<PAGE>
EXHIBIT 10.1(L)
NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY "[***]" ARE SUBJECT TO
A
CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS
EXHIBIT.
COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH
THE SECURITIES
AND EXCHANGE COMMISSION AS PART OF THIS COMPANY'S CONFIDENTIAL
TREATMENT
REQUEST.
ASSET PURCHASE AGREEMENT
DATED AS OF MARCH 30, 2006
AMONG
MARINEMAX OF NEW YORK, INC.,
SURFSIDE-3 MARINA, INC.,
MATTHEW BARBARA,
PAUL BARBARA,
DIANE KEENEY,
ANGELA CHIANESE,
AND
CERTAIN AFFILIATED COMPANIES OF
SURFSIDE 3 MARINA, INC.
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[***] -- CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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SECTION I. TRANSFER OF
ASSETS............................................ 1
1.1.
Purchase and
Sale of Assets.................................... 1
1.2.
Purchased
Assets............................................... 1
(a) Trade
Accounts Receivable................................ 2
(b)
Inventory................................................
2
(c) Intellectual
Property.................................... 2
(d) Prepaid
Expenses......................................... 2
(e) Machinery,
Equipment, Vehicles, Furniture, Fixtures...... 2
(f) Claims and
Rights to the Purchased Assets................ 2
(g) Leased
Personalty........................................ 3
(h) Business
Contracts....................................... 3
(i) Customer and
Supplier Lists.............................. 3
(j) Licenses,
Permits, and Approvals......................... 3
(k) Books and
Records........................................ 3
(l) Computer
Software and Hardware........................... 4
(m)
Names....................................................
4
(n) Phone and
Facsimile Numbers, E-Mail Addresses, and Web
Sites....................................................
4
(o) Leasehold
Interests...................................... 4
(p) Payments
from Manufacturers.............................. 4
(q)
Goodwill.................................................
4
(r) Covenant Not
to Compete.................................. 4
(s) Pending
Sales Contracts.................................. 4
(t) Payments
from Retail Financing Sources................... 4
1.3.
Excluded
Assets................................................ 4
(a) Rights
Hereunder......................................... 4
(b) Corporate
Documents...................................... 5
(c) Records of
Negotiations.................................. 5
(d) Employee
Records......................................... 5
(e) Tax
Records.............................................. 5
(f) Disposed of
Assets....................................... 5
(g)
Cash.....................................................
5
(h)
Bank
Accounts............................................ 5
(i)
[***]....................................................
5
(j) Tax and
Insurance Refunds................................ 5
(k) Non-Trade
Accounts Receivable............................ 5
(l)
Securities...............................................
5
(m)
[***]....................................................
5
SECTION II. ASSUMPTION OF
LIABILITIES.................................... 5
2.1.
Assumed
Liabilities............................................
5
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[***] -- CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
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(a) Performance
Obligations.................................. 5
(b) Assumed
Inventory Floorplan.............................. 6
(c) Customer
Deposits........................................ 6
(d) Accrued
Employee Expenses................................ 6
(e) Unearned
Income.......................................... 6
(f) Assumed
[***] Obligations................................ 6
2.2.
Excluded
Liabilities........................................... 6
(a) Liabilities
Hereunder.................................... 6
(b) Legal and
Accounting Fees................................ 6
(c) Tax
Liabilities.......................................... 6
(d) Liability to
Buyer for Breach............................ 7
(e) Liabilities
to Employees................................. 7
(f) Property and
Personal Injury Liabilities................. 7
(g) Liability
for Medical, Dental, and Disability Benefits... 7
(h) Liability to
Others for Breach........................... 7
(i) Liability
Regarding Employee Welfare and Pension
Benefits.................................................
8
(j)
ERISA....................................................
8
(k) Employee
Grievances...................................... 8
(l) Liability
for Violation of Law........................... 8
(m)
Environmental Laws.......................................
8
(n) Bank Debt
and Other Indebtedness......................... 8
(o) Shareholders
and Affiliates.............................. 8
(p) Trade and
Non-Trade Accounts Payable and Accrued
Expenses.................................................
9
(q) Previously
Collected and Misapplied Accounts............. 9
(r)
Litigation...............................................
9
(s) Liabilities
Not Assumed Hereunder........................ 9
2.3.
No Expansion of
Third-Party Rights............................. 9
SECTION III. PURCHASE
PRICE.............................................. 9
3.1.
Purchase
Price................................................. 9
3.2.
Payment of
Purchase Price...................................... 9
3.3.
Net Working
Capital Adjustment................................. 10
(a) Trade
Accounts Receivable and Prepaid Expenses........... 10
(b)
Inventories..............................................
10
(c) Equipment,
Vehicles, and Machinery....................... 10
(d) [***]
Expense Adjustment................................. 10
(e) Payment of
Net Working Capital Adjustment................ 10
3.4.
Allocation of
Purchase Price................................... 10
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3.5.
Confidentiality................................................
10
SECTION IV. REPRESENTATIONS AND
WARRANTIES............................... 11
4.1.
Representations
and Warranties of Seller, Seller's Affiliates,
and Designated Shareholders....................................
11
(a) Due
Incorporation, Good Standing, and Qualification...... 11
(b) Corporate
Authority...................................... 11
(c) Capital
Stock; Options, Warrants, and Rights............. 11
(d)
Subsidiaries.............................................
12
(e) Financial
Statements..................................... 12
(f) Actions in
the Ordinary Course of Business............... 13
(g) No Material
Change....................................... 13
(h) Title to
Properties...................................... 13
(i) Condition of
Assets and Properties....................... 14
(j) Litigation;
Absence of Claims or Product or Service
Warranties...............................................
14
(k) Licenses and
Permits..................................... 14
(l) No
Violation............................................. 14
(m)
Taxes....................................................
15
(n) Accounts
Receivable...................................... 15
(o)
Contracts................................................
15
(p) Compliance
with Law and Other Regulations................ 16
(q) Employee
Benefit and Employment Matters.................. 17
(r)
Insurance................................................
18
(s) Governing
Documents and Minute Books..................... 18
(t) Intellectual
Property.................................... 18
(u)
Inventories..............................................
19
(v) Sufficiency
of Purchased Assets.......................... 19
(w) Securities
Matters....................................... 19
(x) Accuracy of
Statements................................... 20
4.2.
Further
Representations and Warranties of Designated
Shareholders...................................................
20
(a) Ownership of
Stock....................................... 20
(b) Power of
Designated Shareholders to Execute Agreement.... 20
(c) Agreement
Not in Breach of Other Instruments Affecting
Designated Shareholders..................................
21
4.3.
Representations
and Warranties of Buyer........................ 21
(a) Due
Incorporation, Good Standing, and Qualification...... 21
(b) Corporate
Authority...................................... 21
(c) No
Violation............................................. 21
(d) Accuracy of
Statements................................... 22
(e) SEC
Reports.............................................. 22
(f) Status of
MarineMax Common Stock to be Issued............ 22
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(g) Subsequent
Events........................................ 22
(h) Financial
Ability to Perform............................. 22
(i) [***]
Purchase........................................... 22
SECTION V.
COVENANTS.....................................................
23
5.1.
Covenants of
Seller, Seller's Affiliates, and Designated
Shareholders...................................................
23
(a) Truth of
Representations and Warranties.................. 23
(b) Preservation
of Business................................. 23
(c) No Organic
Change........................................ 23
(d) Ordinary
Course.......................................... 23
(e) Maintenance
of Assets and Properties..................... 24
(f) Satisfaction
of Obligations and Liabilities.............. 24
(g) Books and
Records........................................ 24
(h)
Insurance................................................
24
(i) Entry Into
Obligations................................... 24
(j) No Issuance
of Shares, Options, or Other Securities...... 25
(k) Acquisitions
and Dispositions............................ 25
(l)
Dividends................................................
25
(m)
Compensation.............................................
25
(n)
Employees................................................
25
(o) Right of
Inspection...................................... 25
(p)
Confidentiality..........................................
25
(q) Consents and
Approvals................................... 26
(r)
Recommendation of Board of Directors.....................
26
(s) Approval of
Shareholders................................. 26
5.2.
Further
Covenants of Seller, Seller's Affiliates and Designated
Shareholders...................................................
26
(a) Change of
Name........................................... 26
(b) Filing of
Tax Returns.................................... 26
(c)
Dividends................................................
26
5.3.
Covenants of
Buyer............................................. 26
(a) Truth of
Representations and Warranties.................. 26
(b) Consents and
Approvals................................... 27
5.4.
No
Solicitation................................................
27
5.5.
Good Faith
Efforts............................................. 27
5.6.
Public
Announcements...........................................
27
SECTION VI. CONDITIONS PRECEDENT TO
OBLIGATIONS.......................... 28
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6.1.
Conditions
Precedent to the Obligations of Buyer............... 28
(a) Accuracy of
Representations and Warranties............... 28
(b) Performance
of Agreements................................ 28
(c) Corporate
Approvals...................................... 28
(d) No Material
Adverse Change............................... 28
(e)
Litigation...............................................
28
(f) Proceedings
Satisfactory to Counsel...................... 28
(g) Delivery of
Documents.................................... 28
(h) Closing
Certificate of Seller, Seller's Affiliates, and
Designated Shareholders..................................
29
(i)
Environmental Reports....................................
29
(j)
Leases...................................................
29
(k) Escrow and Security
Agreement............................ 29
(l) Listing on
New York Stock Exchange....................... 29
(m) Termination
of HSR Act Waiting Periods................... 29
(n) Consent of
Brunswick Corporation and Azimut, SPA......... 29
6.2.
Conditions
Precedent to the Obligations of Seller, Seller's
Affiliates and Designated Shareholders.........................
29
(a) Accuracy of
Representations and Warranties............... 29
(b) Performance
of Agreements................................ 30
(c) Corporate
Approval....................................... 30
(d) No Material
Adverse Change............................... 30
(e)
Litigation...............................................
30
(f) Proceedings
Satisfactory to Counsel...................... 30
(g) Delivery of
Documents.................................... 30
(h) Closing
Certificate of Buyer............................. 30
(i)
Leases...................................................
30
(j) Escrow and
Security Agreement............................ 30
(k) Termination
of HSR Waiting Periods....................... 31
SECTION VII. THE
CLOSING.................................................
31
7.1.
Closing........................................................
31
7.2.
Deliveries by
Seller, Seller's Affiliates, and Designated
Shareholders...................................................
31
(a) Instruments
of Conveyance................................ 31
(b) Closing
Certificate of Seller, Seller's Affiliates, and
Designated Shareholders..................................
31
(c) Secretary's
Certificate.................................. 31
(d) Books and
Records........................................ 31
(e) The
Leases............................................... 31
(f) Escrow and
Security Agreement............................ 31
(g) Consents and
Estoppel Letters............................ 31
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(h) Change of
Name........................................... 32
(i) Good
Standing Certificates............................... 32
(j) The
Brunswick and Azimut Consents........................ 32
7.3.
Deliveries by
Buyer............................................ 32
(a) Assumption
of Liabilities................................ 32
(b) Purchase
Price........................................... 32
(c) Closing
Certificate of Buyer............................. 32
(d) Secretary's
Certificate.................................. 32
(e) Consents and
Approvals................................... 32
(f) The
Leases............................................... 32
(g) The Bill of
Sale and Assignment Agreement................ 32
7.4.
Payment of
Creditors........................................... 32
7.5.
Obligations of
All Parties..................................... 33
(a) Third-Party
Claims....................................... 33
(b) Further
Assurances....................................... 33
7.6.
Risk of
Loss...................................................
33
SECTION VIII. WAIVER AND
MODIFICATION.................................... 33
8.1.
Waivers........................................................
33
8.2.
Modification...................................................
33
SECTION IX.
NON-COMPETITION..............................................
33
9.1.
Non-competition................................................
33
9.2.
Duration and
Extent of Restriction............................. 34
9.3.
Restrictions
with Respect to Customers and Employees........... 34
9.4.
Remedies for
Breach............................................ 34
9.5.
Blue Pencil
Provision.......................................... 35
SECTION X.
INDEMNIFICATION...............................................
35
10.1.
Indemnification by
Seller and [***]............................ 35
(a)
General..................................................
35
(b)
Environmental............................................
35
(c) Security for
Seller's and Seller's Affiliates
Obligations..............................................
37
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10.2.
Indemnification by
Buyer....................................... 37
10.3.
Notice and Right to
Defend Third-Party Claims.................. 37
10.4.
[***]
Indemnity................................................
38
(a) [***]
Indemnity.......................................... 38
(b)
Environmental............................................
38
10.5.
[***] Indemnification
Claims................................... 39
(a)
Vehicles.................................................
39
(b) Equipment
and Fixtures................................... 39
(c) Boats and
Accessories.................................... 39
(d) Other
Claims............................................. 39
10.6.
Sole
Remedy....................................................
40
SECTION XI.
GENERAL......................................................
40
11.1.
Indemnity Against
Finders...................................... 40
11.2.
Controlling
Law................................................ 40
11.3.
Notices........................................................
40
11.4.
Entire
Agreement...............................................
41
11.5.
Severability...................................................
41
11.6.
Section
Headings...............................................
41
11.7.
Gender.........................................................
41
11.8.
Survival of
Representations and Warranties..................... 41
11.9.
Counterparts;
Facsimile........................................ 41
11.10.
Subsidiaries...................................................
42
11.11. No
Obligation to Hire..........................................
42
11.12.
Third-Party Beneficiary........................................
42
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ASSET PURCHASE AGREEMENT
AGREEMENT dated as of March 31, 2006, among MARINEMAX OF NEW
YORK,
INC., a Delaware corporation ("Buyer"); SURFSIDE-3 MARINA, INC., a
New York
corporation ("Seller"); the various affiliated companies of Seller
executing
this Agreement (each a "Seller Affiliate" and collectively
"Seller's
Affiliates"); and, solely for the purposes specifically set forth
in this
Agreement, MATTHEW BARBARA, PAUL BARBARA, DIANE KEENEY, and ANGELA
CHIANESE,
(each a "Designated Shareholder" and collectively "Designated
Shareholders").
Seller, together with Seller's Affiliates, sells, rents,
leases,
brokers, provides storage for, and services various boating
products (the
"Watercraft Business").
Buyer, Seller, and Seller's Affiliates desire that Buyer
acquire
substantially all of the assets, properties, rights, and goodwill
of Seller and
Seller's Affiliates and assume various designated liabilities of
Seller and
Seller's Affiliates all upon the terms and conditions set forth in
this
Agreement.
To induce Buyer to enter into and perform this Agreement,
Designated
Shareholders, who directly or indirectly own Seller and Seller's
Affiliates and
will derive substantial benefit from this Agreement, have agreed to
be parties
to this Agreement as specified herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual
covenants set forth herein, the parties agree as follows:
SECTION I.
TRANSFER OF ASSETS
1.1. PURCHASE AND SALE OF ASSETS. Based upon and subject to the
representations, warranties, covenants, agreements, and other terms
and
conditions set forth in this Agreement, Seller and Seller's
Affiliates shall
sell, convey, transfer, assign, and deliver at the Closing (as
defined in
Section 7.1), and Buyer shall purchase, acquire, and accept, or
cause one or
more affiliates of MarineMax, Inc., a Delaware corporation
("MarineMax") to
purchase, acquire, and accept, as provided in Section 2.4, all of
the assets,
properties, rights, and goodwill of Seller and each Seller
Affiliate of every
kind and description, wherever located, used in or associated with
the business
of Seller and each Seller Affiliate, except for the "Excluded
Assets" listed in
Section 1.3.
1.2. PURCHASED ASSETS. The assets, properties, rights, and goodwill
to
be conveyed, transferred, assigned, and delivered by Seller and
each Seller
Affiliate at the Closing pursuant to Section 1.1 are sometimes
herein called the
"Purchased Assets" and shall include, without limitation, all of
the assets and
properties shown on or reflected in the Combined Balance Sheet of
Seller and
Seller's Affiliates as of December 31, 2004 (the "Base Balance
Sheet") and all
assets and properties acquired by Seller and Seller's Affiliates
after the date
of the Balance Sheet and to the Closing Date (as defined in Section
7.1), except
for the Excluded Assets. The Purchased Assets are to be sold to
Buyer free and
clear of any and all liens, claims, charges, liabilities,
obligations, and
security interests of every kind and nature, except for the
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Assumed Liabilities to be assumed pursuant to Section 2.1 hereof.
Without
limiting the foregoing, the Purchased Assets shall include the
following:
(a) TRADE ACCOUNTS RECEIVABLE. All of Seller's and each Seller
Affiliate's trade accounts receivable (the "Trade Accounts
Receivable"),
including, without limitation, those set forth on Schedule 1.2(a)
hereto, which
sets forth the amount of each receivable and the name and mailing
address of the
obligor on each such receivable as of January 31, 2006 and which
schedule shall
be updated to a date three days prior to the Closing Date. As used
herein, Trade
Accounts Receivable and non-trade accounts and notes receivable
("Non-Trade
Accounts Receivable") collectively are called "Accounts
Receivable."
(b) INVENTORY. All of Seller's and each Seller Affiliate's
inventory, including, without limitation, boats, motors, trailers,
parts,
accessories, fuel, and work in process (the "Inventory"),
including, without
limitation, the Inventory set forth on Schedule 1.2(b) hereto,
which is of a
date not more than five days prior to the Closing Date but which
shall be
updated as of the Closing Date.
(c) INTELLECTUAL PROPERTY. All of Seller's and each Seller
Affiliate's intellectual property rights that are owned by or
licensed to Seller
or any Seller Affiliate, including, without limitation, all patents
and
applications therefor, know-how, unpatented inventions, trade
secrets, formulas,
business and marketing plans, ideas for products, production, or
services
developed by or on behalf of Seller or any Seller Affiliate,
copyrights and
applications therefor, trademarks and applications therefor,
service marks and
applications therefor, trade names and applications therefor, and
all names,
fictitious names, logos, and slogans used by Seller or any Seller
Affiliate (the
"Intellectual Property"), including, without limitation, the
Intellectual
Property set forth on Schedule 1.2(c) hereto and any other
Intellectual Property
transferable by Seller or any Seller Affiliate. Attached to
Schedule 1.2(c) are
copies of all such business and marketing plans, license
agreements, product
formulas, copyrighted materials, trademarks, trade names, and
patents and all
applications therefor used in the conduct of or relating to the
business
conducted by Seller and Seller's Affiliates.
(d) PREPAID EXPENSES. All of Seller's and each Seller
Affiliate's
prepaid expenses (the "Prepaid Expenses"), including, without
limitation, the
Prepaid Expenses set forth on Schedule 1.2(d) hereto (including any
prepaid
expenses with respect to the Leased Personalty assumed by Buyer
pursuant to
Section 2.1), as reduced in the ordinary course of business in
accordance with
past historical practices.
(e) MACHINERY, EQUIPMENT, VEHICLES, FURNITURE, FIXTURES. All of
Seller's and each Seller Affiliate's new or used motor vehicles,
furniture,
fixtures, machinery, equipment, tools, and leasehold improvements
(the
"Equipment") related to the sale, service, or storage of marine
retail products,
including, without limitation, the Equipment set forth on Schedule
1.2(e)
hereto.
(f) CLAIMS AND RIGHTS TO THE PURCHASED ASSETS. All of Seller's
and each Seller Affiliate's claims and rights (and benefits arising
therefrom)
related to the Purchased Assets against all persons and entities,
including,
without limitation, all rights against suppliers
2
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[***] -- CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
under warranties covering any of the Equipment and Inventory, other
than claims
and rights to any tax refunds and insurance refunds from any
Excluded Assets.
(g) LEASED PERSONALTY. The assignable leasehold interests
created
by all leases of personal property constituting any part of the
Purchased Assets
or used in connection with the business of Seller or any Seller
Affiliate, under
which Seller or any Seller Affiliate is a lessee, including those
leases that
are capitalized leases and all of Seller's and each Seller
Affiliate rights
arising from any maintenance contracts and deposits in connection
therewith (all
such personal property that Seller or any Seller Affiliate is
leasing as lessee
shall herein be referred to as "Leased Personalty"), including,
without
limitation, the Leased Personalty set forth on Schedule 1.2(g)
hereto and any
other Leased Personalty transferable by Seller or any Seller
Affiliate. Attached
to Schedule 1.2(g) are copies of all the lease agreements listed on
Schedule
1.2(g).
(h) BUSINESS CONTRACTS. All of Seller's and each Seller
Affiliate's assignable sales orders and sales contracts,
quotations, bids,
sales, dealer agreements, storage agreements, brokerage agreements,
service
agreements, service orders, license agreements, supply agreements,
franchise
agreements, sales representative agreements, consulting agreements,
technical
service agreements, and boat show agreements (the "Business
Contracts"),
including, without limitation, each Business Contract set forth on
Schedule
1.2(h) hereto, together with any revenue or other income associated
therewith.
Attached to Schedule 1.2(h) is a complete, accurate, and executed
copy of each
Business Contract that Seller and each Seller Affiliate reasonably
believes will
be in effect on the Closing Date and including any other Business
Contracts
transferable by Seller or any Seller Affiliate.
(i) CUSTOMER AND SUPPLIER LISTS. All of Seller's and each
Seller
Affiliate's current and historical customer and supplier lists and
customer and
supplier records. Schedule 1.2(i) hereto sets forth a list of all
previous
(within the last two years from the date hereof) and existing
customers and
suppliers of Seller and Seller's Affiliates and their last known
business
addresses and phone numbers.
(j) LICENSES, PERMITS, AND APPROVALS. All of Seller's and each
Seller Affiliate's [***] licenses, permits, approvals, and
authorizations of
whatsoever kind and type, governmental or private, issued, applied
for, or
pending, used in the conduct of or relating to the business of
Seller or any
Seller Affiliate (the "Licenses and Permits"). The Licenses and
Permits are set
forth on Schedule 1.2(j) hereto. Attached to Schedule 1.2(j) are
copies of all
Licenses and Permits.
(k) BOOKS AND RECORDS. All of Seller's and each Seller
Affiliate's books and records with respect to the Purchased Assets
and the
business of Seller and each Seller Affiliate, including, without
limitation,
blueprints, drawings, manuals, and other technical papers, and all
accounts
receivable, inventory, maintenance, and asset history records, but
excluding all
employee and tax records (provided, however, that access to such
employee and
tax records shall be provided to Buyer upon written request for a
period of
three years following the Closing Date), but such books and records
shall not
include any personal tax returns or other personal financial
information of any
Designated Shareholder.
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[***] -- CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
(l) COMPUTER SOFTWARE AND HARDWARE. All computer software and
hardware used or intended for use in connection with the business
of Seller or
any Seller Affiliate, owned, leased, or licensed by or to Seller or
any Seller
Affiliate, [***]. Section 1.2(l) hereto constitutes a list of all
computer
software and hardware.
(m) NAMES. All right, title, and interest in and to the name
"Surfside 3 Marina" and any and all names related to or associated
with the
business of Seller or any Seller Affiliate at any time within the
preceding 12
months, and any derivations thereof (the "Names").
(n) PHONE AND FACSIMILE NUMBERS, E-MAIL ADDRESSES, AND WEB
SITES.
All telephone and facsimile numbers and e-mail addresses used by
Seller or any
Seller Affiliate and any web sites developed or owned by Seller or
any Seller
Affiliate.
(o) LEASEHOLD INTERESTS. All of Seller's and each Seller
Affiliate's leasehold interests, as a tenant or otherwise, related
to or arising
from the leases of real property set forth on Schedule 1.2(o)
hereto.
(p) PAYMENTS FROM MANUFACTURERS. All rebates, bonuses,
allowances, refunds, warranty receivables, volume incentives,
market share
bonuses, promotional pricing payments, and all other backend
payments related to
all [***] purchases, and other payments received by Seller or any
Seller
Affiliate from or due and payable to Seller or any Seller Affiliate
from
manufacturers, suppliers, and other third parties other than income
tax refunds
due or owing to Seller and each Seller Affiliate. [***].
(q) GOODWILL. All of Seller's and each Seller Affiliate's
goodwill associated with the Watercraft Business.
(r) COVENANT NOT TO COMPETE. The covenant not to compete
contained in Article IX.
(s) PENDING SALES CONTRACTS. All of Seller's and each Seller
Affiliate's boat contracts, [***] which have not been delivered as
of the
Closing Date as well as all of Seller's and each Seller Affiliate's
boat
contracts, [***] which were not closed as of the Closing Date, as
set forth on
Schedule 1.2(s).
(t) PAYMENTS FROM RETAIL FINANCING SOURCES. All retail
financing
incentives and volume discounts associated with retail financing
placements on
boat sales [***].
Each Schedule provided for in this Section 1.2 also sets forth,
separately as appropriate, the assets and properties of Seller and
each Seller
Affiliate and any purported restriction on the sale, transfer, or
assignment
thereof.
1.3. EXCLUDED ASSETS. The following assets shall be excluded from
the
purchase and sale contemplated by this Agreement (the "Excluded
Assets"):
(a) RIGHTS HEREUNDER. The rights of Seller and Seller's
Affiliates under this Agreement.
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[***] -- CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
(b) CORPORATE DOCUMENTS. The corporate charter, minute and
stock
record books, and corporate seal of Seller and Seller's
Affiliates.
(c) RECORDS OF NEGOTIATIONS. The records of Seller and Seller's
Affiliates relating to the negotiation and sale of stock or
assets.
(d) EMPLOYEE RECORDS. All records of Seller and Seller's
Affiliates with respect to employees, provided that reasonable
access thereto
shall be provided to Buyer upon written request for a period of
three years
following the Closing Date.
(e) TAX RECORDS. All books and records of Seller and Seller's
Affiliates with respect to taxes, provided that reasonable access
thereto shall
be provided to Buyer upon written request for a period of three
years following
the Closing Date.
(f) DISPOSED OF ASSETS. Any assets and properties disposed of
by
Seller or any Seller Affiliate since the date of the Base Balance
Sheet in the
ordinary and usual course of business and as contemplated by this
Agreement.
(g) CASH. All cash and cash equivalents of Seller and Seller's
Affiliates on hand and in banks.
(h) BANK ACCOUNTS. All right, title, and interest in and to
Seller's and Seller's Affiliates bank accounts.
(i) [***].
(j) TAX AND INSURANCE REFUNDS. All tax and insurance refunds
due
or owing to Seller or any Seller Affiliate.
(k) NON-TRADE ACCOUNTS RECEIVABLE. Any Non-Trade Accounts
Receivable, including receivables from affiliates and receivables
out of the
ordinary course of business.
(l) SECURITIES. All securities owned by Seller or any Seller
Affiliate including the capital stock of subsidiaries, including
those set forth
on Schedule 1.3(l) hereto.
(m) [***].
SECTION II.
ASSUMPTION OF LIABILITIES
2.1. ASSUMED LIABILITIES. Buyer shall not assume any liabilities
or
obligations of Seller or any Seller Affiliate, whatsoever the
nature or type,
except that at the Closing, Buyer shall assume the following:
(a) PERFORMANCE OBLIGATIONS. Those nondelinquent performance
obligations of Seller and each Seller Affiliate arising after the
Closing Date
under the Business
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[***] -- CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Contracts, Licenses and Permits, Leased Personalty, and Prepaid
Expenses as
listed in Section 2.1(a) hereto.
(b) ASSUMED INVENTORY FLOORPLAN. The principal amount payable
by
Seller or any Seller Affiliate relating to inventory financing
listed on
Schedule 2.1(b) hereto (the "Assumed Inventory Floorplan"), but
only to the
extent current as of the Closing.
(c) CUSTOMER DEPOSITS. Those obligations and liabilities of
Seller or any Seller Affiliate relating to the customer deposits
set forth on
Schedule 2.1(c) hereto.
(d) ACCRUED EMPLOYEE EXPENSES. The accrued employee expenses of
Seller and each Seller Affiliate set forth on Schedule 2.1(d)
hereto.
(e) UNEARNED INCOME. The unearned storage and other income of
Seller and each Affiliate of Seller set forth on Schedule 2.1(e)
hereto.
(f) ASSUMED [***] OBLIGATIONS. The cost to [***] and that are
listed on Schedule 2.1(f) hereto. Such costs are solely [***] costs
and shall
not include [***] other selling expenses, including sales
commissions.
2.2. EXCLUDED LIABILITIES. Except only with respect to the
Assumed
Liabilities expressly assumed pursuant to Section 2.1, Buyer shall
not be
obligated to directly or indirectly pay, perform, or discharge any
claims,
obligations, or liabilities of Seller or any Seller Affiliate,
including,
without limitation, the following:
(a) LIABILITIES HEREUNDER. Any obligations or liabilities of
Seller, any Seller Affiliate, or any Designated Shareholder under
this
Agreement.
(b) LEGAL AND ACCOUNTING FEES. Any obligations or liabilities
for
legal, accounting, and other fees and expenses incurred by or on
behalf of
Seller, any Seller Affiliate, or any Designated Shareholder in
connection with
the negotiation of the transactions contemplated by this Agreement,
this
Agreement, the sale of the Purchased Assets, the assumption of the
Assumed
Liabilities, and the documents related thereto.
(c) TAX LIABILITIES. Any tax and tax related obligations or
liabilities of Seller or any Seller Affiliate whether or not owed
on or prior to
the Closing Date, including, without limitation, (i) any
obligations or
liabilities (federal, state, local, or foreign) for or related to
taxes on or
measured by the income of Seller or any Seller Affiliate; (ii) any
obligations
or liabilities for federal, state, local, or foreign income and
employee FICA
taxes that Seller or any Seller Affiliate is legally obligated to
withhold
through the Closing Date whether or not Seller or any Seller
Affiliate has
withheld the same as required by law; (iii) any obligations or
liabilities for
employer FICA and unemployment taxes; (iv) any sales, use,
property, and
transfer taxes arising as a result of the operation of the
Watercraft Business
at any time until the Closing Date; (v) any obligations or
liabilities for
franchise and excise taxes relating to the corporate status of
Seller or any
Seller Affiliate; (vi) any obligations or liabilities for property
taxes; and
(vii) any other taxes of any kind or description, [***] which shall
be the
responsibility of Buyer.
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(d) LIABILITY TO BUYER FOR BREACH. Any obligations or
liabilities
of Seller or any Seller Affiliate to the extent that their
existence or
magnitude constitutes or results in a breach of a material
representation,
warranty, covenant, or agreement made by Seller, any Seller
Affiliate, or any
Designated Shareholder to Buyer, or makes any of the information
contained in
this Agreement or any Exhibit, Schedule, or the other documents
delivered by or
on behalf of Seller, any Seller Affiliate, or any Designated
Shareholder (or
their representatives) pursuant to or in connection with this
Agreement or any
of the transactions contemplated hereby untrue in any material
adverse respect.
(e) LIABILITIES TO EMPLOYEES. Except as set forth in Schedule
2.1(d) hereto, any obligations or liabilities of Seller or any
Seller Affiliate
with respect to payroll, bonuses, severance benefits, vacation pay,
sick pay,
and other employment benefits or sums, including, without
limitation, FICA,
workers' compensation premiums, or unemployment premiums and taxes
to or on
behalf of employees of Seller or any Seller Affiliate for any
period prior to
the Closing Date, and any and all obligations or liabilities of
Seller or any
Seller Affiliate, arising under any collective bargaining agreement
or union
contract.
(f) PROPERTY AND PERSONAL INJURY LIABILITIES. Any claims
against
or obligations or liabilities of Seller or any Seller Affiliate for
injury to or
death of persons or damage to or destruction of property
(including, without
limitation, any workers' compensation claim) regardless of when
such claim or
liability is asserted, including, without limitation, any claim,
obligation, or
liability for damages in connection with the foregoing, it being
understood and
agreed that any claim, obligation, or liability asserted after the
Closing Date
arising out of the sale of any product sold by Seller or any Seller
Affiliate or
the performance of any services by Seller or any Seller Affiliate
prior to the
Closing Date, shall be considered to be a claim against or an
obligation or
liability of Seller or a Seller Affiliate for injury to or death of
persons or
damage to or destruction of property and therefore, except as
otherwise provided
for herein, not assumed hereunder by Buyer. Any pending sales
contracts
transferred pursuant to Section 1.2(s) shall be the responsibility
of Buyer for
any obligations in this Section.
(g) LIABILITY FOR MEDICAL, DENTAL, AND DISABILITY BENEFITS. Any
obligations or liabilities of Seller or any Seller Affiliate for
medical,
dental, and disability (both long-term and short-term) benefits,
whether insured
or self-insured, based upon a condition existing on or prior to the
Closing Date
or for claims incurred or disabilities commencing prior to the
Closing Date and
any obligation or liability for the foregoing, regardless of when
accrued and
regardless of when any condition existed, that arises by virtue of
an employment
relationship at any time with Seller or any Seller Affiliate.
(h) LIABILITY TO OTHERS FOR BREACH. Any obligations or
liabilities of Seller or any Seller Affiliate for any breach of
any
representation, warranty, covenant, or agreement, or for any claim
for
indemnification, contained in any contract or other document
referred to in
Section 1.2, agreed to be performed pursuant hereto by Buyer, to
the extent that
such breach or claim arose out of or by virtue of the performance
or
nonperformance by Seller or any Seller Affiliate thereunder prior
to the Closing
Date, it being understood that, as between Seller and Seller's
Affiliates on the
one hand and Buyer on the other hand, this paragraph shall apply
notwithstanding
any provisions that may be contained in any form of consent to the
assignment of
any such contract or document that, by its terms, imposes such
liabilities upon
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FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Buyer and which assignment is accepted by Buyer notwithstanding the
presence of
such a provision, and that the failure by Seller or any Seller
Affiliate to
discharge any such liability shall entitle Buyer to indemnification
in
accordance with the provisions of Section 10.1.
(i) LIABILITY REGARDING EMPLOYEE WELFARE AND PENSION BENEFITS.
Any obligations or liabilities of Seller or any Seller Affiliate up
to the
Closing Date, arising out of or in connection with any past or
present employee
welfare and pension benefit plans of Seller or any Seller
Affiliate, including,
without limitation, any obligations or liabilities of Seller or any
Seller
Affiliate to or on behalf of any past or present employee of Seller
or any
Seller Affiliate arising under any collective bargaining agreement,
union
contract, union health and welfare fund, or similar program.
(j) ERISA. Any obligations or liabilities of Seller or any
Seller
Affiliate with respect to, or arising under the Employee Retirement
Income
Security Act of 1974, as amended ("ERISA"), or any Pension Plan,
Welfare Plan or
Employee Benefit Plan, as each are hereinafter defined or as
defined by ERISA,
and any related trust agreements or annuity contracts not expressly
assumed in
Section 2.1.
(k) EMPLOYEE GRIEVANCES. Any obligations or liabilities of
Seller
or any Seller Affiliate with respect to, or arising under, any
grievance or
complaint brought by any past or present employee of Seller or any
Seller
Affiliate while in the employ of Seller or any Seller Affiliate
during any
period prior to the Closing Date or filed pursuant to any
collective bargaining
agreement to which Seller or any Seller Affiliate is a party or by
which Seller
or any Seller Affiliate is bound related to any period prior to the
Closing
Date.
(l) LIABILITY FOR VIOLATION OF LAW. Any obligations or
liabilities of Seller or any Seller Affiliate arising out of or in
connection
with any violation by Seller or any Seller Affiliate of any
statute, law, or
governmental rule, regulation, policy, or directive, which
violation arises out
of any act or omission relating to Seller or any Seller Affiliate
that occurred
or commenced prior to the Closing Date.
(m) ENVIRONMENTAL LAWS. [***] any obligations or liabilities of
Seller or any Seller Affiliate with respect to, or relating to,
environmental
laws or environmental matters applicable to the business,
properties, or
operations of Seller or any Seller Affiliate for any period prior
to the Closing
Date.
(n) BANK DEBT AND OTHER INDEBTEDNESS. Except as expressly
assumed
pursuant to Section 2.1, any amounts owing by Seller or any Seller
Affiliate to
banks or other persons, firms, or institutions for borrowed funds
and any
obligations or liabilities of Seller or any Seller Affiliate with
respect to any
other indebtedness of Seller or any Seller Affiliate.
(o) SHAREHOLDERS AND AFFILIATES. Any obligations or liabilities
of Seller or any Seller Affiliate with respect to any of its
shareholders or any
Affiliate of Seller or any Seller Affiliate or any such
shareholder. For
purposes of this Agreement, the term "Affiliate" shall mean any
entity in which
any Designated Shareholder is an officer or director or in which
any Designated
Shareholder or Seller or any Seller Affiliate, directly or
indirectly, owns
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FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
or controls 10 percent or more of the equity securities of the
entity, or any
person related to any Designated Shareholder by blood or
marriage.
(p) TRADE AND NON-TRADE ACCOUNTS PAYABLE AND ACCRUED EXPENSES.
Any Trade or Non-Trade Accounts Payable or Accrued Expenses of
Seller or any
Seller Affiliate.
(q) PREVIOUSLY COLLECTED AND MISAPPLIED ACCOUNTS. Any
obligations
or liabilities of Seller or any Seller Affiliate for previously
collected
accounts receivable, misapplied credits, misapplied payments,
overpayments, and
duplicate payments.
(r) LITIGATION. Any obligations or liabilities of Seller or any
Seller Affiliate relating to lawsuits, claims (whether instituted,
pending, or
threatened), or judgments against Seller or any Seller Affiliate or
relating to
the business of Seller or any Seller Affiliate or the use of any of
its assets
or properties relating to any facts or circumstances arising prior
to the
Closing Date.
(s) LIABILITIES NOT ASSUMED HEREUNDER. Consistent with and
without limitation by the specific enumeration of the foregoing,
any obligations
or liabilities not expressly assumed by Buyer pursuant to the
provisions of
Section 2.1.
2.3. NO EXPANSION OF THIRD-PARTY RIGHTS. The assumption by Buyer
of
the Assumed Liabilities, and the transfer thereof by Seller or any
Seller
Affiliate, shall in no way expand the rights and remedies of any
third party
against Seller or any Seller Affiliate or against Buyer, as
assignee of Seller
or any Seller Affiliate, as compared to the rights and remedies
that such third
party would have had against Seller or any Seller Affiliate or
against Buyer, as
assignee of Seller or any Seller Affiliate, had Buyer not assumed
such
liabilities. Without limiting the generality of the preceding
sentence, the
assumption by Buyer of such liabilities shall not create any
third-party
beneficiary rights.
SECTION III.
PURCHASE PRICE
3.1. PURCHASE PRICE. The purchase price for the Purchased Assets to
be
acquired pursuant to Section 1.1 shall be, in addition, as
applicable, to the
assumption of liabilities pursuant to Section 2.1, an amount equal
to the total
of the Base Purchase Price and the Net Working Capital Adjustment.
The Base
Purchase Price (which shall be provided by MarineMax pursuant to
and in
accordance with all applicable law) shall equal [***] of which 55%
shall be paid
in cash or a cashier's check or wire transfer, and 45% shall be
paid in
MarineMax common stock valued based on the average closing price of
MarineMax
common stock during the 10-day period [***] prior to the Closing
Date [***]. The
Net Working Capital Adjustment shall be calculated pursuant to
Section 3.3.
3.2. PAYMENT OF PURCHASE PRICE. Other than as provided in
Section
10.1(d), the purchase price shall be payable in full at the
Closing.
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FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
3.3. NET WORKING CAPITAL ADJUSTMENT. Net Working Capital shall
equal
the value of all trade accounts receivable, inventory, [***] and
prepaid
expenses sold to Buyer pursuant to Section 1.2 less liabilities
assumed pursuant
to Section 2.1.
(a) TRADE ACCOUNTS RECEIVABLE AND PREPAID EXPENSES. Trade
Accounts Receivable and Prepaid Expenses shall be valued at net
realizable value
[***].
(b) INVENTORIES. For purposes of the calculation of the value
of
the Inventory in this Section 3.3(b), the value of the Inventory
shall be
determined as follows: (i) new 2005 and 2006 models shall be dealer
net invoice,
less [***] including, but not limited to, promotional pricing
discounts, market
share bonuses, purchasing and ordering discounts and commitment
bonuses (ii) new
2004 and prior year models shall be dealer net invoice, less 17%;
(iii) used
boats shall be [***] used trade in value, minus the costs of
necessary repairs
to put the boats in good working order [***] and (iv) parts and
accessories
shall be valued at cost less an allowance for obsolete or slow
moving inventory
(parts that have not sold in over one year shall be [***] or Seller
shall
retain). As used in this Section 3.3(b), Inventory refers only to
new and used
boat, motor, trailer, parts, accessory, and fuel inventory. No
amount shall be
due with respect to any work in process (except for any parts
inventory not
included in Section 3.3(b)(iv)).
(c) EQUIPMENT, VEHICLES, AND MACHINERY. Equipment, vehicles,
and
machinery [***] shall be valued at zero.
(d) [***] EXPENSE ADJUSTMENT. Buyer shall pay Seller and
Seller's
Affiliates [***] calculated on a pro rata basis [***]. Such
purchase price
adjustment shall be reduced by the gross profit (sale price less
invoice cost
for new boats and NADA used trade in value for used boats) on any
boat [***]
delivered prior to Closing. These adjustments shall be reflected on
the Closing
Statement.
(e) PAYMENT OF NET WORKING CAPITAL ADJUSTMENT. Any purchase
price
adjustment required under this Section 3.3, shall be added to or
subtracted from
the amount of the cash to be delivered at the Closing Date.
3.4. ALLOCATION OF PURCHASE PRICE. The purchase price shall be
allocated among the Purchased Assets in accordance with their
respective fair
market values. Without limiting the foregoing, the parties agree
that the total
purchase price (including liabilities assumed) for the assets and
properties
purchased pursuant to this Agreement shall be allocated to those
assets and
properties as set forth on Schedule 3.4 hereto, and the parties
agree that the
allocation set forth on Schedule 3.4 hereto has been made in
accordance with the
requirements of Section 1060 of the Internal Revenue Code of 1986,
as amended
(the "Code") and any applicable Treasury Regulations promulgated
thereunder. The
parties, each at its own expense, also agree to file appropriate
forms with the
Internal Revenue Service setting forth the information required to
be furnished
to the Internal Revenue Service by Section 1060 of the Code and the
applicable
Treasury Regulations thereunder.
3.5. CONFIDENTIALITY. Each of Buyer, Seller, Seller's
Affiliates,
Designated Shareholders, and their respective directors,
officers,
representatives, and affiliates shall maintain in confidence all
aspects of the
negotiation of the transactions contemplated by this Agreement
10
<PAGE>
including the determination of the Purchase Price except to the
extent that
disclosure is required by applicable law or any governmental
authority.
SECTION IV.
REPRESENTATIONS AND WARRANTIES
4.1. REPRESENTATIONS AND WARRANTIES OF SELLER, SELLER'S
AFFILIATES,
AND DESIGNATED SHAREHOLDERS. Except as otherwise set forth in the
Seller
Disclosure Schedule heretofore delivered by Seller and Seller's
Affiliates to
and acknowledged as received by Buyer, Seller, Seller's Affiliates,
and
Designated Shareholders jointly and severally represent and warrant
to Buyer, as
follows:
(a) DUE INCORPORATION, GOOD STANDING, AND QUALIFICATION. Each
of
Seller and Seller's Affiliates is a corporation duly organized,
validly
existing, and in good standing under the laws of the jurisdiction
of its
incorporation and has the requisite corporate power and authority
to own,
operate, and lease its assets and properties and to carry on its
business as now
being conducted. Neither Seller nor any Seller Affiliate is subject
to any
material disability by reason of the failure to be duly qualified
as a foreign
corporation for the transaction of business or to be in good
standing under the
laws of any jurisdiction. Schedule 4.1(a) hereto constitutes a list
setting
forth, as of the date of this Agreement, each jurisdiction in which
Seller and
each Seller Affiliate is qualified to do business.
(b) CORPORATE AUTHORITY. Each of Seller and Seller's Affiliates
has the corporate power and authority to enter into this Agreement
and all
related transaction documents contemplated by this Agreement and to
carry out
the transactions contemplated hereby and thereby. The Board of
Directors and
shareholders of Seller and each Seller Affiliate have duly
authorized the
execution, delivery, and performance of this Agreement and all
related
transaction documents contemplated by this Agreement. No other
corporate
proceedings on the part of Seller or any Seller Affiliate are
necessary to
authorize the execution and delivery by Seller or any Seller
Affiliate of this
Agreement or the consummation by Seller or any Seller Affiliate of
the
transactions contemplated hereby. This Agreement has been duly
executed and
delivered by, and constitutes a legal, valid, and binding agreement
of, Seller
and each Seller Affiliate, enforceable against Seller and each
Seller Affiliate
in accordance with its terms, except that (i) such enforcement may
be subject to
bankruptcy, insolvency, reorganization, moratorium, or other
similar laws now or
hereafter in effect relating to creditors' rights, and (ii) the
remedy of
specific performance and injunctive and other forms of equitable
relief may be
subject to equitable defenses and to the discretion of the court
before which
any proceeding therefore may be brought.
(c) CAPITAL STOCK; OPTIONS, WARRANTS, AND RIGHTS. Schedule
4.1(c)
hereto sets forth, as of the date hereof, the authorized and
outstanding capital
stock of Seller and each Seller Affiliate. All of the issued and
outstanding
shares of capital stock of Seller and of each Seller Affiliate have
been duly
authorized and validly issued, are fully paid and nonassessable,
and are free of
preemptive rights. Neither Seller nor any Seller Affiliate has any
treasury
shares. Neither Seller nor any Seller Affiliate has outstanding
any
subscriptions, options, warrants, or other rights to purchase, or
securities or
other obligations convertible into or
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WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
exchangeable for, or contracts, commitments, agreements,
arrangements, or
understandings, to issue, any shares of its capital stock,
membership interests,
or other securities.
(d) SUBSIDIARIES. Schedule 4.1(d) hereto constitutes a list
setting forth, as of the date of this Agreement, (i) the name,
jurisdiction of
incorporation, and list of shareholders of Seller and each Seller
Affiliate; and
(ii) the name and a description of every other person, corporation,
partnership,
limited liability company, joint venture, or other business
association in which
Seller or any Seller Affiliate directly or indirectly owns a
material interest.
The outstanding shares of capital stock of the subsidiaries of
Seller and each
Seller Affiliate are owned as set forth in Schedule 4.1(d) hereto
free and clear
of all claims, liens, charges, and encumbrances. Neither Seller nor
any Seller
Affiliate owns, directly or indirectly, any capital stock or other
equity
securities of any corporation or has any direct or indirect equity
or ownership
interest in any corporation or other business other than with
respect to its
subsidiaries.
(e) FINANCIAL STATEMENTS. The Combined Balance Sheets of Seller
and Seller's Affiliates as of December 31, 2003 and December 31,
2004, as well
as the Combined Statements of Operations, the Combined Statements
of
Shareholders' Equity, and the Combined Statements of Cash Flows of
Seller and
Seller's Affiliates for the two years ended December 31, 2004, and
all related
schedules and notes to the foregoing, have been reported on by
Ernst & Young
LLP, independent public accountants The Combined Balance Sheet of
Seller and
Seller's Affiliates as of December 31, 2005 and the Combined
Statement of
Operations, the Combined Statement of Shareholders' Equity, and the
Combined
Statement of Cash Flows of Seller and Seller's Affiliates for the
year ended
December 31, 2005, and all related schedules and notes to the
foregoing, have
been reported on by Povol & Feldman CPA, PC, independent public
accountants. All
of the foregoing financial statements have been prepared in
accordance with
generally accepted accounting principles, which were applied on a
consistent
basis, and present fairly, in all material respects, the
consolidated financial
position, results of operations, shareholders' equity, and cash
flow of Seller
and Seller's Affiliates as of their respective dates and for the
periods
indicated. Neither Seller nor any Seller Affiliate has any material
liabilities
or obligations of a type that would be included in a combined
balance sheet
prepared in accordance with generally accepted accounting
principles, whether
related to tax or non-tax matters, accrued or contingent, due or
not yet due,
liquidated or unliquidated, or otherwise, except as and to the
extent disclosed
or reflected in the Base Balance Sheet or incurred since the date
of that
balance sheet in the ordinary course of business and as
contemplated by this
Agreement. Notwithstanding anything else contained in this Section
4.1(e), in
the event that Buyer makes a written claim, within the time frames
provided
herein, that any of the representations and warranties contained in
this Section
4.1(e) are untrue, then the December 31, 2005 financial statements
shall be
audited by Ernst & Young, LLP at the [***] expense of [***]
Seller. If Ernst &
Young LLP determines that the net income, after add back for
officers'
compensation, is not less than [***] of the calendar year 2004 net
income, after
add back for officers' compensation, then it shall be deemed that
Buyer has no
damage and the inquiry and allegation is deemed to be satisfied. If
Ernst &
Young LLP determines that the net income, after add back for
officers'
compensation, is less than [***] of the calendar year 2004 net
income, after add
back for officers' compensation, Seller shall pay to Buyer an
amount equal to
the amount of the percentage decrease below [***] in 2004 net
income, after add
back for officers' compensation, multiplied by the Base Purchase
Price, [***],
within 30 days of such
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FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
determination being made by Ernst & Young LLP, which shall be
deducted from
amounts held pursuant to the Escrow and Security Agreement
described below.
[***]
(f) ACTIONS IN THE ORDINARY COURSE OF BUSINESS. Since the date
of
the Base Balance Sheet, neither Seller nor any Seller Affiliate (i)
has taken
any action or entered into any material transaction other than
contemplated
hereby outside the ordinary and usual course of business; (ii) has
borrowed any
money or become contingently liable for any obligation or liability
of another
other than indebtedness not material in the aggregate incurred in
the ordinary
and usual course of business; (iii) has failed to pay any of its
debts and
obligations as they become due; (iv) has incurred any debt,
liability, or
obligation of any nature to any party, except for obligations
arising from the
purchase of goods or the rendition of services in the ordinary and
usual course
of business; (v) has failed to use its best efforts to preserve its
business
organization intact, to keep available the services of its
employees and
independent contractors, or to preserve its relationships with its
customers,
suppliers, and others with which it deals; (vi) has sold,
transferred, leased,
or encumbered any of its assets or properties outside the ordinary
and usual
course of business; (vii) has waived any material right; (viii) has
written off
any assets or properties; or (ix) has hired any employees or
increased the
compensation of any employees outside the ordinary and usual course
of business.
(g) NO MATERIAL CHANGE. Since the date of the Base Balance
Sheet,
there has not been and there is not threatened (i) any material
adverse change
in the financial condition, business, assets, properties, or
operating results
of Seller and Seller's Affiliates taken as a whole; (ii) any loss
or damage
(whether or not covered by insurance) to any of the assets or
properties of
Seller or any Seller Affiliate, which materially affects or impairs
its ability
to conduct its business; or (iii) any mortgage or pledge of any
assets or
properties of Seller or any Seller Affiliate, or any indebtedness
incurred by
Seller or any Seller Affiliate, other than indebtedness, not
material in the
aggregate, incurred in the ordinary and usual course of
business.
(h) TITLE TO PROPERTIES. Except for leased personal property,
each of Seller and Seller's Affiliates has good and marketable
title to and
rightful possession of all of its real and personal assets and
properties,
including all assets and properties reflected in the Base Balance
Sheet or
acquired subsequent to the date of the Base Balance Sheet, except
assets or
properties disposed of subsequent to the date of the Base Balance
Sheet in the
ordinary and usual course of business and as contemplated by this
Agreement.
Except for leased personal property such assets and properties are
subject to no
mortgage, indenture, pledge, lien, claim, encumbrance, charge,
security interest
or title retention, or other security arrangement, except for liens
for the
payment of federal, state, and other taxes, the payment of which is
neither
delinquent nor subject to penalties, and except for other liens and
encumbrances
incidental to the conduct of the business of Seller and Seller's
Affiliates or
the ownership of their assets or properties, which were not
incurred in
connection with the borrowing of money or the obtaining of advances
and which do
not in the aggregate materially detract from the value of the
assets or
properties of Seller and Seller's Affiliates taken as a whole or
materially
impair the use thereof in the operation of their respective
businesses, except
in each case as disclosed in the Base Balance Sheet. All leases
pursuant to
which Seller or any Seller Affiliate leases any substantial amount
of real or
personal property are valid and effective in accordance with their
respective
terms. Schedule 4.1(h) hereto sets forth the location, physical
description,
basis of occupancy,
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WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
ownership, and terms of any mortgages or leases with respect to all
properties
used in the conduct of the Watercraft Business.
(i) CONDITION OF ASSETS AND PROPERTIES. The buildings,
equipment,
machinery, docks, harbors, bulkheads, fixtures, furniture,
furnishings, office
equipment, and all other tangible personal assets and properties
presently used
in, or necessary for the operation of, the business of Seller and
Seller's
Affiliates, do not require any repairs other than normal
maintenance and are in
good operating condition and in a state of good maintenance and
repair. In
addition, [***] there are no issues, including current or pending
legislation or
regulatory actions affecting access to the waterways, customarily
used by Seller
or any Seller Affiliate or the customers of Seller or any Seller
Affiliate, that
would otherwise adversely affect the business of Seller or any
Seller Affiliate.
(j) LITIGATION; ABSENCE OF CLAIMS OR PRODUCT OR SERVICE
WARRANTIES. [***] Seller, any Seller Affiliate, or any Designated
Shareholder,
there are no actions, suits, claims, proceedings, investigations,
or other
litigation pending or, [***] threatened or that could be threatened
against
Seller or any Seller Affiliate, at law or in equity, or before or
by any
federal, state, municipal, or other governmental department,
commission, board,
bureau, agency, or instrumentality that, if determined adversely to
Seller or
any Seller Affiliate, would individually or in the aggregate have a
material
adverse effect on the business, assets, properties, operations,
operating
results, prospects, or condition, financial or otherwise, of Seller
and Seller's
Affiliates taken as a whole (a "Material Adverse Effect"). [***]
any Seller
Affiliate, and any Designated Shareholder, none of Seller or any
Seller
Affiliate is a party to any decree, order, or arbitration award (or
agreement
entered into in any administrative, judicial, or arbitration
proceeding with any
governmental authority) with respect to or affecting any of the
Purchased Assets
(or the use thereof), the Assumed Liabilities, or the Watercraft
Business (or
the conduct thereof). [***] Seller, any Seller Affiliate, or any
Designated
Shareholder, there are no material claims pending, anticipated, or
to the
knowledge of Seller, any Seller Affiliate, or any Designated
Shareholder,
threatened against Seller or any Seller Affiliate with respect to
the quality of
or absence of defects in such products or services.
(k) LICENSES AND PERMITS. Neither Seller nor any Seller
Affiliate
is subject to any material disability or liability by reason of its
failure to
possess any license, permit, franchise, certificate, consent,
approval, or
authorization. Each of Seller and Seller's Affiliates has all
licenses, permits,
franchises, certificates, consents, approvals, and authorizations
of whatever
kind and type, governmental or private, necessary for the business
conducted by
it and the ownership or use of all assets and properties and the
premises
occupied by it except for those, which if not obtained, would not
reasonably be
expected to have a Material Adverse Effect. Schedule 1.2(g) hereto
contains a
true, correct, and complete list of all licenses, permits,
franchises,
certificates, consents, approvals, and authorizations necessary for
the conduct
of the business of Seller and Seller's Affiliates.
(l) NO VIOLATION. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will
not violate or
result in a breach by Seller or any Seller Affiliate of, or
constitute a default
under, or conflict with, or cause any acceleration of any
obligation with
respect to (i) any provision or restriction of any charter, bylaw,
shareholders'
agreement, voting trust, proxy, or other similar agreement; (ii)
any loan
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WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
agreement, indenture, lease, or mortgage of Seller or any Seller
Affiliate;
(iii) any provision or restriction of any lien, lease agreement,
dealer
agreement, contract, or instrument to which Seller or any
Seller
