EXHIBIT 10.40


                              TBC MANAGEMENT, LTD.


                                November 16, 1999



Mr. Mark T. Walton
Travis Boats & Motors, Inc.
5000 Plaza on the Lake Blvd., Suite 250
Austin, Texas  78746


         Re:      Employment Agreement
                  --------------------

Dear Mark:

         This letter agreement (this "Letter Agreement") sets forth the terms of
your  employment  relationship  with  TBC  Management,  Ltd.,  a  Texas  limited
partnership  (the  "Company"),  which has an  agreement  to  provide  management
services  to  Travis  Boats  &  Motors,  Inc.,  a  Texas  corporation,  and  its
subsidiaries  (collectively  referred to as "Travis Boats"). As an inducement to
you to enter into this Letter Agreement, if for any reason the agreement between
the Company and Travis  Boats  ceases to exist,  the Company  shall  immediately
assign this Letter  Agreement to Travis Boats.  Travis  Boats,  by signing below
where indicated,  agrees to accept such assignment and perform the terms of this
Letter  Agreement.  This Letter  Agreement  supersedes  all previous  agreements
between you and the Company  and/or Travis  Boats,  including but not limited to
the Letter Agreements dated December 14, 1995, as amended,  and May 7, 1996 (the
"May 7 Letter Agreement").

         1.   Duties.   You  agree  to   perform   the  duties  and  assume  the
responsibilities  normally  incidental  to the  position of  President of Travis
Boats.  You  further  agree to perform  for the  Company  such other  duties and
responsibilities  as may be  reasonably  prescribed  from  time  to  time by the
Company. It is acknowledged that you are the President,  but not an employee, of
Travis Boats.

         2. Extent of Service. The initial term of this employment contract with
the Company shall expire on the third  anniversary of the Effective Date of this
Letter Agreement (as defined in paragraph 3 hereof), unless sooner terminated in
accordance  with the terms  hereof.  You shall devote such time,  attention  and
energy to the business of the Company as shall be reasonably requested,  and you
will faithfully,  industriously,  and to the best of your ability perform all of
the duties that may be required  of you as an  employee.  You will not engage in
activities,  businesses,  or investment  that would in any way conflict with the
best interests of the Company or Travis Boats.



<PAGE>


Mr. Mark T. Walton
November 16, 1999
Page 2





         3. Effective Date. This Letter  Agreement shall be effective as of June
28,  1999 (the  "Effective  Date").  The  parties  acknowledge  that this Letter
Agreement  shall be deemed  effective as of the  expiration  of the May 7 Letter
Agreement.

         4. Salary.  As long as you remain employed by the Company,  the Company
will pay you an annual salary of $200,000  (before federal or state  withholding
deductions), subject to adjustments, payable on the same schedule that salary is
paid to other  salaried  employees of the  Company.  Your  performance  and base
salary will be reviewed annually by the Company.  You may be entitled to receive
such further  compensation  as may be authorized by the Company upon such annual
review or at other times deemed appropriate by the Company.

         5. [Intentionally Omitted]

         6. Benefits.  As long as you remain employed by the Company,  you shall
be entitled to participate in health  insurance,  dental  insurance,  disability
insurance,  and accidental,  death and disability insurance,  as provided to the
other executive employees of the Company,  and such vacation and holiday time as
provided in the Company's vacation/holiday policy. The Company shall provide you
the use of an automobile for business use with all maintenance costs, automobile
insurance premiums,  gas and Company-related  cellular phone charges paid by the
Company.

         7. Renewal and Extension Bonus Payment.  As consideration  for limiting
other employment  opportunities  during the term of this Letter  Agreement,  the
Company will pay you a renewal and extension bonus payment (the "Renewal Bonus")
of $129,362.01, subject to withholding for applicable federal income tax, social
security  and other items  required  by law.  The Company and you agree that you
shall  promptly repay a pro rata share of the Renewal Bonus to the Company based
upon the  initial  three  (3) year  term of this  Letter  Agreement  (net of any
applicable taxes paid by you upon the payment of the Renewal Bonus) if you leave
the employ of the  Company  during the initial  term of this  Letter  Agreement,
except for any  termination of this Letter  Agreement in connection  with: (a) a
termination by you for Good Reason (as defined below),  (b) a termination by the
Company  Without  Good Cause (as defined  below),  or (c) a  termination  by you
Without Good Reason (as defined  below) within sixty (60) days after the date of
a Change of Control (as defined below).

         8. Annual Bonus.  As long as you remain employed by the Company and the
consolidated  income of Travis Boats before income tax expense and non-recurring
audit adjustments (collectively "Pre-tax Income") reflects growth of 20% or more
over the previous fiscal year, you



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Mr. Mark T. Walton
November 16, 1999
Page 3




shall receive an annual bonus of 1.5% of such total annual  Pre-tax  Income.  If
the Pre-tax  Income  reflects  growth of less than 20% over the previous  fiscal
year, the annual bonus shall be an amount determined by the Company.

         9. Termination of Employment;  Severance Payments.  Notwithstanding the
foregoing or anything to the contrary  contained in this Letter  Agreement,  you
may terminate your employment  relationship with the Company at any time and for
any reason whatsoever, or for no reason, after giving the Company written notice
of such  resignation at least 30 days prior to such intended  resignation  date,
subject to the following provisions:

         (a) You shall have the right to resign for any Good  Reason (as defined
below) and such  resignation  shall be deemed to be a  termination  Without Good
Cause (as defined  below) for all purposes under this  Agreement,  including the
"Change of Control" provisions set forth below and the severance  provisions set
forth in paragraph 9(d) below.  For purposes of this  Agreement,  the term "Good
Reason" shall be defined as:

                  (i)  The Company's failure in any  material respect to perform
any provision of this Agreement;

                  (ii) Any material changes in your duties and  responsibilities
under this Agreement without your written consent;

                  (iii) The  hiring  or  promotion  by the  Company  of  another
executive  employee to a position of  substantially  similar job  description or
daily  responsibility  for the  management  of the Company  without your written
consent;

                  (iv) The Company's  directing you to work at a location  other
than Austin, Texas without your written consent; or

                  (v) After a Change of Control,  any material  change which, in
your  sole but  reasonable  discretion,  impacts  you  detrimentally  upon  your
position within the Company.

         (b) Any  resignation by you for any reason other than Good Reason shall
be deemed a  resignation  "Without  Good  Reason."  Other  than as  provided  in
paragraph 9(d) with respect to your  resignation  Without Good Reason during the
60-day period  following a Change of Control,  in the event of your  resignation
Without Good Reason,  the Change of Control  provisions  in paragraph 10 and the
severance provisions in paragraph 9(d) shall be inapplicable.

         (c) From the date you  voluntarily  terminate your  employment with the
Company  Without  Good Reason  (other than as  provided in  paragraph  9(d) with
respect to your resignation Without



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Mr. Mark T. Walton
November 16, 1999
Page 4




Good Reason  during the 60-day period  following a Change of Control),  from the
date of your death or from the date your  employment is terminated For Cause (as
defined  below) by the  Company,  you shall no  longer be  entitled  to any base
salary, bonus or other compensation  benefits,  other than such salary and bonus
amounts earned but unpaid as of the date of termination of your employment.  The
term "For Cause" shall mean (i) your gross neglect or willful  misconduct in the
discharge of your duties and  responsibilities  to the Company, as determined by
the Board of Directors of the general partner of the Company, (ii) your repeated
failure to obey reasonable directions from the Company or the Board of Directors
of the  general  partner  of the  Company,  (iii) any act of yours  against  the
Company or Travis Boats  intended to enrich you at the expense of the Company or
Travis  Boats,  (iv) any  willful  act or  omission  by you having the effect of
materially  injuring  the business or business  relationships  of the Company or
Travis Boats,  or (v) your  commission of a felony or any crime  involving moral
turpitude, fraud or misrepresentation.  Any termination that is not For Cause or
that does not  result  from your  death or  disability,  shall be deemed to be a
termination "Without Good Cause."

         (d) If your  employment is terminated by the Company Without Good Cause
(including  expiration of a term without  renewal) or you terminate  this Letter
Agreement  Without Good Reason within sixty (60) days after the date of a Change
of  Control,  then you shall be  entitled  to receive  2.99  times  your  annual
compensation  with proration of bonus for the year in which your  employment was
terminated,  which amounts shall be payable over the three-year term in the same
manner as such  compensation  would  have been  payable  if  employment  had not
terminated,  provided  that the  Company  may  elect to pay or you may  elect to
receive such compensation as a lump sum payment.

         (e)  Notwithstanding  the  foregoing  you may  submit the  decision  to
classify  termination of your  employment as "For Cause" to binding  arbitration
under the rules and auspices of the  American  Arbitration  Association  then in
effect.

         10.  Change of  Control.  The Company  acknowledges  that you agreed to
assume your  position  with the Company and to enter into this  Agreement  based
upon his confidence in the current  shareholders  of the Company and the support
of the Board of Directors for the development of a new strategy for the Company.
Accordingly,  if the Company should undergo a "Change of Control," as defined in
this section, the parties agree as follows:

         (a) For  purposes of this  Agreement,  a "Change of  Control"  shall be
deemed to exist in the event that any of the following occurs:

                  (i) a change  in the  ownership  of the  capital  stock of the
Company where a  corporation,  person or group acting in concert (a "Person") as
described in Section 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange  Act"),  holds or acquires,  directly or  indirectly,  beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange



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Mr. Mark T. Walton
November 16, 1999
Page 5




Act) of a number of shares of capital stock of the Company which constitutes 40%
or more (or,  30% or more in the event the  Company is subject to the  reporting
requirements  of Sections 12 or 15(d) under the  Exchange  Act) of the  combined
voting power of the Company's  then  outstanding  capital stock then entitled to
vote generally in the election of directors; or

                  (ii) the  persons who were  members of the Board of  Directors
immediately prior to a tender offer,  exchange offer,  contested election or any
combination  of the  foregoing,  cease to  constitute a majority of the Board of
Directors of the Company; or

                  (iii) a  dissolution  of the  Company,  or the adoption by the
Company of a plan of  liquidation,  or the  adoption by the Company of a merger,
consolidation  or  reorganization  involving the Company in which the Company is
not the surviving entity, or a sale of all or substantially all of the assets of
the Company (for purposes of this Agreement,  a sale of all or substantially all
of the assets of the Company shall be deemed to occur if any Person acquires, or
during the 12-month period ending on the date of the most recent  acquisition by
such Person,  has  acquired,  gross assets of the Company that have an aggregate
fair market  value  equal to 50% or more of the fair market  value of all of the
gross  assets  of  the  Company   immediately   prior  to  such  acquisition  or
acquisitions); or

                  (iv) a tender  offer or  exchange  offer is made by any Person
which,  if  successfully  completed,  would  result in such person  beneficially
owning  (within the meaning of Rule 13d-3  promulgated  under the Exchange  Act)
either 50% or more of the Company's outstanding shares of Common Stock or shares
of  capital  stock  having  50% or  more of the  combined  voting  power  of the
Company's  then  outstanding  capital  stock  (other  than an offer  made by the
Company),  and  sufficient  shares  are  acquired  under the offer to cause such
person to own 30% or more of the voting power; or

                  (v) a change in  control  is  reported  or is  required  to be
reported by the  Company in  response  to either  Item 6(e) of  Schedule  14A of
Regulations  14A  promulgated  under  the  Exchange  Act or Item 1 of  Form  8-K
promulgated  under  the  Exchange  Act,  which  change in  control  has not been
approved  by a  majority  of the  Board of  Directors  then in  office  who were
directors  at the  beginning  of the  two-year  period  ending  on the  date the
reported change in control occurred; or

                  (vi) during any period of two consecutive  years,  individuals
who, at the beginning of such period  constituted  the entire Board of Directors
of the Company, cease for any reason (other than death) to constitute a majority
of the directors,  unless the election,  or the nomination for election,  by the
Company's stockholders, of each new director was approved by a vote of a least a
majority  of the  directors  then  still in  office  who were  directors  at the
beginning of the period.




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Mr. Mark T. Walton
November 16, 1999
Page 6




         For  purposes  of  paragraph  10(a)(i)  above,  if a  Person  were  the
beneficial  owner of 30% or more or 40% or more, as applicable,  of the combined
voting power of the Company's  then  outstanding  securities as of the Effective
Date and such Person  thereafter  accumulates more than 5% of additional  voting
power,  a Change of Control  of the  Company  shall be deemed to have  occurred,
notwithstanding  anything in this Agreement to the contrary. A Change of Control
shall include any other transactions or series of related transactions occurring
which have substantially the same effect as the transactions specified in any of
the preceding clauses of paragraph  4(a)(i)-(vi).  However,  a Change of Control
shall not be deemed to occur if a person  becomes  the  beneficial  owner of the
applicable percentage or more (as referenced above) of the combined voting power
of the company's then outstanding  securities  solely by reason of the Company's
redemption or repurchase of securities;  but further acquisitions by such Person
that cause such Person to be the beneficial  owner of the applicable  percentage
or more (as referenced above) of the combined voting power of the Company's then
outstanding securities shall be deemed a Change of Control.

         (b) In the event of a Change of  Control,  as defined in this  section,
all stock options then held by you for the purchase of equity  securities of the
Company shall immediately become vested,  effective on the date of the Change of
Control.

         11.      Nondisclosure and Noncompetition; Consideration.

         (a) You shall not,  at any time during the term of your  employment  by
the  Company,  nor so long as such  information  remains  confidential  with the
Company or Travis  Boats,  use for your own  account  or for the  benefit of any
other person, firm, corporation or entity, directly or indirectly, except in the
ordinary course of business,  any of the supplier lists,  customer or subscriber
lists,  contract terms,  trade names, trade secrets or goodwill owned or used by
the Company or Travis Boats in its business or, directly or indirectly, disclose
or furnish to any other  person,  firm,  corporation  or entity,  the methods by
which the Company's  business or that of Travis Boats is or has been  conducted,
any of the methods by which the  customers or business of the Company or that of
Travis  Boats are or have been  obtained,  or any  confidential  or  proprietary
information  whatsoever  of the  Company  or Travis  Boats,  including,  without
limitation,  the Intellectual  Property  described in paragraph 12 below and the
identities  of or other  information  regarding  any  customers  or  prospective
customers of the Company.

         (b) Unless the Company consents in writing, at any time during the term
of your  employment  with the  Company,  and within one year after the date your
employment with the Company terminates,  you will not, within the United States,
directly or indirectly own, manage, operate,  control, be employed by, advise or
be  connected  in any manner  (including,  without  limitation,  as an employee,
director,  agent,  partner,  officer,   stockholder,   creditor,  consultant  or
otherwise)  with any person,  firm,  corporation  or business  which directly or
indirectly is competitive with the Company's  business (i.e., any business which
engages in the business of retail marketing



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Mr. Mark T. Walton
November 16, 1999
Page 7




or selling  recreational  power boats,  boat motors or boat trailers or provides
services to people or entities selected because of their involvement in the same
industry);  provided,  however,  the  covenant  not to compete set forth in this
paragraph 11(b) shall not apply if you are rightfully  entitled to receive,  and
the Company fails to pay you, the  consideration in paragraph 9(d) or if you are
part of a group  that seeks to effect a Change of  Control  with  respect to the
Company.

         (c)  Notwithstanding  the foregoing,  nothing in this Letter  Agreement
will  prohibit you from owning less than five percent of the capital  stock of a
corporation,  the  common  stock of  which  is  publicly  traded  on a  national
securities exchange or through NASDAQ, notwithstanding that such corporation may
compete with the Company.

         (d) At any time during the term of your employment by the Company,  and
within  one year after the date your  employment  with the  Company  terminates,
neither  you nor any  entity  or  business  owned or  controlled  by you,  will,
directly  or  indirectly  for your  benefit or the  benefit of any third  party,
without the written  consent of the Company,  hire or solicit the  employment of
any  employee of the  Company or  influence  or induce any  employee to leave or
decline employment by the Company.

         12.  Materials.  All  data,  listings,   charts,   drawings,   records,
documents,  programs, software,  documentation,  memoranda, journals, notebooks,
records,  files,  drafts,  specifications  and  similar  items  relating  to the
business of the Company or its affiliates, whether compiled by you, furnished to
you by the Company, its customers or clients or otherwise made accessible to you
or coming  into your  possession,  while you are  employed by the  Company,  and
copies of any such items, shall be and remain the sole and exclusive property of
the Company or its  customers  or clients,  as the case may be, and none of such
items shall be removed from the Company's  business  premises by you without the
prior  consent  of the  Company,  except  as  required  in the  course  of  your
employment.  All of such items  shall be returned to the Company by you upon the
termination  of your  employment  with the  Company  for  whatever  reason.  The
provisions of this  paragraph  shall not,  however,  prohibit you from using any
materials  published by the Company and made available (without a breach of this
agreement) to the general public.

         13. Intellectual Property. If, during the term of your employment,  you
develop  any   proprietary   technology   (including   without   limitation  any
architecture,  structure, layouts, processes,  formulae,  inventions,  know-how,
ideas, concepts, designs, drawings,  specifications,  test data, and quality and
quality  control  standards);  any  patents  and patent  rights  (including  all
information or discoveries covered thereby and all enhancements,  modifications,
improvements,   divisions,  continuations,   continuations  in  part,  reissues,
re-examinations  or  extensions  thereof),   trademarks  and  trademark  rights,
copyrights  and copyright  rights,  trade secrets and trade secret  rights,  and
applications,  registrations  or their  equivalents  for any of the same; or any
other intellectual property rights (collectively,  the "Intellectual Property"),
relating to the manufacturing or supplying of



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Mr. Mark T. Walton
November 16, 1999
Page 8




products or services in which the Company is or is likely to be  involved,  such
Intellectual  Property shall  automatically  become the property of the Company.
You agree to  cooperate  with the Company to perfect your  respective  claims to
such  Intellectual  Property  and to execute and  deliver any and all  documents
reasonably  necessary in order to effectuate the intent of this  paragraph,  and
you hereby grant to the Company an irrevocable  power of attorney to execute any
such documents.

         14.  Notices.  All notices  and  communications  hereunder  shall be in
writing and shall be deemed to have been duly given to a party when delivered in
person  (including  delivery  by an express  delivery  service  or by  facsimile
transmission  during the recipient's  regular business hours), or three business
days after such notice is enclosed in a properly sealed  envelope,  certified or
registered, and deposited (postage and certification or registration prepaid) in
a post office or collection  facility regularly  maintained by the United States
Postal  Service  and  addressed  for  delivery,  if to you,  at 7308 Kapok Lane,
Austin,  Texas  78759,  or if to the  Company,  at 5000 Plaza on the Lake Blvd.,
Suite 250, Austin, Texas 78746.

         15.      Miscellaneous.

         (a) The  rights  and  obligations  of the  Company  under  this  Letter
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company.

         (b) This Letter  Agreement shall be subject to and governed by the laws
(except the conflict of laws) of the State of Texas.

         (c) Whenever the context requires,  the gender of all words used herein
shall include the  masculine,  feminine and neuter,  and the number of all words
shall  include the singular and plural.  Titles of sections are for  convenience
only and neither limit nor amplify any of the provisions contained herein.

         (d) Upon  execution of this Letter  Agreement,  the rights,  duties and
obligations  of the parties  hereto with respect to the matters set forth herein
shall be governed  solely by the  provisions of this Letter  Agreement,  and all
representations,  warranties,  terms and conditions with respect to such matters
which may be contained in any prior  writing  executed by the parties (or by any
of them) shall be null and void and of no further force and effect.

         (e) If any  provisions  of this Letter  Agreement,  or the  application
thereof  to any party  hereto or under any  circumstances,  shall be  invalid or
unenforceable  to any extent,  the  remainder of this Letter  Agreement  and the
application of such  provisions to other parties or  circumstances  shall not be
affected  thereby and shall be enforced to the greatest extent permitted by law;
provided,  that a  provision  as similar in terms and effect to such  invalid or
unenforceable shall be added automatically as part of this Letter Agreement.



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Mr. Mark T. Walton
November 16, 1999
Page 9




         (f) In  the  event  of a  breach  or  threatened  breach  by you of any
provision  of this Letter  Agreement,  then in  addition to any other  available
remedy to which the Company may be entitled,  including the recovery of damages,
the Company shall be entitled to an injunction restraining you from breaching or
attempting to breach,  in whole or in part, any of the provisions of this Letter
Agreement.  In  addition,  in the  event  of a  breach  by  either  party of any
provision  of this  Letter  Agreement,  the  non-breaching  or (in the  event of
litigation)  the  prevailing  party shall be entitled to recover  from the other
party all reasonable costs and attorneys' fees incurred by the  non-breaching or
prevailing  party in seeking  any of such  remedies,  in  addition  to the other
relief to which the  non-breaching or prevailing party may be entitled.  As used
in the preceding sentence, "prevailing party" shall include, without limitation,
the party who retains legal counsel or brings an action  against the other party
and subsequently obtains all or substantially all of the relief sought,  whether
by compromise, settlement or judgment.

                                      * * *




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Mr. Mark T. Walton
November 16, 1999
Page 10



         If you are in  agreement  with the  foregoing,  please so  indicate  by
signing the enclosed extra original of this Letter Agreement and returning it to
the Company,  whereupon the provisions  contained herein will be effective as of
the date of this letter. Travis Boats, by signing below where indicated,  agrees
to be bound by the terms of this agreement in the event the management  contract
between the Company and Travis Boats ceases to exist.

                           Very truly yours,

                           TBC Management, Ltd.


                           By:    /s/ Michael B. Perrine
                                  ----------------------------------------------
                                  Michael B. Perrine, Chief Financial Officer of
                                  Travis Boats & Motors, Inc., its Managing
                                  General Partner



AGREED TO AND ACCEPTED:



/s/ Mark T. Walton
----------------------------
Mark T. Walton

Date:                       , 1999
     -----------------------


AGREED TO AND ACCEPTED:

Travis Boats & Motors, Inc.

By:  /s/ Michael B. Perrine
     ------------------------
     Michael B. Perrine
     Chief Financial Officer

Date:                        , 1999
     ------------------------