SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) January 16, 1997
MAKO MARINE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Florida 0-26618 65-0501535
(State or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification No.)
4355 N.W. 128th Street
Miami, Florida 33054
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (305)685-6591
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Item 1. Changes in Control of Registrant
On January 16, 1997 ("Closing Date"), Tracker Marine, L.P., a Missouri
limited partnership ("Tracker") acquired control Registrant ("Mako") by means of
Tracker's purchase of 930,000 shares (the "CAVC Shares") of Mako common stock,
having a par value of $.01 per share (the "Mako Common Stock") from
CreditAmercia Venture Capital, Inc. ("CAVC") for a purchase price of $1,860,000,
subject to CAVC's obligation to satisfy certain Mako liabilities (the "Assumed
Mako Obligations") totaling approximately $550,000 (for a net purchase price of
approximately $1,310,000, or $1.40 per share) and contemporaneously therewith
Tracker's purchase from Mako of 6,400,000 newly issued shares (the "Mako
Shares") of Mako's Common Stock, for a purchase price consisting of cash in the
amount of $4,140,000 and assets relating to Tracker's saltwater boat business,
including exclusive rights over a five-year period to advertise Mako's saltwater
boat products in a catalog published by an affiliate of Tracker. The sale by
Mako of the Mako Shares to Tracker was exempt from registration under the
Securities Act of 1933, as amended pursuant to Section 4(2) thereof and
Regulation D promulgated thereunder.
With its acquisition of CAVC Shares and the Mako Shares, Tracker
acquired a total of 7,330,000 shares of Mako Common Stock (representing
approximately 80.9% of the currently outstanding shares of Mako Common Stock)
over which it has sole voting and dispositive power. Mako has been advised by
Tracker that Tracker's purpose in acquiring such shares is to control and
operate Mako.
Tracker's purchases of the CAVC Shares and the Mako Shares were
pursuant to two separate Stock Purchase Agreements, each dated as of December 4,
1996, one (covering the CAVC Shares) between Tracker and CAVC (the "CAVC Stock
Purchase Agreement") and the other (covering the Mako Shares) between Tracker
and Mako (the "Mako Stock Purchase Agreement"). The CAVC Stock Purchase
Agreement and the Mako Stock Purchase Agreement were each amended by a letter
agreement dated January 16, 1997 among Tracker, CAVC and Mako (the "Amendatory
Agreement"). The Amendatory Agreement provides for CAVC's obligation with
respect to the Assumed Mako Obligations, and for the satisfaction of certain
obligations of Mako with respect to remedial and other costs associated with
certain potential environmental conditions in, on or about the Mako facility
which may be incurred in the future. The net purchase price paid to CAVC
pursuant to the CAVC Stock Purchase Agreement (e.g., $1,310,000) has been
deposited in escrow to secure CAVC's obligation with respect to such potential
environmental costs.
The Mako Stock Purchase Agreement provides, among other things, that in
addition to the Mako Shares, during the period beginning on the Closing Date and
ending 90 business days following the exercise, redemption or expiration of
Mako's publicly-traded Redeemable Common Stock Purchase Warrants (the "Public
Warrants"), Mako will issue to Tracker (i) 1,800,000 shares, if the market price
of the Mako Common Stock is $5 or more during a period of 10 consecutive trading
days, (ii) an additional 1,800,000 shares, if the price of the Mako Common Stock
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is $6 or more during a period of 10 consecutive trading days, and (iii) an
additional 3,629,000 shares, if the market price of the Mako Common Stock is $7
or more during a period of 10 consecutive trading days. The expiration day of
the Public Warrants is August 23, 2000.
The Mako Stock Purchase Agreement also provides Tracker with an option
to acquire additional shares of Mako Common Stock at $1.50 per share. The option
is designed to permit Tracker to maintain an 80% interest in Mako to the extent
that options and warrants to acquire shares of Mako Common Stock which were
outstanding on the Closing Date are exercised in the future. There are currently
outstanding options and warrants to purchase 3,622,900 shares of Mako Common
Stock, which expire at varying dates through 2001.
Pursuant to the Mako Stock Purchase Agreement, effective as of the
Closing Date, the Board of Directors of Mako was increased from four to seven
persons, and Kenneth Burroughs, Joe C. Greene, Susie Henry and Larry Mueller,
each a designee of Tracker, was appointed a director of Mako. In addition,
Douglas W. Baena, Bruce Foerster and Joseph J. Messina continue to serve as
directors of Mako, and Jeffrey Bleustein resigned effective on the Closing Date.
To the best of Mako's knowledge, there were no disagreements between Mako and
Mr. Bleustein as to Mako's operations, policies or practices.
In connection with the closing of Tracker's purchase of the Mako
Shares, Mako entered into amendments to the employment agreements of Douglas W.
Baena, Hugh Landon Russ, Jr. and Lawrence Tierney, the Chairman of the Board,
President and Chief Executive Officer, Executive Vice President and Chief
Operating Officer and Vice President of Finance of Mako, respectively. Such
agreements were amended to provide for, among other things, Mako's right to
terminate such contracts: (a) in the case of Mr. Baena, upon the giving of at
least 30 days' written notice to Mr. Baena and, upon such termination, a
severance payment of $75,000 payable in 12 monthly installments of $6,250 each;
(b) in the case of Mr. Russ, upon the giving of at least 30 days' written notice
to Mr. Russ and, upon such termination, a severance payment equal to 50% of his
then current annual base salary, payable in 6 equal monthly installments; and
(c) in the case of Mr. Tierney, immediately upon written notice to Mr. Tierney
and, upon such termination, a severance payment of 66.67% of his then current
annual base salary, payable in 8 equal monthly installments. Under their
respective employment agreements, as amended, each of Messrs. Baena, Russ and
Tierney will serve in such executive capacities as assigned to him by the Board
of Directors of Mako.
Tracker is a Missouri limited partnership, and the sole general partner
of Tracker is JLM Management Company, a privately-held Missouri corporation
("JLM"). The principal executive offices of JLM are located at 1915-C South
Campbell, Springfield, Missouri 65809. John L. Morris, an individual, residing
in Springfield, Missouri, is the sole director, the Chairman and Chief Executive
Officer and the indirect beneficial owner of all of the capital stock of JLM.
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Item 2. Acquisition or Disposition of Assets.
As indicated in Item 1 above, on January 16, 1997 Mako acquired from
Tracker certain of Tracker's assets constituting Tracker's saltwater boat
business (the "Tracker Saltwater Boat Business"), including its "Seacraft" and
"Silver King" boat brands and Tracker's exclusive right to feature at preferred
rates its saltwater fishing boats (now including Mako brands) in a catalog
published by an affiliate of Tracker. In addition, Tracker contributed cash in
the amount of $4,140,000 to the capital of Mako (the "Cash Contribution").
Mako's acquisition of the Tracker Saltwater Boat Business and the Cash
Contribution were effected pursuant to the Mako Stock Purchase Agreement.
Tracker's primary business is the manufacture of freshwater fishing and
pontoon boats and, prior to the Closing Date, had been engaged to a limited
extent in the manufacture of saltwater fishing boats at a facility located in
Punta Gorda, Florida (the "Punta Gorda Facility"). Included in the assets
acquired by Mako is the Punta Gorda Facility, the improvements thereon,
equipment and other physical property used in the manufacture of saltwater
fishing boats. It is currently anticipated that Mako will retain and continue to
operate the Punta Gorda Facility.
The consideration paid by Mako (consisting of 6,400,000 newly issued
shares of Mako Common Stock) for the Tracker Saltwater Boat Business and the
Cash Contribution was determined by the parties through arm's length
negotiations. No indebtedness was incurred by Mako in connection with the
financing of its acquisition of the Tracker Saltwater Boat Business.
To the best of Mako's knowledge, neither Tracker, JLM nor any officer
or director of JLM has had any material relationship with Mako or any of its
officers or directors other than as described in Items 1 and 2 hereof.
Item 4. Changes in Registrant's Certifying Accountant
On January 29, 1997, Registrant engaged Arthur Andersen LLP as its new
independent accountant, replacing BDO Seidman, LLP (the "Former Accountant")
which Former Accountant had served as the Registrant's independent accountant.
The decision to change accountants was unanimously approved by the Board of
Directors of the Registrant.
The Report of the Former Accountant on the financial statements of the
Registrant for its fiscal year ended June 29, 1996 stated that in view of the
recurring losses suffered by the Mako and its negative cash flow from
operations, substantial doubt existed as to the Mako's ability to continue as a
going concern. There were no disagreements with the Former Accountant, whether
or not resolved, on any manner of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
the satisfaction of the Former Accountant, would have caused it to make
reference to the subject matter of the disagreement(s) in connection with its
Report.
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements - It is currently impracticable to
provide the required financial statements. The required
financial statements will be filed as an amendment to this
form as soon as practicable, but in no event later than April
1, 1997.
(b) Pro forma financial information. - It is currently
impracticable to provide the required pro forma financial
information. The required pro forma financial information will
be filed as an amendment to this form as soon as practicable,
but in no event later than April 1, 1997.
(c) Exhibits - The following exhibits are filed with this report:
Exhibit No. Document
2.1 Mako Stock Purchase Agreement.*
2.2 CAVC Stock Purchase Agreement.*
2.3 Letter dated December 4, 1996.*
2.4 Letter Agreement dated January 16, 1997,
filed herewith.
2.5 Escrow Agreement dated January 16, 1997
among SunTrust Bank, Miami, N.A., as escrow
agent, Mako, CAVC and Tracker, filed
herewith.
2.6 Amendment dated January 16, 1997 to Douglas
W. Baena Employment Agreement, filed
herewith.
2.7 Employment Agreement dated July 1, 1996
between Mako and Hugh Landon Russ, Jr.,
filed herewith.
2.8 Amendment dated January 16, 1997 to Hugh
Landon Russ, Jr. Employment Agreement, filed
herewith.
2.9 Amendment dated January 16, 1997 to Lawrence
Tierney Employment Agreement, filed
herewith.
2.10 Letter from BDO Seidman regarding Mako's
change of independent accountants.
* Filed as an Exhibit to Mako's Form 8-K, dated December 13, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: January 30, 1997
MAKO MARINE INTERNATIONAL, INC.
By: /s/ Douglas W. Baena
Title: President and Chief Executive
Officer
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EXHIBIT INDEX
Exhibit Number Description
2.1 Mako Stock Purchase Agreement.*
2.2 CAVC Stock Purchase Agreement.*
2.3 Letter dated December 4, 1996.*
2.4 Letter Agreement dated January 16, 1997, filed herewith.
2.5 Escrow Agreement dated January 16,
1997 among SunTrust Bank, Miami,
N.A., as escrow agent, Mako, CAVC
and Tracker, filed herewith.
2.6 Amendment dated January 16, 1997 to Douglas W.
Baena Employment Agreement, filed herewith.
2.7 Employment Agreement dated July 1,
1996 between Mako and Hugh Landon
Russ, Jr., filed herewith.
2.8 Amendment dated January 16, 1997 to Hugh Landon
Russ, Jr. Employment Agreement, filed herewith.
2.9 Amendment dated January 16, 1997 to Lawrence Tierney
Employment Agreement, filed herewith.
2.10 Letter from BDO Seidman regarding Mako's change of
independent accountants.
* Filed as an Exhibit to Mako's Form 8-K, dated December 13, 1996.
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January 16, 1997
Mako Marine International, Inc.
4355 N.W. 128th Street
Miami, Florida 33054
CreditAmerica Venture Capital, Inc.
c/o Douglas W. Baena
4355 N.W. 128 Street
Miami, Florida 33054
Gentlemen:
This letter, when executed by each of you, shall constitute an
agreement between (i) Tracker Marine, L.P. ("Tracker") and Mako Marine
International, Inc., ("Mako") with respect to certain additional agreements and
modifications to the Stock Purchase Agreement dated as of December 4, 1996 by
and between Tracker and Mako (the "Mako Agreement"), as amended, and (ii)
Tracker and CreditAmerica Venture Capital, Inc. ("CAVC") with respect to certain
additional agreements and modifications of the Stock Purchase Agreement dated as
of December 4, 1996 by and between Tracker and CAVC (the "CAVC Agreement").
As you know, certain environmental issues have arisen in connection
with Tracker's environmental due diligence review and analysis of Mako's
Opa-Locka, Florida property upon which its executive offices and manufacturing
facility are located (the "Property"). The results of such due diligence review
and analysis is described in the Phase I and Limited Phase II Environmental Site
Assessment dated December 16, 1996, issued by Environmental Works, Inc., of
Springfield, Missouri, as modified by a report dated January 2, 1997 ("ERM
Report"), issued by ERM-South, Inc. ("ERM") (collectively, the "Environmental
Reports"). As a result thereof, subject to the creation of the escrow described
below, Tracker has agreed to waive any conditions set forth in the Mako
Agreement or the CAVC Agreement which would not be satisfied as a result of any
and all of the environmental issues referred to in the Environmental Reports and
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Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 2
waive any right it would have to terminate the Mako Agreement or the CAVC
Agreement as a result of the effect of any and all of the environmental issues
referred to in the Environmental Reports, (such waivers being collectively
referred to herein as the "Waivers"). The Waivers are hereby given, subject to
and in consideration of the agreement of Mako and CAVC as follows:
1. With respect to the Mako Agreement:
(a) A new Section 6.14 is hereby added to the Mako Agreement
to read as follows:
"6.14 Nasdaq Listing. Tracker acknowledges its intent to cause Mako to
reapply to the Nasdaq Stock Market, Inc., for the listing of its shares
of Common Stock and Common Stock Purchase Warrants on the Nasdaq
SmallCap Market at such time as the Board of Directors of Mako
determines that such action is appropriate in view of Mako's cash flow
position and profitability.
(b) New subparagraphs (h) and (i) are hereby added to Section
7.2 of the Mako Agreement to read as follows:
(h) The current employment agreements between Mako and
each of Douglas W. Baena, Hugh L. Russ, Jr., and
Lawrence Tierney shall have been modified in form
reasonably satisfactory to Tracker and signed copies
of such modifications shall be delivered at Closing.
(i) (A) The Amended Triple Net Lease dated April 18, 1995
between Robert C. Schwebke and Mako ("Lease") shall
have been modified pursuant to an Amendment to Lease
in form reasonably satisfactory to Tracker and signed
copies of such amendment shall be delivered at
Closing.
(c) Except to the extent assumed by CAVC under the CAVC Agreement, Mako
will be responsible for, and shall pay directly, all Cleanup Costs (as
hereinafter defined). "Cleanup Costs" is defined herein as all costs and
expenses incurred in connection with the investigation, clean up, removal,
containment, remediation or response action performed in connection with the
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Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 3
preparation, negotiation, implementation and completion of an "Approved Action
Plan" (as hereinafter defined). Tracker's environmental due diligence costs
incurred prior to Closing are not Cleanup Costs for which Mako is responsible
pursuant to this paragraph, except for payment for the services provided by ERM.
(d) Except to the extent provided herein, Tracker and Mako each ratify
and confirm all of the provisions of the Mako Agreement. To the extent of any
inconsistencies between any provision contained herein and any provision
contained in the Mako Agreement, the provision contained herein shall prevail.
2. With respect to the CAVC Agreement:
(a) CAVC shall be responsible for and pay (i) all fees of Stroock &
Stroock & Lavan, Mako's counsel, incurred by Mako in connection with or related
to such firm's services performed on behalf of Mako in connection with the Mako
Agreement (including, without limitation, work performed on behalf of Mako in
connection with the Nasdaq delisting matter and the information statement
relating to the proposed change of control of Mako), and all of the transactions
contemplated thereunder, whether such fees were incurred on, before or after the
Closing Date, it being represented by CAVC that no portion of such expenses has
been paid by Mako, and (ii) additional expenses of $300,000 incurred by Mako
prior to the Closing Date as agreed by the parties on the Closing Date. CAVC's
responsibility as provided herein is undertaken in consideration of Tracker's
closing the Mako Agreement, notwithstanding certain operating losses to date.
(b) The responsibility for and the obligation to pay Cleanup
Costs will be as follows:
(i) the first $100,000 will be the responsibility
of and paid by Mako;
(ii) the next $300,000 of such Cleanup Costs will
be the responsibility of and paid by CAVC;
(iii) the next $50,000 of such Cleanup Costs will be
the responsibility of and paid by Mako;
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Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 4
(iv) the next $200,000 of such Cleanup Costs will
be the responsibility of and paid by CAVC;
(v) the next $50,000 of such Cleanup Costs will be
the responsibility of and paid by Mako;
(vi) the next $200,000 of such Cleanup Costs will
be the responsibility of and paid by CAVC;
(vii) the next $50,000 of such Cleanup Costs will be
the responsibility of and paid by Mako;
(viii) the next $200,000 of such Cleanup Costs will
be the responsibility of and paid by CAVC;
(ix) the next $50,000 of such Cleanup Costs will be
the responsibility of and paid by Mako;
(x) the next $200,000 of such Cleanup Costs will
be the responsibility of and paid by CAVC;
(xi) the next $50,000 of such Cleanup Costs will be
the responsibility of and paid by Mako;
(xii) the next $200,000 of such Cleanup Costs will
be the responsibility of and paid by CAVC;
(xiii) the next $50,000 of such Cleanup Costs will be
the responsibility of and paid by Mako; and
(xiv) the next $10,000 of such Cleanup Costs will be
the responsibility of and paid by CAVC.
(xv) the balance of such Cleanup Costs will be the
responsibility of Mako.
The obligations of the parties under this Section 2(b) shall survive
the closing of the Mako Agreement and the CAVC Agreement.
CAVC's payments of Cleanup Costs shall be made from the escrow account
described below.
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Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 5
(c) At the Closing, a total of $1,310,000 of the "Purchase Price" (as
defined in the CAVC Agreement) shall be deposited in escrow with Sun Trust Bank,
Miami, N.A. as escrow agent, solely for the purpose of the payment of Cleanup
Costs for which CAVC is responsible pursuant to subparagraph (b) of this
Paragraph 2. Such escrow agent shall hold, administer and distribute such
escrowed funds pursuant to an escrow agreement ("Escrow Agreement") being
executed concurrently herewith.
(d) On January 2, 1997, ERM issued the ERM Report to Tracker in
response to a request to identify contamination on, in or under the Property
("Contamination"). The ERM Report indicated there was Contamination consisting
of certain volatile organics located in the area of MW-1A, more specifically
described in the ERM Report. The ERM Report also mentioned other Contamination
as set forth below. Tracker has engaged ERM to conduct further investigative
activities post-closing to determine: (a) whether the chlorinated solvents in
groundwater on the Property and the lead in groundwater on the Property arise
from on-site or off-site sources; and (b) whether there is Contamination
associated with either the soakage pit or retention tank (the "ERM Post-Closing
Investigation"). As soon as practicable the ERM Post-Closing Investigation
Report shall be submitted to CAVC. Tracker and CAVC shall both be provided the
opportunity to review and comment on a draft version of the ERM Post-Closing
Investigation Report before it is finalized.
(e) Within 30 days of receipt of the ERM Post-Closing Investigation
Report, CAVC, on behalf of Mako, shall request proposals from three mutually
acceptable environmental consulting firms to develop a proposed plan of action
for submittal to the Dade County Department of Environmental Resources
Management ("DERM"), based on the ERM Post-Closing Investigation Report. CAVC,
after first consulting with Mako, shall engage one of the three firms to submit
to DERM a letter (which, together with any further correspondence on behalf of
Mako to DERM, is referred to as the "Mako Letter Report"), including supporting
documentation and laboratory analyses, describing all Contamination identified
by ERM and identifying sources where any such Contamination may have been
disposed, discharged, or released. In addition, there shall be submitted to DERM
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Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 6
a plan of action (the "Action Plan") for proposed remediation, monitoring, or no
further action, as appropriate, with respect to environmental matters associated
with the Property. CAVC and Mako will consult as often as is necessary and
advisable with respect to the preparation of the Mako Letter Report and Action
Plan. A draft of the Mako Letter Report and Action Plan shall be submitted to
Tracker for review and approval prior to submittal to DERM. Any written report
or correspondence thereafter submitted to DERM shall be first provided to Mako
for review and approval. Mako will be notified of and invited to participate in
any meetings scheduled with DERM regarding the Property. Mako will also be
invited to meet with CAVC before any DERM meetings to discuss and develop
appropriate strategies. If after the initial meeting with DERM, Mako in its
reasonable judgment, determines that any significant information contained in
the draft Post-Closing Investigation Report has not been submitted to DERM, then
Mako may submit to DERM the ERM Post-Closing Investigation Report. Prior to such
submittal, Mako shall identify to CAVC the specific "significant information" of
concern and CAVC shall have 30 days therefrom to submit such information to
DERM. If such submittal is unsatisfactory to Mako, Mako may then file the ERM
Post-Closing Investigation Report.
CAVC will seek DERM's written approval of the Action Plan. DERM's
failure to take exception to any proposal in the Action Plan for no further
action for a period of 90 days following receipt of the Action Plan shall be
deemed to be approval by DERM of such no further action proposal; provided,
however, that ongoing negotiations as to no further action will toll such 90 day
period. Subject to the terms outlined herein, CAVC agrees that it shall oversee
and implement, to the satisfaction of DERM, all investigation and remediation of
the Property and other response actions outlined in the Action Plan as approved
by DERM and all amendments thereto (the "Approved Action Plan"). CAVC agrees
that it shall commence and perform to completion all activities required under
the Approved Action Plan in a diligent and timely manner.
Within 30 days of receipt of DERM's written approval of the Action
Plan, CAVC and Mako shall obtain proposals from three mutually acceptable
environmental consulting firms to develop and implement such Approved Action
Plan and to estimate the Cleanup Costs associated therewith. Unless otherwise
agreed after receiving and reviewing the proposals, CAVC will award the work and
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Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 7
hire the consulting firm which has submitted the lowest bid; provided, however,
that if Mako objects to the retention of the lowest bidding consulting firm, it
shall notify CAVC in writing, of its objection and the parties will seek a bid
from a fourth consulting firm. If the bid from such fourth consulting firm is
not greater than 10% of the bid from the lowest bidding consulting firm, then
such lowest bidding firm shall be retained. If the bid from such fourth firm is
greater than 10% of the lowest bidding consulting firm, then the bid of such
lowest bidding consulting firm shall not be considered and the consulting firm
then having submitted the next lowest bid will be awarded the work. Within ten
days following the approval of DERM of an Action Plan, Mako shall notify the
escrow agent to release to CAVC an amount equal to the excess of the funds in
escrow over the product of 125% of CAVC's portion of the Cleanup Costs then
estimated by the retained consulting firm to implement the Approved Action Plan.
Thereafter, Mako agrees from time to time to notify the escrow agent that funds
should be released to it for payment of CAVC's portion of the Cleanup Costs as
incurred. When the Approved Action Plan is completed to the satisfaction of
DERM, indicated by DERM's written acknowledgment, Mako will notify the escrow
agent to release the balance of the funds, if any, in escrow to CAVC.
(f) CAVC's obligations herein are limited to activities relating to or
required under the Approved Action Plan. CAVC shall not be responsible for any
spills, releases, or discharges of pollutants or contaminants which occur from
conditions not existing prior to Closing.
(g) CAVC agrees that it shall not permit and shall cause its agents to
not permit any damage, nuisance or waste on the property in the course of its
implementation and completion of activities in the Approved Action Plan
("Activities"). Mako agrees that it shall grant CAVC access to the Property on
the condition that the actions of CAVC and its agents will not unreasonably
interfere with Mako's use of the Property and that these activities shall be
performed in such a manner to prevent or minimize disruption to Mako's
operations on the Property. Mako agrees that, to the extent practicable, CAVC
and its agents shall be permitted to perform the Activities without hindrance or
obstruction.
(h) CAVC and Mako agree that any consultants, contractors,
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Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 8
subcontractors or other agents engaged to perform relative to obligations
outlined herein shall maintain and furnish evidence of insurance mutually
satisfactory to Mako and CAVC for any insurance required by Florida law,
including workers' compensation insurance, automobile liability insurance and
commercial general liability insurance and professional liability insurance.
(i) CAVC agrees that upon receipt of the ERM Post-Closing Investigation
Report , it will promptly undertake preparation of the Mako Letter Report and
the finalization of the Action Plan. CAVC shall commence all activities outlined
in the Approved Action Plan as soon as possible following receipt of approval
thereof from DERM. CAVC shall implement and oversee all such activities in a
timely and diligent manner. Should CAVC default in a material respect in
implementing the Activities under the Approved Action Plan, Mako shall be
entitled to undertake such activities on its own volition and to receive a full
reimbursement from the escrow of all costs incurred by Mako which were the
responsibility of and for which the obligation to pay was attributable to CAVC
as outlined herein at Section 2(b) thereof. Prior to Mako's undertaking such
activities, Mako shall notify CAVC of the specific default, and CAVC shall have
30 days to cure any such default.
(j) Both parties agree to promptly provide the other party with copies
of all studies, reports, permits, data, analysis, correspondence and other
documents relating to environmental matters associated with the Property. Draft
copies of all submissions to DERM shall be provided by one party to the other
party at least five days prior to submittal.
(k) If DERM determines that another agency should regulate the matters
referred to in the Mako Letter Report, then all references to DERM contained
herein shall be deemed to refer to such other regulatory agency.
(l) The parties hereto recognize that responsibility for certain of the
Cleanup Costs may be the responsibility of the landlord under the Lease. Within
a reasonable period of time as agreed by the parties, Tracker agrees to cause
Mako to retain counsel reasonably acceptable to CAVC to determine the nature and
extent of the liability of the landlord under the Lease for Cleanup Costs. If it
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Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 9
is determined that such landlord is or may be liable for the Cleanup Costs, Mako
agrees to pursue diligently all of its rights and remedies against such landlord
to recover any amount expended by Mako or CAVC for the Cleanup Costs. If such
pursuit results in an action or proceeding against the landlord, CAVC shall have
the right to participate in the pursuit of such action or proceeding and, at its
sole cost and expense, to retain counsel for such purpose. Any amount recovered
by Mako from the landlord by reason of his responsibility for the Cleanup Costs
will be divided between Mako and CAVC pro rata to the extent of amounts paid by
each for Cleanup Costs under the Mako Agreement and the CAVC Agreement ("Pro
Rata Split"). The obligations of Mako under this paragraph 2(l) will cease if
Mako acquires the Property.
(m) If any of the Contamination is determined to have been caused by
third parties (other than the landlord under the Lease) or is covered by
insurance policies, Mako agrees to pursue such third party or insurance policies
and any proceeds net of expenses recovered from such third parties or insurance
carriers relating to the Contamination shall be subject to the Pro Rata Split.
(n) The legal expense of any action or proceeding under paragraph 2(l)
and (m) will be advanced by Mako, subject to reimbursement in accordance with
the Pro Rata Split. CAVC's portion of such legal expense if not paid directly,
may be withdrawn from the escrow.
3. (a) The rights of the parties herein are not assignable.
(b) This Letter Agreement is solely for the benefit of the parties
hereto and no provision of this Letter Agreement shall be deemed to confer upon
third parties any remedy, claim, liability, release or waiver in excess of those
existing without reference to this Agreement. Without limiting the generality of
the foregoing, no release or waiver by any party hereto shall operate as a
release, waiver or discharge or any liability upon any third party, or otherwise
effect any actual or potential liability with respect to environmental remedial
or clean up costs with respect to the Property.
(c) Any dispute arising out of or relating to paragraph 2(d)
through 2(n) of this Letter Agreement shall be submitted to and
<PAGE>
Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 10
determined in binding arbitration. The arbitration shall be conducted before and
by a single arbitrator selected as follows: (i) each of Mako and CAVC shall
select an arbitrator; (ii) the two arbitrators selected shall select a single
person to serve as the arbitrator hereunder; and (iii) if such single arbitrator
has not been selected within ten days of written demand by either party to the
other party for arbitration, the arbitrator shall be selected by the American
Arbitration Association pursuant to the then current rules of that Association.
The arbitrator shall have authority to fashion such just, equitable and legal
release as such arbitrator, in his or her sole discretion, may determine. Each
party shall bear all its own expenses of arbitration. All arbitration
proceedings shall be conducted in the City of Miami, State of Florida. The duty
to arbitrate shall survive the Closing of the Mako Agreement and the CAVC
Agreement.
Except to the extent modified herein, Tracker and CAVC each ratify and
confirm all of the provisions of the CAVC Agreement. To the extent of any
inconsistencies between any provision contained herein and any provision
contained in the CAVC Agreement, the provision contained herein shall prevail.
If you are in agreement with the provisions of Paragraph 1, in the case
of Mako, and Paragraph 2, in the case of CAVC, please so indicated by signing a
copy hereof in the appropriate space provided below and returning same to the
undersigned.
Very truly yours,
TRACKER MARINE, L.P.
By: JLM MANAGEMENT COMPANY
Its: General Partner
By: /s/ Kenneth Burroughs
Title: President
<PAGE>
Mako Marine International, Inc.
CreditAmerica Venture Capital, Inc.
January 16, 1997
Page 11
Agreed to and accepted this day of January, 1997.
Mako Marine International, Inc.
By: /s/ Douglas W. Baena
Title: President and Chief Executive Officer
Agreed to and accepted this day of January, 1997.
CreditAmerica Venture Capital, Inc.
By: /s/ Douglas W. Baena
Title: President
SELLERS' ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is executed this 16th day of
January, 1997, by and among Mako Marine International, Inc., a Florida
corporation ("Seller"), Credit America Venture Capital, Inc., a Florida
corporation ("CAVC"), Tracker Marine, L.P., a Missouri limited partnership
("Purchaser"), and SunTrust Bank, Miami N.A., a national banking association
("Agent"). (All initially capitalized terms utilized herein, unless specifically
otherwise defined herein, shall have the meaning assigned to such terms in the
"Letter Agreement," as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to Stock Purchase Agreements each dated December 4,
1996, by and between Purchaser and Seller and Purchaser and CAVC, respectively,
Purchaser is acquiring certain shares of Common Stock of Seller; and
WHEREAS, Purchaser, Seller and CAVC are concurrently herewith entering
into a Letter Agreement ("Letter Agreement") dated the date hereof with respect
to the matters contained herein; and
WHEREAS, pursuant to the Letter Agreement, CAVC has agreed to place
$1,310,000 in an escrow account (the "Escrow Account"), as hereinafter described
as security for certain obligations of CAVC under the Letter Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein
contained and intending to be legally bound, the parties hereto agree as
follows:
1. Purpose of the Escrow Account. The Escrow Account is being
established to provide funds to satisfy claims against CAVC pursuant to the
Letter Agreement.
2. Appointment of Agent. Each of Purchaser, Seller and CAVC hereby
appoints the Agent as escrow agent in accordance with the terms and conditions
set forth herein, and Agent hereby accepts such appointment.
3. Delivery of Escrow Account to Agent. Upon execution hereof, there
will be deposited with Agent on behalf of CAVC the sum of $1,310,000 (the
"Escrow Deposit").
4. Maintenance of the Escrow Account. Agent shall maintain the Escrow
Deposit in the Escrow Account. The Escrow Account shall be a special purpose
segregated escrow account maintained in the name of the Agent, as escrow agent
<PAGE>
under this Agreement. During the term of this Agreement, Agent agrees to hold
the Escrow Deposit and accumulated income thereon in the Escrow Account in
escrow, to invest the Escrow Deposit in Permitted Investments as directed by
CAVC and to disburse amounts in the Escrow Account (including any income on the
Escrow Deposit) in accordance with the terms of this Agreement. As used herein,
the term "Permitted Investments" shall mean (a) obligations issued by, or the
principal of interest of which is fully guaranteed by, the United States of
America or any agency or instrumentality thereof; (b) commercial paper rated A-1
or A-1+ by Standard & Poors or P-1 by Moody's; (c) obligations issued by, or the
principal of and interest on which is fully guaranteed by, any state and which
are rated AA (or its equivalent) or better by Standard & Poors or Moody's; (d)
certificates of deposit, bankers' acceptances, or money market accounts issued
by or established with any commercial bank whose certificates of deposit, other
deposits, or banker's acceptances are rated A-1 or A-1+ by Standard & Poor's or
P-1 by Moody's; (e) SEC registered money market funds invested in Permitted
Investments defined herein; or (f) any other investment approved by CAVC. CAVC
shall pay any applicable federal and state income taxes in respect of any income
from amounts in the Escrow Account. Until otherwise advised in writing by CAVC
and delivered to Agent, upon receipt of the Escrow Deposit, Agent shall invest
the Escrow Deposit in its STI Classic US Government Money Market Fund for which
affiliates of Agent act as investment advisors.
5. Income Disbursements. On the first business day of each calendar
quarter, Escrow Agent shall disburse to CAVC all cash actually received by it as
income on the Escrow Deposit.
6. Claims Procedure.
(a) At any time or from time to time during the term hereof, Seller may
give written notice (a "Notice") to the Agent, with a copy thereof to CAVC, for
distribution of the Escrow Account (i) in satisfaction of any claim of Seller
for Cleanup Costs for which CAVC is responsible pursuant to the Letter Agreement
(each, a "Distribution") or (ii) as a release of funds to CAVC pursuant to the
Letter Agreement. Each Notice shall briefly set forth:
A. the dollar amount of the Distribution ("Dollar
Amount") and whether the recipient thereof is Seller
or CAVC;
B. if the recipient is CAVC, the method of calculation
of the Distribution pursuant to the Letter Agreement;
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<PAGE>
C. if the recipient is the Seller:
(1) the nature, basis and Dollar Amount of the
Cleanup Costs for which the Notice is
given; and
(2) a representation that CAVC is responsible
for and is required to pay such Cleanup
Costs under the terms of the Letter
Agreement.
D. a certification that a copy of such Notice has been
delivered to CAVC in accordance with the provisions
of Section 11 hereof.
(b) On the tenth day after the Notice is delivered by Agent to CAVC,
Agent shall disburse from the Escrow Account the Dollar amount specified in the
Notice, as directed by Seller, unless Agent receives a written direction
directing Agent not to make such disbursement ("Notice of Direction"), signed by
CAVC within such 10-day period, accompanied by a certification from CAVC that a
copy of such Notice of Direction has been delivered to Seller in accordance with
the provisions hereof.
(c) If a Notice of Direction is received, Agent shall continue to hold
the Dollar Amount in escrow and shall disburse the Dollar Amount only upon
either (A) receipt of joint written instructions from CAVC and Seller, or (B)
receipt from either CAVC or Seller of a notice enclosing a certified copy of a
court or arbitrator's order, together with a certification from the court or
arbitrator or opinion of counsel to the effect that such order is a final order
in respect of which there is no further right of appeal, directing Agent as to
the manner in which the Dollar Amount is to be disbursed, in which event Agent
shall act in accordance with such order.
(d) Notwithstanding anything contained in Sections 6(a), (b) and (c) of
this Agreement, in the event that Agent receives either (i) a joint written
instruction from CAVC and Seller directing the Agent as to the manner in which
the Escrow Deposit, or any portion thereof, is to be disbursed or (ii) a notice
from either CAVC or Seller enclosing a certified copy of a court or arbitrator's
order, together with a certification from the court or arbitrator or opinion of
counsel to the effect that such order is a final order in respect of which there
is no further right of appeal, directing Agent as to the manner in which the
Escrow Deposit or any portion thereof, is to be disbursed, in either case the
Agent shall act in accordance therewith.
(e) Any amount paid as a Distribution in accordance with the terms
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<PAGE>
hereof shall no longer be deemed a part of the Escrow Account or otherwise be
subject to the provisions of this Agreement.
7. Distribution of Escrow Account.
The Escrow Account shall be held by the Agent until the final
disposition of the monies and properties held in escrow hereunder (the
"Termination Date").
8. Exculpation and Indemnification of Agent.
(a) Agent shall have no duties or responsibilities other than those
expressly set forth herein. Agent shall have no duty to enforce any obligation
of any person to make any payment or delivery, or to direct or cause any payment
or delivery to be made, or to enforce any obligation of any person to perform
any other act. Agent shall be under no liability to the other parties hereto or
to anyone else by reason of any failure on the part of any party hereto or any
maker, guarantor, endorser or other signatory of any document or any other
person to perform such person's obligations under any such document. Except for
amendments to this Agreement referred to below, and except for instructions
given to Agent relating to the amount in the Escrow Account under this
Agreement, Agent shall not be obligated to recognize any agreement between any
and all of the persons referred to herein, notwithstanding that references
thereto may be made herein and whether or not it has knowledge thereof.
(b) Agent shall not be liable to any of the parties hereto or to anyone
else for any action taken or omitted by it, or any action suffered by it to be
taken or omitted, in good faith and in the exercise of its own best judgment.
Agent may rely conclusively and shall be protected in acting upon any order,
notice, demand, certificate, opinion or advice of counsel (including counsel
chosen by Agent), statement, instrument, report or other paper or document (not
only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and acceptability of any information
therein contained), which is believed by Agent to be genuine and to be signed or
presented by the proper person or persons. Agent shall not be bound by any
notice or demand, or any waiver, modification, termination or rescission of this
Agreement or any other terms thereof, unless evidenced by a writing delivered to
Agent signed by the proper party or parties and, if the duties of Agent are
affected (other than a termination of Agent), unless it shall give its prior
written consent thereto.
(c) Agent shall have no responsibility with respect to the use or
application of any funds or other property paid or delivered by Agent pursuant
to the provisions hereof. Agent shall not be liable to any of the parties hereto
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<PAGE>
or to anyone else for any loss which may be incurred by reason of any investment
of any monies which it holds hereunder provided Agent has complied with the
provisions of Section 4 hereof.
(d) To the extent that Agent becomes liable for the payment of taxes,
including withholding taxes, in respect of income derived from the investment of
funds held hereunder or any payment made hereunder, Agent may pay such taxes.
Agent may withhold from any payment of monies held by it hereunder such amount
as Agent estimates to be sufficient to provide for the payment of such taxes not
yet paid, and may use the sum withheld for that purpose. Agent shall be
indemnified and held harmless against any liability for taxes and for any
penalties or interest in respect of taxes, on such investment income or payments
in the manner provided in Section 8(e) hereof.
(e) Agent will be indemnified and held harmless jointly and severally
by CAVC and Seller from and against any and all expenses, including reasonable
counsel fees and disbursements, or loss suffered by Agent in connection with any
action, suit or other proceeding involving any claim, or in connection with any
claim or demand, which in any way, directly or indirectly, arises out of or
relates to this Agreement, the services of Agent hereunder, the monies or other
property held by it hereunder or any income earned from investment of such
monies. Promptly after the receipt by Agent of notice of any demand or claim or
the commencement of any action, suit or proceeding, Agent shall, if a claim in
respect thereof is to be made against any party hereto, any of such parties
notify the parties in writing, but the failure by Agent to give such notice
shall not relieve any of such parties from any liability which such parties may
have to Agent hereunder.
(f) For the purposes hereof, the term "expense or loss" shall include
all amounts paid or payable to satisfy any claim, demand or liability, or in
settlement of any claim, demand, action, suit or proceeding settled with the
express written consent of Agent, and all costs and expenses, including, but not
limited to, reasonable counsel fees and disbursements, paid or incurred in
investigating or defending against any such claim, demand, action, suit or
proceeding.
9. Termination of Agreement and Resignation of Agent.
(a) This Agreement may be terminated by mutual agreement of the parties
and shall terminate on the Termination Date, provided that the rights of Agent
and the obligations of the other parties hereto under Sections 8 and 10 shall
survive the termination hereof.
(b) Agent may resign at any time and be discharged from its duties as
escrow agent hereunder by giving the parties hereto at least 60 days' notice
thereof. As soon as practicable after its resignation, Agent shall turn over to
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<PAGE>
a successor escrow agent appointed by the parties hereto all monies and property
held hereunder upon presentation of the document appointing the new escrow agent
and its acceptance thereof. If no new agent is so appointed within the 60-day
period following such notice of resignation, Agent may deposit the aforesaid
monies and property with any court it deems appropriate.
10. Compensation of Agent. Agent shall receive as compensation for
services pursuant to this Agreement an administration fee of $2,000 per annum,
to be borne equally by CAVC and Purchaser. Agent shall be entitled to
reimbursement for all actual and reasonable expenses paid or incurred by it in
the administration of its duties hereunder, including, but not limited to, all
reasonable fees and disbursements of outside counsel, such expenses to be borne
equally by CAVC and Purchaser.
11. Notices. All notices, requests, demands and other communications
provided for herein shall be in writing, shall be delivered by hand or Federal
Express or other overnight courier service, shall be deemed given when delivered
by hand or, if delivered by courier, when received, and shall be addressed to
the parties hereto at their respective addresses listed below or to such other
persons or addresses as the relevant party shall have designated as to itself
from time to time in writing delivered in like manner.
If to CAVC: 7358 Pine Forest Circle
Lake Worth, Florida 33463
Attention: President
If to Seller: Mako Marine International, Inc.
4355 N.W. 128 Street
Miami, Florida 33054
Attention: President
If to Purchaser: Tracker Marine, L.P.
1915-C South Campbell
Springfield, Missouri 65809
Attention: Mr. Kenneth Borroughs
If to Agent: SunTrust Bank, Miami N.A.
777 Brickell Avenue
Miami, Florida 33131
Attn: Corporate Trust Department
12. Miscellaneous.
(a) In the event of any disagreement regarding the interpretation of
this Agreement, or the rights and obligations set forth herein, or the propriety
of any action contemplated to be taken by Agent hereunder, Agent may, in its
sole discretion, continue to hold the Escrow Deposit until such time as Agent
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<PAGE>
shall be entitled to disburse the Escrow Deposit in accordance with the terms of
this Agreement, or file an action in interpleader to resolve such disagreement.
Agent shall be jointly and severally indemnified by CAVC and Seller for all
costs, including reasonable attorneys' fees and costs at the pre- trial, trial
and appellate levels, in connection with the aforementioned interpleader action,
and shall be fully protected in suspending all or a part of its activities under
this Agreement, except for its obligations under Sections 4 and 5 hereof, which
it shall continue to perform, until a final judgment as to which there is no
further rights of appeal in the interpleader action is received.
(b) This Agreement shall be construed without regard to any presumption
or other rule requiring construction against the party causing such instrument
to be drafted. The terms "hereby", "hereof", "hereto", "hereunder" and any
similar terms, as used in this Agreement, refer to the Agreement in its entirety
and not only to the particular portion of this Agreement where the term is used.
The word "person" shall mean any natural person, partnership, corporation,
government and any other form of business or legal entity. All words or terms
used in this Agreement, 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. This Agreement shall not be admissible in evidence to
construe the provisions of any prior agreement.
(c) This Agreement shall be binding upon and inure to the benefit of
each party's respective successors and assigns. No other person shall acquire or
have any rights under or by virtue of this Agreement. This Agreement may not be
changed orally or modified, amended or supplemented without an express written
agreement executed among Agent, Purchasers' Designee and Sellers' Designee. This
Agreement is intended to be for the sole benefit of the parties hereto, and
(subject to the provisions of this Section 12(c)) their respective successors
and assigns, and none of the provisions of this Agreement are intended to be,
nor shall they be construed to be, for the benefit of any third person.
(d) This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Florida. The headings in this Agreement
are for purposes of reference only and shall not limit or otherwise affect any
of the terms hereof.
(e) If the date on which or by which Agent is required to take any
action under this Agreement is a day on which Agent is not open for the
transaction of banking business, then the time for performance of such action
shall be extended to the next day on which Agent is open for the transaction of
banking business.
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<PAGE>
13. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signature of all of the parties reflected hereon as the
signatories.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the day and year first above written.
MAKO MARINE INTERNATIONAL, INC.
By: /s/ Douglas W. Baena
Title: President and Chief Executive
Officer
TRACKER MARINE, L.P., a limited
partnership
By: JLM MANAGEMENT COMPANY
GENERAL PARTNER
By: /s/ Kenneth Burroughs
Title: President
CREDIT AMERICA VENTURE CAPITAL,
INC.
By: /s/ Douglas W. Baena
AGENT
SUNTRUST BANK, MIAMI N.A.
By: /s/ Eric M. McKenna
Title: Corporate Trust Officer
Vice President
-8-
January 16, 1997
Mr. Douglas W. Baena
19901 East Country Club Drive
Building Two, Apartment 104
Aventura, Florida 33180
Dear Sir:
Reference is made to an Employment Agreement ("Agreement") dated as of
January 1, 1995, as amended as of June 28, 1995, by and between you ("Employee")
and the undersigned (Corporation").
This is to confirm our understanding and agreement as follows:
1. The Agreement is hereby amended in the following respects:
a. The Corporation shall have the right at any time during the
term of the Agreement to terminate the Agreement at its sole discretion and for
any reason whatsoever immediately upon the giving of 30 days' written notice of
such termination and specifying the effective time thereof; provided, however,
that if the Corporation shall not have terminated Employee prior to April 30,
1997 pursuant to this paragraph, Employee shall have the right at any time
during the term of the Agreement to terminate the Agreement at his sole
discretion upon the giving of 30 days written notice of such termination and
specifying the effective time thereof. Upon either of such terminations, the
Corporation shall pay to Employee a severance payment (the "Severance Payment")
of $75,000 payable in 12 monthly installments of $6,250 each, commencing on the
first day of the calendar month immediately following any such termination
(subject to all required withholding).
<PAGE>
Mr. Douglas W. Baena
January 16, 1997
Page 2
b. Paragraph 1 of the Agreement is deleted and in lieu thereof
Employee agrees to serve in such executive capacity as may be assigned to him
from time to time by the Board of Directors of the Corporation.
c. Paragraphs 4(ii), 6(b) and 9 of the Agreement are hereby
deleted in their entirety.
d. Notwithstanding anything contained in the fourth full
paragraph of Section 13(c) of the Agreement to the contrary, if the Agreement is
terminated by either the Corporation or Employee pursuant to paragraph 1(a)
hereof, and regardless of the payment of severance thereunder, from and after
such termination, the fourth full paragraph of Section 13(c) relating to "Non
Competition" shall no longer apply to Employee; provided, however, that if
Employee engages in any activity that would have been violative of such portion
of Section 13(c) ("Competitive Activity"), then all remaining obligations of the
Corporation with respect to Severance Payment installments to be paid from and
after such Competitive Activity shall thereupon cease, and all rights of
Employee to the remainder of such Severance Payment shall be forfeited.
2. Except as provided in paragraph 1(d) in the event of any conflict
between the provisions of the Agreement and this letter, the provisions of this
letter shall prevail. Except as provided herein, the Agreement shall continue in
full force and effect without change or modification.
If the foregoing correctly sets forth our understanding, please
indicate your agreement in the space provided below.
Very truly yours,
MAKO MARINE INTERNATIONAL, INC.
By: /s/ Hugh Landon Russ, Jr.
Vice President/Secretary
AGREED:
/s/ Douglas W. Baena
EMPLOYMENT AGREEMENT
AGREEMENT, made as of the 1st day of July, 1996 between MAKO MARINE
INTERNATIONAL, INC., a Florida corporation, having its principal place of
business at 4355 N.W. 128 Street, Miami, Florida 33054 (the "Employer") and HUGH
LANDON RUSS, JR., residing at 24-14 Cleveland Street, Hollywood, Florida 33020
(the "Employee").
BACKGROUND OF AGREEMENT
WHEREAS, the Employee is presently employed by the Employer as
Executive Vice President pursuant to an oral understanding;
WHEREAS, the Employer desires to continue to employ the Employee and
reduce to writing the terms of the Employee's employment; and
WHEREAS, the Employee desires to remain in the employ of the Employer
on the terms hereinafter set forth.
THEREFORE, it is mutually agreed between the parties as follows:
1. Employment; Duties. The Employer hereby employs the Employee as
Executive Vice President to supervise and direct the operations of the Employer,
and to perform such other duties consistent with such position as may be
assigned to the Employee by the President of the Employer or board of directors,
and Employee does hereby accept such employment. Employee shall devote his full
business time, attention, energies, and best efforts, to the business of the
Employer and foster the best interests of the Employer and shall follow and
enforce all of the Employer's work rules. Employee recognizes that the services
to be performed by him hereunder may require him to travel outside of Southern
<PAGE>
Florida but he shall not be required to relocate from his present residence to
perform his duties hereunder.
2. Term. Subject to the earlier termination provisions herein, the
Employee's employment shall continue until June 30, 1999.
3. Compensation. As full compensation for his services hereunder, the
Employer shall pay, and the Employee shall accept, an annual base salary in the
sum of One Hundred Thousand Dollars ($100,000) payable in accordance with the
Employer's payroll practices in effect from time to time. The base salary shall
be increased as of July 1 of each year (each an "Adjustment Date") commencing
July 1, 1997 by an amount equal to the Employee's then base salary multiplied by
a fraction, the numerator of which is the difference between the Consumer Price
Index for Miami, Florida ("CPI") on each Adjustment Date during the Term and the
CPI on the date hereof and the denominator is the CPI on the date hereof.
The Employer may, from time to time, consider annual bonuses for the
Employee's based upon the Employee's performance and the performance of the
Employer generally, but nothing contained herein shall obligate the Employer to
grant the Employee any bonus.
4. Benefits. The Employer shall provide the Employee with hospital and
major medical insurance coverage consistent with the coverage afforded other
senior officers of the Employer. In addition, the Employer shall furnish the
Employee the use of a 19__ Ford Explorer and pay the insurance therefore (but no
other operating expenses). The Employee shall be entitled to such paid vacations
2
<PAGE>
sick days and other benefits as are provided to employees generally.
5. Termination. This Agreement and all the rights of the Employee
hereunder shall terminate (a) upon the death of Employee, (b) if the Employee is
unable to perform his duties hereunder as a result of the physical or mental
incapacity of the Employee and such inability continues for a period of eight
(8) consecutive weeks or twelve (12) weeks in any fifty two (52) week period, or
(c) for cause. For purposes of this Agreement, "for cause" means the breach by
the Employee of the terms of this Agreement which is not cured within five (5)
days following receipt of written notice or neglect of duty, gross negligence or
reckless, willful misconduct or the conviction (or plea of nolo contendere) of
the Employee of a crime which constitutes a felony in the jurisdiction involved
during the term hereof.
6. Non-Competition. In consideration of the covenants and undertakings
of the Employer, the Employee agrees that, during the term of his employment
hereunder, and for a period of one (1) year thereafter, the Employee will not,
in any area in which the Employer is doing business at the time of the
Employee's termination, become associated with any entity whether as employee,
agent, shareholder, director, partner, officer or otherwise, which is engaged in
any business which is then being engaged in or contemplated by the Employer.
7. Non-Disclosure of Information. The Employee acknowledges that as a
consequence of his relationship with the Employer, he has been and will be given
3
<PAGE>
access to confidential information including, without limitation, trade secrets,
methods of operation, procedures, improvements, systems, customer lists,
suppliers, and other private and confidential matters concerning the Employer's
business (collectively "Confidential Information"). In consideration of the
covenants of the Employer under this Agreement, the Employee agrees that while
employed and indefinitely thereafter the termination of his employment he shall
maintain such Confidential Information in strictest confidence and shall not
disclose such Confidential Information to third parties, except for the benefit
of the Employer or in the course of performing his duties for the Employer.
8. Injunctive Relief. In the event that the covenants contained in
Section 6 or 7 are breached by the Employee, the Employer shall, be entitled to
an injunction restraining the Employee from disclosing in whole or in part the
Employer's Confidential Information. Nothing herein shall be construed as
prohibiting the Employer from pursuing any other remedies available to it for
such breach or threatened breach.
9. Expenses. The Employee will be reimbursed for any reasonable
business expenses incurred by him in the course of his employment upon
presentation of expense statements or vouchers and such other supporting
information as the Employer may from time to time reasonably request.
10. Employee Stock Option. The Employee has heretofore been granted
options to acquire 15,000 shares of the Employer pursuant to the Employer's
4
<PAGE>
Employee Stock Option Plan. Nothing contained herein is intended to modify and
affect such awards which remain subject to the terms of such Plan.
11. Damages. Any provision to the contrary herein notwithstanding, in
the event of a breach of any provision of this Agreement by the Employer, the
Employee shall be limited to seeking relief for recovery of the base
compensation set forth herein less any monies earned by the Employee from other
employment.
12. Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof. It may not be
changed except by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
13. Assignment. This Agreement shall inure to the benefit of the
Employee and the Employer and be binding upon the employee and the Employer and
the Employer's successors and assigns.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
15. Enforceability. In the event that it is determined that this
Agreement is enforceable in any respect, it shall be construed to apply and be
enforceable to the maximum extent permitted by applicable law.
16. Notices. All notices to the Employee will be sent by certified
mail, return receipt requested, to the address set forth above. Notice by the
Employee to the Employer will be sent certified mail, return receipt requested
5
<PAGE>
to the address set forth above, with a copy to Alan C. Winick, Esq., Winick &
Rich, P.C., 919 Third Avenue, New York, New York 10022. Either party shall have
the right from time to time to notify the other in writing of changes in the
designations under this paragraph.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MAKO MARINE INTERNATIONAL, INC.
By: /s/ Douglas W. Baena
President
/s/ Hugh Landon Russ, Jr.
6
January 16, 1997
Mr. Hugh Landon Russ, Jr.
24-14 Cleveland Street
Hollywood, Florida 33020
Dear Sir:
Reference is made to an Employment Agreement ("Agreement") dated as of
July 1, 1996, by and between you ("Employee") and the undersigned
("Corporation").
This is to confirm our understanding and agreement as follows:
1. The Agreement is hereby amended in the following respects:
(a) The Corporation may terminate this Agreement at its sole discretion
and for any reason whatsoever immediately upon the giving of 30 days' written
notice to Employee of such termination and specifying the effective time
thereof. Upon such termination, the Corporation shall pay to Employee an amount
equal to 50% of Employee's then current annual base salary (such severance
payment shall be subject to all required withholding) (the "Severance Payment"),
which Severance Payment shall be payable in six equal consecutive monthly
installments, commencing on the first day of the calendar month immediately
following any such termination, and subject to the provisions of subparagraph
(b) below.
<PAGE>
Mr. Hugh Landon Russ, Jr.
January 16, 1997
Page 2
(b) If the Agreement is terminated pursuant to paragraph (a) hereof,
paragraph 6 of the Agreement will be amended, effective upon such termination,
to delete the words "and for a period of one (1) year thereafter" in the third
and fourth lines thereof, provided, however, that if Employee engages in any
activity that would have been violative of paragraph 6 of the Agreement
("Competitive Activity") then all remaining obligations of the Corporation with
respect to Severance Payment installments to be paid from and after such
engagement in Competitive Activity shall thereupon cease, and all rights of
Employee to the remainder of such Severance Payment installments shall be
forfeited.
2. Paragraph 1 of the Agreement is deleted and in lieu thereof Employee
agrees to serve in such executive capacity as may be assigned to him by the
Board of Directors of the Corporation. Additionally, the Corporation shall, upon
thirty (30) days prior written notice to Employee, have the right to discontinue
providing Employee with the vehicle currently being provided to Employee, and,
if Employee so chooses, he may purchase such vehicle from the Corporation on
terms mutually satisfactory to the Corporation and the Employee. Also, copies of
all notices to the Corporation shall be provided to Joe C. Greene, Esq., 1340
East Woodhurst, Springfield, Missouri 65804 in lieu of the attorney specified in
Section 16 of the Agreement.
3. In the event of any conflict between the provisions of the Agreement
and this letter, the provisions of this letter shall prevail. Except as provided
herein, the Agreement shall continue in full force and effect without change or
modification.
If the foregoing correctly sets forth our understanding, please
indicate your agreement in the space provided below.
Very truly yours,
MAKO MARINE INTERNATIONAL, INC.
By: /s/ Douglas W. Baena
President
AGREED:
/s/ Hugh Landon Russ, Jr.
January 16, 1997
Mr. Lawrence Tierney
1121 NW 193rd Avenue
Pembroke Pines, Florida 33029
Dear Sir:
Reference is made to an Employment Agreement ("Agreement") dated as of
March 1, 1995, between you ("Employee") and the undersigned (Corporation").
This is to confirm our understanding and agreement as follows:
1. The Agreement is hereby amended in the following respects:
a. At any time following the Closing Date of the Stock
Purchase Agreement dated as of December 4, 1996, by and between the Corporation
and Tracker Marine, L.P., the Corporation may terminate this Agreement at its
sole discretion and for any reason whatsoever immediately upon the giving of
written notice to Employee of such termination and specifying the effective time
thereof. Upon such termination, the Corporation shall pay to Employee an amount
equal to two-thirds of Employee's then current annual base salary (such
severance payment shall be subject to all required withholding (the "Severance
Payment"), which Severance Payment shall be payable in eight equal consecutive
monthly installments, commencing on the first day of the calendar month
immediately following any such termination, and subject to the provisions of
subparagraph (c) below.
b. Paragraph 1 of the Agreement is deleted and in lieu thereof
Employee agrees to serve in such executive capacity as may be assigned to him
from time to time by the Board of Directors of the Corporation.
<PAGE>
Mr. Lawrence Tierney
January 16, 1997
Page 2
c. If employee is terminated pursuant to Section 1(a) hereof,
such termination will be deemed to be "without cause" for purposes of Section 9
of the Agreement provided, however, that if Employee engages in any activity
that would have been violative of Section 9 of the Agreement ("Competitive
Activity"), then all remaining obligations of the Corporation with respect to
Severance Payment installments to be paid from and after such engagement in
Competitive Activity shall thereupon cease, and all rights of Employee to the
remainder of such Severance Payment installments shall be forfeited.
d. Paragraphs 3, 4(iii) and 11(b) of the Agreement are hereby
deleted in their entirety.
2. In the event of any conflict between the provisions of the Agreement
and this letter, the provisions of this letter shall prevail. Except as provided
herein, the Agreement shall continue in full force and effect without change or
modification.
If the foregoing correctly sets forth our understanding, please
indicate your agreement in the space provided below.
Very truly yours,
MAKO MARINE INTERNATIONAL, INC.
By: /s/ Douglas W. Baena
President
AGREED:
/s/ Lawrence Tierney
January 30, 1997
Securities and Exchange Commission
450 5th Street NW
Washington, D.C. 20549
Gentlemen:
We have been furnished with a copy of the response to Item 4 of Form
8-K for the event that occurred on January 29, 1997, to be filed by our former
client, Mako Marine International, Inc. We agree with the statement made in
response to that Item insofar as they relate to our firm.
Very truly yours,
/s/ BDO Seidman, LLP
