Exhibit 10.65












                           TRAVIS BOATS & MOTORS, INC.



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                                  SUBORDINATED
                             NOTE PURCHASE AGREEMENT


                          Dated as of December 14, 2001


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                                TABLE OF CONTENTS
                                                                                                               Page

<S>     <C>                                                                                                      <C>

Article I  DEFINITIONS; INTERPRETATION............................................................................1

   1.1  Definitions...............................................................................................1

   1.2  Interpretation............................................................................................1

   1.3  Accounting Terms..........................................................................................2

Article II  ISSUANCE AND SALE OF SECURITIES.......................................................................2

   2.1  Commitment to Purchase....................................................................................2

Article III  CLOSING; CLOSING DELIVERIES..........................................................................2

   3.1  Closing...................................................................................................2

   3.2  Delivery of Securities....................................................................................2

Article IV  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................3

   4.1  Corporate Existence and Power.............................................................................3

   4.2  Corporate and Governmental Authorization; No Contravention................................................3

   4.3  Binding Effect............................................................................................3

   4.4  Financial Information.....................................................................................3

   4.5  Litigation................................................................................................4

   4.6  Compliance with ERISA.....................................................................................4

   4.7  Environmental Matters.....................................................................................4

   4.8  Taxes.....................................................................................................5

   4.9  Compliance with Laws......................................................................................5

   4.10  Title to and Condition of Properties.....................................................................5

   4.11  Not an Investment Company................................................................................5

   4.12  Full Disclosure..........................................................................................5

   4.13  Capitalization...........................................................................................6

   4.14  Non-Existence of Defaults................................................................................6

   4.15  Capital..................................................................................................6

   4.16  Solvency.................................................................................................6

   4.17  Accuracy of Statements...................................................................................6

Article V  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER........................................................7

   5.1  Authorization and Enforceability..........................................................................7

   5.2  Government Approvals......................................................................................7

   5.3  Brokers...................................................................................................7


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Article VI  COMPLIANCE WITH SECURITIES LAWS.......................................................................7

   6.1  Investment Intent of the Initial Purchaser................................................................7

   6.2  Status of Notes...........................................................................................7

   6.3  Status of the Initial Purchaser...........................................................................7

   6.4  Transfer..................................................................................................7

Article VII  CONDITIONS PRECEDENT.................................................................................8

   7.1  Conditions Precedent to the Initial Purchaser's Obligations...............................................8

Article VIII  COVENANTS OF THE COMPANY............................................................................9

   8.1  Information...............................................................................................9

   8.2  Maintenance of Property; Insurance.......................................................................11

   8.3  Compliance with Laws.....................................................................................11

   8.4  Inspection of Property, Books and Records................................................................12

   8.5  Ownership of Stock of Wholly-Owned Subsidiaries..........................................................12

   8.6  Investments..............................................................................................12

   8.7  Restricted Payments on Stock.............................................................................13

   8.8  Maximum Debt to Tangible Net Worth.......................................................................13

   8.9  Senior Indebtedness Outstanding..........................................................................13

   8.10  Consolidations, Mergers and Sales of Assets.............................................................13

   8.11  Changes to the Company's Business.......................................................................13

   8.12  Lease Conversions.......................................................................................13

   8.13  Transactions with Affiliates............................................................................14

   8.14  Senior Indebtedness Consent.............................................................................14

   8.15  Taxes...................................................................................................14

   8.16  No Additional Stores....................................................................................15

Article IX  SUBORDINATION........................................................................................15

   9.1  Extent of Subordination..................................................................................15

Article X  EVENTS OF DEFAULT.....................................................................................15

   10.1  Events of Default.......................................................................................15

   10.2  Consequences of Events of Default.......................................................................17

Article XI  REGISTRATION RIGHTS..................................................................................18

   11.1  Piggyback Registrations.................................................................................18

   11.2  Demand Registration.....................................................................................20

   11.3  Registration Procedures.................................................................................21

   11.4  Expenses of Registration................................................................................22

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   11.5  Registration Indemnification............................................................................22

   11.6  Information to be Furnished by Registered Holders.......................................................24

   11.7  Rule 144 Sales..........................................................................................24

   11.8  Survival of Registration Rights.........................................................................24

Article XII  SURVIVAL AND INDEMNIFICATION........................................................................24

   12.1  Survival................................................................................................24

   12.2  Indemnification.........................................................................................25

Article XIII  GENERAL PROVISIONS.................................................................................25

   13.1  Successors and Assigns..................................................................................25

   13.2  Entire Agreement........................................................................................25

   13.3  Notices.................................................................................................26

   13.4  Amendment and Waiver....................................................................................26

   13.5  Counterparts............................................................................................27

   13.6  Headings................................................................................................27

   13.7  Remedies Cumulative.....................................................................................27

   13.8  Governing Law...........................................................................................27

   13.9  No Third Party Beneficiaries............................................................................27

   13.10  Severability...........................................................................................27

   13.11  Confidentiality........................................................................................27

   13.12  Limitation of Liability................................................................................27

   13.13  Arbitration............................................................................................27

   13.14  Release of Claims......................................................................................28

   13.14  AGREEMENT, THE NOTES OR ANY SALES CONTRACT AND THE NEGOTIATION AND EXECUTION THEREOF...................29

Article XIV  PURCHASER COVENANTS.................................................................................29

   14.1  Tender Offer Covenant...................................................................................29

   14.2  Dilution Protection Covenant............................................................................29

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LIST OF ANNEXES, EXHIBITS AND SCHEDULES

Annex 1- Definitions

Exhibit A-........Form of Note

Exhibit B-........Form of Opinion(s) of Counsel to the Company


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Schedule 4.4(c) - Material Adverse Changes

Schedule 4.14 - Material Defaults on Senior Indebtedness


















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                                  SUBORDINATED
                             NOTE PURCHASE AGREEMENT

         This SUBORDINATED NOTE PURCHASE AGREEMENT (this "Agreement"),  dated as
of December 14,  2001,  is by and between  TRAVIS BOATS & MOTORS,  INC., a Texas
corporation (the "Company"),  and BRUNSWICK CORPORATION,  a Delaware corporation
(the "Initial Purchaser" and, together with such other Persons who may from time
to time hold any Notes, the "Purchasers").

         Subject to the terms and  conditions  set forth  herein,  the Purchaser
desires to purchase from the Company,  and the Company desires to issue and sell
to the Purchaser, promissory notes.

         In consideration of the mutual promises,  representations,  warranties,
covenants  and  conditions  set forth in this  Agreement,  the  parties  hereto,
intending legally to be bound hereby, agree as follows:

                                   ARTICLE I

                           DEFINITIONS; INTERPRETATION

         1.1 Definitions. Unless a clear contrary intention appears, capitalized
terms that are defined in Annex 1 shall have the respective  indicated  meanings
when used in this Agreement or the Notes.

         1.2  Interpretation.  Unless a clear contrary  intention appears or the
context otherwise requires, in this Agreement and the Notes:

         (a) the singular  number , word or phrase  includes the plural  number,
word or phrase and vice versa;

         (b)  reference to any Person  includes  such  Person's  successors  and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually;

         (c) reference to any gender includes each other gender;

         (d) reference to any agreement (including this Agreement and the Annex,
Schedules and Exhibits  hereto),  document or instrument  means such  agreement,
document or instrument as amended or modified and in effect from time to time in
accordance  with the terms  thereof  and, if  applicable,  the terms  hereof and
reference  to any  promissory  note  includes  any  promissory  note which is an
extension or renewal thereof or a substitute or replacement therefor;

         (e)  reference  to any  applicable  law means  such  applicable  law as
amended,  modified,  codified or reenacted,  in whole or in part,  and in effect
from time to time, including rules and regulations promulgated thereunder;

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         (f) unless the context indicates  otherwise,  reference to any Article,
Section, Schedule or Exhibit means such Article or Section hereof or Schedule or
Exhibit hereto;

         (g) "hereunder,"  "hereof,"  "hereto" and words of similar import shall
be deemed  references  to this  Agreement  as a whole and not to any  particular
Article, Section or other provision hereof;

         (h)  "including"  (and  with  correlative   meaning   "include")  means
including  without  limiting the  generality of any  description  preceding such
term; and

         (i) relative to the  determination of any period of time,  "from" means
"from and including" and "to" and "through" means "to but excluding".

         1.3 Accounting Terms. Unless otherwise specified herein, all accounting
terms  used  herein  shall be  interpreted,  and all  accounting  determinations
hereunder shall be made, and all financial  statements  required to be delivered
hereunder  shall be prepared in accordance  with generally  accepted  accounting
principles as in effect from time to time, applied on a basis consistent (except
for changes concurred in by the Company's  independent public  accountants) with
the Base Financials.

                                   ARTICLE II

                         ISSUANCE AND SALE OF SECURITIES

         2.1  Commitment to Purchase.  Subject to the terms and  conditions  set
forth  herein and in  reliance  on the  representations  and  warranties  of the
Company  contained herein,  the Initial Purchaser agrees to purchase  $3,000,000
principal amount of the Company's convertible subordinated notes in the form set
forth as Exhibit A hereto (the "Notes").  The purchase price for the Notes shall
be 100% of the principal amount thereof. The obligation of the Initial Purchaser
to purchase any Notes hereunder at the Closing will expire at 5:00 P.M. (Chicago
time) on December 14, 2001.

                                  ARTICLE III

                           CLOSING; CLOSING DELIVERIES

         3.1 Closing.  The closing of the transactions  contemplated hereby (the
"Closing")  shall  simultaneously  take place at the  offices of Mayer,  Brown &
Platt, 190 South LaSalle Street, Chicago, Illinois and at the offices of Jenkens
& Gilchrist, 600 Congress Avenue, Austin, TX 78701, at such time and date (prior
to December 14,  2001) after all  conditions  to closing have been  satisfied as
shall be agreed  upon by the parties  hereto.  The date of the Closing is herein
sometimes called the "Closing Date."

         3.2 Delivery of Securities. At the Closing, the Company will deliver to
the Initial  Purchaser a Note in such Initial  Purchaser's name, or if requested
by such  Initial  Purchaser,  in the name of a  Subsidiary  or Affiliate of such
Initial  Purchaser,  duly  executed and dated the Closing Date, in the aggregate
principal  amount of $3,000,000 and the Initial  Purchaser  shall deliver to the
Company by wire transfer or certified check $3,000,000.


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                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company hereby  represents and warrants to the Initial Purchaser as
follows:

         4.1  Corporate  Existence  and  Power.  Each  of the  Company  and  its
Subsidiaries is a corporation  duly  incorporated,  validly existing and in good
standing  under  the  laws of its  jurisdiction  of  incorporation,  and has all
corporate powers and all  governmental  licenses,  authorizations,  consents and
approvals  required to carry on its business as now  conducted  except where the
failure to obtain  such  governmental  licenses,  authorizations,  consents  and
approvals  would not  materially  adversely  affect the  business,  consolidated
financial position or consolidated  results of operations of the Company and its
Consolidated  Subsidiaries  and would not in any manner draw into  question  the
validity of any Financing Document.

         4.2 Corporate and Governmental  Authorization;  No  Contravention.  The
execution,  delivery and  performance by the Company of each Financing  Document
are within the  Company's  corporate  powers,  have been duly  authorized by all
necessary  corporate  action,  require no action by or in respect  of, or filing
with,  any  governmental  body,  agency or official  and do not  contravene,  or
constitute a default under,  any provision of applicable law or regulation or of
the  certificate of  incorporation  or by-laws of the Company,  of any agreement
relating to Senior Indebtedness or of any other agreement, judgment, injunction,
order,  decree or other  instrument  that is  material,  individually  or in the
aggregate,  and that is binding  upon the  Company or result in the  creation or
imposition  of any Lien on any asset of the Company or any of its  Subsidiaries.
The Board of Directors of the Company has taken the necessary action so that the
three year  moratorium set forth in the Texas Business  Combination Law does not
apply to the  transactions  contemplated  by this Agreement,  including  without
limitation,  the issuance or the  conversion of the Notes,  or to any subsequent
business combination between the Initial Purchaser and the Company.

         4.3 Binding  Effect.  This  Agreement  constitutes  a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms,  and the Notes,  when  executed  and  delivered in  accordance  with this
Agreement,  will  constitute  valid  and  binding  obligations  of the  Company,
enforceable  against the Company in accordance  with their terms,  except as the
enforceability  thereof may be limited by  bankruptcy,  insolvency or other laws
relating to or affecting  creditors'  rights generally and by general  equitable
principles  (regardless  of  whether  such  enforceability  is  considered  in a
proceeding or action in equity or at law).

         4.4 Financial Information.

         (a) The Base  Financials,  copies of which have been  delivered  to the
Purchaser,  fairly  present,  in conformity with generally  accepted  accounting
principles,   the  consolidated  financial  position  of  the  Company  and  its
Consolidated  Subsidiaries  as of  September  30,  2000 and  their  consolidated
results of operations  and cash flows for the fiscal year of the Company and its
Consolidated Subsidiaries then ended.

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         (b) The unaudited condensed  consolidated  balance sheet of the Company
and its Consolidated  Subsidiaries as of June 30, 2001 and the related unaudited
condensed  consolidated  statements  of income  and cash flows for the three and
nine months  then ended,  set forth in the  Company's  quarterly  report for the
fiscal  quarter ended June 30, 2001 as filed with the Commission on Form 10-Q, a
copy of which has been delivered to the Purchaser, fairly present, in conformity
with generally accepted accounting principles applied on a basis consistent with
the Base Financials,  the consolidated financial position of the Company and its
Consolidated  Subsidiaries  as of such date and their  consolidated  results  of
operations  and cash  flows for such three and nine month  periods  (subject  to
normal year-end adjustments, the absence of footnote disclosure and condensation
pursuant to GAAP and the rules of the Commission).

         (c) Except as set forth in Schedule 4.4(c),  since June 30, 2001, there
has been no material adverse change in the business, financial position, results
of  operations  or prospects of the Company and its  Consolidated  Subsidiaries,
considered as a whole.

         4.5 Litigation.  Except as disclosed in the Company's Form 10-K for the
year ended September 30, 2000 or the Company's quarterly report on Form 10-Q for
the fiscal quarter ended June 30, 2001 as filed with the Commission, there is no
action,  suit or proceeding pending against,  or to the knowledge of the Company
threatened against or affecting,  the Company or any of its Subsidiaries  before
any court or arbitrator or any  governmental  body,  agency or official in which
there is a reasonable  possibility of an adverse decision which could materially
adversely affect the business,  consolidated  financial position or consolidated
results of operations of the Company and its Consolidated  Subsidiaries or which
in any manner draws into question the validity of any Financing Document.

         4.6 Compliance with ERISA.  Each member of the ERISA Group has complied
with its  obligations  under  the  minimum  funding  standards  of ERISA and the
Internal  Revenue  Code with  respect to each Plan and is in  compliance  in all
material  respects  with the  presently  applicable  provisions of ERISA and the
Internal  Revenue Code with  respect to each Plan.  No member of the ERISA Group
has (i) sought a waiver of the minimum  funding  standards  under Section 412 of
the  Internal  Revenue  Code in  respect  of any Plan,  (ii)  failed to make any
contribution or payment to any Plan or Multiemployer Plan, or made any amendment
to any Plan, which has resulted or could reasonably be expected to result, prior
to the first  anniversary  of the maturity of the Notes,  in the imposition of a
Lien or the posting of a bond or other security under Section 302(f) of ERISA or
Section  401(a)(29) or 412(n) of the Internal  Revenue Code,  (iii) incurred any
liability  under  Title  IV of  ERISA  other  than a  liability  to the PBGC for
premiums  under  Section  4007 of ERISA or (iv) within the  preceding  five plan
years, with respect to any Other Plan,  engaged in any transaction  described in
Section 4069 or Section 4212(c) of ERISA.

         4.7 Environmental  Matters.  The Company has reasonably concluded that,
to its best  knowledge,  Environmental  Laws  are  unlikely  to have a  material
adverse effect on the business,  financial  condition,  results of operations or
prospects  of the Company and its  Consolidated  Subsidiaries,  considered  as a
whole.

         (a) As of the date hereof and the Closing Date, to the knowledge of the
Company and its Subsidiaries no material claim, investigation or written inquiry
has been made,  and the  Company is not aware of any  circumstances  which would

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warrant or give rise to such a claim,  investigation or inquiry,  with regard to
the Company or any of its Subsidiaries,  in respect of any facility owned, or to
the knowledge of the Company and its  Subsidiaries,  leased or operated,  either
now or in the  past,  by the  Company  or  any of its  Subsidiaries,  under  the
Comprehensive Environmental Response,  Compensation and Liability Act of 1980 or
pursuant  to any other  Environmental  Law, or by the  Environmental  Protection
Agency or by any state,  local,  municipal or foreign  enforcement agency having
jurisdiction  over the protection of the environment,  or by any other Person in
respect of or under any Environmental Law.

         4.8 Taxes.  United States federal income tax returns of the Company and
its  Subsidiaries  have been filed through the year ended December 31, 2000, and
are  materially  correct  and are not  subject to  amendment  that would have an
material  adverse  effect  on the  Company  and  its  Consolidated  Subsidiaries
considered as a whole.  The Company and its  Subsidiaries  have filed all United
States  federal  income tax returns and all other material tax returns which are
required  to be filed by them and have  paid  all  taxes  due  pursuant  to such
returns or  pursuant  to any  assessment  received  by the Company or any of its
Subsidiaries  other  than any such  taxes  the  amount or  validity  of which is
currently  being  contested in good faith by  appropriate  proceedings  and with
respect to which  reserves in  conformity  with  generally  accepted  accounting
principles  have been  established.  The  charges,  accruals and reserves on the
books  of the  Company  and its  Subsidiaries  in  respect  of  taxes  or  other
governmental charges are, in the opinion of the Company, adequate.

         4.9  Compliance  with Laws.  The Company  and each of its  Subsidiaries
complies with all other  applicable  laws,  ordinances,  rules,  regulations and
requirements of governmental authorities,  except where the failure to so comply
would not  materially  adversely  affect the  business,  consolidated  financial
position  or  consolidated   results  of  operations  of  the  Company  and  its
Subsidiaries  and would not in any manner draw into question the validity of any
Financing Document.

         4.10 Title to and  Condition of  Properties.  As of the date hereof and
the Closing Date (a) the Company and its  Subsidiaries  have good and marketable
title to all of the  properties  and other assets  (real or personal,  tangible,
intangible,  intangible  or mixed) they own or purport to own and (b) all leases
to  which  the  Company  or any of its  Subsidiaries  is a party  as  lessee  or
sublessee  are in full force and  effect,  except for such  defects in title and
such invalidity or  unenforceability  of leases as, in the aggregate,  could not
materially  adversely affect the condition  (financial or otherwise),  earnings,
business affairs or business prospects of the Company and its Subsidiaries taken
as a whole.

         4.11 Not an  Investment  Company.  Neither  the  Company nor any of its
Subsidiaries  is  an  "investment  company"  or a  company  "controlled"  by  an
"investment company" within the meaning of the Investment Company Act of 1940.

         4.12 Full  Disclosure.  As of the date hereof and the Closing Date, all
information  furnished  in writing by the Company to the Initial  Purchaser  for
purposes of or in connection with this Agreement or any transaction contemplated
hereby was true and  accurate in all  material  respects on the date as of which
such information was stated or certified.  As of the date hereof and the Closing
Date, the Company has disclosed to the Initial  Purchaser in writing,  including

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all  disclosures  set forth on the Company's  annual report on Form 10-K for the
fiscal year ended  September 30, 2000,  and all  quarterly  reports filed by the
Company thereafter with the Commission on Form 10-Q and current reports filed by
the Company  thereafter  with the  Commission on Form 8-K, and all filings under
Regulation  14(A) and 14(C) any and all facts (to the extent the Company can now
reasonably foresee), which materially and adversely affect, or may so affect the
business,  operations or financial condition of the Company and its Consolidated
Subsidiaries,  taken as a whole,  or the  ability of the  Company to perform its
obligations under the Financing Documents.

         4.13 Capitalization. The Company's authorized capital stock consists of
50,000,000  shares of common stock,  4,393,009 of which are  outstanding  on the
date  hereof,  and  1,000,000  shares  of  preferred  stock,  none of which  are
outstanding on the date hereof.  Except for (i) the Notes, (ii) certain notes to
shareholder purchasers issued pursuant to a subordinated note purchase agreement
of the Company dated as of the date hereof and (iii) options to purchase 404,964
shares of common stock  pursuant to employee  benefit  plans as in effect on the
Closing Date hereof,  the Company does not have any  commitments,  agreements or
obligations  to issue common stock on  securities  exercisable,  convertible  or
exchangeable for common stock.  The Company has reserved a sufficient  number of
shares of common stock for the issuance of common stock upon the  conversion  of
the Notes at the conversion price in effect on the Closing Date.

         4.14  Non-Existence of Defaults.  Except as set forth in Schedule 4.14,
neither the Company nor any of its  Subsidiaries  is in default  with respect to
any material amount of its existing Debt.

         4.15  Capital.  All  issued  shares and all  outstanding  shares in the
Company's  Subsidiaries as reflected in the Company's  financial  statements are
validly  issued  pursuant to proper  authorization  of the board of directors of
such Subsidiary and are fully paid, and non-assessable. All of the Company's and
its Subsidiaries' issued shares and outstanding capital stock are fully paid and
non-assessable.   The  shares  of  the  Company's  common  stock  issuable  upon
conversion  of the Notes will be fully paid and  non-assessable  when  issued in
accordance with the terms of this Agreement and the Notes.

         4.16 Solvency.  The Company and its Subsidiaries  collectively now have
capital  sufficient to carry on their  respective  business and transactions and
all  business  and  transactions  in which  they are about to engage and are now
solvent and able to pay their debts as they  mature,  and they now own  property
having a value, greater than the amount required to pay all outstanding debts of
the Company and its Subsidiaries.

         4.17 Accuracy of Statements. Neither this Agreement, nor any statement,
list,  certificate  or other  information  furnished or to be furnished by or on
behalf of the Company to the Initial Purchaser in connection with this Agreement
or any of the transactions  contemplated  hereby,  nor any annual,  quarterly or
current  report or proxy  statement  filed by the  Company  with the  Commission
contains or, if filed or delivered on or prior to the Closing Date, will contain
any untrue  statement of a material fact regarding the Company,  or omits or, if
filed or delivered on or prior to the Closing Date will omit to state a material

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fact necessary to make the statements  regarding the Company contained herein or
therein, in light of the circumstances in which they are made, not misleading.

                                   ARTICLE V

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

         The  Initial  Purchaser  represents  and  warrants  to the  Company  as
follows:

         5.1 Authorization and  Enforceability.  The Initial Purchaser has taken
all action  necessary to permit it to execute and deliver this  Agreement and to
carry  out the terms  hereof.  This  Agreement  constitutes  a legal,  valid and
binding  obligation of the Initial  Purchaser,  enforceable  against the Initial
Purchaser in accordance with its terms.

         5.2  Government  Approvals.  To the  best  of the  Initial  Purchaser's
knowledge,  the Initial Purchaser is not required to obtain any order,  consent,
approval or  authorization  of, or to make any  declaration  or filing with, any
governmental  agency in  connection  with the  execution  and  delivery  of this
Agreement and the other  documents and instruments to be executed by it pursuant
hereto or thereto or the  consummation of the transactions  contemplated  hereby
and thereby.

         5.3 Brokers.  The Initial  Purchaser is not  obligated to any broker or
finder or other person, and the Initial Purchaser has not retained any broker or
finder or other  person,  who is entitled to any broker's or finder's fee or any
other  commission or financial  advisory fee in connection with the transactions
contemplated hereby.

                                   ARTICLE VI

                         COMPLIANCE WITH SECURITIES LAWS

         6.1 Investment Intent of the Initial  Purchaser.  The Initial Purchaser
represents  and warrants to the Company that it is acquiring the Notes and, upon
issuance in accordance  with this Agreement,  the Underlying  Shares for its own
account, with no present intention of selling or otherwise distributing the same
to the public.

         6.2 Status of Notes.  The Initial  Purchaser  has been  informed by the
Company that neither the Notes nor the Underlying  Shares have been (or will be)
registered  under the Securities Act or under any state  securities laws (except
pursuant  to Article XI of this  Agreement)  and are being  offered  and sold in
reliance upon federal and state  exemptions for  transactions  not involving any
public offering.

         6.3 Status of the Initial Purchaser.  The Initial Purchaser  represents
and  warrants  to the Company  that it is an  "accredited  investor"  within the
meaning of Regulation D under the Securities Act.

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         6.4 Transfer. Subject to the restrictions of Article IX:

         (a) The Notes and the Underlying Shares may be transferred, without the
need for the  Company's  consent,  pursuant to (i) public  offerings  registered
under the Securities Act, (ii) Rule 144 or 144A promulgated under the Securities
Act (or any similar rule then in force) or (iii) subject to the  conditions  set
forth in Sections 6.4(b) and (c), any other legally available means of transfer.

         (b) In connection  with any transfer of any Notes or Underlying  Shares
described in Section 6.4(a)(iii), the holder of Notes or Underlying Shares shall
deliver  written  notice to the Company  and the holders of Senior  Indebtedness
describing in reasonable detail the proposed transfer,  together with an opinion
of counsel to the effect that such transfer may be effected without registration
of such Notes or Underlying  Shares under the Securities  Act;  provided that no
opinion of counsel shall be needed with respect to a transfer to a Subsidiary or
Affiliate of a holder of Notes or  Underlying  Shares.  Promptly upon receipt of
such written notice and, if applicable,  opinion,  the Company shall prepare and
deliver new  instruments for the Notes or Underlying  Shares being  transferred.
Promptly upon receipt of any opinion to the effect that no  subsequent  transfer
of Notes or Underlying  Shares shall require  registration  under the Securities
Act, the Company shall prepare and deliver in connection  with the  consummation
of the proposed  transfer,  new instruments  for the Notes or Underlying  Shares
being transferred that do not bear the legend referred to in Section 6.4(c).

         (c) Except as provided in Section 6.4(b),  each Note shall be imprinted
with a  legend  substantially  in the form set  forth  at the top of  Exhibit  A
hereto.

                                  ARTICLE VII

                              CONDITIONS PRECEDENT

         7.1 Conditions  Precedent to the Initial Purchaser's  Obligations.  The
obligations  of  the  Initial   Purchaser  to  purchase  Notes  are  subject  to
satisfaction  (or written  waiver) at or prior to the  Closing of the  following
conditions:

         (a) The  representations and warranties of the Company contained herein
shall be true and correct when made and at the Closing Date;

         (b) No action,  suit,  investigation  or proceeding shall be pending or
threatened  before  any  court or  governmental  agency to  restrain,  prohibit,
collect damages as a result of or otherwise challenge this Agreement or any Note
or any transaction contemplated hereby or thereby;

         (c)  Except as set  forth in  Schedule  4.14,  no Event of  Default  or
Default shall have occurred and be  continuing.  In addition,  the Company shall
have received and provided to the Initial  Purchaser a written consent signed by
each  of  the  lenders  of  the  Senior  Indebtedness,  in  form  and  substance
satisfactory to the Initial Purchaser,  consenting to this Agreement,  the Notes
and the  transactions  contemplated  thereby  and  confirming  that no  event of
default  or  default  shall  occur  under the  agreements  governing  the Senior
Indebtedness as a result of the Company entering into the Agreement or the Notes
or performing its  obligations  thereunder.  The Company shall have received and
provided to the Initial  Purchaser a waiver signed by each of the lenders of the

                                       8
<PAGE>

Senior  Indebtedness,   in  form  and  substance  satisfactory  to  the  Initial
Purchaser,  waiving all then  existing  events of default or defaults  under the
agreements governing the Senior Indebtedness.

         (d) The  Initial  Purchaser  shall  have  received  a legal  opinion of
counsel to the Company,  dated the Closing  Date, as to the matters set forth on
Exhibit B hereto;

         (e) All governmental  and third party approvals  necessary or advisable
in connection  with the Note, this Agreement and the  transactions  contemplated
hereby and thereby shall have been obtained and be in full force and effect, and
all applicable waiting periods shall have expired without any action being taken
or  threatened  by any  competent  authority  which would  restrain,  prevent or
otherwise  impose  adverse  conditions  on  the  Note,  this  Agreement  or  the
transactions contemplated hereby and thereby;

         (f) There shall have been no  disruption  or adverse  change  after the
date hereof in the United  States  financial or capital  markets  generally,  as
reasonably determined by the Initial Purchaser;

         (g) The Company shall have delivered to the Initial Purchaser:

                  (i)  certificates of a duly authorized  officer of the Company
         dated as of the Closing Date (A) stating that the  conditions set forth
         in  clauses  (a)  through  (c) and (e) of this  Section  7.1 have  been
         satisfied,  (B) setting forth the resolutions of the board of directors
         of the Company authorizing the execution and delivery of this Agreement
         and the  Note and the  consummation  of the  transactions  contemplated
         hereby and  thereby  and  certifying  that such  resolutions  were duly
         adopted and have not been rescinded or amended and (C) certifying as to
         the  incumbency of the officers of the Company  authorized to sign this
         Agreement  and the other  Financing  Documents  along  with a  specimen
         signature of each such officer;

                  (ii) copies of the  Company's  Certificate  of  Incorporation,
         certified  by the  Secretary  of State of the State of  Texas,  and the
         Company's By-Laws, certified by the Secretary of the Company; and

                  (iii)  such  other  documents  relating  to  the  transactions
         contemplated hereby as the Initial Purchaser may reasonably request.

                                  ARTICLE VIII

                            COVENANTS OF THE COMPANY

         The  Company  agrees  that,  so long as the Initial  Purchaser  has any
obligation to purchase Notes or while any Notes remain outstanding:

         8.1 Information.  The Company will deliver to the Initial Purchaser and
each holder of Notes:

                                       9
<PAGE>

         (a) as soon as available  and in any event within 90 days after the end
of each fiscal year of the Company,  consolidated  balance sheets of the Company
and its  Consolidated  Subsidiaries  as of the end of such  fiscal  year and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for such fiscal year,  setting forth in each case in comparative  form the
figures for the previous fiscal year, all reported on in a manner  acceptable to
the Commission by Ernst & Young LLP or other independent  public  accountants of
nationally  recognized standing and certified as to fairness of presentation and
consistency by an Authorized Financial Officer of the Company;

         (b) as soon as available  and in any event within 45 days after the end
of  each  of the  first  three  quarters  of each  fiscal  year of the  Company,
condensed  consolidated  balance  sheets  of the  Company  and its  Consolidated
Subsidiaries  as  of  the  end  of  such  quarter  and  the  related   condensed
consolidated  statements  of income and cash flows for such  quarter and for the
portion of the Company's  fiscal year ended at the end of such quarter,  setting
forth in each case in comparative form the figures for the corresponding quarter
and the  corresponding  portion  of the  Company's  previous  fiscal  year,  all
certified (subject to normal year-end  adjustments and condensation  pursuant to
the rules of the Commission) as to the fairness of presentation  and consistency
by an Authorized Financial Officer of the Company;

         (c)  simultaneously   with  the  delivery  of  each  set  of  financial
statements  referred  to in  clauses  (a) and (b)  above,  a  certificate  of an
Authorized  Financial  Officer of the Company (i)  setting  forth in  reasonable
detail and including the calculations  required to establish whether the Company
was in compliance with the  requirements of Sections 8.6, 8.7, 8.8, 8.9 and 8.12
hereof on the date of such  financial  statements  and (ii) stating  whether any
Default exists on the date of such  certificate and, if any Default then exists,
setting forth the details  thereof and the action which the Company is taking or
proposes to take with respect  thereto;

         (d) promptly upon the  occurrence of any Default,  a certificate  of an
Authorized  Financial  Officer of the Company  setting forth the details thereof
and the action  which the  Company is taking or  proposes  to take with  respect
thereto;

         (e)  promptly  upon the  mailing  thereof  to the  shareholders  of the
Company  generally,  copies  of all  financial  statements,  reports  and  proxy
statements so mailed;

         (f)  promptly  upon the  filing  thereof,  copies  of all  registration
statements  (other than the exhibits thereto and any registration  statements on
Form S-8 or its  equivalent)  and reports on Forms 10-K,  10-Q and 8-K (or their
equivalents) which the Company shall have filed with the Commission;

         (g) if and when any  member  of the  ERISA  Group  (i)  provides  or is
required to provide notice to the PBGC of any "reportable  event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might  constitute  grounds
for a termination  of such Plan under Title IV of ERISA,  or knows that the plan
administrator  of any Plan has provided or is required to provide  notice of any
such reportable event, a copy of the notice of such reportable event provided or
required to be provided to the PBGC, (ii) receives notice of complete or partial
withdrawal  liability  under Title IV of ERISA or notice that any  Multiemployer
Plan is in reorganization,  is insolvent or has been terminated,  a copy of such
notice, (iii) receives notice from the PBGC under Title IV of ERISA of an intent

                                       10
<PAGE>

to terminate,  impose  liability  (other than for premiums under Section 4007 of
ERISA) in respect  of, or appoint a trustee to  administer  any Plan,  a copy of
such notice,  (iv) applies for a waiver of the minimum  funding  standards under
Section 412 of the  Internal  Revenue  Code with  respect to any Plan, a copy of
such application, (v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA,  a copy of such notice and such other  information as is filed
with the PBGC in connection therewith,  (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA,  a copy of such notice,  (vii)  receives
notice from the PBGC or any plan  administrator of an intent to impose liability
on any member of the ERISA Group with  respect to any Other Plan on account of a
transaction  described  in  Section  4069 or  4212(c)  of ERISA,  a copy of such
notice,  (viii)  receives notice from the PBGC or any plan  administrator  of an
intent to impose  liability on any member of the ERISA Group with respect to any
Other Plan on the basis that such  member of the ERISA  Group is a member of the
"controlled  group" with respect to such Other Plan under Section  412(c)(11) of
the  Internal  Revenue  Code or  Section  4001(a)(14)  of ERISA,  a copy of such
notice,  or (ix)  fails  to make  any  payment  or  contribution  to any Plan or
Multiemployer  Plan or makes any  amendment  to any Plan which has  resulted  or
could  result  in the  imposition  of a Lien or the  posting  of a bond or other
security  under Section  302(f) of ERISA or Section  401(a)(29) or 412(n) of the
Internal Revenue Code, a certificate of an Authorized  Financial  Officer of the
Company setting forth all material and relevant details as to such occurrence or
event and the action,  if any, which the Company or the applicable member of the
ERISA Group proposes or, after  consultation  with counsel,  believes that it is
required to take;

         (h) as soon as  available  and in any event within 45 days prior to the
commencement  of each fiscal year,  budgets of the Company and its  Subsidiaries
prepared in good faith  detailing  proposed  expenditures  and revenues for such
upcoming fiscal year; and

         (i)  from  time to  time  such  additional  information  regarding  the
financial  position or business of the Company or any of its Subsidiaries as any
holder of Notes may reasonably request.

         8.2 Maintenance of Property; Insurance. The Company will keep, and will
cause each of its  Subsidiaries to keep, all property  necessary in its business
in good working order and condition, ordinary wear and tear excepted.

         (a) The  Company  will,  and will  cause each of its  Subsidiaries  to,
maintain  (either in the name of the Company or in such  Subsidiary's  own name)
with financially  sound and responsible  insurance  companies,  insurance on all
their  respective  properties in at least such amounts and against at least such
risks (and with such risk retention and self  insurance) as are usually  insured
against in the same general area by companies of  established  repute engaged in
the same or a similar  business.  The Company will furnish to the holders of the
Notes,  upon  request,  information  presented  in  reasonable  detail as to the
insurance so carried.

         8.3 Compliance with Laws. The Company will comply,  and will cause each
of its  Subsidiaries to comply,  with all applicable  laws,  ordinances,  rules,
regulations   and   requirements   of   governmental    authorities   (including
Environmental Laws and ERISA and the rules and regulations  thereunder)  (except
(i) where the failure to so comply  would not  materially  adversely  affect the

                                       11
<PAGE>

business,  consolidated financial position or consolidated results of operations
of the  Company  and its  Subsidiaries  and  would not in any  manner  draw into
question the validity of any  Financing  Document or (ii) where the necessity of
compliance  therewith is contested in good faith by appropriate  proceedings and
for which adequate  reserves have been  established in accordance with generally
accepted  accounting  principles)  and  will  maintain  and  cause  each  of its
Subsidiaries to maintain all governmental  licenses,  approvals,  authorizations
and  consents  necessary  for the conduct of the business of the Company and its
Subsidiaries  (except where the failure to maintain such governmental  licenses,
approvals, authorizations and consents would not materially adversely affect the
business,  consolidated financial position or consolidated results of operations
of the  Company  and its  Subsidiaries  and  would not in any  manner  draw into
question the validity of any Financing Document).

         8.4 Inspection of Property,  Books and Records.  The Company will keep,
and will  cause each of its  Subsidiaries  to keep,  proper  books of record and
account in which full,  true and correct  entries  shall be made of all dealings
and transactions in relation to its business and activities and will permit, and
will cause each such  Subsidiary  to  permit,  representatives  of any holder of
Notes to visit and inspect any of its properties,  to examine and make abstracts
from any of its books and records (excluding confidential manufacturer contracts
or other such similar  data) and to discuss its  affairs,  finances and accounts
with its officers,  employees and independent  public  accountants,  all at such
reasonable  times and upon reasonable  notice to the Company and as often as may
reasonably  be desired;  provided that (i) unless an Event of Default shall have
occurred  and be  continuing,  the  Company  shall not be  obligated  to pay the
expenses of the holders'  respective  representatives  and (ii) the Company will
have an opportunity to  participate in any  discussions  that take place between
representatives  of any  holder of Notes and the  Company's  independent  public
accountants.

         8.5 Ownership of Stock of Wholly-Owned  Subsidiaries.  The Company will
at all times  maintain,  or cause a  Wholly-Owned  Subsidiary  of the Company to
maintain, ownership of 100% of each class of voting securities of, and all other
equity  securities  (except for  directors'  qualifying  shares) in, each of its
Subsidiaries that shall be a Wholly-Owned  Subsidiary of the Company on the date
hereof  and each  Person  that shall  become a  Wholly-Owned  Subsidiary  of the
Company  after  the date  hereof,  except  in each  case  any such  Wholly-Owned
Subsidiary that shall hereafter be disposed of in its entirety,  consolidated or
merged  with or into the  Company or another  such  Wholly-Owned  Subsidiary  or
liquidated.

         8.6 Investments.  Neither the Company nor any of its Subsidiaries  will
make or acquire after the date hereof any Investment other than:

         (a)  Investments in the Company or in Persons that are  Subsidiaries of
the Company on the date hereof;

         (b) Temporary Cash Investments;

         (c)  negotiable  instruments  endorsed  for  deposit or  collection  or
similar  instruments  received or held by the Company or its Subsidiaries in the
ordinary course of business; and


                                       12
<PAGE>

         (d) promissory  notes and other  Investments  received as consideration
for  facilities  sold,  provided  that  the  aggregate  net  book  value  of all
outstanding  Investments  permitted  by this  clause (d) shall not, at any time,
exceed $2,500,000.

         8.7  Restricted  Payments on Stock.  Neither the Company nor any of its
Subsidiaries   shall  (a)  declare  or  make  any  dividend   payment  or  other
distribution  on any capital stock of the Company (other than dividends  payable
solely in shares of the  Company's  capital  stock) or (b)  declare  or make any
payment on account of the purchase, redemption, retirement or acquisition of the
Company's capital stock.

         8.8 Maximum Debt to Tangible Net Worth. The Company will maintain as of
the last day of each  fiscal  quarter  ending on or after  September  30, 2001 a
ratio of (a) Debt (less the Notes contemplated herein) to (b) Tangible Net Worth
of not more than Four and One-Half to One (4.5:1.0).  "Tangible Net Worth" means
the  book  value  of  the  Company's  assets  less  liabilities   (including  as
liabilities all reserves for  contingencies  and other  potential  liabilities),
excluding from  liabilities  all unearned  income and excluding from such assets
all Intangibles.  "Intangibles"  means and includes general intangibles (as that
term is defined in the Uniform Commercial Code; accounts receivable and advances
due  from  officers,  directors,  member,  owner,  employees,  stockholders  and
affiliates;  leasehold  improvements net of depreciation;  licenses;  good will;
escrow deposits; covenants not to compete; the excess of cost over book value of
acquired assets; franchise fees; organizational costs; finance reserves held for
recourse obligations; capitalized research and development costs.

         8.9 Senior  Indebtedness  Outstanding.  The Company will not permit the
aggregate  outstanding  principal  amount of Senior  Indebtedness at any time to
exceed $110,000,000 plus seasonal or temporary increases.

         8.10 Consolidations,  Mergers and Sales of Assets.  Neither the Company
nor any of its Subsidiaries will (i) consolidate or merge with or into any other
Person,  unless the Company or, except in the case of a merger or  consolidation
to which the Company is a party, a Wholly-Owned Subsidiary of the Company is the
surviving  corporation  or (ii) sell,  lease or  otherwise  transfer  all or any
substantial part of the assets of the Company and its  Subsidiaries,  taken as a
whole,  to any other Person,  provided that this Section 8.10 shall not apply to
mergers,  dissolutions,  reorganizations  or liquidations of Subsidiaries of the
Company that have disposed of all or substantially all of their assets.

         8.11 Changes to the Company's Business.  The Company will not, and will
not permit any of its  Subsidiaries  to,  engage in any business  other than the
Retail Marine Business.

         8.12 Lease Conversions.  With the exception of the Company's operations
in Knoxville, Tennessee and in New Orleans, Louisiana, the Company will not, and
will not permit any of its  Subsidiaries  to, make any Lease  Conversion  in any
calendar year unless:

         (i) the aggregate  consideration  paid or to be paid by the Company and
its Subsidiaries in connection with the termination of leases or the acquisition
of facilities  and related  property  pursuant to such Lease  Conversion and all
other Lease Conversions made during such calendar year would not exceed $250,000
net of any financing; and

                                       13
<PAGE>

         (ii)  to the  extent  such  Lease  Conversion  is  financed  or will be
financed  with  Debt of the  Company  or any of its  Subsidiaries,  such Debt is
incurred within one year of such Lease Conversion.

         8.13  Transactions with Affiliates.  Exclusive of management  services,
financing activities and other business activities conducted pursuant to written
agreements with the Company or one of its Subsidiaries signed prior to September
1, 2001, the Company will not, and will not permit any of its  Subsidiaries  to,
enter into any  transaction  or arrangement  with any Affiliate,  other than the
Company or any of its  Subsidiaries  (including  the purchase  from,  sale to or
exchange of  property  with,  or the  rendering  of any  service by or for,  any
Affiliate),  except in the  ordinary  course of and  pursuant to the  reasonable
requirements of the Company's or such Subsidiary's (as the case may be) business
and upon fair and  reasonable  terms no less  favorable  to the  Company or such
Subsidiary than would be obtained in a comparable arm's-length  transaction with
a Person other than an Affiliate.

         8.14  Senior  Indebtedness  Consent.  Prior to the  Closing  Date,  the
Company  will  obtain  the  consent  of the  requisite  holders  of  the  Senior
Indebtedness to allow the issuance and maturity of the Notes,  without violating
the agreements governing the Senior Indebtedness.

         8.15 Taxes. The Company agrees that any and all payments by the Company
hereunder  or under  the  Notes  shall be made,  free and  clear of and  without
deduction  for any and all present or future Taxes (other than  Excluded  Taxes)
now or  hereafter  imposed  on each  holder  of a Note or its  property.  If the
Company shall be required by law to deduct any Taxes (other than Excluded Taxes)
from or in respect of any sum payable hereunder or under the Notes to any holder
of a Note,  (i) the sum payable  shall be  increased as may be necessary so that
after  making  all  required  deductions  (including  deductions  applicable  to
additional  sums payable under this Section 8.15) such holder receives an amount
equal to the sum it would have received had no such  deductions  been made, (ii)
the Company shall make such  deductions and (iii) the Company shall pay the full
amount  deducted  to  the  relevant  taxing  authority  or  other  authority  in
accordance  with applicable law. For purposes  hereof:  (x) "Taxes" means,  with
respect to any Person, any taxes,  assessments or other governmental  charges on
levies  imposed upon such Person,  such Person's  income or any of such Person's
properties, franchises or assets; and (y) "Excluded Taxes" means, in the case of
payments made to any holder of a Note,  net income taxes and franchise  taxes in
lieu  of net  income  taxes  imposed  on  such  Person  by its  jurisdiction  of
organization,  the  jurisdiction in which its office for maintaining its loan is
located or any political  subdivision of either such  jurisdiction or the United
States or any state or political subdivision thereof.

         (a) The Company  shall pay any present or future  stamp or  documentary
taxes or any other excise or property  taxes,  charges or similar levies ("Other
Taxes")  which arise from any payment made  hereunder or under the Notes or from
the  execution,  delivery or  registration,  or otherwise  with respect to, this
Agreement or the Notes.

         (b) The  Company  shall  indemnify  each  holder of a Note for the full
amount of Taxes (other than Excluded Taxes) and Other Taxes (including any Taxes
(other than  Excluded  Taxes) and Other  Taxes  imposed by any  jurisdiction  on
amounts  payable  under this Section  8.15) paid by such holder of a Note or any

                                       14
<PAGE>

liability  (including  penalties and interest) arising therefrom or with respect
thereto,  whether or not such Taxes (other than  Excluded  Taxes) or Other Taxes
were correctly or legally asserted.  This  indemnification  shall be made within
thirty (30) days from the date a holder of a Note makes written demand therefor.

         (c)  Within  thirty  (30) days  after the date of the  payment of Taxes
(other than  Excluded  Taxes) or Other Taxes,  the Company shall furnish to each
holder of a Note at its address  specified  in Section  13.3,  the original or a
certified copy of a receipt evidencing payment thereof.

         (d) Without  prejudice  to the  survival of any other  agreement of the
Company  hereunder,  the agreements and obligations of the Company  contained in
this  Section  8.15 shall  survive the payment in full of all  obligations  with
respect to the Notes.

         8.16 No  Additional  Stores.  Prior to the Company or its  Subsidiaries
opening any stores or  facilities  in addition to those in existence on the date
of this Agreement,  the Company shall provide  projected balance sheets and cash
flow  projections to the Majority  Noteholders for review and approval;  if such
projections  demonstrate to the Majority Noteholders'  satisfaction that the new
store will be accretive to both net income and operating cash flow by the end of
the first 12 months  following  the  opening  of such new  store,  the  Majority
Noteholders shall not unreasonably withhold such approval.

                                   ARTICLE IX

                                  SUBORDINATION

         9.1 Extent of Subordination. The indebtedness evidenced by the Notes is
subject to the terms of two separate  Subordination  Agreements - Travis  Boats,
Inc.  Indebtedness to Brunswick  Corporation,  each dated as of the date hereof,
one with respect to Transamerica Commercial Finance Corporation as senior lender
and one with  respect  to  Deutsche  Financial  Services  Corporation  as senior
lender. No provision of this Section 9.1 shall be deemed to subordinate,  to any
extent,  any claim or right of any holder of the Notes to any claim  against the
Company by any  creditor  or any other  Person  except to the  extent  expressly
provided in the above referenced Subordination Agreements.

                                   ARTICLE X

                                EVENTS OF DEFAULT

         10.1  Events  of  Default.  For  purposes  of the  Notes,  an "Event of
Default" shall be deemed to have occurred if:

         (a) the Company  fails to pay when due the full amount of interest then
accrued  and unpaid on any Note or the full amount of any  principal  payment on
any Note;

         (b) the  Company  fails to  perform  or  observe  any  other  provision
contained in the Notes or in this  Agreement  and such failure to perform  shall
continue  for 30 days after  notice  thereof from the holders of the Note to the
Company;

                                       15
<PAGE>

         (c) any  representation,  warranty  or  information  contained  in this
Agreement  or required to be  furnished  to any holder of the Notes  pursuant to
this  Agreement,  or any writing  furnished  by the Company to any holder of the
Notes,  is false or  misleading  in any  material  respect  on the date  made or
furnished;

         (d)

         (i) the Company  makes an  assignment  for the benefit of  creditors or
         admits in writing  its  inability  to pay its debts  generally  as they
         become due; or an order, judgment or decree is entered adjudicating the
         Company bankrupt or insolvent;  or any order for relief with respect to
         the  Company is  entered  under the  Federal  Bankruptcy  Code;  or the
         Company  petitions or applies to any tribunal for the  appointment of a
         custodian,  trustee,  receiver or liquidator of the Company,  or of any
         substantial  part  of the  assets  of the  Company,  or  commences  any
         proceeding relating to the Company under any bankruptcy reorganization,
         arrangement,   insolvency,   readjustment   of  debt,   dissolution  or
         liquidation  law  of  any   jurisdiction;   or  any  such  petition  or
         application is filed, or any such proceeding is commenced,  against the
         Company  and  either  the  Company by any act  indicates  its  approval
         thereof,  consent  thereto or  acquiescence  therein or such  petition,
         application or proceeding is not dismissed within 60 days;

         (ii) without notice to, and approval by, the Majority Noteholders,  any
         Subsidiary  of the  Company  makes an  assignment  for the  benefit  of
         creditors or admits in writing its inability to pay its debts generally
         as they  become  due;  or an  order,  judgment  or  decree  is  entered
         adjudicating  any Subsidiary of the Company  bankrupt or insolvent;  or
         any order for relief with respect to any  Subsidiary  of the Company is
         entered under the Federal  Bankruptcy  Code;  or any  Subsidiary of the
         Company  petitions or applies to any tribunal for the  appointment of a
         custodian,  trustee,  receiver or liquidator  of any  Subsidiary of the
         Company,  or of any substantial part of the assets of any Subsidiary of
         the Company,  or commences any proceeding  (other than a proceeding for
         the voluntary  liquidation  and  dissolution  of any  Subsidiary of the
         Company) relating to any Subsidiary of the Company under any bankruptcy
         reorganization,   arrangement,   insolvency,   readjustment   of  debt,
         dissolution  or  liquidation  law of  any  jurisdiction;  or  any  such
         petition or application is filed,  or any such proceeding is commenced,
         against  any  Subsidiary  of  the  Company  and  either  (x)  any  such
         Subsidiary of the Company by any act  indicates  its approval  thereof,
         consent  thereto  or   acquiescence   therein  or  (y)  such  petition,
         application or proceeding is not dismissed within 60 days;

         (e) a judgment in excess of $300,000 is rendered against the Company or
any Subsidiary  and,  within 60 days after entry  thereof,  such judgment is not
discharged or execution  thereof stayed pending appeal,  or within 60 days after
the expiration of any such stay, such judgment is not discharged;

                                       16
<PAGE>

         (f) the Company or any  Subsidiary  defaults in the  performance of any
Senior  Indebtedness,  if the effect of such  default is to cause the demand for
payment and any Senior  Indebtedness  to become due prior to its stated maturity
or to permit  the holder or  holders  of any  Senior  Indebtedness  to cause any
Senior Indebtedness to become due prior to its stated maturity;

         (g) the financial ratio covenants under any agreement  governing Senior
Indebtedness  is breached and such breach is not cured (by amendment,  waiver or
otherwise) within 90 days;

         (h) the Company or any  Subsidiary  defaults in the  performance of any
obligation  other than Senior  Indebtedness  if the effect of such default is to
cause an amount exceeding $250,000 to become due prior to its stated maturity or
to permit the holder or holders of such obligation to cause an amount  exceeding
$250,000 to become due prior to its stated maturity; or

         (i) at any  time any  Person  or group of  Persons  acting  in  concert
directly or indirectly owns,  controls or has the power to vote more than 50% of
the shares of Common Stock then outstanding.

         10.2 Consequences of Events of Default.  Subject to the restrictions of
Article IX:

         (a) If an Event of Default of the type described in Section  10.1(a) or
(b) has  occurred  and  continued  for 15 days or any other Event of Default has
occurred,  the  interest  rate on the Notes  shall  increase  immediately  by an
increment of 5  percentage  points to the extent  permitted by law.  Thereafter,
until such time as no Event of Default exists,  the interest rate shall increase
automatically  at the end of each  succeeding  30-day  period  by an  additional
increment of 1 percentage  point to the extent permitted by law (but in no event
shall the interest rate exceed 18%). If any other Event of Default  described in
Section  10.1(a) or (b) occurs;  the interest  rate on the Notes shall  increase
immediately  by an increment of 2 percentage  points to the extent  permitted by
law. Any  increase of the interest  rate  resulting  from the  operation of this
subparagraph shall terminate as of the close of business on the date on which no
Event of Default  exists  (subject  to  subsequent  increases  pursuant  to this
subparagraph).

         (b) If an Event of Default of the type described in Section  10.1(d)(i)
has occurred,  the aggregate  principal  amount of the Notes  (together with all
accrued interest thereon and all other amounts payable in connection  therewith)
shall become  immediately  due and payable without any action on the part of the
holders of the Notes,  and the Company shall,  subject to Article IX, pay to the
holders of the Notes all amounts due and payable with respect to the Notes.

         (c) If any  Event of  Default  (other  than an Event of  Default  under
Section  10.1(d)(i)) has occurred,  the Majority  Noteholders may declare all or
any portion of the outstanding  principal amount of the Notes (together with all
accrued interest thereon and all other amounts due in connection  therewith) due
and payable and demand,  subject to Article IX, payment of all or any portion of
the outstanding  principal  amount of the Notes owned by such holder or holders.
The  Company  shall give prompt  written  notice of any such demand to the other
holders of Notes,  each of which may,  subject to Article IX, demand  payment of
all or any portion of such  holder's Note and the Company shall also give a copy
of such demand to the holders of Senior  Indebtedness  concurrently with sending
such demand to the other holders of Notes. If any holder or holders of the Notes

                                       17
<PAGE>

demand  immediate  payment and all or any portion of such  holder's  Notes,  the
Company shall,  subject to Article IX, pay to such holder or holders all amounts
due and payable with respect to such Notes.

         (d) Each holder of the Notes shall also have any other rights,  subject
to Article IX,  which such holder may have been  afforded  under any contract or
agreement at any time and any other  rights which such holder may have  pursuant
to applicable law.

         (e) The  Company  hereby  waives  diligence,  presentment,  protest and
demand and notice of protest and demand,  dishonor and  nonpayment  of any Note,
and expressly  agrees that any Note, or any payment  hereunder,  may be extended
from time to time and that the holder  thereof may accept  security for any Note
or release security for any Note, all without in any way affecting the liability
of the Company hereunder.

                                   ARTICLE XI

                               REGISTRATION RIGHTS

         11.1 Piggyback Registrations.

         (a) If the Company  proposes to register  any shares of Common Stock or
any securities  convertible into shares of Common Stock under the Securities Act
(other than pursuant to (i) a registration on Form S-4 or any successor form, or
(ii) an offering of  securities in connection  with an employee  benefit,  share
dividend,  share ownership or dividend  reinvestment  plan) and the registration
form to be used may be used for the  registration  of  Registrable  Shares,  the
Company will give prompt written notice to all holders of Registrable  Shares of
its intention to effect such a registration  (each,  a "Piggyback  Notice") and,
subject to Section  11.1(b)  and (c) below,  the  Company  will  include in such
registration  all  Registrable  Shares  with  respect to which the  Company  has
received  written  requests for inclusion  therein within 15 business days after
the date of sending the Piggyback Notice (a "Piggyback  Registration"),  unless,
if the Piggyback  Registration is not an underwritten  offering,  the Company in
its  reasonable  judgment  determines  that,  or in the case of an  underwritten
Piggyback Registration,  the managing underwriters advise the Company in writing
that in their  opinion,  the  inclusion of  Registrable  Shares would  adversely
interfere  with such  offering,  affect the  Company's  securities in the public
markets, or otherwise adversely affect the Company.  Nothing herein shall affect
the  right  of the  Company  to  withdraw  any  such  registration  in its  sole
discretion.

         (b) If a Piggyback  Registration is a primary registration on behalf of
the Company and, if the Piggyback  Registration is not an underwritten offering,
the Company in its  reasonable  judgment  determines  that, or in the case of an
underwritten  Piggyback  Registration,  the  managing  underwriters  advise  the
Company in writing that in their opinion,  the number of securities requested to
be included  in such  registration  exceeds  the number  which can be sold in an
orderly manner within a price range  reasonably  acceptable to the Company,  the
Company will include in such  registration (i) first, the securities the Company
proposes  to sell  and (ii)  second,  the  Registrable  Shares  requested  to be
included in such Registration and any other securities  requested to be included
in  such  registration,  pro  rata  among  the  holders  of  Registrable  Shares

                                       18
<PAGE>

requesting  such  registration  and the holders of such other  securities on the
basis of the number of securities  requested for inclusion in such  registration
by each such holder.

         (c) If a Piggyback  Registration is a demand  registration  pursuant to
the Subordinated Note Purchase Agreement between the Company and the Shareholder
Purchasers named therein dated as of December 14, 2001 (the "Junior Subordinated
Purchase Agreement) , and if such Piggyback  Registration is not an underwritten
offering,  the Company determines that, or if such Piggyback  Registration is an
underwritten  offering,  the managing underwriters advise the Company in writing
that in their opinion,  the number of securities  requested in such registration
exceeds  the  number  which can be sold in an  orderly  manner in such  offering
within a price range acceptable to the holders requesting such registration, the
Company will include in such registration (i) first, the securities requested to
be included in such  registration  by the  holders of  "Registrable  Shares" (as
defined in the Junior Subordinated Purchase Agreement),  (ii) any securities the
Company  proposes to sell and (iii) the  Registrable  Shares (as defined in this
Agreement)  requested  to  be  included  in  such  registration  and  any  other
securities  requested  to be included in such  registration,  pro rata among the
holders of Registrable  Shares (as defined in this  Agreement)  requesting  such
registration and the holders of such other securities on the basis of the number
of shares requested for inclusion in such registration by each such holder.

         (d) If a Piggyback  Registration is a secondary registration other than
as described in Section 11.1(c) on behalf of holders of the Company's securities
other than the holders of Registrable Shares, and, if the Piggyback Registration
is not an underwritten  offering, the Company determines that, or in the case of
an underwritten  Piggyback  Registration,  the managing  underwriters advise the
Company in writing that in their opinion,  the number of securities requested to
be included  in such  registration  exceeds  the number  which can be sold in an
orderly manner in such offering  within a price range  acceptable to the holders
initially  requesting  such  registration,  the  Company  will  include  in such
registration  the  securities  requested  to be included  therein by the holders
requesting such registration and the Registrable Shares requested to be included
in such registration,  pro rata among the holders of securities  requesting such
registration on the basis of the number of securities requested for inclusion in
such registration by each such holder.

         (e) In the case of an underwritten Piggyback Registration,  the Company
will  have the  right to select  the  investment  banker(s)  and  manager(s)  to
administer the offering.  If requested by the  underwriters for any underwritten
offerings by Registered  Holders,  under a  registration  requested  pursuant to
Section 11.1(a), the Company will enter into a customary  underwriting agreement
with such  underwriters  for such offering,  which  agreement shall contain such
representations  and  warranties  by the  Company and such other terms which are
customarily  contained  in  agreements  of this  type.  The  Registered  Holders
requesting registration shall be a party to such underwriting agreement and may,
at their  option,  require  that any or all of the  conditions  precedent to the
obligations  of such  underwriters  under such  underwriting  agreement  also be
conditions  precedent to the obligations of Registered  Holders.  The Registered
Holders  shall not be required to make any  representations  or warranties to or
agreement  with the  Company or the  underwriters  other  than  representations,
warranties or agreements  regarding the  Registered  Holders and the  Registered
Holders'  intended  method  of  distribution  and any  other  representation  or
warranties required by law.

                                       19
<PAGE>

         11.2 Demand Registration. The holders of the Registrable Shares, at any
time, may require the Company to effect the  registration of Registrable  Shares
pursuant to this Section 11.2; provided that no registration  statement shall be
required to be initiated or declared  effective prior to the date that the Notes
may be converted in accordance  with the terms of paragraph 3 of the Notes.  The
right to demand  registration  under this  Section  11.2 may be exercised on two
separate occasions;  provided, that if a request is withdrawn in accordance with
the terms  hereof,  it shall not be deemed to be a demand  for  registration.  A
shelf  registration may be demanded  pursuant to this Section 11.2. These demand
registration  rights may only be exercised if the  Majority  Registered  Holders
give  notice to the  Company to the effect that  holders of  Registrable  Shares
intend to (i) transfer all or any part of the Registrable Shares or (ii) convert
all or any part of the Notes  and  transfer  all or any part of the  Registrable
Shares  issuable upon the  conversion  thereof under such  circumstances  that a
public  distribution   (within  the  meaning  of  the  Securities  Act)  of  the
Registrable  Shares will be involved,  then the Company (A) within 10 days after
receipt of such notice  shall give written  notice of the proposed  registration
pursuant to this Section 11.2 to the other holders of Registrable Shares and (B)
within  45 days  after  receipt  of such  notice  from the  Majority  Registered
Holders,  shall file a registration  statement pursuant to the Securities Act in
order that all Registrable Shares of the holders requesting registration thereof
either pursuant to the original notice from the Majority Registered Holders give
pursuant to this sentence or by written  notice given to the Company during such
45-day  period,  may  be  sold  under  the  Securities  Act  as  promptly  as is
practicable thereafter. The Company shall use its best efforts to cause any such
registration  to become  effective as promptly as is practicable and to keep the
prospectus  included  therein  current  for 135 days  after the  effective  date
thereof or until the  distribution  shall be completed,  whichever first occurs;
provided,  however,  that such  holders  shall  furnish  the  Company  with such
appropriate  information as is required in connection with such  registration as
the  Company  may  reasonably  request in  writing.  If, at the time the Company
receives  notice  pursuant  to this  Section  11.2,  it would be  impossible  or
impracticable  to include the Company's  most recent fiscal  year-end  financial
statements  as the most recent  certified  financial  statements  required to be
included in the  registration  statement,  the Company's  obligation to effect a
registration  pursuant  to this  Section  11.2  shall  be  suspended  until  the
Company's next fiscal year-end  financial  statements are due in accordance with
applicable securities law regulations applicable to reporting companies,  and at
which time the  Company  shall  again be  required  to effect  the  registration
pursuant to this  Section  11.2 unless the  request  for  registration  has been
withdrawn by the Majority Registered  Holders.  If the managing  underwriter for
any  offering  made  pursuant to this Section 11.2 (who shall be selected by the
Majority  Registered  Holders,  subject  to the  consent of the  Company,  which
consent shall not be unreasonably withheld) advises the Company in writing that,
in its opinion,  the inclusion of all of the Registrable  Shares requested to be
included  in such  registration  by the  holders  of  Registrable  Shares  would
materially adversely affect the distribution of all such securities,  then there
shall be  included  in such  registration  only the  shares  of the  holders  of
Registrable Shares pro rata based on the number of shares originally proposed to
be registered by each holder of  Registrable  Shares and no other  securities of
the Company may be included in such  registration.  In lieu of having its number
of  Registrable  Shares  included in the  registration  reduced  pursuant to the
previous  sentence,  any holder of  Registrable  Shares thereof may, at its sole
option,  delay its  offering  and sale for a period not to exceed 120 days after
the  effective  date of such  registration  as such managing  underwriter  shall
reasonably  request.  In the event of such delay, the Company shall use its best
efforts to effect any registration or qualification under the Securities Act and

                                       20
<PAGE>

the  securities  or blue sky laws of any  jurisdiction  as may be  necessary  to
permit such prospective  seller to make its proposed offering and sale following
the end of such  period  of  delay.  A  registration  will not count as a demand
registration  under this  Section  11.2 until it has  become  effective  and the
holders of the Registrable Shares  participating in the demand  registration are
able to  register  and sell at least 90% of the  Registrable  Shares  originally
requested to be included in such registration.

         11.3 Registration Procedures.

         (a) The Company shall  promptly  notify the  Registered  Holders of the
occurrence of the following events:

                  (i)  when  any   registration   statement   relating   to  the
                  Registrable  Shares or post-effective  amendment thereto filed
                  with the Commission has become effective;

                  (ii)  the  issuance  by  the  Commission  of  any  stop  order
                  suspending the  effectiveness  of any  registration  statement
                  relating to the Registrable Shares;

                  (iii)  the  Company's  receipt  of  any  notification  of  the
                  suspension  of the  qualification  of any  Registrable  Shares
                  covered  by  a   registration   statement   for  sale  in  any
                  jurisdiction; and

                  (iv) the  existence of any event,  fact or  circumstance  that
                  results in a registration  statement or prospectus relating to
                  Registrable  Shares or any  document  incorporated  therein by
                  reference  containing an untrue  statement of material fact or
                  omitting  to  state a  material  fact  required  to be  stated
                  therein  or  necessary  to make  the  statements  therein  not
                  misleading during the distribution of securities.

         The Company  agrees to use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of any such registration statement or any
state  qualification  as promptly as possible.  The Registered  Holder agrees by
acquisition of the  Registrable  Shares that upon receipt of any notice from the
Company  of the  occurrence  of any  event  of the  type  described  in  Section
11.3(a)(ii),  (iii)  or (iv)  to  immediately  discontinue  its  disposition  of
Registrable  Shares  pursuant  to any  registration  statement  relating to such
securities  until the  Registered  Holder's  receipt of written  notice from the
Company that such disposition may be made.

         (b) The Company shall provide to the Registered  Holders, at no cost to
the Registered  Holders, a copy of the registration  statement and any amendment
thereto  used  to  effect  the  registration  of the  Registrable  Shares,  each
prospectus contained in such registration statement or post-effective  amendment
and any  amendment  or  supplement  thereto  and  such  other  documents  as the
requesting  Registered Holders may reasonably request in order to facilitate the
disposition of the Registrable  Shares covered by such  registration  statement.
The  Company  consents  to the use of each such  prospectus  and any  supplement
thereto by the  Registered  Holders in connection  with the offering and sale of
the Registrable  Shares covered by such registration  statement or any amendment

                                       21
<PAGE>

thereto.  The  Company  shall  also  file a  sufficient  number of copies of the
prospectus  and any  post-effective  amendment  or  supplement  thereto with the
securities exchange or market on which shares of Common Stock are then listed so
as to enable the  Registered  Holders  to have the  benefits  of the  prospectus
delivery provisions of Rule 153 under the Securities Act, if applicable.

         (c) The Company agrees to use its best efforts to cause the Registrable
Shares covered by a registration  statement to be registered with or approved by
such state  securities  authorities as may be necessary to enable the Registered
Holders to consummate  the  disposition  of such shares  pursuant to the plan of
distribution set forth in the registration statement.

         (d) If any event,  fact or  circumstance  requiring  an  amendment to a
registration  statement  relating to the  Registrable  Shares or supplement to a
prospectus  relating to the  Registrable  Shares shall exist,  immediately  upon
becoming aware thereof the Company  agrees to notify the Registered  Holders and
prepare and furnish to the Registered Holders a post-effective  amendment to the
registration   statement  or  supplement  to  the  prospectus  or  any  document
incorporated  therein by reference or file any other required  document so that,
as  thereafter  delivered  to the  purchasers  of the  Registrable  Shares,  the
prospectus  will not contain an untrue  statement of a material  fact or omit to
state any material fact  required to be stated  therein or necessary to make the
statements therein not misleading.

         (e) The Company  agrees to use its best efforts  (including the payment
of any listing fees) to obtain the listing of all Registrable  Shares covered by
the  registration  statement on each securities  exchange on which securities of
the same class or series are then listed.

         (f) The  Company  agrees to use its best  efforts  to  comply  with the
Securities  Act and the  Exchange Act in  connection  with the offer and sale of
Registrable  Shares  pursuant  to a  registration  statement,  and,  as  soon as
reasonably  practicable  following  the end of any fiscal  year  during  which a
registration  statement effecting a Registration of the Registrable Shares shall
have been  effective,  to make  available  to its  security  holders an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act.

         (g) The Company agrees to cooperate with the selling Registered Holders
to facilitate the timely  preparation and delivery of certificates  representing
Registrable  Shares to be sold  pursuant to a  Registration  and not bearing any
Securities Act legend; and enable certificates for such Registrable Shares to be
issued for such numbers of shares and registered in such names as the Registered
Holders may  reasonably  request at least two business days prior to any sale of
Registrable Shares.

         11.4 Expenses of  Registration.  The Company shall pay all Registration
Expenses  incurred  in  connection  with  the  registration,   qualification  or
compliance  pursuant to Article XI. All Selling Expenses  incurred in connection
with the sale of Registrable  Shares by any of the  Registered  Holders shall be
borne by the Registered Holder selling such Registrable  Shares. Each Registered
Holder shall pay the expenses of its own counsel.

                                       22
<PAGE>

         11.5 Registration Indemnification.

         (a) The Company will indemnify each Registered Holder,  each Registered
Holder's  officers and directors,  and each person  controlling  such Registered
Holder  within the  meaning of Section 15 of the  Securities  Act,  against  all
expenses,  claims,  losses,  damages and liabilities (including reasonable legal
expenses),  arising out of or based on any untrue  statement (or alleged  untrue
statement)  of a  material  fact  contained  in any  registration  statement  or
prospectus  relating to the Registrable  Shares,  or any amendment or supplement
thereto,  or based on any  omission  (or alleged  omission)  to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  provided,  however, that the Company will not be liable
in any such case to the extent that any such claim, loss,  damage,  liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue  statement  or omission,  made in reliance  upon and in  conformity  with
information  furnished in writing to the Company by such  Registered  Holder for
inclusion therein.

         (b) Each Registered  Holder, if Registrable  Shares held by such holder
are included in the securities  for which such  registration,  qualification  or
compliance is being effected,  will indemnify the Company, each of its directors
and each of its officers who signs the registration statement, each underwriter,
if any, of the Company's securities covered by such registration statement,  and
each person who controls the Company or such  underwriter  within the meaning of
Section 15 of the  Securities  Act,  against  all  claims,  losses,  damages and
liabilities  (including  reasonable  legal fees and expenses)  arising out of or
based on any untrue  statement (or alleged untrue  statement) of a material fact
contained in any such registration statement or prospectus,  or any amendment or
supplement  thereto,  or based on any  omission  (or alleged  omission) to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein not misleading,  in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged  omission)  is made in such  registration  statement or  prospectus,  in
reliance upon and in  conformity  with  information  furnished in writing to the
Company by such Registered Holder for inclusion therein.

         (c) Each party entitled to indemnification under this Section 11.5 (the
"Indemnified  Party")  shall  give  notice  to the  party  required  to  provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual  knowledge of any claim as to which indemnity may be sought,  but the
omission  to so notify  the  Indemnifying  Party  shall not  relieve it from any
liability which it may have to the Indemnified  Party pursuant to the provisions
of this Section 11.5 except to the extent of the actual damages suffered by such
delay in notification.  The Indemnifying  Party shall assume the defense of such
action,  including the  employment  of counsel to be chosen by the  Indemnifying
Party, such counsel to be reasonably  satisfactory to the Indemnified Party, and
the obligation of payment of all expenses.  The Indemnified Party shall have the
right to  employ  its own  counsel  in any such  case,  but the  legal  fees and
expenses  of such  counsel  shall be at the  expense of the  Indemnified  Party,
unless the  employment of such counsel shall have been  authorized in writing by
the  Indemnifying  Party in connection  with the defense of such action,  or the
Indemnifying Party shall not have employed counsel to take charge of the defense
of such action or the  Indemnified  Party shall have  reasonably  concluded that
there  may be  defenses  available  to it or them  which are  different  from or
additional  to those  available  to the  Indemnifying  Party (in which  case the
Indemnifying Party shall not have the right to direct the defense of such action
on  behalf  of the  Indemnified  Party),  in any of which  events  such fees and
expenses shall be borne by the Indemnifying Party. No Indemnifying Party, in the
defense of any such claim or litigation,  shall, except with the consent of each

                                       23
<PAGE>

Indemnified Party, consent to entry of any judgment or enter into any settlement
which  does not  include  as an  unconditional  term  thereof  the giving by the
claimant or plaintiff to such Indemnified  Party of a release from all liability
in respect to such claim or litigation.

         (d) In no event shall any Registered Holder be liable for any expenses,
claims,  losses,  damages or liabilities pursuant to this Section 11.5 in excess
of the net proceeds to such Registered Holder of any Registrable  Shares sold by
such Registered Holder.

         11.6 Information to be Furnished by Registered Holders. Each Registered
Holder  shall  furnish  to the  Company  such  information  as the  Company  may
reasonably  request and as shall be required in connection with the Registration
and related  proceedings  referred to in Section 11.5. If any Registered  Holder
fails to provide the Company with such information  within 20 days of receipt of
the Company's request, the Company's obligations under Section 11.1 and 11.2, as
applicable,  with respect to such Registered  Holder or the  Registrable  Shares
owned by such Registered  Holder shall be suspended until such Registered Holder
provides such information.

         11.7 Rule 144 Sales.

         (a) The Company  covenants that it will file the reports required to be
filed by the  Company  under the  Exchange  Act so as to enable  any  Registered
Holder to sell Registrable Shares pursuant to Rule 144 under the Securities Act.

         (b) In connection with any sale,  transfer or other  disposition by any
Registered  Holder  of any  Registrable  Shares  pursuant  to Rule 144 under the
Securities  Act, the Company  shall  cooperate  with such  Registered  Holder to
facilitate  the timely  preparation  and delivery of  certificates  representing
Registrable  Shares to be sold,  and enable  certificates  for such  Registrable
Shares to be for such  number  of shares  and  registered  in such  names as the
selling  Registered  Holder may  reasonably  request at least two business  days
prior to any sale of Registrable Shares.

         11.8 Survival of Registration Rights. The provisions of this Article XI
shall  survive  any  conversion  of the Notes and any  termination  of any other
provision of this Agreement or of any of the other Financing Documents.

                                  ARTICLE XII

                          SURVIVAL AND INDEMNIFICATION

         12.1 Survival.  Notwithstanding any examination made by or on behalf of
any party hereto,  the knowledge of any party or the  acceptance by any party of
any certificate or opinion, each representation and warranty contained herein in
Sections 4.1,  4.2, 4.3 and 4.13 (other than as to such matters,  if any, as the
Initial  Purchaser  shall have waived in writing)  shall survive the Closing for
the applicable statute of limitations.  All other representations and warranties
contained  herein  shall  survive  the  Closing  until the first to occur of (i)
payment in full of all  interest  and premium on the Notes or (ii)  December 14,
2004.

                                       24
<PAGE>

         12.2 Indemnification. In consideration of the execution and delivery of
this  Agreement  by the  Initial  Purchaser,  the Company  agrees to  indemnify,
exonerate  and hold the  Purchaser  and  each  holder  of a Note and each of the
officers, directors,  employees and agents of the Purchaser and each such holder
(collectively the "Purchaser Parties" and individually each a "Purchaser Party")
free and harmless from and against any and all actions, causes of action, suits,
losses, liabilities,  damages and expenses, including reasonable attorneys' fees
and  charges  (collectively  therein  called  the  "Indemnified   Liabilities"),
incurred by the Purchaser  Parties or any of them as a result of, or arising out
of, or  relating to (i) any  transaction  financed or proposed to be financed in
whole or in part, directly or indirectly,  with the proceeds of any of the Notes
or (ii) the execution, delivery, performance or enforcement of this Agreement or
any other  Financing  Document by any of the Purchaser  Parties,  except for any
such  Indemnified  Liabilities  as to any Purchaser  Party arising on account of
such Purchaser  Party's gross  negligence or willful  misconduct.  If and to the
extent that the foregoing  undertaking may be unenforceable for any reason,  the
Company  hereby  agrees to make the  maximum  contribution  to the  payment  and
satisfaction of each of the Indemnified  Liabilities  which is permissible under
applicable  law.  Nothing  set forth  above  shall be  construed  to relieve any
Purchaser Party from any obligation it may have under this Agreement.

         (a) Without  limiting the  provisions of clause (a) above,  the Company
hereby  agrees to  reimburse  each  Purchaser  Party  for,  and  indemnify  each
Purchaser  Party  against,  any  and all  losses,  claims,  damages,  penalties,
judgments,   liabilities  and  expenses  (including  reasonable  attorneys'  and
consultant's fees) which any Purchaser Party may pay, incur or become subject to
arising out of or relating to the use, handling,  release, emission,  discharge,
transportation, storage, treatment or disposal of any Hazardous Substance by the
Company or any Subsidiary at any real property owned or leased by the Company or
any  Subsidiary  or used by the  Company or any  Subsidiary  in its  business or
operations.

         (b) All obligations  provided for in this Section 12.2 and in any other
indemnity  provided any Purchaser  Party in any other  Financing  Document shall
survive  repayment of the Notes and any  termination of this Agreement or any of
the other Financing Documents; provided that a notice of the claim must be given
to the Company prior to the date the applicable  representation or warranty upon
which such claim is based  expires  pursuant  to Section  12.1.  Nothing in this
Article  XII in any way  limits the  provisions  of Article  XI,  including  the
registration  indemnification  provisions contained therein, which shall survive
and operate in accordance with the terms of that Article.

                                  ARTICLE XIII

                               GENERAL PROVISIONS

         13.1 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the  parties  hereto and their  respective  successors  and  assigns,
including each subsequent holder of any Note.

         13.2 Entire  Agreement.  This Agreement and the other writings referred
to herein or delivered pursuant hereto constitute the entire agreement among the
parties  with  respect to the  subject  matter  hereof and  supersede  all prior

                                       25
<PAGE>

arrangements or understandings,  other than agreements of the Company in respect
of certain fee arrangements.

         13.3 Notices. All notices, requests,  consents and other communications
provided  for herein  shall be in writing and shall be (i)  delivered in person,
(ii) transmitted by telecopy,  (iii) sent by reputable overnight courier or (iv)
sent by first class  registered  or  certified  mail,  postage  prepaid,  to the
recipient  at the  address or  telecopy  number set forth  below,  or such other
address or telecopy  number as may  hereafter be  designated  in writing by such
recipient.  Notices shall be deemed given upon personal delivery, three (3) days
following  deposit in the mail as set forth above,  upon  acknowledgment  by the
receiving telecopier or upon receipt from overnight courier.

                  (a)         If to the Company:

                                   President,
                                   Travis Boats & Motors, Inc.
                                   5000 Plaza on the Lake, Suite 250
                                   Austin, TX 78746
                                   Fax:  (512) 329-0480

                  (b)         If to the Initial Purchaser:

                                   President, Mercury Marine
                                   W 6250 West Pioneer Road
                                   Fond du Lac, Wisconsin 54935
                                   Fax (920) 929-5253


with a copy to General Counsel, Mercury Marine at the same address.

         (c) If to subsequent  holders of Notes, to such address as such holders
shall provide in written notice to the Company.

         13.4  Amendment  and Waiver.  No  amendment  to any  provision  of this
Agreement or the Notes shall be  effective  unless the same shall be approved in
writing by all  holders of the Senior  Indebtedness  and shall be in writing and
signed  by  the  Company  and  the  Majority  Noteholders.  Notwithstanding  the
foregoing,  if: (a) any amendment would treat any holder of any Note differently
than any other holder of any Note,  such amendment  shall require the consent of
the holder differently  treated;  and (b) any amendment to this Agreement or the
Notes  shall  postpone  or delay any date fixed for any  payment  of  principal,
interest or other amounts due on the Notes or under this  Agreement,  reduce the
principal  of, or the rate of interest on, or fees or other  amounts  payable in
connection with the Notes, or amend this sentence, such amendment must be signed
by the Company and all of the holders of Notes.  No such waiver shall operate as
a waiver of, or estoppel with respect to, any  subsequent or other  failure.  No
failure by any party to take any action  against any breach of this Agreement or
default by any other party shall  constitute a waiver of such  party's  right to
enforce any provision hereof or to take any such action.

                                       26
<PAGE>

         13.5  Counterparts.  This  Agreement  may be  executed in any number of
counterparts,  each of which shall be deemed to be an original, but all of which
together shall constitute one agreement.

         13.6 Headings.  The headings of the various  sections of this Agreement
have been inserted for  convenience of reference only and shall not be deemed to
be a part of this Agreement and shall not affect the interpretation hereof.

         13.7 Remedies  Cumulative.  Except as otherwise  provided  herein,  the
remedies  provided  herein  shall be  cumulative  and  shall  not  preclude  the
assertion  by any party  hereto of any other  rights or the seeking of any other
remedies against any other party hereto.

         13.8 Governing  Law. This Agreement  shall be governed by and construed
in accordance with the internal laws of the State of Delaware for contracts made
and to be performed in Delaware.

         13.9 No Third Party Beneficiaries.  Except as specifically set forth in
Article IX hereof or otherwise referred to herein, nothing herein is intended or
shall be  construed  to confer upon any person or entity  other than the parties
hereto, the holders of Senior Indebtedness and their successors or assigns,  any
rights or remedies under or by reason of this Agreement.

         13.10 Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent  jurisdiction to be invalid, void
or  unenforceable,  the  remainder  of  the  terms,  provisions,  covenants  and
restrictions  of this Agreement  shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

         13.11 Confidentiality.  The Initial Purchaser and each holder of a Note
shall hold all non-public  information  obtained pursuant to the requirements of
this  Agreement  which has been  identified as such by the Company in accordance
with their customary  procedures for handling  confidential  information of this
nature and, in any event, may make disclosure on the same confidential  basis as
provided  for  herein  that is  reasonably  required  by any actual or bona fide
potential transferee in connection with the contemplated transfer of any Note or
as required or requested by any governmental agency or representative thereof or
pursuant to legal process; provided that, unless prohibited by applicable law or
court  order,  each  holder of a Note shall  promptly  notify the Company of any
request by any governmental  agency or representative  thereof for disclosure of
any such non-public information prior to disclosure of such information.

         13.12  Limitation of  Liability.  Under no  circumstances  and under no
legal theory,  whether in tort,  contract or otherwise,  shall any party to this
Agreement  be liable  to any other  party to this  Agreement  for any  indirect,
special,  incidental,  exemplary,  punitive  or  consequential  damages  of  any
character  including,  without limitation,  damages for lost profits, or any and
all  other  commercial  damages  or  losses  arising  from  or  related  to this
Agreement. Nothing in this Section 13.12 limits (i) the Company's obligations to
pay the principal, premium and interest on the Notes, including the default rate
of interest, (ii) the express  indemnification  obligations set forth herein, or
(iii) any other express obligation set forth hereunder.

         13.13  Arbitration.  Any  dispute,  claim or  action  arising  under or
relating to this Agreement shall be settled by binding arbitration  according to
the  rules  of the  American  Arbitration  Association  before  a panel of three

                                       27
<PAGE>

arbitrators.  The location of such arbitration  shall be in the city of Chicago,
Illinois.  Such arbitration  shall be conducted under the guidance of the United
States  Federal Rules of Civil  Procedure and the United States Federal Rules of
Evidence  but the  arbitrators  (at their  discretion)  shall not be required to
comply strictly with such rules. The arbitrators  shall conduct  evidentiary and
other hearings as they deem necessary or appropriate  and thereafter  shall make
their  determination  as soon as  practicable.  A full and  complete  record and
transcript of the arbitration proceeding shall be maintained and the judgment of
the arbitrators  shall be accompanied by the detailed  written  findings of fact
and the conclusions  reached by the arbitrators  (which findings and conclusions
the arbitrators  shall be required to make) as well as the arbitrators'  reasons
for reaching such  conclusions.  The arbitrators  shall give the parties written
notice of the decision, with the reasons therefor set out, and shall have thirty
(30) days  thereafter  to reconsider  and modify such  decisions if any party so
requests  within ten (10) days after the decision.  Thereafter,  the decision of
the arbitrators shall be final,  binding and non-appealable  with respect to all
persons,  including  persons  who have failed or refused to  participate  in the
arbitration  process, and shall be reviewable only to the extent provided by the
American Arbitration Association Rules. The arbitrators shall have the authority
to  award  relief  under  legal  or   equitable   principles   and  to  allocate
responsibility  for the  costs  of such  arbitration  and to award  recovery  of
attorney's  fees and expenses in such manner as is determined to be  appropriate
by the  arbitrators.  The  arbitration  shall be  governed  by the choice of law
provisions set forth in Section 13.8 above.  The award of the arbitration  panel
shall be binding on both parties and judgment upon any award may be entered by a
court having competent  jurisdiction.  The parties will be responsible for their
own attorneys'  fees,  witness fees and their own  out-of-pocket  expenses.  The
parties will each pay  one-half of the  arbitrator's  fees and the  arbitrator's
out-of-pocket expenses.

         13.14 Release of Claims.  THE COMPANY  HEREBY  ACKNOWLEDGES  AND AGREES
THAT IT DOES NOT HAVE ANY DEFENSES,  COUNTERCLAIMS,  OFFSETS,  CROSS-COMPLAINTS,
CLAIMS OR  DEMANDS  OF ANY KIND OR NATURE  WHATSOEVER  THAT CAN BE  ASSERTED  TO
REDUCE OR  ELIMINATE  ALL OR ANY PART OF  LIABILITY  OF THE COMPANY TO REPAY THE
HOLDERS  OF THE NOTES OR TO SEEK  AFFIRMATIVE  RELIEF OR  DAMAGES OF ANY KIND OR
NATURE FROM ANY HOLDER OF THE NOTES OR ANY OF THEIR  RESPECTIVE  SUBSIDIARIES OR
AFFILIATES.  THE COMPANY HEREBY  VOLUNTARILY AND KNOWINGLY  RELEASES AND FOREVER
DISCHARGES  INITIAL  PURCHASER AND ITS  SUBSIDIARIES  AND  AFFILIATES AND ALL OF
THEIR RESPECTIVE AGENTS,  EMPLOYEES,  SUCCESSORS AND ASSIGNS,  FROM ALL POSSIBLE
CLAIMS,  DEMANDS,  ACTIONS,  CAUSES OF ACTION,  DAMAGES, COSTS, OR EXPENSES, AND
LIABILITIES  WHATSOEVER,   KNOWN  OR  UNKNOWN,   ANTICIPATED  OR  UNANTICIPATED,
SUSPECTED  OR  UNSUSPECTED,  FIXED,  CONTINGENT,  OR  CONDITIONAL,  AT LAW OR IN
EQUITY,  ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AGREEMENT IS
EXECUTED,  WHICH THE COMPANY MAY NOW OR HEREAFTER  HAVE AGAINST SUCH PERSON,  IF
ANY, AND  IRRESPECTIVE  OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT,  TORT,
VIOLATION OF LAW OR REGULATIONS,  OR OTHERWISE,  INCLUDING,  WITHOUT LIMITATION,

                                       28
<PAGE>

THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THIS  AGREEMENT,  THE NOTES OR ANY
SALES CONTRACT AND THE NEGOTIATION AND EXECUTION THEREOF.

                                  ARTICLE XIV

                               PURCHASER COVENANTS

         14.1 Tender Offer Covenant.  The Initial  Purchaser agrees that it will
not initiate a tender offer to purchase the  Company's  common stock for 60 days
following  the date it provides  the Company with notice of intention to convert
the  Notes  if the  conversion  referenced  in  such  notice  (a)  represents  a
conversion  of 20% or more of the  principal  amount of the Notes  issued on the
Closing  Date or (b)  taken  together  with all other  conversions  that did not
previously  (individually or with other conversions)  trigger such 60 day period
pursuant to the terms of this section, in the aggregate  represents a conversion
of 20% or more of the principal amount of the Notes issued on the Closing Date.

         14.2 Dilution Protection Covenant.  The adjustments to Conversion Price
set forth in paragraph  3(b) of the Notes shall not apply after the date that is
24  months  after the  Closing  Date if,  but only if,  the  Company  is able to
demonstrate,  to the satisfaction of the Majority Noteholders, in their sole but
reasonable discretion, that the Company is in need of additional working capital
for general  business  purposes from equity  financing at a per share price less
than the Conversion  Price and that such  financing is not available  unless the
Majority  Noteholders waive the dilution adjustments set forth in paragraph 3(b)
of the Notes. Any such waiver of dilution  adjustments must be in writing signed
by the  Majority  Noteholders.  Any such  waiver  shall apply only to the equity
financing specified in such waiver. The Majority  Noteholders have no obligation
to waive the dilution  adjustments  set forth in paragraph 3(b) of the Notes and
reserve all rights to enforce such dilution adjustments.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly  authorized  officers as of the date and year first above
written.

                                 COMPANY:

                                    TRAVIS BOATS & MOTORS, INC.

                                    By:
                                       ---------------------------------------
                                    Name:
                                         -------------------------------------
                                    Title:
                                          ------------------------------------

                                 INITIAL PURCHASER:

                                    BRUNSWICK CORPORATION

                                    By:
                                       ---------------------------------------
                                    Name:
                                         -------------------------------------
                                    Title:
                                          ------------------------------------



                                       29
<PAGE>

                                      ANNEX

                                   DEFINITIONS

"Affiliate"  means any Person  (other than the Company,  any  Subsidiary  of the
Company  or any  Purchaser  or other  holder of Notes)  (a)  which  directly  or
indirectly through one or more intermediaries  controls, or is controlled by, or
is under common control with, the Company or (b) which is the "beneficial owner"
(pursuant to Rule 13d-3 or 13d-5 of the  Securities  Exchange Act of 1934, as in
effect on the date  hereof)  of 10% or more of any class of Voting  Stock of the
Company.  As used herein,  the term "control" means the possession,  directly or
indirectly,  of the power to direct or cause the direction of the  management or
policies of a Person, whether through the ownership of voting stock, by contract
or otherwise.

"Agreement" has the meaning set forth in the preamble.

"Authorized  Financial Officer" of any Person means the Chief Financial Officer,
Treasurer or Controller of such Person.

"Base  Financials"  means the consolidated  balance sheet of the Company and its
Consolidated  Subsidiaries as of September 30, 2000 and the related consolidated
statements of operations,  stockholders' equity and cash flows for the year then
ended, together with the notes thereto,  included in the Company's Form 10-K for
the year ended September 30, 2000 and reported on without qualification by Ernst
& Young LLP.

"Business Day" means a day on which commercial banking institutions are required
to be open for business in Chicago, Illinois and New York, New York.

"Closing" has the meaning set forth in Section 3.1.

"Closing Date" has the meaning set forth in Section 3.1.

"Commission" means the Securities and Exchange Commission.

"Common  Stock" means the  Company's  common stock and any capital  stock of any
class of the Company hereafter authorized which is not limited to a fixed sum or
percentage  of par or stated  value in  respect  to the  rights  of the  holders
thereof to  participate in dividends or in the  distribution  of assets upon any
liquidation, dissolution or winding up of the Company.

"Company" has the meaning set forth in the preamble.

"Consolidated  Net  Income"  means,  for  any  period,  the  net  income  (loss)
(calculated (a) before preferred and common stock dividends and (b) exclusive of
the effect of any  extraordinary  or other material  non-recurring  gain or loss
outside the ordinary  course of  business)  of the Company and its  Consolidated
Subsidiaries, determined on a consolidated basis for such period.

"Consolidated Subsidiary" means, with respect to any Person and at any date, any
of its  Subsidiaries  or any  other  entity  the  accounts  of  which  would  be
consolidated with those of such Person in its consolidated  financial statements
if such statements were prepared as of such date.


                                       A-1
<PAGE>

"Debt" of any Person means at any date, without duplication, (i) all obligations
of such Person for borrowed money, (ii) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments,  (iii) all obligations
of such Person to pay the  deferred  purchase  price of  property  or  services,
except trade accounts  payable arising in the ordinary course of business,  (iv)
all  obligations  of such Person as lessee which are  capitalized  in accordance
with  generally  accepted  accounting  principles,  (v) all  obligations of such
Person  with  respect to letters of credit and  similar  instruments,  including
obligations  under  reimbursement  agreements,  (vi) all mandatorily  redeemable
preferred  stock of such Person,  (vii) all Debt of others  secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by such Person and
(viii) all Debt of others Guaranteed by such Person.

"Default" means any condition or event which  constitutes an Event of Default or
which with the giving of notice or lapse of time or both would,  unless cured or
waived, become an Event of Default.

"Derivatives  Obligations" of any Person means all obligations of such Person in
respect of any rate swap  transaction,  basis swap,  forward  rate  transaction,
commodity swap, commodity option,  equity or equity index swap, equity or equity
index option, bond option,  interest rate option,  foreign exchange transaction,
cap  transaction,   floor  transaction,   collar   transaction,   currency  swap
transaction,  cross-currency rate swap transaction, currency option or any other
similar  transaction  (including any option with respect to any of the foregoing
transactions) or any combination of the foregoing transactions.

"Environmental  Laws"  means  any and all  federal,  state,  local  and  foreign
statutes, laws, judicial decisions,  regulations,  ordinances, rules, judgments,
orders, decrees, plans, injunctions,  permits, concessions,  grants, franchises,
licenses,  agreements  and  other  governmental  restrictions  relating  to  the
environment,  the effect of the  environment  on human  health or to  emissions,
discharges  or releases of  pollutants,  contaminants,  Hazardous  Substances or
wastes into the environment,  including ambient air, surface water,  groundwater
or land, or otherwise  relating to the  manufacture,  processing,  distribution,
use,  treatment,   storage,  disposal,  transport  or  handling  of  pollutants,
contaminants,   Hazardous   Substances  or  wastes  or  the  clean-up  or  other
remediation thereof.

"ERISA" means the Employee Retirement Income Security Act of 1974.

"ERISA  Group"  means the  Company  and all  members  of a  controlled  group of
corporations and all trades or businesses  (whether or not  incorporated)  under
common  control  which,  together  with the  Company,  are  treated  as a single
employer under Section 414(b) or 414(c) of the Internal Revenue Code.

"Event of Default" has the meaning set forth in Section 10.1.

"Exchange Act" means the  Securities  Exchange Act of 1934, as it may be amended
from time-to-time.

"Excluded Taxes" has the meaning set forth in Section 8.15(a).

"Financing Documents" means this Agreement and the Notes.


                                       A-2
<PAGE>

"Guarantee" by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly  guaranteeing  any Debt or other obligation of any
other  Person  and,  without  liming  the  generality  of  the  foregoing,   any
obligation,  direct or indirect,  contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other  obligation  of the  payment  thereof or to protect  such  obligee
against loss in respect  thereof (in whole or in part);  provided  that the term
Guarantee  shall not  include  endorsements  for  collection  or  deposit in the
ordinary  course  of  business.  The  term  "Guarantee"  used  as a  verb  has a
corresponding meaning.

"Hazardous  Substance"  means  any  toxic,  radioactive,  caustic  or  otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hyrdrocarbons,  or any substance having any constituent  elements displaying any
of the foregoing characteristics.

"Indemnified Liabilities" has the meaning provided in Section 12.2(a).

"Initial Purchaser" has the meaning provided in the preamble.

"Intangibles" has the meaning provided in Section 8.8.

"Internal Revenue Code" means the Internal Revenue Code of 1986.

"Investment"  means any  investment  in any  Person,  whether  by means of share
purchase, capital contribution, loan, Guarantee, time deposit or otherwise.

"Lease  Conversion"  means  any  acquisition  by  the  Company  or  any  of  its
Subsidiaries of a facility and related property that had theretofore been leased
by the  Company  or any  such  Subsidiary  and that  the  Company  or any of its
Subsidiaries continues to operate.

"Lien" means,  with respect to any asset, any mortgage,  lien,  pledge,  charge,
security  interest or encumbrance of any kind, or any other type of preferential
arrangement  that has the practical effect of creating a security  interest,  in
respect of such asset. For the purposes of this Agreement, the Company or any of
its Subsidiaries shall be deemed to own subject to a Lien any asset which it has
acquired  or holds  subject  to the  interest  of a vendor or  lessor  under any
conditional  sale agreement,  capital lease or other title  retention  agreement
relating to such asset.

"Majority  Noteholders"  means  holders  of  more  than  50%  of  the  aggregate
outstanding principal amount of the Notes.

"Majority  Registered  Holders"  means the  holders of a  majority  of the total
Registrable Shares.

"Multiemployer  Plan" means at any time an employee  pension benefit plan within
the  meaning  of  Section  4001(a)(3)  of ERISA to which any member of the ERISA
Group is then making or  accruing an  obligation  to make  contributions  or has
within the preceding five plan years made contributions.


                                       A-3
<PAGE>

"Notes" has the meaning set forth in Section 2.1(a).

"Other  Plan" means an  employee  pension  benefit  plan (other than a Plan or a
Multiemployer  Plan)  which is  covered  by Title IV of ERISA or  subject to the
minimum funding standards under Section 412 of the Internal Revenue Code.

"Other Taxes" has the meaning set forth in Section 8.15(b).

"PBGC" means the Pension Benefit Guaranty  Corporation or any entity  succeeding
to any or all of its functions under ERISA.

"Person"  means an individual,  a  corporation,  limited  liability  company,  a
partnership,  an  association,  a trust or any  other  entity  or  organization,
including a government or political  subdivision or an agency or instrumentality
thereof.

"Plan"  means  at any  time an  employee  pension  benefit  plan  (other  than a
Multiemployer  Plan)  which is  covered  by Title IV of ERISA or  subject to the
minimum funding  standards under Section 412 of the Internal Revenue Code and is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group.

"Purchaser" has the meaning set forth in the preamble.

"Purchaser Parties" has the meaning set forth in Section 12.2(a).

"Register,"  "Registered" and "Registration" refer to a registration effected by
preparing and filing a registration  statement in compliance with the Securities
Act providing for the sale by the Registered  Holders of Registrable  Shares and
the declaration or ordering of the effectiveness of such registration  statement
by the Commission.

"Registered Holders" means the holders of Underlying Shares.

"Registrable  Shares" shall mean the  Underlying  Shares,  except that as to any
particular  Underlying  Shares,  once issued such  securities  shall cease to be
Registrable Shares when (a) a registration statement with respect to the sale of
such  securities  shall have become  effective under the Securities Act and such
securities  shall have been  disposed of in  accordance  with such  registration
statement,  or (b) such securities  shall have been sold in accordance with Rule
144 (or any successor provision) under the Securities Act.

"Registration Expenses" shall mean all out-of-pocket expenses (excluding Selling
Expenses)  incurred  by the Company in  complying  with  Sections  11.1 and 11.2
hereof,  including,  without  limitation,  the following:  (a) all registration,
filing and listing  fees;  (b) fees and  expenses  relating to  compliance  with
federal and state securities laws  (including,  without  limitation,  reasonable
fees and  disbursements  of the  Company's  counsel  in  connection  with  state
securities  qualifications  of the  Registrable  Shares  under  the laws of such
jurisdictions as the Registered Holders may reasonably designate);  (c) printing
costs  (including,  without  limitation,   expenses  of  printing  or  engraving
certificates for the Registrable  Shares in a form eligible for deposit with The
Depository  Trust  Company  and  otherwise   meeting  the  requirements  of  any
securities  exchange  on which  they are  listed  and of  printing  registration
statements  and  prospectuses),  messenger,  telephone,  shipping  and  delivery


                                       A-4
<PAGE>

expenses;  (d) fees and  disbursements of counsel for the Company;  (e) fees and
disbursements of all independent  public  accountants of the Company  (including
without  limitation  the  expenses  of any  annual  or  special  audit and "cold
comfort"  letters  required by the managing  underwriter);  (f)  Securities  Act
liability  insurance  if the Company so desires;  (g) fees and expenses of other
Persons reasonably necessary in connection with the registration,  including any
experts,  retained by the Company;  (h) fees and expenses incurred in connection
with the listing of the Registrable Shares on each securities  exchange on which
securities  of the  same  class or  series  are  then  listed;  and (i) fees and
expenses associated with any filing with the National  Association of Securities
Dealers, Inc. required to be made in connection with the registration statement.

"Retail  Marine  Business"  means the sales and service of  recreational  boats,
motors,  trailers and related marine parts and  accessories  business,  and such
items or services reasonably incidental thereto, including financing,  insurance
and credit life as are being  offered in the ordinary  course of business on the
date hereof.

"Rule  144"  shall  mean  Rule  144  promulgated  by the  Commission  under  the
Securities Act.

"Securities  Act" means the  Securities  Act of 1933,  as it may be amended from
time to time.

"Selling Expenses" shall mean all underwriting  discounts,  selling  commissions
and stock transfer taxes applicable to any sale of Registrable Shares.

"Senior Indebtedness" shall mean obligations of the Company identified as Senior
Liabilities  in the two  separate  Subordination  Agreements  -  Travis  Boats &
Motors,  Inc.  Indebtedness  of  Brunswick  Corporation  signed  by the  Initial
Purchaser as of the date hereof,  one with  respect to  Transamerica  Commercial
Finance  Corporation as senior lender and one with respect to Deutsche Financial
Services   Corporation,   and  any  duly  executed   amendment,   supplement  or
modification thereto.

"Subsidiary"  means, with respect to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons  performing  similar
functions are at the time directly or indirectly owned by such Person.

"Tangible Net Worth" has the meaning provided in Section 8.8.

"Taxes" has the meaning provided in Section 8.15(a).

"Temporary Cash  Investment"  means any Investment in (i) direct  obligations of
the United States or any agency thereof, or obligations guaranteed by the United
States or any agency thereof,  (ii) commercial paper with maturities of not more
than 180 days rated at least P-1 by Moody's  Investors  Service,  Inc. or A-1 by
Standard & Poor's Ratings Group,  (iii) deposit accounts in, and certificates of
deposit,  repurchase  agreements  and bankers'  acceptances  of,  United  States
branches of commercial banks whose unsecured senior long-term debt is rated A or
better by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group, in
each case maturing within one year from the date of acquisition  thereof or (iv)
in addition to the accounts and instruments referred to in clause (iii), deposit
accounts and  certificates of deposit in United States branches of banks insured


                                       A-5
<PAGE>

by the Federal Deposit  Insurance  Corporation  which do not aggregate more than
$100,000 in any one bank, except for demand deposits.

"Underlying Shares" means (i) the Common Shares issued or issuable upon exercise
of the Notes and (ii) any  securities  issued or issuable  with  respect to such
shares by way of any stock split, stock dividend, recapitalization or otherwise.

"Voting Stock" means capital stock of any class or classes (however  designated)
having ordinary voting power for the election of directors of the Company, other
than stock having such power only by reason of the happening of a contingency.

"Wholly-Owned  Subsidiary"  means, with respect to any Person, any Subsidiary of
such Person all of the shares of Voting  Stock or other  ownership  interests of
which  (except  directors'  qualifying  shares)  are at  the  time  directly  or
indirectly owned by such Person.







                                      A-6
<PAGE>


                                                                    EXHIBIT A







                                  FORM OF NOTE










                                      A-1

<PAGE>

                                                                       EXHIBIT B

            ITEMS TO BE COVERED BY OPINIONS OF COUNSEL TO THE COMPANY

                                 [Closing Date]

Counsel shall state they have acted as counsel for Travis Boats & Motors,  Inc.,
a Texas  corporation  (the  "Company"),  in  connection  with  the  negotiation,
preparation, execution and delivery of the following (the "Documents"):

                  (a) The  Subordinated  Note  Purchase  Agreement,  dated as of
         December 14, 2001 (the "Note Purchase  Agreement"),  by and between the
         Company and the Initial Purchaser named therein (the "Purchaser"); and

                  (b) The  convertible  subordinated  note of the Company issued
         pursuant to the Note Purchase  Agreement  (the "Note"),  dated December
         14, 2001, in favor of the Purchaser.

                  (c) The two separate Subordination  Agreements - Travis Boats,
         Inc.  Indebtedness  to Brunswick  Corporation,  each dated December 14,
         2001, one with respect to Transamerica  Commercial Finance  Corporation
         as senior  lender and one with respect to Deutsche  Financial  Services
         Corporation as senior lender.

                  (d)  The   Subordination   Agreement  -  Travis  Boats,   Inc.
         Indebtedness to Shareholder Purchasers dated December 14, 2001.

Capitalized  terms used but not otherwise defined in the opinions shall have the
respective meanings assigned thereto in the Note Purchase Agreement.

Counsel shall render opinions that:

         1. The Company is a corporation duly incorporated, validly existing and
in good standing  under the laws of the State of Texas and is duly qualified and
in good  standing in each  jurisdiction  where it holds  property  and where the
nature of its  business  makes such  qualification  necessary,  except where the
failure  to be so  qualified  would not have a  material  adverse  effect on the
Company and its Subsidiaries taken as a whole.

         2. The  execution,  delivery  and  performance  by the  Company  of the
Documents and the  consummation  of the  transactions  contemplated  thereby are
within  the  Company's  corporate  powers,  have  been  duly  authorized  by all
necessary  corporate  action and do not and will not (a) conflict with or result
in a breach of any of the provisions of the Company's  articles of incorporation
or bylaws, (b) contravene any applicable requirement of law (including,  without
limitation,  Regulations  G, T, U and X of the Board of Governors of the Federal
Reserve System), (c) result in a breach or violation of, or constitute a default
under, any agreement, undertaking,  contract, indenture or mortgage to which the
Company or any  Subsidiary  of the Company is a party or by which the Company or
any of its  Subsidiaries  or any of their property is bound,  including  without
limitation  any  contract  relating to Senior  Indebtedness,  except as any such
breach, violation or default as shall have been waived in writing, or (d) result


                                       B-1
<PAGE>

in the creation or  imposition  of (or the  obligation  to create or impose) any
Lien  upon  any of the  properties  of the  Company  or any of its  Subsidiaries
pursuant to any agreement, undertaking, contract, indenture or mortgage.

         3. The Company has duly  executed  and  delivered  the  Documents.  The
Documents  constitute the legal,  valid and binding  obligations of the Company,
enforceable against the Company in accordance with their terms.

         4. No  authorization,  consent or approval  or other  action by, and no
notice to or filing with, any  governmental  authority or other person or entity
(including,  without  limitation,  the  shareholders of any person or entity) is
required to be obtained or made by the Company for the due  execution,  delivery
and performance by the Company of any of the Documents, except such as have been
duly obtained or made and are in full force and effect.

         5. To our  knowledge,  there  are no  actions,  suits,  proceedings  or
investigations pending against the Company which seek to enjoin or relate to the
Documents or the transactions contemplated thereby.

         6. Assuming the accuracy of the  representations  and warranties of the
Purchaser  in Sections  6.1,  6.2 and 6.3 of the Note  Purchase  Agreement,  the
issuance,  sale and delivery of the Note to be delivered to the Purchaser on the
Closing Date under the circumstances  contemplated by the Agreement is an exempt
transaction from the registration requirement of Section 5 of the Securities Act
of 1933, as amended,  and does not, under existing law, require the registration
of the Notes or the Underlying  Shares issued upon conversion of the Notes under
the Securities Act of 1933, as amended,  or the qualification of an indenture in
respect of the Notes under the Trust Indenture Act of 1939.

         7. The Company's authorized capital stock consists of 50,000,000 shares
of common  stock,  4,393,009 of which are  outstanding  on the date hereof,  and
1,000,000 shares of preferred  stock,  none of which are outstanding on the date
hereof.  Except for the Notes and options to purchase  404,964  shares of common
stock,  pursuant to  employee  benefit  plans as in effect on the  Closing  Date
hereof, to our knowledge, the Company does not have any commitments,  agreements
or obligations to issue common stock on securities  exercisable,  convertible or
exchangeable for common stock.

         8. The  Company  has  reserved  1,219,810  shares of  common  stock for
issuance upon conversion of the Notes.

         9. Upon  issuance  of shares of  common  stock in  connection  with the
conversion of the Notes,  such shares will be legally and validly issued,  fully
paid and non-assessable.

         10.  The Board of  Directors  of the  Company  has taken the  necessary
action  so that the  three  year  moratorium  set  forth in the  Texas  Business
Combination  Law  does  not  apply  to  the  transactions  contemplated  by  the
Agreement,  including without limitation,  the issuance or the conversion of the
Notes, or to any subsequent  business  combination between the Initial Purchaser
and the Company.


                                       B-2
<PAGE>

The opinion as to the  enforceability  of the Documents in accordance with their
terms may be  limited  by  applicable  bankruptcy,  insolvency,  reorganization,
moratorium and other similar laws of general application affecting the rights of
creditors and the availability of equitable remedies.















                                      B-3
<PAGE>

                   Schedule 4.4(c) - Material Adverse Changes

Statistical  data from  various  industry  sources  indicates  that the  overall
recreational  marine  industry has suffered during the 2001 calendar year from a
broad  slowdown  and  softness  in  sales   volumes.   This  has  impacted  both
manufacturers, such as Brunswick Corporation, and retailers such as Travis Boats
& Motors,  Inc.  ("Travis  Boats").  Travis Boats has indicated  that it expects
overall sales volumes  during its 2001 fiscal year ending  September 30, 2001 to
decline in the  approximate  range of 10-15% from the sales levels posted in its
prior  fiscal  year.  Exclusive of the  aforementioned  industry  issues and the
impact thereof on the sales and financial  operations  filed with the Securities
and Exchange  Commission  (the "SEC")  subsequent  to September  30, 2001 and as
reasonably  projected in ProForma  financial data  submitted  herewith by Travis
Boats,  there has been no material  adverse  change in the  business,  financial
position,  results of operations or prospects of the Company since September 30,
2000.

The Company has  historically  been, and is expected to be highly  influenced by
seasonality and the  fluctuations in sales and operating  performance  resultant
therefrom.  The impact of such  seasonality  may be  negatively  impacted by the
terror  events  impacting  the United States on September 11, 2001 or any future
terroristic  events that may target the United States or its citizens.  This may
include  not only the  impact on sales and  operating  performance  but also the
possibility  of damage or  interruptions  to  operations  occurring  that is not
covered under the insurance coverages historically obtained and available to the
Company.

The Company's master agreement to purchase outboard engines and related products
from  Brunswick  Corporation  has expired.  Current  purchases  are made under a
temporary  renewal of the master agreement which expires on October 29, 2001. In
the event that the agreement is not renewed or the prices charged thereunder are
modified it could have a material adverse impact on the Company.

The Company has listed other Risk Factors  which may impact sales and  financial
operations  in its Report on Form 10-K form the fiscal year ended  September 30,
2000 and in subsequent quarterly Reports on Form 10-Q filed with the SEC.








                                      S-1
<PAGE>

            Schedule 4.14 - Material Defaults on Senior Indebtedness

Effective,  January 16, 2001,  the Company  amended and  restated its  borrowing
agreements  with TDF and DFS to  provide  for the  waiver  and  modification  of
certain ratio levels for each quarterly  period through and including  September
30,  2001.  The amended  borrowing  agreements,  which  mature in January  2003,
continue  to  provide  for a total  of $110  million  in  inventory  floor  plan
financing and working capital borrowings.  Interest on the borrowing  agreements
is at variable  rates ranging from the lender's  daily prime rate minus 0.25% to
LIBOR plus 3.0%, fixed for each 30 day period.

Effective  with the company's  financial  results for the period ended March 31,
2001, the Company was in violation of several financial ratio covenants with TDF
and DFS.  The Company  has  remained  out of  compliance  with the ratio  levels
required as of the period  ended  March 31,  2001 and the period  ended June 30,
2001 and is currently  out of  compliance  with the ratio levels  required as of
September 30, 2001. The Company has notified DFS and TDF of  non-compliance  and
has  requested  the waiver and  re-establishment  of ratio's with  consideration
towards the  current  Company  performance  and the overall  weak  industry  and
economic environments.

Effective as of its March 31, 2001 and June 30, 2001,  the  Company's  operating
results were out of compliance  with two (2) ratio covenants and a miscellaneous
covenant of its Borrowing  Agreements  with  Transamerica  Distribution  Finance
("TDF") and Deutsche Financial Services ("DFS"):

Interest Coverage Ratio.  With respect to the TDF and DFS Borrowing  Agreements,
the Interest  Coverage  Ratio  requires  Travis Boats to maintain,  as of the 12
months ended March 31, 2001, an Interest Coverage Ratio of not less than 1.00 to
1.00.  Travis Boats'  Interest  Coverage Ratio for the 12 months ended March 31,
2001 was 0.90 to 1.00 and as such Travis  Boats was not in  compliance  with the
Agreement.  With respect to the TDF and DFS Borrowing  Agreements,  Travis Boats
was also  requires to  maintain,  as of the 12 months  ended June 30,  2001,  an
Interest  Coverage Ratio of not less than 1.15 to 1.00.  Travis Boats'  Interest
Coverage  Ratio for the 12 months  ended  June 31,  2001 was 0.60 to 1.00 and as
such Travis Boats was not in compliance with the Agreement.

Fixed  Charge  Coverage  Ratio.  With  respect  to the  TDF  and  DFS  Borrowing
Agreements,  the Fixed Charge Coverage Ratio requires Travis Boats' to maintain,
as of the 12 months ended March 31, 2001, a Fixed Charge  Coverage  Ratio of not
less than 1.20 to 1.00.  Travis  Boats' Fixed Charge  Coverage  Ratio for the 12
months ended March 31, 2001 was 1.10 to 1.00 and as such Travis Boats was not in
compliance  with  the  Agreement.  With  respect  to the TDF  and DFS  Borrowing
Agreements,  Travis  Boats was also  required to  maintain,  as of the 12 months
ended June 30,  2001,  a Fixed  Charge  Coverage  Ratio of not less than 1.35 to
1.00. Travis Boats' Fixed Charge Coverage Ratio for the 12 months ended June 30,
2001 was 0.90 to 1.00 and as such Travis  Boats was not in  compliance  with the
Agreement.

Default Under Other Agreements.  The Borrowing  Agreements are cross- defaulted,
thus lack of compliance under one agreement constitutes lack of compliance under
the other agreement.




                                      S-2