b) the
<PAGE>
manner or conduct of Lessee's business or operation of its installations,
equipment or other property therein; (c) any cause or condition created by or at
the instance of Lessee; or (d) breach of any of Lessee's obligations hereunder,
whether or not such compliance requires work which is non-structural, ordinary
or foreseen or unforeseen: and Lessee shall pay all the costs, expenses, fines,
penalties and damages which may be imposed upon Lessor or any successor lessor
by reason or arising out of Lessee's failure to fully and promptly comply with
and observe the provisions of this Section. Lessor shall give prompt notice to
Lessee of any notice it receives of the violation of any law or requirement of
any public authority with respect to the leased premises or the use or
occupation thereof. Lessor shall, at Lessor's expense, comply with all laws and
requirements of any public authorities which shall, in respect of the leased
premises or the use and occupation thereof or the abatement of any nuisance in,
on or about the premises, impose any violation, order or duty on Lessor or
Lessee arising from all matters, conditions, events and circumstances
independent of Lessee s presence on, occupation of and use of the premises.
21. Risk of Loss. The Lessee takes all risks of any damage to its property and
to any property brought on the leased premises by it or its agents, servants,
licensees or invitees, that may occur by reason of any cause whatsoever, except
for intentional or negligent acts of the Lessor or his agents or the failure of
the Lessor to perfom the obligations of Lessor contained herein. The Lessee may
terminate this lease and move from the premises if the premises become untenable
because of damage by fire, water or other casualty or because of any condition
hazardous to health, unless the Lessor can restore the premises to a tenable
condition within ninety (90) days from the date Lessor is notified of said
damage to the premises, by repairing, rebuilding or eliminating the health
hazard. The Lessee may terminate this lease and move from the premises, after
said ninety (90) day period has expired, if the inconvenience to the Lessee by
reason of the nature and period of repair, rebuilding or elimination would
impose undue hardship on him. If the Lessor proceeds to repair or rebuild the
premises or eliminate the hazard to health, and the Lessee remains in
possession, rent abates to the extent the Lessee is deprived of the nominal use
of the premises. If the Lessee justifiably terminates the Lease under this
paragraph 21, the Lessee is not liable for rent after the premises become
untenantable and the Lessor must repay any rent paid in advance apportioned to
the period after the premises become untenable. If Lessee terminates under this
provision, all obligations of Lessee to repair the premises, if any, shall be
null and void. The termination provisions of this paragraph 21, are inapplicable
if the damage or condition is caused by negligence or improper use by the
Lessee.
22. Lessor's Estate. Lessee shall look only to Lessor's estate and Lessor' s
interest in the Property, or the proceeds thereof, for the satisfaction of
Lessee' s remedies for the collection of a judgement (or other judicial process)
requiring the payment of money by Lessor in the event of any default by Lessor
hereunder, and no other property or assets of Lessor, disclosed or undisclosed,
shall be subject to levy, execution, or other enforcement procedure for the
satisfaction of Lessee's remedies under or with respect to this Lease, the
relationship of Lessor and Lessee hereunder or Lessee's use or occupancy of the
Property.
23. Memorandum of Lease. At the option of either party, the parties hereto
shall, simultaneously with the execution and delivery of this lease, or within
twenty (20) days thereof execute and deliver a Memorandum of Lease setting forth
such information as may be necessary to constitute a "short term lease",
provided that the form and content of said memorandum of lease is acceptable to
both
<PAGE>
parties, either party may, at its expense, cause said memorandum of lease to be
recorded within (30) days following delivery of this Lease.
24. Radon Gas. The parties acknowledge that the Lessee has received the
following statutory notification concerning Radon gas; Radon is a naturally
occurring radioactive gas that, when it has accumulated in a building in
sufficient quantities, may create health risks to persons who are exposed to it
over a time period. Levels that exceed Federal and State guidelines have been
found in buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your County Public Health Unit.
25. Environmental Matters. Tenant agrees that it will comply with all
enviromnnental laws, whether local, state, or federal, including, withoumt
limitation, (a) Federal Clean Air Act, 42 U.S.C. ~1857 et seq.; (b) Federal
Water Pollution Act. 33 U.S.C. -.1151 et seg.; (c) Resource Conservation and
Recoven Act of 1976, 42 U.S.C. -.6901. ~ (d) Comprehensive Environmental
Response, Compensation and Liability Act. 42 U.S.C. S9601. et seg.; (e) Federal
Clean Water Act. 33 U.S.C. -.1251. et seg.; (f) Toxic Substances Control Act. 15
U.S.C. -.2301. et seg.; and (g) Florida Air amid Water Polluition Act. Chapter
403, Florida Statutes, as each shall be amended time to time. Without limiting
the foregoing, Tenant agrees that it will (i) give written notice to Landlord at
least seven (7) days in advance of any production, generation, handling,
storage, treatment, transportation, disposal, release or removal of "Hazardous
Waste" (as defined below) from or on the Demised Premises; (ii) not use or
employ the Demised Premises or any portion of the Land to handle, transport,
store, treat or dispose of any Hazardous Waste, whether or not it was generated
or produced on the Demised Premises; and (iii) defend, indemnify, and hold
Landlord harmless from and against any and all claim, damage, liability, expense
or cost of any kind whatsoever, including, but not limited to, attorney's fees
and costs at all tribunal levels, which Landlord may suffer, incur, or pay
resulting from or arising out of any act or omission of Tenant, or Tenant's
agents, or any other person on the Demised Premises nnder color of authority of
Tenant, effecting time handling, storage, treatment, transportation, disposal,
release or removal of Hazardous Waste from or on the Demised Premises or any
portion of the Land. The term "Hazardous Waste" shall include, withoumt
limitation, any solid waste, or similar environmental hazard, which, because of
its quantity, concentration, or physical, chemical or infectious characteristics
may cause or significantly contribute to (i) an increase in mortality, (ii) an
irreversibile or incapacitating illness, or (iii) a substantial, present, or
potential hazard to human health or the envirownent, when unproperly treated,
stored, transported or disposed, or otherwise managed, whether at such time of
occurrence, it shall be deemed a violation of any Law.
26. WAIVER OF JURY. THE PARTIES HERETO WAIVE TRIAL BY JURY IN CONNECTION WITH
THE PROCEEDINGS OR COUNTERCLAIMS BROUGHT BY EITHER OF THE PARVIES HERETO AGAINST
THE OTHER IN CONNECTION WITH THIS LEASE OR ANY MATTER RELATING HERETO.
27. Right of First Refusal. It is acknowledged by the parties hereto that during
the term of this Lease or any extensions or renewals thereof Lessee shall have a
right of first refusal in connection with the purchase and sale of the Property
which is the subject matter of this Lease. The right of first refusal shall be
effective only so long as Lessee is in good standing under this Lease, and may
not be assigned separate fromn or independently from the Lease, and, may not be
sold or assigmied without
<PAGE>
the prior written consent of Lessor. In the event the right of first refusal is
in effect. and, in the event Lessor receives a bona fide offer for the purchase
of all or any part of the Property. Lessor shall give written notice to Lessee
of the offer of purchase, amid Lessee shall have a period of fifteen (15) days,
after receiving said written notice, within which to match the offer and
purchase time property, in the event Lessee wishes to match the offer and
purchase the Property, Lessee shall, within the above fifteen (15) day period,
tender written notice to Lessor of its election to match the offer and purchase
the Property. In the event Lessor does not receive written notification from
Lessee of its intent to match the offer and purchase the Property, at the end of
the fifteen (15) day period. Lessor shall be free to sell the Property to the
party tendering the offer. All notices by Lessee must be in accordance with the
notice provisions of this agreement. In the event Lessee elects to match the
offer. the purchase price for the Property shall be identical to the purchase
price set fbrthm in the written offer, excepting that Lessee shall be credited,
against the purchase price to be paid by the Lessee, with a sum equal to the
amount of any brokerage commission, if any, which Lessor shall save by a sale to
the Lessee, and shall be payable in accordance with the terms and provisions of
the written offer. If Lessor shall receive an offer for the purchase of time
Property, which is not consumunmated by delivering a deed to the offerer, the
Lessee's right of first refusal shall remain applicable to all subsequent
offers, provided that Lessee is not in default of this lease. Notwithstanding
anything to the contrary provided in the written offer,other than the purhase
price and the manner of payment,which shall be identical to the terms and
provisions set foth in the written offer, the terms, provisions and procedures
under which Lessee shall purchase the Property will be in accordance with the
terms and provisions as herinafter set forth:
Abstract/Title Commitment. Lessor shall furnish an abstract, or abstracts, to
the real property within fifteen (15) days from the date of Lessee s election to
purchase the Property. in accordance with the tenus and provisions of paragraph
27 above, such abstract or abstracts to be brought up to date at Lessor's
expense. The abstract(s) shall show Lessor's title to the Property to be good,
marketable and insurable, and subject only to restrictions, reservations,
limitations, easements, servitudes, dedications and covenants of record, as is
hereinabove permitted under Paragraph 27.A. (the "Permitted Title Exceptions").
Any subsequent continuations necessary to continue the abstract to a time
proximate to the time of closing shall be the responsibility of Lessee. In the
event such title shall not be found to be good, marketable and insurable, then
Lessor agrees to use reasonable diligence to make his title good, marketable and
insurable, and shall have twenty (20) days to do so, but if, after reasonable
diligence on his part, said title shall not be made good, marketable and
insurable, the Earnest Money Deposit paid by Lessee, if any, shall be returned
to it and, thereupon, both the Lessor and Lessee shall be released from all
obligations under this agreement and the Agreement for Purchase and Sale or, at
the option of Lessee, communicated in writing, Lessor shall deliver his title in
existing condition. However, Lessor's obligation with respect to remedying any
defect in title shall not exceed a monetary obligation of One Thousand ($
1.000.00) Dollars.
B. Prorations, Adjustments and Prepaid Items.
(i) Taxes, rents, revenues and issues of the Property shall be prorated as of
the time of closing. Any prepaid items which were taken over by the Lessor at
closing shall be paid to Lessor to the extent of their unused benefit. Any
contracts or Insurance policies assigned to and assumed by the Lessee at closing
shall be paid to Lessor to the extent of the unused benefit of said contracts,
and
<PAGE>
insurance policies, if applicable, to the extent of any prepayment for the
same. Finally, any existing deposits or prepaid items constituting Lessor s
obligations under existing contracts. if any. shall be delivered by the Lessor
to the Lessee at the closing of said transaction. (ii) Pending governmental
liens, if any. shall be assumed by Lessee. Certified governmental liens, if any,
shall be paid by the Lessor provided the improvements for which die lien was
imposed have been installed and are in service.
C. Title. Title shall be conveyed at closing by warranty deed (statutory
form), subject to taxes prorated for the current year and the Permitted
Exceptions.
D. Assignment of Lease. At closing, Lessor shall assign to the Lessee, by
written assignment, this Lease, and the purchaser shall assume and agree to
perform the obligations under said lease and indemnify and hold the seller free
amid harmless of and from any further liability thereunder. Alternatively,
natively, at Lessee's option. Lessee may terminate this Lease.
E. Mechanic's Lien Aftidavit. At closing, Lessor shall deliver to Lessee a
mechanic's lien affidavit.
F. Brokers. The Lessor amid the Lessee represent to each other that there
are no brokers involved in this transaction and no brokerage commission is
payable, and, each of the parties agree to indemnify the other in connection
with any loss, including any reasonable attorney's fees, through and including
trial and appellate levels. This provision shall survive the closing of this
transaction.
G. Time of Closing. The parties agree that closing shall occur on or before
forty-five (45) days from the date that the Lessee exercises its right to
purchase under this right of first refusal, unless failure to close within the
said forty-five (45) day period is attributable to the Lessor, upon which the
time for closing shall be extende,. said closing to take place at time and place
to be determined.
H. Default of Lessee. Should the Lessee, after electing to purchase,
default in connection with any of its obligations under this right of first
refusal, then the Lessor shall retain the sum of $10,000.00 as agreed liquidated
damages in that both parties stipulate that such amount is to be paid to Lessor
in consequence of such breach and that is difficult, if not impossible, to
determine actual damages; whereupon both parties shall be released of and from
any and all further obligations under this right of first refusal.
I. Default of Lessor. Should the Lessor default in any of his obligations
under this right of first refusal. the Lessee shall be entitled to enforce this
right of first refusal by specific performance.
J. Closing Costs. It shall be the obligation of Lessor to pay for abstract
preparation or cost of issuance of title insurance commitment and documentary
stamps on the deed, together with his own attorney's fees. It shall be the
obligation of Lessee to pay for the recording of its deed, title insurance, if
any, and its own attorney's lees. It is specifically understood and agreed that
any costs involved, charged or exacted in connection with Lessee's mortgage
financing shall be the responsibility of the Lessee.
<PAGE>
K. Successors and Assigns. This agreement shall be binding upon and inuire
to the benefit of the parties and their successors, administrators and assigns.
28. Miscellaneoums.
A. All prior understandings and agreements between the parties are merged in
this Lease and Right of First Refusal Agreement which alone filly and completely
express the agreement of the parties. No agreement shall be effective to change,
modify, waive, release, discharge, terminate or effect an abandonment of this
Lease, in whole or in part unless such agreement is in writing, and is signed by
the party against whom enforcement of said change or modification) is sought.
B. The failure of either party to insist in any one or more instances upon the
strict performance of any one or more of the obligations of this Lease and Right
of First Refusal Agreement, or to exercise any election herein contained. shall
not be construed as a waiver or relinquishment for the future of the performance
of such one or more obligations of this Lease and Right of First Refusal
Agreement or of the right to exercise such election. but the Lease shall
continue and remain in full force and effect with respect to any subsequent
breach, act or omission.
C If any provision of this Lease and Right of First Refusal Agreement or the
application thereof to any person or circumstance shall, for any reason and to
any extent be invalid or unenforceable. the remainder of this Lease and Right of
First Refusal Agreement and the application of that provision to other persons
or circumstances shall not be affected but rather shall be enforced to the
extent permitted by law. This Lease and Right of First Refusal Agreement shall
be construed without regard to any presumption or other rule requiring
construction against the party causing this Lease and Right of~ First Refusal
Agreement to be drafted. Each covenant. agreement. obligation. or other
provision of this Lease and Right of First Refusal Agreement on Lessee s part to
be performed. shall be deemed and construed as a separate and independent
covenant of Lessee. not dependent on any other provision of this Lease and Right
of First Refusal Agreement. Each covenant. agreement. obligation, or other
provision of this Lease and Right of First Refusal Agreement on Lessor's~ s part
to be performed. shall be deemed and construed as a separate and independent
covenant of Lessor. not dependent on any other provision of this Lease and Right
of First Refusal Agreement. All terms and words used in this Lease, regardless
of the number or gender in which they are used. shall be deemed to include any
other number and any other gender as the context may require.
D. This Lease and Right of First Refusal Agreement which includes Exhibit A
(Excluded Property). Exhibit B (Equipment Lease). and Exhibit C (Guaranty)
constitutes the entire agreement between the parties hereto and shall be
interpreted in accordance with the laws of the State of Florida.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals.
the day and year first abov e set forth.
Signed. sealed and delivered in
the presence of:
Witness to "Lessor" Ronald L. Fedor
Treasure Coast Boating Center, Inc.
Witness as to "Lessee"
By:
D. Thomas Grane, GM-Owner
STATE OF FLORIDA, COUNTY OF BROWARD
I HEREBY CERTIFY, that on this day personally appeared before me, an officer
duly authorized to administer oaths and take acknowledgments. RONALD L. FEDOR,
who produced DRIVER S LICENSE as identification as the person(s) described in
and who executed the foregoing and acknowledged before me that they executed the
same freely and voluntarily for the purpose therein expressed and who did take
an oath.
SWORN. SUBSCRIBED and ACKNOWLEDGED before me, an officer, County of
Broward, State of Florida. this
day of October, 1998
Notary Public
Print Name:
Mv Commission Expires:
I HEREBY CERTIFY, that on this day personally appeared before me. an
officer duly authorized to administer oaths and take acknowledgments, D. THOMAS
GRANE, to me personally known or who produced DRIVER S LICENSE as identification
as the person(s) described in and who executed the foregoing and acknowledged
before me that they executed the same freely and voluntarily for the purpose
therein expressed and who did take an oath.
Sworn, Subscribed and acknowledged before me, an officer, County of
Martin, State of Florida, this 26th day of October, 1998
GAIL L POLLHEIN
<PAGE>
LANDLORD WAIVER
PREMISES: 3101 N. Federal HWY, Pompano Beach, FL 33064
TENANT: Treasure Coast Boating Center, Inc.
DATE: 10/27/98
WHEREAS, the undersigned has entered into a lease agreement whereby undersigned
holds Leasehold interest in the above premises and undersigned is the landlord
of the above premises which are rented to the above named tenant ("Tenant"), and
WHEREAS, Tenant has granted or Is granting a continuing lien and security
interest to The ClTGroup/Sales Financing, Inc. ("Lender") in the following
collateral (called "Collateral")
All present and future inventory consisting of all of Tenant s
Inventory of Manufactured HousIng, RecreatIon Vehicles and Marine products,
including boats, boat motors and engines financed by Lender in possession,
custody or control of Debtor and all accessories and parts; all Manufacturer
Certificates of Origin and Certifications of Titles thereof; all equipment,
manufacturer volume rebates, finance reserves and insurance proceeds of all said
inventory which are financed by Secured Party, together with all proceeds of the
sales or other disposition thereof. All after acquired property for all of the
foregoing, whether by way of replacement, substitution or addition, is included.
NOW, THEREFORE, the undersigned Intending to be legally bound hereby,
and for other good, valuable and sufficient consideration, receipt whereof is
hereby acknowledged, hereby agreed as follows;
1) Any and all liens, claims, demands, or rights, including but not
limited to the right to levy or distrain for unpaid rent, which the undersigned
now has or hereafter acquires on or in any of the collateral shall be
subordinate and inferior to the lien and security interest of the Lender, and as
to the Lender, the undersigned hereby specifically waives and relinquishes all
rights of levy, distraint or execution with respect to such property.
2) Any Collateral of Tenant shall, at all times, be considered to be
personal property, even if it is attached to the real estate, and shall not
become a part of the aforementioned premises, so long as any m:Onies are owing
to the Lender by Tenant.
3) Lender may at any time enter upon the aforementioned premises and
remove the Collateral, provided, however, that Lender shall first advise
Undersigned of its intent to so enter the premises, and/or remove the
Collateral. Lender may also take possession of the Collateral on the Tenant s
premises, and may remain on the premises for a reasonable period of time, in
order to dismantle, prepare for disposition, or removal, dispose of or otherwise
deal with the Collateral. Any damage caused the leased premises by the Lender or
its agents on removal of such Collateral shall be promptly repaired by Lender at
its own cost and expense. Lender agrees to underwrite and remit any unpaid rent
on these premises for the period used to remove its (Lenders) property.
4) The undersigned will notify any purchasers of the premises and any subsequent
mortgagee of the existence of this Waiver, which shall be binding upon the
executors, administrators, successors, transferees or assignees of the
undersigned and sb II inure to the benefit of the successors and assigns of
Lender.
Owner: Signed: (Print name) (Sign name)
<PAGE>
Ronald L. Fedor
2628 N.E. 49th Street
Ft. Lauderdale, FL 33308-4836
FL 1-954-491-9456 GA 1-912-932-5856
10/22/1998
Treasure Coast Boating Center, Inc.
420 5. Federal Highway
Stuart, Florida 34994
att: Judy or Tom Grane
Re: Addenduun to Lease Agreement
Dear Tom & Judy:
Per our phone conversation today, please add the following addendum to the
proposed Lease Agreement on the Pompano Beach location.
The environniental clause will become effective on delivery to you of an
environmentally clean property report from a certified environmental company. I
am meeting with EPAC Environniental Services, Inc. today. The report will be
added to the Lease Agreement as an addendum.
The Leased property mailing address is 3101 N. Federal Highway. Pompano
Beach, Florida 33064. The parcel size is an irregumlar rectangle approximately
186 feet fronting on N. Federal Highway with an average of 163.5' of depth.
Which calculates to approximately 30,411 sq. ft. This location is presently
occupied by Five Star Marine.
The roof will be repaired as needed as soon as possible.
It is my understanding you will have an inspection of the premises priorto
accepting the maintenance clause in the Lease.
lf you have ammy other concerns, please contact me.
Thanks,
Ron
<PAGE>
LEASE
THIS AGREEMENT, made this 1st day of December, 1998, by and between
James E. McFrederick and Patsy McFrederick, hereinafter collectively called
"Landlord," and Boat Tree, Inc., whose principal place of business is located in
Orange County, Florida, hereinafter called "Tenant."
1. PREMISES
a. Landlord leases and demises to Tenant for the purpose of operating a
new and used watercraft 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 Pinellas
County, Florida, 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; provided, however, Landlord
reserves the right to utilize the small cement block structure located on the
Demised Premises adjacent to the West Wall of the metal building together with
parking spaces located northerly and westerly of the fenced area adjacent to the
cement block structure solely for personal purposes which shall not interfere
with Tenant's business.
2. TERM OF LEASE
a. The term and duration of this lease shall be for a period of five
(5) years, two (2) months and fifteen (15) days commencing from the commencement
date herein provided. This agreement shall be cancelable by Tenant in the event
Tenant cannot obtain permits to operate its business prior to February 15, 1999.
b. The commencement date shall be December 1, 1998.
c. Tenant shall have the option to renew this Lease at the end of the
initial term for thirty-six (36) months at $9,500.00 per month and at the end of
the first renewal term for an additional twenty-four (24) months at $10,000.00
per month.
This option may be exercised by written notice from Tenant to Landlord
sixty (60) days prior to the expiration of the initial term or any renewal term.
1
<PAGE>
3. RENT
a. Tenant's liability for rent shall commence to accrue on February 15,
1999. The rent to be paid by Tenant to Landlord shall be $6,500.00 per month for
the first three (3) months of the term, $8,500.00 per month for the next nine
(9) months of the term, $9,000.00 per month for the next twenty-four (24) months
of the term and $9,500.00 per month for the remaining months of the term, plus
applicable sales taxes. Such rent shall be payable in advance in monthly
installments on the fifteenth day of each calendar month during the tern hereof.
Landlord agrees to assign the rents and lease (which is on a month to month
basis) from Shoe Warehouse effective February 15.
1999.
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. In addition to the payments required herein as rent to the Landlord,
the Tenant shall also pay the following:
(1) All occupational licenses and other licenses necessary in
the operation of the business to be carried on in the Demised Premises.
(2) All utility services provided to the Demised Premises and
used by Tenant, including, but not limited to, water, gas, electric, and
telephone, as they from time to time shall accrue and be due and payable during
the term of this lease.
(3) After February 15, 1999, Tenant shall pay to the
appropriate governmental agencies ad valorem taxes with respect to the Demised
Premises and the improvements thereon during the term of this lease or any
extension thereof. It is further understood and agreed that all ad valorem taxes
assessed during the term of this lease shall be prorated and that Tenant shall
only be liable for such portions of such taxes assessed for said first and last
years as its months of occupancy during any of said years shall bear to the
total of twelve (12) months. Should Tenant fail to pay any tax when due and
payable, Landlord may, if Landlord so desires, pay the same and the amount
together with any penalties which Landlord may have paid, shall immediately
become due and payable to Landlord as additional rent, Tenant shall have the
right in its name or in Landlord's name, whichever shall be appropriate, but at
its own cost and expense, to file and prosecute applications for reduction of
assessed valuation and to institute legal proceedings for the reduction thereof.
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. Landlord agrees to promptly deliver copies of
all tax notices and tax bills to the Tenant so that Tenant may timely contest
any proposed tax increase and promptly pay the tax due as to take advantage of
any discounts allowed for timely payment. In the event of any special assessment
with respect to the Demised Premises levied during the term of this Lease, the
Tenant
2
<PAGE>
shall have no obligation with respect to payment of such assessment and Landlord
shall be obligated to pay same.
Landlord shall use reasonable efforts, if requested by Tenant, to
obtain from the taxing authorities a separate assessment for the Demised
Premises if said premises are part of a larger parcel. If such separate
assessment shall be obtained, the real estate taxes payable by Tenant shall be
paid by Tenant directly to the taxing authority. If Landlord shall be unable to
obtain such separate assessment, and the tax bill covering the Demised Premises
shall include property in addition to the Demised Premises, Tenant shall pay its
proportionate share of said tax bill to Landlord, which proportionate share
shall equal the product obtained by multiplying the amount of the tax bill by a
fraction, the numerator of which is the acreage contained within the Demised
Premises and the denominator of which is the total land owned by the Landlord
and assessed in the tax bill. Tenant shall pay its share by the later of (i)
thirty (30) days after Landlord notifies Tenant of the amount thereof and
furnishes Tenant with a copy of the tax bill and the calculations by which
Tenant's share has been determined, or (ii) ten (10) days prior to the due date
of the tax, Landlord shall pay said tax bill when due. In no event shall Tenant
be liable for interest or penalties, if Tenant shall pay such taxes within such
period. Landlord will furnish Tenant with a copy of the receipted tax bill
promptly after demand therefor.
4. CONSTRUCTION OF IMPROVEMENTS -- REPAIRS
a. The Tenant, during the term of this lease or any extension or
renewal of this lease, shall, at its expense, make all such routine repairs as
shall be reasonably necessary to keep the Demised Premises in good condition and
repair. The Tenant further agrees that all damage or injury done to the Demised
Premises by the Tenant or by any person who may be in or upon the Demised
Premises, except the Landlord, Landlord's agents, servants and employees, shall
be repaired by the Tenant at its expense, The Tenant agrees at the expiration of
this lease or upon the earlier termination thereof, to quit and surrender said
Demised Premises in good condition and repair, reasonable wear and damage by act
of God or fire or other causes beyond the control of Tenant excepted.
b. Tenant shall be permitted to install and use on and about the
Demised Premises at any time or times 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.
c. Landlord shall maintain the Demised Premises in good structural
condition and repair, shall make all structural repairs and replacements
necessitated to the roof, foundation, load bearing 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. Landlord shall be responsible for repairing and maintaining all
heating, air conditioning and ventilation systems for a
3
<PAGE>
period of six (6) months from the commencement date. After such date Tenant
shall be responsible for maintaining the heating, air conditioning and
ventilation systems.
Tenant may make alterations, additions and improvements to the Demised
Premises from time to time during the term of this lease with the prior written
consent of Landlord 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 advisable consistent with the permissible uses as
provided in Section I above. Tenant shall have no authority to create or place
any lien or encumbrance of any kind whatsoever upon or in any manner to bind,
the interest of Landlord in the Demised Premises, and Tenant covenants and
agrees to pay all sums legally due and payable by it within forty-five (45) days
on account of any labor performed by it on the Demised Premises upon which any
lien is or can be asserted against the Demised Premises or the improvements
thereon. Tenant shall notify any contractor making improvements to the Demised
Premises that the Landlord's interest shall not be subject to any liens or
encumbrances as provided in ss.713.10, Florida Statutes. The Memorandum of Lease
to be filed in connection with this lease shall contain the appropriate
statutory provisions to effect the provisions of this subparagraph.
d. Notwithstanding the foregoing, the Landlord shall cause the roof and
parking lot of the Demised Premises to be repaired (Landlord shall not be
obligated to repave or seal the parking lot) and the Demised Premises to be
freshly painted and in clean and market ready condition, at its sole cost and
expense. Landlord shall also remove the existing hydraulic lifts from the
Demised Premises within thirty (30) days from the date of this Lease. All work
being performed on the Demised Premises shall be in compliance with all
applicable codes and regulations and shall be performed in a good and workman
like manner and shall be of a good quality.
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 Demised Premises on the commencement
date, the Tenant shall be entitled to terminate this lease.
7. WARRANTIES
a. Tenant shall be entitled to receive a good and marketable first
leasehold interest in and to the Demised Premises, free and clear of all liens,
encumbrances and other exceptions, except for a first mortgage lien not to
exceed $1,000,000.00.
4
<PAGE>
b. This lease is subject to Landlord's delivery on or before February
15, 1999 to Tenant of a warranty that Landlord has good and marketable title in
fee simple to the Demised Premises free and clear of all liens, encumbrances and
easements, except permitted easements, and has full power and authority to make
this lease. Tenant shall have and enjoy full, quiet and peaceful possession of
the Demised Premises, its appurtenances and all rights and privileges incidental
thereto during the term hereof and all extensions and renewals thereof.
c. This lease is subject to Tenant, at Landlord's expense, obtaining
from Landlord by February 15, 1999, a leasehold title insurance binder from
Commonwealth Land Title Insurance Company agreeing to issue a valid title
insurance policy insuring Tenants leasehold interest. Said title binder must
show that Landlord's title to the Demised Premises is good and marketable, free,
clear and unencumbered, and subject to no liens, encumbrances or exceptions
(except for the mortgage referred to above and other than current real estate
taxes not delinquent), except such as Tenant may, at its option, waive, and that
Tenant has a valid and binding first leasehold interest without exception other
than such taxes and waived exceptions. Without in any way limiting the
generality of the foregoing, said title binder shall contain no exceptions for
(i) rights or claims of Tenants in possession not shown by the public records,
(ii) boundary line disputes, encroachments or other exceptions to be covered by
the survey or surveyor's certificate required hereinbelow, (iii) easements or
claims of easements not shown by the public records, (iv) any lien or right to a
lien for services, labor or material heretofore or hereafter furnished, imposed
by law and not shown by the public records, and (v) taxes or special assessments
which are not shown as existing liens by the public records. In the event the
binder or commitment fails to show such good and marketable title, subject only
to the aforesaid permitted exceptions, Tenant shall notify Landlord of the
exceptions or defects in such title within ten (10) days of its receipt of said
binder and Landlord shall have sixty (60) days to cure such exceptions and
defects and render the title marketable; provided that all such exceptions and
defects shall be cured no later than February 15,1999, unless extended by Tenant
to permit Landlord additional time in which to cure. Tenant shall also have the
right to attempt to cure at its expense any exceptions or defects in title, but
there shall he no obligation on Tenant to do so. Landlord shall diligently
pursue the curing of title exceptions arid defects, the satisfaction of all
conditions and requirements hereunder and shall cooperate with Tenant in the
satisfaction of conditions and elimination of other difficulties. In the event
that Landlord is unable to cure defects in title by February 15, 1999, Tenant
shall have the right to terminate this lease and the parties hereto shall
thereafter be relieved of any obligations, liabilities or responsibilities
arising hereunder.
8. COMPLIANCE WITH LAWS AND ORDINANCES
a. Tenant shall comply with all federal, state, county and city laws
and ordinances and all rules and regulations of any duly constituted authority
present and future affecting or respecting the use or occupancy of the Demised
Premises by Tenant or the business at any time thereon transacted by Tenant or
any assignee or subtenant of Tenant, after the commencement of the term of this
lease.
5
<PAGE>
b. Tenant shall at all times keep the Demised Premises, the building
thereon and all appurtenances in a clean and sanitary condition, according to
the applicable statutes, city ordinances, and the directions or regulations of
the proper public authorities.
9. 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.
10. 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, and shall remove all of its property therefrom so that the
Landlord can repossess the Demised Premises not later than noon on the day upon
which this lease or any extension thereof ends, whether upon notice or by
holdover or otherwise. The Landlord shall have the same rights to enforce this
covenant by ejectment and for damages or otherwise as for the breach of any
other condition or covenant of this lease. 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. Any such
property not removed shall become the property of the Landlord.
11. 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 effect during said term (i) fire and extended
coverage insurance covering all improvements, structures and their contents 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 and war, with deductibles or self
insurance consistent with insurance industry practices, and (ii) bodily injury
and property damage comprehensive public liability insurance with a combined
single limit of not less than $1,000,000.00 including deductibles consistent
with normal insurance industry practices.
6
<PAGE>
b. The Landlord shall deliver to Tenant 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 Tenant and shall name Tenant
as an additional insured thereunder.
c. Tenant shall be responsible for obtaining insurance on Tenant's
property.
12. CONDEMNATION
If the whole or any part of the Demised Premises shall be taken by any
public authority under the power of eminent domain, then the term of the lease
shall cease on the part so taken from the date of possession of that part shall
be required for any public purpose, and the rent shall be paid up to that date.
If such portion of the Demised Premises is so taken as to damage or destroy the
usefulness of the Demised Premises for the purposes for which they were leased,
then, from that day Lessee shall have the right either to terminate the lease or
to continue in the possession of the remainder under the terms herein provided,
except that the rent shall be reduced in proportion to the amount of the Demised
Premises taken. Further, in the event of a taking which occurs without the
Tenant's exercise of its option to purchase, the Lessor shall be entitled to all
sums from the taking of the real estate. The Lessee shall be entitled to only
those sums arising out of a business damage and/or moving expense claim which
shall be an independent claim against the public authority.
13. ASSIGNMENT AND SUBLETTING
The Tenant may assign this Lease or let or underlet the whole or any
part of said Demised Premises without the prior written consent of the Landlord.
Any such assignment or subletting shall not relieve Tenant of its obligations
under this lease.
14. OPTION TO PURCHASE
In consideration of the amounts payable hereunder during the term, the
Landlord and Tenant agree as follows:
a. Option Grant. The Landlord hereby grants unto the Tenant the
exclusive right to purchase the property set forth on Exhibit "A" hereto (the
"Property") at any time during the term of this Lease on the terms and
conditions set forth below.
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 he $1,200,000.00. On February 15, 2004, and on each anniversary
thereafter, the option price shall increase by
7
<PAGE>
$30,000.00 per year for each successive year during the lease term in which the
option is not exercised.
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
documentary stamps on the Deed and for recording the deed. At closing Tenant
shall deliver the cash required to close and Landlord shall convey title to
Tenant by general warranty deed.
f. Representation of Ownership. The Landlord covenants that Landlord
is the in fee of the Property. Landlord covenants that it shall not permit or
cause the property aforementioned to be encumbered during the term of this
agreement for an amount or amounts, in the aggregate, of more than
$1,000,000.00, without the express and written permission of the Tenant.
g. Hazardous Waste. At the commencement of the term of this Lease,
there are no pollutants, contaminants, petroleum products or by-products,
asbestos or other substances, whether hazardous or not, on or beneath the
surface of the Property, which Landlord or any other person has placed, caused
or allowed to be placed upon the Property, and which has caused or may cause any
investigation by any agency or instrumentality of government, which is or may be
on the Property in violation of any law or regulation of any local, state or
federal government or which is or may be a nuisance or health threat to
occupants of the Property or other residents of the area. In the event Tenant
exercised its option, Tenant shall take the Demised Premises subject to any
condition which may exist at the time of exercise of that option.
h. 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.
i. Closing Procedure. At the Closing, the parties shall deliver the
following duly executed documents and funds:
(1) By Landlord:
(i) A statutory warranty deed conveying fee simple title to the Property to
Tenant.
(ii) A no-lien affidavit in a form satisfactory to Tenant's attorney.
8
<PAGE>
(iii) Such other instruments and documents provided in this Option and as
may be reasonably required in order to consummate the transaction herein
contemplated.
(iv) An Owner's Title Commitment showing no change from the Leasehold
Commitment delivered pursuant to the Contract for Sale between the parties.
(2) By Tenant: 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.
j. Memorandum of'Option. Simultaneously with the execution of
this lease the parties hereto shall execute a Memorandum of Option Agreement
including Landlord's right to purchase solely for the purpose of recording in
the public records,
k. Default. The option herein granted shall, at the election
of Landlord, be declared null, void, and of no further force and effect in the
event Tenant should become in substantial and material default of any one or
more of its obligations under this Lease and fail to cure any such default
within the time or times provided for herein.
15. 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.
16. 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, the Landlord shall forthwith repair the same, unless same was caused
by the negligence of Tenant, its employees or business invitees, provided such
repairs can be made within one hundred twenty (120) days under the laws and
regulations of state, federal, county or municipal authorities, but such total
or partial destruction shall in no wise annul or void this lease, except that
the minimum rent to be paid hereunder shall be equitably adjusted according to
the amount and value of the undamaged space.
Should the total or partial destruction result from causes covered by
the fire and extended coverage insurance furnished by the Tenant, the insurance
proceeds shall be made available to the Landlord to effect the required repairs.
In the interests of expediency, the Tenant may, at its option, elect to make the
necessary repairs, in which event the insurance proceeds shall be made available
to the Tenant for such purpose.
9
<PAGE>
If such repairs cannot be made within one hundred twenty (120) days,
this lease may be terminated at the option of Tenant.
17. 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 Tenant is 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.
18. RELATIONSHIP OF PARTIES
It is understood and agreed that the relationship of the parties hereto
is strictly that of Landlord and Tenant and that this lease shall not be
construed as a joint venture or partnership. The Tenant is not and shall not be
deemed to be the agent or representative of the Landlord.
19. PERSONAL PROPERTY
The Landlord acknowledges that Landlord has no interest in any personal
property or equipment or furniture and fixtures which may be presently located
or installed by the Tenant upon the Demised Premises, and the 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 such personal property, equipment, furniture
and fixtures. The Tenant shall have the right to remove same at the termination
of this lease, and, notwithstanding anything to the contrary contained in this
lease, Tenant shall be permitted five (5) days after the effective date of
termination of the term or any renewal or hold-over term within which to
accomplish the removal, and shall be obligated to repair any damage caused by
removal.
20. DEFAULT AND INSOLVENCY
a. The occurrence of any one or more of the following events shall
constitute a default and breach of this Lease by Tenant:
(1) The failure by Tenant to make any payment of Rent or any
other payment required to be made by Tenant hereunder, as and when due provided
Landlord has given five (5) days' written notice to Tenant of non-payment; or
(2) More than three defaults by Tenant within any one year of
the term of the lease for the nonpayment of rent hereunder, necessitating that
Landlord, because of such defaults, shall have served upon Tenant within said
year more than three written notices. This default shall be deemed a non-curable
default; or
10
<PAGE>
(3) The failure by Tenant to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Tenant,
other than paragraph (i) above, where such failure shall continue for a period
of thirty (30) business days after written notice thereof from Landlord to
Tenant; or
(4) The insolvency of the Tenant or the execution by Tenant of an
assignment for the benefit of creditors; or
(5) The filing by or for reorganization or arrangement under any law
relating to bankruptcy or insolvency if said petition remains undischarged for
ninety (90) days; or
(6) The appointment of a receiver or trustee to take possession of
substantially all of Tenant's assets located at the Demised Premises or of
Tenant's interest in this Lease; or
(7) The vacating or abandonment of the Demised Premises for a period of
three (3) days or more.
b. Upon the occurrence of any event of default, Landlord shall have the
right at any time thereafter to pursue any one or more of the following remedies
with or without notice or demand. Pursuit of any of the following remedies shall
not preclude pursuit of any of the other remedies herein provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver of
any rents due to Landlord hereunder or of any damages accruing to Landlord by
reason of the Tenant's violation of any of the terms, conditions or covenants
herein contained.
(1) Terminate this Lease, in which event Tenant shall
immediately surrender the Demised Premises to Landlord, and if Tenant fails to
do so, Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rents, enter upon and take possession of the Demised
Premises and expel or remove Tenant and any other person who may by occupying
the Demised Premises or any part thereof, by force if necessary, without being
liable for prosecution or any claim or damages therefor. Tenant agrees to pay to
Landlord on demand the amount of all loss and damage which Landlord may suffer
by reason of such termination, whether through inability to relet the Demised
Premises on satisfactory terms or otherwise.
(2) Enter upon and take possession of the Demised Premises and
expel or remove Tenant and any other person who may be occupying the Demised
Premises, without being liable fix prosecution or any claim for damages
therefor, and relet the Demised Premises and receive the rents therefrom. Tenant
agrees to pay to Landlord on demand any deficiency that may arise by reason of
such reletting.
(3) Enter upon the Demised Premises without being liable for
prosecution or any claim for damages therefor, and do whatever Tenant is
obligated to do under the terms of this Lease. Tenant agrees to reimburse
Landlord on demand for expenses which Landlord may incur in
11
<PAGE>
effecting compliance with Tenants obligations under this Lease, and Tenant
further agrees that Landlord shall not be liable for any damages resulting to
the Tenant from such action.
(4) At its option, declare the rents for the entire remaining
term of the Lease, and other indebtedness, if any, immediately due and payable
without regard to whether or not possession shall have been surrendered to or
taken by Landlord, and may commence action immediately thereupon and recover
judgment therefor provided same shall not relieve Landlord of Its duty to
mitigate its damages by reasonable action.
Any rents which may be due Landlord, whether by acceleration
or otherwise, as provided herein, shall include the minimum rent, and any
additional amounts provided for herein.
c. In the event of any default under this lease by Landlord, Tenant
shall have such other and further rights as are allowed by law or in equity.
Failure to exercise any right hereunder on any one or more occasions shall not
be deemed a waiver of such right or any subsequent right. In the event either
party is in default in the performance of any term, covenant, agreement or
condition contained in this lease, the defaulting party shall reimburse the
non-defaulting party for all costs and expense, including without limitation,
court costs and reasonable attorneys' fees incurred by it in protecting the
interests, whether or not litigation is involved.
21. RADON GAS
Radon is a naturally occurring radioactive 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 your county public health
unit. (Pursuant to ss.404.056(8), Florida Statutes.)
22. 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 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.
23. TENANT'S RIGHTS TO CURE LANDLORD'S DEFAULTS
The Landlord agrees that if the Landlord fails to perform any
obligation, including its obligation to pay any interest, principal, cost or
other charges upon any mortgage or mortgages or
12
<PAGE>
other liens and encumbrances affecting the Demised Premises and to which this
lease may be subordinate when any of the same become due, or if Landlord fails
to make any repairs or do any work required of the Landlord by the provisions of
this lease, or in any other respects fails to perform any covenant or agreement
in this lease contained on the part of the Landlord to be performed, then and in
such event after the continuance of any such failure or default for thirty (30)
days after notice in writing thereof is given by the Tenant to the Landlord,
notwithstanding any delay or forbearance in giving such notice, Tenant may
perform any such obligation or pay said principal, interest cost and other
charges, and cure such defaults, all on behalf of and at the expense of the
Landlord. The Tenant may further do all necessary work and make all necessary
payments in connection therewith including, but not limited to, the payment of
any attorney's fees, costs and charges of or in connection with any legal action
which may have been brought. The Landlord agrees to pay to the Tenant forthwith
any amount so paid by the Tenant, together with interest thereon at the maximum
legal rate. All sums charged to Landlord by Tenant hereunder shall be
indebtedness of Landlord to Tenant payable on demand. If any such indebtedness
or any other indebtedness of Landlord to Tenant is due at any time, Tenant may,
in addition to other remedies, withhold all rent accruing hereunder and apply
the same to the payment of such indebtedness. If all such indebtedness is not
frilly paid at the expiration of the original term of this lease or any
extension thereof. Tenant may, at its option, extend this lease on the same
covenants and conditions as herein provided, until such indebtedness is fully
paid by application of all rents thereto.
24. ACCESS
The Landlord hereby warrants, represents and covenants to the Tenant
that Tenant has access to public streets sufficient to service the Demised
Premises. If any street or substantial part of the parking area is obstructed or
blocked for repairs, reconstruction or otherwise, to the extent the operation of
Tenant's business is substantially adversely affected, a fair and reasonable
reduction of rent shall be made. If customer access to Tenant's store is
completely blocked for more than ten (10) consecutive days, rent shall abate;
provided, however, rent shall not abate if access is blocked due to acts of
Tenant.
25. 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. The Landlord shall have such right of entry
and the right to fulfill the purpose thereof without any rebate of rent to the
Tenant for any loss of occupancy or quiet enjoyment of the Demised Premises
thereby occasioned.
13
<PAGE>
26. 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 St., Orlando, FL 32839, Attn: Joseph G. Pozo, Jr.,
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 be in writing, deposited in the United States mail, certified or
registered, return receipt requested, with postage prepaid, and addressed to the
Landlord at Globe Auto, 9525 Ulmerton Road, Largo, Florida 33771, Att: James
McFrederick. with a copy to Timothy Mariani, Esq., 1550 So. Highland Ave,
Clearwater, Florida 33756. 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.
27. LICENSING
The Landlord agrees upon request by Tenant to sign promptly and without
charge therefore to the Tenant, any application for occupational licenses and
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, this
to include, without limitation, applications for occupational licenses, signs,
and any other licenses where the signature of the Landlord or owner is required
by the applicable laws of the state, county, or municipality in which the
Demised Premises are located that are in effect and in force at the time, the
cost of any such licenses and permits to be borne by the Tenant.
28. COOPERATION
Landlord shall fully cooperate with Tenant throughout the term of this
lease and all extensions and renewals to secure and maintain proper zoning,
building and other permits and compliance with all applicable laws, and Landlord
shall execute all such petitions, requests and the like as Tenant shall
reasonably request for such purposes.
29. FORCE MAJEURE
If Landlord or Tenant is delayed or prevented from performing any of
their respective obligations under this lease by reason of any acts of God
(other than inability to obtain financing) beyond Landlord's or Tenant's
reasonable control, the period of such delay or such prevention shall be deemed
added to the time herein provided for the cure of any default.
30. 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,
14
<PAGE>
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.
31. DECLARATION OF GOVERNING LAW
This lease shall be governed by, construed and enforced in accordance
with the laws of the State of Florida.
32. 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 plural in any place in which the
context so requires.
33. ADDITIONAL INSTRUMENTS
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.
34. 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.
35. 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. This lease cannot be changed or supplemented orally.
36. 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.
15
<PAGE>
37. 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.
38. ATTORNEYS FEE
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.
39. 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.
40. HAZARDOUS WASTE
a. Tenant's Restrictions. Tenant shall not cause or permit to occur:
(1) Any violation of any federal, state or local law,
ordinance or regulation now or hereafter enacted, related to environmental
conditions on, under or about the Demised Premises, arising from Tenant s use or
occupancy of the Demised Premises, including but not limited to, soil and ground
water conditions; or
(2) The use, generation, release, manufacture, refining,
production, processing, storage, or disposal of any hazardous substances on,
under, or about the Demised Premises, or the transportation to or from the
Demised Premises of any hazardous substances, except as may be permitted by
applicable law and regulation.
41. HOLD HARMLESS
Tenant shall indemnify, defend and hold Landlord harmless from any and
all claims, liabilities, damages and costs, including attorneys fees, incurred
by Landlord which may arise from Tenant s use of the Demised Premises or from
the conduct of its business or from any activity, work or things which may be
permitted or suffered by Tenant in, on or about the Demised Premises to the
extent not caused by the Landlord, and shall further indemnify, defend and hold
Landlord harmless from and against any and all claims, liabilities, damages and
costs, including attorneys fees, incurred by Landlord which may arise from any
negligence of Tenant or any of its agents, representatives, customers,
employees, or invitees.
16
<PAGE>
42. COMMISSION
Tenant acknowledges the existence of a commission agreement with
Prudential Florida Realty Commercial Services, provided this reference shall not
obligate Tenant for the payment of any commission.
IN WITNESS WHEREOF, the parties have executed this lease as of the day
and year first above written.
Witnesses: Tenant:
/s/ M. Pozo By: /s/ Joe G. Pozo, Jr.
M. Pozo Print Name: Joe G. Pozo, Jr.
Title: President
Witnesses: Tenant:
/s/ Debra A. Borgh /s/ James E. McFrederick
Debra A. Borgh James E. McFrederick
/s/ Mary Zaraualas /s/ Patsy McFrederick
Mary Zaraualas Patsy McFrederick
STATE OF FLORIDA
COUNTY OF PINELLAS
The foregoing instrument was acknowledged before me this 29th day of
December, 1998, by James E. McFrederick, who is personally known to me or who
has produced as identification and who did (did not) take an oath.
Debra A. Borgh
(Signature)
Debra A. Borgh
(Printed Name)
NOTARY PUBLIC STATE OF FLORIDA
SERIAL NO.:
17
<PAGE>
STATE OF FLORIDA
COUNTY OF PINELLAS
The foregoing instrument was acknowledged before me this 29th day of
December, 1998, by Patsy McFrederick, who is personally known to me or who has
produced as identification and who did (did not) take an oath.
/s/ Sue A. Roberts
(Signature)
Sue A. Roberts
(Printed Name)
NOTARY PUBLIC STATE OF FLORIDA
SERIAL NO.:
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 24th day of
December, 1998, by Joseph Pozo, Jr., as President of Boat Tree, Inc., on behalf
of the corporation, who personally known to me or who has produced as
identification and who did (did not) take an oath.
/s/ Dorothy R. Stein
(Signature)
Dorothy R. Stein
(Printed Name)
NOTARY PUBLIC STATE OF FLORIDA
SERIAL NO.:
18
<PAGE>
Exhibit "A"
Legal Description of "Demised Premises"
19
<PAGE>
GUARANTEE
For value received and in consideration of any loan or other
financial accommodation of any kind heretofore, now or hereafter made or given
by Transamerica Commercial Finance Corporation ("TCFC") to BOAT TREE, INC. (the
"Debtor") or to a customer of the Debtor, the undersigned (the "Guarantor")
unconditionally guarantees the full and punctual payment and performance when
due, whether upon demand, at maturity or earlier by reason of acceleration or
otherwise, and at all times thereafter, of all of the indebtedness and
obligations of every kind and nature of the Debtor to TCFC howsoever created,
arising or evidenced, whether arising before or after a bankruptcy of the
Debtor, whether direct or indirect, absolute or contingent, joint or several,
now or hereafter existing, or due or to become due (all such indebtedness and
obligations being hereinafter referred to as the "Liabilities"). The Guarantor
further agrees to pay on demand all costs and expenses incurred by TCFC in
endeavoring to collect the Liabilities or in enforcing this Guarantee.
This is a guarantee of payment and not of collection. The
Guarantor agrees that the obligations of the Guarantor under this Guarantee
shall be unconditional, irrespective of (i) the invalidity or unenforceability
of the Liabilities or any agreement or instrument relating to the Liabilities
(sometimes hereinafter referred to, collectively, as the "Documents"), or any
law affecting the Liabilities or any Document; (ii) the absence of any attempt
to collect the Liabilities from the Debtor or from any other person primarily or
secondarily liable with respect to the Liabilities or of any attempt to realize
upon any collateral for the Liabilities, for the obligations of any such other
person, or for this Guarantee; (iii) any failure by TCFC to acquire, perfect or
maintain a security interest in or to protect any collateral for the Liabilities
or for any such obligations; (iv) any defense arising by reason of any
disability or other defense of the Debtor or any other person primarily or
secondarily liable on the Liabilities; (v) the acceptance of additional parties
primarily or secondarily liable on the Liabilities; (vi) the disallowance or
avoidance of all or any portion of TCFC's claim(s) for repayment of the
Liabilities or of any collateral for the Liabilities; or (vii) any other
circumstance which might otherwise constitute a discharge or defense of a
guarantor.
Upon a default under any Document, TCFC may proceed directly
and at once against the Guarantor to collect the full amount of all or any
portion of the liability of the Guarantor hereunder, without notice and without
first proceeding against the Debtor or any other person primarily or secondarily
liable on the Liabilities. TCFC shall have the exclusive right to determine the
application of payments and credits, if any, from the Guarantor, the Debtor, or
any other person primarily or secondarily liable on the Liabilities.
TCFC is hereby authorized, without notice (which is hereby
waived by the Guarantor) and without affecting the liability of the Guarantor
hereunder, from time to time to (i) renew, extend, accelerate or otherwise
change the time, place or manner for payment of, or other terms relating to, the
Liabilities, or otherwise modify, amend, change or waive compliance with the
terms of the Liabilities or any of the Documents; (ii) accept partial payments
on the Liabilities; (iii) take collateral for the Liabilities and the
obligations of any other person primarily or secondarily liable on the
Liabilities, and exchange, release, realize upon or institute any proceeding to
realize upon, or liquidate any such collateral; (iv) apply such collateral and
direct the order or manner of sale thereof as TCFC may determine in its
discretion; (v) release or compromise, in any manner, or collect or
<PAGE>
initiate any proceeding to collect the Liabilities or any portion thereof; (vi)
extend additional loans, credit and financial accommodations and otherwise
create additional Liabilities; (vii) enforce or institute any proceeding to
enforce any other guarantee of the Liabilities or release, or compromise in any
manner the obligations of, any other person primarily or secondarily liable on
the Liabilities.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
GUARANTOR HEREBY WAIVES ANY AND ALL CLAIMS AND OTHER RIGHTS IT MAY NOW HAVE OR
HEREAFTER ACQUIRE (WHETHER ARISING DIRECTLY OR INDIRECTLY, BY OPERATION OF LAW
OR CONTRACT OR EQUITY OR STATUTE OR OTHERWISE) AGAINST ANY OF THE DEBTOR OR ANY
OTHER PERSON PRIMARILY OR SECONDARILY LIABLE ON THE LIABILITIES OR ARISING ON
ACCOUNT OF THE PERFORMANCE OF THE GUARANTOR'S OBLIGATIONS UNDER THIS GUARANTEE,
INCLUDING WITHOUT LIMITATION, ANY AND ALL RIGHTS OF SUBROGATION, REIMBURSEMENT,
EXONERATION, CONTRIBUTION, INDEMNIFICATION OR PARTICIPATION IN ANY CLAIM OR
REMEDY OF TCFC AGAINST THE DEBTOR OR ANY COLLATERAL OR SECURITY THEREFOR.
If the Debtor or the Guarantor shall die or if the Debtor or
the Guarantor should at any time dissolve or terminate its existence, or become
insolvent or make a general assignment for the benefit of creditors, or if a
bankruptcy, insolvency or reorganization proceeding shall be filed by or against
or commenced in respect of the Debtor or the Guarantor, the Guarantor shall, at
the option of TCFC, forthwith pay TCFC the full amount which would be payable
hereunder by the Guarantor if all Liabilities were then due and payable.
The Guarantor waives all set-offs and counterclaims and all
notices, presentments, protests and demands of any kind with respect to the
Liabilities and this Guarantee (including without limitation demands for
performance, notices of non-payment or non-performance, notices of protest,
notices of dishonor and notices of acceptance of this Guarantee) and promptness
and diligence with respect to the Liabilities.
The Guarantor hereby agrees that TCFC shall have no duty to
advise the Guarantor of information now or hereafter known to TCFC regarding the
financial or other condition of the Debtor or any other person primarily or
secondarily liable on the Liabilities or regarding any circumstance bearing on
the risk of non-payment of the Liabilities.
The Guarantor agrees to provide to TCFC, promptly after TCFC's
request therefor, such financial statements and other financial records and
information respecting the Guarantor as may be from time to time requested by
TCFC. The Guarantor 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 the Guarantor, whether supplied by the Guarantor to TCFC or otherwise
obtained by TCFC, with such authority to continue throughout the term of this
Guarantee.
The Guarantor agrees that the sale of inventory by TCFC to a
person who is liable to TCFC under a guarantee, endorsement, repurchase
agreement or the like shall not be deemed to be a transfer subject to Section
9-504(5) of the of the Uniform Commercial Code as in effect in
<PAGE>
Illinois or any similar provision of any other applicable law, and the Guarantor
waives any provision to the contrary of such laws. The Guarantor agrees that
repurchase of inventory by a seller of goods pursuant to a repurchase agreement
between TCFC and such seller shall be a commercially reasonable method of
disposition. the Guarantor shall be liable to TCFC for any deficiency resulting
from TCFC's disposition, including without limitation a repurchase by such a
seller, regardless of the subsequent disposition of the inventory by the
purchaser. The Guarantor 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 the Guarantor at least 10 days
before such disposition in accordance with the notice provision below.
This Guarantee shall be binding upon the Guarantor and upon
the heirs, personal representatives, trustees, successors and assigns of the
Guarantor, and shall inure to the benefit of TCFC's successors and assigns.
References herein to TCFC shall be deemed to refer to TCFC and its successors
and assigns.
Wherever possible each provision of this Guarantee shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guarantee shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Guarantee.
This Guarantee may be terminated only upon written notice to
TCFC effective no earlier than 30 days after the date such written notice is
actually received by TCFC. Any such termination shall not affect the liability
of the Guarantor under this Guarantee with respect to Liabilities created or
incurred prior to the effective date of such termination. Without limiting the
foregoing, any such termination shall not relate to any approval given by TCFC
to or for the benefit of the Debtor prior to the effective date of such
termination and upon any such termination, the Guarantor shall nevertheless
remain liable with respect to all Liabilities, and the performance of all
duties, created or arising theretofore or based on a commitment theretofore
entered into or any approval theretofore given to or for the benefit of the
Debtor to the full extent of the Guarantor's liability therefor as provided
herein.
All notices and other communications hereunder to or upon the
respective parties shall be in writing (and, in the case of a notice by the
Guarantor, identify the name of the Debtor) and shall be delivered by hand to,
or mailed by first class United States mail, postage prepaid, certified, return
receipt request, addressed to, or by personal delivery to, or by a reputable
overnight courier service addressed to, the addresses specified below.
No delay on the part of TCFC in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
TCFC of any right or remedy shall preclude any further exercise thereof. No
modification, waiver or amendment of any of the provisions of this Guarantee
shall be binding upon TCFC except as expressly set forth in a writing duly
signed on TCFC's behalf by any authorized officer or agent of TCFC and delivered
by TCFC to the Guarantor. TCFC's failure at any time to require strict
performance by the Guarantor of any of the provisions contained in this
Guarantee shall not waive, affect or diminish any right of TCFC at any time to
demand strict performance therewith.
<PAGE>
This Guarantee contains all of the understandings, promises
and undertakings of the parties hereto concerning the subject matter. All prior
undertakings and agreements, oral or written, concerning the subject matter are
merged herein.
To the extent that the Guarantor or the Debtor makes a payment
or payments to TCFC or TCFC enforces its security interests or exercises its
rights of set off, and such payment or payments or the proceeds of such
enforcement or set off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or set off had not occurred.
The Guarantor hereby consents to the jurisdiction of any
local, state or federal court located within the State of Illinois and waives
any objection which the Guarantor may have based on improper venue or forum non
conveniens to the conduct of any 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 the Guarantor in this Guarantee and that
service so made shall be deemed to be completed upon the earlier of actual
receipt or 3 days after the same shall have been posted to the Guarantor or the
Guarantor's agent as set forth below. The Guarantor hereby irrevocably appoints
CT Corporation System as the Guarantor's agent for the purpose of accepting the
service of any process within the State of Illinois. The Guarantor 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. 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 the Guarantor or its property in the courts of any other
jurisdiction.
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 THIS GUARANTEE,
AND UNDER ANY THEORY OF LAW OR EQUITY, WHETHER NOW EXISTING OR HEREAFTER
ARISING.
THIS GUARANTEE SHALL BE EFFECTIVE WHEN ACCEPTED BY TCFC, HAS
BEEN DELIVERED AND ACCEPTED AND SHALL BE DEEMED TO BE MADE IN ILLINOIS, AND
SHALL BE INTERPRETED AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO,
WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE, SHALL BE DETERMINED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS, ACCEPTANCE MAY BE BY FACSIMILE SIGNATURE.
<PAGE>
If more than one person or entity has signed this Guarantee,
then the term "Guarantor" herein shall refer to each of the undersigned (other
than TCFC) and obligations of each of the undersigned shall be joint and
several. The use of any gender shall include all other genders.
IN WITNESS WHEREOF, this Guarantee has been duly executed by
the Guarantor this 1st day of July, 1992.
Witness (or Attest of Guarantor is a corporation)
/s/ William Fulton
Title (if Attest):
Print Name: William Fulton
(Seal if Attest)
Witness' Home Address:
910 N. Phelps Avenue
Winter Park, Florida 32789
JOSEPH G. POZO, JR.
(Print Name of Guarantor)
/s/ Joseph G. Pozo, Jr.
(Signature of Individual)
Address for Notices to such Guarantor:
114 W. Grant Street
Orlando, Florida 32806
Accepted in Illinois:
Transamerica Commercial Financial Corporation
By: /s/ Richard Strickler
Title: Vice President
Print Name: Richard Strickler
Address for Notices to TCFC:
Transamerica Commercial Finance Corporation
225 North Michigan Avenue
Suite 2200
Chicago, Illinois 60601
Attention: Credit Department
<PAGE>
GUARANTY
(ARBITRATION)
TO: ITT COMMERCIAL FINANCE CORP.
In consideration of financing provided or to be provided by you to BOAT TREE,
INC. ("Dealer"), and for other good and valuable consideration received, we
jointly, severally, unconditionally and absolutely guaranty to you, from
property held separately, jointly or in community, the immediate payment of all
current and future liabilities owed by Dealer to you when due, whether such
liabilities are direct or indirect ("Liabilities"). We will pay you on demand
the full amount of all sums owed by Dealer to you, together with all costs and
expenses (including, without limitation, reasonable attorneys' fees). We also
indemnify and hold you harmless from and against all (a) losses, costs and
expenses you incur and/or are liable for (including, without limitation,
reasonable attorneys' fees) and (b) claims, actions and demands made by Dealer
or any third party against you, which in any way relate to any relationship or
transaction between you and Dealer.
Our guaranty will not be affected by any: (a) change in the manner, place or
terms of payment or performance in any current or future agreement between you
and Dealer, the release, settlement or compromise of or with any party liable
for the payment or performance thereof or the substitution, release,
non-perfection, impairment, sale or other disposition of any collateral
thereunder; (b) change in Dealer's financial condition; (c) interruption of
relations between Dealer and you or us; (d) claim or action by Dealer against
you; and/or (e) increases or decreases in any credit you may provide to Dealer.
We will pay you even if you have not (i) notified Dealer that it is in default
of the Liabilities and/or that you have accelerated the payment of all or any
part of the Liabilities, or (ii) exercised any of your rights or remedies
against Dealer, any other person or any current or future collateral. This
Guaranty is assignable by you and will inure to the benefit of your assignee. If
Dealer hereafter undergoes any change in its ownership, identity or
organizational structure, this Guaranty will extend to all current and future
obligations owed to you by such new or changed legal entity.
We irrevocably waive: notice of your acceptance of this Guaranty, presentment,
demand, protest, nonpayment, nonperformance, any right of contribution from
other guarantors, dishonor, the amount of indebtedness of Dealer outstanding at
any time, the number and amount of advances made by you to Dealer in reliance on
this Guaranty and any claim or action against Dealer; notice and hearing as to
any prejudgment remedy, all other demands and notices required by law; all
rights of offset and counterclaims against you or Dealer; all rights in, and
invoices or demands relating to, any collateral now or hereafter securing any
Liabilities (including, without limitation, all rights, notices or demands
directly or indirectly relating to the sale or other disposition of such
collateral or the manner of such sale or other disposition); all defenses to the
enforceability of this Guaranty (including, without limitation, fraudulent
inducement); and all of our present and future rights and remedies (a) of
subrogation to any of your rights or remedies against Dealer, (b) of
contribution, reimbursements, indemnification and restoration from Dealer and
(c) to assert any other claim or action against Dealer directly or indirectly
relating to this Guaranty. All our waivers herein will survive any termination
of this Guaranty.
<PAGE>
We have made an independent investigation of the financial condition of Dealer
and give this Guaranty based on that investigation and not upon any
representation made by you. We have access to current and future Dealer
financial information which enables us to remain continuously informed of
Dealer's financial condition. This Guaranty will survive any federal and/or
state bankruptcy or insolvency action involving Dealer. We are solvent and our
execution of this guaranty will not make us insolvent. If you are required in
any action involving Dealer to return or rescind any payment made to or value
received by you from or for the account of Dealer, this Guaranty will remain in
full force and effect and will be automatically reinstated without any further
action you and notwithstanding any termination of this Guaranty or your release
of us. Any delay or failure by you, or your successors or assigns. In exercising
any of your rights or remedies hereunder will not waive any such rights or
remedies. This Guaranty supersedes all prior oral and written agreements
concerning the subject matter hereof. Any oral or other amendment or waiver made
or claimed to be made to this Guaranty that is not evidenced by a written
document signed by you and our authorized representatives will be null, void and
have no force or effect whatsoever. We may terminate this Guaranty by a written
notice to you, the termination to be effective sixty (60) days after you receive
and acknowledge it, but the termination will not terminate our obligations
hereunder arising prior to the effective termination date. The meanings of all
terms herein are equally applicable to both the singular and plural forms of
such terms.
BINDING ARBITRATION. Except as otherwise specified below, all actions, disputes,
claims and controversies under common law, statutory law or equity (including,
without limitation, all torts, whether for negligence, breach of fiduciary duty,
restraint of trade, fraud, conversion, duress, interference, wrongful replevin,
wrongful sequestration, fraud in the inducement or otherwise, all contract
actions, whether concerning express or implied terms, such implied covenants of
good faith, fair dealing, commercial reasonableness of any collateral
disposition, and all claims for deceptive trade practices, lends liability and
the reasonableness or lawfulness of any act), heretofore or hereafter arising
out of or directly or indirectly relating to (a) this Guaranty and/or any
amendments and addenda hereto, or the breach, invalidity or termination hereof,
(b) any previous or subsequent agreement between you and us and/or (c) any
relationship, transaction or dealing between you and us (collectively, the
"Disputes"), will be subject to and resolved by binding arbitration.
All arbitration hereunder will be pursuant to 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, Minnesota 55405. A copy of the
Code may be obtained by contacting the NAF. If the Code is cancelled and/or the
NAF dissolves, all arbitrable Disputes will be subject to and resolved by
binding arbitration in accordance with the Code and administered by the American
Arbitration Association. The arbitrator(s) will decide if any inconsistency
exists between the Code and the arbitration provisions contained herein. If any
such inconsistency exists, the arbitration provisions contained herein will
control and supersede the Code. The site of all arbitration will be in Division
of the Federal Judicial District of your branch office closest to Dealer. The
laws of the State of Georgia will govern this Guaranty; provided, however, if
the jurisdictional requirements of the Federal Arbitration Act ("FAA") are
satisfied, the FAA will supersede laws of such state and govern. This Guaranty
concerns transactions involving commerce among the several states. Discovery
proceedings under the Federal Rules of Civil Procedure are permitted before and
during recesses of arbitration hearings, but only with respect to Disputes where
at least $250,000,000 is
<PAGE>
controversy. Any disagreements relating to such discovery will be resolved by
the arbitrator(s) after a hearing. All arbitration proceedings and all awards
granted thereunder will be kept confidential.
Nothing herein will be construed to prevent your or our 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 owed by either of us to the other. Any such action or
remedy will not waive your or our right to compel arbitration of any Dispute. If
either of us brings any other action for judicial relief with respect to any
Dispute, the party bringing such action will be liable for and immediately pay
all of the other party's costs and expenses (including attorneys' fees) incurred
to stay such action and remove or refer such Dispute to arbitration.
Any arbitration proceeding must be instituted within thirteen (13) months after
the date: (a) the last payment was received by the instituting party regarding
any Dispute for the collection of any current or future debt owed by either of
us to the other; or (b) the incident occurred giving rise to any other type of
Dispute, whether or not any damage was sustained or capable of ascertainment or
either of us 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. All notices will be
sufficiently given if mailed or delivered: (i) to us at our address(es)
specified below; and (ii) to you at 8251 Maryland Avenue, Clayton, Missouri
63105, Attention: General Counsel, or such other address as you may specify from
time to time. 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. If either
of us 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 in defending such action. If the arbitration
section of this Guaranty 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. We waive any right to a jury
trial in any such proceeding.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION. DATE: October 7, 1992
INDIVIDUAL GUARANTOR(S):
SIGNED BY: /s/ Joseph G. Pozo, Jr.
--------------------------------------------
(Print Name: Joseph G. Pozo, Jr.
-----------------------------------------------
WITNESS:
------------------------------------------------------------
(Print Name:
----------------------------------------------------------
SIGNED BY: /s/ Jacqueline Pozo
----------------------------------------------
(Print Name: Jacqueline Pozo
------------------------------------------------
WITNESS:
-------------------------------------------------------------
(Print Name:
-----------------------------------------------------------
2CORPORATE OR PARTNERSHIP GUARANTOR:
- -------------------------------------------
(Name of Corporate or Partnership Guarantor)
By:
(Print Name _______________________________
Title:______________________________________
Address of Guarantor(s):
4232 Down Point Lane, Orlando, Florida 34786
NOTARY STATEMENT
<PAGE>
On this 7th day of October, 1992, before me, the subscriber, a Notary Public,
personally appeared Joseph G. Pozo, Jr. and Jacqueline Pozo 7 known to me to be
the person(s) described in and who executed the above Guaranty (Arbitration),
and who acknowledged the execution thereof to be their free act and deed.
My commission expires: Notary Public:________________________________
(SEAL)
SECRETARY'S CERTIFICATE
I hereby certify that I am the Secretary of _____________________________
("Guarantor") and that execution of the above Guaranty (Arbitration) was
ratified, approved and confirmed by the Shareholders at a meeting, if necessary,
and pursuant to a resolution of the Board of Directors of Guarantor at a meeting
of the Board of directors duly called, and which is currently in effect, which
resolution was duly presented, seconded and adopted and reads as follows: "BE IT
RESOLVED that any officer of this corporation is hereby authorized to execute a
guaranty of the obligations of ___________________________________________
("Dealer") to ITT Commercial Finance Corp. on behalf of the corporation, which
instrument may contain such terms as the above named persons may see fit
including, but not limited to a waiver of notice of the acceptance of the
guaranty: presentment; demand; protest; notices of nonpayment; nonperformance,
dishonor, the amount of indebtedness of Dealer outstanding at any time, any
legal proceedings against Dealer, and any other demands and notices required by
law; any right of contribution from other guarantors; and all offsets." IN
WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal on
this ___ day of _____________, 19__.
(SEAL) Secretary: _______________________________________
***********************************
1 Complete Section only if Individual Guarantor(s) 5 Signature of Corporate or
Partnership Representative 2 Complete Section only if Corporate or Partnership
Guarantor 6 Title of Corporate or Partnership Representative 3 Individual
Guarantor's Signature 7 Name of Each Individual Guarantor 4 Signature of Witness
to Individual Guarantor's Signature 8 Complete Section only if Corporate
Guarantor
(Must be ITT CMF Employee)
<PAGE>
LEASE
between
SEAGATE LAND TRUST,
ROBERT L. MILLER, Trustee
(the Landlord)
and
TREASURE COAST BOATING CENTER, INC.
(the Tenant)
at
SEAGATE MARINA
18679 SOUTHEAST FEDERAL HIGHWAY
TEQUESTA, FLORIDA 33469
(name of Property)
Dated: December 22, 1998
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
Article 1. Introductory Provisions
1.1 Introductory Provisions 1
1.2 References and Conflicts 3
1.3 Exhibits
1.4 The Property; The Landlord's Site; Landlord's Building 3
1.5 Gross Leasable Area
Article 2. Premises
2.1 Lease of Premises
2.2 Premises Defined
2.3 Delivery of Premises
2.4 Opening of Premises
4
2.5 Possession
Article 3. Term
3.1 Term of this Lease
Article 4. Rent
4.1 Tenant's Agreement to Pay Rent 4
4.2 Minimum Rent
4.3 Lease Year Defined
4.4 Minimum Annual Rent 4
4.5 Percentage Rent
4.6 Monthly Payment of Percentage Rent; Year-End Adjustment 4
4.7 Gross Sales
4.8 Tenant's Records and Statements of Gross Sales 4
4.9 Additional Audit Rights
4.10 Additional Rent 4
4.11 Where Rent Payable and to Whom; No Deduction; Late Charge 4
Article 5. Taxes and Assessments
5.1 Tenant's Proportionate Share of Taxes 5
5.2 Payment by Tenant
5.3 Rent Tax
Article 6. Tenant's Conduct of Business
6.1 Hours
Article 7. Use of Premises
7.1 Sole Use and Trade Name 5
7.2 Requirements and Restrictions 5
7.3 Effect on Landlord's Insurance 6
Article 8. Common Areas
8.1 Use by Tenant; Maintenance 6
8.2 Common Areas Defined 6
8.3 Rules and Regulations 6
8.4 Landlord's Control 6
8.5 Employee Parking
8.6 Landlord's Use of Common Area 7
8.7 Common Area Costs 7
8.8 Tenant's Proportionate Share of Common Area Costs 7
Article 9. Hazardous Substance
9.1 Restriction on Use 7
9.2 Landlord's Representation 7
9.3 Indemnification 7
<PAGE>
9.4 Survival
Article 10. Alterations to Premises
10.1 Alterations; Mezzanines; Damages 7
10.2 Compliance with Laws 8
10.3 Insurance and Reconstruction 8
Article 11. Liability. Indemnity and Insurance
11.1 Landlord's Liability 8
11.2 Indemnification by Tenant 8
11.3 Mutual Waivers 8
11.4 Tenant's Insurance 8
11.5 Landlord's Insurance 9
11.6 Compliance with Insurance and Governmental Requirements 9
11.7 Limit of Landlord's Responsibility 9
Article 12. Reconstruction
12.1 Landlord's Duty to Reconstruct 10
12.2 Tenant's Duty to Reconstruct 10
12.3 Landlord's Right to Terminate 10
12.4 Abatement of Rent 10
12.5 Tenant's Right to Terminate 10
Article 13. Maintenance of Premises
13.1 Landlord's Duty to Maintain 10
13.2 Tenant's Duty to Maintain 10
13.3 Landlord's Repair of Premises 11
13.4 Landlord's Right of Entry and Use 11
13.5 Conflicts 11
Article 14. Utilities and Garbage Disposal
14.1 Water, Sanitary Sewer, Telephone and Electric Service 11
14.2 Vendors Selected by Landlord 11
14.3 Garbage Collection 11
14.4 Security Service 11
Article 15. Liens
15.1 No Liens Permitted; Discharge 12
Article 16. Fixtures and Personal Property
16.1 Tenant's Property; Removal 12
16.2 Improvements to Premises 12
Article 17. Assignment and Subletting
17.1 Restrictions on Assignment 12
17.2 Change of Ownership 12
Article 18. Defaults by Tenant
18.1 Events of Default 13
18.2 Landlord's Remedies 13
18.3 Attorney's Fees and Costs 13
18.4 Rent Payable by Tenant 13
18.5 Tenant's Property to Remain 13
Article 19. Liability of Landlord
19.1 Landlord's Default 14
19.2 Transfer of Landlord's Interest 14
Article 20. Subordination and Attornment
20.1 Subordination of Lease 14
20.2 Tenant's Attornment 14
20.3 Instruments to Carry Out Intent 14
<PAGE>
Article 21. Estoppel Certificates
21.1 Tenant's Agreement to Deliver 14
21.2 Failure of Tenant to Give Estoppel 14
Article 22. Quiet Enjoyment
22.1 Faithful Performance 14
Article 23. Surrender and Holding Over
23.1 Delivery after Term 14
23.2 Effect of Holding Over; Rent 15
Article 24. Condemnation
24.1 All of Premises Taken 15
24.2 Less Than All of Premises Taken 15
24.3 Property Taken 15
24.4 Ownership of Award 15
24.5 Conflicts 15
Article 25. Landlord's Right to Relocate Premises
25.1 Conditions on Landlord's Right to Relocate Premises 15
25.2 Landlord's Right to Terminate 16
Article 26. Miscellaneous
26.1 Interpretation 16
26.2 Relationship of Parties 16
26.3 Notices 16
26.4 Successors 16
26.5 Broker's Commission 16
26.6 Unavoidable Delays 16
26.7 Entire Agreement 17
26.8 Other Tenants 17
26.9 Applicable Law 17
26.10 Waiver 17
26.11 Accord and Satisfaction 17
26.12 Landlord's Self-Help 17
26.13 Recording 17
26.14 Joint and Several Liability 17
26.15 Execution of Lease 17
26.16 Waiver of Jury Trial and Counterclaim 18
26.17 Radon Gas 18
26.18 Time of the Essence 18
26.19 Tenant and Guarantor Financial Statements 18
Article 27. Security Deposit
27.1 Security 18
27.2 Transfer of Deposit 18
Exhibits & Attachments
(a) Exhibit "A" - Legal Description of the entire Property.
(b) Exhibit "B" - Site plan of entire Property.
(c) Exhibit "C" - Description of Tenant's Work.
(d) Exhibit "C-1" - Description of Landlord's Work
(e) Exhibit "C-2" - Sign Criteria.
(f) Exhibit "D" - Guaranty Agreement.
(g) Exhibit "E" - Exclusive.
(h) Exhibit "F" - Environmental Indemnification Compliance.
(i) Exhibit "G" - Notice to Contractor, Memorandum of Lease.
(j) Exhibit "H" - Landlord's Personal Property.
(k) Exhibit "I" - Forklift Use Agreement.
(I) Exhibit "J"- Lease Extension Agreement.
</TABLE>
<PAGE>
LEASE
THIS LEASE made as of the 22nd day of December, 1998, by and between SEAGATE
LAND TRUST, ROBERT L. MILLER, Trustee, (herein called "Landlord"), and TREASURE
COAST BOATING CENTER, INC., (herein called "Tenant").
For and in consideration of the sum of Ten and No/1 00 Dollars ($10.00) and
other valuable considerations, including the mutual covenants and agreements of
the Parties, Landlord leases to Tenant and Tenant leases from Landlord the
premises described herein for the term and subject to the terms and conditions
set forth herein.
ARTICLE 1. INTRODUCTORY PROVISIONS
1.1 FUNDAMENTAL LEASE PROVISIONS. Certain fundamental provisions are presented
in this Section in summary form to facilitate convenient reference by the
parties hereto:
(a) Tenant's Name: TREASURE COAST BOATING CENTER, INC.
(Section 7.1)
(b) Term: Three (3) years
(Section 3.1)
(c) Premises Space Number: New Boat Sales Area,
Used Boat Sales Area &
Maintenance Building (1st Floor Only)
(Exhibit "B")
(d) GLA in Premises:Exact Square Footage
Unknown - See Exhibit "B" (Section 1.5)
(e) GLA in Landlord's Building: N/A Square Feet
(Section 1.5)
(f) Tenant's Proportionate Share: N/A(GLA in the Premises divided
by GLA in Landlord's Building; at commencement Date %.)
(g) Minimum Monthly Rent: $1 5,000.00
plus applicable sales tax (Section 4.2)
(h) Minimum Annual Rent: CPI however, not less than 3% nor
Cumulative yearly increases more than 8%
(i) Percentage Rent: None
(Section 4.4)
(j) Tenant Buildout Period: None
(Section 2.5)
(k) Use: New boat sales, used boat sales, consignment
boat sales, boat brokerage, marine service and
repair, and marine engine and propulsion system parts
(Article 7)
(l) Guarantor(s): Mr. D. Thomas Grane
(if none, so state) (Exhibit "D")
(m) Default rate:The greater of twelve percent (12%)
per annum or the maximum lawful rate of interest
under the
laws of the state in which the Premises is located
whichever is greater.
<PAGE>
(n) Security Deposit: TRANSFERRED
(Section 27.1)
(o) Estimated Common Area Costs: $ None - Gross Lease
(Article 8)
(p) Estimated Property Taxes for: $ None - Gross Lease
Landlord's Property
(Article 5)
(q) Estimated Insurance for: $ None - Gross Lease
Landlord's Property (Article 11)
(r) Estimated Monthly
Payments Required
Minimum Rent $ 15,000.00
Additional Rent $ 0.00
Common Area Costs $ 0.00
Taxes $ 0.00
Insurance $ 0.00
Other $ 0.00
Total Month Additional Rent $ 0.00
State and County Sales Tax $ 900.00
Total Monthly Payment
at Commencement Date $ 15,900.00
(5) Address for Notice:
To Landlord: Tequesta Marine, Inc.
18679 Southeast Federal Highway
Tequesta, FL 33469
To Tenant: Treasure Coast Boating Center, Inc.
420 S. Federal Highway
Stuart, FL 34994
(t) Additional Provisions: Landlord to provide certain personal property
owned by Landlord for use by Tenant pursuant to the terms and conditions of
Exhibit "H", Landlord's Personal Property, attached hereto and made part hereof
by reference; Landlord shall make available a marina forklift owned and operated
by Landlord for non-exclusive use by Tenant pursuant to the terms and conditions
of Exhibit "I", Forklift Use Agreement, attached hereto and made part hereof by
reference;
<PAGE>
LEASE PROVISIONS
1.2 REFERENCES AND CONFLICTS. References appearing in Section 1.1 are to
designate some of the other places in this lease where additional provisions
applicable to the particular Fundamental Lease Provisions appear. Each reference
in this Lease to any of the Fundamental Lease Provisions contained in Section
1.1 shall be instructed to incorporate all of the terms provided for under such
provisions, and such provisions shall be read in conjunction with all other
provisions of this Lease applicable Thereto. If there is any conflict between
any of the Fundamental Lease Provisions set forth in Section 1.1 and any other
provision of this lease, the latter shall control.
1.3 EXHIBITS. The following drawings and special provisions are attached
hereto as exhibits and hereby made a part of this Lease:
(a) Exhibit "A" - Legal Description of the entire Property as presently
constituted.
(b) Exhibit "B" - Site plan of entire Property.
(c) Exhibit "C" - Description of Tenants Work and work to be performed by
Landlord, if any, in the Premises. (d) Exhibit "C-1" - Description of Landlord's
Work, if any.
(e) Exhibit "C-2" - Sign Criteria.
(f) Exhibit "D" - Guaranty Agreement (not an exhibit unless Guarantor is
named in Section 1.1). "Guarantor" means the guarantor or guarantors named in
Section 1.1.
(g) Exhibit "E" - Exclusive.
(h) Exhibit "F" - Environmental Indemnification Compliance.
(j) Exhibit "G" - Notice to Contractor, Memorandum of Lease.
(j) Exhibit "H" - Landlord's Personal Property.
(k) Exhibit "I" - Forklift Use Agreement.
(l) Exhibit "J"- Lease Extension Agreement.
1.4 THE PROPERTY; THE LANDLORDS SITE; LANDLORD'S BUILDING. The "Property'
means the land described in Exhibit "A" and improvements hereon constituting an
integrated retail and marina facility, as the same may be modified from time to
time. The structure or structures shown on Exhibit "B" as "Landlord's Building",
as the same may be altered, reduced or expanded from time to time, is
hereinafter called the "Landlord's Building." The owners of the Property may at
any time and from time to time change the shape, size, location, number, height
and extent of the improvements in the Property and eliminate or add any
improvements to any portion of the Property and add land thereto or eliminate
land therefrom. Notwithstanding the foregoing, to the extent that the actual
area of Tenant's Premises, as detailed in Exhibit "B", is reduced pursuant to
such a change by Landlord, Tenant's Rent and other charges shall also be reduced
accordingly.
1.5 GROSS LEASABLE AREA.
(a) At the Commencement Date, GLA means, with respect to the Premises, the
number of square feet set forth in section 1 .1(d) and, with respect to the
Landlord's Building, the number of square feet set forth in section 1.1(e). GLA
will change with additions or deletions to the Landlord's Building or the
Premises.
(b) If additions or deletions are made to the Premises or Landlord's
Building and it becomes necessary to determine the GLA of the modified space,
GLA is defined as the actual number of square feet of area on all levels for the
exclusive use and occupancy by the occupant thereof, including, without
limitation, any mezzanines used for the sale of goods or services and any
basements and balconies (but excluding Common Areas and excluding stock
mezzanines and Property management office space) measured from the exterior face
of exterior walls, the exterior face of service corridor walls and the
centerline of interior demising walls. No deduction shall be made for columns,
stairs, elevators or any interior construction or equipment.
ARTICLE 2. PREMISES
2.1 LEASE OF PREMISES. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, the premises for the Term, at the rent, and upon the
covenants and conditions herein set
<PAGE>
forth.
2.2 PREMISES DEFINED. The term "Premises" means The space situated in The
Landlord's building and around the Landlord's building as such area is shown
cross-hatched in Exhibit "B". With respect to building area, the "Premises"
shall consist of the space there at within the walls, structural floor and the
bottom of the roof of the Landlord's Building excepting the second and third
floor of the building known as the "maintenance building". With respect to areas
around the building areas such as, without limitation, the parking lot areas of
Landlord, Tenant agrees that such areas shown cross-hatched in Exhibit "B" will
be included in the "Premises" so long as Tenant's use does not significantly
impair vehicular and forklift traffic to and from Landlord's other buildings and
structures. Tenant shall not construct any mezzanines (including stock
mezzanines) without Landlord's written consent.
2.3 DELIVERY OF PREMISES. Landlord agrees to deliver to Tenant, and Tenant
agrees to accept from Landlord, possession of the Premises when Landlord advises
Tenant in writing that the Landlord's Work in the Premises (if any) has been
sufficiently completed to permit Tenant's Work to begin or Tenant takes
possession of the Premises, whichever first occurs, and Landlord's notice
thereof shall constitute such delivery of the Premises without further act by
either party. On said delivery of Premises to the Tenant and the commencement of
the Tenant's work, the Tenant shall execute and deliver to the Landlord a
Certificate of Estoppel noting the date of delivery and rental commencement
date. Failure to deliver said Estoppel in accordance with Section 21.1 hereof
shall be considered an event of Tenant default.
2.4 OPENING OF PREMISES. On or before delivery of possession of the
Premises to Tenant, Tenant shall commence that Tenant's Work specified in
Exhibit "C", if any, diligently and continually proceed to completion in
accordance with the Lease, and open for business on or before the Commencement
Date specified in Section 1.1 (j). By opening for business, Tenant shall be
deemed to have acknowledged that all work required to be preformed by Landlord
in connection with the premises and any and all other obligations to be
preformed by Landlord on or before the opening of the Premises have been fully
performed.
2.5 POSSESSION. Tenant agrees that it shall, with due diligence and all
reasonable commercial promptness, proceed to install such fixtures and equipment
to perform such work as shall be necessary or appropriate in order to prepare
The Demised Premises for the opening of business. The work to be performed by
the Tenant is set forth on Exhibit "C" which is appended hereto and incorporated
herein by reference. The agreement of Landlord and Tenant concerning
construction of the Demised Premises is set forth in Exhibit "C and C-2" which
is appended hereto and incorporated herein by reference. In the event that, for
whatever reason, Tenant does not fully open the Demised Premises for the conduct
of its business as set forth in Article 3 hereof within the period of time noted
in 1.1 (j) after receiving delivery of the Demised Premises from Landlord, as
provided in Paragraph 2.3 hereof, Landlord, in addition to all other remedies
given to it hereunder, shall have the option of terminating this Lease by giving
Tenant written notice of such termination; and in such event this Lease shall be
terminated unless by the date of the giving of said written notice, Tenant shall
have actually opened the Demised Premises for the conduct of its business.
ARTICLE 3. TERM
3.1 TERM OF THIS LEASE. The Term of this Lease shall commence on the
earlier of the date on which the Tenant opens for business or the date specified
in Section 1.1 (j) (the "Buildout Period") and shall continue for the number of
months or years set forth in Section 1.1(b).
ARTICLE 4. RENT
4.1 TENANT'S AGREEMENT TO PAY RENT. Tenant hereby agrees to pay Minimum
Rent and Additional Rent. The term "Rent" includes the Minimum Rent and
Additional Rent.
4.2 MINIMUM RENT. The minimum amount of rent Tenant shall pay Landlord for
The first Lease Year is the amount set forth in Section 1.1(r). (the "Minimum
Rent"). Minimum Rent for the period from the Commencement Date to the first day
of the month following such date shall be prorated on a daily basis and shall be
payable with and in addition to the first installment of Minimum Rent. The
Minimum Rent for each Lease Year shall be payable in monthly
<PAGE>
installments, in advance, on the first day of each calendar month. The
first installment of Minimum Rent shall be due on execution of this Lease by
Tenant.
4.3 LEASE YEAR DEFINED. The "First Lease Year" means the period beginning
on the Commencement Date and ending on the last day of the twelfth full calendar
month thereafter. "Lease Year" means each successive twelve (12) month period
after the First Lease Year occurring during the term.
4.4 MINIMUM ANNUAL RENT CUMULATIVE INCREASES. Commencing The second Lease
Year and continuous yearly thereafter, the minimum annual rent shall increase an
amount equal to the previous year's minimum rent multiplied by the current
Consumer Price Index however, the increase shall not be less than 3% nor more
than 8%, payable as outlined in Section 4.2.
4.5 PERCENTAGE RENT. Percentage Rent is not paid or collected as a part of
this Lease.
4.6 MONTHLY PAYMENT OF PERCENTAGE RENT; YEAR-END ADJUSTMENT. Percentage
Rent is not paid or collected as a part of this Lease.
4.7 GROSS SALES: Tenant is not required to report gross sales as a
condition of this Lease
4.8 TENANTS RECORDS AND STATEMENTS OF GROSS SALES. Tenant is not required
to report gross sales as a condition of this Lease
4.9 ADDITIONAL AUDIT RIGHTS. N/A
4.10 ADDITIONAL RENT. Tenant shall pay, as additional rent (herein
sometimes collectively called "Additional Rent") all sums of money or charges of
whatsoever nature (except Minimum Rent and Percentage Rent) required to be paid
by Tenant to Landlord pursuant to this lease, whether or not the same is
designated as "Additional Rent."
4.11 WHERE RENT PAYABLE AND TO WHOM; NO DEDUCTION; LATE CHARGE. Rent
payable by Tenant under this Lease shall be paid to Landlord on or before the
first day of each month without prior demand therefor (except where such prior
demand is expressly provided for in this Lease), without any deductions, set
offs or counterclaims whatsoever, at the place to which notices are to be sent
to Landlord pursuant to Section 26.3 or to such payee and at such place as may
be designated by Landlord to Tenant in writing at least ten (10) days prior to
The next ensuing Minimum Rent installment payment date. If any payment of Rent
or other charges due hereunder is not received by Landlord in good funds on or
before the seventh (7) day of the month, Tenant will pay to Landlord the default
rate Section 1.1(m) in addition to the amount due. In addition to such interest,
if Tenant shall fail to pay any monthly installment of rent by the seventh (7)
day of the month, a "late charge" equal to one (1.0%) of said monthly
installment of rent shall be assessed. Furthermore, if Tenant shall pay rent
with a bank draft without sufficient funds in his account when presented for
payment, then said installment shall be considered late and Tenant shall be
subject to the "late charge" detailed herein plus the amount charged to the
Landlord by its bank for processing the non-sufficient fund bank draft.
ARTICLE 5. TAXES AND ASSESSMENTS
5.1 TENANT'S PROPORTIONATE SHARE OF TAXES. Tenant shall not be responsible
for the payment to Landlord, as Additional Rent, Tenants Proportionate Share of
all real estate and other ad valorem taxes and assessments of every kind and
nature (including, but not limited to, general and special assessments, foreseen
as well as unforeseen) with respect to the land described on Exhibit "A" and
improvements located thereon.
5.2 PAYMENT BY TENANT. N/A
5.3 RENT TAX. Should any governmental taxing authority acting under any
present or future law, ordinance or regulation levy, assess or impose a tax,
excise or assessment (other than an income or franchise tax) upon or against or
measured by the Rent, or any part of it, Tenant shall pay such tax, excise
and/or assessment when due or shall on demand reimburse Landlord for the amount
thereof, as the case may be.
<PAGE>
ARTICLE 6. TENANT'S CONDUCT OF BUSINESS
6.1 HOURS. Tenant agrees that, from and after the Commencement Date, Tenant
will keep its entire store in The Premises open for business with the public
daily during such hours as are customary in the Property (including Saturday
hours), but in no event shall Tenant be required to be open for business on New
Year's Day, Christmas, Thanksgiving or, or before 7:30 a.m. or after 7:30 p.m.
on any day. The requirements of this Section shall not be applied when the
Tenant is prevented from operating by strike, casualty, governmental regulation,
or cause beyond the reasonable control of Tenant.
ARTICLE 7. USE OF PREMISES
7.1 SOLE USE AND TRADE NAME. Tenant shall use the Premises for the purpose
specified in Section 1.1(k) and for no other purpose whatsoever and shall
conduct its business in the Premises solely under the trade name specified in
Section 1.1(a).
7.2 REQUIREMENTS AND RESTRICTIONS. Except as specifically allowed and
detailed in Exhibit "C2", Tenant agrees that it:
(a) will not, without Landlord's consent, conduct or permit to be conducted
any auction, fire, bankruptcy or going-out-of-business sales, or similar type
sale, in connection with the Premises; provided however, that this provisions
shall not restrict the absolute freedom of Tenant to determine its own selling
prices nor shall it preclude the conduct of periodic seasonal, promotional or
clearance sales;
(b) will not use or permit the use of any apparatus for sound reproduction
or transmission or of any musical instrument in such manner that the sounds so
reproduced, transmitted or produced shall be audible beyond the interior of the
Premises; will not utilize an advertising medium within the Property which can
be seen, heard or experienced outside Premises, including, but not limited to,
flashing lights, search lights, loudspeakers, phonographs, radio, or television;
will not display, paint or cause to be displayed, painted or placed, any
handbills, bumper stickers or other advertising devices on any vehicle parked in
the parking area of the Property, will not distribute, or cause to be
distributed, in the Property any handbills or other advertising devices; and
will not conduct or permit any activities that might constitute a nuisance;
(c) will keep all mechanical apparatus free of vibration and noise which
may be transmitted beyond the confines of the Premises; will not cause or permit
strong, unusual, offensive, or objectionable noise, odors, fumes, dust or vapors
to emanate or be dispelled from the Premises; will not burn trash or store or
permit accumulations of any trash, garbage, rubbish or other refuse outside of
the Premises except on compactors or other receptacles approved by Landlord;
(d) will not load or permit the loading or unloading of merchandise,
supplies or other property, nor ship, nor receive, outside the area entrance
designated therefor by Landlord from time to time; will not permit the parking
or standing, outside of said area, of trucks, trailers or other vehicles or
equipment engaged in such loading or unloading in a manner to interfere with the
use of Common Areas or any pedestrian or vehicular use and good real estate
management practice;
(e) will not paint or decorate any part of the exterior of the premises, or
change the architectural treatment thereof, or install any visible productive
devices such as burglar bars or security shutters or window tinting, without
first obtaining Landlord's written approval; and will remove promptly upon order
of Landlord any paint, decoration or protective device which has been applied to
or installed upon the exterior or the Premises without Landlord's prior
approval, or take such other action with reference thereto as Landlord may
direct;
(I) will keep the inside and outside of all glass in the doors and windows
of the Premises clean; will not place or maintain any merchandise, vending
machines or other articles in the vestibule or entry of the Premises, on the
foot walks adjacent thereto or elsewhere on the exterior thereof; will maintain
the Premises at its own expense in a clean, orderly and sanitary condition and
free of insect, rodents, vermin and other pests; and will keep refuse in proper
containers on the interior of the Premises until removed from the Premises;
<PAGE>
(g) will comply with all laws, rules, regulations, orders and guidelines
relating to the Premises and will not use or permit the use of any portion of
the Premises for any unlawful purpose;
(h) will not place, permit or maintain on the exterior walls or roof of the
Premises any sign, advertising matter, decoration, lettering, insignia, emblems,
trademark or descriptive material (herein called "Signs") and will not permit
any Signs to remain or be placed on any window or door or the Premises unless
the same have been approved in writing by Landlord; and will maintain any and
all Signs as may be approved in good condition and repair at all times, Landlord
reserving the right to do so at Tenant's expense if Tenant fails to do so after
five (5) days' notice from Landlord;
(i) will keep the display windows in the Premises electrically lighted and
any and all electric signs lighted during all other periods that a majority of
tenants are open for business in the Property; and
(j) will not use the sidewalks adjacent to the Premises, or any other space
outside of the Premises, for the sale of display of any merchandise or for other
business, occupation or undertaking.
7.3 EFFECT ON LANDLORD'S INSURANCE. Tenant shall not do or suffer to be
done, or keep or suffer to be kept, anything in, upon or about the Premises
which will contravene Landlord's policies insuring against loss or damage by
fire or other hazards, or which will prevent Landlord from procuring such
policies in companies acceptable to Landlord, or which will cause an increase in
The insurance rates upon any portion of the Property. If Tenant violates any
prohibition provided for in The first sentence of This Section, Landlord may,
without notice to Tenant, correct the same at Tenant's expense. Tenant agrees to
pay to Landlord as Additional Rent on demand the amount of any increase in
premiums for insurance resulting from any violation of the first sentence of
this section, even if Landlord shall have consented to the doing of or keeping
of anything on the premises which constitutes such a violation (but the payment
of such Additional Rent shall not entitle Tenant to violate the provisions of
the first sentence of this Section).
ARTICLE 8. COMMON AREAS
8.1 USE BY TENANT; MAINTENANCE. Tenant and its employees and invitees are,
except as otherwise specifically provided in this Lease, authorized, empowered
and privileged during the Term to use Common Areas for their respective intended
purposes in common with other persons. Notwithstanding the foregoing, Common
Areas shall explicitly not be used for storage of any kind, including, but not
by way of limitation, the storage of boats, trailers, automobiles, etc. Tenant
hereby acknowledges that Tenant's use of Common Area Parking Lot not within
Tenant's demised area as described in Exhibit B is allowed at the discretion of
the Landlord and may be terminated at any time with twenty-four (24) hour
notice. Landlord's discretion in this matter is sole and absolute and Landlord's
right of termination may not be waived by any act, whether voluntary or
involuntary. Landlord agrees to maintain the Common Areas in good condition and
keep the same property lighted (at a candlepower reasonable for security type
lighting) during periods that a majority of the GLA in the Property is open for
a reasonable period thereafter.
8.2 COMMON AREAS DEFINED. "Common Areas" means all areas, facilities, and
improvements provided in the Property from time to time for the convenience and
use of patrons of the Property, and shall include but not be limited to, the
parking areas and facilities, sidewalks, stairways, service corridors, truck
ways, ramps, loading docks, delivery areas, landscaped areas, access and
interior roads, and lighting faculties.
8.3 RULES AND REGULATIONS. Tenant agrees to comply with such reasonable
rules and regulations as Landlord may deem necessary or advisable for the proper
and efficient use, operation and maintenance of the Common Areas, provided that
all rules and regulations affecting Tenant and its invites and employees shall
apply equitably and without discrimination to all Tenants of Landlord's
Building.
8.4 LANDLORD'S CONTROL. Landlord shall at all times during The term have
The sole and exclusive control, management and direction of the Common Areas,
and may at any time and from time to time during the Term exclude and restrain
any person from use or occupancy
<PAGE>
thereof, excepting, however, Tenant and other tenants of Landlord and bona
fide invites of either who make use of the said areas in accordance with the
rules and regulations established by Landlord from time to time with respect
thereto. The rights of Tenant in and to the Common Areas shall at all times be
subject to the rights of others to use the same in common with Tenant. Landlord
may, at anytime, and from time to time close all or any portion of the Common
Areas to make repairs or changes and, to the extent necessary in the opinion of
the Landlord, to prevent a dedication thereof or the accrual of any rights to
any person or to the public therein. Landlord shall have the sole and absolute
right to determine the location of the Common Areas and to change the location,
size and/or boundaries at anytime. Landlord may close temporarily any or all
portions of The Common Areas to discourage non-customer parking and use and to
do and perform such other acts in and to the Common Areas as, in the exercise of
good business judgment, Landlord shall determine to be advisable with a view to
the improvement of the convenience and use thereof by occupants and tenants,
their employees and invites.
8.5 EMPLOYEE PARKING. Landlord may from time to time designate a particular
parking area or areas to be used by its tenants. If it does so, Tenant and its
employees shall park their vehicles only in those portions of the Property
designated for that purpose by Landlord. Tenant shall furnish Landlord with a
list of Tenant's and its employees' vehicle license numbers within fifteen (15)
days after Landlord delivers possession of the Premises, and Tenant shall
thereafter notify Landlord of any and all changes, additions and deletions to or
from such list within five (5) days after each such change occurs. If Tenant or
any of its employees fail to park their vehicle in designated parking areas,
Landlord may give Tenant notice of such violation and, if the violation is not
corrected within two (2) days after said notice is given, Tenant shall pay to
Landlord an amount equal to ten Dollars ($10.00) per day for each violating
vehicle calculated from and including the day on which notice was given, to and
including the day when all violations by Tenant and its employees cease. If,
from time to time after such cessation, Tenant or any of its employees violate
this Section. Landlord need not give Tenant any further notice of violation, and
the said Ten Dollars ($10.00) per day violating vehicle charge shall commence
against Tenant for each violating vehicle immediately upon such further
violation and run until such violation ceases. All amounts due under the
provisions of this Section shall be payable by Tenant on demand as Additional
Rent within ten (10) days after demand therefor. Tenant hereby authorizes
Landlord to tow or haul away from the Property all violating vehicles belonging
to Tenant or its employees, or to attach violation notices to such cars, or to
do both, and if such right is exercised agrees to reimburse Landlord for the
cost of doing so. Tenant shall notify each of its employees of the provisions of
this Section prior to their commencing any employment connection with the
Premises.
8.6 LANDLORD'S USE OF COMMON AREAS. Landlord shall at all times have the
right to utilize the Common Areas, or any part thereof, for promotions,
exhibits, carnival type shows, rides, outdoor shows, displays, and other product
shows, the leasing of kiosks and food facilities, landscaping, decorative items,
and any other use which, in Landlord's judgment, tends to attract customers to
or benefit the customers of the Property and does not materially interfere with
Tenant's business or the parking available for use by Tenant's customers.
8.7 COMMON AREA COSTS. Common Area Costs are not paid or collected as a
part of this Lease.
8.8 TENANT'S PROPORTIONATE SHARE OF COMMON AREA COSTS. Common Area Costs
are not paid or collected as a part of this Lease.
ARTICLE 9. HAZARDOUS SUBSTANCES
9.1 RESTRICTION ON USE. Tenant shall not use or permit the use of the
Premises for the generation, storage, treatment, use, transportation, handling
or disposal of any chemical, material or substance which is regulated as toxic
or hazardous or exposure to which is prohibited, limited or regulated by any
governmental authority, or which, even if not so regulated, may or could pose a
hazard to the health or safety of persons on The Premises or other tenants or
occupants of the Property or property adjacent Thereto, and no such chemical,
material or substance shall be brought unto the Premises without the Landlord's
express written approval. Tenant agrees that it will at all times observe and
abide by all laws and regulations relating to the handling of such materials and
will promptly notify landlord of (a) the receipt of any warning notice, notice
of violation, or complaint received from any governmental agency or third party
relating to
<PAGE>
environmental compliance and (b) any release of hazardous materials on the
Premise. Tenant shall carry out, at its sole cost and expense, any relegation
required as a result of the release of any hazardous substance by Tenant or by
Tenant's agents, employees, contractors or invites, from the Premises.
Notwithstanding the foregoing, the Tenant shall have the right to bring on to
the Premises reasonable amounts of cleaning materials and the like necessary for
the operation of the Tenant's business, but Tenant's liability with respect to
such materials shall be as set forth in this Article.
9.2 LANDLORD'S REPRESENTATION. Landlord represents that it has no actual
knowledge of any toxic or hazardous substance (as described in Section 9.1) on
the Premises as of the date of this Lease.
9.3 INDEMNIFICATION. Tenant agrees to indemnify and save the Landlord
harmless from all liability, costs and claims, including attorneys' fees,
resulting from any environmental contamination on the Premises caused by Tenant
or its agents, contractors, employees or invites, including the cost of
relegation and defense of any action for any violation of the provisions of
Section 9.1.
9.4 SURVIVAL. The provisions of this Article shall survive the termination
of this lease.
ARTICLE 10. ALTERATIONS TO PREMISES
10.1 ALTERNATIONS; MEZZANINES; DAMAGES. Tenant shall make no structural
alterations, additions, or changes in or to the Premises without Landlord's
prior written consent, which may or may not be withheld at Landlord's sole
option. In no event shall Tenant make or cause to be made any penetration
through any roof, floor or exterior or corridor wall without the prior written
consent of Landlord. Tenant shall be responsible for any and all damages
resulting from any alteration, addition or change Tenant makes, whether or not
Landlord's consent therefor was obtained. Any and all alterations, additions and
changes made to the Premise which are consented to by Landlord shall be made
under the supervision of a competent licensed architect or competent licensed
structural engineer and in accordance with plans and specification approved in
writing by the Landlord before the commencement of the work and all necessary
governmental approvals and permits, which approvals and permits Tenant shall
obtain at its sole expense. All work with respect to any alterations, additions
and changes 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 the work. Any and all work done by
Tenant without Landlord's consent shall be returned to its original condition at
Tenant's expense upon request by Landlord.
10.2 COMPLIANCE WITH LAWS. Any permitted changes, alterations and additions
made by Tenant shall be performed strictly in accordance with applicable laws,
rules, regulations and building codes relating thereto. Tenant shall have the
work performed in such a manner so as not to obstruct the access to the Premises
or to the premises of any other tenant or obstruct the Common Areas.
10.3 INSURANCE AND RECONSTRUCTION. In the event Tenant shall make any
alterations, additions or changes to the Premises, none of such alterations,
additions or changes need be insured by Landlord under such insurance as
Landlord may carry upon the Landlord's building, nor shall Landlord be required
under any provisions of this Lease to reconstruct or reinstall any such
alterations, additions or changes in the event of casualty loss.
ARTICLE 11. LIABILITY. INDEMNITY AND INSURANCE
11.1 LANDLORD'S LIABILITY. Landlord shall not be liable for any damage or
liability of any kind or for any injury to or death of any persons or damage to
any property on or about the Premises from any cause whatsoever.
11.2 INDEMNIFICATION BY TENANT. Tenant hereby agrees to indemnify and save
Landlord harmless from all claims, actions, demands, costs and expenses and
liability whatsoever, including any reasonable attorneys' fees, on account of
any damage or liability occasioned in whole or in part by any use or occupancy
of the Premises or by any act or omission of Tenant, its agents, contractors,
servants, employees or invites. Tenant shall not be liable for damage or injury
<PAGE>
occasioned by the affirmative negligence or willful acts of the Landlord or
its agents, contractors, servant or employees unless such damage or injury
arises from perils against which Tenant is required by this Lease to insure and
then only to the extent of such insurance.
11.3 MUTUAL WAIVERS. Landlord and Tenant hereby waive any rights they may
have against each other on account of any loss of damage occasioned to Landlord
or Tenant, as the case may be, their property, the Premises, its contents, or
arising from any risk covered by fire and extended coverage insurance. The
parties hereto each, on behalf of their respective insurance companies insuring
the property of either Landlord or Tenant against any such loss, waive any right
of subrogation that it may have against Landlord or Tenant, as the case may be.
This release shall be effective only so long as the applicable insurance
policies contain a clause to the effect that this release shall not affect the
right of the insured to recover under such policies. Each party agrees that its
insurance policies will include such a clause only for so long as it is
includable without extra cost or, if extra cost is chargeable therefor, only so
long as the other party pays such extra cost. If extra cost is chargeable
therefor, the party will advise the other of the amount thereof and the other
party may, but shall not be obligated to, pay such charge.
11.4 TENANT'S INSURANCE.
(a) Tenant agrees that, from and after the date of delivery of the Premises
to Tenant, Tenant will carry at its sole cost and expense the following types of
insurance, in the amounts specified and in the form hereinafter provided for:
(1) Public Liability and Property Damage Insurance covering the Premises
and Tenant's use thereof against claims for personal injury or death and
property damage including sudden and accidental coverage for environmental
and/or ecological damage and its remediation expenses occurring upon, in or
about the Premises (Tenant shall procure said insurance for sudden and
accidental environmental and/or ecological damage and its remediation expenses
and shall deliver copy of policy naming Landlord as insured and until such time,
Tenant's Guarantor, D. Thomas Grane shall provide an unlimited personal guaranty
for the risks that would be covered by such a policy. In the event that Tenant
fails to deliver the insurance or the guaranty amendment to Landlord by said
date, Landlord may terminate this Lease at its sole and complete option) such
insurance to afford protection to the limit of not less than $2,000,000.00 in
respect of injury or death of any number of persons arising out of any one
occurrence and such insurance against property damage to afford protection to
the limit of not less than $1,000,000.00 in respect to any instance of property
damage. The insurance coverage required under this Section 11 .4(a)(1) shall, in
addition, extend to any liability of Tenant arising out of the indemnities
provided for in Section 11 .2; and
(2) Tenant improvements and Property Insurance covering all of the items
owned by Tenant included in Tenant's Work, Tenant's leasehold improvements,
Tenants new and used boat inventory, trade fixtures, signage and Tenant's and
Landlord's personal property from time to time in, on or upon the Premises and,
to the extent not covered by Landlord's similar insurance, alterations,
additions or changes made by Tenant pursuant to Article 10, in an amount not
less than their full replacement cost from time to time during the Term,
providing protection against all perils, including, but not by way of
limitation, windstorm coverage, within standard forms of fire and extended
coverage insurance policy, together with insurance against sprinkler damage,
vandalism and malicious mischief. With the exception of proceeds from policies
insuring Tenants personal property and inventory which shall be made available
to Tenant, any policy proceeds from such insurance shall be held in trust by
Tenant for the repair, reconstruction, restoration or replacement of the
property damaged or destroyed, unless this Lease shall cease and terminate under
the provisions of Article 12.
(b) All policies of insurance provided for in Section 11.4(a) shall be
issued in a form acceptable to Landlord by insurance companies with general
policyholder's rating of not less than A and a financial rating of AAA as rated
in the most currently available "Best Insurance Report" and qualified to do
business in the state in which the Premises is located. Each such policy shall
be issued in the names of Landlord and Tenant and any other parties in interest
from time to time designated in writing by notice by Landlord to Tenant. Said
policies shall be for the mutual and Joint benefit and protection of Landlord
and Tenant and executed copies of each such policy of insurance or a certificate
thereof shall be delivered to Landlord within ten (10) days after delivery of
possession of the Premises to Tenant and thereafter within thirty (30) days
prior to the
<PAGE>
expiration of each such policy. As often as any such policy shall expire or
terminate, renewal or additional policies shall be procured and maintained by
Tenant in like manner and to like extent. All such policies of insurance shall
contain a provision that the company writing said policy will give Landlord at
least thirty (30) days' notice in writing in advance of any cancellation, or
lapse, or the effective date of any reduction in the amounts, or insurance. All
such public liability, property damage and other casualty policies shall be
written as primary policies which do not contribute to and are in excess of
coverage which Landlord may carry. All such public liability and property damage
policies shall contain a provision that Landlord, although named as an insured,
shall nevertheless be entitled to recover under said policies for any loss
occasioned to it, its servants, agents and employees by reason of the negligence
of Tenant and shall contain minimum limits of $2,000,000.00 on account of bodily
injury or death as a result of and one accident occurrence or disaster and
$1,000,000.00 on account of damage to property. Any insurance provided for in
Section 11.4(a) may be effected by a policy of blanket insurance, covering
additional items or locations of insured; provided, however, that (i) Landlord
shall be named as an additional insured thereunder as its interest may appear;
(ii) the coverage afforded Landlord will not be reduced or diminished by reason
of the use of such blanket policy of insurance; (iii) any such policy or
policies except any covering the risks referred to in Section 11 .4(a)(1) shall
specific therein or Tenant shall furnish Landlord with a written statement from
the insurers under such policy specifying the amount of the total insurance
allocated to the "Tenant Improvements and Property" more specifically detailed
in Section 11 .4(a)(2); and (iv) the requirements set forth herein are otherwise
satisfied.
(c) Tenant agrees to permit Landlord at all reasonable times to inspect the
policies of insurance and require full copies of same by Tenant for any and all
policies of Tenant covering risks upon the Premises for which policies or exact
and full copies thereof are not previously delivered to Landlord.
11.5 LANDLORD'S INSURANCE.
(a) Landlord shall at all times during the Term maintaining in effect a
policy or policies on insurance covering the Landlord's Building and the Common
Areas (excluding Tenant improvements and property required to be insured by
Tenant pursuant to Section 11.4 (a)(2) in an amount not less than the full
replacement cost (exclusive of the cost of excavations, foundations and
footings), providing protection against perils included within standard forms of
fire and extended coverage insurance policies, together with insurance against
sprinkler damage, vandalism, and malicious mischief, and such other risks as
Landlord may from time to time determine and with any such deductible as
Landlord may from time to time determine and public liability insurance in such
amounts as Landlord deems to be reasonable.
(b) Landlord may carry rent insurance with respect to the Premises in an
aggregate amount equal to not more than twelve (12) times the sum of (i) the
monthly requirement of Minimum Rent, plus (ii) the sum of the amounts estimated
by Landlord to be payable by Tenant for Additional Rent and Percentage Rent for
the month immediately prior to the month in which the policy is purchased or
renewed.
(c) Any insurance provided for in Sections 11 .5 (a) or (b) may be effected
by a policy or policies of blanket insurance, covering additional items or
locations of insured, provided that the requirements of Section 11.5(a) and
otherwise satisfied.
(d) Tenant shall not be required to pay Tenant's Proportionate Share of
premiums for the insurance provided for in this Article. Tenant shall have no
rights in any policy or policies maintained by Landlord and shall not, by reason
of payment by Tenant of its proportionate share, if any, of the premium for such
insurance be entitled to be a named insured thereunder.
11.6 COMPLIANCE WITH INSURANCE AND GOVERNMENTAL REQUIREMENTS. Tenant and
Landlord, respectively, represent to each other that each has no knowledge of
any existing violation with any insurance underwriters, public or private body
or governmental authority as of the date hereof. Tenant agrees at its own
expense to comply with all recommendations and requirements with respect to the
Premises, or its use or occupancy, of the insurance underwriters and any similar
public or private body, and any governmental authority having jurisdiction over
insurance rates with respect to The use of occupancy of the Property, including,
but not limited to, installation of fire extinguishers or automatic dry chemical
<PAGE>
extinguishing systems, any changes, modifications or alterations in the
sprinkler system or additional sprinkler heads or the location of partitions,
trade fixtures or other contents of the Premises. Notwithstanding the foregoing,
Tenant shall not be responsible for the cost, if any, associated with the
correction of any problem or requirement in existence as of March 5,1997
relating to the "Used Boat Area" previously leased to Seagate Marine Sales, Inc.
11.7 LIMIT OF LANDLORD'S RESPONSIBILITY. Landlord shall not be responsible
or liable to Tenant for any loss or damage that may be occasioned by or through
the acts or omissions of persons occupying space in any other part of the
Property, or for any loss or damage resulting to the Tenant or its property from
bursting, stoppage or leaking of water, gas, sewer or steam pipes or for any
damage caused by water leakage, or loss of property within the Premises from any
cause whatsoever except Landlord's gross negligence or willful acts.
ARTICLE 12. RECONSTRUCTION
12.1 LANDLORD'S DUTY TO RECONSTRUCT. In the event that less than 25% of the
area comprising Landlord's Building that is leased to Tenant is damaged or
destroyed by any of the risks against which Landlord has procured insurance,
regardless of said insurance, Landlord shall be required to commence to repair,
reconstruct and restore or replace Landlord's Building provided that Landlord is
able to obtain all necessary permits and local and governmental approvals
therefor. However, in no event shall Landlord be liable for interruption to
business of Tenant or for damage to or repair, reconstruction, restoration or
replacement of any of those things which Tenant is required to insure pursuant
to Section 11 .4(a)(2).
12.2 TENANT'S DUTY TO RECONSTRUCT. If any item which Tenant is required to
insure pursuant to Section 11.4 (a)(2) is damaged or destroyed by any of the
risks referred to therein, Tenant shall, within one hundred twenty (120) days
thereafter (unless Landlord terminates this Lease pursuant to Section 12.3),
commence to repair, reconstruct and restore or replace said matters and
prosecute the same diligently to completion.
12.3 LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the option to
terminate this Lease upon giving written notice to Tenant of exercise thereof
within thirty (30) days after the Landlord's Building is damaged or destroyed
if:
(a) no part of the Premises remains tenantable after damage or destruction
thereof from any cause; or
(b) the damage or destruction of the Landlord's Building occurs within the
last (2) months of the Lease Term; or
(c) twenty five percent (25%) or more of the area comprising Landlord's
Building that is leased to Tenant immediately after the damage or destruction is
rendered untenantable;
Unless terminated, this Lease shall continue in full force and effect, and
Landlord and Tenant shall perform their respective obligations under Sections
12.1 and 12.2 Upon any termination of this Lease under any of the provisions of
this Section, the Rent shall be adjusted as of the date of such termination and
the parties shall be released therefrom without further obligation to the other
party coincident with the surrender of the possession of the Premises to the
Landlord, except for items which have theretofore accrued and are then unpaid.
12.4 ABATEMENT OF RENT. If this Lease is not terminated by Landlord
pursuant to Section 12.3 and if the Premises have been rendered wholly or
partially untenantable by such damage or destruction, then the Minimum Rent and
the Additional Rent payable by Tenant under this Lease during the period the
Premises are untenantable shall be abated in direct proportion to the percentage
of the GLA in the Premises which is untenantable.
12.5 TENANT'S RIGHT TO TERMINATE. If Landlord chooses to restore and fails
to commence the restoration within 120 days after the casualty, Tenant shall
have the right to terminate this Lease by notice to Landlord given prior to
Landlord's commencement of construction.
ARTICLE 13 MAINTENANCE OF PREMISES
<PAGE>
13.1 LANDLORD'S DUTY TO MAINTAIN. Landlord will keep the exterior walls,
roof, structural columns and structural floor or floors (excluding outer floor
and floor coverings, walls installed at the request of Tenant, doors, windows
and glass) in good repair. Notwithstanding the foregoing provisions of this
Section, Landlord shall not in any way be liable to Tenant on account of its
failure to make repairs unless Tenant shall have given Landlord written notice
of the necessity for such repairs and has afforded Landlord a reasonable
opportunity to effect the same after such notice and provided that any damage
arising therefrom shall not have been caused by the negligence or willful act or
omission of Tenant, its concessionaires, offices, employees, licensees or
contractors (in which event Tenant shall be responsible therefor) or have been
caused to any of the items Tenant is required to insure pursuant to Article 11.
13.2 TENANT'S DUTY TO MAINTAIN. Tenant will, at its own cost and expense,
maintain the Premises (except that part Landlord has agreed to maintain) and the
Landlords Personal Property in Exhibit "H" in good and tenantable condition, and
make all repairs to the Premises, personal property and every part thereof as
needed. Tenant's obligations under this Section shall include, but not be
limited to, modifying, repairing and maintaining items as are required by any
governmental agency having jurisdiction thereof (whether the same is ordinary or
extraordinary, foreseen or unforeseen), interior walls and glass, and the
interior portions of exterior walls, ceilings, utility meters, pipes and
conduits within the Premises, and all utility meters, and all pipes and conduits
outside the Premises between the Premises and the service meter, all fixtures,
heating, ventilating and air conditioning equipment (whether such heating,
ventilating and air conditioning equipment is located inside or outside the
Premises), garbage collection servicing the leased Premises, sprinkler equipment
and other equipment within the Premises, the store fronts and all exterior
glass, all Tenant's signs, locks and closing devices, and all window sash,
casement or frames, doors and door frames; provided that Tenant shall make no
adjustment, alteration or repair of any part of any sprinkler or sprinkler alarm
system in or serving the Premises without Landlord's prior approval. At
Landlord's option and upon prior written notice from Landlord to Tenant, Tenant
shall contract with a service company approved by Landlord for the preventative
maintenance of the heating, ventilating and air conditioning equipment, and a
copy of the service contract shall be furnished by Tenant to Landlord within ten
(10) days after Tenant's opening for business and a copy of any subsequent
contract shall be furnished by Tenant to Landlord within ten (10) days after the
same becomes effective. Such service contract must provide for at least six (6)
visits, inspections and service each year and the regular changing of filters.
All broken glass, both exterior and interior, broken shall be promptly replaced
by Tenant with glass of the same kind, size and quality. Tenant shall permit no
wastes, damage or injury to the Premises and Tenant shall initiate and carry out
a program of regular maintenance and repair of the Premises, including the
painting or refinishing of all areas of the interior and the store front, so as
to impede, to the extent possible, deterioration by ordinary wear and tear and
to keep the same in attractive condition. Tenant will not overload the
electrical wiring serving the Premises and will install, at its expense, but
only after obtaining Landlord's written approval, any additional electrical
wiring which may be required in connection with Tenant's apparatus.
Without limitation of the terms and conditions of this Section, Tenant
shall be responsible for the repair (and cost of repair) to the overhead doors
at the Service Building. Upon Tenants completion of said repair and Landlord's
satisfactory inspection of said repair, Landlord shall issue a credit to Tenant
in the amount of $1,000.00 to be applied against Tenant's next Rent payment due
hereunder.
13.3 LANDLORD'S REPAIR OF PREMISES. Except as specifically detailed in
Article 13.1, Landlord shall be under no obligation to make any repairs,
replacements, reconstruction, alterations, renewals, or improvements to or upon
the Premises or the mechanical equipment exclusively serving the Premises.
Notwithstanding the foregoing, Landlord shall be under no obligation to make any
additional repairs to said doors after the initial repair.
13.4 LANDLORD'S RIGHT OF ENTRY AND USE. Landlord and its authorized
representative may enter the Premises at any and all times during usual business
hours for the purpose of inspecting the same. Tenant further agrees that
Landlord may from time to time go upon the Premises and make any repairs to the
Premises or to any utilities, systems or equipment located in, above or under
the Premises. Nothing herein shall imply any duty on the part of Landlord to
perform any such work which under any provision of this Lease Tenant may be
required to do, nor shall it constitute a waiver of Tenant's default in failing
to do the same. In the event Landlord performs or causes any such work to be
performed, Tenant shall pay the cost
<PAGE>
thereof to Landlord forthwith as Additional Rent upon receipt of a bill
therefor. Landlord may install pipes, ducts, conduits, wires and other
mechanical equipment serving other portions, tenants and occupants of the
Property, under or above the Premises, without the same constituting an actual
or constructive eviction of Tenant. Landlord may also go in the Premises at all
times for the purpose of showing the Premises to prospective purchasers,
mortgagees and tenants. Provided that Landlord and Tenant are not able to reach
an agreement for the extension of this Lease in accordance with Schedule "J"
attached hereto, during the last one (1) months of the Term or at the time that
Tenant has notified Landlord that it will not seek to renew said Lease, which
ever is earlier, Landlord may advertise the Premises for rent in any manner
whatsoever and Landlord may place on the exterior of the premises a "For Rent"
sign, which shall not be obliterated or hidden by Tenant. No exercise by
Landlord of any rights provided in Article 13 shall entitle Tenant to any damage
for any inconvenience, disturbance, loss of business or other damage to Tenant
occasioned thereby, nor to any abatement of Rent, Landlord will exercise its
right under this Section in a manner that will not cause unreasonable
interference with Tenant's business.
13.5 CONFLICTS. If there is a conflict between the provisions of this
Article 13 and Article 12, the provisions of Article 12 shall govern.
ARTICLE 14. UTILITIES, GARBAGE DISPOSAL & SERVICES
14.1 WATER, SANITARY SEWER, TELEPHONE AND ELECTRIC SERVICE. Tenant shall
pay for all telephone and electric services used within the Premises and make
such deposits to assure service and may be required by the utility company
providing the same. Landlord shall pay for all water and sanitary sewer service
for use in the Premises as same is currently installed.
14.2 VENDORS SELECTED BY LANDLORD. Landlord shall have the right to
designate vendors to provide utility services and garbage collection services to
the Premises, provided the cost of such service is competitive in the vicinity
of the Property.
14.3 GARBAGE COLLECTION. Tenant will, at Tenant's expense, contract with
the service company designated by Landlord for the disposal of all trash and
garbage from the Premises. Tenant will furnish to Landlord a copy of such
contract prior to opening for business, and a copy of each renewal of such
contract shall be furnished to Landlord at least seven (7)days prior to the
expiration of the existing contract.
14.4 SECURITY SERVICE. Landlord shall, at its sole cost and expense,
provide a security person to patrol Landlord's property including the exterior
of Tenant's Premises. Said security person shall be available on site for patrol
from "dusk to dawn" or at all hours that at least one of Landlord's other
employees are not present at the Property. Landlord shall (i) assume no
liability for the actions or inactions of said security person, (ii) shall not
be subject to any "care, custody or control" equitable actions in the court of
law or otherwise for providing said service to Tenant or (iii) shall not be
liable for any losses that Tenant may have from theft, vandalism, etc. Tenant
shall not rely on said security service in order to minimize the need for full
and adequate insurance against such perils as theft and vandalism.
ARTICLE 15. LIENS
15.1 NO LIENS PERMITTED; DISCHARGE. The Landlord's property shall not be
subject to liens for work done or materials used on the Premises made at the
request of, or on order of or to discharge an obligation of, Tenant. If any lien
or notice of lien on account of an alleged debt of Tenant or any notice of lien
by a party engaged by Tenant or Tenant's contractor to work on the Premises
shall be filed against the Property or any part thereof, Tenant, within ten (10)
days after notice of the filing thereof, will cause the same to be discharged of
record by payment, deposit, bond, order of a court of competent jurisdiction or
otherwise. If Tenant shall fail to cause such lien or notice of lien to be
discharge within the period aforesaid, then, in addition to any other right or
remedy, Landlord may discharge the same either by paying the amounts claimed to
be due or by procuring the discharge of such lien by deposit or by bonding
procedures. Any amount so paid by Landlord and all costs and expenses, including
attorneys' fees, incurred by Landlord in connection therewith, and including
interest at the Default Rate, shall constitute Additional Rent and shall be paid
by Tenant to Landlord on demand. Nothing herein shall obligate Tenant to pay or
discharge any lien created by Landlord.
<PAGE>
ARTICLE 16. FIXTURES AND PERSONAL PROPERTY
6.1 TENANT'S PROPERTY; REMOVAL. Tenant shall have the right, provided
Tenant is not in default, at any time and from time to time during the Term, to
remove any and all of its trade fixtures, signs and other personal property
owned by Tenant which it may have stored or installed in the Premises, provided
that any trade fixtures necessary for Tenant's operation shall be immediately
replaced with similar personal property of comparable or better quality so as to
render the Premises suitable for conducting the type of business specified in
Section 1.1(k). Tenant at its expense shall immediately repair any damage
occasioned to the Premise by reason of installation or removal of any such trade
fixtures, signs and other personal property. If this Lease expires or is
terminated for any reason except termination by Landlord pursuant to Section
12.3 and Tenant fails to remove such items from the Premises prior to such
expiration or termination, or if this Lease is terminated by Landlord pursuant
to Section 12.3 and Tenant fails to remove such items from the Premises on or
before fourteen (14) days after the effective date of such termination, then in
any such event all such trade fixtures, signs and other personal property shall
thereupon become the property of Landlord, without further act by either party
hereto, unless Landlord elects to require their removal, in which case Tenant
agrees to promptly remove same and restore the Premises to its prior condition
at Tenant's expense.
16.2 IMPROVEMENTS TO PREMISES. All improvements to the Premises by Tenant,
including, but not limited to, the items furnished pursuant to Tenant's Work,
alterations, changes and additions by Tenant, light fixtures, floor coverings
and partitions, but excluding trade fixtures and signs, shall become the
property of Landlord upon expiration or earlier termination of this Lease;
provided, however, that Landlord may designate by written notice to Tenant those
alterations, changes and additions which shall be removed by Tenant at the
expiration or termination of this Lease, in which event Tenant shall, at its
expense, promptly remove the same and repair any damage to the Premises caused
by such removal.
ARTICLE 17. ASSIGNMENT AND SUBLETTING
17.1 RESTRICTIONS ON ASSIGNMENT. Tenant shall have no right to transfer,
assign, sublet, enter into license or concession agreements, or mortgage or
hypothecate this Lease or the Tenant's interest in the Premises or any part
thereof without Landlord's consent, which Landlord's consent shall not be
unreasonably withheld. Any attempted transfer, assignment, subletting, license,
or concession agreement, or hypothecation, without the Landlord's consent, shall
be void and shall confer no rights upon any third person. Any transfer of this
Lease from Tenant by merger, acquisition, consolidation, liquidation or
otherwise by operation of law, including, but not limited to, an assignment for
the benefit of creditors, shall be included in the term "assignment" for the
purposes of this Lease and, if done without the Landlord's consent, shall be a
violation of this Section.
17.2 CHANGE OF OWNERSHIP. If Tenant or any Guarantor is a corporation,
unincorporated association or partnership, a transfer, assignment or
hypothecation of any stock or interest in such corporation, association or
partnership by any stockholder or partner so as to result in a change in the
control thereof by the person, persons or entities owning a majority interest,
therein as of the date of this Lease, shall be deemed to be an assignment of
this Lease. This provision shall not be applicable to Tenant or to any Guarantor
if it is a corporation whose voting stock is listed on a national securities
exchange (as defined in the Securities Exchange Act of 1934, as amended) or is
traded in any recognized over-the-counter market.
ARTICLE 18. DEFAULTS BY TENANT
18.1 EVENTS OF DEFAULT. This Lease is made upon the condition that Tenant
shall punctually and faithfully perform all of the covenants, conditions, and
agreements by it to be performed. The following shall each be deemed to be an
event of default (each of which is sometimes referred to as an "Event of
Default") in this Lease.
(a) any part of the Rent required to be paid by Tenant under this Lease
shall at any time be unpaid for seven (7) days after written notice that rent is
due;
(b) Tenant fails in the observance or performance of any of its other
covenants, agreements or conditions provided for in this Lease, and said failure
shall continue for a period of ten (10) days after written notice thereof from
Landlord to Tenant (unless such failure cannot reasonably be cured within ten
(10) days and Tenant shall have commenced to cure said failure within said
<PAGE>
thirty (30) days and continues diligently to pursue the curing of the
same);
(c) Tenant fails, after the date on which it is required by this Lease to
open the Premises for business with the public, to be open for business as
required by this Lease, or vacates or abandons the Premises;
(d) the estate created in Tenant hereby is taken in execution or by other
process of law, or all or a substantial part of the assets of Tenant or any
Guarantor is placed in the hands of a liquidator, receiver or trustee (and such
receivership or trusteeship or liquidation continues for a period of thirty (30)
days, or Tenant or any such Guarantor makes an assignment for the benefit of
creditors, or admits in writing that it cannot meet its obligations as they
become due, or is adjudicated a bankrupt, or Tenant or any such Guarantor
institutes any proceedings under any federal or state insolvency or bankruptcy
law as the same now exists or under any amendment thereof which may hereafter be
enacted, or under any other act relating to the subject of bankruptcy wherein
the Tenant or any such Guarantor seeks to be adjudicated as bankrupt, or to be
discharged of its debts, or to effect a plan of liquidation, composition or
reorganization, or should any involuntary proceedings be filed against Tenant or
any such Guarantor under any such insolvency or bankruptcy law (and such
proceeding not be removed within ninety (90) days thereafter). If any insolvency
proceedings, such as those referred to in this Section 18.1(d) are instituted
against Tenant, the Premises shall not become an asset in any such proceedings.
18.2 LANDLORD'S REMEDIES. If any Event of Default occurs then and in such
case Landlord may treat the occurrence of such Event as a breach of this Lease
and, in addition to any and all other rights or remedies of Landlord in this
Lease or by law or in equity provided, it shall be, at the option of Landlord,
without further notice or demand to Tenant or any other person, the right of
Landlord to:
(a) declare the Term ended and to enter the Premises and take possession
thereof and remove all persons therefrom, and Tenant shall have no further claim
thereon or thereunder;
(b) bring suit for the collection of Rent as it accrues pursuant to the
terms of this Lease and damages without entering into possession of the Premises
or canceling this Lease;
(c) retake possession of the Premises from Tenant by summary proceedings or
otherwise, and to sue Tenant for an amount equal to the remaining Rent to become
due during the Term (or any extension period then in effect). Alternatively,
Landlord may, after such retaking of possession, relet the Premises or any
portion thereof provided Landlord shall attempt to relet at the most favorable
rate available. Tenant shall pay to Landlord all monthly deficits in Rent after
any such re-entry in monthly installments as the amounts of such deficits from
time to time are ascertained until the expiration of the Term of this Lease.
Such deficiency shall be calculated and paid monthly; Tenant shall have no right
to any excess. Tenant shall also pay to Landlord any costs and expenses,
including, but not limited to, reasonable brokerage commissions and reasonable
attorneys' fees, incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rental received from such reletting.
In the event of an entry or taking possession of the Premises as aforesaid,
Landlord shall have the right, but not the obligation to remove therefrom all at
any part of the personal property located therein and may place the same in
storage at a public warehouse at the expense and risk of the owner or owners
thereof.
18.3 ATTORNEY'S FEES AND COSTS. For any and all litigation arising from or
in connection with this Lease, the prevailing party shall be entitled to the
reimbursement and recovery of their costs and reasonable attorneys' fees from
the other party, including reasonable attorneys' fees and costs in connection
with trial, appellate proceedings, and any post judgment collection proceedings.
18.4 RENT PAYABLE BY TENANT. For all purposes of Article 18, in determining
the Rent which would be payable to Tenant hereunder subsequent to default, Rent
for each month of the unexpired Rent shall be deemed to be the amount of Rent
payable by Tenant during the one (1) month immediately preceding the Event of
Default.
18.5 TENANT'S PROPERTY TO REMAIN. If there is an Event of Default, all of
the Tenant's fixtures, furniture, equipment, improvements, additions,
alterations, and other personal property shall remain on the Premises and, in
that event and continuing during the length of said default,
<PAGE>
Landlord shall have the right take the exclusive possession of same and to use
same, without cost, until all defaults are cured or, at its option, at any time
during the term to require Tenant to forthwith remove same.
ARTICLE 19. LIABILITY OF LANDLORD
19.1 LANDLORD'S DEFAULT. Except as otherwise provided in this Lease,
Landlord shall be in default under this Lease if Landlord fails to perform any
of its obligations hereunder and said failure continues for a period of thirty
(30) days after written notice thereof from Tenant to Landlord (unless such
failure cannot reasonably be cured within thirty (30) days and Landlord shall
have commenced to cure said failure within said thirty (30) days and continues
diligently to pursue the curing of the same). If Landlord defaults under this
Lease, as a consequence of such default, Tenant may recover a money judgment
against Landlord's right, title and interest in the Property as the same may
then be constituted and encumbered. However, Landlord shall not be liable for
any additional deficiency as Tenant shall have no right to levy execution
against any additional property of Landlord.
19.2 TRANSFER OF LANDLORD'S INTEREST. In the event of the sale or other
transfer of Landlord's interest in the Premises (except in the case of a
sale-leaseback financing transaction in which Landlord is the lessee), Landlord
shall transfer and assign to such purchaser or transferee the Security Deposit
and Landlord thereupon and without further act of either party shall be released
from all liability and obligations hereunder arising out of any act, occurrence
or omission relating to the Premises or this Lease occurring after the
consummation of such sale or transfer. Tenant agrees to attorn to any successor,
assign, mortgage or ground lessor of Landlord.
ARTICLE 20. SUBORDINATION AND ATTORNMENT
20.1 SUBORDINATION OF LEASE. This Lease is subordinated to the lien of all
mortgages, deeds of trust, security instruments, ground leases and easement
agreements now or hereafter covering all of any part of the Property, and to all
modifications, consolidations, renewals, replacements and extensions thereof,
provide, however, that this lease shall not be subordinate to any mortgage other
than a first mortgage without the consent of the holder of such first mortgage.
Tenant also agrees that, if any mortgagee elects to have this Lease prior to the
lien of its mortgage and signifies such election in the instrument creating its
lien, or as separate recorded instrument, this Lease shall be prior in dignity
to such mortgage.
20.2 TENANTS ATTORNMENT. In the event of any proceedings brought for the
enforcement of any mortgage or superior lease, Tenant shall, upon demand by the
mortgagee or superior lessor, attorn to and recognize such mortgagee or lessor
as Landlord under this Lease. In the event of a sale of assignment of Landlord's
interest under this Lease or in the Premises, Tenant shall attorn to and
recognize such purchaser or assignee as Landlord under this Lease without
further act by Landlord or such purchaser or assignee.
20.3 INSTRUMENTS TO CARRY OUT INTENT. Tenant agrees that, in order to
confirm the provisions of this Article, but in no way limiting the
self-operative effect of said provisions, Tenant shall execute and deliver
whatever instruments may be required for such purposes.
ARTICLE 21. ESTOPPEL CERTIFICATES
21.1 TENANT'S AGREEMENT TO DELIVER. Within ten (10) days before Tenant
opens for business in the Premises, and from time to time thereafter within ten
(10) days after request therefor from Landlord, Tenant agrees to execute and
deliver to Landlord, or to such other addressee or addressees as Landlord may
designate (and any such addressee may rely thereon), a statement in writing
certifying (if true) that the Lease is in full force and effect and unmodified
or describing any modifications; that Tenant has accepted the Premises; that
Landlord has performed all of its obligations under the lease arising prior to
the date of the certificate; that there are no defenses or offsets against the
enforcement of this Lease or stating with particularity those claimed by Tenant;
stating the date to which Rent has been paid; and making such other true
representations as may be reasonably requested by Landlord.
21.2 FAILURE OF TENANT TO GIVE ESTOPPEL. If Tenant fails to give the
estoppel certificate required by Section 21.1 within the time permitting thereby
and fails to object in
<PAGE>
writing specifying with particularity the manner in which the requested estoppel
certificate is untrue, it shall be conclusively deemed that the matters set
forth in the requested estoppel are true and correct as of the date of the
request.
ARTICLE 22. QUIET ENJOYMENT
22.1 FAITHFUL PERFORMANCE. Upon payment by the Tenant of the Rent herein
provided for and upon the observance and performance of all of the agreements,
covenants, terms and conditions on Tenant's part to be observed and performed,
Tenant shall peaceably and quietly hold and enjoy the Premises for the Term
without hindrance or interruption by Landlord or any other person or persons
lawfully or equitably claiming by, through or under Landlord.
ARTICLE 23. SURRENDER AND HOLDING OVER
23.1 DELIVERY AFTER TERM. Tenant shall deliver up and surrender to Landlord
possession of the Premises upon the expiration or earlier termination of the
term, broom clean, free of debris, in good order, condition and state of repair
(except as may be Landlord's obligation under this Lease and ordinary wear and
tear), and shall deliver the keys at the office of Landlord in the Property or
to Landlord at the address to which notices to Landlord are to be sent pursuant
to Section 25.3. If not sooner terminated as herein provided, this Lease shall
terminate at the end of the term as provided for in Article 3 without the
necessity of notice from either Landlord or Tenant to terminate the same, Tenant
hereto waiving notice to vacate the Premises and agreeing that Landlord shall be
entitled to the benefit of all provisions of law respecting the summary recovery
of possession of premises from a tenant holding over.
23.2 EFFECT OF HOLDING OVER; RENT. If Tenant or any party claiming under
Tenant remains in possession of the Premises, or any part thereof, after any
termination of this Lease, no tenancy or interest in the Premises shall result
therefrom, but such holding over shall be an unlawful detainer and all such
parties shall be subject to immediate eviction and removal, and Tenant shall
upon demand pay to Landlord, as liquidated damages, a sum equal $25,000.00 per
month (or any portion thereof) during any period which Tenant shall hold the
Premises after the Term has expired.
ARTICLE 24. CONDEMNATION
24.1 ALL OF THE PREMISES TAKEN. If the whole of the Premises shall be taken
either permanently or temporarily by any right of eminent domain or conveyance
in lieu thereof (each being hereinafter referred to as "condemnation"), this
Lease shall terminate as of the day possession shall be taken by the condemning
authority, and Tenant shall pay Rent and perform all of its other obligations
under this Lease up to that date with a proportionate refund by Landlord of any
Rent that may have been paid in advance for a period subsequent to the date of
taking.
24.2 LESS THAN ALL OF PREMISES TAKEN. If less than all but more than twenty
percent (20.0%) of the GLA in the Premises is taken by condemnation or if
(regardless of the percentage of the GLA in the Premises which is taken) the
remainder of the Premises is not one undivided parcel of property, then in
either event Landlord and Tenant shall have the right to terminate this Lease
upon notice in writing to the other party within ninety (90) days after
possession is taken by such condemnation. If this Lease is so terminated, it
shall terminate as of the day possession shall be taken by such authority, and
Tenant shall pay Rent and perform all of its other obligations under this Lease
up to that date with proportionate refund by Landlord of any Rent they may have
been paid in advance for a period subsequent to the date of the taking. If this
Lease is not so terminated, it shall terminate only with respect to the parts of
the Premises so taken as of the day possession is taken by such authority, and
Tenant shall pay Rent up to that day with a proportionate refund by Landlord of
any Rent that may have been paid for a period subsequent to the date of the
taking and, thereafter, the Rent shall be based on the remaining square footage
of GLA in the Premises. Landlord agrees, at Landlord's cost and expense, as soon
as reasonably possible, to restore the Premises on the land remaining to a
complete unit of like quality and character as existed prior to such
appropriation or taking; provided that Landlord shall not be required to expend
more on such restoration than the condemnation award received by Landlord (less
all expenses, costs, legal fees and court costs incurred by Landlord in
connection with such award).
<PAGE>
24.3 PROPERTY TAKEN.
(a) If any part of the Property (including any easement appurtenant to
Landlord's interest therein) is taken by condemnation so as to render, in
Landlord's judgment, the remainder unsuitable for use as a retail and marine
facility, Landlord shall have the right to terminate this Lease upon notice in
writing to Tenant within one hundred twenty (120) days after possession is taken
by such condemnation. If Landlord so terminates this Lease, it shall terminate
as of the day possession is taken by the condemning authority, and Tenant shall
pay Rent and perform all of its obligations under this Lease up to that date
with a proportionate refund by Landlord of any Rent as may have been paid in
advance for a period subsequent to such possession.
(b) If title to (i) twenty percent (20.0%) or more of the GLA of Landlord's
Building or (ii) twenty percent (20.0%) or more of the parking required to be
maintained in the Property is so taken, and if Landlord within one (1) year
after such taking has not substituted an equivalent number of parking spaces in
a location reasonably accessible to the Property, then either party may
terminate this Lease by notice to the other given within thirty (30) days after
the taking or after the expiration of such one year period as the case may be.
24.4 OWNERSHIP OF AWARD. All damages for any condemnation of all or any
part of the Property, including, but not limited to, all damages as compensation
for diminution in value of the leasehold, reversion, and fee, shall belong to
the Landlord without any deduction therefrom for any present or future estate of
Tenant, and Tenant hereby assigns to Landlord all its rights, title and interest
to any such award. Although all damages in the event of any condemnation are to
belong to the Landlord, Tenant may have the right to claim and recover from the
condemning authority, but not from Landlord (unless Landlord has received an
amount from the condemning authority for the specific items owned by Tenant or
relating directly to the value of Tenant's business as a going concern) such
compensation as may be separately awarded or recoverable by Tenant in Tenant's
own right on account of any and all damage to Tenant's business by reason of the
condemnation and for or on account of any cost or loss which Tenant might incur
in removing Tenant's merchandise, furniture, fixtures, leasehold improvements
and equipment.
24.5 CONFLICTS. If there is a conflict between the provisions of this
Article 24 and Article 13, the Provisions of this Article 24, shall govern.
ARTICLE 25. LANDLORD'S RIGHT TO RELOCATED PREMISES
25.1 CONDITIONS ON LANDLORD'S RIGHT TO RELOCATE PREMISES. Landlord shall
have the right at any time to require Tenant to surrender the Premises and
accept substitute premises (the "New Premises") in the Property, provided the
following conditions are met:
(a) The New Premises shall be comparable in size, configuration, utility
and location to the Premises and shall be reasonably acceptable to Tenant.
(b) Landlord will, at Landlord's sole cost and expense, prepare the New
Premises to as nearly the same condition as the Premises as is practical under
the circumstances.
(c) Landlord will pay all reasonable costs incurred by Tenant in effecting
such relocation, including, without limitation, costs of licenses, permits,
utility deposits and moving expenses, to the end that Tenant may move into the
New Premises without incurring additional costs on account thereof.
(d) Landlord will give Tenant not less than thirty (30) days' notice of
Landlord's intention to exercise its rights under this Article. Tenant agrees to
cooperate with Landlord in finding the New Premises which are reasonably
acceptable to Tenant and in planning improvements, if any, required to the New
Premises.
25.2 TENANT'S RIGHT TO TERMINATE. If Landlord is unable to provide New
Premises which are reasonably acceptable to Tenant, then Tenant shall have the
right to terminate this Lease by 30 days' written notice to Tenant.
<PAGE>
ARTICLE 26. MISCELLANEOUS
26.1 INTERPRETATION.
(a) The captions appearing in this Lease are inserted only as a matter of
convenience and in no way amplify, define, limit, construe or describe the scope
or intent of such sections of the Lease.
(b) The neuter, feminine or masculine pronoun when used herein shall each
include each of the other genders and the use of the singular shall include the
plural.
(c) Although the printed provisions of this Lease were drawn by Landlord,
this Lease shall not be construed for or against Landlord or Tenant, but this
Lease shall be interpreted in accordance with the general tenor of the language
in an effort to reach the intended result.
(d) Notwithstanding any other provision of this Lease, if the state in
which the premises is located recognizes a distinction between an estate for
years and a "usufruct," it is the intention of the parties for this instrument
to create a usufruct and not an estate for years.
26.2 RELATIONSHIP OF PARTIES. Nothing herein contained shall be construed
as creating any relationship between the parties other than the relationship of
Landlord and Tenant, nor cause either party to be responsible in any way for the
acts, debts or obligations of the other.
26.3 NOTICES.
(a) Any notice, demand, request, approval, consent or other instrument
which may be or is required to be given under this Lease shall be in writing and
shall be deemed to have been given when delivered to the party to be notified or
when mailed by United States certified mail, return receipt requested, postage
prepaid, or when delivered to a courier such as Federal Express, addressed to
the party to be notified at the address of such party set forth in Section 1
.1(t), or to such other address as such party may from time to time designate by
notice to the other in accordance with this Section.
(b) No notice if required to be given to Landlord shall be effective for
any purpose unless and until a true copy thereof is given to each mortgagee of
Landlord's estate, provided Tenant has previously been given written notice of
the name and address of such mortgagee.
26.4 SUCCESSORS. This Lease shall inure to the benefit of and be binding
upon Landlord, its successors and assigns, and shall be binding upon Tenant, its
successors and assigns, and shall inure to the benefit of Tenant and only such
assigns of Tenant to whom the assignment by Tenant has been made and consented
to in accordance with the provisions of this Lease.
26.5 BROKER'S COMMISSION. Tenant and Landlord each, respectively, warrant
and represent to each other that neither has dealt with any broker in connection
with this Lease.
26.6 UNAVOIDABLE DELAYS. In the event that either party shall be delayed or
hindered in or prevented from the performance of any act required hereunder by
reason of strikes, lockouts, labor troubles, inability to procure labor or
materials, failure of power, restrictive governmental laws or regulations,
riots, insurrection, war, fire or other casualty or other reason of a similar or
dissimilar nature beyond the reasonable control of the party delayed in
performing work or doing acts required under the terms of this Lease, then
performance of such act shall be excused for the period of the delay and the
period for the performance of any such act shall be extended for a period
equivalent to the period of such delay. The provisions of this Section shall not
operate to excuse Tenant from prompt payment of Rent or any other payments
required by the terms of this Lease and shall not extend the Term. Delays or
failures to perform resulting from lack of funds shall not be deemed delays
beyond the reasonable control of a party.
26.7 ENTIRE AGREEMENT.
(a) There are no oral agreements between the parties hereto affecting this
Lease, and this Lease supersedes and cancels any and all previous negotiations,
arrangements, letters of intent, lease proposals, brochures, agreements,
representations, promises, warranties and understandings between the parties
hereto or displayed by Landlord to Tenant with respect to the subject mailer
thereof.
<PAGE>
(b) This lease, including the Exhibits and any addenda, sets forth all the
covenants, promises, agreements, conditions and understandings between Landlord
and Tenant concerning the Premises and the Property. No alteration, amendment,
change or addition to this Lease shall be binding upon Landlord or Tenant unless
reduced in writing, signed by them and mutually delivered between them.
26.8 OTHER TENANTS. Landlord reserves the absolute right to effect such
other tenancies in the Property as Landlord shall determine in the exercise of
its sole business judgment. Tenant does not rely on the fact, nor does Landlord
represent, that any specific tenant or occupant or number of tenants or
occupants shall occupy any space in the Property.
26.9 APPLICABLE LAW. The laws of the state in which the Premises is located
shall govern the validity, performance and enforcement of this lease.
26.10 WAIVERS.
(a) The waiver by Landlord of any term, covenant, agreement or condition
herein shall not be deemed to be a waiver of any subsequent breach of the same
or any other term, covenant, agreement or condition. The acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any prior default by
Tenant, other than the failure of Tenant to pay the particular Rent so accepted,
regardless of Landlord's knowledge of such prior default at the time of
acceptance of such Rent. No covenant, term, agreement or condition of this Lease
shall be deemed to have been waived by Landlord unless such waiver be in writing
by Landlord.
(b) No waiver of any covenant, term, agreement or condition of this Lease
or legal right or remedy shall be implied by the failure of Landlord to declare
a forfeiture, or for any other reason. No waiver by Landlord in respect to one
or more tenants or occupants of the Property shall constitute a waiver in favor
of any other Tenant. Landlord's consent to, or approval of, any act by Tenant
requiring Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent similar act by
Tenant.
26.11 ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord
of a lesser amount than the Rent herein stipulated shall be deemed to be other
than on account of the earliest stipulated Rent, nor shall any endorsement or
statement on any check or any letter accompanying any such check or payment as
Rent be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
Rent or pursue any other remedy provided for in this Lease or available at law
or in equity.
26.12 LANDLORD'S SELF-HELP. In addition to Landlord's rights of self-help
set forth elsewhere in this Lease, if Tenant at any time fails to perform any of
its obligations under this Lease relating to maintenance, repair or
Environmental Mailers in a manner reasonably satisfactory to Landlord, Landlord
shall have the right, but not the obligation, upon giving Tenant at least ten
(10) days' prior written notice of its election to do so (in the event of an
emergency, no prior notice shall be required), to perform such obligations on
behalf of and for the account of Tenant and to take all such action necessary to
perform such obligations. In such event, Landlord's costs and expenses incurred
therein shall be paid for by Tenant as additional Rent, forthwith upon demand
therefor, with interest thereon from the date Landlord performs such work at the
Default Rate, the performance by Landlord of any such obligation shall not
constitute a release or waiver of account therefrom.
26.13 RECORDING. Tenant agrees that it will not record the Lease.
26.14 JOINT AND SEVERAL LIABILITY. If two or more individuals,
corporations, partnerships or other business associations (or any combination of
two or more thereof) shall sign this Lease as Tenant, the liability of each of
them shall be Joint and several in like manner, if the Tenant named in this
Lease shall be a partnership or other business association, the members of which
are, by virtue of statute or general law, subject to personal liability, the
liability of each such member shall be Joint and several.
26.15 EXECUTION OF LEASE. The submission of this Lease for examination does
not constitute a reservation of or option for the Premises or any other space
within the Property and
<PAGE>
shall vest no right in either party. This Lease shall become effective as a
Lease only upon execution and legal delivery thereof by the parties, together
with the execution and delivery to Landlord of a Guaranty in the form annexed
hereto by the Guarantor(s), if any, named in Section 1.1(l). This Lease may be
executed in more than one counterpart, and each such counterpart shall be deemed
to be an original document.
26.16 WAIVER OF JURY TRIAL AND COUNTERCLAIM. The Tenant hereby waives trial
by jury in any action, proceeding, or counterclaim involving any matters
whatsoever arising out of or in any way connected with the Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Demised
Premises, or claim or injury or damage. Venue to any action related hereto shall
be in the Court of appropriate jurisdiction in the Fifteenth Judicial Circuit of
Florida.
26.17 RADON GAS. If the Premises is located in Florida, the following
provision is required by Section 404.056(7), Florida Statues: "Radon is a
naturally occurring radioactive gas that, when it has associated in a building
insufficient qualities, may present health risks to premises or 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 your county public health
unit."
26.18 TIME OF THE ESSENCE. Time is of the essence of each and every
obligation under this Lease.
26.19 TENANT AND GUARANTOR FINANCIAL STATEMENTS. Tenant and Guarantor, if
applicable to this Lease, shall deliver to the Landlord on each anniversary of
the Lease commencement a full and complete statement of financial viability on a
form acceptable to the Landlord.
ARTICLE 27. SECURITY DEPOSIT
27.1 SECURITY. As security for the faithful performance by Tenant of all of
the terms and conditions of this Lease on the Tenant's part to be performed,
Tenant has deposited with Landlord the Security Deposit required by Section 1
.1(n). Such amount shall be returned to Tenant, without interest, on the day set
forth for the expiration of the term herein if Tenant has fully and faithfully
carried out all of the terms, covenants and conditions on its part to be
performed, including, without limitation, the obligations of Tenant under
Article 23 hereof. Landlord shall have the right to apply any part of said
deposit to the payment of monies due to Landlord hereunder by Tenant, but such
application shall not remedy the default.
27.2 TRANSFER OF DEPOSIT. In the event of a sale of the building or lease
of the Landlord's Building or the land on which it stands, subject to this
Lease, the Landlord shall have the right to transfer this security to the vendee
or lessee and the Landlord shall thereupon be released from all liability for
the return of such security, and the Tenant shall look to the new landlord
solely for the return of the said security. This provision shall apply to every
transfer or assignment made of the security to a new landlord. The security
deposited under this Lease shall not be mortgaged, assigned or encumbered by the
Tenant without the written consent of the Landlord. In the event of any
authorized assignment of this Lease, Landlord shall have no further liability
with respect to the return of said Security Deposit to the Tenant or assignee.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of
the day and year first above written.
Witnesses: LANDLORD:
SEAGATE LAND TRUST
By: Tequesta Marine, Inc., Beneficiary
By: Daren Rubenfeld
Its: Vice President & General Counsel
Witnesses: TENANT
<PAGE>
Treasure Coast Boating Center, Inc.
By:
Its:
Attest:________________________________
its___________________________________
Tax I.D.#_______________________
EXECUTION:
CORPORATE: This Lease must be executed for Tenant, if a corporation, by the
president or vice president and the secretary or assistant secretary, unless the
bylaws or a resolution of the Board of Directors shall otherwise provide, in
which event, a certified copy of the bylaws or resolution, as the case may be,
must be finished. Also, the corporate seal of Tenant, if Tenant has such a seal,
must be affixed.
INDIVIDUAL: This Lease must be executed by each individual whose name
appears under the signature lines. Their execution must be witnessed by two
disinterested persons who must sign as witnesses in the space provided.
STATE OF FLORIDA
COUNTY OF MARTIN
The foregoing instrument was acknowledged before me this 22nd day of
December, 1998 by Daren Rubenfeld, its vice president who is personally known to
me or who has produced did (did not) take an oath.
/s/ Eldorene S. McGuinn
Notary Public
Eldorene S.McGuinn
Printed Name
My Commission expires:___6/25/2001
STATE OF FLORIDA
COUNTY OF MARTIN
The foregoing instrument was acknowledged before me this 22nd day of
December, 1998 by Thomas Grane, its Chairman who is personally known to me or
who has produced ____________ as identification and who did (did not) take an
oath.
/s/ Eldorene S. McGuinn
Notary Public
Eldorene S.McGuinn
Printed Name
My Commission expires:___6/25/2001
<PAGE>
EXHIBIT "A"
Legal Description of entire "Property"
A parcel of land lying in Government Lot 2, Section 19, Township 40 South,
Range 43 East,
Martin County, Florida, said parcel being bounded on the North by the South
line of the North
250.00 feet of said Government Lot 2; bounded on the South by the North
line of the South
481.00 feet of said Government Lot 2; bounded on the West by the Easterly
right-of-way line of U.S. Highway No. One (a 200 foot right-of-way); and bounded
on the East by the Westerly edge of the waters of the Intracoastal Waterway
(Hobe Sound Waterway).
<PAGE>
EXHIBIT "C-2"
SIGN CRITERIA
1. All applications for sign approvals shall be submitted to the LANDLORD
for approval prior to permitting the sign fabrication. A Sign Approval
Application consists of a photocopy of the Lease Face Page attached to an exact,
to scale, drawing of the sign including actual color chips of the sign and other
information.
2. There shall be no flashing signs, audible signs, moving signs, product
description signs, price signs, percent discount signs, paper signs, suspended
under canopy signs, exposed neon signs, painted signs, or newspaper advertising
attached to any storefront windowglass other than that provided by LANDLORD.
3. No roof/canopy mount signs, pole/pylon signs or trailer signs will not
be permitted at any time without written consent of the Landlord.
4. There shall be no exposed conduit, tubing or raceways except for
hot-dipped galvanized support brackets.
5. All openings for conduit and sleeve in sign panel of building wall must
be shown on submitted drawing.
6. TENANT shall, at its own cost, erect only such signs which conform
hereto, and obtain any permits or licenses required for same, and shall maintain
same in good condition and repair. TENANT must install its mansard sign prior to
opening for business. TENANT shall not display or affix any other sign, decal,
advertisement, notice or other writing, nor affix any awning, antenna, or other
projection to or on the roof or outside walls or windows of the Premises without
LANDLORD'S written approval. No pennants, banners, or other advertising matter
shall be suspended from the ceiling, doors, or interior walls of the Premises.
All window display advertising, materials or signs shall be in keeping with the
character and standards of the Property as determined by LANDLORD, who reserves
the right to require TENANT to correct or remove any objectionable material.
<PAGE>
EXHIBIT "D"
GUARANTY AGREEMENT
KNOWN ALL MEN BY THESE PRESENT:
THAT for and in consideration of the Landlord, (SEAGATE LAND TRUST, ROBERT
L. MILLER, TRUSTEE), entering into a lease with (TREASURE COAST BOATING CENTER,
INC.), a Florida Corporation (hereinafter called "Tenant"), dated December 22,
1998., the delivery of which is conditioned upon the execution of this Guaranty,
the undersigned (hereinafter called the "Guarantor") does hereby (jointly and
severally, if executed by two or more guarantors) guarantee the full and prompt
performance by the Tenant of all the terms, covenants, conditions and agreements
as contained in said Lease on the part of the Tenant to be performed, including
specifically the obligation to pay all rents, maintenance charges, and any other
charges or obligations therein set forth.
The undersigned agrees that this Guaranty shall not be affected by reason
of assertion by Landlord against tenant of any rights or remedies reserved to
Landlord in said Lease, or by reason of any summary or other proceedings against
the Tenant, or by reason of any extension or indulgences granted to the Tenant,
or by the amendment or modification of the Lease Agreement with or without
notice to the Guarantor.
The undersigned waives any and all notice of nonperformance or demand upon
the Tenant and agrees that all obligations of the undersigned under this
Guaranty are independent of the obligations of the Tenant under the Lease and
that a separate action may be brought against the undersigned whether or not an
action is commenced against the Tenant under the Lease.
Neither the Guarantor's obligation to make payment in accordance with this
agreement nor any remedy for the enforcement thereof shall be impaired,
modified, changes, or released in any manner whatsoever by an impairment,
modification, change, release, or limitation of the liability of the Tenant or
its estate in bankruptcy, or of any remedies for the enforcement thereof
resulting from the operation of any present or future provision of the National
Bankruptcy Act or other State or Federal statute relating to insolvency or the
appointment of a receiver of the decisions of any Court. Guarantor agrees to pay
all costs incurred by Landlord in the enforcement of the Lease after default by
Tenant and all costs incurred by Landlord in the enforcement of the Guaranty
including, in each instance, reasonable attorneys' fees whether or not suit is
brought, and including in each instance reasonable attorneys' fees in
prosecuting or defending any appeal.
It is agreed that the provision of this Guaranty shall bind the successors
and assigns of the Guarantor and shall inure to the benefit of the legal
representatives, heirs, successors, and assigns of the landlord.
IN WITNESS WHEREOF, the Guarantor has caused these presents to be signed
this 22nd day of December, 1998.
Signed, sealed, and delivered in the presence of:
WITNESSES: GUARANTOR(S)
<PAGE>
THE CREDIT ACCOMMODATION MADE PURSUANT TO THIS NOTE
REPRESENTS A LINE OF CREDIT
------------------
PROMISSORY NOTE
("Note")
$400,000.00 Orange County, Florida
January ___, 1999
THE UNDERSIGNED, Boat Tree, Inc., a Florida corporation ("Maker"),
promises to pay to the order of JCJ Family Partnership, Ltd., a Florida limited
partnership ("Payee"), whose mailing address is 1924 33rd Street, Orlando, FL
32839, the principal sum of FOUR HUNDRED THOUSAND DOLLARS ($400,000.00), or so
much thereof as may be advanced and outstanding from time to time.
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
accounts.
Interest on the outstanding principal balance of this Note, shall
accrue at a rate of twelve percent (12%) per annum and shall be payable upon
maturity.
The principal amount of this Note, or so much thereof as has been
advanced and is outstanding, together with all interest accrued thereon, shall
be due and payable on demand within ten (10) days of written notice after
March 31, 2000.
This Note may be paid in advance, in whole or in part, without premium
or penalty. Advance payment shall be applied first to payment of accrued
interest and then to payment of the principal.
This Note is payable at the address of the Payee as stated herein, or
at such other place as the holder hereof may from time to time designate in
writing to the Maker.
The Maker promises to pay all costs of collection reasonably incurred
by the holder hereof because of the failure of the Maker to comply with the
agreements in this Note. Presentment, protest, notice of dishonor, and notice of
protest are hereby waived.
Dated this __ th day of January, 1999.
MAKER:
BOAT TREE, INC., a Florida corporation
By:
Joe G. Pozo, Jr., President
ORL95 80883.1 - LMB
-1-
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
American Marine Recreation, Inc.
Orlando, Florida
We hereby consent to use in the Prospectus constituting a part of this
Registration Statement of our report dated January 8, 1999 except for Note 11
and Note 1(B) as to which the dates are January 22, 1999 and February __, 1999,
respectively, relating to the consolidated financial statements of American
Marine Recreation, Inc. and subsidiary, which is contained in that Prospectus,
and of our report dated January 8, 1999, relating to Schedule II, which is
contained in Part II of the Registration Statement.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
BDO Seidman,LLP
Orlando, Florida
January 25, 1999
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to use in this Registration Statement on Amendemtn Number 1
to Form SB-2 on Form S-1, of our report dated January 15, 1999, except for Note
10 as to which the date is January 22, 1999, relating to the financial
statements of Treasure Coast Boating Centers, Inc. for the year ended December
31, 1997 and 1998, and the reference to our firm under the caption "Experts" in
this Registration Statement.
FELDMAN SHERB EHRLICH & CO., P.C.
Certified Public Accountants
New York, New York
January 26, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,139,269
<SECURITIES> 0
<RECEIVABLES> 668,606
<ALLOWANCES> 27,000
<INVENTORY> 13,702,083
<CURRENT-ASSETS> 15,502,578
<PP&E> 3,117,666
<DEPRECIATION> 373,677
<TOTAL-ASSETS> 18,975,127
<CURRENT-LIABILITIES> 16,044,699
<BONDS> 0
0
0
<COMMON> 18,403
<OTHER-SE> 1,458,749
<TOTAL-LIABILITY-AND-EQUITY> 18,975,127
<SALES> 25,562,656
<TOTAL-REVENUES> 25,629,136
<CGS> 19,082,436
<TOTAL-COSTS> 5,418,407
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 524,720
<INCOME-PRETAX> 603,573
<INCOME-TAX> 0
<INCOME-CONTINUING> 603,573
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 603,573
<EPS-PRIMARY> .33
<EPS-DILUTED> .28
</TABLE>
<PAGE>
Report of Independent Certified Public Accountants
American Marine Recreation, Inc. and Subsidiary
Orlando, Florida
The audits referred to in our report dated January 8, 1999 except for Note 11
and Note 1(b) as to where the dates are January 22, 1999 and February __, 1999
relating to the consolidated financial statements of American Marine Recreation,
Inc. and subsidiary, which is contained in the prospectus, constituting part of
this registration statement, included the audit of financial statement Schedule
II for each of the three years in the period ended December 31, 1998. The
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement based
upon our audits.
In our opinion, such financial statement schedule presents fairly, in all
material respects, information set forth therein.
/s/ BDO Seidman, LLP
---------------------------------
BDO Seidman, LLP
Orlando, Florida
January 8, 1999, except for Note 11 and Note 1(B) as to which the date are
January 22, 1999 and February __, 1999, respectively.
S-1
<PAGE>
SCHEDULE II
AMERICAN MARINE RECREATION, INC. AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS ENDED DECEMBER 31, 1996, 1997, 1998
<TABLE>
<CAPTION>
Other
Charges Charges-
Balance at to Cost Charges Additions Balance
Beginning and to Other (Deductions) at End of
Year Description of Period Expenses Accounts (a) Period
- ------- ---------------------------------- ------------ ---------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996 Accounts receivable allowance for
possible losses $ -- $ -- $ -- $ -- $ --
1997 Accounts receivable allowance for
possible losses -- 67,893 -- (25,893) 42,000
1998 Accounts receivable allowance for
possible losses 42,000 65,163 -- (80,163) 27,000
</TABLE>
(a) Specific accounts receivable written off against the allowance for possible
losses
S-2