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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 16, 1999
---------------------------
THOUSAND TRAILS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in Charter)
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Delaware 1-14645 75-2138671
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(State or other jurisdiction of (Commission File Number) (I.R.S. employer
incorporation or organization) identification no.)
2711 LBJ Freeway, Suite 200, Dallas, TX 75234
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (972) 243-2228
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(Former Name or Former Address if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 16, 1999, Thousand Trails, Inc., a Delaware corporation (the
"Company"), acquired all of the outstanding capital stock of Albertsen
Investment Corporation, Inc., a Washington corporation ("AIC"), from Bernard O.
Albertsen, Leodyce Albertsen, Bradley Albertsen, Mark Albertsen, Tom Sites, and
Nancy Sites (collectively, the "Sellers"). AIC is the holding company owning
Leisure Time Resorts of America, Inc., a Washington corporation ("Leisure
Time"), which owns and operates 10 membership campground resorts in Washington
and Oregon serving approximately 16,000 members. The acquisition was effected
pursuant to a Stock Purchase Agreement, dated as of November 30, 1999, between
the Company and the Sellers. The basic terms of the acquisition are set forth in
the Stock Purchase Agreement, which is filed as Exhibit 2.1 hereto and
incorporated by reference herein.
The purchase price for the stock of AIC was $7,903,485 in cash, subject to
adjustment after closing based on the balance sheet of Leisure Time as of the
closing date. The Company does not expect the amount of this adjustment to be
material. The purchase price was arrived at through arms-length negotiation
between the Company and the Sellers. In connection with the acquisition, the
Company also paid in full all of the outstanding real estate debt on Leisure
Time's campgrounds, which totaled approximately $2.3 million. The Company
borrowed the funds for the stock purchase and debt repayment under its line of
credit with Foothill Capital Corporation.
The principal assets of Leisure Time consist of its 10 membership-based
campground resorts and related improvements and personal property, approximately
16,000 members, and approximately $3.4 million of contracts receivable. Leisure
Time will continue to operate a separate system of campgrounds from the
Company's other membership-based campground systems.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
NONE.
(b) Pro Forma Financial Statements.
NONE.
(c) Exhibits.
The following documents are filed as exhibits to this report.
Exhibit
Number Description
- ------ -----------
2.1 Stock Purchase Agreement, dated November 30, 1999, between the
Company as Purchaser and the Sellers.
10.1 Amended and Restated Loan and Security Agreement, dated as of
December 10, 1999, between the Company and its subsidiaries as
Borrowers, and Foothill Capital Corporation as Lender.
[SIGNATURE ON THE NEXT PAGE]
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THOUSAND TRAILS, INC.
(Registrant)
Date: January 3, 2000 By: /s/ William J. Shaw
----------------------------------
William J. Shaw
President and
Chief Executive Officer
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EXHIBIT INDEX
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Exhibit
Number Description Page No.
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2.1 Stock Purchase Agreement, dated November 30, 1999,
between the Company as Purchaser and the Sellers.
10.1 Amended and Restated Loan and Security Agreement,
dated as of December 10, 1999, between the Company
and its subsidiaries as Borrowers, and Foothill
Capital Corporation as Lender.
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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
BETWEEN
THOUSAND TRAILS, INC.
(PURCHASER)
AND
BERNARD O. ALBERTSEN AND LEODYCE ALBERTSEN
BRADLEY ALBERTSEN
MARK ALBERTSEN
THOMAS SITES AND NANCY SITES
(SELLERS)
NOVEMBER 30, 1999
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TABLE OF CONTENTS
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I. PURCHASE AND SALE...............................................................................2
Section 1.1 Purchase of the Shares.........................................................2
Section 1.2 Purchase Price.................................................................2
Section 1.3 Payment........................................................................2
Section 1.4 Earnest Money Deposit..........................................................2
Section 1.5 Closing Balance Sheet..........................................................2
Section 1.6 Adjustment to the Purchase Price...............................................3
Section 1.7 Additional Adjustment to the Purchase Price....................................4
Section 1.8 Withholding....................................................................4
Section 1.9 Risk of Loss...................................................................4
II. REPRESENTATIONS AND WARRANTIES OF THE SELLERS..................................................4
Section 2.1 Organization of Leisure Time...................................................4
Section 2.2 Organization of the Company....................................................5
Section 2.3 Legal Capacity of the Sellers..................................................5
Section 2.4 Power and Authority of Leisure Time............................................5
Section 2.5 Power and Authority of the Company.............................................5
Section 2.6 Execution, Delivery, and Enforceability........................................5
Section 2.7 Consents.......................................................................5
Section 2.8 Conflicts......................................................................6
Section 2.9 No Prohibitions................................................................6
Section 2.10 Compliance with Applicable Laws...............................................6
Section 2.11 Compliance with Organizational Documents......................................6
Section 2.12 Corporate Records.............................................................6
Section 2.13 Capitalization of Leisure Time................................................7
Section 2.14 Capitalization of the Company.................................................7
Section 2.15 Shares........................................................................7
Section 2.16 Ownership of the Shares.......................................................7
Section 2.17 Ownership of the Leisure Time Shares..........................................8
Section 2.18 No Derivative Securities......................................................8
Section 2.19 Subsidiaries..................................................................8
Section 2.20 Joint Ventures................................................................8
Section 2.21 Offices of Leisure Time and the Company.......................................8
Section 2.22 Audited Financial Statements of Leisure Time..................................8
Section 2.23 Interim Financial Statements of Leisure Time..................................9
Section 2.24 Balance Sheet of the Company..................................................9
Section 2.25 Interim Balance Sheet of the Company..........................................9
Section 2.26 Accounting....................................................................9
Section 2.27 Absence of Certain Changes....................................................9
Section 2.28 Internal Accounting Controls.................................................10
Section 2.29 Intentionally Deleted........................................................10
Section 2.30 Intentionally Deleted........................................................10
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Section 2.31 Bank Accounts................................................................10
Section 2.32 Accounts Receivable..........................................................10
Section 2.33 Inventory....................................................................11
Section 2.34 Condition of Assets..........................................................11
Section 2.35 Real Property................................................................11
Section 2.36 Real Property Exceptions.....................................................11
Section 2.37 Environmental Matters........................................................12
Section 2.38 Equipment....................................................................13
Section 2.39 Vehicles.....................................................................13
Section 2.40 Marketing Contracts..........................................................14
Section 2.41 Sellers' Acquisition Contracts...............................................14
Section 2.42 Acquisition Contracts........................................................14
Section 2.43 Member Contracts.............................................................14
Section 2.44 Employment and Related Party Contracts.......................................15
Section 2.45 Financing Contracts..........................................................15
Section 2.46 Restrictive Contracts........................................................15
Section 2.47 Utility Contracts............................................................15
Section 2.48 Other Significant Contracts..................................................15
Section 2.49 Leases.......................................................................15
Section 2.50 Contracts Generally..........................................................16
Section 2.51 Undocumented Arrangements....................................................16
Section 2.52 Permits......................................................................16
Section 2.53 Intellectual Property........................................................17
Section 2.54 Intentionally Deleted........................................................17
Section 2.55 Computer Software Licenses...................................................17
Section 2.56 Intentionally Deleted........................................................17
Section 2.57 Intentionally Deleted........................................................17
Section 2.58 Intentionally Deleted........................................................17
Section 2.59 Intentionally Deleted........................................................17
Section 2.60 Litigation and Claims........................................................17
Section 2.61 Intentionally Deleted........................................................17
Section 2.62 Orders.......................................................................17
Section 2.63 Audit Letter Responses.......................................................18
Section 2.64 Investigations...............................................................18
Section 2.65 Insurance Policies...........................................................18
Section 2.66 Insurance Policy Exceptions..................................................18
Section 2.67 No Undisclosed Liabilities...................................................18
Section 2.68 Taxes........................................................................19
Section 2.69 Tax Exceptions...............................................................19
Section 2.70 Directors and Officers.......................................................20
Section 2.71 Employees....................................................................20
Section 2.72 Collective Bargaining Agreements.............................................20
Section 2.73 Labor Relations Exceptions...................................................21
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Section 2.74 Employee Benefit Plans.......................................................21
Section 2.75 Employee Benefit Plan Exceptions.............................................22
Section 2.76 Intentionally Deleted........................................................23
Section 2.77 Predecessors.................................................................23
Section 2.78 Absence of Unethical Business Practices......................................23
Section 2.79 Intentionally Deleted........................................................23
Section 2.80 No Broker....................................................................23
Section 2.81 Adequate Disclosure..........................................................23
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..............................................24
Section 3.1 Organization..................................................................24
Section 3.2 Power and Authority...........................................................24
Section 3.3 Execution, Delivery and Enforceability........................................24
Section 3.4 Consents......................................................................24
Section 3.5 Conflicts.....................................................................24
Section 3.6 No Prohibitions...............................................................24
Section 3.7 Sophisticated Investor........................................................24
Section 3.8 No Broker.....................................................................25
IV. COVENANTS OF THE SELLERS......................................................................25
Section 4.1 Cooperation by the Sellers....................................................25
Section 4.2 No Sale of the Shares or Leisure Time Shares..................................25
Section 4.3 Access to the Company.........................................................25
Section 4.4 Affirmative Covenants Concerning Operation of
Leisure Time and the Company......................................25
Section 4.5 Negative Covenants Concerning Operation of
Leisure Time and the Company......................................26
Section 4.6 Termination of Credit Arrangements and
Individual Guarantees/Forgiveness of Shareholder Loans............28
Section 4.7 Intentionally Deleted.........................................................28
Section 4.8 Sellers' Expenses.............................................................28
Section 4.9 Intentionally Deleted.........................................................29
Section 4.10 Intentionally Deleted........................................................29
Section 4.11 Insurance Certificates.......................................................29
Section 4.12 Transactions with Affiliates.................................................29
Section 4.13 Resignations.................................................................30
Section 4.14 Employees....................................................................30
Section 4.15 Releases.....................................................................30
Section 4.16 Names........................................................................31
Section 4.17 No Shopping..................................................................31
V. RESTRICTIVE COVENANTS..........................................................................31
Section 5.1 Non-Compete Covenant..........................................................31
Section 5.2 Non-Solicitation Covenant.....................................................31
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Section 5.3 Non-Disclosure Covenant.......................................................31
Section 5.4 Reasonableness................................................................32
Section 5.5 Judicial Enforcement..........................................................32
VI. COVENANTS OF THE PURCHASER....................................................................33
Section 6.1 Cooperation by the Purchaser..................................................33
Section 6.2 No Disclosure of Confidential Information.....................................33
Section 6.3 Member Contracts..............................................................33
Section 6.4 Loans to Leisure Time.........................................................33
VII. MUTUAL COVENANTS............................................................................33
Section 7.1 Representations, Warranties, and Covenants....................................33
Section 7.2 Notifications.................................................................34
Section 7.3 Further Assurances............................................................34
Section 7.4 Announcements.................................................................34
VIII. TAXES.......................................................................................34
Section 8.1 Pre-Closing Tax Periods.......................................................34
Section 8.2 Preparation and Filing of Income Tax Returns..................................34
Section 8.3 Termination of Tax Sharing Agreement..........................................35
Section 8.4 Audit.........................................................................35
Section 8.5 Books and Records.............................................................36
IX. CAMPGROUND RESORTS............................................................................36
Section 9.1 Title Insurance...............................................................36
Section 9.2 Environmental Audits..........................................................37
X. ASSETS TO BE DISTRIBUTED.......................................................................37
Section 10.1 Vacation Time Note...........................................................37
Section 10.2 Albertsen Assets.............................................................37
Section 10.3 Terms of Distributions.......................................................37
Section 10.4 No Warranties................................................................38
Section 10.5 Expenses.....................................................................38
Section 10.6 Cooperation..................................................................38
Section 10.7 Intentionally Deleted........................................................38
XI. TERMINATION BEFORE THE CLOSING................................................................39
Section 11.1 Termination of this Agreement................................................39
Section 11.2 Effect of Termination........................................................40
Section 11.3 Notice of Termination........................................................40
XII. CONDITIONS TO THE SELLERS' OBLIGATION TO CLOSE...............................................40
Section 12.1 Representations and Warranties...............................................40
Section 12.2 Covenants....................................................................41
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Section 12.3 Closing Certificate..........................................................41
Section 12.4 Litigation...................................................................41
Section 12.5 Secretary's Certificate......................................................41
Section 12.6 Other........................................................................41
XIII. CONDITION TO THE PURCHASER'S OBLIGATION TO CLOSE............................................41
Section 13.1 Representations and Warranties...............................................42
Section 13.2 Covenants....................................................................42
Section 13.3 Beneficiary Statements and Reconveyances.....................................42
Section 13.4 Closing Certificate..........................................................42
Section 13.5 Litigation...................................................................42
Section 13.6 No Prohibition...............................................................42
Section 13.7 No Material Adverse Change...................................................42
Section 13.8 Legal Opinion................................................................42
Section 13.9 Secretary's Certificate of Leisure Time......................................44
Section 13.10 Secretary's Certificate of the Company......................................45
Section 13.11 Other.......................................................................45
XIV. CLOSING......................................................................................46
Section 14.1 Closing Date.................................................................46
Section 14.2 Place of Closing.............................................................46
Section 14.3 Deliveries by the Sellers....................................................46
Section 14.4 Deliveries by the Purchaser..................................................47
Section 14.5 Simultaneous Deliveries......................................................47
XV. INDEMNIFICATION AND DAMAGES...................................................................47
Section 15.1 Indemnification of the Purchaser.............................................47
Section 15.2 Indemnification of the Sellers...............................................48
Section 15.3 Indemnification Procedure....................................................48
Section 15.4 Meritless Third Party Claims.................................................49
Section 15.5 Assignment of Claims.........................................................50
Section 15.6 Other Indemnities............................................................50
Section 15.7 Contribution.................................................................50
Section 15.8 Payments.....................................................................50
Section 15.9 Baskets......................................................................51
Section 15.10 Reserve Accounts............................................................51
Section 15.11 Damages.....................................................................51
Section 15.12 Interest....................................................................52
Section 15.13 Discovery of Breach.........................................................52
Section 15.14 Survival of Terms...........................................................52
Section 15.15 Security for Sellers' Indemnification Obligations...........................52
Section 15.16 Sellers' Representative.....................................................53
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XVI. ARBITRATION AND EQUITABLE REMEDIES...........................................................53
Section 16.1 Settlement Meeting...........................................................53
Section 16.2 Arbitration Proceedings......................................................54
Section 16.3 Place of Arbitration.........................................................54
Section 16.4 Discovery....................................................................54
Section 16.5 Equitable Remedies...........................................................55
Section 16.6 Exclusive Jurisdiction.......................................................55
Section 16.7 Judgments....................................................................55
Section 16.8 Expenses.....................................................................55
Section 16.9 Cost of the Arbitration......................................................55
Section 16.10 Exclusivity of Remedies.....................................................55
XVII. MONETARY ENCUMBRANCES.....................................................................55
XVIII. DEFINITIONS................................................................................56
Section 18.1 Affiliate....................................................................56
Section 18.2 Applicable Law...............................................................56
Section 18.3 Certified Public Accountants.................................................56
Section 18.4 Claim........................................................................56
Section 18.5 Confidential Information.....................................................56
Section 18.6 Contract.....................................................................57
Section 18.7 Derivative Securities........................................................57
Section 18.8 Environmental Law............................................................57
Section 18.9 ERISA........................................................................57
Section 18.10 ERISA Pension Plan..........................................................57
Section 18.11 ERISA Welfare Plan..........................................................58
Section 18.12 GAAP........................................................................58
Section 18.13 Governmental Authority......................................................58
Section 18.14 Hazardous Material..........................................................58
Section 18.15 Income Tax..................................................................58
Section 18.16 Law Affecting Creditors' Rights.............................................58
Section 18.17 Lawsuit.....................................................................58
Section 18.18 Lien........................................................................58
Section 18.19 Material Adverse Change.....................................................58
Section 18.20 Material Contract...........................................................59
Section 18.21 Member Contract.............................................................59
Section 18.22 Order.......................................................................59
Section 18.23 Outside Representatives.....................................................59
Section 18.24 Parties.....................................................................59
Section 18.25 Permit......................................................................59
Section 18.26 Person......................................................................59
Section 18.27 Plan........................................................................59
Section 18.28 Prime Rate..................................................................59
Section 18.29 Representatives.............................................................60
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Section 18.30 Subsidiary..................................................................60
Section 18.31 Tax.........................................................................60
Section 18.32 WARN Act....................................................................60
XIX. INTERPRETATION...............................................................................60
Section 19.1 Attorneys' Fees..............................................................60
Section 19.2 Breach.......................................................................60
Section 19.3 Drafting.....................................................................60
Section 19.4 Headings.....................................................................61
Section 19.5 Include......................................................................61
Section 19.6 May..........................................................................61
Section 19.7 Notification.................................................................61
Section 19.8 Performance on Business Days.................................................61
Section 19.9 Plural and Singular Words....................................................61
Section 19.10 Predecessors................................................................61
Section 19.11 Pronouns....................................................................61
Section 19.12 Representations and Warranties..............................................61
Section 19.13 Representatives.............................................................62
Section 19.14 Shall.......................................................................62
Section 19.15 Statutes....................................................................62
Section 19.16 To the Best of Sellers' Knowledge...........................................62
Section 19.17 To the Best of Purchaser's Knowledge........................................62
XX. GENERAL.......................................................................................62
Section 20.1 Amendment....................................................................62
Section 20.2 Counterparts.................................................................62
Section 20.3 Entire Agreement.............................................................63
Section 20.4 Expenses.....................................................................63
Section 20.5 Governing Law................................................................63
Section 20.6 No Assignment................................................................63
Section 20.7 No Third Party Beneficiaries.................................................63
Section 20.8 Notices......................................................................63
Section 20.9 Representation by Legal Counsel..............................................65
Section 20.10 Schedules...................................................................65
Section 20.11 Severability................................................................65
Section 20.12 Specific Performance........................................................65
Section 20.13 Successors..................................................................65
Section 20.14 Time of the Essence.........................................................65
Section 20.15 Waiver......................................................................66
Section 20.16 Purchaser's Lender Provisions...............................................66
Section 20.17 Allocation of the Purchase Price............................................67
SIGNATURE PAGES....................................................................................67
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INDEX OF DEFINED TERMS
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Acquisition Contracts................................................................................14
Affiliate............................................................................................54
Agreement.............................................................................................1
Albertsen Assets.....................................................................................37
Albertsens...........................................................................................29
Applicable Law.......................................................................................56
Arbitration Notice...................................................................................54
Arbitration Rules....................................................................................54
Audited Financial Statements of Leisure Time..........................................................8
Business Day.........................................................................................61
Campgrounds..........................................................................................36
Certified Public Accountants.........................................................................56
Claim................................................................................................57
Closing..............................................................................................46
Closing Balance Sheet.................................................................................2
Closing Date.........................................................................................46
Code.................................................................................................20
Commitments..........................................................................................36
Common Stock..........................................................................................1
Company...............................................................................................1
Company's Secretary Certificate......................................................................45
Competing Business...................................................................................31
Computer Software Licenses...........................................................................17
Confidential Information.............................................................................57
Confidentiality Exceptions...........................................................................32
Contract.............................................................................................57
Current Lawsuits.....................................................................................17
Decreasing Adjustment.................................................................................4
Deposit...............................................................................................2
Derivative Securities................................................................................57
Employee Benefit Plans...............................................................................22
Employment and Related Party Contracts...............................................................15
Environmental Law....................................................................................57
Equipment............................................................................................13
ERISA................................................................................................58
ERISA Pension Plan...................................................................................58
ERISA Welfare Plan...................................................................................58
Escrow Agent..........................................................................................2
Final Tax Return.....................................................................................35
Financial Statements..................................................................................9
Financing Contracts..................................................................................15
Foothill.............................................................................................66
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GAAP.................................................................................................58
Governmental Authority...............................................................................58
Hazardous Material...................................................................................58
Income Tax...........................................................................................58
Increasing Adjustment.................................................................................4
Indemnitee...........................................................................................48
Indemnitor...........................................................................................48
Indemnity Escrow Agreement...........................................................................52
Insurance Certificates...............................................................................29
Insurance Policies...................................................................................18
Interim Balance Sheet of the Company..................................................................9
Interim Financial Statements of Leisure Time..........................................................9
IRS..................................................................................................19
Law Affecting Creditors' Rights......................................................................58
Lawrence Lawsuit.....................................................................................48
Lawsuit..............................................................................................59
Leases...............................................................................................16
Leisure Time..........................................................................................1
Leisure Time Secretary Certificate...................................................................44
Leisure Time Shares...................................................................................1
Lien.................................................................................................59
Material Adverse Change..............................................................................59
Material Contract....................................................................................59
Material Defect......................................................................................11
Material Permits.....................................................................................17
Member Contract......................................................................................59
Most Recent Audited Balance Sheet of Leisure Time.....................................................8
Most Recent Balance Sheet of the Company..............................................................9
Non-Compete Covenant.................................................................................31
Non-Disclosure Covenant..............................................................................32
Non-Solicitation Covenant............................................................................31
Order................................................................................................58
Other Significant Contracts..........................................................................15
Outside Representatives..............................................................................59
Parties..............................................................................................59
Permit...............................................................................................59
Person...............................................................................................59
Plan.................................................................................................60
Pre-Closing Tax Period...............................................................................34
Prime Rate...........................................................................................60
Purchase Price........................................................................................2
Purchased Shares......................................................................................1
Purchaser.............................................................................................1
Purchaser's Closing Certificate......................................................................41
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Purchaser's Confidentiality Covenant.................................................................33
Purchaser's Secretary Certificate....................................................................41
Real Property........................................................................................11
Releases.............................................................................................30
Representatives......................................................................................60
Resignations.........................................................................................30
Restrictive Contracts................................................................................15
Seller................................................................................................1
Sellers...............................................................................................1
Sellers' Closing Certificate.........................................................................42
Sellers' Legal Opinion...............................................................................42
Settlement Meeting...................................................................................53
Shares................................................................................................1
Specified Level.......................................................................................4
Steve Albertsen Contract..............................................................................1
Subsidiary...........................................................................................60
Tax..................................................................................................60
Tax Sharing Termination Agreement....................................................................35
Taxing Authorities...................................................................................19
Utility Contracts....................................................................................15
Vacation Time.........................................................................................1
Vacation Time Note...................................................................................37
Vehicles.............................................................................................14
WARN Act.............................................................................................60
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INDEX OF SCHEDULES
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
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1.4 Escrow Agreement for the Deposit
2.1 Foreign Qualifications of Leisure Time/Articles of
Incorporation and Bylaws
2.2 Foreign Qualifications of the Company/Articles of
Incorporation and Bylaws
2.10 Compliance with Applicable Law Exceptions
2.21 Location of Offices
2.22 Audited Financial Statements of Leisure Time
2.23 Interim Financial Statements of Leisure Time
2.24 Most Recent Balance Sheet of the Company
2.25(a) Interim Balance Sheet of the Company
2.25(b) Assets and Liabilities to be distributed to Sellers
2.27 List of Certain Changes
2.31 Bank Accounts
2.34 Condition of Assets
2.36(h) Parties in Possession
2.37 Environmental Matters
2.38 Equipment
2.39 Vehicles
2.42 Acquisition Contracts
2.43 Member Contracts
2.43(c) Memberships Sold
2.44 Employment and Related Party Contracts
2.45 Financing Contracts
2.46 Restrictive Contracts
2.47 Utility Contracts
2.48 Other Significant Contracts
2.49 Leases
2.50 Contract Exceptions
2.51 Undocumented Arrangements
2.52 Material Permits
2.53 Intellectual Property
2.55 Computer Software Licenses
2.60 Litigation and Claims
2.62 Orders
2.63 Audit Letter Responses
2.64 Investigations
2.65 Insurance Policies
2.68 Tax Returns
2.69 Tax Exceptions
2.70 Directors and Officers
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SCHEDULE DESCRIPTION
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2.71 Employees
2.73 Labor Relations Exceptions
2.74 Employee Benefit Plans
2.75 Employee Benefit Plan Exceptions
7.4 Press Release
9.1(a) Title Commitment for Cascade Resort
9.1(b) Title Commitment for Crescent Bar Resort
9.1(c) Title Commitment for Grandy Creek Resort
9.1(d) Title Commitment for Oceania I and II Resort
9.1(e) Title Commitment for Neskowin Resort
9.1(f) Title Commitment for Paradise Resort
9.1(g) Title Commitment for Seaside Resort
9.1(h) Title Commitment for Thunderbird Resort
9.1(i) Title Commitment for Warden Lake Resort
9.1(j) Title Commitment for Whalers Resort
9.1(k) Title Objections
9.2 Phase I Environmental Audits for Campgrounds
10.2(a) Land to be Distributed to the Albertsens
10.2(a)-2 Easement Agreement
10.6 License Agreement
15.15 Indemnity Escrow Agreement
17 Monetary Encumbrances
20.17 Allocation of the Purchase Price
</TABLE>
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of November
30, 1999, is between Thousand Trails, Inc., a Delaware corporation (the
"Purchaser"), and Bernard O. Albertsen and Leodyce Albertsen, husband and wife,
Bradley Albertsen, Mark Albertsen, and Thomas Sites and Nancy Sites, husband and
wife (individually a "Seller" and collectively, the "Sellers").
RECITALS
WHEREAS, Albertsen Investment Corporation, a Washington corporation
(the "Company"), is authorized to issue 1,000,000 shares of common stock, no par
value (the "Common Stock"), of which 20,000 shares are issued and outstanding;
WHEREAS, the Sellers own 18,000 shares of Common Stock (the "Shares"),
as follows:
<TABLE>
<CAPTION>
NAME OF SELLER NUMBER OF SHARES
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Bernard O. Albertsen and Leodyce Albertsen,
husband and wife 12,000 shares
Bradley Albertsen 2,000 shares
Mark Albertsen 2,000 shares
Thomas Sites and Nancy Sites, husband and wife 2,000 shares
</TABLE>
WHEREAS, the Company has purchased the remaining 2,000 outstanding
shares of Common Stock (the "Purchased Shares") from Steve Albertsen pursuant to
an installment contract (the "Steve Albertsen Contract"), which had a remaining
unpaid balance of $350,046.08 as of October 31, 1999.
WHEREAS, the Company owns all of the outstanding capital stock of
Leisure Time Resorts of America, Inc., a Washington corporation ("Leisure
Time"), consisting of 200,000 shares of common stock of a par value of $0.10 per
share (the "Leisure Time Shares");
WHEREAS, the Company owns all of the outstanding capital stock of
Vacation Time Worldwide, Inc., a Washington corporation ("Vacation Time"), and,
prior to the Closing, the Sellers shall cause the Company to distribute all of
the capital stock of Vacation Time to the Sellers;
WHEREAS, the Purchaser desires to purchase the Shares from the Sellers,
and the Sellers desires to sell the Shares to the Purchaser; and
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<PAGE> 15
WHEREAS, the Parties therefore desire to enter into this Agreement
pursuant to which the Purchaser will purchase the Shares from the Sellers upon
the terms and conditions set forth in this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals and the
terms and conditions of this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound by this Agreement, the Parties agree as follows:
I. PURCHASE AND SALE
SECTION 1.1 PURCHASE OF THE SHARES. At the Closing, the Purchaser shall
purchase the Shares from the Sellers, and the Sellers shall sell the Shares to
the Purchaser, free and clear of any Lien.
SECTION 1.2 PURCHASE PRICE. The purchase price for the Shares shall be
Eight Million Two Hundred Fifty Thousand and No/100 Dollars ($8,250,000.00) (the
"Purchase Price"), subject to adjustment pursuant to Section 1.6 and Section
1.7.
SECTION 1.3 PAYMENT. At the Closing, the Purchaser shall pay the
Purchase Price to the Sellers by wire transfer of immediately available funds,
and the Sellers shall deliver to the Purchaser the certificates representing the
Shares duly endorsed by the Sellers for transfer to Purchaser. The Sellers shall
notify the Purchaser of the Sellers' account to which the Purchaser should wire
transfer the Purchase Price at the Closing.
SECTION 1.4 EARNEST MONEY DEPOSIT. Concurrently with the execution of
this Agreement, the Purchaser shall deposit $500,000.00 (the "Deposit") in an
escrow account at Union Bank of California, N.A. ("Escrow Agent"), pursuant to
an Escrow Agreement in the form attached hereto as Schedule 1.4. The Deposit
shall be held by Escrow Agent as earnest money pursuant to the terms of this
Agreement. The Deposit shall be credited against the Purchase Price and paid to
the Sellers at the Closing. If the purchase of the Shares fails to close because
of a default by the Purchaser, the Deposit and all interest thereon shall be
paid to the Sellers. If the purchase of the Shares fails to close because of a
default by the Sellers, the Deposit and all interest thereon shall be refunded
to the Purchaser.
SECTION 1.5 CLOSING BALANCE SHEET. Within 30 days after the Closing
Date, the Company shall prepare a balance sheet for Leisure Time as of the
Closing Date in accordance with GAAP applied on a basis consistent with the
principles that the Company used to prepare the Most Recent Audited Balance
Sheet of Leisure Time (the "Closing Balance Sheet"). The Closing Balance Sheet
shall reflect all adjustments necessary for a fair presentation of Leisure
Time's financial position as of the Closing Date, including the prorated effect
of any contemplated year-end adjustments. The Closing Balance Sheet, however,
shall not reflect any adjustments to Leisure Time's assets and liabilities
caused
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<PAGE> 16
by the sale of the Shares to the Purchaser, except that a reserve shall be
established for the amount of all costs arising from the termination of the
employees of the Company and Leisure Time pursuant to Section 4.14 that are
payable after Closing, including without limitation all employee severance
benefits (and specifically the severance payable to Margie Burnett under an
Employment Agreement dated February 25, 1998) and any amounts that are payable
under the WARN Act. The parties agree that the Closing Balance Sheet shall be
prepared using Leisure Time's historical method of accounting for membership
sales, and not the deferral method required by the Securities and Exchange
Commission for public companies. Promptly after the preparation of the Closing
Balance Sheet, the Purchaser shall deliver it to the Sellers. Unless the Sellers
notify the Purchaser within 60 days after such delivery that the Sellers
disagree with the Closing Balance Sheet and specify in such notice the reasons
for such disagreement, the Sellers shall be deemed to have accepted such Closing
Balance Sheet and it shall be final and binding for both Purchaser and Sellers.
The Company shall give the Sellers reasonable access to Leisure Time's assets,
books and records, business, employees, and facilities to enable the Sellers to
determine whether to disagree with the Closing Balance Sheet. The Sellers shall
indemnify the Purchaser for any Claim arising in connection with such access.
(a) DISAGREEMENT WITH THE CLOSING BALANCE SHEET. If the
Sellers deliver a proper notice to the Purchaser with respect to the
Sellers' disagreement with the Closing Balance Sheet within the
required period, the Parties shall promptly begin to negotiate in good
faith to resolve such disagreement. If the Parties fail to resolve such
disagreement through negotiation within 15 days after the Sellers'
delivery of their notice, then the Purchaser shall engage the Certified
Public Accountants to render a report that the Closing Balance Sheet
fairly presents the financial position of Leisure Time as of the
Closing Date in accordance with this Agreement and GAAP applied on a
basis consistent with the principles that the Company used to prepare
the Most Recent Audited Balance Sheet of Leisure Time. The Company
shall: (i) give the Certified Public Accountants reasonable access to
the Company's assets, books and records, business, employees, and
facilities to enable the Certified Public Accountants to perform such
audit, without placing any restrictions upon the scope of such audit,
and (ii) make any revisions to the Closing Balance Sheet necessary to
enable the Certified Public Accountants to render such a report.
Promptly after the Certified Public Accountants render their report,
the Purchaser shall deliver it to the Sellers, along with the Closing
Balance Sheet, as revised if necessary. The Closing Balance Sheet, as
revised if necessary, shall be the balance sheet on which any
Increasing Adjustment or Decreasing Adjustment is based.
(b) FEES OF THE CERTIFIED PUBLIC ACCOUNTANTS. The Purchaser
shall pay the fees and expenses of the Certified Public Accountants for
rendering their report on the Closing Balance Sheet, provided that if
the Company is not required to revise the Closing Balance Sheet in
connection with such report, the Sellers shall promptly reimburse the
Purchaser for such fees and expenses.
SECTION 1.6 ADJUSTMENT TO THE PURCHASE PRICE. If the shareholder's
equity of Leisure Time shown on the Closing Balance Sheet is more than the
Specified
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<PAGE> 17
Level (defined below), then the Purchase Price shall be increased by the
excess of such equity over the Specified Level (the "Increasing
Adjustment"). The Purchaser shall pay any Increasing Adjustment, with
interest computed on such amount at the Prime Rate from the Closing Date
through the date of payment, to the Sellers within 10 days after the
Closing Balance Sheet becomes final under this Agreement by wire transfer
of immediately available funds to such account as the Sellers specify to
the Purchaser. If the shareholder's equity of Leisure Time shown on the
Closing Balance Sheet is less than the Specified Level, then the Purchase
Price shall be decreased by the excess of the Specified Level over such
equity (the "Decreasing Adjustment"). The Sellers shall pay any
Decreasing Adjustment, with interest computed on such amount at the Prime
Rate from the Closing Date through the date of payment, to the Purchaser
within 10 days after the Closing Balance Sheet becomes final under this
Agreement by wire transfer of immediately available funds to such account
as the Purchaser specifies to the Sellers. For purposes of this Section
1.6, "Specified Level" means $3,365,026 less (a) the book value of the
assets described in Sections 10.1 and 10.2, (b) the book value of one SL
600 CP Mercedes Benz automobile, Vehicle Identification No.
WDBFA76E6RF089827 and (c) the book value of any accounts receivable that
are written off in connection with the settlement of the Lawrence
lawsuit, up to a maximum of $400,000. Any failure to pay any Increasing
Adjustment or Decreasing Adjustment shall not affect the validity of the
transfer of the Shares at the Closing. Such failure shall merely be a
Claim of one Party against the other Party under this Agreement.
SECTION 1.7 ADDITIONAL ADJUSTMENT TO THE PURCHASE PRICE. At the
Closing, the Purchase Price shall be decreased by the amount of the unpaid
balance of the Steve Albertsen Contract as of the Closing Date. After the
Closing, the Company shall pay the unpaid balance of the Steve Albertsen
Contract in the ordinary course.
SECTION 1.8 WITHHOLDING. When making any payments pursuant to this
Agreement, the Purchaser may withhold such amounts that Applicable Law requires
it to withhold.
SECTION 1.9 RISK OF LOSS. Subject to Section 11.1(d), all risk of loss
with respect to the Shares and the Company before the Closing shall remain with
the Sellers.
II. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers jointly and severally represent and warrant to the
Purchaser as follows:
SECTION 2.1 ORGANIZATION OF LEISURE TIME. Leisure Time is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Washington and is qualified to transact business as a foreign
corporation in each jurisdiction where Leisure Time conducts business or owns or
leases property. Schedule 2.1 lists each jurisdiction where Leisure Time is
qualified to transact business as a foreign corporation. Schedule 2.1 also
contains correct and complete copies of Leisure Time's Articles of Incorporation
and Bylaws.
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SECTION 2.2 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Washington and is qualified to transact business as a foreign
corporation in each jurisdiction where the Company conducts business or owns or
leases property. Schedule 2.2 lists each jurisdiction where the Company is
qualified to transact business as a foreign corporation. Schedule 2.2 also
contains correct and complete copies of the Company's Articles of Incorporation
and Bylaws.
SECTION 2.3 LEGAL CAPACITY OF THE SELLERS. The Sellers possesses the
legal capacity to execute, deliver, and perform this Agreement and all documents
contemplated hereby to which the Sellers are or will be parties.
SECTION 2.4 POWER AND AUTHORITY OF LEISURE TIME. Leisure Time possesses
the corporate power and authority to execute, deliver, and perform all documents
necessary to facilitate the closing of the transactions contemplated by this
Agreement, without obtaining any approval or giving any notice, other than the
approval of its Board of Directors and shareholders, which it has properly
obtained. Leisure Time also possesses the corporate power and authority to own
or lease its assets, carry on its business as presently conducted, and perform
its obligations under the Material Contracts.
SECTION 2.5 POWER AND AUTHORITY OF THE COMPANY. The Company possesses
the corporate power and authority to execute, deliver, and perform all documents
necessary to facilitate the closing of the transactions contemplated by this
Agreement, without obtaining any approval or giving any notice, other than the
approval of its Board of Directors and shareholders, which it has properly
obtained. The Company also possesses the corporate power and authority to own or
lease its assets, carry on its business as presently conducted, and perform its
obligations under the Material Contracts.
SECTION 2.6 EXECUTION, DELIVERY, AND ENFORCEABILITY. The Sellers have
duly executed and delivered this Agreement, and this Agreement constitutes a
valid, legal, and binding obligation of the Sellers, enforceable against the
Sellers in accordance with its terms, subject to any Law Affecting Creditors'
Rights. In addition, as of the Closing, the Sellers, Leisure time, and the
Company will have duly authorized, executed and delivered all documents
contemplated by this Agreement to which the Sellers, Leisure Time, or the
Company is a party, and each such document will constitute a valid, legal, and
binding obligation of the Sellers, Leisure Time, or the Company, respectively,
enforceable against the Sellers, Leisure Time, or the Company in accordance with
such document's terms, subject to any Law Affecting Creditors' Rights.
SECTION 2.7 CONSENTS. Except for any consents that may be required by
the terms of the monetary liens on the Campgrounds, the execution, delivery, and
performance of this Agreement by the Sellers does not require the Sellers, the
Company, or Leisure Time to obtain any approval or consent from any Person, make
any filing with any Person, or give any notice to any Person.
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<PAGE> 19
SECTION 2.8 CONFLICTS. Subject to payment in full of the monetary
encumbrances on the Campgrounds at Closing as contemplated by Article XVII, to
the best of Sellers' knowledge, the Sellers' execution, delivery, and
performance of this Agreement and all documents contemplated by this Agreement,
Leisure Time's execution, delivery, and performance of all documents
contemplated by this Agreement, and the Company's execution, delivery, and
performance of all documents contemplated by this Agreement, will not directly
or indirectly:
(a) DOCUMENTS. Breach or violate: (i) any provision of the
Articles of Incorporation or the Bylaws of Leisure Time or the Company,
(ii) any resolution of the Board of Directors, any committee of the
Board of Directors, or the shareholders of Leisure Time or the Company
that are not contained in the minute books of Leisure Time and the
Company furnished to Purchaser in connection with its due diligence,
(iii) any Contract of the Sellers, Leisure Time, or the Company,
including any Acquisition Contract, Financing Contract, Material
Contract, Other Significant Contract, Material Permit, Computer
Software License, or Insurance Policy, or (iv) any Order to which the
Sellers, Leisure Time, the Company, or any of their respective assets
or Representatives is subject or bound; or
(b) LIEN. Result in a Lien against any of the assets of the
Sellers, Leisure Time, or the Company (or give rise to an event that
with notice or lapse of time would result in such a Lien).
SECTION 2.9 NO PROHIBITIONS. To the best of Sellers' knowledge, the
execution, delivery, and performance of this Agreement by the Sellers will not
violate any Applicable Law and no Lawsuit before any court or other Governmental
Authority is pending or threatened that could prohibit the Sellers from
consummating any of the transactions contemplated by this Agreement or subject
the Sellers, Leisure Time, or the Company to damages with respect to any such
transaction.
SECTION 2.10 COMPLIANCE WITH APPLICABLE LAWS. To the best of Sellers'
knowledge, except as described in Schedule 2.10 and the Phase I environmental
audits described in Section 9.2, the Sellers, Leisure Time, and the Company have
complied with all Applicable Laws. To the best of Sellers' knowledge, except as
described in such schedule and environmental audits, neither the Sellers,
Leisure Time, nor the Company has received any notice from any Governmental
Authority asserting that the Sellers, Leisure Time, or the Company has violated
any Applicable Law.
SECTION 2.11 COMPLIANCE WITH ORGANIZATIONAL DOCUMENTS. Leisure Time and
the Company are in compliance with all provisions of their respective Articles
of Incorporation and Bylaws.
SECTION 2.12 CORPORATE RECORDS. The minute books of Leisure Time and
the Company accurately reflect all actions taken by their respective Boards of
Directors, committees of their respective Boards of Directors, and their
respective shareholders. All such actions were properly taken at meetings duly
called and held upon proper notice with
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<PAGE> 20
a quorum present and acting throughout each such meeting or by written consent
in lieu of a meeting signed by all of the directors or all of the shareholders,
as appropriate. The stock transfer books of Leisure Time and the Company
accurately reflect all issuances and transfers of the capital stock of Leisure
Time and the Company prior to the date of this Agreement, all applicable stock
transfer taxes have been paid and all required stock transfer stamps have been
affixed to the transferred certificates. Leisure Time and the Company possess
their respective minute books and stock transfer books and the Sellers shall
deliver them to the Purchaser at Closing.
SECTION 2.13 CAPITALIZATION OF LEISURE TIME. Leisure Time is authorized
to issue 1,500,000 shares of common stock of a par value of $0.10 per share, of
which 200,000 shares are issued and outstanding. Leisure Time does not hold any
shares of its capital stock as treasury shares. There are no contractual or
statutory preemptive rights with respect to any securities of Leisure Time.
SECTION 2.14 CAPITALIZATION OF THE COMPANY. The Company is authorized
to issue 1,000,000 shares of Common Stock, of which 20,000 shares are issued and
outstanding. The Sellers own the Shares, consisting of 18,000 outstanding shares
of Common Stock, as follows: Bernard O. Albertsen and Leodyce Albertsen, husband
and wife, 12,000 shares, Bradley Albertsen, 2,000 shares, Mark Albertsen, 2,000
shares, and Thomas Sites and Nancy Sites, husband and wife, 2,000 shares. The
Company purchased the Purchased Shares, consisting of the remaining 2,000
outstanding shares of Common Stock, from Steve Albertsen pursuant to the Steve
Albertsen Contract, which had a remaining unpaid balance of $350,046.08 as of
October 31, 1999. The Company has complied with the terms of the Steve Albertsen
contract and is not in default thereunder. The Company does not hold any shares
of its capital stock as treasury shares. There are no contractual or statutory
preemptive rights with respect to any securities of the Company.
SECTION 2.15 SHARES. The Shares, the Purchased Shares, and the Leisure
Time Shares have been validly authorized and issued, are fully paid and
nonassessable, and were not issued in breach or violation of any Applicable Law,
Contract, or contractual or statutory preemptive rights. No restrictions exist
upon the transfer of the Shares or the Leisure Time Shares and the certificates
representing the Shares and the Leisure Time Shares do not contain any legends
indicating the existence of any such restrictions, other than restrictions under
applicable securities laws.
SECTION 2.16 OWNERSHIP OF THE SHARES. The Company does not have any
outstanding securities other than the Shares and the Purchased Shares. The
Sellers are the record and beneficial owners of the Shares, free and clear of
any Lien. The Company is the beneficial owner of the Purchased Shares, free and
clear of any Lien other than the Steve
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Albertsen Contract. No Person has asserted any Claim with respect to the Shares
or the Purchased Shares, other than the Sellers with respect to the Shares and
Steve Albertsen with respect to the Purchased Shares. At the Closing, the
Sellers will transfer the Shares to the Purchaser free and clear of any Lien.
SECTION 2.17 OWNERSHIP OF THE LEISURE TIME SHARES. Leisure Time does
not have any outstanding securities other than the Leisure Time Shares. The
Company is the record and beneficial owner of the Leisure Time Shares, free and
clear of any Lien. No Person other than the Company has asserted any Claim with
respect to the Leisure Time Shares.
SECTION 2.18 NO DERIVATIVE SECURITIES. Leisure Time and the Company do
not have: (a) any outstanding Derivative Securities, or (b) any voting trust,
arrangement, or Contract concerning Leisure Time's securities or the Company's
securities to which either the Sellers, Leisure Time, or the Company is a party
or bound. In addition, the Sellers are unaware of any voting trust, arrangement,
or Contract concerning Leisure Time's securities or the Company's securities to
which any other Person is a party or bound.
SECTION 2.19 SUBSIDIARIES. At the Closing, the Company shall not have
any Subsidiaries except Leisure Time.
SECTION 2.20 JOINT VENTURES. At the Closing, the Company shall not
directly or indirectly own or hold any interest in any Person other than Leisure
Time, including any equity securities or partnership interests. Except for
Leisure Time's interest in Resorts of Distinction, Leisure Time does not
directly or indirectly own or hold any interest in any Person, including any
equity securities or partnership interests. At the Closing, the Company shall
not be under any obligation to make any advance, contribution, investment, or
loan to any such entity, and Leisure Time is not under any obligation to make
any advance, contribution, investment, or loan to any such entity.
SECTION 2.21 OFFICES OF LEISURE TIME AND THE COMPANY. Schedule 2.21
describes the location of the chief executive office and each other office,
place of business, or facility of Leisure Time and the Company.
SECTION 2.22 AUDITED FINANCIAL STATEMENTS OF LEISURE TIME. Attached as
Schedule 2.22 is the balance sheet of Leisure Time as of December 27, 1998 (the
"Most Recent Audited Balance Sheet of Leisure Time"), the balance sheet of
Leisure Time as of December 28, 1997, the related statements of operations, cash
flows, and shareholder's equity for each of the years in the two year period
ended December 27, 1998, and the notes to such financial statements
(collectively with the Most Recent Audited Balance Sheet of Leisure Time, the
"Audited Financial Statements of Leisure Time"). The Audited Financial
Statements of Leisure Time have been audited by Leisure Time's auditors, whose
report is attached to such financial statements. The balance sheets contained in
the Audited Financial Statements of Leisure Time present fairly, in all material
respects, the financial condition of Leisure Time as of their dates. The
statements of operations and cash flows contained in the Audited Financial
Statements of Leisure Time present fairly, in all
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<PAGE> 22
material respects, the results of operations and cash flows of Leisure Time for
the periods presented.
SECTION 2.23 INTERIM FINANCIAL STATEMENTS OF LEISURE TIME. Attached as
Schedule 2.23 is the balance sheet of Leisure Time as of October 31, 1999, the
related statements of operations, and shareholder's equity for the ten month
period ended October 31, 1999 (collectively, the "Interim Financial Statements
of Leisure Time"). The Interim Financial Statements of Leisure Time have been
prepared in accordance with GAAP applied on a consistent basis, except for any
changes disclosed in such financial statements and the absence of notes to such
statements. The balance sheet contained in the Interim Financial Statements of
Leisure Time presents fairly, in all materials respects, the financial condition
of Leisure Time as of its date. The statements of operations contained in the
Interim Financial Statements of Leisure Time present fairly, in all material
respects, the results of operations of Leisure Time for the period presented.
The Interim Financial Statements of Leisure Time reflect all material
adjustments necessary for a fair presentation, which adjustments consist only of
normal recurring adjustments and include estimated provisions for year-end
adjustments.
SECTION 2.24 BALANCE SHEET OF THE COMPANY. Attached as Schedule 2.24 is
the consolidated balance sheet of the Company as of December 27, 1998 (the "Most
Recent Balance Sheet of the Company"). The Most Recent Balance Sheet of the
Company has not been audited. The Most Recent Balance Sheet of the Company
presents fairly, in all material respects, the consolidated financial condition
of the Company as of December 27, 1998.
SECTION 2.25 INTERIM BALANCE SHEET OF THE COMPANY. Attached as Schedule
2.25(a) is the consolidated balance sheet of the Company as of October 31, 1999,
(the "Interim Balance Sheet of the Company"). The Interim Balance Sheet of the
Company presents fairly, in all materials respects, the consolidated financial
condition of the Company as of its date. Attached as Schedule 2.25(b) is a list
of the assets and liabilities that the Company will distribute to the Sellers
pursuant to the terms of this Agreement and the book values of such assets and
liabilities.
SECTION 2.26 ACCOUNTING. Leisure Time and the Company have not changed
any of their respective accounting or Tax reporting principles, policies, or
procedures during the two years immediately preceding the date of this
Agreement. Leisure Time and the Company have prepared the Audited Financial
Statements of Leisure Time, the Interim Financial Statements of Leisure Time,
the Most Recent Balance Sheet of the Company, and the Interim Balance Sheet of
the Company (collectively, the "Financial Statements") from their books and
records.
SECTION 2.27 ABSENCE OF CERTAIN CHANGES. Except as shown in Schedule
2.27, since the date of the Interim Financial Statements of Leisure Time,
Leisure Time has not: (a) engaged in any transaction outside Leisure Time's
ordinary course of business, (b) suffered any Material Adverse Change, or (c)
suffered any material damage to any of its
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significant assets. Except as shown in Schedule 2.27, since the date of the
Interim Balance Sheet of the Company, the Company has not suffered any Material
Adverse Change.
SECTION 2.28 INTERNAL ACCOUNTING CONTROLS. Leisure Time and the Company
keep accounts, books, and records that accurately, fairly, and in reasonable
detail reflect their respective assets, business, liabilities, and transactions.
In addition, Leisure Time and the Company maintain systems of internal
accounting controls sufficient to provide reasonable assurance that: (a)
transactions are accurately and promptly recorded to permit the preparation of
Leisure Time's financial statements and the Company's financial statements, (b)
transactions are executed in accordance with management's general or specific
authorization, (c) access to Leisure Time's assets and the Company's assets is
permitted only in accordance with management's general or specific
authorization, and (d) comparisons are made between Leisure Time's fixed asset
registers and its existing assets at reasonable intervals, and Leisure Time
takes appropriate action with respect to any differences. To the best of
Sellers' knowledge, Leisure Time and the Company have not made or received any
payment in violation of Applicable Law.
SECTION 2.29 INTENTIONALLY DELETED.
SECTION 2.30 INTENTIONALLY DELETED.
SECTION 2.31 BANK ACCOUNTS. Schedule 2.31 describes each bank, money
market, mutual fund, or similar account that Leisure Time and the Company
maintain at any financial institution or otherwise, including any lock box
arrangements or safe deposit boxes. Such schedule also describes all individuals
authorized to draw upon such accounts or have access to such safe deposit boxes.
SECTION 2.32 ACCOUNTS RECEIVABLE. The notes receivable, contracts
receivable, and other receivables reflected on the Most Recent Audited Balance
Sheet of Leisure Time and all notes receivable, contracts receivable, and other
receivables of Leisure Time arising after the date of such balance sheet, other
than notes receivable, contracts receivable, and other receivables collected
since then in the ordinary course of Leisure Time's business consistent with its
past practices, arose from bona fide transactions in the ordinary course of
Leisure Time's business consistent with past practices. Such notes receivable,
contracts receivable, and other receivables are valid and enforceable
obligations of the respective makers thereof and, to the best of Sellers'
knowledge, are not subject to any valid offset or counterclaim. The allowance
for doubtful accounts reflected in the Most Recent Audited Balance Sheet of
Leisure Time was determined in accordance with GAAP and is reasonable in light
of historical data and other relevant information. Nothing has come to the
attention of the Sellers, Leisure Time, or the Company which leads any of them
to believe that the future experience of Leisure Time with respect to the
allowance for doubtful accounts will vary in any material amounts from the
allowance reflected in the Most Recent Audited Balance Sheet of Leisure Time.
The representations and warranties in this Section 2.32 shall not apply to the
Vacation Time Note to be distributed to the Sellers pursuant to Section 10.1
hereof.
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SECTION 2.33 INVENTORY. Leisure Time owns all of the inventory
reflected on the Most Recent Audited Balance Sheet of Leisure Time and all
inventory that it has acquired or created after the date of such balance sheet,
other than inventory disposed of since then in the ordinary course of Leisure
Time's business consistent with past practices.
SECTION 2.34 CONDITION OF ASSETS. Except as set forth on Schedule 2.34,
to the best of Sellers' knowledge, the buildings, fixtures, mechanical systems
(include air conditioning, boilers, electrical, heating, plumbing, telephone,
and ventilation systems), and other improvements on the Real Property, and the
equipment, vehicles, and other tangible personal property, that Leisure Time
owns or uses in its business are structurally sound and in good operating
condition, ordinary wear and tear excepted, and do not have any Material
Defects. For purposes of this Section 2.34, the term "Material Defect" means any
structural, mechanical, or other defect or problem that would require an
expenditure to repair of more than $5,000 with respect to each individual asset.
To the best of Sellers' knowledge, all real and tangible personal property that
Leisure Time owns or uses in its business complies with Applicable Law.
SECTION 2.35 REAL PROPERTY. Schedules 9.1(a) - (j) describe each parcel
of real property that Leisure Time owns, leases, or otherwise uses (the "Real
Property") and each deed, lease, or other document pursuant to which Leisure
Time owns, leases, or uses such Real Property, including the recording
information for such deed, lease, or other document.
SECTION 2.36 REAL PROPERTY EXCEPTIONS. Except as described in Schedules
9.1(a) - (j):
(a) TITLE. Leisure Time has good and marketable title in fee
simple to the Real Property, except for the property that Leisure Time
leases pursuant to the leases described in Schedule 2.49.
(b) NO BREACH OR DEFAULT. With respect to any Contracts,
easements, restrictions, and other documents granting to Leisure Time
an interest in the Real Property or otherwise affecting the Real
Property, to the best of Sellers' knowledge, no breach exists and no
condition or event has occurred that with the giving of notice or the
lapse of time would constitute a breach.
(c) NO CONDEMNATION. No condemnation, eminent domain, or
similar proceeding is pending or, to the best of Sellers' knowledge,
threatened with respect to any Real Property. In addition, to the best
of Sellers' knowledge, no such proceeding on any other real property
could affect the Real Property.
(d) PUBLIC IMPROVEMENTS. To the best of Sellers' knowledge, no
public improvements are proposed, in progress, or completed for which
Leisure Time could be assessed after the date of this Agreement.
(e) COMPLIANCE WITH LAWS. To the best of Sellers' knowledge,
the buildings, fixtures, and other improvements on the Real Property do
not violate: (i)
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any Applicable Law, including the Americans with Disabilities Act and
any building, fire, land use, occupancy, safety, set-back, or zoning
code, law, ordinance, regulation, or statute, or (ii) any restrictive
covenant affecting any Real Property.
(f) UTILITIES. Each of Leisure Time's campgrounds is connected
to, or has on-site facilities for, water, electric power, sewage or
septic disposal, and telephone. To the best of Sellers' knowledge, such
connections or on-site facilities are adequate for the current use of
such campgrounds.
(g) ROADS. Each of Leisure Time's campgrounds has adequate
access to and from public highways, streets, and roads. To the best of
Sellers' knowledge, no condition exists and no proceeding is pending or
threatened that could limit or terminate such access.
(h) PARTIES IN POSSESSION. Except as set forth in Schedule
2.36(h), there are no Persons in possession of any portion of any of
Leisure Time's campgrounds as lessees, tenants at sufferance, or
trespassers. In addition, to the best of Sellers' knowledge, no Person
claims any right in any portion of any of Leisure Time's campgrounds by
adverse possession.
(i) NO ENCROACHMENTS. To the best of Sellers' knowledge, no
building, fixture, or other improvement on any of Leisure Time's
campgrounds encroaches on any adjacent property. In addition, to the
best of Sellers' knowledge, no building, fixture, or other improvement
on any adjacent property encroaches on any of Leisure Time's
campgrounds.
SECTION 2.37 ENVIRONMENTAL MATTERS. Except as described in Schedule
2.37 and the Phase I environmental audits described in Section 9.2:
(a) NO VIOLATION OF ENVIRONMENTAL LAWS. To the best of
Sellers' knowledge, Leisure Time and the Company have never violated
any Environmental Law or any Permits related to any Environmental Law.
In addition, to the best of Sellers' knowledge, no Governmental
Authority has asserted that Leisure Time or the Company has ever
violated any such law or Permit.
(b) NO LIABILITY. To the best of Sellers' knowledge, Leisure
Time and the Company are not subject to any actual or contingent
liability in connection with any release of Hazardous Material into the
environment or any septic system, storm drain, sewer, or treatment
facility. In addition, to the best of Sellers' knowledge, Leisure Time
and the Company are not subject to any reclamation or redemption
requirements under any Environmental Law.
(c) NOT NAMED AS A POTENTIALLY RESPONSIBLE PARTY. Leisure Time
and the Company have never been named as a potentially responsible
party under any Environmental Law, and, to the best of Sellers'
knowledge, no basis exists for naming Leisure Time or the Company as a
potentially responsible party in the future.
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To the best of Sellers' knowledge, none of the off-site locations to
which Leisure Time or the Company has sent Hazardous Materials, if any,
has been identified as a facility that is subject to an existing or
potential claim under any Environmental Law.
(d) NO HAZARDOUS MATERIALS ON THE REAL PROPERTY. To the best
of Sellers' knowledge, neither Leisure Time, any previous occupant,
owner, tenant, or user of any Real Property, nor any other Person has
engaged in or permitted any activity upon the Real Property involving
the discharge, disposal, dumping, emission, escape, generation,
handling, leaching, leaking, manufacture, refining, release, spilling,
storage, treatment, or use of any Hazardous Materials on, under, in, or
about, the Real Property or transported any Hazardous Materials to,
from, or across the Real Property in violation of Applicable Law. To
the best of Sellers' knowledge, no Hazardous Materials currently are
constructed, deposited, produced, stored, or otherwise located on,
under, in, or about the Real Property in violation of Applicable Law.
(e) NO STORAGE TANKS. To the best of Sellers' knowledge,
except as set forth on Schedule 2.37, no underground improvement,
including any storage, stump, or treatment tank or any gas, oil, or
water well is located on the Real Property that does not comply with
Applicable Law.
(f) NO NOTICES. Neither Leisure Time nor, to the best of
Sellers' knowledge, any previous occupant, owner, tenant, or user of
the Real Property has received any notice or other communication
concerning: (i) any violation of any Environmental Law with respect to
the Real Property, or (ii) any liability for environmental damages in
connection with the Real Property. No Claim or Lawsuit is pending or,
to the best of Sellers' knowledge, threatened relating to the
maintenance, operation, ownership, or use of the Real Property, the
violation of any Environmental Law with respect to the Real Property,
or the presence of any Hazardous Materials on the Real Property, and,
to the best of Sellers' knowledge, no basis exists for the institution
or filing of any such Claim or Lawsuit. In addition, no Order relating
to any of the foregoing matters is outstanding.
(g) NO FILINGS. To the best of Sellers' knowledge, neither the
Sellers, Leisure Time, the Company, nor the Purchaser is required to
make any filings under any Environmental Law in connection with the
sale of the Shares to the Purchaser.
SECTION 2.38 EQUIPMENT. Schedule 2.38 describes each piece of equipment
and machinery having a value of $200 or more that Leisure Time owns, leases, or
otherwise uses in its business (the "Equipment"), other than the Vehicles.
Except as described on such schedule, Leisure Time owns the Equipment free and
clear of any Lien.
SECTION 2.39 VEHICLES. Schedule 2.39 describes each automobile,
trailer, truck, and other vehicle that Leisure Time owns, leases, or otherwise
uses in its business (the "Vehicles"). Such descriptions include any applicable
vehicle identification numbers. Except as described on such schedule, Leisure
Time owns each Vehicle free and clear of any Lien and holds the certificate of
title to it.
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SECTION 2.40 MARKETING CONTRACTS. Leisure Time has entered into
agreements with two marketing companies pursuant to which they are marketing and
selling additional benefits to the existing members of Leisure Time. The
agreements with these marketing companies permit Leisure Time to terminate the
agreements upon the Closing of the sale of the Shares to Purchaser by paying a
fee of $37,500 to each marketing company.
SECTION 2.41 SELLERS' ACQUISITION CONTRACTS. Except for the Company's
acquisition of the capital stock of Leisure Time from Bernard O. Albertsen and
Leodyce Albertsen and Eugene Hine, there are no Contracts pursuant to which any
of the Sellers or any of their Affiliates acquired the capital stock of Leisure
Time or the Company.
SECTION 2.42 ACQUISITION CONTRACTS. Schedule 2.42 describes each
Contract of Leisure Time and the Company that: (a) concerns Leisure Time's or
the Company's acquisition or disposition of assets having a value of $25,000 or
more outside Leisure Time's or the Company's ordinary course of business
occurring during the two years immediately preceding the date of this Agreement,
(b) concerns the purchase or sale of any business having a value of $25,000 or
more and involving Leisure Time or the Company occurring during the two years
immediately preceding the date of this Agreement, or (c) concerns any
consolidation, merger, or share exchange involving Leisure Time or the Company,
occurring during the two years immediately preceding the date of this Agreement
(collectively, the "Acquisition Contracts").
SECTION 2.43 MEMBER CONTRACTS. Schedule 2.43 includes a sample of each
form of Member Contract used by Leisure Time (or the prior owner of the
campground) in connection with the sale of memberships.
(a) NO CONFLICTING ORAL REPRESENTATIONS. Except as set forth
in Schedule 2.43, no agent of Leisure Time has made any statement or
representation to prospective members in connection with the offer and
sale of memberships which differs in any material respect from the
statements and representations contained in the Member Contracts.
(b) COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in
Schedule 2.43, to the best of Sellers' knowledge, all sales of Member
Contracts by Leisure Time (or the prior owner of the campground) were
made in compliance in all material respects with all Applicable Laws,
including without limitation (a) all federal and state truth-in-lending
and similar laws applicable to Leisure Time, (b) all federal and state
securities and blue sky laws applicable to Leisure Time, and (c) all
federal and state land sales acts, timeshare acts, membership
campground acts, and similar laws applicable to Leisure Time.
(c) MEMBERSHIPS SOLD. Schedule 2.43(c) sets forth the number
of each category of membership that has been sold by Leisure Time or
the prior owner of the
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campground and which has not been revoked or terminated by the member
or Leisure Time.
SECTION 2.44 EMPLOYMENT AND RELATED PARTY CONTRACTS. Other than oral
at-will contracts, Schedule 2.44 describes each Contract of Leisure Time and the
Company that (a) relates to the employment or severance of any individual,
including any collective bargaining, labor, or union agreement or (b) concerns
Leisure Time's or the Company's engagement of any Person, including any
Representative or Outside Representative (collectively, the "Employment and
Related Party Contracts").
SECTION 2.45 FINANCING CONTRACTS. Schedule 2.45 describes each Contract
of Leisure Time or the Company that: (a) pertains to the borrowing or lending of
money, including any letters of credit, (b) creates any Lien, or (c) creates any
guarantee (collectively, the "Financing Contracts").
SECTION 2.46 RESTRICTIVE CONTRACTS. Schedule 2.46 describes each
Contract of Leisure Time or the Company that: (a) restricts the ability of
Leisure Time or the Company to compete or restricts any Person from competing
against Leisure Time or the Company, (b) requires Leisure Time or the Company to
keep any information confidential or requires any Person to keep confidential
any Confidential Information of Leisure Time or the Company, or (c) restricts
the ability of Leisure Time or the Company to employ or engage any Person or
restricts any Person from employing or engaging any Person that Leisure Time or
the Company has employed or engaged (collectively, the "Restrictive Contracts").
SECTION 2.47 UTILITY CONTRACTS. Schedule 2.47 describes each Contract
of Leisure Time or the Company that cannot be terminated on 60 days advance
notice concerning the provision to Leisure Time or the Company of electricity,
gas, telephone services, or water (collectively, the "Utility Contracts").
Except as described in such schedule, no Utility Contract has a "take or pay" or
minimum purchase requirement.
SECTION 2.48 OTHER SIGNIFICANT CONTRACTS. Schedule 2.48 describes each
Contract of Leisure Time or the Company other than the Acquisition Contracts,
the Member Contracts, the Employment and Related Party Contracts, the Financing
Contracts, the Leases, the Restrictive Contracts, and the Utility Contracts
that: (a) affect Leisure Time's or the Company's assets, business, cash flows,
financial condition, liabilities, operations, prospects, or relationships and
(b) binds Leisure Time or the Company without permitting Leisure Time or the
Company to terminate such Contract on not more than 60 days advance notice
without paying any penalty or other amount in connection with such termination
(collectively, the "Other Significant Contracts").
SECTION 2.49 LEASES. Schedule 2.49 describes each lease to which
Leisure Time or the Company is a party or pursuant to which Leisure Time or the
Company leases any property as either lessor or lessee (the "Leases"). Leisure
Time and the Company have paid all rental and other payments due under each
Lease under which Leisure Time or the Company is the lessee in accordance with
its terms. With respect to each such Lease, Leisure Time or the Company has been
in peaceable possession of the buildings,
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equipment, machinery, real property, vehicles, or other tangible property
covered by such Lease since the commencement of the original term of such Lease.
Leisure Time or the Company possesses full right and power to occupy or possess
all of the buildings, equipment, machinery, real property, vehicles, and other
tangible property covered by such Leases.
SECTION 2.50 CONTRACTS GENERALLY. Except as described in Schedule 2.50:
(a) DESCRIPTIONS. No Material Contract has been amended or
supplemented in any material way except as described in the description
of such Material Contract. In addition, no material arrangement,
correspondence, or side-agreement exists concerning the interpretation
of any Material Contract.
(b) VALID AND BINDING. To the best of Sellers' knowledge, each
Material Contract is valid, binding, and in full force and effect.
(c) NO BREACH. To the best of Sellers' knowledge, no material
breach exists under any Material Contract. In addition, to the best of
Sellers' knowledge, no party to any Material Contract has notified
Leisure Time or the Company that such party intends to breach or
terminate such Contract or believes that Leisure Time or the Company
has breached such Contract.
(d) NO LIENS. Except as described in a Schedule to this
Agreement, Leisure Time's or the Company's rights under each Material
Contract are free and clear of any Lien.
(e) NO BURDENSOME CONTRACTS. No Contract of Leisure Time or
the Company guarantees any obligation of another Person.
(f) REQUIREMENTS CONTRACTS. Except for contracts that can be
terminated by Leisure Time or the Company on not more than 60 days
notice without paying any penalty or other amount in connection with
such termination, the Company and Leisure Time are not parties to any
Contract that requires Leisure Time or the Company to purchase all or a
certain portion of Leisure Time's or the Company's requirements of a
particular product or service from a particular Person or requires
Leisure Time or the Company to supply all or a certain portion of a
Person's requirements for a particular product or service.
SECTION 2.51 UNDOCUMENTED ARRANGEMENTS. Except as described in Schedule
2.51, Leisure Time and the Company do not have any material arrangements that
are not documented in a Contract that is described in a schedule to this
Agreement.
SECTION 2.52 PERMITS. Schedule 2.52 describes the conditional use
permit or similar permit issued by the applicable Governmental Authority for the
development and operation of each of Leisure Time's Campgrounds (the "Material
Permits"). To the best of Sellers' knowledge, each Material Permit is currently
in effect, no violation of the terms of
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such Material Permit have occurred, the issuing Governmental Authority has not
taken or threatened to take any action to revoke or limit such Material Permit,
and no basis exists for revoking or limiting it. In addition, to the best of
Sellers' knowledge, no issuing Governmental Authority has indicated that it will
not renew a Material Permit and, to the best of Seller's knowledge, no basis
exists for failing to renew a Material Permit. To the best of Sellers'
knowledge, no Material Permit will terminate or require re-issuance in
connection with the change in control of Leisure Time or the Company upon the
sale of the Shares to the Purchaser.
SECTION 2.53 INTELLECTUAL PROPERTY. Except as set forth in Schedule
2.53 and the Computer Software Licenses, Leisure Time and the Company do not own
or use any copyright, trademark, service mark, patent, or other intellectual
property.
SECTION 2.54 INTENTIONALLY DELETED.
SECTION 2.55 COMPUTER SOFTWARE LICENSES. Schedule 2.55 describes each
material computer software program that Leisure Time or the Company has licensed
(the "Computer Software Licenses"), excluding common computer application
programs that can be purchased for less than $1,000. Except as described in such
schedule, such licenses are perpetual, unrestricted, and not subject to any
future payment or royalty.
SECTION 2.56 INTENTIONALLY DELETED.
SECTION 2.57 INTENTIONALLY DELETED.
SECTION 2.58 INTENTIONALLY DELETED
SECTION 2.59 INTENTIONALLY DELETED.
SECTION 2.60 LITIGATION AND CLAIMS. Except as described in Schedule
2.60, no Claim or Lawsuit involving more than $5,000 is pending or threatened
concerning: (a) Leisure Time, (b) the Company, (c) any current or former
Representative of Leisure Time or the Company with respect to such
Representative's service to Leisure Time or the Company, (c) any Material
Contract, or (d) the execution, delivery, or performance of this Agreement
(collectively, the "Current Lawsuits"). To the best of Sellers' knowledge,
except as described in such schedule, no events have occurred or circumstances
exist that could result in a future Claim against Leisure Time or the Company,
other than minor and routine claims.
SECTION 2.61 INTENTIONALLY DELETED.
SECTION 2.62 ORDERS. Schedule 2.62 describes each Order to which
Leisure Time, the Company, or any of their assets is subject or bound. Such
schedule also describes each Order concerning any current or former
Representative of Leisure Time or the Company with respect to such
Representative's service to Leisure Time or the Company. Leisure Time, the
Company, and each such Representative has fully complied
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with each such Order at all times since such Order's issuance. Leisure Time, the
Company, and such Representatives have not received any notice from any
Governmental Authority or other Person asserting a violation of any such Order.
SECTION 2.63 AUDIT LETTER RESPONSES. Schedule 2.63 describes each
lawyer response to Leisure Time's auditors' request for information concerning
legal proceedings that such auditors received in connection with their audit of
the Audited Financial Statements of Leisure Time.
SECTION 2.64 INVESTIGATIONS. Schedule 2.64 describes each pending
investigation and, to the best of Sellers' knowledge, each threatened
investigation by any Governmental Authority involving Leisure Time or the
Company, including any investigation concerning antitrust, environmental,
securities, consumer protection, and other regulatory matters.
SECTION 2.65 INSURANCE POLICIES. Schedule 2.65 contains each insurance
policy that provides any type of insurance coverage for Leisure Time and the
Company other than with respect to the Employee Benefit Plans, including
insurance coverage with respect to business casualties, business travel,
directors' and officers' liabilities, environmental liabilities, errors and
omissions, employee fidelity, excess liability or umbrella coverage, fire,
general business liabilities, key-man life, property, product liabilities,
theft, vehicular comprehensive and liability coverage, and workers' compensation
(collectively, the "Insurance Policies"). These policies describe the coverage
deductible and limit, expiration date, and current premium for each Insurance
Policy. The Sellers have delivered to the Purchaser a correct and complete
summary of all claims made under such insurance policies during the five years
proceeding the date of this Agreement.
SECTION 2.66 INSURANCE POLICY EXCEPTIONS. Except as described in
Schedule 2.65:
(a) PREMIUM ADJUSTMENTS. No Insurance Policy provides for any
retrospective premium adjustment or other experience based liability
with respect to Leisure Time or the Company.
(b) APPLICATIONS. No material inaccuracy exists in any
application with respect to any Insurance Policy.
(c) DISPUTES. No disagreement or dispute exists between any
insurance carrier and Leisure Time or the Company.
SECTION 2.67 NO UNDISCLOSED LIABILITIES. Except for the Liens and
Claims that are specifically described in the Schedules to this Agreement, to
the best of Sellers' knowledge, the assets and business of Leisure Time and the
Company are not subject to any Lien or Claim of any nature, absolute or
contingent, other than contractual obligations incurred since the date of the
Most Recent Audited Balance Sheet of Leisure Time or Most
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Recent Balance Sheet of the Company in the ordinary course of their business
consistent with past practices.
SECTION 2.68 TAXES. Schedule 2.68 describes each federal and state Tax
report and return in connection with Leisure Time's and the Company's assets,
business, and employees that either the Sellers, Leisure Time, or the Company
filed during the two years immediately preceding the date of this Agreement.
SECTION 2.69 TAX EXCEPTIONS. Except as described in Schedule 2.69:
(a) CONSOLIDATED INCOME TAX RETURNS. Leisure Time has been
included in the Company's combined, consolidated, and unitary Income
Tax reports and returns for all periods for which the applicable
statute of limitations has not expired.
(b) TAX RETURNS AND PAYMENTS. For all periods for which the
applicable statute of limitations has not expired, the Company has
filed all federal, state, and local Tax reports and returns in
connection with Leisure Time's and the Company's assets, business, and
employees and the Company or Leisure Time has paid and discharged all
Tax obligations shown on such reports and returns, including any
withholding obligations. Such Tax reports and returns are accurate and
complete and correctly compute the Tax obligation to which each such
report or return pertains.
(c) NO NOTICES. The Company and Leisure Time have not received
any determination letter, revenue agent report, or other notice of any
proposed or outstanding Tax deficiency against the Company or Leisure
Time. In addition, neither the Company, Leisure Time, nor any other
Person has executed any extension agreement or waiver of any statute of
limitations with respect to the assessment or collection of any Tax
against the Company or Leisure Time.
(d) NO AUDITS. Neither the Internal Revenue Service ("IRS")
nor any other taxing authority (collectively with the IRS, the "Taxing
Authorities") has contacted the Sellers, the Company, or Leisure Time
concerning a future audit or examination of any Tax reports and returns
that include the Company or Leisure Time. In addition, no such audit or
examination is in process with respect to any period for which the
statute of limitations has not expired.
(e) NO TAX LIENS. No Tax liens exist with respect to any
assets of Leisure Time or the Company, other than statutory Tax liens
for Taxes not yet due.
(f) NO AGREEMENTS. No Tax ruling from any Taxing Authority or
closing agreement with any Taxing Authority has a continuing effect
upon the Company or Leisure Time. In addition, no such Tax ruling or
closing agreement is pending.
(g) NO GOLDEN PARACHUTES. The Company does not have any
Contract that could require the Company to make any "excess parachute
payment" as defined
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under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), determined without considering any of the exceptions
contained in such section.
(h) NO PARTNERSHIPS. The Company is not a member of any joint
venture, partnership, or other arrangement or Contract that is treated
as a partnership for Income Tax purposes.
(i) NO PROPERTY TREATED AS OWNED BY ANOTHER PERSON. No
property of Leisure Time or the Company is property that the Company is
required to treat as owned by another Person pursuant to any Applicable
Law.
(j) NO TAX EXEMPT USE PROPERTY. No property of Leisure Time or
the Company is "tax exempt use property" as defined under Section
168(h)(1) of the Code.
(k) NO TRANSFER TAXES. The sale of the Shares to the Purchaser
will not impose or create any Tax obligations on the Purchaser or the
Company, including any withholding Tax obligations on the Purchaser.
(l) NO REVALUATION OF ASSETS. The sale of the Shares to the
Purchaser will not cause any reassessment or revaluation of Leisure
Time's or the Company's assets for any ad valorem or property Tax
purposes.
(m) NO FOREIGN SELLER. The Sellers are not a "foreign person"
under Sections 1445 and 7701 of the Code.
SECTION 2.70 DIRECTORS AND OFFICERS. Schedule 2.70 lists each director
and officer of Leisure Time and the Company on the date of this Agreement.
Except for the Employment Agreement dated February 25, 1998, between the Company
and Margie Burnett, no director or officer of Leisure Time or the Company has an
employment agreement with Leisure Time or the Company, and each such individual
is an employee at will.
SECTION 2.71 EMPLOYEES. Schedule 2.71 lists each employee of Leisure
Time and the Company on the date of this Agreement. Such schedule gives each
such employee's job title, current aggregate annual compensation along with the
components of such compensation, and other material benefits. Except for the
Employment Agreement dated February 25, 1998, between the Company and Margie
Burnett, no such employee has an employment agreement with Leisure Time or the
Company, and each such employee is an employee at will.
SECTION 2.72 COLLECTIVE BARGAINING AGREEMENTS. Leisure Time and the
Company are not a party to any collective bargaining agreement or other labor
union Contract applicable to any employee of Leisure Time or the Company.
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SECTION 2.73 LABOR RELATIONS EXCEPTIONS. Except as described in
Schedule 2.73:
(a) NO OTHER AGREEMENTS. No collective bargaining agreement or
other labor union Contract has been requested by any employee or group
of employees of Leisure Time or the Company. In addition, no
discussions or negotiations with respect to any such agreement or
Contract have occurred.
(b) LABOR UNIONS. No labor associations, organizations, or
unions have been certified to represent any employee of Leisure Time or
the Company.
(c) NO ORGANIZING ACTIVITIES. There have not been any union
organizing activities, petitions, or proceedings with respect to any
labor association, organization, or union becoming the exclusive
bargaining agent for any group of employees of Leisure Time or the
Company. In addition, no proceeding is pending or threatened before
National Labor Relations Board or other Governmental Authority
concerning any labor association, organization, or union seeking to
represent any employees of Leisure Time or the Company.
(d) WORK RULES. No work rules exist with respect to Leisure
Time's or the Company's employees.
(e) NO STRIKES. No lockouts, pickets, sick-outs, strikes, work
slowdowns, or work stoppages are pending or threatened with respect to
any employees of Leisure Time or the Company. In addition, no such
matters have occurred during the five years immediately preceding the
date of this Agreement.
(f) NO LABOR LAW VIOLATIONS. No charge of discrimination,
unfair labor practices, or violations of the Americans With
Disabilities Act or any fair employment, health and safety, or wage
payment laws are pending or threatened before any Governmental
Authority concerning any current or former employee of Leisure Time or
the Company or any applicant for employment. In addition, to the best
of Sellers' knowledge, no basis exists for any such charges.
(g) OSHA. No Governmental Authority has issued any citation to
Leisure Time or the Company under the Occupational Health and Safety
Act during the three years proceeding the date of this Agreement.
SECTION 2.74 EMPLOYEE BENEFIT PLANS. Schedule 2.74 describes each Plan
established or maintained by or on behalf of Leisure Time and the Company, or
with respect to which Leisure Time or the Company has contributed or may have
any liability (the "Employee Benefit Plans"). Such schedule indicates which
plans are ERISA Welfare Plans, ERISA Pension Plans, and other Plans and sets
forth the aggregate contribution that each such Plan required Leisure Time or
the Company to make during the most recently completed year reflected in the
Audited Financial Statements of Leisure Time, along with the payment made by or
on behalf of Leisure Time or the Company. Such schedule also
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describes any insurance policies with respect to any of the Employee Benefit
Plans. Except for the Employee Benefit Plans, the employees of Leisure Time and
the Company have no expectation or right with respect to any Plan under any
Applicable Law, arrangement, Contract, past custom, or otherwise.
SECTION 2.75 EMPLOYEE BENEFIT PLAN EXCEPTIONS. Except as described in
Schedule 2.75:
(a) DELIVERY OF DOCUMENTS. The Sellers have delivered to the
Purchaser correct and complete copies of: (i) each Employee Benefit
Plan, including all amendments to such Plan and all summary plan
descriptions of such Plan, (ii) each trust agreement, annuity or
insurance Contract, or other funding instrument pertaining to each
Employee Benefit Plan, (iii) the most recent determination letter
issued by the IRS with respect to each Employee Benefit Plan that is
intended to be tax-qualified and a copy of any pending applications for
such determination letters, (iv) the five most recent actuarial
valuation reports for each Employee Benefit Plan for which an actuarial
valuation report exists, and (v) the most recent annual report (IRS
Form 5500 Series) for each Employee Benefit Plan, including all
schedules to such reports, and plan audits filed with respect to such
reports.
(b) AMENDMENTS. The Company or Leisure Time can amend or
terminate each Employee Benefit Plan at any time without the approval
of any Person, and without any liability other than the benefits
accrued prior to such amendment or termination.
(c) JOINT AND SEVERAL LIABILITY. With respect to each Employee
Benefit Plan, no event has occurred and no condition exists that after
the Closing could subject the Purchaser, the Company, or Leisure Time,
directly or indirectly, to any liability under Code Sections 412, 4971,
4975, or 4980B or ERISA Sections 502, 601, or 606, including liability
under any indemnification agreement.
(d) CLAIMS FOR BENEFITS. All benefits due under each Employee
Benefit Plan have been timely paid and there is no Claim or Lawsuit
pending or threatened against any Employee Benefit Plan or the
fiduciaries of any such Plan, other than routine uncontested Claims for
benefits. In addition, to the best of Sellers' knowledge, no basis
exists for any such Claim or Lawsuit.
(e) COMPLIANCE WITH PLAN AND APPLICABLE LAW. Each Employee
Benefit Plan has been administered and documented in compliance with
such Plan's terms and Applicable Law. In addition, each Employee
Benefit Plan and any related trust agreement, annuity or insurance
Contract, or other funding instrument has complied in both form and
substance with such Plan's terms and Applicable Law, including the Code
and ERISA.
(f) CONTRIBUTIONS. All contributions and payments to or with
respect to each Employee Benefit Plan have been timely made.
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(g) NO ERISA PENSION PLANS. The Company and Leisure Time do
not have, and have never had, any ERISA Pension Plan.
(h) NO AUDITS OR PROHIBITED TRANSACTIONS. No audit or
investigation by any Governmental Authority is pending or threatened
regarding any Employee Benefit Plan. In addition, no Person has
breached any fiduciary duty or engaged in any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code
with respect to any Employee Benefit Plan.
(i) NO UNFUNDED BENEFITS. No Employee Benefit Plan has any
unfunded benefits that are not fully reflected in the Most Recent
Audited Balance Sheet of Leisure Time and Most Recent Balance Sheet of
the Company.
SECTION 2.76 INTENTIONALLY DELETED.
SECTION 2.77 PREDECESSORS. There are no predecessors of Leisure Time or
the Company.
SECTION 2.78 ABSENCE OF UNETHICAL BUSINESS PRACTICES. Neither Leisure
Time, the Company, nor any of their Affiliates has directly or indirectly given
or agreed to give any thing of value to any government employee or other Person
who was or is in a possible position to help or hinder Leisure Time or the
Company that might subject Leisure Time or the Company to damages or penalties
in a civil or criminal proceeding.
SECTION 2.79 INTENTIONALLY DELETED.
SECTION 2.80 NO BROKER. Neither the Sellers, Leisure Time, nor the
Company has any obligation or liability to any broker, finder, or other Person
for any broker or similar services with respect to the sale of the Shares to the
Purchaser.
SECTION 2.81 ADEQUATE DISCLOSURE. The Sellers are unaware of any facts
concerning Leisure Time or the Company that the Sellers have not disclosed to
the Purchaser in this Agreement and its schedules that could have a material
adverse effect on Leisure Time or the Company. To the best of Sellers'
knowledge, the Sellers have provided the Purchaser with all documents and
information that the Purchaser requested when deciding whether to enter into
this Agreement. In addition, no representation or warranty of the Sellers
contained in this Agreement contains any material untrue statement or omits to
state any material information necessary to make such representation and
warranty not misleading.
EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2, THE SELLERS ARE NOT MAKING ANY
WARRANTIES, EXPRESS OR IMPLIED, REGARDING LEISURE TIME OR THE COMPANY.
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III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
SECTION 3.1 ORGANIZATION. The Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and is qualified to transact business as a foreign corporation in each
jurisdiction where the failure to qualify could have a Material Adverse Effect
upon the Purchaser.
SECTION 3.2 POWER AND AUTHORITY. The Purchaser possesses the corporate
power and authority to execute, deliver, and perform this Agreement, without
obtaining any approval or giving any notice, other than the approval of its
Board of Directors, which it has properly obtained.
SECTION 3.3 EXECUTION, DELIVERY, AND ENFORCEABILITY. The Purchaser has
duly authorized, executed, and delivered this Agreement, and this Agreement
constitutes a valid, legal, and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, subject to any Law Affecting
Creditors' Rights.
SECTION 3.4 CONSENTS. The Purchaser's execution, delivery, and
performance of this Agreement does not require the Purchaser to obtain any
approval or consent from any Person, make any filing with any Person, or give
any notice to any Person.
SECTION 3.5 CONFLICTS. To the best of Purchaser's knowledge, the
Purchaser's execution, delivery, and performance of this Agreement will not
directly or indirectly breach or violate: (i) any provision of the Articles of
Incorporation or the Bylaws of the Purchaser, (ii) any resolution of the Board
of Directors, any committee of the Board of Directors, or the shareholders of
the Purchaser, (iii) any Contract of the Purchaser, or (iv) any Order to which
the Purchaser or any of its assets or Representatives is subject or bound.
SECTION 3.6 NO PROHIBITIONS. To the best of Purchaser's knowledge, the
Purchaser's execution, delivery, and performance of this Agreement will not
violate any Applicable Law and no Lawsuit before any court or other Governmental
Authority is pending or threatened that could prohibit the Purchaser from
consummating the transactions contemplated by this Agreement or subject the
Purchaser to damages with respect to any such transaction.
SECTION 3.7 SOPHISTICATED INVESTOR. The Purchaser is an "accredited
investor" under the federal securities laws that was not formed for the purpose
of purchasing the Shares. The Purchaser is acquiring the Shares for investment
purposes and not with a view to making a distribution of them.
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SECTION 3.8 NO BROKER. The Purchaser does not have any obligation or
liability to any broker, finder, or other Person for any broker or similar
services with respect to the purchase of the Shares from the Sellers.
IV. COVENANTS OF THE SELLERS
SECTION 4.1 COOPERATION BY THE SELLERS. From the date of this Agreement
through the Closing Date, the Sellers shall use reasonable efforts to take all
actions and do all things necessary or advisable to consummate the transactions
contemplated by this Agreement. The Sellers shall cooperate with the Purchaser
in the Purchaser's efforts to close this Agreement.
SECTION 4.2 NO SALE OF THE SHARES OR LEISURE TIME SHARES. From the date
of this Agreement through the Closing Date, the Sellers shall not sell or
otherwise transfer the Shares, or allow the Company to sell or otherwise
transfer the Purchased Shares or the Leisure Time Shares, to any Person other
than the Purchaser or a wholly owned subsidiary of the Purchaser. This
prohibition shall preclude the Sellers and the Company from pledging the Shares,
the Purchased Shares, or the Leisure Time Shares, granting any Lien with respect
to them, or suffering any Lien to exist on them.
SECTION 4.3 ACCESS TO THE COMPANY. From the date of this Agreement
through the Closing Date, the Sellers shall cause the Company to permit the
Purchaser reasonable access to Leisure Time's and the Company's assets, books
and records, business, employees, and facilities. In addition, during this
period, the Sellers shall cause the Company to furnish promptly to the Purchaser
such financial and operating information as the Purchaser may reasonably
request, including copies of any requested documents. The Purchaser shall
indemnify the Sellers for any Claim arising in connection with such access.
SECTION 4.4 AFFIRMATIVE COVENANTS CONCERNING OPERATION OF LEISURE TIME
AND THE COMPANY. Unless the Purchaser gives its prior written consent, which
shall not be unreasonably withheld, from the date of this Agreement through the
Closing Date, the Sellers shall cause Leisure Time and the Company to:
(a) REPRESENTATIONS AND WARRANTIES. Operate and maintain their
assets and business in such a manner so that the Sellers'
representations and warranties contained in this Agreement continue to
be correct and complete at all times prior to the Closing Date as if
made on and as of such times;
(b) OPERATE LEISURE TIME IN THE ORDINARY COURSE. Operate the
business of Leisure Time in the ordinary course consistent with past
practices, this Agreement, and Applicable Law;
(c) MAINTAIN ASSETS. Maintain the tangible assets of Leisure
Time in accordance with past practices;
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(d) MAINTAIN GOODWILL. Preserve intact Leisure Time's business
and the goodwill of its members, customers, Outside Representatives,
Representatives, suppliers, and any other Person having business
relations with it;
(e) PERFORM OBLIGATIONS. Perform punctually all obligations
under each Material Contact, and keep each Material Contract in full
force and effect, free from any right of cancellation, forfeiture, or
termination;
(f) INSURANCE COVERAGE. Continue in effect all Insurance
Policies;
(g) MAKE PAYMENTS. Pay promptly when due all liabilities and
obligations of every kind and nature owed by Leisure Time and the
Company;
(h) PAY TAXES. File all required Tax reports and returns and
timely pay all Taxes owed with respect to such reports and returns;
(i) EMPLOYEE BENEFIT PLAN PAYMENTS. Make full and timely
payments of all amounts required under each Employee Benefit Plan; and
(j) NO CONTRARY AGREEMENTS. Refrain from: (i) entering into
any Contract that could cause or require Leisure Time or the Company to
fail to take any action described in Paragraphs (a) through (i) above
at any time, or (ii) making any contractual offer that could result in
such a Contract.
SECTION 4.5 NEGATIVE COVENANTS CONCERNING OPERATION OF LEISURE TIME AND
THE COMPANY. Unless the Purchaser gives its prior written consent, which shall
not be unreasonably withheld, from the date of this Agreement through the
Closing Date, the Sellers shall cause Leisure Time and the Company to NOT:
(a) NO MATERIAL ADVERSE CHANGE. Cause or suffer any Material
Adverse Change to occur to Leisure Time or the Company;
(b) NO AMENDMENTS. Amend the Articles of Incorporation or
Bylaws of Leisure Time or the Company;
(c) NO EXTRAORDINARY CORPORATE TRANSACTIONS. Merge,
reorganize, restructure, sell substantially all of their assets, enter
into any Contract involving any other form of business combination or
share exchange, dissolve, liquidate, or wind up;
(d) NO ACQUISITIONS. Acquire any interest or investment in
another Person or any material amount of assets of another Person, or
make any advances, capital contributions, or loans to another Person.
(e) NO TRANSACTIONS IN SHARES. Issue, purchase, redeem, or
otherwise effect any transactions with respect to any securities of
Leisure Time or the
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Company, or any right to acquire any securities of Leisure Time or the
Company, including any Derivative Securities;
(f) NO DIVIDENDS. Except as permitted by the terms of this
Agreement, declare, issue, make, or pay any dividend or other
distribution of assets, or combine, distribute, reclassify, or split
any shares of the capital stock of Leisure Time or the Company;
(g) NO ACCOUNTING CHANGES. Change any accounting or Tax
reporting principles, policies, or procedures of Leisure Time or the
Company;
(h) ASSETS. Except as permitted by the terms of this
Agreement, lease, purchase, sell, transfer, or otherwise acquire or
dispose of any assets, other than in the ordinary course of business
consistent with past practices;
(i) CAPITAL EXPENDITURES. Make or obligate Leisure Time or the
Company to make capital expenditures in excess of an aggregate of
$5,000;
(j) NO CHANGES TO CONTRACTS. Amend, modify, or terminate any
Material Contract, or enter into any new Contract that would have been
a Material Contract if existing on the date of this Agreement;
(k) NO CHANGES TO PERMITS. Amend, modify, or terminate any
Material Permits, or obtain any new Permit that would have been a
Material Permit if existing on the date of this Agreement;
(l) NO BORROWING MONEY. Assume, create, guarantee, or incur
any indebtedness, whether absolute or contingent, other than
indebtedness incurred in the ordinary course of Leisure Time's business
consistent with past practices;
(m) NO LIENS. Grant any Liens.
(n) ACCOUNTS. Accelerate or delay the collection of any
membership, dues, or other accounts receivable, the payment of any
accounts payable, the purchase or receipt of any supplies, or the
delivery or sale of its products or services outside the ordinary
course of its business consistent with past practices, provided,
however, that the Company and Leisure Time may repay loans made to them
by Bernie Albertsen;
(o) CUSTOMERS. Increase or decrease the prices that Leisure
Time charges for its products and services or grant credit to any
customer on terms more favorable than the terms on which Leisure Time
has previously extended credit to customers in the past;
(p) LAWSUITS. File any Lawsuit or settle any Lawsuit to which
Leisure Time or the Company is a party, provided, however, that the
Company and Leisure Time
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may continue to finalize the court approved settlement of the Lawrence
lawsuit and pay amounts owing to members under such settlement;
(q) ORDERS. Violate any Order to which Leisure Time or the
Company or their respective assets are subject or bound or suffer the
violation of any Order concerning any current or former Representative
of Leisure Time or the Company with respect to such Representative's
service to Leisure Time or the Company.
(r) INCOME TAX GROUP. Change the Company's affiliated group
for Income Tax purposes;
(s) COMPENSATION. Increase the compensation or benefits
payable to any Representative, Outside Representative, or other Person
under any arrangement, Contract, Employee Benefit Plan, or other Plan,
or pay any bonus to any Representative, provided, however, that Leisure
Time may pay bonuses to its field sales personnel consistent with past
practices, and, at the Closing, the Company and Leisure Time may pay
severance compensation to its employees as contemplated by Section
4.14;
(t) EMPLOYEE BENEFIT PLANS. Amend or terminate any Employee
Benefit Plan or any current policy of Leisure Time or the Company
concerning its Representatives, or adopt any new Plan;
(u) EMPLOYEE EXPECTATIONS. Create any expectation on the part
of the Representatives of Leisure Time or the Company with respect to
their employment, compensation, or benefits;
(v) NO CONTRARY AGREEMENTS. Enter into any Contract to take or
permit any of the actions described in Paragraphs (a) through (u) above
at any time or make any contractual offer that could result in such a
Contract.
Notwithstanding anything in this Section 4.5 to the contrary, the
Company may distribute to the Sellers the assets and liabilities of the Company
(other than Leisure Time) that the Company is required by this Agreement to
distribute to the Sellers at or prior to the Closing.
SECTION 4.6 TERMINATION OF CREDIT ARRANGEMENTS AND INDIVIDUAL
GUARANTEES. Prior to the Closing, the Sellers shall have the right to cause the
Company to pay-off and revoke all outstanding credit and merchant accounts upon
which there are individual guarantees of Bernard O.
Albertsen and Leodyce Albertsen (the "Albertsens").
SECTION 4.7 INTENTIONALLY DELETED.
SECTION 4.8 SELLERS' EXPENSES. The Company and Leisure Time shall not
bear the following expenses, which shall be paid by the Sellers: (a) the fees
and expenses of Sellers' counsel, Wolfstone, Panchot & Bloch, P.S., (b) the
out-of-pocket expenses incurred by
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Leisure Time or the Company in transferring the Assets to Be Distributed to the
Albertsens as described in Section 10.5, and (c) any real estate excise taxes
payable as a result of the transaction contemplated by this Agreement. As of
October 31, 1999, the Company has paid expenses payable by the Sellers in
connection with this transaction in the amount of $166,980.59, and the amount of
such expenses has been treated on the Company's books as a loan made by the
Company to the Sellers. The Company and the Sellers may continue this practice
through the Closing. At the Closing, the amount of this loan from the Company to
the Sellers shall be forgiven by the Company and treated on the Company's books
as a dividend to the Sellers. To the extent that such expenses are or have been
paid with cash that originated in Leisure Time, the Sellers agree that the
Company and Leisure Time shall treat the transfer of funds from Leisure Time to
the Company as a dividend from Leisure Time to the Company.
SECTION 4.9 INTENTIONALLY DELETED.
SECTION 4.10 INTENTIONALLY DELETED.
SECTION 4.11 INSURANCE CERTIFICATES. Beginning immediately after the
date of this Agreement and continuing through the Closing Date, the Sellers
shall use reasonable efforts to obtain a certificate from the insurance carrier
with respect to each Insurance Policy confirming the existence and material
provisions of such policy, in form and substance reasonably satisfactory to the
Purchaser (the "Insurance Certificates"). The Sellers shall promptly deliver to
the Purchaser copies of all Insurance Certificates received and all
correspondence concerning the Insurance Certificates.
SECTION 4.12 TRANSACTIONS WITH AFFILIATES. At the Closing, all
indebtedness between the Company and all Affiliates of the Company (except
Leisure Time), and all indebtedness between Leisure Time and all Affiliates of
the Company, shall be terminated without any cost or penalty to Leisure Time,
the Company, or the Purchaser, except for an unsecured promissory note, dated
November 10, 1999, in the principal amount of $350,000, payable by Leisure Time
to Bernard O. Albertsen. The Parties agree that the unpaid balance of this
promissory note shall not become due and payable until an Increasing Adjustment
or a Decreasing Adjustment is due and payable under Section 1.6 hereof, at which
time the unpaid balance of this promissory note shall become due and payable in
full. In addition, the Parties agree that no payments shall be made by Leisure
Time on this promissory note after the date of this Agreement except as set
forth in this Section 4.12. Mr. Albertsen represents and warrants that this
promissory note represents a bona fide cash loan that he made to Leisure Time in
the amount of $350,000.
In addition, for 30 days after the Closing, the Purchaser shall have
the option to terminate, without any cost or penalty to Leisure Time, the
Company, or the Purchaser, any and all agreements between Leisure Time and/or
the Company and any Affiliate of the Company relating to obligations to be
fulfilled after the Closing Date. For purposes of this Section 4.12, Affiliates
of the Company shall include the Sellers and members of their immediate
families, and all companies, entities, or persons controlled by or under common
control with the Sellers or any of them.
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SECTION 4.13 RESIGNATIONS. The Sellers shall cause each director and
officer of Leisure Time and the Company to resign pursuant to a written
resignation effective immediately before the Closing (collectively, the
"Resignations").
SECTION 4.14 EMPLOYEES. Immediately before the Closing, the Sellers
shall cause the Company and Leisure Time to terminate the employment of all of
the employees of the Company and Leisure Time. The terminated employees will be
eligible for rehire by the Company or Leisure Time, in accordance with the
Purchaser's standard employment practices and policies, in the event the
Purchaser elects to continue the employee's position after the Closing.
SECTION 4.15 RELEASES. Immediately before the Closing, the Sellers
shall release Leisure Time and the Company and their current and former
Representatives and successors from any and all Claims of any kind or nature
that the Sellers possess against them as of the Closing, whether known or
unknown, including any Claims for indemnification or reimbursement, pursuant to
a document in form and substance reasonably satisfactory to the Purchaser;
provided, however, that this release shall not apply to (a) any Claim arising
under this Agreement or (b) any Claim that is fully covered by insurance and for
which there is no right of subrogation against Leisure Time or the Company. Such
document shall include a covenant not to sue with respect to any released Claim
(collectively, the "Releases").
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SECTION 4.16 NAMES. After the Closing Date, the Sellers shall not use
or permit any of their Affiliates to use the name of Leisure Time or any
variation of any such name. The Parties agree that, after the Closing, the
Purchaser shall change the name of the Company to something other than
"Albertsen Investment Corporation".
SECTION 4.17 NO SHOPPING. From the date of this Agreement through the
Closing Date, the Sellers, Leisure Time, and the Company shall not directly or
indirectly encourage, initiate, solicit, or participate in any discussions or
negotiations with any Person other than the Purchaser concerning any
acquisition, business combination, consolidation, merger, sale of substantially
all assets, sale of shares of capital stock, or similar transaction involving
Leisure Time or the Company. During this period, the Sellers, Leisure Time, and
the Company also shall not furnish any Confidential Information to any person
other than the Purchaser. If the Sellers, Leisure Time, the Company, or any of
their respective Representatives or Outside Representatives receives an offer or
inquiry with respect to any of the foregoing transactions, the Sellers shall
promptly inform the Purchaser of such offer or inquiry. The Sellers, Leisure
Time, and the Company shall terminate immediately any discussions or
negotiations that they are currently conducting concerning the acquisition of
Leisure Time or the Company with any Person other than the Purchaser.
V. RESTRICTIVE COVENANTS
SECTION 5.1 NON-COMPETE COVENANT. During the two year period
immediately following the Closing, the Sellers shall not (without the prior
written consent of Purchaser which shall not be unreasonably withheld) engage
directly or indirectly in a Competing Business within a 25 mile radius of any of
Leisure Time's existing Campgrounds (the "Non-Compete Covenant"). For purposes
of this Section 5.1, the term "Competing Business" means any aspect of owning,
operating, or managing a membership-based campground or campgrounds or the
marketing or selling of any right to use or interest in such campground or
campgrounds. Purchaser will not withhold its consent to a proposed activity
unless it would have a material adverse effect on one or more of Leisure Time's
existing Campgrounds. Notwithstanding the foregoing, this section shall not in
any way limit the activities of Trendwest Resorts, Inc.
SECTION 5.2 NON-SOLICITATION COVENANT. During the two year period
immediately following the Closing, the Sellers shall not encourage or solicit,
or cause any Person to encourage or solicit, any employee of Leisure Time or the
Company who is rehired after the Closing to resign (the "Non-Solicitation
Covenant"). The Sellers' placement during this period of general employment
advertisements in trade journals, newspaper and periodicals of general
circulation, and other public media in which such advertisements are customarily
placed shall not constitute a breach of this section if an employee responds to
such advertisement without other contact from the Sellers. Notwithstanding the
foregoing, this section shall not in any way limit the activities of Trendwest
Resorts, Inc.
SECTION 5.3 NON-DISCLOSURE COVENANT. The Sellers shall not disclose any
Confidential Information at any time to any Person other than the Purchaser and
its designated Representatives and Outside Representatives or use such
information in any
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way (the "Non-Disclosure Covenant"), provided that the following disclosures and
uses (the "Confidentiality Exceptions") by the Sellers shall not violate this
section:
(a) ADVISORS. Disclosing information to their accountants,
investment bankers, lawyers, and other professional advisors, provided
that any such accountant, investment banker, lawyer, or other
professional advisor agrees not to disclose any Confidential
Information in violation of the terms of this Agreement;
(b) PUBLIC INFORMATION. Disclosing or using information
generally available to the public other than by breach of this section;
(c) REQUIRED BY LAW. Disclosing information required by law or
court order after promptly notifying the Purchaser of the requirement
to disclose such information and cooperating with the Purchaser in
attempting to obtain an injunction preventing such disclosure;
(d) DISPUTE RESOLUTION. Disclosing information required to
prosecute or defend any Claim for damages or indemnification under this
Agreement or a request for equitable relief in connection with this
Agreement pursuant to an arbitration or judicial proceeding
contemplated under Article XV, provided that they use reasonable
efforts to preserve the confidentiality of such information in such
proceeding; or
(e) TAX RETURNS. Disclosing information required in any Tax
report or returns.
SECTION 5.4 REASONABLENESS. The Sellers acknowledge that the
Non-Compete Covenant, the Non-Solicitation Covenant and the Non-Disclosure
Covenant are reasonable in all respects and necessary to permit the Purchaser to
realize the benefits of the purchase of the Shares.
SECTION 5.5 JUDICIAL ENFORCEMENT. Monetary damages alone will be
inadequate to remedy any breach of the Non-Compete Covenant, the
Non-Solicitation Covenant, or the Non-Disclosure Covenant. Accordingly, any
breach or threatened breach of the Non-Compete Covenant, the Non-Solicitation
Covenant, or the Non-Disclosure Covenant shall entitle the Purchaser to an
injunction restraining the Sellers from breaching such covenants. When seeking
such an injunction, the Purchaser shall not be obligated to post any bond or
other security. Such right to an injunction shall be in addition to any other
remedies to which the Purchaser may be entitled because of such breach. If a
court of competent jurisdiction determines that the Non-Compete Covenant, the
Non-Solicitation Covenant, or the Non-Disclosure Covenant is partially or wholly
inoperative, invalid, or unenforceable in a particular case because of its
duration, restricted activity, or any other parameter, such court may reform
such duration, restricted activity, or other parameter with respect to such case
to permit enforcement of such covenant to the greatest extent allowable.
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VI. COVENANTS OF THE PURCHASER
SECTION 6.1 COOPERATION BY THE PURCHASER. From the date of this
Agreement through the Closing Date, the Purchaser shall use reasonable efforts
to take all actions and do all things necessary or advisable to consummate the
transactions contemplated by this Agreement. The Purchaser shall cooperate with
the Sellers in the Sellers' efforts to close this Agreement.
SECTION 6.2 NO DISCLOSURE OF CONFIDENTIAL INFORMATION. From the date of
this Agreement through the Closing Date, the Purchaser shall not disclose any
Confidential Information that the Purchaser has obtained from the Sellers to any
Person other than the Purchaser's lenders unless permitted by the
Confidentiality Exceptions or required by the securities laws (the "Purchaser's
Confidentiality Covenant") or use any such Confidential Information for any
purpose except evaluating a purchase of the Shares. If this Agreement terminates
before the Closing, the Purchaser's Confidentiality Covenant shall remain in
effect. In addition, upon the termination of this Agreement, the Purchaser shall
deliver to the Sellers any documents or other medium that the Purchaser or any
of its Representatives or Outside Representatives possess that contain any
Confidential Information that the Purchaser has obtained from the Sellers,
including all originals and copies of such documents and other medium and all
notes or other documents or medium that contain extracts of any such
Confidential Information, unless such documents or other medium also contain
Confidential Information of the Purchaser, in which event, they shall be
destroyed by the Purchaser.
SECTION 6.3 MEMBER CONTRACTS. The Purchaser agrees to cause Leisure
Time to perform all of its obligations under the Member Contracts.
SECTION 6.4 LOANS TO LEISURE TIME. If necessary, at the Closing, the
Purchaser agrees to loan Leisure Time the amount needed to pay severance
compensation to the employees who are terminated immediately before the Closing
in accordance with Section 4.14 hereof and not rehired on either a permanent or
temporary basis, not to exceed a total of $450,000. The Purchaser agrees to
cause Leisure Time to pay severance compensation to employees who are rehired on
a temporary basis for less than 120 days at the end of their period of temporary
employment.
In addition, at the Closing, the Purchaser agrees to loan Leisure Time
the amount needed to finalize the court approved settlement of the Lawrence
lawsuit and to pay amounts owing to members and the plaintiffs' attorneys under
such settlement, not to exceed a total of $100,000.
VII. MUTUAL COVENANTS
SECTION 7.1 REPRESENTATIONS, WARRANTIES, AND COVENANTS. Each Party
shall use reasonable efforts to: (a) cause its representations and warranties
contained in this Agreement to be correct and complete as of the Closing Date as
though made as of such
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date, except for such representations and warranties made as of a specific date,
and (b) satisfy all conditions to the Closing within its control as promptly as
possible.
SECTION 7.2 NOTIFICATIONS. Each Party shall notify the other Party of
any condition, circumstance, event, fact or other information that may cause the
representations and warranties of such Party to be incorrect or incomplete if
made as of the Closing Date or cause such Party to be unable to perform its
covenants contained in this Agreement. Such Party shall then use reasonable
efforts to prevent or promptly cure any such breach. If a Party discovers that
the other Party has breached this Agreement, such Party shall promptly notify
such other Party of the breach. Such other Party shall then use reasonable
efforts to cure such breach as soon as possible.
SECTION 7.3 FURTHER ASSURANCES. Subject to the other terms and
conditions of this Agreement, at any time and from time to time after the
Closing Date, each Party shall execute and deliver all instruments and documents
and use reasonable efforts to take all other actions and do all other things
that the other Party may reasonably request to carry out the intent and purposes
of this Agreement, provided that, except as specifically set forth herein,
neither Party shall be required to pay any amount or incur any out-of-pocket
expense when taking such actions or doing such things.
SECTION 7.4 ANNOUNCEMENTS. Upon the execution of this Agreement, the
Purchaser will issue a press release regarding the execution of this Agreement
in the form attached hereto as Schedule 7.4. In addition, the Purchaser may make
additional public announcements and/or filings in the future with respect to the
status of the transaction contemplated by this Agreement if the Purchaser
considers such announcements and/or filings advisable or necessary to comply
with the Purchaser's obligations under the federal securities laws. The
Purchaser agrees to obtain the Sellers' prior approval of any such announcement
and/or filing, which approval shall not be unreasonably withheld by the Sellers.
VIII. TAXES
SECTION 8.1 PRE-CLOSING TAX PERIODS. With respect to any combined,
consolidated, or unitary Income Tax reports or returns of the Company, the
Parties shall elect to treat the Closing Date as the last day of a taxable
period of the Company (a "Pre-Closing Tax Period").
SECTION 8.2 PREPARATION AND FILING OF INCOME TAX RETURNS. The Company
shall be responsible for preparing and filing any Income Tax reports and returns
for any Pre-Closing Tax period. The Company shall prepare the Income Tax reports
and returns for any Pre-Closing Tax period in a manner consistent with prior
years and determine the income, gain, expenses, losses, deductions, and credits
of Leisure Time and the Company consistently with prior practices. The Company
shall submit such reports and returns to the Sellers a reasonable period before
filing them with the respective Taxing Authorities and the Company shall comply
with any reasonable request of the Sellers to change such reports and returns.
The Closing Balance Sheet shall contain an appropriate reserve for the
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amount of any Taxes payable by the Company and its Subsidiaries after the
Closing for any Pre-Closing Tax period. If the amount of Taxes payable by the
Company and its Subsidiaries after the Closing for any Pre-Closing Tax period
exceeds the amount of the reserve for such Taxes on the Closing Balance Sheet,
the Sellers shall promptly pay the amount of such excess to the Purchaser, with
interest computed on such amount at the Prime Rate from the Closing Date through
the date of payment, after the amount of such Taxes has been finally
determined.. If the amount of the reserve for such Taxes on the Closing Balance
Sheet exceeds the amount of Taxes payable by the Company and its Subsidiaries
after the Closing for any Pre-Closing Tax period, the Purchaser shall promptly
pay the amount of such excess to the Sellers, with interest computed on such
amount at the Prime Rate from the Closing Date through the date of payment,
after the amount of such Taxes has been finally determined. The Company shall
notify the Sellers and the Purchaser promptly after the amount of such Taxes has
been finally determined.
SECTION 8.3 TERMINATION OF TAX SHARING AGREEMENT. Any Contract between
the Company and any present or former Subsidiary of the Company other than
Leisure Time that relates to any liability of the Company for the Income Taxes
of any present or former Subsidiary of the Company other than Leisure Time shall
terminate as of the Closing Date and any rights or obligations resulting from
such Contract shall be eliminated as of the Closing Date. The termination of any
such Contract shall be pursuant to an agreement among the Company, any present
or former Subsidiary of the Company other than Leisure Time, and any other
relevant parties, which agreement shall be in form and substance reasonably
satisfactory to the Purchaser (the "Tax Sharing Termination Agreement").
Notwithstanding the foregoing, the Parties agree that the Company shall include
the operations of Vacation Time in the consolidated federal income tax return
that the Company files for the period ending on the Closing Date (the "Final Tax
Return"). The Company shall pay the Sellers the amount of any actual income tax
savings realized by the Company as a result of including the operations of
Vacation Time in the Final Tax Return, or the Sellers shall pay the Company the
amount of any actual income tax cost incurred by the Company as a result of
including the operations of Vacation Time in the Final Tax Return. Such payment
shall be made promptly after the amount of such tax savings or cost has been
finally determined.
SECTION 8.4 AUDIT. If after the Closing, either Party or the Company
receives a notice of deficiency or a proposed adjustment in connection with any
audit or other proceeding concerning any Income Tax report or return covering
the operations of the Company on or before the Closing Date, the Party receiving
such item shall notify the other Party, or if the Company receives such notice
the Company shall notify the Sellers of its receipt. The Company shall have the
sole and exclusive right to settle or contest in a manner reasonable to all
Parties any notice of deficiency or proposed adjustment, and to represent the
Company and its Subsidiaries in connection with any audit or other proceeding
relating thereto; provided, however, that the Sellers shall have the right to
approve any settlement involving a payment of $5,000 or more, which approval
shall not be unreasonably withheld. If the Sellers refuse or fail to approve any
settlement proposed by the Company that involves a payment of $5,000 or more,
the Sellers shall assume the defense of such matter in accordance with the terms
of Article XV.
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SECTION 8.5 BOOKS AND RECORDS. During the period beginning on the
Closing Date and ending on the day immediately preceding the fifth anniversary
of the Closing Date, the Purchaser shall provide the Sellers with reasonable
access during normal business hours to the books and records of the Company to
the extent that such books and records relate to the condition or operation of
the Company prior to the Closing and the Sellers require such books and records
to review Income Tax reports or returns or respond to third party Claims,
including any audits or proceedings with respect to such reports or returns. The
Sellers shall have the right to make copies of such books and records at their
own expense. Any information provided to the Sellers shall be subject to the
Sellers' Non-Disclosure covenant. In addition, the Sellers shall indemnify the
Purchaser for any Claims arising in connection with any such access provided to
the Sellers.
IX. CAMPGROUND RESORTS
SECTION 9.1 TITLE INSURANCE.
(a) TITLE COMMITMENTS. Attached hereto as Schedules 9.1(a) - (j)
are preliminary commitments for title insurance (the "Commitments"),
issued by Chicago Title Insurance Company, describing the state of title
of that portion of the Real Property comprising Leisure Time's 10
campground resorts (the "Campgrounds"). Attached as Schedule 9.1(k), is a
list of the exceptions contained in the Commitment to which the Purchaser
objects. If any supplements to the Commitments are issued by Chicago
Title Insurance Company which add exceptions not contained in the
Commitments, then the Purchaser shall have two days from receipt thereof
to object to any such added exceptions. The Purchaser shall make such
objections by giving written notice thereof to the Sellers within the
applicable two day period. Should the Purchaser fail to deliver any
written objections to the Sellers within the applicable two day period,
the supplement shall be deemed approved. The Sellers shall cause Leisure
Time to use reasonable efforts to remove the exceptions listed on
Schedule 9.1(k) and any added exceptions to which Purchaser objects as
provided herein. If the Sellers cannot remove any exception to which the
Purchaser objects by the Closing, the Purchaser shall have the right
either (a) to terminate this Agreement and recover its deposit in full,
or (b) to accept tender of the title which the Sellers are able to
deliver at the Closing.
(b) TITLE POLICIES. At the Closing, the Parties shall cause
Chicago Title Insurance Company to issue standard owner's ALTA policies
of title insurance to Leisure Time, coverage effective as of the Closing
Date and with liability in the amount of the fair market value of the
Campgrounds, showing title to the Campgrounds vested in Leisure Time,
subject only to the standard printed exceptions contained in such form of
policy and the special exceptions contained in the Commitments and
supplements thereto to which the Purchaser does not object pursuant to
section 9.1(a). The Purchaser shall pay the cost of obtaining this title
insurance.
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SECTION 9.2 ENVIRONMENTAL AUDITS. Attached hereto as Schedule 9.2 are
Phase I environmental audits of each of the Campgrounds prepared by an
independent consultant acceptable to the Sellers and the Purchaser. The
Purchaser shall pay the cost of obtaining these environmental audits.
X. ASSETS TO BE DISTRIBUTED
SECTION 10.1 VACATION TIME NOTE. Leisure Time holds a promissory note
from the buyers of the assets of Vacation Time, Donald LeMaster and Earl
Brischle (the "Vacation Time Note"), which has an unpaid principal balance of
$328,577.30 (including accrued interest of $23,324.93) as of October 31, 1999.
Prior to the Closing, the Sellers shall cause Leisure Time and the Company to
distribute the Vacation Time Note to the Sellers. Prior to the Closing, the
Sellers shall cause the Company to terminate, at the Sellers' expense, the
contingent liabilities of the Company and/or Leisure Time under a real estate
lease and telephone system lease which were guaranteed by the Company and/or
Leisure Time and are now being used by the buyers of the assets of Vacation
Time. The Sellers' represent and warrant to the Purchaser that the Company and
Leisure Time have no liabilities or obligations of any kind relating to Vacation
Time other than these contingent liabilities.
SECTION 10.2 ALBERTSEN ASSETS. On May 1, 2000, (or as soon thereafter
as applicable subdivision requirements have been satisfied), Leisure Time shall
distribute to the Albertsens approximately 13 acres of land and the summer home
located adjacent thereto, which are more particularly described in Schedule
10.2(a) (the "Albertsen Assets"). This property shall be conveyed to the
Albertsens subject to an Easement Agreement in the form attached hereto as
Schedule 10.2(a)-2. This Easement Agreement shall provide that the Crescent Bar
Campground may continue to use the existing water line, sewer line, pump
stations, tanks, and septic drainfield on the property described in Schedule
10.2(a). This Easement Agreement shall also provide that (i) the Albertsens may
relocate the drain line to the septic drainfield through this property at their
sole expense, and (ii) the owner of the Crescent Bar Campground will continue to
supply water to the existing summer home (at historical levels and subject to
any constraints of the existing well) through the existing water line. If the
Albertsens' further develop this property, they shall construct a reasonable
buffer between the new development and the Crescent Bar Campground on the terms
set forth in the Easement Agreement.
SECTION 10.3 TERMS OF DISTRIBUTIONS. The Vacation Time Note and the
Albertsen Assets will be conveyed to the Sellers or the Albertsens, as the case
may be, free and clear of any monetary encumbrances other than real estate taxes
for the current year not yet payable. The Purchaser shall cause the financial
institution holding the existing mortgage on the property described in Schedule
10.2(a) to release such mortgage in connection with the distribution of such
property. The Sellers represent and warrant that there are no monetary
encumbrances on the Vacation Time Note. Purchaser agrees to cause Leisure Time
to cooperate with the Albertsens in the removal or relocation, at the
Albertsens' expense, of any non-monetary encumbrances on the real property
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described in Schedule 10.2(a), provided that such action does not interfere with
Leisure Time's use of the Crescent Bar Campground.
SECTION 10.4 NO WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN SECTION
10.3, THE PURCHASER, THE COMPANY, AND LEISURE TIME SHALL MAKE NO WARRANTIES,
EXPRESS OR IMPLIED, AS TO THE TITLE, CONDITION, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER MATTER WHATSOEVER CONCERNING THE VACATION TIME
NOTE AND THE ALBERTSEN ASSETS, ALL OF WHICH ARE EXPRESSLY DISCLAIMED BY SUCH
PARTIES. THE SELLERS AND THE ALBERTSENS' HEREBY WAIVE AND RENOUNCE ANY IMPLIED
WARRANTIES TO WHICH THEY MAY BE OTHERWISE ENTITLED IN REGARD TO THE VACATION
TIME NOTE AND THE ALBERTSEN ASSETS. THE VACATION TIME NOTE AND THE ALBERTSEN
ASSETS SHALL BE DELIVERED TO THE SELLERS AND THE ALBERTSENS, AS THE CASE MAY BE,
AND SHALL BE ACCEPTED BY THEM IN AN "AS IS" CONDITION.
SECTION 10.5 EXPENSES. The Albertsens shall pay all out-of-pocket
expenses incurred by Leisure Time or the Company in connection with the transfer
of the Albertsen Assets (other than the cost of obtaining the release of the
mortgage), including without limitation the costs to subdivide the real estate
described in Schedule 10.2(a), real estate excise and sales taxes, title
insurance premiums, recording fees, etc.
SECTION 10.6 COOPERATION. If the property described in Schedule 10.2(a)
is not distributed to the Albertsens at or before the Closing because applicable
subdivision requirements have not been satisfied, Leisure Time shall cooperate
with the Albertsens after the Closing to complete such subdivision requirements
as promptly as reasonably practicable. In addition, at the Closing, Leisure Time
and the Albertsen's shall enter into a License Agreement in the form attached
hereto as Schedule 10.6, which shall convey to the Albertsens the right to use
the property described in Schedule 10.2(a) until applicable subdivision
requirements have been satisfied and such land has been conveyed to the
Albertsens.
SECTION 10.7 INTENTIONALLY DELETED.
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XI. TERMINATION BEFORE THE CLOSING
SECTION 11.1 TERMINATION OF THIS AGREEMENT. The Parties may terminate
this Agreement under the circumstances described below at any time prior to the
Closing:
(a) CONSENT. The Parties may agree to terminate this
Agreement.
(b) BREACH BY THE PURCHASER. The Sellers may terminate this
Agreement by notice to the Purchaser if: (i) the representations and
warranties of the Purchaser set forth in this Agreement were materially
incorrect or incomplete as of the date of this Agreement or would be
materially incorrect or incomplete as of the Closing Date if made as of
such date, except for such representations and warranties made as of a
specific date, or (ii) the Purchaser fails to perform in any material
respect the covenants and obligations that it is required to perform
under this Agreement before the Closing. The Sellers may not terminate
this Agreement pursuant to this paragraph, however, if the Purchaser
could also terminate this Agreement pursuant to Paragraph (c) below.
(c) BREACH BY THE SELLERS. The Purchaser may terminate this
Agreement by notice to the Sellers if (i) the representations and
warranties of the Sellers set forth in this Agreement were materially
incorrect or incomplete as of the date of this Agreement or would be
materially incorrect or incomplete as of the Closing Date if made as of
such date, except for such representations and warranties made as of a
specific date, or (ii) the Sellers fail to perform in any material
respect the covenants and obligations that they are required to perform
under this Agreement before the Closing. The Purchaser may not
terminate this Agreement pursuant to this paragraph, however, if the
Sellers could also terminate this Agreement pursuant to Paragraph (b)
above.
(d) CASUALTY LOSS. In the event any asset of Leisure Time or
the Company is destroyed or damaged by fire or other casualty, the
Purchaser may elect either to (a) terminate this Agreement by notice to
the Sellers and recover its deposit in full or (b) accept the condition
of asset that is damaged or destroyed, proceed to Close,
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and receive an assignment of any insurance proceeds payable with
respect to such asset.
(e) OUTSIDE DATE. If the Closing has not occurred by December
15, 1999, despite the Parties good faith efforts, and not because of a
Party's failure to perform its obligations under this Agreement, the
Closing Date shall be extended for the number of days necessary to
Close, but in no event beyond December 31, 1999. In addition, if the
Closing has not occurred by December 31, 1999, due to a temporary
injunction or restraining order, then the December 31, 1999 date shall
be extended by the number of days equal to the period during which such
temporary injunction or restraining order was in effect, but in no
event beyond January 31, 2000.
SECTION 11.2 EFFECT OF TERMINATION. The termination of this Agreement
shall have the following effects:
(a) GENERAL. Notwithstanding any termination of this Agreement
the following articles and sections of this Agreement shall survive
such termination and remain in full force and effect: (i) Section 4.3
with respect to the Purchaser's obligation to indemnify the Seller for
any Claim arising in connection with any access to the Company given to
the Purchaser before the Closing, including the requirement to provide
such indemnification to the Sellers' Representatives and Outside
Representatives under Sections 15.6 and 15.7, (ii) Section 6.2, which
concerns the Purchaser's confidentiality obligations, (iii) Article
XVI, which concerns the dispute resolution procedures under this
Agreement, and (iv) Section 20.4, which provides that each Party shall
bear its own expenses in connection with this Agreement.
(b) NO LIABILITY. If this Agreement is terminated pursuant to
Sections 11.1(a) or 11.1(e), all obligations of the Purchaser and the
Sellers under this Agreement shall terminate, except for the
obligations described in Paragraph (a) above.
SECTION 11.3 NOTICE OF TERMINATION. Any notice of termination pursuant
to Section 11.1(b) or 11.1(c) must specify the facts and circumstances giving
rise to the termination right in reasonable detail. A delivery of such a
termination notice absent the right to terminate this Agreement shall be
ineffective.
XII. CONDITIONS TO THE SELLERS' OBLIGATION TO CLOSE
The Sellers' obligation to close shall be subject to the satisfaction
of the following conditions, which the Sellers may waive:
SECTION 12.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser under this Agreement shall have been correct and
complete as of the date of this Agreement and as of the Closing Date as though
made as of such date,
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except for such representations and warranties made as of a specific date, which
shall have been correct and complete as of the specified date.
SECTION 12.2 COVENANTS. The Purchaser shall have performed all
agreements, covenants, and obligations that it is required to perform under this
Agreement at or before the Closing.
SECTION 12.3 CLOSING CERTIFICATE. An executive officer of the Purchaser
shall have delivered to the Sellers a certificate confirming the satisfaction of
the conditions set forth in Section 12.1 and 12.2 (the "Purchaser's Closing
Certificate").
SECTION 12.4 LITIGATION. No Order shall exist against either Party
enjoining any transaction contemplated by this Agreement. In addition, no
Lawsuit shall be pending or threatened before any court or other Governmental
Authority seeking to enjoin the Closing or seeking damages against the Sellers
or any of their Representatives as a result of any of the transactions
contemplated by this Agreement, provided that neither the Sellers nor any of
their Affiliates instituted such Lawsuit.
SECTION 12.5 SECRETARY'S CERTIFICATE. The Purchaser shall have
delivered to the Sellers a certificate executed by the Secretary or an Assistant
Secretary of the Purchaser (the "Purchaser's Secretary Certificate"), in form
and substance satisfactory to the Sellers in their reasonable discretion, which
shall include:
(a) CHARTER. A copy of the Purchaser's Articles of
Incorporation, certified by the Delaware Secretary of State a
reasonable number of days before the Closing Date.
(b) BYLAWS. A copy of the Purchaser's Bylaws.
(c) RESOLUTIONS. A copy of the resolutions in which the
Purchaser's Board of Directors approved this Agreement.
(d) INCUMBENCY CERTIFICATE. An incumbency certificate setting
forth the names, offices, and signatures of the Purchaser's officers
who execute any documents on behalf of the Purchaser in connection with
this Agreement.
SECTION 12.6 OTHER. The Purchaser shall have delivered to the Sellers
such other certificates, documents, and instruments as the Sellers may
reasonably request in connection with this Agreement.
XIII. CONDITIONS TO THE PURCHASER'S OBLIGATION TO CLOSE
The Purchaser's obligation to close shall be subject to the
satisfaction of the following conditions, which the Purchaser may waive:
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SECTION 13.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers under this Agreement shall have been correct and
complete as of the date of this Agreement and as of the Closing Date as though
made as of such date, except that such representations and warranties made as of
a specific date shall have been correct and complete as of the specified date.
SECTION 13.2 COVENANTS. The Sellers shall have performed all
agreements, covenants, and obligations that they are required to perform under
this Agreement at or before the Closing.
SECTION 13.3 BENEFICIARY STATEMENTS AND RECONVEYANCES. The Sellers
shall have received and delivered to Chicago Title Insurance Company to hold in
escrow and record at Closing reconveyances and/or satisfactions of all monetary
encumbrances on the Campgrounds, and beneficiary statements from the holders of
such encumbrances, as contemplated by Article XVII hereof, in form and substance
reasonably satisfactory to the Purchaser.
SECTION 13.4 CLOSING CERTIFICATE. An executive officer of the Sellers
shall have delivered to the Purchaser a certificate confirming: (a) the
satisfaction of the conditions set forth in Section 13.1 and 13.2, and (b) the
continued force and effect of all Consents delivered to the Purchaser (the
"Sellers' Closing Certificate").
SECTION 13.5 LITIGATION. No Order shall exist against either Party
enjoining any transaction contemplated by this Agreement. In addition, no
Lawsuit shall be pending or threatened before any court or other Governmental
Authority seeking to enjoin the Closing or seeking damages against the
Purchaser, Leisure Time, the Company, or any of their respective Representatives
as a result of any of the Transactions contemplated by this Agreement, provided
that neither the Purchaser nor any of its Affiliates instituted such Lawsuit.
SECTION 13.6 NO PROHIBITION. Neither the consummation of the
transactions contemplated by this Agreement nor the Purchaser's ownership of the
Shares could result in a violation of any Applicable Law, any Governmental
Authority's interpretation of any Applicable Law, or any law or statute proposed
by any Governmental Authority.
SECTION 13.7 NO MATERIAL ADVERSE CHANGE. Neither Leisure Time nor the
Company shall have undergone any Material Adverse Change since the date of this
Agreement.
SECTION 13.8 LEGAL OPINION. The Purchaser shall have received from the
Sellers' outside legal counsel an opinion (the Sellers' Legal Opinion"), in form
and substance satisfactory to the Purchaser in its reasonable discretion, dated
as of the Closing Date, opining that:
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(a) ORGANIZATION OF LEISURE TIME. Leisure Time is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Washington.
(b) ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized, validly existing, and in good standing under the laws
of the State of Washington.
(c) POWER AND AUTHORITY OF LEISURE TIME. Leisure Time
possesses the corporate power and authority to execute, deliver, and
perform any document necessary for the Sellers to comply with the terms
of this Agreement. Leisure Time also possesses the corporate power and
authority to own or lease its assets, carry on its business as
presently conducted, and perform its obligations under the Material
Contracts.
(d) POWER AND AUTHORITY OF THE COMPANY. The Company possesses
the corporate power and authority to execute, deliver, and perform any
document necessary for the Sellers to comply with the terms of this
Agreement. The Company also possesses the corporate power and authority
to own or lease its assets, carry on its business as presently
conducted, and perform its obligations under the Material Contracts.
(e) EXECUTION, DELIVERY AND ENFORCEABILITY. The Sellers have
duly authorized, executed, and delivered this Agreement and this
Agreement constitutes a valid, legal, and binding obligation of the
Sellers enforceable against the Sellers in accordance with its terms,
subject to any Law Affecting Creditors' Rights and the enforceability
of this Agreement against the Purchaser. In addition, the Sellers,
Leisure Time, and the Company have duly authorized, executed, and
delivered each document contemplated by this Agreement to which the
Sellers, Leisure Time, or the Company is a party, and each such
document constitutes a valid, legal, and a binding obligation of the
Sellers, Leisure Time, or the Company, respectively, enforceable
against the Sellers, Leisure Time, or the Company in accordance with
such document's terms, subject to any Law Affecting Creditors' Rights
and the enforceability of such document against the other parties to
such document.
(f) CAPITALIZATION OF LEISURE TIME. Leisure Time is authorized
to issue 1,500,000 shares of common stock, of which 200,000 shares are
issued and outstanding.
(g) CAPITALIZATION OF THE COMPANY. The Company is authorized
to issue 1,500,000 shares of Common Stock, of which 20,000 shares are
issued and outstanding.
(h) LEISURE TIME SHARES. The Leisure Time Shares have been
validly authorized and issued, are fully paid and nonassessable, and
were not issued in breach or violation of any Applicable Law or
statutory preemptive rights.
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(i) SHARES. The Shares and the Purchased Shares have been
validly authorized and issued, are fully paid and nonassessable, and
were not issued in breach or violation of any Applicable Law or
statutory preemptive rights.
(j) OWNERSHIP OF THE LEISURE TIME SHARES. The Company is the
record owner of the Leisure Time Shares, free and clear of any Lien
reflected in the corporate records of Leisure Time or the Company.
(k) OWNERSHIP OF THE SHARES. The Sellers are the record owners
of the Shares, free and clear of any Lien reflected in the corporate
records of the Company or Leisure Time. Upon the Purchaser's payment of
the Purchase Price to the Sellers and the Sellers' delivery of the
certificates representing the Shares to the Purchaser, duly endorsed by
the Sellers for transfer to the Purchaser, the Purchaser will own the
Shares, free and clear of any Lien reflected in the corporate records
of the Company or Leisure Time.
(l) OWNERSHIP OF THE PURCHASED SHARES. The Company is the
beneficial owner of the Purchased Shares, subject only to the Steve
Albertsen Contract. Upon the Company's payment of the balance owing
under the Steve Albertsen Contract in accordance with the terms of such
contract, the Company will own the Purchased Shares, free and clear of
any Lien reflected in the corporate records of the Company or Leisure
Time.
SECTION 13.9 SECRETARY'S CERTIFICATE OF LEISURE TIME. The Sellers shall
have delivered to the Purchaser a certificate executed by the Secretary or an
Assistant Secretary of Leisure Time (the "Leisure Time Secretary Certificate"),
in form and substance satisfactory to the Purchaser in its reasonable
discretion, which shall include:
(a) CHARTER. A copy of Leisure Time's Articles of
Incorporation certified by the Washington Secretary of State a
reasonable number of days before the Closing Date.
(b) BYLAWS. A copy of the Leisure Time's Bylaws.
(c) GOOD STANDING CERTIFICATE. A certificate from the
Secretary of the State of Washington, dated as of the Closing Date or a
reasonable number of days before such date, stating that Leisure Time
is in good standing under such state's laws.
(d) FOREIGN GOOD STANDING CERTIFICATES. A certificate from the
appropriate official of each jurisdiction where Leisure Time conducts
business or owns or leases property, dated as of the Closing Date or a
reasonable number of days before such date, stating that Leisure Time
is in good standing as a foreign corporation under the laws of such
jurisdiction.
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(e) RESOLUTIONS. A copy of the resolutions in which Leisure
Time's Board of Directors and shareholders approved the execution and
delivery by Leisure Time of any documents necessary for the Sellers' to
comply with the terms of this Agreement.
(f) INCUMBENCY CERTIFICATE. An incumbency certificate setting
forth the names, offices, and signatures of Leisure Time's officers who
execute any documents on behalf of Leisure Time in connection with this
Agreement.
SECTION 13.10 SECRETARY'S CERTIFICATE OF THE COMPANY. The Sellers shall
have delivered to the Purchaser a certificate executed by the Secretary or an
Assistant Secretary of the Company (the "Company's Secretary Certificate"), in
form and substance satisfactory to the Purchaser in its reasonable discretion,
which shall include:
(a) CHARTER. A copy of the Company's Articles of Incorporation
certified by the Washington Secretary of State a reasonable number of
days before the Closing Date.
(b) BYLAWS. A copy of the Company's Bylaws.
(c) GOOD STANDING CERTIFICATE. A certificate from the
Secretary of the State of Washington, dated as of the Closing Date or a
reasonable number of days before such date, stating that the Company is
in good standing under such state's laws.
(d) FOREIGN GOOD STANDING CERTIFICATES. A certificate from the
appropriate official of each jurisdiction where the Company conducts
business or owns or leases property, dated as of the Closing Date or a
reasonable number of days before such date, stating that the Company is
in good standing as a foreign corporation under the laws of such
jurisdiction.
(e) RESOLUTIONS. A copy of the resolutions in which the
Company's Board of Directors and shareholders approved the execution
and delivery by the Company of any documents necessary for the Sellers'
to comply with the terms of this Agreement.
(f) INCUMBENCY CERTIFICATE. An incumbency certificate setting
forth the names, offices, and signatures of the Company's officers who
execute any documents on behalf of the Company in connection with this
Agreement.
SECTION 13.11 OTHER. The Sellers shall have delivered to the Purchaser
such other certificates, documents, and instruments as the Purchaser may
reasonably request in connection with this Agreement, including the delivery of
each of the items described in Section 14.3.
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XIV. CLOSING
SECTION 14.1 CLOSING DATE. The consummation of the purchase of the
Shares (the "Closing") shall occur on December 15, 1999, if the closing
conditions set forth in Articles XII and XIII have been satisfied or waived as
of that date, other than such conditions that a Party must satisfy at the
Closing. If such satisfaction or waiver has not occurred as of such date, the
Closing shall occur as soon as possible after such satisfaction or waiver
occurs. Each Party shall promptly notify the other Party of such satisfaction or
waiver of such Party's closing conditions and the Purchaser shall then notify
the Sellers of the date of the Closing. The date and time of the Closing is
referred to in this Agreement as the "Closing Date."
SECTION 14.2 PLACE OF CLOSING. The Closing shall occur at the offices
of Wolfstone, Panchot & Bloch, P.S., Inc., 1500 Norton Building, 801 Second
Avenue, Seattle, WA 98004, commencing at 10:00 am on the Closing Date, unless
the Purchaser designates another place and time of day.
SECTION 14.3 DELIVERIES BY THE SELLERS. At the Closing, the Sellers
shall deliver to the Purchaser the following:
(a) STOCK CERTIFICATES. The certificates representing the
Shares with any required stock transfer stamps affixed, duly endorsed
by the Sellers for transfer to the Purchaser;
(b) RECEIPT. A receipt evidencing the Sellers' receipt of the
Purchase Price;
(c) CLOSING CERTIFICATE. The Sellers' Closing Certificate;
(d) LEGAL OPINION. The Sellers' Legal Opinion;
(e) SECRETARY CERTIFICATES. The Leisure Time Secretary
Certificate and the Company's Secretary Certificate;
(f) RECONVEYANCES. The reconveyances and/or satisfactions of
all monetary encumbrances on the Campgrounds, and beneficiary
statements from the holders of such encumbrances, as contemplated by
Article XVII hereof.
(g) INSURANCE CERTIFICATES. The Insurance Certificates;
(h) TERMINATION OF TAX SHARING AGREEMENT. The Tax Sharing
Termination Agreement;
(i) RESIGNATIONS. The Resignations;
(j) RELEASES. The Releases;
(k) INDEMNITY ESCROW AGREEMENT. The Indemnity Escrow
Agreement;
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(l) FIRPTA AFFIDAVIT. An affidavit executed by the Sellers
containing the Sellers' Social Security numbers and stating under
penalties of perjury that the Sellers are not a "foreign person" under
Sections 1445 and 7701 of the Code; and
(m) OTHER DOCUMENTS. Such other certificates, documents, and
instruments as the Purchaser may reasonably request in connection with
this Agreement.
SECTION 14.4 DELIVERIES BY THE PURCHASER. At the Closing, the Purchaser
shall deliver to the Sellers the following:
(a) PURCHASE PRICE. The Purchase Price as contemplated by
Section 1.2;
(b) CLOSING CERTIFICATE. The Purchaser's Closing Certificate;
(c) SECRETARY CERTIFICATE. The Purchaser's Secretary
Certificate; and
(d) OTHER DOCUMENTS. Such other certificates, documents, and
instruments as the Sellers may reasonably request in connection with
this Agreement.
SECTION 14.5 SIMULTANEOUS DELIVERIES. The payment of the Purchase Price
(excluding any Increasing Adjustment or Decreasing Adjustment), the transfer of
the Shares, and the delivery of the documents that this Agreement requires each
Party to deliver to the other Party at the Closing shall be deemed to occur
simultaneously. Neither such payment, transfer, nor delivery shall be effective
until the Sellers have received such payment, the Purchaser has received the
Shares, and each party has received or waived receipt of the documents that this
Agreement entitles such Party to receive.
XV. INDEMNIFICATION AND DAMAGES
SECTION 15.1 INDEMNIFICATION OF THE PURCHASER. Subject to Section 15.9,
the Sellers shall jointly and severally indemnify, defend, and hold the
Purchaser harmless from any and all Claims directly or indirectly related or
arising with respect to:
(a) BREACHES OF REPRESENTATIONS AND WARRANTIES. Any inaccuracy
in any representation or warranty of the Sellers under this Agreement;
(b) BREACHES OF COVENANTS. Any failure to perform or observe
any covenant or agreement to be performed by the Sellers set forth in
this Agreement or any document delivered to the Purchaser pursuant to
this Agreement;
(c) SUBSIDIARIES. Any Claims relating to any present or former
Subsidiaries of the Company other than Leisure Time, including without
limitation, Holiday Adventure Resorts, Inc., a California corporation,
Premium Outfitters, Inc., a Washington corporation, Ultimate Marketing,
Inc., a California corporation, and Vacation Time;
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(d) LAWRENCE LAWSUIT. Any damages, losses, and expenses
(including reasonable attorney's fees) arising from the lawsuit
captioned Jack and Theresa Lawrence, et. al. v. Leisure Time Resorts of
America, Inc., et. al. (the "Lawrence lawsuit"), that are payable after
the Closing and are not adequately reserved on the Closing Balance
Sheet, except those attributable to Claims accruing after the Closing
as a result of the Purchaser's actions or omissions; and
(e) RIGHT OF FIRST REFUSAL. Any damages, losses, and expenses
(including reasonable attorney's fees) arising from the Right of First
Refusal held by Puget Western, Inc., which was recorded December 10,
1991, under Auditor's File No. 9112201264, Records of King County,
Washington, as a result of the transaction contemplated by this
Agreement.
SECTION 15.2 INDEMNIFICATION OF THE SELLERS. The Purchaser shall
indemnify, defend, and hold the Sellers harmless from any and all Claims
directly or indirectly related or arising with respect to;
(a) BREACHES OF REPRESENTATIONS AND WARRANTIES. Any material
inaccuracy in any representation or warranty of the Purchaser under
this Agreement; or
(b) BREACHES OF COVENANTS. Any material failure to perform or
observe any covenant or agreement to be performed by the Purchaser set
forth in this Agreement or any document delivered to the Sellers
pursuant to this Agreement.
SECTION 15.3 INDEMNIFICATION PROCEDURE. The indemnification obligations
under this Agreement shall be subject to the following procedures:
(a) DEFENSE OF CLAIM. Within 20 days after a Party entitled to
indemnification (an "Indemnitee") receives a notice of any Claim that
may give rise to an indemnification obligation under this Agreement,
the Indemnitee shall give the Party responsible for providing
indemnification with respect to such Claim (the "Indemnitor") notice of
such Claim, together with a copy of all documents relating to such
Claim that the Indemnitee possesses. The Indemnitor shall then
immediately undertake the defense of such Claim by representatives of
its own choosing, provided that the Purchaser shall have the right to
join in such defense at its expense by representatives of its own
choosing if the Claim could have a continuing effect upon the Company
or involves any Environmental Law, or Hazardous Material. The
Indemnitor shall notify the Indemnitee of the Indemnitor's undertaking
of the defense of a Claim promptly after receiving the notice of the
Claim. Similarly, the Indemnitee shall notify the Indemnitor of the
Indemnitee's election of its right to join in such defense under the
circumstances described above. The failure to give notice of a Claim
within the period described above shall not affect the Indemnitee's
rights to indemnification under this Agreement unless such delay
prejudices the Indemnitor.
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(b) PARTICIPATION OF THE INDEMNITEE. If 20 days after
delivering notice of a Claim to the Indemnitor or such shorter period
necessary to prevent judgment by default in favor of the Person
asserting the Claim, the Indemnitor has not begun to defend against
such Claim, the Indemnitee shall have the right to defend or settle
such Claim reasonably and equitably on behalf of the Indemnitor, until
the Indemnitor undertakes the defense of such Claim in accordance with
this Agreement. Notwithstanding whether the Indemnitor commences at any
time to defend against a Claim, the Indemnitee shall have the right to
participate in such defense by representatives of its own choosing, at
the Indemnitee's expense, unless the Indemnitor did not defend against
the Claim and had a duty to do so. The Indemnitor shall reimburse the
Indemnitee for the Indemnitee's reasonable attorneys' fees and expenses
incurred during the period when the Indemnitor did not defend against
the Claim and had a duty to do so. The Indemnitor shall make such
reimbursement payments to the Indemnitee upon the Indemnitee's
submission of periodic invoices describing such fees and expenses in
reasonable detail.
(c) SETTLEMENT OF CLAIMS. The Indemnitor may settle any Claim
at its own expense, provided that the Indemnitor shall not settle any
Claim or consent to the entry of any judgment without the consent of
the Indemnitee, which shall not be unreasonably withheld, if such
settlement or judgment: (i) includes any admission of wrongdoing by the
Indemnitee or any of the Indemnitee's Representatives or Outside
Representatives, (ii) includes any consent to any type of injunctive
relief affecting the Indemnitee or any of the Indemnitee's
Representatives or Outside Representatives, (iii) excludes an
unconditional release by the Person asserting the Claim of the
Indemnitee and the Indemnitee's Representatives from all liability with
respect to such Claim, (iv) requires the Indemnitee or any of the
Indemnitee's Representatives or Outside Representatives to make any
payment, or (v) would have a material adverse effect on the future
operations of Leisure Time or the Company.
(d) REIMBURSEMENT. If an Indemnitor undertakes the defense of
any Claim or settles any Claim and such Claim was not within the scope
of the Indemnitor's indemnification obligations under this Agreement,
the Indemnitee shall promptly reimburse the Indemnitor for all expenses
with respect to such defense or settlement, including the Indemnitor's
reasonable attorney's fees and expenses.
(e) COOPERATION. In connection with any indemnity obligation,
the Indemnitee shall cooperate with all reasonable requests of the
Indemnitor, and the Indemnitor shall cooperate with all reasonable
requests of the Indemnitee, including any request to be kept informed
of the status of any matter.
SECTION 15.4 MERITLESS THIRD PARTY CLAIMS. If a third party makes a
Claim against the Indemnitee that ultimately proves to be meritless, the
Indemnitee may nevertheless require the Indemnitor to defend such Claim and
reimburse the Indemnitee for its reasonable attorneys' fees and expenses in
connection with such Claim if such Claim was within the scope of the
Indemnitor's indemnification obligations under the Agreement and Indemnitor
failed to defend when it had an obligation to do so.
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SECTION 15.5 ASSIGNMENT OF CLAIMS. If any amounts for which the
Indemnitor is responsible are recoverable from a third party, the Indemnitee
shall assign any rights that it may have to recover such amounts to the
Indemnitor.
SECTION 15.6 OTHER INDEMNITIES. Upon the Purchaser's request, the
Sellers shall indemnify any of the Purchaser's Representatives or Outside
Representatives to the same extent as the Purchaser. Conversely, upon the
Sellers' request, the Purchaser shall indemnify any of the Sellers'
Representatives or Outside Representatives to the same extent as the Sellers. No
Representative or Outside Representatives of either Party, however, shall be a
third party beneficiary of the indemnification provisions contained in this
Agreement. In addition, a Party may release or waive any Claim to which such
Party previously requested the other Party to indemnify such Party's
Representatives or Outside Representatives, and such Representatives or Outside
Representatives shall have no recourse against the Party releasing or waiving
such Claim. To the extent that a Party requests the other Party to indemnify
such Party's Representatives or Outside Representatives, such Party shall cause
its Representatives or Outside Representatives to comply with the
indemnification provisions and abide by the indemnification limitations set
forth in this Agreement, including the arbitration provisions in connection with
disputed Claims. In any such arbitration proceedings, a Party's Representative
or Outside Representative shall possess the rights and obligations of such
Party.
SECTION 15.7 CONTRIBUTION. If the indemnity obligations provided for in
this Agreement are held unenforceable in whole or in part for any reason, each
Party shall perform such indemnity obligations to the extent enforceable. To the
extent that such indemnity obligations are unenforceable, the Party that would
have been the Indemnitor with respect to a Claim except for such
unenforceability shall contribute to such Claim in such proportion as
appropriate to reflect the relative fault of such Party as opposed to the
relative fault of the Person who would have been the Indemnitee, as well as any
other relevant equitable considerations.
SECTION 15.8 PAYMENTS. The Parties shall make any damage or
indemnification payment as follows. The Parties shall treat any such payment as
an adjustment to the Purchase Price on their Income Tax reports and returns
except for the interest component of any such payment, which the Parties shall
treat as interest income or expense, respectively.
(a) UNCONTESTED DAMAGE PAYMENTS. With respect to any
uncontested Claim for damages concerning a breach of this Agreement,
the Party owing such damages shall pay them to the Party asserting the
Claim for such damages within 30 days after the claiming Party makes
its Claim.
(b) UNCONTESTED INDEMNIFICATION PAYMENTS. With respect to any
uncontested Claim for indemnification concerning an out-of-pocket
expenditure that an Indemnitee has paid or an obligation that an
Indemnitee has incurred, the Indemnitor shall reimburse the Indemnitee
for such payment or satisfy such
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obligation within 30 days after the Indemnitee presents its Claim for
indemnification to the Indemnitor. With respect to any uncontested
Claim for indemnification concerning a potential obligation that an
Indemnitee may incur, the Indemnitor shall satisfy such obligation
within 30 days after the Indemnitee incurs such obligation.
(c) CONTESTED CLAIMS. With respect to any contested Claims for
damages concerning a breach of this Agreement or indemnification
pursuant to this Agreement that the Party responsible for making such
payment contests, such Party shall make the required damage or
indemnification payment within 30 days after a final decision of the
arbitrators that such Party is responsible for such payment, provided
that the Party shall not be required to make any indemnification
payment for which the Indemnitee has not made an out-of-pocket
expenditure or incurred an obligation until such Indemnitee would be
required to make such expenditure or incur such obligation.
SECTION 15.9 BASKETS.
(a) The Sellers shall not be liable for any Claim for damages
or indemnification with respect to a breach of the Sellers'
representations and warranties under this Agreement until the amount of
such Claim exceeds $1,000. If the amount of an individual Claim for
which the Sellers are responsible exceeds $1,000, the Sellers shall
only be responsible for the amount of such excess.
(b) Furthermore, the Sellers shall not be liable for any Claim
for damages or indemnification with respect to a breach of the Sellers'
representations and warranties under this Agreement until the aggregate
amount of Claims for which the Sellers are responsible under section
(a) above exceeds (i) $20,000 for all Claims except Claims relating to
Taxes, and (ii) $50,000 for all Claims relating to Taxes. If the
aggregate amount of Claims for which the Sellers are responsible under
clause (a) above exceeds $20,000 or $50,000, as the case may be, the
Sellers shall only be responsible for the amount of such excess.
Notwithstanding the foregoing, the baskets created by this Section
15.10 shall not apply to Claims arising under Section 2.34.
SECTION 15.10 RESERVE ACCOUNTS. The amount of any Claim for damages or
indemnification concerning the Sellers' breach of their representations and
warranties under this Agreement shall be decreased by the amount of any reserve
account on the Closing Balance Sheet that relates specifically to such Claim.
SECTION 15.11 DAMAGES. A Party shall be: (a) liable for any actual,
consequential, incidental, punitive, or special damages with respect to any
breach of this Agreement, and (b) responsible for indemnifying an Indemnitee for
any actual, consequential, incidental, punitive, or special damages that such
Indemnitee incurs if within the scope of such Party's indemnification
obligation.
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SECTION 15.12 INTEREST. A Party shall pay interest computed at the
Prime Rate on: (a) any Claim for damages with respect to such Party's breach of
this Agreement from the date the damages occur through the date that the Party
pays such damages, and (b) any Claim for indemnification under this Agreement
for which such Party is the Indemnitor from the date of the Indemnitee's
indemnifiable out-of-pocket expenditure though the date that the Party pays such
Claim.
SECTION 15.13 DISCOVERY OF BREACH. If before the Closing a Party
discovers that the other Party has breached this Agreement, such discovery shall
neither prevent such Party from seeking damages for such breach nor decrease or
mitigate such damages if such Party still closes the transactions contemplated
by this Agreement.
SECTION 15.14 SURVIVAL OF TERMS. The agreements, covenants, indemnity
obligations, representations and warranties, and other terms of this Agreement,
the Purchaser's Closing Certificate, the Sellers' Closing Certificate, and any
other documents contemplated under this Agreement shall survive the Closing and
any investigation or notice by either Party, provided that the representations
and warranties of each Party shall expire at 11:59 p.m., Pacific Time, on the
day immediately preceding the first anniversary of the Closing Date.
Notwithstanding the general expiration of each Party's representations and
warranties described above, (a) the Sellers' representations and warranties
contained in Sections 2.13, 2.14, 2.15, 2.16, and 2.17 shall survive forever,
subject to all defenses available under Applicable Law, including the expiration
of any applicable statute of limitations, and (b) the Sellers' representations
and warranties contained in Sections 2.68 and 2.69 shall not expire until 30
days after the expiration of the applicable statute of limitations, as such
statutory period may be extended from time to time. With respect to any Claim
arising before the expiration of a particular representation or warranty, the
Party responsible for such representation or warranty shall remain responsible
for any damage or indemnification amounts claimed notwithstanding the subsequent
expiration of such representation or warranty.
SECTION 15.15 SECURITY FOR SELLERS' INDEMNIFICATION OBLIGATIONS. To
secure the Sellers' obligations under this Article XV with respect to Claims not
related to the Lawrence lawsuit, $200,000 of the Purchase Price shall be held in
escrow for a period of one year after the Closing pursuant to the terms of an
Escrow Agreement in the form attached hereto as Schedule 15.16 (the "Indemnity
Escrow Agreement").
In addition, an additional $350,000 of the Purchase Price shall be held
in escrow pursuant to the terms of the Indemnity Escrow Agreement until an
Increasing Adjustment or a Decreasing Adjustment is due and payable under
Section 1.6 hereof. If an Increasing Adjustment is payable to the Sellers under
Section 1.6 hereof, this $350,000 shall be paid to the Sellers with the
Increasing Adjustment. If a Decreasing Adjustment is payable to the Purchaser
under Section 1.6 hereof, all or part of this $350,000, up to the amount of the
Decreasing Adjustment, shall be paid to Purchaser and off-set against the
Decreasing Adjustment, and the balance (if any) shall be paid to Sellers.
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If, at the time of the Closing, the Company and/or Leisure Time have
not paid in full all Claims related to the Lawrence lawsuit, a reasonable
additional amount of the Purchase Price shall be held in escrow pursuant to the
terms of the Indemnity Escrow Agreement, to secure the Sellers' obligations
under this Article XV with respect to Claims related to the Lawrence lawsuit,
until such time as all Claims relating to the Lawrence lawsuit have been paid in
full. Such amount shall be sufficient to cover the estimated amount of all
unpaid Claims related to the Lawrence lawsuit. The Indemnity Escrow Agreement
shall provide for the payment of Claims from the funds held in escrow.
In addition, if the Purchaser loans amounts to Leisure Time pursuant to
Section 6.4 hereof, an additional amount of the Purchase Price equal to the
amount of such loans shall be held in escrow pursuant to the terms of the
Indemnity Escrow Agreement until an Increasing Adjustment or a Decreasing
Adjustment is due and payable under Section 1.6 hereof. If an Increasing
Adjustment is payable to the Sellers under Section 1.6 hereof (after taking into
account the second paragraph of this Section 15.15), such amount shall be paid
to the Sellers with the Increasing Adjustment. If a Decreasing Adjustment is
payable to the Purchaser under Section 1.6 hereof (after taking into account the
second paragraph of this Section 15.15), all or part of such amount, up to the
amount of the Decreasing Adjustment, shall be paid to the Purchaser and off-set
against the Decreasing Adjustment, and the balance (if any) shall be paid to the
Sellers.
SECTION 15.16 SELLERS' REPRESENTATIVE. The Sellers hereby designate and
appoint Bernard O. Albertsen as the Sellers' attorney in fact, to act on the
Sellers' behalf, in connection with the defense and settlement of all Claims
within the scope of the Sellers' indemnification obligations under this
Agreement. The Sellers' attorney-in-fact shall have full power and authority to
do and perform every act, deed, matter and thing whatsoever in connection with
the defense and settlement of all Claims within the scope of the Sellers'
indemnification obligations under this Agreement, as fully and effectually to
all intents and purposes as the Sellers might or could do in person if
personally present. This power of attorney shall become effective on the date of
this Agreement and shall terminate when the Sellers' indemnification obligations
under this Agreement have been satisfied in full or expired. This power of
attorney shall not be affected by the disability or death of any of the Sellers.
Any person acting without negligence and in good faith in reasonable reliance on
this power of attorney shall not incur any liability thereby. Any action so
taken, unless otherwise invalid or unenforceable, shall be binding on the heirs
and personal representatives of the Sellers.
XVI. ARBITRATION AND EQUITABLE REMEDIES
SECTION 16.1 SETTLEMENT MEETING. The Parties shall attempt in good
faith to resolve promptly through negotiations any Claim or dispute under this
Agreement. If any such Claim or dispute should arise, the Parties shall meet at
least once to attempt to resolve the matter (the "Settlement Meeting"). Either
Party may request the other Party to attend a Settlement Meeting at a mutually
agreed time and place within ten days after delivery of a notice of a Claim or
dispute. The occurrence of a Settlement Meeting with respect to a Claim or
dispute shall be a condition precedent to seeking any arbitration or judicial
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remedy, provided that if a party refuses to attend a Settlement Meeting the
other Party may proceed to seek such remedy.
SECTION 16.2 ARBITRATION PROCEEDINGS. If the Parties have not resolved
a monetary Claim or dispute at the Settlement Meeting, either Party may submit
the matter to arbitration in accordance with the provisions of the Federal
Arbitration Act (99 U.S.C. Section 1 et seq.) and the Commercial Arbitration
Rules of the American Arbitration Association (the "Arbitration Rules"). Unless
the Parties mutually agree to the appointment of a single arbitrator, a panel of
three arbitrators shall conduct the arbitration proceedings, and the decision of
a majority of the panel shall be the decision of the arbitrators.
(a) ARBITRATION NOTICE. To submit a monetary Claim or dispute
to arbitration, a Party shall furnish the other Party and the American
Arbitration Association with a notice (the "Arbitration Notice")
containing: (i) the name and address of such Party, (ii) the nature of
the monetary Claim or dispute in reasonable detail, (iii) the Party's
intent to commence arbitration proceedings under this Agreement, and
(iv) the other information required under the Federal Arbitration Act
and the Arbitration Rules.
(b) SELECTION OF ARBITRATORS. Unless the Parties mutually
agree to the appointment of a single arbitrator, within ten days after
delivery of the Arbitration Notice, the Purchaser and the Sellers shall
each select one arbitrator from the list of the American Arbitration
Association's National Panel of Commercial Arbitrators. Within Ten days
after the selection of the last of these two arbitrators, these two
arbitrators shall select the third arbitrator from such list. If the
first two arbitrators cannot select a third arbitrator within such ten
day period, the American Arbitration Association shall select such
third arbitrator from the list. Each arbitrator shall be an individual
not subject to disqualification under Rule No. 19 of the Arbitration
Rules with experience in settling complex litigation involving mergers
and acquisitions.
(c) ARBITRATION FINAL. The arbitration of the matters in
controversy and the determination of any amount of damages or
indemnification shall be final and binding upon the Parties to the
maximum extent permitted by Applicable Law, provided that any Party may
seek any equitable remedy available under Applicable Law as provided in
this Agreement. This agreement to arbitrate is irrevocable.
SECTION 16.3 PLACE OF ARBITRATION. Any arbitration proceedings shall be
conducted in Bellevue, Washington or at such other location as the Parties may
agree. The arbitrators shall hold the arbitration proceedings within 60 days
after the selection of the third arbitrator.
SECTION 16.4 DISCOVERY. During the period beginning with the selection
of the third arbitrator and ending upon the conclusion of the arbitration
proceedings, the arbitrators shall have the authority to permit the parties to
conduct such discovery as the arbitrators consider appropriate.
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SECTION 16.5 EQUITABLE REMEDIES. Notwithstanding anything else in this
Agreement to the contrary, after the Settlement Meeting a Party shall be
entitled to seek any equitable remedies available under Applicable Law,
including an injunction prohibiting a breach of the Non-Compete Covenant, the
Non-Solicitation Covenant, and the Non-Disclosure Covenant or an Order requiring
the Sellers to perform this Agreement. Any such equitable remedies shall be in
addition to any damages or indemnification rights that such Party may assert in
an arbitration proceeding.
SECTION 16.6 EXCLUSIVE JURISDICTION. The Parties agree that any claim
for equitable relief relating to this Agreement shall be instituted in a federal
or state court sitting in King County, Washington, which courts and their
respective appellate courts shall be the exclusive venue for any such claim.
Each Party waives any objection that it may have to the laying of such venue,
and irrevocably submits to the jurisdiction of any such court with respect to
any such claim. Any service of process and other notice in any such case shall
be effective against a Party when transmitted in accordance with Section 20.8,
provided that a Party also may serve process in any manner permitted by
Applicable Law.
SECTION 16.7 JUDGMENTS. Any arbitration award under this Agreement
shall be final and binding. Any court having jurisdiction may enter judgment on
such arbitration award upon application of a Party.
SECTION 16.8 EXPENSES. If any Party commences arbitration proceeding or
court proceedings seeking equitable relief with respect to this Agreement, the
prevailing Party in such arbitration proceedings or case may receive as part of
any award or judgment reimbursement of such Party's reasonable attorneys' fees
and expenses to the extent that the arbitrators or court considers appropriate.
SECTION 16.9 COST OF THE ARBITRATION. The arbitrators shall assess the
costs of the arbitration proceedings, including their fees, to the Parties in
such proportions as the arbitrators consider reasonable under the circumstances.
SECTION 16.10 EXCLUSIVITY OF REMEDIES. To the extent permitted by
Applicable Law, the arbitration and judicial remedies contained in this Article
XVI shall be the exclusive remedies available to the Parties with respect to any
dispute under this Agreement or Claim for damages or indemnification under this
Agreement.
XVII. MONETARY ENCUMBRANCES
The Parties acknowledge that, at Closing, the Purchaser intends to pay
in full all of the monetary encumbrances on the Campgrounds that are listed on
Schedule XVII. The Sellers shall obtain and deliver to Chicago Title Insurance
Company to hold in escrow and record at Closing reconveyances and/or
satisfactions of such monetary encumbrances, and beneficiary statements from the
holders of such encumbrances showing the amounts needed to pay such encumbrances
in full as of the Closing, in form
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and substance reasonably satisfactory to the Purchaser. The Purchaser shall
cooperate with the Sellers in their efforts to obtain such items. If the Sellers
cannot obtain reconveyances and/or satisfactions of any such monetary
encumbrance by the Closing, the Purchaser shall fund the amount of the
encumbrance into escrow at Chicago Title Insurance Company, and Sellers' shall
deliver to Chicago Title Insurance Company such indemnity as it may require in
order to insure over the encumbrance in the title insurance policies delivered
to Purchaser pursuant to Section 9 hereof.
XVIII. DEFINITIONS
Terms with initial capitalized letters that are not otherwise defined
in this Agreement shall have the meanings set forth below:
SECTION 18.1 AFFILIATE. The term "Affiliate" with respect to a Person
means any other Person that directly or indirectly controls, is controlled by,
or is under common control with such Person. For the purposes of this
definition, control means the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by Contract, or otherwise. Control shall be presumed by an
individual that is a director, executive officer, general partner, manager, or
similar functionary of a Person, or a Person that beneficially owns more than
10% of any class of securities of such Person having general voting rights.
During the period before the Closing and at the Closing, the Company and Leisure
Time shall be considered an Affiliate of the Sellers. During the period after
the Closing, the Company and Leisure Time shall be considered an Affiliate of
the Purchaser for so long as the Purchaser controls the Company and Leisure
Time.
SECTION 18.2 APPLICABLE LAW. The term "Applicable Law" means any
applicable code, common law, law, Order, ordinance, regulation, rule, or statue
of any Governmental Authority.
SECTION 18.3 CERTIFIED PUBLIC ACCOUNTANTS. The term "Certified Public
Accountants" means the firm of Moss Adams LLP.
SECTION 18.4 CLAIM. The term "Claim" means any arbitration award,
assessment, charge, citation, claim, actual damages, demand, directive, expense,
fine, interest, joint or several liability, Lawsuit, notice, obligation,
payment, penalty, or summons of any kind or nature whatsoever, any consequential
or punitive damages, and any reasonable attorneys' fees and expenses. A Claim
shall be considered to exist even though it may be conditional, contingent,
indirect, potential, secondary, unliquidated, or unmatured.
SECTION 18.5. CONFIDENTIAL INFORMATION. The term "Confidential
Information" means any information not available by other legal means and kept
in a confidential manner concerning a Party's assets, business, cash flows,
financial condition, liabilities, operations, prospects, or relationships,
including the Party's proprietary databases and
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software programs and the Party's membership base. Confidential Information may
exist in oral or written form or in any other medium.
SECTION 18.6 CONTRACT. The term "Contract" with respect to a Person
means any oral or written agreement, arrangement, authorization, commitment,
deed of trust, franchise, indenture, lease, license, mortgage, Order, Permit,
promise, undertaking, or other document or obligation to which such Person is a
party, under which such Person possesses any rights or owes any obligations, or
by which any of such Person's assets are bound, or under which another Person
possesses any rights against such person or expectation of benefits from such
Person. The Contracts of a Person shall include such Person's Articles of
Incorporation, Bylaws, and other organizational documents.
SECTION 18.7 DERIVATIVE SECURITIES. The term "Derivative Securities"
with respect to any Person means: (a) any outstanding options, warrants, or
other rights to purchase any securities of such Person, (b) any Contract to
issue any securities or options, warrants, or other rights to purchase any
securities of such Person, (c) any Contract to recapitalize or restructure such
Person, (d) any Contract to redeem, repurchase, or otherwise acquire any of such
Person's securities, or (e) any bonds, debentures, notes, or other indebtedness
of such Person having general voting rights or convertible into securities of
such Person having general voting rights.
SECTION 18.8 ENVIRONMENTAL LAW. The term "Environmental Law" means: (a)
the Clean Air Act (42 U.S.C. Section 7401 et seq.), (b) the Clean Water Act (33
U.S.C. Section 1251 et seq.), (c) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S.C. Section 9601 et seq.), (d) the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), (e) the Hazardous
Materials Transportation Act (49 U.S.C. Section 5101 et seq.), (f) the National
Environmental Policy Act (42 U.S.C. Section 4321 et seq.), (g) the Oil Pollution
Act of 1990 (33 U.S.C. Section 2701 et seq.), (h) the Resource Conservation and
Recovery Act, as amended by the Hazardous and Solid Waste Amendments of 1984 (42
U.S.C. Section 6901 et seq.), (i) the Safe Drinking Waste Act (42 U.S.C. Section
300f et seq.), (j) the Toxic Substances Control Act (15 U.S.C. Section 2601 et
seq.), (k) any state, local, tribal, or foreign law, ordinance, regulation, or
statute analogous to any of the foregoing statutes, or (l) any other federal,
state, local, tribal, or foreign law, ordinance, regulation, or statue
prohibiting, regulating, or restricting the disposal, generation, handling,
placement, recycling, release, storage, or treatment of any contaminant, liquid,
mass, material, matter, pollutant, solid, substance, or waste classified or
considered to be hazardous or toxic to human heath or the environment.
SECTION 18.9 ERISA. The term "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended.
SECTION 18.10 ERISA PENSION PLAN. The term "ERISA Pension Plan" means
an "employee pension plan" as defined in Section 3(2) of ERISA.
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SECTION 18.11 ERISA WELFARE PLAN. The term "ERISA Welfare Plan" means
an "employee welfare benefit plan" as defined in Section 3(1) of ERISA.
SECTION 18.12 GAAP. The term "GAAP" means generally accepted accounting
principles in effect in the United States.
SECTION 18.13 GOVERNMENTAL AUTHORITY. The term "Governmental Authority"
means any federal, state, local, tribal, or foreign government and any agency,
board, body, branch, bureau, commission, court, department, instrumentality,
subdivision, or tribunal of any such government to the extent of its legally
enforceable authority.
SECTION 18.14 HAZARDOUS MATERIAL. The term "Hazardous Material" means
(a) any contaminant, liquid, mass, material, matter, pollutant, solid,
substance, or waste for which any Environmental Law limits, prohibits, or
regulates its disposal, generation, handling, placement, recycling, release,
storage, or treatment, (b) any carcinogenic, corrosive, explosive, flammable,
infectious, mutagenic, radioactive, or toxic substance, (c) any diesel fuel,
gasoline, or other petroleum product in an unconfined manner, (d) any substance
that contains polychlorinated biphenyls, (e) any substance that contains
asbestos, (f) any substance that contains urea formaldehyde foam installation,
(g) any substance that constitutes a nuisance upon any property, or (h) any
substance that imposes a hazard to the health or safety of any individual.
SECTION 18.15 INCOME TAX. The term "Income Tax" means any Tax based
upon or measured by net income, including any alternative minimum tax, along
with any interest, penalties, or additions to such Tax.
SECTION 18.16 LAW AFFECTING CREDITORS' RIGHTS. The term "Law Affecting
Creditors' Rights" means any bankruptcy, fraudulent conveyance or transfer,
insolvency, moratorium, reorganization, or other law affecting the enforcement
of creditors' rights generally, and any general principles of equity.
SECTION 18.17 LAWSUIT. The term "Lawsuit" means any action, arbitration
proceeding, cause of action, counterclaim, cross claim, inquiry, investigation,
legal action, litigation, Order, proceeding, or suit.
SECTION 18.18 LIEN. The term "Lien" means any claim, deed of trust,
judgment, lease, liability, limitation, mortgage, option, pledge, preferential
right of purchase, right of first refusal, security interest, Tax lien, or
encumbrance of any kind which affects a specific asset.
SECTION 18.19 MATERIAL ADVERSE CHANGE. The term "Material Adverse
Change" with respect to a Person means the occurrence of an event or the
existence of a circumstance that has a material adverse effect on such Person's
assets, business, cash flows, financial condition, liabilities, operations,
prospects, or relationships, including the occurrence of any event or the
existence of any circumstance that could reasonably be expected to cause such an
effect in the future.
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SECTION 18.20 MATERIAL CONTRACT. The term "Material Contract" means an
Acquisition Contract, an Employment and Related Party Contract, a Financing
Contract, a Lease, a Utility Contract, or an Other Significant Contract.
SECTION 18.21 MEMBER CONTRACT. The term "Member Contract" means the
written membership agreements and other written instruments and documents
defining the rights and obligations of membership in any of the Campgrounds.
SECTION 18.22 ORDER. The term "Order" means any consent decree, decree,
determination, injunction, judgment, order, or writ of any arbitrator or
Governmental Authority.
SECTION 18.23 OUTSIDE REPRESENTATIVES. The term "Outside
Representatives" with respect to a Person means such Person's accountants,
Affiliates, agents, consultants, investment bankers, lawyers, lenders, and
shareholders.
SECTION 18.24 PARTIES. The term "Parties" means the Purchaser and
Sellers.
SECTION 18.25 PERMIT. The term "Permit" means any approval,
authorization, certificate, certificate of occupancy, exemption, franchise,
license, registration, right variance, or waiver issuable in writing by any
Governmental Authority.
SECTION 18.26 PERSON. The term "Person" means any association, bank,
business trust, corporation, estate, general partnership, Governmental
Authority, individual, joint stock company, joint venture, labor union, limited
liability company, limited partnership, non-profit corporation, professional
association, professional corporation, trust, or any other organization or
entity.
SECTION 18.27 PLAN. The term "Plan" means any: (a) accident, dental,
disability, health, life, medical, or vision plan or insurance policy, (b) bonus
plan, (c) change in control plan, (d) deferred compensation plan, (e) ERISA
Pension Plan, (f) ERISA Welfare Plan, (g) executive compensation plan, (h)
fringe benefits and perquisites, such as automobile allowance, country club
memberships, diner club memberships, and health club memberships, (i) holiday,
sick pay, leave, vacation, or other similar policy, (j) incentive plan, (k) life
insurance plan or policy, (l) loan agreement with any Representatives, (m)
moving expense reimbursement policy, (n) multi-employer or multiple employer
plan, (o) pension plan, (p) phantom stock plan, (q) profit sharing plan, (r)
retirement plan, (s) severance plan, (t) appreciation plan, (u) stock purchase
plan, (v) stock option plan, (w) tuition reimbursement policy, or (x) other
employee arrangement, benefit plan, Contract, commitment, compensation plan,
custom, policy, or practice. A Plan may apply to only one individual, such as
an employment or severance agreement.
SECTION 18.28 PRIME RATE. The term "Prime Rate" means the publicly
announced prime commercial lending rate per annum of Wells Fargo Bank, N. A., or
its successor in effect from time to time, provided that such rate shall not
exceed the
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maximum interest rate permitted under Applicable law. The Prime Rate shall
change as such publicly announced prime commercial lending rate changes.
SECTION 18.29 REPRESENTATIVES. The term "Representatives" with respect
to a Person means such Person's directors, employees, and officers.
SECTION 18.30 SUBSIDIARY. The term "Subsidiary" with respect to a
Person means (i) a corporation a majority of whose capital stock with voting
power, under ordinary circumstances, to elect directors is at the time, directly
or indirectly, owned by such Person, by such Person and one or more Subsidiaries
of such Person or by one or more Subsidiaries of such Person or (ii) any other
Person (other than a corporation) in which such Person, one or more Subsidiaries
of such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof, has at least a
majority ownership interest. Unless otherwise specified, "Subsidiary" means any
Subsidiary of the Company.
SECTION 18.31 TAX. The term "Tax" means any federal, state, local,
tribal, foreign, or other assessment, charge, duty, fee, impost, levy, tariff,
or tax of any kind whatsoever, including, all ad valorem, alternative minimum,
capital gains, customs, documentary, employment, estate, excise, franchise,
gift, gross receipts, income, lease, license, net income, payroll, premium,
profits, property, occupation, sales, service, service use, stamp, severance,
transaction privilege, transfer, use, value-added, windfall profit, or
withholding taxes or charges imposed by any Governmental Authority or payable
pursuant to any tax sharing Contract, together with any related interest,
penalties, and addition to tax.
SECTION 18.32 WARN ACT. The term "WARN Act" means the Worker Adjustment
and Retraining Notification Act of 1988 and any similar state law.
XIX. INTERPRETATION
In interpreting this Agreement, the following interpretive guidelines
shall apply:
SECTION 19.1 ATTORNEYS' FEES. Whenever this Agreement refers to a
Person's "attorneys' fees and expenses," such reference also shall include any
fees and expenses of accountants, experts, investigators, and other professional
advisors whose services such Person's attorney reasonably considered advisable
in connection with the prosecution or defense of the particular matter.
SECTION 19.2 BREACH. The term "breach" with respect to any Contract
means any breach or violation of such Contract or any default under such
Contract.
SECTION 19.3 DRAFTING. Neither this Agreement nor any provision
contained in this Agreement shall be interpreted in favor of or against either
Party because such Party or its legal counsel drafted this Agreement or such
provision. In addition, no prior draft of
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this Agreement or any provision contained in this Agreement shall be used when
interpreting this Agreement or its provisions.
SECTION 19.4 HEADINGS. Article and section headings are used in this
Agreement only as a matter of convenience and shall not have any effect upon the
construction or interpretation of this Agreement.
SECTION 19.5 INCLUDE. The term "include" or any derivative of such term
does not mean that the items following such term are the only types of such
items.
SECTION 19.6 MAY. The term "may" indicates a permissive election. No
permissive election under this Agreement shall imply any duty to exercise such
election.
SECTION 19.7 NOTIFICATION. Whenever any provision of this Agreement
describes any notice given to the Company or Leisure Time concerning the breach
of any Contract, the violation of any Applicable Law, or otherwise, such
provision shall be interpreted to include any such notice concerning the Company
or Leisure Time given to the Sellers or any of their Affiliates.
SECTION 19.8 PERFORMANCE ON BUSINESS DAYS. If any event or the
expiration of any period provided for in this Agreement is scheduled to occur or
expire on a day that is not a Business Day, such event shall occur or such
period shall expire on the next succeeding day that is a Business Day. The term
"Business Day" means a day that is not a Sunday, Saturday, or holiday when banks
in the State of Washington are required or permitted to be closed.
SECTION 19.9 PLURAL AND SINGULAR WORDS. Whenever the plural form of a
word is used in this Agreement, that word shall include the singular from of
that word. Whenever the singular form of a word is used in this Agreement, that
word shall include the plural form of that word.
SECTION 19.10 PREDECESSORS. Any of the Sellers' representations and
warranties concerning any Claim against the Company or Leisure Time, any
liability or obligation of the Company or Leisure Time, or any violation of
Applicable Law by the Company or Leisure Time shall include any Claims,
liabilities, obligations, or violations with respect to each predecessor of the
Company or Leisure Time or any Subsidiary, including all direct and indirect
predecessors of any such predecessor.
SECTION 19.11 PRONOUNS. Whenever a pronoun of a particular gender is
used in this Agreement, if appropriate that pronoun also shall refer to the
other gender and the neuter. Whenever a neuter pronoun is used in this
Agreement, if appropriate that pronoun also shall refer to the masculine and
feminine gender.
SECTION 19.12 REPRESENTATIONS AND WARRANTIES. The Sellers'
representations and warranties under this Agreement shall mean the
representations and warranties contained in Article II and the reaffirmation of
the Sellers' representations and warranties
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in the Sellers' Closing Certificate. The Purchaser's representations and
warranties under this Agreement shall mean the representations and warranties
contained in Article III and the reaffirmation of those representations and
warranties in the Purchaser's Closing Certificate.
SECTION 19.13 REPRESENTATIVES. Whenever this Agreement permits a Party
to perform any act, such provision shall be interpreted to permit such Party to
perform such act through its Representatives and Outside Representatives,
provided that such Party's Outside Representatives may perform any such act on
behalf of such Party only after such Party expressly authorizes such Outside
Representative to perform such act. Notwithstanding the immediately preceding
sentence, however, only an authorized officer of a Party may enter into an
amendment to this Agreement on behalf of such Party, execute any document in
connection with this Agreement on behalf of such party, release any Claim of
such Party under this Agreement, or waive any right of such Party under this
Agreement. Similarly, whenever this Agreement prohibits a Party from performing
any act, such provision shall be interpreted to preclude such party from
performing such act and shall require such Party to cause its Representatives
not to perform such act. In addition, such Party shall not perform such act
indirectly through its Outside Representatives.
SECTION 19.14 SHALL. The term "shall" indicates a mandatory obligation.
SECTION 19.15 STATUTES. Any reference to Applicable Law or any specific
statue shall include any changes to such law or statute after the date of this
Agreement, any successor law or statute, and any regulations and rules
promulgated under such law or statute and any successor law or statute, whether
promulgated before or after the date of this Agreement.
SECTION 19.16 TO THE BEST OF SELLERS' KNOWLEDGE. The phrase "To the
Best of Sellers' knowledge" means to the best of each Seller's knowledge after
he or she has conducted a reasonable investigation to determine the accuracy of
the representation or warranty in question.
SECTION 19.17 TO THE BEST OF PURCHASER'S KNOWLEDGE. The phrase "To the
Best of Purchaser's knowledge" means to the best knowledge of each executive
officer of Purchaser after he or she has conducted a reasonable investigation to
determine the accuracy of the representation or warranty in question.
XX. GENERAL
SECTION 20.1 AMENDMENT. No amendment of this Agreement shall be
effective unless in a writing signed by the Parties.
SECTION 20.2 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original agreement, but
all of which shall constitute one and the same agreement. Either Party may
execute and deliver this
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Agreement by an executed signature page transmitted by a facsimile machine. If a
Party transmits its signature page by a facsimile machine, such Party shall
promptly thereafter deliver an originally executed signature page to the other
Party, provided that any failure to deliver such an originally executed
signature page shall not affect the validity, legality, or enforceability of
this Agreement.
SECTION 20.3. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the Parties and supersedes all prior
agreements and understanding, both written and oral, with respect to the subject
matter of this Agreement.
SECTION 20.4 EXPENSES. Each party shall bear its own expenses with
respect to the negotiation and preparation of this Agreement and the Closing,
including any fees and expenses of its Outside Representatives, provided that if
a Party terminates this Agreement because of the other Party's breach of this
Agreement, such Party shall be entitled to seek reimbursement of its expenses as
part of its damages with respect to such breach. The Sellers shall bear any Tax
imposed in connection with the transfer of the Shares to the Purchaser pursuant
to this Agreement, including the expense of purchasing any required stock
transfer stamps.
SECTION 20.5 GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Washington, regardless of the laws that might otherwise
govern under the conflicts of laws principles of the State of Washington.
SECTION 20.6 NO ASSIGNMENT. Neither Party may assign benefits or
delegate its duties under this Agreement without the prior written consent of
the other Party. Any attempted assignment or delegation without such prior
written consent shall be void. Notwithstanding this prohibition against
assignment and delegation, the Purchaser may assign its rights and delegate its
duties under this Agreement to a wholly owned subsidiary of the Purchaser
without the Sellers' consent.
SECTION 20.7 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for
the benefit of the Parties and no other Person shall have any right, interest,
or claim under this Agreement. In addition, nothing in this Agreement shall
require: (a) the Company or Leisure Time to continue the employment of any of
their respective employees or (b) the Company, Leisure Time, or the Purchaser to
continue any Employee Benefit Plan.
SECTION 20.8 NOTICES. All claims, consents, designations, notice,
waivers, and other communications in connection with this Agreement shall be in
writing. Such claims, consents, designations, notices, waivers, and other
communications shall be considered received only on the day of actual receipt
unless mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed to a Party at its address set forth below (or to such other
address to which such Party has notified the other Party in accordance with this
section to send such claims, consents, designations, notices, waivers, and other
communications), in which case such claims, consents, designations, notices,
waivers, or other communications shall be deemed to have been received three
Business Days after the date of posting:
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If to the Purchaser: Thousand Trails, Inc.
2711 LBJ Freeway, Suite 200
Dallas, Texas 75234
Attn: William J. Shaw, Chief Executive Officer
Telephone No. (972) 243-2228
Facsimile No. (972) 488-5085
With a copy to:
Walter B. Jaccard
Vice President and General Counsel
Thousand Trails, Inc.
2122 - 112th Avenue N.E., Suite A300
Bellevue, Washington 98004
Telephone No. (425) 455-3173
Facsimile No. (425) 637-0947
If to the Sellers: Bernard O. Albertsen
809 Stitch Road
Lake Stevens, Washington 98285
Telephone No. (425) 334-4566
Facsimile No. (425) 334-3371
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With a copy to:
Kenneth A. Bloch
Wolfstone, Panchot & Bloch, P.S., Inc.
1500 Norton Building
801 Second Avenue
Seattle, Washington 98104
Telephone No. (206) 682-3840
Facsimile No. (206) 340-8837
SECTION 20.9 REPRESENTATION BY LEGAL COUNSEL. Each Party is a
sophisticated Person that was advised by experienced legal counsel and other
advisors in the negotiation and preparation of this Agreement.
SECTION 20.10 SCHEDULES. All references in this Agreement to schedules
shall mean the schedules identified in this Agreement, which are incorporated
into this Agreement and shall be deemed a part of this Agreement for all
purposes. Each section of this Agreement that refers to a schedule shall have a
separate schedule. The Seller has delivered to the Purchaser a correct and
complete copy of each document described on each schedule to this Agreement and
a correct and complete written description of each unwritten arrangement or
other item described on each such schedule.
SECTION 20.11 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions of this Agreement or affect the validity or enforceability
of such provision in any other jurisdiction. In addition, any such prohibited or
unenforceable provision shall be given effect to the extent possible in the
jurisdiction where such provision is prohibited or unenforceable.
SECTION 20.12 SPECIFIC PERFORMANCE. The Sellers acknowledges that the
benefits that the Purchaser will derive from the transactions contemplated by
this Agreement are unique and irreplaceable. Accordingly, if the Sellers
improperly abandon or terminate this Agreement, the Purchaser would not have an
adequate remedy at law. The Purchaser therefore shall be entitled to a court
order requiring the Sellers to perform this Agreement. The Sellers, however,
shall not be entitled to specific performance of this Agreement.
SECTION 20.13 SUCCESSORS. This Agreement shall be binding upon and
shall inure to the benefit of each Party and its heirs, legal representatives,
permitted assigns, and successors, provided that this section shall not permit
the assignment or other transfer of this Agreement, whether by operation of law
or otherwise, if such assignment or other transfer is not otherwise permitted
under this Agreement.
SECTION 20.14 TIME OF THE ESSENCE. Time is of the essence in the
performance of this Agreement and all dates and periods specified in this
Agreement.
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SECTION 20.15 WAIVER. No provision of this Agreement shall be
considered waived unless such waiver is in writing and signed by the Party that
benefits from the enforcement of such provision. No waiver of any provision in
this Agreement, however, shall be deemed a waiver of a subsequent breach of such
provision or a waiver of a similar provision. In addition, a waiver of any
breach or a failure to enforce any term or condition of this Agreement shall not
in any way affect, limit, or waive a Party's rights under this Agreement at any
time to enforce strict compliance thereafter with every term and condition of
this Agreement.
SECTION 20.16 PURCHASER'S LENDER PROVISIONS. The Sellers acknowledge
that the Purchase Price is being financed by Foothill Capital Corporation, a
California corporation ("Foothill"), and that Foothill will be receiving various
security interests in the Shares and the assets of the Company and Leisure Time.
The Sellers acknowledge that Foothill would not be making the financing
available to the Purchaser without the grants of the security interests, and an
assignment of the Purchaser's rights and benefits under this Agreement. Thus the
Sellers agree that the provisions of Sections 20.6, 20.7, and 20.13
notwithstanding, the Purchaser may assign its rights under Section 15, and the
benefits
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conferred therein, to Foothill and, in accordance with the provisions of the
financing agreements between Foothill and the Purchaser, Foothill may enforce
such provisions to the same degree and in the same manner as the Purchaser.
SECTION 20.17 ALLOCATION OF THE PURCHASE PRICE. For purposes of Section
1060 of the Code, the Parties agree that a portion of the aggregate of the
Purchase Price and the Company's liabilities shall be allocated to Leisure
Time's Campgrounds as described in Schedule 20.17. The Parties shall allocate
any adjustment to the Purchase Price proportionately to Leisure Time's
Campgrounds unless the adjustment specifically relates to another asset.
IN WITNESS WHEREOF, each Party has executed and delivered this
Agreement on the date set forth below next to its name with the intent that this
Agreement be effective as of the date first written above.
PURCHASER:
THOUSAND TRAILS, INC.
Date of Execution: November 30, 1999 By: /s/ Walter B. Jaccard
-----------------------------------
Walter B. Jaccard, Vice President
SELLERS:
Date of Execution: November 30, 1999 /s/ Bernard O. Albertsen
-----------------------------------
Bernard O. Albertsen
Date of Execution November 30, 1999 /s/ Leodyce Albertsen
-----------------------------------
Leodyce Albertsen
Date of Execution: November 30, 1999 /s/ Bradley Albertsen
-----------------------------------
Bradley Albertsen
Date of Execution: November 30, 1999 /s/ Mark Albertsen
-----------------------------------
Mark Albertsen
Date of Execution: November 30, 1999 /s/ Thomas Sites
-----------------------------------
Thomas Sites
Date of Execution: November 30, 1999 /s/ Nancy Sites
-----------------------------------
Nancy Sites
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CONSENT OF SPOUSE
The undersigned is the wife of Bradley Albertsen, one of the parties to
the foregoing Stock Purchase and Sale Agreement; she acknowledges that she has
read such Agreement and knows its contents; that she is aware that by its
provisions her husband agrees to sell all of his shares of stock of Albertsen
Investment Corporation, Inc., including her community property interest therein,
if any, upon the happening of certain events; she hereby consents to such a sale
and approves the provisions of such Agreement; she hereby agrees, on behalf of
herself and all persons who may claim on her behalf, that upon her legal
separation from or the dissolution of her marriage to Bradley Albertsen, or upon
her or her husband's death, neither she nor anyone claiming on her behalf will
seek to partition her or her husband's community property interest in such
shares and that in any such event she shall be entitled only to the value of her
interest in such shares, if any, and that she shall have no claim or right to
the shares themselves.
Executed this 30th day of November, 1999.
/s/ Denise M. Albertsen
-----------------------------------
Signature
Denise M. Albertsen
-----------------------------------
Print Name
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CONSENT OF SPOUSE
The undersigned is the wife of Mark Albertsen, one of the parties to
the foregoing Stock Purchase and Sale Agreement; she acknowledges that she has
read such Agreement and knows its contents; that she is aware that by its
provisions her husband agrees to sell all of his shares of stock of Albertsen
Investment Corporation, Inc., including her community property interest therein,
if any, upon the happening of certain events; she hereby consents to such a sale
and approves the provisions of such Agreement; she hereby agrees, on behalf of
herself and all persons who may claim on her behalf, that upon her legal
separation from or the dissolution of her marriage to Mark Albertsen, or upon
her or her husband's death, neither she nor anyone claiming on her behalf will
seek to partition her or her husband's community property interest in such
shares and that in any such event she shall be entitled only to the value of her
interest in such shares, if any, and that she shall have no claim or right to
the shares themselves.
Executed this 30th day of November, 1999.
/s/ Melanie A. Albertsen
-----------------------------------
Signature
Melanie A. Albertsen
-----------------------------------
Print Name
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EXHIBIT 10.1
================================================================================
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
by and between
NATIONAL AMERICAN CORPORATION
THOUSAND TRAILS, INC.
and the
Party Borrowers Signatory Hereto
and
FOOTHILL CAPITAL CORPORATION
Dated as of December 10, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
1. DEFINITIONS AND CONSTRUCTION.............................................................................1
1.1 Definitions...................................................................................1
1.2 Accounting Terms.............................................................................17
1.3 Code.........................................................................................17
1.4 Construction.................................................................................17
1.5 Schedules and Exhibits.......................................................................18
1.6 References to Sections in the Mortgages......................................................18
2. LOAN AND TERMS OF PAYMENT...............................................................................18
2.1 Revolving Advances...........................................................................18
2.2 Term Loan....................................................................................19
2.3 Overadvances.................................................................................19
2.4 Interest: Rate, Payments, and Calculations...................................................20
2.5 Collection of Accounts.......................................................................21
2.6 Crediting Payments; Application of Collections...............................................22
2.7 Statements of Obligations....................................................................22
2.8 Fees.........................................................................................23
3. CONDITIONS; TERM OF AGREEMENT...........................................................................23
3.1 Conditions Precedent to the Initial Advance to Borrower......................................23
3.2 Conditions Precedent to the Leisure Time Advance.............................................24
3.3 Conditions Precedent to All Advances.........................................................26
3.4 Term.........................................................................................26
3.5 Effect of Termination........................................................................27
3.6 Early Termination or Paydown by Borrower.....................................................27
3.7 Termination Upon Event of Default............................................................28
3.8 Post Closing Date Obligations of Borrower....................................................28
4. CREATION OF SECURITY INTEREST...........................................................................29
4.1 Grant of Security Interest...................................................................29
4.2 Negotiable Collateral........................................................................29
4.3 Collection of Accounts, General Intangibles, Negotiable Collateral...........................30
4.4 Sales of Portions of the Real Property; Application of Proceeds..............................30
4.5 Delivery of Additional Documentation Required................................................31
4.6 Power of Attorney............................................................................32
4.7 Right to Inspect.............................................................................32
5. REPRESENTATIONS AND WARRANTIES..........................................................................33
5.1 No Prior Encumbrances........................................................................33
5.2 Eligible Accounts............................................................................33
5.3 Location of Chief Executive Office; FEIN.....................................................33
5.4 Borrower's Corporate Ownership...............................................................33
5.5 Due Organization and Qualification...........................................................33
5.6 Due Authorization; No Conflict...............................................................34
5.7 Litigation...................................................................................34
</TABLE>
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<TABLE>
<S> <C> <C>
5.8 No Material Adverse Change in Financial Condition............................................34
5.9 Solvency.....................................................................................34
5.10 Employee Benefits............................................................................34
5.11 Environmental Condition......................................................................35
5.12 Compliance With The ADA......................................................................36
5.13 Real Property................................................................................36
5.14 Inter-Company Indebtedness...................................................................37
5.15 Solvency of AIC and Leisure Time - Washington................................................37
5.16 Reliance by Foothill; Cumulative.............................................................38
6. AFFIRMATIVE COVENANTS...................................................................................38
6.1 Accounting System............................................................................38
6.2 Collateral Reports...........................................................................38
6.3 Schedules of Accounts........................................................................39
6.4 Financial Statements, Reports, Certificates..................................................39
6.5 Tax Returns..................................................................................40
6.6 Title to Equipment...........................................................................40
6.7 Maintenance of Equipment.....................................................................40
6.8 Taxes........................................................................................41
6.9 Insurance....................................................................................41
6.10 Financial Covenants..........................................................................42
6.11 No Setoffs or Counterclaims..................................................................43
6.12 Compliance with Laws.........................................................................43
6.13 Employee Benefits............................................................................43
6.14 Environmental Condition......................................................................44
6.15 Compliance With The ADA......................................................................46
6.16 Post Closing Date Issues.....................................................................46
6.17 The Real Property............................................................................46
6.18 Term Note Substitute Cash Collateral.........................................................46
7. NEGATIVE COVENANTS......................................................................................46
7.1 Indebtedness.................................................................................47
7.2 Liens........................................................................................47
7.3 Restrictions on Fundamental Changes..........................................................48
7.4 Extraordinary Transactions and Disposal of Assets............................................48
7.5 Change Name..................................................................................48
7.6 Guarantee....................................................................................48
7.7 Restructure..................................................................................48
7.8 Prepayments..................................................................................48
7.9 Change of Control............................................................................49
7.10 Capital Expenditures.........................................................................49
7.11 Distributions................................................................................49
7.12 Accounting Methods...........................................................................49
7.13 Investments..................................................................................49
7.14 Transactions with Affiliates.................................................................50
7.15 Suspension...................................................................................50
7.16 Compensation.................................................................................50
7.17 Use of Proceeds..............................................................................50
</TABLE>
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<TABLE>
<S> <C> <C>
8. EVENTS OF DEFAULT.......................................................................................50
9. FOOTHILL'S RIGHTS AND REMEDIES..........................................................................53
9.1 Rights and Remedies..........................................................................53
9.2 Remedies Cumulative..........................................................................55
9.3 Foreclosure Not A Discharge..................................................................56
10. WAIVERS; INDEMNIFICATION................................................................................56
10.1 Demand; Protest; etc.........................................................................56
10.2 Foothill's Liability for Collateral..........................................................56
10.3 Indemnification..............................................................................56
10.4 References in Mortgages......................................................................57
11. TAXES AND EXPENSES REGARDING THE COLLATERAL.............................................................57
12. NOTICES.................................................................................................58
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................................................58
14. DESTRUCTION OF BORROWER'S DOCUMENTS.....................................................................59
15. GENERAL PROVISIONS......................................................................................59
15.1 Effectiveness................................................................................59
15.2 Successors and Assigns.......................................................................59
15.3 Section Headings.............................................................................60
15.4 Interpretation...............................................................................60
15.5 Severability of Provisions...................................................................60
15.6 Amendments in Writing........................................................................60
15.7 Counterparts; Telefacsimile Execution........................................................60
15.8 Revival and Reinstatement of Obligations.....................................................61
15.9 Lending Relationship.........................................................................61
15.10 Joint and Several Liability of Borrower......................................................61
15.11 Third Party Beneficiaries....................................................................61
15.12 Further Assurances with Respect to the Real Property.........................................61
15.13 Integration..................................................................................62
</TABLE>
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SCHEDULES
Schedule ERP Excluded Real Property
Schedule RP DEF-1 Real Property Definitions
Schedule RP DEF-2 Supplemental Real Property Definitions Effective
as of the Making of the Leisure Time Advance
Schedule P-1 Permitted Liens
Schedule 3.2(b) Real Property to be Mortgaged Concurrently with
the Leisure Time Advance
Schedule 4.4 Real Property to be Sold
Schedule 5.7-1 Litigation
Schedule 5.7-2 Additional Litigation Effective as of the Making
of the Leisure Time Advance
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LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, is entered into
as of December 10, 1999, between FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), with a place of business located at 11111 Santa Monica
Boulevard, Suite 1500, Los Angeles, California 90025-3333, and NATIONAL AMERICAN
CORPORATION, a Nevada corporation ("NAC"), THOUSAND TRAILS, INC., a Delaware
corporation ("Trails"), and the party borrowers signatory hereto: (each,
individually and collectively, jointly and severally, a "Borrower"), with their
chief executive office located at 2711 LBJ Freeway, Suite 200, Dallas, Texas,
75234, and is made with reference to the following facts.
W I T N E S S E T H:
WHEREAS, on or about July 10, 1996, Foothill and Borrower (and other
initial borrowers) entered into that certain Loan and Security Agreement, which
such Loan and Security Agreement was first amended by that certain First
Amendment dated as of May 16, 1997, that certain Second Amendment dated as of
December 23, 1997, that certain Third Amendment dated as of January 5, 1998,
that certain Fourth Amendment dated as of June 10, 1998, that certain Fifth
Amendment dated as of September 15, 1998, that certain Sixth Amendment dated as
of October ___, 1998, and that certain Seventh Amendment dated as of June 1,
1999; and
WHEREAS, Borrower has requested that Foothill further amend the Loan
and Security Agreement, and Borrower and Foothill have agreed to further amend
and restate in its entirety the borrower and lender relationships between them,
on the terms and conditions set forth herein.
NOW, THEREFOR, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following
terms shall have the following definitions:
"Account Debtor" means any Person who is or who may
become obligated under, with respect to, or on account of an Account.
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"Accounts" means all currently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the rendition of services by
Borrower, or the sale of campground memberships, timeshare intervals and
interests, undivided real estate interests, lots and other inventory,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.
"Act" means all present and future laws, regulations,
statutes, common law, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises, and similar items of
any federal, state, or local government, instrumentality, or body, as the same
may be amended, modified, or supplemented from time to time and that are related
to Hazardous Substances.
"ADA" means the Americans with Disabilities Act, 42
U.S.C. Sections 12101, et. seq., and all applicable rules and regulations
promulgated thereunder.
"Advance" or "Advances" has the meaning set forth in
Section 2.1.
"Affiliate" means, as applied to any Person, any
other Person directly or indirectly controlling, controlled by, or under common
control with, that Person. For purposes of this definition, "control" as applied
to any Person means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Amended and Restated Loan and
Security Agreement and any extensions, riders, supplements, schedules,
amendments, or modifications to or in connection with this Loan and Security
Agreement.
"AIC" means Albertsen Investment Corporation, a
Washington corporation.
"Authorized Officer" means any officer of Borrower.
"Average Unused Portion of Revolving Maximum Amount"
means (a) the Revolving Maximum Amount; less (b) the actual Daily Balance of
advances made by Foothill under Section 2.1 that were outstanding during the
immediately preceding month.
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<PAGE> 8
"Bankruptcy Code" means the United States Bankruptcy
Code (11 U.S.C. S 101 et seq.), as amended, and any successor statute.
"Borrower" has the meaning set forth in the preamble
to this Agreement.
"Borrower's Books" means all of Borrower's books and
records including: ledgers; records indicating, summarizing, or evidencing
Borrower's properties or assets (including the Collateral) or liabilities; all
information relating to Borrower's business operations or financial condition;
all membership and mailing lists; and all computer programs, disc or tape files,
printouts, runs, or other computer prepared information, and the equipment
containing such information.
"Business Day" means any day which is not a Saturday,
Sunday, or other day on which national banks are authorized or required to
close.
"Cash Equivalents" means (i) any evidence of
Indebtedness with a maturity of two years or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof, provided that the full faith and credit of the United
States of America is pledged in support thereof, (ii) demand and time deposits
and certificates of deposit or acceptance with a maturity of 180 days or less of
any financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000, (iii) commercial paper with a maturity of 270 days or less issued
by a corporation that is not an Affiliate of the Company and is organized under
the laws of any state of the United States or the District of Columbia and rated
at least A-1 by Standard & Poor's Corporation or at least P-1 by Moody's
Investor Service, Inc.; (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any commercial bank meeting the specifications of clause (ii)
above; (v) overnight bank deposits and bankers acceptances at any commercial
bank meeting the qualifications specified in clause (ii) above; (vi) deposits
available for withdrawal on demand with any commercial bank not meeting the
qualifications specified in clause (ii) above but which is a local depository
bank, provided all deposits in the local depository bank do not exceed $100,000
in the aggregate at any one time; (vii) deposits available for withdrawal on
demand with any commercial bank not meeting the qualifications specified in
clause (ii) above but which is a lender (or bank affiliate thereof) under this
Agreement, provided all such deposits do not
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<PAGE> 9
exceed $5,000,000 in the aggregate at any one time; (viii) demand and time
deposits and certificates of deposit with any commercial bank organized in the
United States not meeting the qualifications specified in clause (ii) above,
provided that such deposits and certificates support bond, letter of credit and
other similar types of obligations incurred in the ordinary course of business;
and (ix) investments in money market or other mutual funds substantially all of
whose assets comprise securities of the types described in clauses (i) through
(v) above.
"Cash Proceeds" means the cash or cash equivalents
arising out of the sale of any of Borrower's assets, including, without
limitation, the Accounts, the Equipment, the General Intangibles, the Inventory,
the Negotiable Collateral, the Real Property, and the Excluded Real Property.
"Change of Control" means (i) the sale, lease or
transfer of all or substantially all of Trails' assets to any "person" or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act) (ii) the liquidation or dissolution of Trails, or (iii) the time
that Trails first determines or reasonably should have known that any "person"
or "group" (as such terms are used for purposes of sections 13(d) and 14(d) of
the Exchange Act, whether or not applicable), is or becomes the "beneficial
owner" (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act,
whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such "person" has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 35% of the total voting power in
the aggregate of all classes of Capital Stock then outstanding of Trails
normally entitled to vote in elections of directors.
"Closing Date" means the date set forth on the cover
page to this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means each of the following: the
Accounts; Borrower's Books; the Cash Proceeds; the Equipment; the General
Intangibles; the Inventory; the Negotiable Collateral; the Real Property; the
Term Note Substitute Cash Collateral; any money, or other assets of Borrower
which now or hereafter come into the possession, custody, or control of
Foothill; and the proceeds and products, whether tangible or intangible, of any
of the foregoing including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Borrower's Books,
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<PAGE> 10
Cash Proceeds, Equipment, General Intangibles, Inventory, Negotiable Collateral,
the Real Property, the Excluded Real Property, money, deposit accounts, or other
tangible or intangible property resulting from the sale, exchange, collection,
or other disposition of any of the foregoing, or any portion thereof or interest
therein, and the proceeds thereof. For purposes of the Cultus Lake (BC)
Property, Collateral additionally means all of Borrower's present and
after-acquired personal property wherever situate including but not limited to
goods (including inventory, equipment (equipment includes, without limitation,
machinery, tools, apparatus, plant, furniture, fixtures, aircraft and vehicles
of whatsoever nature and kind) but excluding consumer goods), chattel paper,
documents of title, instruments, intangibles, money and securities.
"Collections" means all cash, checks, notes,
instruments, and other items of payment (including, insurance proceeds, proceeds
of Collateral sales, proceeds of cash sales, rental proceeds, and tax refunds).
"Daily Balance" means the amount of an Obligation
owed at the end of a given day.
"Early Paydown Premium" has the meaning set forth in
Section 3.6.
"EBITDA" means earnings before interest expense,
taxes, depreciation, and amortization and excluding losses and gains from sales
of assets, extraordinary items, other non-recurring items, and interest income
on Accounts, as calculated on a trailing twelve (12) month basis.
"Eligible Accounts" means those Accounts created by
or owned by Borrower in the ordinary course of business that strictly comply
with all of Borrower's representations and warranties to Foothill, that have
been current for the last three required payments, and that are and at all times
shall continue to be reasonably acceptable to Foothill in all respects;
provided, however, that standards of eligibility may be fixed and revised from
time to time by Foothill in Foothill's reasonable credit judgment. Eligible
Accounts SHALL NOT include the following:
Accounts with respect to which the Account Debtor is
an officer, employee, Affiliate, or agent of Borrower;
Accounts with respect to which the Account Debtor is
not a resident of the United States or Canada;
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<PAGE> 11
Accounts with respect to which Borrower is liable to
the Account Debtor;
Accounts with respect to which the Account Debtor
disputes liability or makes any claim with respect thereto, or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business;
Accounts the collection of which Foothill, in its
reasonable credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;
Accounts that are payable in other than United States
or Canadian Dollars;
Accounts that are the subject of litigation or which
are the subject of governmental action which could reasonably be expected to
adversely affect collectability.
"Equipment" means all of Borrower's present and
hereafter acquired machinery, machine tools, motors, equipment, furniture,
furnishings, fixtures, vehicles (including motor vehicles and trailers), boats,
kayaks, paddle boats, jon boats, boats of every description, wharfs, canoes,
water sport equipment, sporting goods, tools, yurts, bicycles, equestrian
related equipment, parts, dies, jigs, goods (other than consumer goods or farm
products), wherever located, and any interest of Borrower in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever
located.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any predecessor, successor, or
superseding laws of the United States of America, together with all regulations
promulgated thereunder.
"ERISA Affiliate" means any trade or business
(whether or not incorporated) which, within the meaning of Section 414 of the
IRC, is: (i) under common control with Borrower; (ii) treated, together with
Borrower, as a single employer; (iii) treated as a member of an affiliated
service group of which Borrower is also treated as a member; or (iv) is
otherwise aggregated with the Borrower for purposes of the employee benefits
requirements listed in IRC Section 414(m)(4).
"ERISA Event" means any one or more of the following:
(i) a Reportable Event with respect to a Qualified Plan or a Multiemployer Plan;
(ii) a Prohibited Transaction with respect to any Plan; (iii) a complete or
partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan;
(iv)
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<PAGE> 12
the complete or partial withdrawal of Borrower or an ERISA Affiliate from a
Qualified Plan during a plan year in which it was, or was treated as, a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; (v) a failure
to make full payment when due of all amounts which, under the provisions of any
Plan or applicable law, Borrower or any ERISA Affiliate is required to make;
(vi) the filing of a notice of intent to terminate, or the treatment of a plan
amendment as a termination, under Sections 4041 or 4041A of ERISA other than a
standard termination under Section 4041(b); (vii) an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Qualified Plan or Multiemployer Plan; (viii) the imposition of any liability
under Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon Borrower or any ERISA Affiliate; and (ix) a
violation by a Plan fiduciary of the applicable requirements of Sections 404 or
405 of ERISA, or the exclusive benefit rule under Section 403(c) of ERISA, for
which Borrower or any ERISA Affiliate may be directly or indirectly liable.
"Excluded Real Property" are the items of real
property set forth on Schedule ERP.
"Event of Default" has the meaning set forth in
Section 8.
"FEIN" means Federal Employer Identification Number.
"Foothill" has the meaning set forth in the preamble
to this Agreement.
"Foothill Account" has the meaning set forth in
Section 2.5.
"Foothill Expenses" means all: costs or expenses
(including taxes, photocopying, notarization, telecommunication and insurance
premiums) required to be paid by Borrower under any of the Loan Documents that
are paid or advanced by Foothill; documentation, filing, recording, publication,
appraisal (including periodic Collateral appraisals conducted by third parties,
in addition to the fees set forth in Section 2.8(c)(ii); provided however, that
unless there shall have occurred an Event of Default, appraisal fees incurred by
Foothill other than annual appraisals conducted on the Collateral shall not be
included in the definition of Foothill Expenses), real estate survey, real
property taxes on any of the Real Property (should Foothill elect to pay them),
environmental audit, and search fees assessed, paid, or incurred by Foothill in
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<PAGE> 13
connection with Foothill's transactions with Borrower; costs and expenses
incurred by Foothill in preserving the value of the Collateral; costs and
expenses incurred by Foothill in the disbursement of funds to Borrower (by wire
transfer or otherwise); charges paid or incurred by Foothill resulting from the
dishonor of checks; costs and expenses paid or incurred by Foothill to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated; costs and expenses paid
or incurred by Foothill in examining Borrower's Books; costs and expenses of
third party claims or any other suit paid or incurred by Foothill in enforcing
or defending the Loan Documents; and Foothill's reasonable attorneys fees and
expenses incurred in advising, structuring, drafting, reviewing, administering,
amending, terminating, enforcing (including attorneys fees and expenses incurred
in connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning Borrower or the Obligations), defending, or concerning the Loan
Documents, irrespective of whether suit is brought.
"GAAP" means generally accepted accounting principles
as in effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's present
and future general intangibles and other personal property (including contract
rights, rights arising under common law, statutes, or regulations, chooses or
things in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringements, claims, computer
programs, computer discs, computer tapes, literature, reports, catalogs, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), other
than goods and Accounts.
"Hazardous Substances" means:
those substances as defined as "hazardous
substances," "hazardous materials," "toxic substances," or "solid
waste" in the Comprehensive Environmental Response, Compensation and
Liability Act, Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq. ("RCRA"), or the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq.;
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<PAGE> 14
those substances designated as a "hazardous
substance" under or pursuant to the Federal Water Pollution Control
Act, 33 U.S.C. Sections 1257 et seq., or defined as a "hazardous waste"
under or pursuant to RCRA;
those substances listed in the United States
Department of Transportation Table (40 CFR 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor
agency) as hazardous substances (40 CFR Part 302 and amendments
thereto); and
such other substances, materials and wastes which are
regulated under any act, or which are classified as hazardous or toxic
under any Act.
All of the statutes, acts, codes, sections and tables
listed above shall include all amendments, modifications and supplements
thereto, together with all regulations promulgated pursuant to such statutes,
acts, codes, sections and tables.
"Indebtedness" means: (a) all obligations of Borrower
for borrowed money; (b) all obligations of Borrower evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations of Borrower in respect of letters of credit, letter of credit
guaranties, bankers acceptances, interest rate swaps, controlled disbursement
accounts, or other financial products; (c) all obligations under capitalized
leases; (d) all obligations or liabilities of others secured by a lien or
security interest on any property or asset of Borrower, irrespective of whether
such obligation or liability is assumed; and (e) any obligation of Borrower
guaranteeing or intended to guarantee (whether guaranteed, endorsed, co-made,
discounted, or sold with recourse to Borrower) any indebtedness, lease,
dividend, letter of credit, or other obligation of any other Person.
"Indemnified Persons" means Foothill and its parents,
subsidiaries and affiliates, attorneys, and each of their officers, directors,
agents, employees, trustees, receivers, executors, and administrators, and the
heirs, successors, and assigns of all of the foregoing.
"Insolvency Proceeding" means any proceeding
commenced by or against any Person under any provision of the Bankruptcy Code or
under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extensions
generally with its
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creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intellectual Property Security Agreement" means: (i)
that certain Intellectual Property Security Agreement entered into July 10, 1996
between Borrower and Foothill whereby Borrower grants to Foothill a security
interest in the property described therein, and (ii) that certain Intellectual
Property Security Agreement entered into concurrently herewith between Borrower
and Foothill whereby Borrower grants to Foothill a security interest in the
property described therein.
"Inventory" means all present and future inventory in
which Borrower has any interest, including lots, timeshare intervals, goods held
for sale or lease or to be furnished under a contract of service and all of
Borrower's present and future raw materials, work in process, finished goods,
and packing and shipping materials, wherever located, and any documents of title
representing any of the above.
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"Known Prior Monetary Liens" means that certain lease
covering a portion of the Lake Tawakoni (TX) Property.
"Leisure Time Advance" means an advance to be made by
Foothill, provided: (i) all the conditions precedent required under Sections 3.2
& 3.3 are met, and (ii) the advance requested would not constitute an
Overadvance; in an amount not to exceed the sum of Eleven Million Five Hundred
Thousand Dollars ($11,500,000.00) plus the Leisure Time Advance fee set forth in
Section 2.8(a) hereof. The Leisure Time Advance shall include the Leisure Time
Advance Fee.
"Leisure Time - Washington" means Leisure Time
Resorts of America, Inc., a Washington corporation.
"Lien Reserve" means the aggregate sum of (i) the
aggregate sum represented by all monetary liens, other than Known Prior Monetary
Liens and Permitted Liens referred to in clause (c) of the definition thereof
and, to the extent the obligations secured thereby are not delinquent or are
secured by cash or its equivalent, the Permitted Liens referred to in clauses
(g), (i) or (m) of such definition, which are senior in priority to Foothill's
lien (including those referenced in Section 8.9, but only to the extent noted
therein); PLUS (ii) the aggregate sum represented by delinquent real property
taxes owing on the Real Property; PLUS (iii) the aggregate sum represented by
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the prior liens and encumbrances on the property set forth on Schedule 3.2(b),
if any.
"Loan Documents" means this Agreement, the Lock Box
Agreements, the Mortgages, the Term Note, the Pledge Agreements, the
Intellectual Property Security Agreement, any other note or notes executed by
Borrower and payable to Foothill, and any other agreement entered into in
connection with this Agreement.
"Lock Box" has the meaning provided in the respective
Lock Box Agreements.
"Lock Box Agreements" means those certain Lockbox
Operating Procedural Agreements and Depository Account Agreements, in form and
substance satisfactory to Foothill, each of which is among Borrower, Foothill,
and one of the Lock Box Banks.
"Lock Box Bank" means Union Bank of California.
"Losses" shall mean any and all losses, liabilities,
contingent liabilities, damages, obligations, claims, contingent claims,
actions, suits, proceedings, disbursements, penalties, costs, and expenses
(including, without limitation, actual attorneys' fees and costs of counsel
retained by Foothill to monitor the proceedings and actions of Borrower in
satisfying its obligations hereunder, and to advise and represent Foothill with
respect to matters related hereto, including, without limitation, fees incurred
pursuant to 11 U.S.C.) and all other professional or consultants' fees and
expenses), whether or not an action or proceeding is commenced or threatened.
"Maximum Amount" means the sum of the Revolving
Maximum Amount plus the then outstanding balance of the Term Note.
"Mortgages" means one or more mortgages, deeds of
trust, or deeds to secure debt, executed by Borrower in favor of Foothill, the
form and substance of which shall be satisfactory to Foothill, that encumber the
Real Property and the related improvements thereto.
"Multiemployer Plan" means a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA or Section 414 of the IRC in
which employees of Borrower or an ERISA Affiliate participate or to which
Borrower or any ERISA Affiliate contribute or are required to contribute.
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"Negotiable Collateral" means all of Borrower's
present and future letters of credit, notes, drafts, instruments, certificated
and uncertificated securities (including the shares of stock of subsidiaries of
Borrower), documents, and chattel paper.
"Non-Revolving Portion" means the sum of Six Million
Five Hundred Sixty-Five Thousand Dollars ($6,565,000) representing a portion of
the advances made pursuant to Section 2.1, which such sum is non-revolving and
remains outstanding until all of the Obligations are indefeasibly paid in full:
The Non Revolving Portion is evidenced by the Term Note.
"Obligations" means all loans, advances, debts,
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), premiums, liabilities (including all
amounts charged to Borrower's loan account pursuant to any agreement authorizing
Foothill to charge Borrower's loan account), obligations, fees (including Early
Paydown Premiums), lease payments, guaranties, covenants, and duties owing by
Borrower to Foothill of any kind and description (whether pursuant to or
evidenced by the Loan Documents, by any note or other instrument (including the
Term Note), or pursuant to any other agreement between Foothill and Borrower,
and irrespective of whether for the payment of money), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including any debt, liability, or obligation owing from
Borrower to others that Foothill may have obtained by assignment or otherwise,
and further including all interest not paid when due and all Foothill Expenses
that Borrower is required to pay or reimburse by the Loan Documents, by law, or
otherwise.
"Overadvance" has the meaning set forth in Section
2.3.
"OWC Acq. Corp." means OWC Acquisition Corp., a
Delaware corporation.
"PBGC" means the Pension Benefit Guaranty Corporation
as defined in Title IV of ERISA, or any successor thereto.
"Permitted Liens" means: (a) liens and security
interests held by Foothill; (b) liens and security interests set forth on
Schedule P-1 attached hereto; (c) purchase money security interests and liens of
lessors under capitalized leases to the extent that the acquisition or lease of
the underlying asset was permitted under Section 7.10, and so long as the
security interest or lien only secures the purchase price of
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the asset; (d) exceptions listed in the title insurance or commitment therefor
to be delivered by Borrower hereunder in respect of the Real Property; (e) the
Known Prior Monetary Liens; (f) junior liens arising by reason of any judgment,
decree or order of any court only to the extent, for an amount, and for a period
not resulting in an Event of Default with respect thereto and so long as such
Lien is being contested in good faith and is adequately bonded and any
appropriate legal proceedings that may have been duly initiated for the review
of such judgment, decree or order shall not have been finally adversely
terminated or the period within which such proceedings may be initiated shall
not have expired; (g) security for the performance of bids, tenders, trade,
contracts (other than contracts for the payment of money) or leases, surety
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business or appeal bonds, and public and statutory bonds; (h)
liens (other than Liens arising under "ERISA") for taxes, assessments or other
governmental charges not yet due or which are being contested in good faith and
by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of Borrower in accordance with GAAP unless the failure
to so pay during the contest period results in an uncurable liability or such
contest period extends beyond one year prior to a curtailment of redemption
rights or uncurable liability; (i) liens of carriers, warehousemen, mechanics,
landlords, materialmen, repairmen or other like Liens arising by operation of
law in the ordinary course of business (other than Liens arising under ERISA)
and consistent with industry practices and Liens on deposits made to obtain the
release of such Liens if (y) the underlying obligations are not overdue for a
period of more than 90 days; or (z) such Liens are being contested in good faith
and by appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of Borrower in accordance with GAAP, and unasserted
banker's liens and rights of set off arising in the ordinary course of business;
(j) easements, rights of way, zoning and similar restrictions and other similar
encumbrances incurred in the ordinary course of business and consistent with
industry practices that do not detract from the use of the property by Borrower
or interfere with the ordinary conduct of the business of the Borrower; provided
that any such Liens are not incurred in connection with any borrowing of money
or any commitment to loan any money or to extend any credit; (k) rights of
members and other customers arising in the ordinary course of business from
memberships, rights to use or related or similar interest in campgrounds,
resorts, or other facilities (whether arising from the holding of such
memberships, rights to use or related or similar interests, by applicable law or
otherwise); (l) leases, subleases, permits or other rights to use or occupy
property owned or hereafter acquired by Borrower; or (m) pledges made in the
ordinary course of business in connection
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with workers' compensation, unemployment insurance and other types of social
security legislation.
"Person" means and includes natural persons,
corporations, limited partnerships, general partnerships, joint ventures,
trusts, land trusts, business trusts, or other organizations, irrespective of
whether they are legal entities, and governments and agencies and political
subdivisions thereof.
"Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) which Borrower or any ERISA Affiliate sponsors or
maintains or to which Borrower or any ERISA Affiliate makes, is making, or is
obligated to make contributions, including any Multiemployer Plan or Qualified
Plan.
"Pledge Agreements" means those certain seven (7)
pledge agreements dated as of July 10, 1996, or as noted below,
contemporaneously herewith, whereby (i) by an Amended and Restated Pledge
Agreement dated contemporaneously herewith, (y) Trails pledges to Foothill all
of the issued and outstanding shares of stock which it owns and all of the
notes, evidences of indebtedness, guaranties and security for the repayment of
approximately Twenty-Seven Million Five Hundred Seventy-Seven Thousand Dollars
($27,577,000) owed to it by NAC, and (z) AIC pledges to Foothill all of the
issued and outstanding shares of stock which it owns; (ii) NAC pledged to
Foothill all of the issued and outstanding shares of stock which it owns; (iii)
Foxwood Corporation pledged to Foothill all of the issued and outstanding shares
of stock which it owns; (iv) Dixie Resort Corporation pledged to Foothill all of
the issued and outstanding shares of stock which it owns; (v) Lake Tansi Village
pledged to Foothill all of the issued and outstanding shares of stock which it
owns; (vi) Western Fun Corporation pledged to Foothill all of the issued and
outstanding shares of stock which it owns; and (vii) Recreation Land Corporation
pledged to Foothill all of the issued and outstanding shares of stock which it
owns.
"Prohibited Transaction" means with respect to a
Plan, any transaction described in Section 406 of ERISA which is not exempt by
reason of Section 408 of ERISA, or a class or individual administrative
exemption, and any transaction described in Section 4975(c) of the IRC which is
not exempt by reason of Section 4975(c) of the IRC or a class or individual
administrative exemption.
"Qualified Plan" means a pension plan (as defined in
Section 3(2) of ERISA) intended to be tax-qualified under Section 401(a) of the
IRC which Borrower or any ERISA Affiliate sponsors, maintains, or to which any
such person makes,
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<PAGE> 20
is making, or is obligated to make, contributions, or, in the case of a
multiple-employer plan (as described in Section 4064(a) of ERISA), has made
contributions at any time during the immediately preceding period covering at
least five (5) plan years, but excluding any Multiemployer Plan.
"Real Property" means the Arizona Property, the BC
Property, the California Property, the Florida Property, the Indiana Property,
the Michigan Property, the Mississippi Property, the Nevada Property, the New
Jersey Property, the North Carolina Property, the Ohio Property, the Oregon
Property, the Pennsylvania Property, the South Carolina Property, the Tennessee
Property, the Texas Property, the Virginia Property, and the Washington
Property. The definitions of each of the foregoing are set forth in Schedule RP
DEF-1 attached hereto, and concurrently with the Leisure Time Advance, as
supplemented by the definitions set forth in Schedule RP DEF-2.
"Reference Rate" means the variable rate of interest,
per annum, most recently announced by Wells Fargo Bank, N.A., a national banking
association, or any successor to the foregoing institution, as its "prime rate"
or "reference rate," as the case may be, irrespective of whether such announced
rate is the best rate available from such financial institution.
"Remediate" and "Remediation" shall include, but not
be limited to, the investigation of the environmental condition of the Real
Property, the preparation of any feasibility studies, reports or remedial plans,
and the performance of any cleanup, abatement, removal, remediation,
containment, operation, maintenance, monitoring or restoration work, whether on
or off of the Real Property.
"Reportable Event" means with respect to a Qualified
Plan, any event described in ERISA Section 4043(c) (other than Subsections
(c)(7) and (c)(9)) of ERISA or any other subsection for which the PBGC has
waived the requirement of reporting such event to the PBGC within thirty days of
incurrence.
"Revolving Maximum Amount" means Twenty-Eight Million
Four Hundred Thirty-Five Thousand Dollars ($28,435,000), which such amount is
permanently reduced to lower amounts by the greater of (y) the sum of (1) an
amount equal to the aggregate net cash proceeds of all sales of Collateral
pursuant to Section 4.4 (other than the last paragraph thereof), or as otherwise
approved by Foothill, which occur after June 10, 1998; plus (2) 100% of Account
collections, once the Term Note has been fully secured by cash; or (z) the
amount set forth below opposite the applicable date of reduction (which such
amounts are not
15
<PAGE> 21
cumulatively computed; thus by way of example, the amount of reduction as of
June 30, 2000 is $7,108,000, not $7,108,000 plus the reduction amount of
$3,544,000 which went into effect on June 30, 1999):
<TABLE>
<S> <C>
6/30/1999 - $3,544,000
6/30/2000 - $7,108,000
12/31/2000 - $10,662,000
6/30/2001 - $17,770,000
12/31/2001 - $21,324,000
6/30/2002 - $24,878,000
1/17/2003 - $28,435,000:
</TABLE>
"Satisfied Indebtedness Liens" means liens of record
which secure obligations which Borrower maintains have been satisfied in full
and which should be released or reconveyed.
"Solvent" means, with respect to any Person on a
particular date, that on such date (a) at fair valuations, all of the properties
and assets of such Person are greater than the sum of the debts, including
contingent liabilities, of such Person, (b) the present fair salable value of
the properties and assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts beyond such Person's ability to pay as such debts mature, and (e)
such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's properties and
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person
is engaged. In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount that, in light of
all the facts and circumstances existing at such time, represents the amount
that reasonably can be expected to become an actual or matured liability.
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<PAGE> 22
"Tangible Net Worth" means, as of the date any
determination thereof is to be made, the difference of: (a) Borrower's total
stockholder's equity or deficit; minus (b) the sum of: (i) all intangible assets
(which such term includes deferred membership selling expenses and net deferred
tax assets) of Borrower; and (ii) all amounts due to Borrower from Affiliates,
calculated on a consolidated basis.
"Term Note" means that certain Secured Promissory
Note dated as of July 10, 1996 in the original principal amount of Six Million,
Five Hundred Sixty-Five Thousand Dollars ($6,565,000.00) executed by Borrower in
favor of Foothill.
"Term Note Substitute Cash Collateral" has the
meaning set forth in Section 2.1(c).
"Title Company" means Chicago Title Insurance
Company.
"Unfunded Benefit Liability" means with respect to a
Qualified Plan the excess of a Plan's benefit liabilities (as defined in Section
4001(a)(16) of ERISA) over the current value of such Plan's assets, determined
in accordance with the assumptions used by the Plan's actuaries for funding the
Plan pursuant to Section 412 of the IRC for the applicable plan year.
"Voidable Transfer" has the meaning set forth in
Section 15.8.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrower" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Borrower on a consolidated
basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement which are defined
in the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
1.4 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this
17
<PAGE> 23
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Section, subsection, clause, schedule, and exhibit references
are to this Agreement unless otherwise specified. Any reference in this
Agreement or in the Loan Documents to this Agreement or any of the Loan
Documents shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, and supplements, thereto
and thereof, as applicable. To the extent that items are specifically addressed
in this Agreement and any other Loan Document, and such provisions are in
conflict with one another (but not supplementary to one another), then the
provisions of this Agreement shall govern.
1.5 Schedules and Exhibits. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
1.6 References to Sections in the Mortgages. References to
Section 11 of the Loan Agreement in the Mortgages shall be deemed to refer to
Section 10 of this Agreement.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolving Advances.
(a) Subject to the terms and conditions of this
Agreement, Foothill agrees to make revolving advances ("Advances": individually,
an "Advance") to Borrower in an amount not to exceed the Revolving Maximum
Amount.
(b) Foothill shall have no obligation to make
advances hereunder to the extent they would cause the outstanding Obligations to
exceed the Maximum Amount.
Until such time as the Obligations have been indefeasibly paid in full, the
Non-Revolving Portion shall remain outstanding during the term of the Loan
Agreement.
(c) All net proceeds from sales of Collateral
pursuant to Section 4.4, (other than the last paragraph thereof), and the sale
of other Collateral as previously approved by Foothill, and all Collections
shall be applied to the Advances until the outstanding balance thereof is Zero
Dollars ($0.00). At such time and during such times as the outstanding balance
of all Advances is Zero Dollars, all Collections received shall be held by
Foothill as "Term Note Substitute Cash Collateral", to be continuously held by
Foothill until such time as the Term Note has been indefeasibly paid in full, as
expressly permitted under this Agreement.
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<PAGE> 24
(d) All Advances shall constitute Obligations.
(e) Foothill is authorized to make advances under
this Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Officer of Borrower. Borrower agrees to establish
and maintain a single designated deposit account for the purpose of receiving
the proceeds of the advances requested by Borrower and made by Foothill
hereunder. Unless otherwise agreed by Foothill and Borrower, any advance
requested by Borrower and made by Foothill hereunder shall be made to such
designated deposit account. Amounts borrowed pursuant to this Section 2.1 may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement.
2.2 Term Loan.
(a) Foothill has made a term loan to Borrower in the
original principal amount of Six Million, Five Hundred Sixty-Five Thousand
Dollars ($6,565,000.00), which such sum is evidenced by the Term Note.
(b) No principal reduction payments may be made on
the Term Note during the term of this Agreement until Foothill's counsel advises
it that there are no adverse mortgage or intangible tax consequences therefrom.
Interest on the Term Note shall be payable monthly, in arrears, on the first of
each month.
(c) All Term Note Substitute Cash Collateral shall be
held by Foothill as Collateral to secure the Obligations (and shall earn
interest thereon at the per annum rate of one quarter of one (.25) percentage
point above the Reference Rate) until such time as payment of the Term Note is
permitted by Section 2.2(b). As of the date of execution hereof, Foothill was
holding the sum of Zero Dollars ($0.00) pursuant to this Section 2.2(c).
(d) All amounts evidenced by the Term Note shall
constitute Obligations.
2.3 Overadvances. If, at any time or for any reason, the
amount of Obligations then due and payable by Borrower to Foothill is greater
than the sum of funds advanced on the Term Note, and the Revolving Maximum
Amount (an "Overadvance"), Borrower immediately shall pay to Foothill, in cash,
the amount of such excess to be used by Foothill to repay such Obligations.
19
<PAGE> 25
2.4 Interest: Rate, Payments, and Calculations.
(a) Interest Rate. All Obligations up to the first
Fifteen Million Dollars ($15,000,000) shall bear interest, on the actual Daily
Balance, at a per annum rate of one quarter of one (.25) percentage points above
the Reference Rate. All Obligations over Fifteen Million Dollars ($15,000,000)
and up to Twenty-Five Million Dollars ($25,000,000) shall bear interest, on the
actual Daily Balance, at a per annum rate of one-half of one (.50) percentage
points above the Reference Rate. All Obligations over Twenty-Five Million
Dollars ($25,000,000) shall bear interest, on the actual Daily Balance, at a per
annum rate of one and one-half (1.5) percentage point above the reference rate.
(b) Default Rate. All Obligations shall bear
interest, from and after the occurrence and during the continuance of an Event
of Default, at a per annum rate equal to four and one-half (4 1/2) percentage
points above the Reference Rate.
(c) Minimum Interest. In no event shall the rate of
interest chargeable hereunder be less than seven percent (7%) per annum. To the
extent that interest accrued hereunder at the rate set forth herein (including
the minimum interest rate) would yield less than the foregoing minimum amount,
the interest rate chargeable hereunder for the period in question automatically
shall be deemed increased to that rate that would result in the minimum amount
of interest being accrued and payable hereunder.
(d) Interest Payments. Interest hereunder (on all the
Obligations, except contingent and unliquidated Obligations) shall be due and
payable on the first day of each month during the term hereof, in arrears.
Borrower hereby authorizes Foothill, at its option, without prior notice to
Borrower, to charge such interest, all Foothill Expenses (as and when incurred),
and all installments or other payments due under the Term Note or any other note
or other Loan Document to revolving Advances, which amounts shall thereafter
accrue interest at the rate then applicable hereunder. Any interest not paid
when due shall be compounded by becoming a part of the Obligations, and such
interest shall thereafter accrue interest at the rate then applicable hereunder.
(e) Computation. The Reference Rate as of this date
is eight and one-half percent (8 1/2%) per annum. In the event the Reference
Rate is changed from time to time hereafter, the applicable rate of interest
hereunder automatically and immediately shall be increased or decreased by an
amount equal to
20
<PAGE> 26
such change in the Reference Rate. The rates of interest charged hereunder shall
be based upon the daily Reference Rate in effect during the month. All interest
and fees chargeable under the Loan Documents shall be computed on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed.
(f) Intent to Limit Charges to Maximum Lawful Rate.
In no event shall the interest rate or rates payable under this Agreement or the
Term Note, plus any other amounts paid in connection herewith, exceed the
highest rate permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable. Borrower and Foothill, in
executing this Agreement, the Term Note, and the other loan Documents, intend to
legally agree upon the rate or rates of interest and manner of payment stated
within it; provided, however, that, anything contained herein, in the Term Note,
or any of the other Loan Documents to the contrary notwithstanding, if said rate
or rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto as of the date of this Agreement and the Term
Note, Borrower is and shall be liable only for the payment of such maximum as
allowed by law, and payment received from Borrower in excess of such legal
maximum, whenever received, shall be applied to reduce the principal balance of
the Obligations to the extent of such excess. All interest paid or agreed to be
paid by Borrower shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until payment in full
of the Obligations (including the period of any extension hereof) so that the
interest hereon for such full period shall not exceed interest computed at the
maximum lawful rate. This paragraph shall control all agreements between
Borrower and Foothill.
2.5 Collection of Accounts. Borrower shall at all times
maintain lockboxes (the "Lockboxes") and, if not earlier so instructed,
immediately after the Closing Date, shall instruct all Account Debtors with
respect to the Accounts, General Intangibles, and Negotiable Collateral of
Borrower to remit all Collections in respect thereof to such Lockboxes. Borrower
agrees that all Collections and other amounts received by Borrower from any
Account Debtor or any other source immediately upon receipt shall be deposited
into a Lockbox Account. No Lockbox Agreement or arrangement contemplated thereby
shall be modified by Borrower without the prior written consent of Foothill.
Upon the terms and subject to the conditions set forth in the Lockbox
Agreements, all amounts received in each Lockbox Account shall be wired each
Business Day into an account (the "Foothill Account") maintained by Foothill at
a depositary selected by Foothill.
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<PAGE> 27
2.6 Crediting Payments; Application of Collections. The
receipt of any wire transfer of funds, check, or other item of payment by
Foothill (whether from transfers to Foothill by the Lock Box Bank pursuant to
the Lock Box Agreements or otherwise) immediately shall be applied to
provisionally reduce the Obligations in the manner which the daily reports
prepared by Borrower disclose are collections resulting from asset sales,
contract collections, and other miscellaneous revenues, but shall not be
considered a payment on account unless such wire transfer is of immediately
available federal funds and is made to the appropriate deposit account of
Foothill or unless and until such check or other item of payment is honored when
presented for payment. From and after the Closing Date, Foothill is and shall be
entitled to charge Borrower for three (3) Business Days of 'clearance' at the
applicable rates set forth in Sections 2.4(a) and 2.4(b) on all collections,
checks, wire transfers, or other items of payment that are received by Foothill
(regardless of whether forwarded by the Lock Box Bank to Foothill, whether
provisionally applied to reduce the Obligations, or otherwise). This
across-the-board three (3) Business Day clearance charge on all receipts is
acknowledged by the parties to constitute an integral aspect of the pricing of
Foothill's facility to Borrower, and shall apply irrespective of the
characterization of whether receipts are owned by Borrower or Foothill, and
irrespective of the level of Borrower's Obligations to Foothill. Should any
check or item of payment not be honored when presented for payment, then
Borrower shall be deemed not to have made such payment, and interest shall be
recalculated accordingly. Anything to the contrary contained herein
notwithstanding, any wire transfer, check, or other item of payment shall be
deemed received by Foothill only if it is received into Foothill's Operating
Account (as such account is identified in the Lock Box Agreements) on or before
11:00 a.m. Los Angeles time. If any wire transfer, check, or other item of
payment is received into Foothill's Operating Account (as such account is
identified in the Lock Box Agreements) after 11:00 a.m. Los Angeles time it
shall be deemed to have been received by Foothill as of the opening of business
on the immediately following Business Day.
2.7 Statements of Obligations. Foothill shall render
statements to Borrower of the Obligations, including principal, interest, fees,
and including an itemization of all charges and expenses constituting Foothill
Expenses owing, and such statements shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrower and Foothill
unless, within thirty (30) days after receipt thereof by Borrower, Borrower
shall deliver to Foothill by registered, certified mail, or telecopy at its
address specified in
22
<PAGE> 28
Section 13, written objection thereto describing the error or errors contained
in any such statements.
2.8 Fees. Borrower shall pay to Foothill the following fees:
(a) Leisure Time Advance Fee. A one time advance fee
of one-half of one percent (0.50%) of the amount of the Leisure Time Advance,
which is fully earned upon the funding thereof, and shall be advanced as an
Advance directly by Foothill to itself without the necessity of further
direction concurrently with the funding of the Leisure Time Advance;
(b) Unused Line Fee. On the first day of each month
during the term of this Agreement, a fee in an amount equal to one half of one
percent (1/2%) per annum times the Average Unused Portion of the Revolving
Maximum Amount, as such defined term may change in accordance with the
definition thereof;
(c) Financial Examination, Documentation, and
Appraisal Fees. (i) Foothill's customary fee of Six Hundred Fifty Dollars ($650)
per day per examiner, plus out-of-pocket expenses for each financial analysis
and examination of Borrower performed by Foothill or its agents; (ii) Foothill's
customary appraisal fee of One Thousand Five Hundred Dollars ($1,500) per day
per appraiser, plus out-of-pocket expenses for each appraisal of the Collateral
performed by Foothill or its agents; and, (iii) on each July 10 while
Obligations remain outstanding, Foothill's fee of Five Thousand Dollars ($5,000)
per year for its loan documentation review: provided there shall not have
occurred an Event of Default or provided that facts or circumstances which would
cause a prudent lender to believe that a prospective Event of Default is about
to occur, Borrower shall not be charged more frequently than quarterly for the
financial examinations set forth in Section 2.8(c)(i) and shall not be charged
more frequently than annually for the appraisals set forth in Section
2.8(c)(ii); and
(d) Servicing Fee. On the first day of each month
during the term of this Agreement, and thereafter so long as any Obligations are
outstanding, a servicing fee in an amount equal to Five Thousand Dollars
($5,000) per month.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance to Borrower.
The obligation of Foothill to make the initial advance to Borrower is subject to
the fulfillment, to the satisfaction of Foothill and its counsel, of each of the
following conditions on or before the Closing Date:
23
<PAGE> 29
(a) Foothill shall have received a certificate from
the Secretary or an Assistant Secretary of each Borrower attesting to the
resolutions of Borrower's Boards of Directors authorizing its execution and
delivery of this Agreement and the other Loan Documents to which such Borrower
is a party and authorizing specific officers of Borrower to execute same;
(b) Foothill shall have received an opinion of
Borrower's counsel in form and substance satisfactory to Foothill in its sole
discretion; and
(c) all other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been
delivered or executed or recorded and shall be in form and substance
satisfactory to Foothill and its counsel.
3.2 Conditions Precedent to the Leisure Time Advance. The
following shall be conditions precedent to the making of the Leisure Time
Advance:
(a) the Closing Date shall occur on or before
December 31, 1999;
(b) There shall not have occurred any material
adverse change in any of AIC's, Leisure Time - Washington's, or Borrower's
businesses;
(c) Foothill and its counsel shall have reviewed and
approved of the stock acquisition agreement between one of Borrower and the
owners of the AIC stock;
(d) Borrower shall have delivered to Foothill and
Foothill shall have approved of (i) an updated combined cash flow statement for
the term of this Agreement which takes into account the acquisition of the AIC
and Leisure Time - Washington stock and (ii) a phase I environmental report on
all properties owned by AIC and Leisure Time - Washington;
(e) Neither AIC nor Leisure Time - Washington shall
be in violation of any Acts other than such violations which are disclosed to,
and accepted by, Foothill;
(f) Completion by Foothill of an audit of AIC and
Leisure Time - Washington, and their assets, which must be acceptable to
Foothill;
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<PAGE> 30
(g) Completion of an appraisal by an entity
acceptable to Foothill of all campgrounds, which appraisal must be acceptable to
Foothill;
(h) AIC and Leisure Time - Washington execute an
amendment to the Loan Agreement adding them as a borrower thereunder;
(i) Foothill is provided with a first priority
security interest securing the obligations under the Loan Agreement in all of
the real property set forth on Schedule 3.2(b) (subject to the obligations of
Borrower to deliver proof of same pursuant to the delivery of the title
insurance policies as set forth in Section 3.8(b) hereof) and a first priority
security interest securing the obligations under the Loan Agreement in all of
the other assets of AIC and Leisure Time - Washington; provided, however that
Foothill shall accept a second in priority lien on some or all of the assets not
disclosed on Schedule 3.2(b) provided that (a) such lien(s) were previously
provided to third party lenders by AIC and Leisure Time - Washington and (b)
such lien(s) in the aggregate secure indebtedness never to exceed $250,000;
(j) Foothill shall have received each of the
following documents, duly executed, and each such document shall be in full
force and effect:
(i) the Lock Box Agreements;
(ii) the UCC-1's reflecting the assets
of AIC and Leisure Time
-Washington; and
(iii) all of the Pledge Agreements;
(k) Foothill shall have received the original stock
certificates and stock powers for the stock which is subject to the Pledge
Agreements;
(l) Foothill shall have received each of the
Mortgages set forth in Schedule 3.2(b), duly executed, and each shall have been
recorded in the appropriate county recording office, or Foothill shall be
provided with "gap" coverage satisfactory to it by Title Company;
(m) Foothill shall have received assurances from
Title Company regarding the post closing issuance of title insurance policies,
in the form acceptable to Foothill;
25
<PAGE> 31
(n) Foothill shall have received the certificates for
the policies of insurance, together with the endorsements for such policies, as
are required by Section 6.9 hereof, the form and substance of which shall be
satisfactory to Foothill and its counsel;
(o) Each Borrower (including AIC and Leisure Time -
Washington) shall be a corporation in good standing in the jurisdiction of its
incorporation and qualified to do business in any other jurisdiction where such
qualification is required by law; and
(p) Foothill shall have received such opinions of
Borrower's counsel relating to AIC and Leisure Time - Washington and their
assets as Foothill shall reasonably require, which opinion(s) shall be
satisfactory to Foothill and its counsel as to both form and substance. Such
opinions shall include, but not be limited to, opinions as to their corporate
existence, their power and authority to enter into the amendment and other
documents, the validity, binding effect, and enforceability of each of the loan
and security documents against them.
3.3 Conditions Precedent to All Advances. The following shall
be conditions precedent to all advances (including the Leisure Time Advance):
(a) the representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such advance as though made on and as
of such date (except to the extent that such representations and warranties
relate solely to an earlier date);
(b) no Event of Default or event which with the
giving of notice or passage of time would constitute an Event of Default shall
have occurred and be continuing on the date of such advance, nor shall either
result from the making of the advance; and
(c) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the making of such
advance shall have been issued and remain in force by any governmental authority
against Borrower, Foothill, or any of their Affiliates.
3.4 Term. This Agreement shall become effective upon the
execution and delivery hereof by Borrower and Foothill and shall continue in
full force and effect for a term ending on January 17, 2003. The foregoing
notwithstanding, Foothill shall
26
<PAGE> 32
have the right to terminate its obligation to make advances hereunder or permit
Borrower to utilize proceeds from any of the Collateral immediately and without
notice upon the occurrence and during the continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination, all
Obligations immediately shall become due and payable without notice or demand.
No termination of this Agreement, however, shall relieve or discharge Borrower
of Borrower's duties, Obligations, or covenants hereunder, and Foothill's
continuing security interests in the Collateral shall remain in effect until all
Obligations (other than contingent unliquidated Obligations pursuant to Section
10.3) have been fully and finally discharged and Foothill's obligation to
provide advances hereunder is terminated.
3.6 Early Termination or Paydown by Borrower. Borrower has the
option, at any time upon thirty (30) days prior written notice to Foothill, to
terminate this Agreement by paying to Foothill, in cash, the Obligations,
together with a premium (the "Early Paydown Premium") payable in the following
events, as follows:
(A) if the termination results from a refinancing or
recapitalization of any Borrower, or any portion of the funds
used to pay-off the Obligations directly or indirectly result
from borrowed money, the Early Paydown Premium shall be equal
to the greater of: (a) the total interest owing for the
immediately preceding six (6) month period; or (b) (i) Five
Hundred Thousand Dollars ($500,000) if terminated during
calendar year 1999, (ii) Four Hundred Thousand Dollars
($400,000) if terminated during calendar year 2000, (iii)
Three Hundred Thousand Dollars ($300,000) if terminated during
calendar year 2001, or (iv) Two Hundred Thousand Dollars
($200,000) if terminated during calendar years 2002 or 2003.
(B) if the termination results from a complete paydown using
funds generated from Borrower's business operations, or in
connection with a Change of Control, the Early Paydown Premium
shall be equal to the greater of: (a) the total interest owing
for the immediately preceding six (6) month period; or (b) (i)
Two Hundred and Fifty Thousand Dollars ($250,000) if
terminated during calendar year 1999, (ii) Two Hundred
Thousand Dollars ($200,000) if terminated during calendar
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year 2000, (iii) One Hundred and Fifty Thousand Dollars
($150,000) if terminated during calendar year 2001, or (iv)
One Hundred Thousand Dollars ($100,000) if terminated during
calendar years 2002 or 2003.
3.7 Termination Upon Event of Default. If Foothill terminates
this Agreement upon the occurrence of an Event of Default that intentionally is
caused by Borrower for the purpose, in Foothill's reasonable judgment, of
avoiding payment of the Early Paydown Premium provided in Section 3.6, in view
of the impracticability and extreme difficulty of ascertaining actual damages
and by mutual agreement of the parties as to a reasonable calculation of
Foothill's lost profits as a result thereof, Borrower shall pay to Foothill upon
the effective date of such termination, a premium in an amount equal to the
Early Paydown Premium. The Early Paydown Premium shall be presumed to be the
amount of damages sustained by Foothill as the result of the early termination
and Borrower agrees that it is reasonable under the circumstances currently
existing. The Early Paydown Premium provided for in this Section 3.7 shall be
deemed included in the Obligations.
3.8 Post Closing Date Obligations of Borrower. Commencing on
the Closing Date, and continuing thereafter until fully and finally resolved to
the satisfaction of Foothill, in its reasonable business judgement, Borrower
shall diligently and continuously seek to provide Foothill with the following:
(a) Foothill shall have received searches reflecting
the filing of its financing statements and fixture filings (other than in
Tennessee) which shall disclose no filings against any of the Collateral not set
forth in Schedule P-1, other than purchase money security interests in
individual pieces of equipment which in the aggregate do not exceed Two Hundred
and Fifty Thousand Dollars ($250,000.00);
(b) Foothill shall have received ALTA 1970 Form
Lenders Policies of Title Insurance in form and content acceptable to Foothill,
in its judgment using the same business standards when evaluating non-monetary
exceptions which it used when evaluating the preliminary title reports delivered
to it by Title Company prior to the Closing Date, on the Real Property
identified on Schedule 3.2(b). The policies or commitments: (i) shall not
disclose prior monetary liens on any of the insured Real Property; (ii) shall
not disclose any other prior monetary liens for which there is an indication
other than such policy or commitment that such lien secures outstanding debt;
and (iii) shall not disclose unacceptable non-monetary liens or title defects
for properties. Borrower shall endeavor to provide the
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policies called for in this Section 3.2(b) within ninety days of the Leisure
Time Advance;
(c) Within ninety (90) days of the funding of the
Leisure Time Advance, Borrower shall have made all arrangements necessary to
ensure that all Accounts acquired with the Leisure Time Advance shall be
deposited into a Lock Box; and
(d) Within thirty (30) days of the funding of the
Leisure Time Advance, Foothill shall have received the originals of each of the
Accounts relating to the AIC and Leisure Time - Washington assets.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower hereby grants to
Foothill a continuing security interest in all currently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Foothill's security interests
in the Collateral shall attach to all Collateral without further act on the part
of Foothill or Borrower. Anything contained in this Agreement or any other Loan
Document to the contrary notwithstanding, Borrower has no authority, express or
implied, to dispose of any item or portion of the Collateral, other than: (i)
the sale of retail inventory sold to the general public, campground memberships,
undivided tenancy in common interests, timeshare intervals, and resort property
lots to members of the general public, consistent with past business practices;
(ii) damaged, worn-out or obsolete items of Equipment, or to abandon the same,
provided such Equipment is no longer necessary for the proper conduct of
Borrower's business; (iii) Real Property sold in accordance with the provisions
of Section 4.4 or otherwise approved by Foothill in writing; and (iv) during any
fiscal year, up to Two Hundred and Fifty Thousand Dollars ($250,000) worth of
Equipment.
4.2 Negotiable Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower shall, immediately upon the request of Foothill, endorse and assign
such Negotiable Collateral to Foothill and deliver physical possession of such
Negotiable Collateral to Foothill.
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4.3 Collection of Accounts, General Intangibles, Negotiable
Collateral.
(a) Foothill, Borrower, and the Lock Box Bank shall
enter into the Lock Box Agreements, in form and substance satisfactory to
Foothill in its sole discretion, pursuant to which all of Borrower's cash
receipts, checks, and other items of payment (including, insurance proceeds,
proceeds of cash sales, rental proceeds, and tax refunds) will be forwarded to
Foothill on a daily basis. At any time, Foothill or Foothill's designee may: (a)
notify customers or Account Debtors of Borrower that the Accounts, General
Intangibles, or Negotiable Collateral have been assigned to Foothill or that
Foothill has a security interest therein; and (b) during the continuation of an
Event of Default, collect the Accounts, General Intangibles, and Negotiable
Collateral directly and charge the reasonable collection costs and expenses to
Borrower's loan account. Borrower agrees that it will hold in trust for
Foothill, as Foothill's trustee, any cash receipts, checks, and other items of
payment (including, insurance proceeds, proceeds of cash sales, rental proceeds,
and tax refunds) that it receives and immediately will deliver said cash
receipts, checks, and other items of payment to Foothill in their original form
as received by Borrower.
(b) Foothill shall apply all collections on the
Accounts in accordance with Sections 2.1 & 2.2.
(c) Foothill shall apply all net proceeds of sales of
Collateral pursuant to Section 4.4 hereof (other than the last paragraph
thereof) or as otherwise approved by Foothill in accordance with Sections 2.1 &
2.2.
4.4 Sales of Portions of the Real Property; Application of
Proceeds. Other than as provided in Section 4.4(b), Borrower may not sell any
of the Real Property or Excluded Real Property without Foothill's express prior
written consent which may be withheld in Foothill's sole and absolute
discretion.
(a) With Foothill's prior written consent, which may
be withheld in Foothill's sole and absolute discretion, and provided further
that there shall not have occurred an Event of Default, Foothill shall, from
time to time, provided Borrower has first fulfilled and satisfied the terms and
conditions on its part to be fulfilled pursuant to the terms of this Agreement
and this Section 4.4, provide for and deliver to escrow or to a title company, a
(partial) reconveyance of a portion of the Real Property, provided all the
following conditions are met:
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(b) the sale shall occur on terms and conditions
sufficient that Foothill shall receive in cash all net proceeds of sale, net of
usual and customary closing costs borne by sellers of real property and, to the
extent applicable, payoff of secured amounts owing on Known Prior Monetary
Liens, in an amount equal to or greater than that set forth on Schedule 4.4, as
consideration for such (partial) reconveyance, such amount to be applied as
provided in Sections 2.1 & 2.2. Property not included on Schedule 4.4 may not be
sold without Foothill's prior written consent, except as otherwise expressly
permitted in Section 4.1;
(i) Such (partial) reconveyance shall not create a
violation of law as to the remainder of the project which is subject to the
Mortgage (including all subdivision laws);
(ii) prior to or at the time of the request for such
partial reconveyance, Borrower shall have delivered to Foothill a pro forma
settlement sheet showing the selling price of the portion of the Real Property
sought to be released, the proceeds to be forwarded to Foothill to be applied
against the Obligations secured hereby, and such other information as Foothill
shall require;
(iii) a description sufficient to show the location
of the portion of the Real Property to be released with respect to the balance
of the property not released;
(iv) issuance of such title endorsements as Foothill
may reasonably require to establish the continuing priority of the lien of the
Mortgages; and
(v) execution of an irrevocable instruction to the
escrow or title company directing that they are only authorized to record the
release of the reconveyance upon payment of the release price set forth herein.
Notwithstanding the foregoing provisions of this
Section 4.4, Borrower may sell campground memberships, timeshare intervals,
undivided tenancy in common interests, and resort property lots to members of
the general public, consistent with past business practices without the prior
written consent of Foothill, and Foothill shall in accordance therewith, deliver
such reconveyances as are reasonably required for the sale of such interests.
4.5 Delivery of Additional Documentation Required. At any
time upon the request of Foothill, Borrower shall execute and deliver to
Foothill all financing statements,
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continuation financing statements, fixture filings, security agreements, chattel
mortgages, pledges, assignments, endorsements of certificates of title,
applications for title, affidavits, reports, notices, schedules of accounts,
letters of authority, and all other documents that Foothill may reasonably
request, in form satisfactory to Foothill, to perfect and continue perfected
Foothill's security interests in the Collateral and in order to fully consummate
all of the transactions contemplated hereby and under the other the Loan
Documents.
4.6 Power of Attorney. Borrower hereby irrevocably makes,
constitutes, and appoints Foothill (and any of Foothill's officers, employees,
or agents designated by Foothill) as Borrower's true and lawful attorney, with
power to: (a) if Borrower refuses to, or fails timely to execute and deliver any
of the documents described in Section 4.5, sign the name of Borrower on any of
the documents described in Section 4.5; (b) at any time that an Event of Default
has occurred and is continuing, sign Borrower's name on any invoice or bill of
lading relating to any Account, drafts against Account Debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to Account
Debtors; (c) send requests for verification of Accounts; (d) endorse Borrower's
name on any checks, notices, acceptances, money orders, drafts, or other item of
payment or security that may come into Foothill's possession; (e) at any time
that an Event of Default has occurred and is continuing , notify the post office
authorities to change the address for delivery of Borrower's mail to an address
designated by Foothill, to receive and open all mail addressed to Borrower, and
to retain all mail relating to the Collateral and forward all other mail to
Borrower; (f) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under Borrower's policies of
insurance and make all determinations and decisions with respect to such
policies of insurance; and (g) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting the Accounts
directly with Account Debtors, for amounts and upon terms which Foothill
determines to be reasonable, and Foothill may cause to be executed and delivered
any documents and releases which Foothill determines to be necessary. The
appointment of Foothill as Borrower's attorney, and each and every one of
Foothill's rights and powers, being coupled with an interest, is irrevocable
until all of the Obligations have been fully and finally repaid and performed
and Foothill's obligation to extend credit hereunder is terminated.
4.7 Right to Inspect. Foothill (through any of its officers,
employees, or agents) shall have the right, from time to time hereafter to
inspect the Real Property, Borrower's Books and to check, test, and appraise the
Collateral in order to
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verify Borrower's financial condition or the amount, quality, value, condition
of, or any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Foothill as follows:
5.1 No Prior Encumbrances. Borrower has good and indefeasible
title to the Collateral, free and clear of liens, claims, security interests, or
encumbrances, except for Permitted Liens.
5.2 Eligible Accounts. The Eligible Accounts are, at the date
hereof and as of each date on which Borrower includes them in a Borrowing Base
calculation or certification, bona fide existing obligations created by the sale
of campground memberships, undivided interests in certain resort properties,
interval interests, and residential resort lots, or the rendition of services to
Account Debtors in the ordinary course of business, unconditionally owed to
Borrower without defenses, disputes, offsets, counterclaims, or rights of return
or cancellation. All conditions precedent to the creation of the Eligible
Accounts have been satisfied without offset or counterclaim. Borrower has not
received notice of actual or imminent bankruptcy, insolvency, or material
impairment of the financial condition of any applicable Account Debtor regarding
any Account included in the Eligible Accounts.
5.3 Location of Chief Executive Office; FEIN.
(a) The chief executive office of Trails is located
at the address indicated in the preamble to this Agreement and Borrower's FEIN
is 75-2138671.
(b) The chief executive office of NAC is located at
the address indicated in the preamble to this Agreement and Borrower's FEIN is
64-0511406.
5.4 Borrower's Corporate Ownership. Trails is a publicly
traded corporation, and its subsidiaries are wholly owned, directly or
indirectly, by Trails, and each subsidiary of such subsidiaries are wholly owned
subsidiaries.
5.5 Due Organization and Qualification. Borrower is duly
organized and existing and in good standing under the laws of the state of its
incorporation and qualified and licensed to do business in, and in good standing
in, any state where the failure to be so licensed or qualified could reasonably
be
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expected to have a material adverse effect on the business, operations,
condition (financial or otherwise), finances, or prospects of Borrower or on the
value of the Collateral to Foothill.
5.6 Due Authorization; No Conflict. The execution, delivery,
and performance of the Loan Documents are within Borrower's corporate powers,
have been duly authorized, and are not in conflict with nor constitute a breach
of any provision contained in Borrower's Articles or Certificate of
Incorporation, or By-laws, nor will they constitute an event of default under
any material agreement to which Borrower is a party or by which its properties
or assets may be bound.
5.7 Litigation. There are no actions or proceedings pending
by or against Borrower before any court or administrative agency and Borrower
does not have knowledge or belief of any pending, threatened, or imminent
litigation, governmental investigations, or claims, complaints, actions, or
prosecutions involving Borrower, except for: (a) ongoing collection matters in
which Borrower is the plaintiff; (b) matters disclosed on Schedule 5.7-1; (c) if
the Leisure Time Advance is made, those matters set forth on Schedule 5.7-2; and
(d) matters arising after the date hereof which could reasonably be expected to
materially impair the prospect of repayment of the Obligations or materially
impair the value or priority of Foothill's security interests in the Collateral.
5.8 No Material Adverse Change in Financial Condition. All
financial statements relating to Borrower that have been delivered by Borrower
to Foothill have been prepared consistent with GAAP and fairly present
Borrower's consolidated financial condition as of the date thereof and
Borrower's results of operations for the period then ended. There has not been a
material adverse change in the consolidated financial condition of Borrower
since the date of the latest financial statements submitted to Foothill on or
before the Closing Date.
5.9 Solvency. On a consolidated basis, Borrower is Solvent.
No transfer of property is being made by Borrower and no obligation is being
incurred by Borrower in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrower.
5.10 Employee Benefits. Except as expressly noted in the last
sentence herein: (i) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA and the IRC; (ii) Each Qualified Plan and
Multiemployer Plan has been determined by the Internal Revenue Service to
qualify under
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Section 401 of the IRC, and the trusts created thereunder have been determined
to be exempt from tax under Section 501 of the IRC, and, to the best knowledge
of Borrower, nothing has occurred that would cause the loss of such
qualification or tax-exempt status; iii) There are no outstanding liabilities
under Title IV of ERISA with respect to any Qualified Plan maintained or
sponsored by Borrower or any ERISA Affiliate, nor with respect to any Qualified
Plan to which Borrower or any ERISA Affiliate contributes or is obligated to
contribute which could reasonably be expected to have a material adverse effect
on the financial condition of Borrower; (iv) No Qualified Plan subject to Title
IV of ERISA has any Unfunded Benefit Liability which could reasonably be
expected to have a material adverse effect on the financial condition of
Borrower; (v) Neither Borrower nor any ERISA Affiliate has transferred any
Unfunded Benefit Liability to a person other than Borrower or an ERISA Affiliate
or has otherwise engaged in a transaction that could be subject to Sections 4069
or 4212(c) of ERISA which could reasonably be expected to have a material
adverse effect on the financial condition of Borrower; (vi) Neither Borrower nor
any ERISA Affiliate has incurred nor reasonably expects to incur (x) any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan, or (y) any liability under
Title IV of ERISA (other than premiums due but not delinquent under Section 4007
of ERISA) with respect to a Qualified Plan, which could, in either event,
reasonably be expected to have a material adverse effect on the financial
condition of Borrower; (vii) No application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the IRC has been made with
respect to any Qualified Plan; (viii) No ERISA Event has occurred or is
reasonably expected to occur with respect to any Plan which could reasonably be
expected to have a material adverse effect on the financial condition of
Borrower; and (ix) Borrower and each ERISA Affiliate have complied in all
material respects with the notice and continuation coverage requirements of
Section 4980B of the IRC. The foregoing representations and warranties contained
in this Section 5.10 are not made with respect to the 401(k) plan which had been
in place by Leisure Time - Washington prior to the acquisition by Trails of the
stock of AIC, which such 401(k) plan is being terminated concurrently with the
Leisure Time Advance.
5.11 Environmental Condition.
(a) Borrower has not used Hazardous Substances at or
affecting the Real Property or the Excluded Real Property in any manner which
violates any Act governing the use, storage, treatment, transportation,
manufacturing, refinement, handling, production, or disposal of Hazardous
Substances, or
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that may make the owner of the Premises liable in tort under a common law public
or private nuisance action which could reasonably be expected to have a material
adverse effect on the business operations or the value of any campground or
other individual portion of the Real Property.
(b) No prior or current owner, occupant or operator
of the Real Property or the Excluded Real Property has used Hazardous Substances
at or affecting each of the foregoing real property in any manner which violates
any Act governing the use, storage, treatment, transportation, manufacturing,
refinement, handling, production, or disposal of Hazardous Substances, or that
may make the owner of the such liable in tort under a common law public or
private nuisance action which could reasonably be expected to have a material
adverse effect on the business operations or the value of any campground or
other individual portion of the Real Property.
5.12 Compliance With The ADA. Except for matters disclosed on
Schedule 5.12:
(a) Borrower has made all modifications or provided
all accommodations which may be required to be made or provided by Borrower to
the Real Property pursuant to the ADA in order to accommodate the needs and
requirements of any disabled persons which if not made could reasonably be
expected to have a material adverse effect on the business operations or the
value of any campground or other individual portion of the Real Property.
(b) Borrower has received no notice or complaint
regarding any noncompliance with the ADA of any of the Real Property or of
Borrower's employment practices and, to the best of Borrower's knowledge, there
has been no threatened litigation alleging any such noncompliance by Borrower or
the Real Property which could reasonably be expected to have a material adverse
effect on the business operations or the value of any campground or other
individual portion of the Real Property.
5.13 Real Property.
(a) Each of the individual parcels of Real Property
substantially includes the amenities and improvements contained in the
definition of each, with such variations as do not materially reduce the overall
benefits purported to be provided to users thereof.
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(b) The Real Property and the Excluded Real Property
constitutes all of the real estate owned by Borrower and a single non-borrower
subsidiary.
(c) The signatories to each of the Mortgages are the
lawful fee owners of the property encumbered thereby.
(d) The Known Prior Monetary Liens secure
indebtedness which in the aggregate do not exceed Three Hundred Thirty-Five
Thousand Four Hundred Dollars ($335,400).
(e) There are no outstanding obligations purportedly
secured by the Satisfied Indebtedness Liens.
(f) As of the Closing Date:
(i) Schedule ERP sets forth the Real
Property which is not at this time
contemplated to be mortgaged;
(ii) Schedule 3.2(a) sets forth the Real
Property to be acquired with the
Leisure Time Advance; and
(iii) Schedule 4.4 sets forth the Real
Property contemplated to be sold,
and the minimum net sale prices for
each.
5.14 Inter-Company Indebtedness.
(a) At all times during the term of this Agreement
NAC will owe Trails, without deduction or set-off of any kind, at least
Twenty-Seven Million Five Hundred Seventy-Seven Thousand Dollars ($27,577,000),
which is guaranteed by secured guaranties by all of its subsidiaries that are
Borrowers; provided that this Section 6.15(a) shall not prohibit loans or
advances (or repayments thereof) permitted by Section 8.8.
(b) All evidences of secured intercompany indebted
nesses, and the security therefore, will on the Closing Date be transferred to
Foothill.
5.15 Solvency of AIC and Leisure Time - Washington. As of the
making of the Leisure Time Advance, both AIC and Leisure Time - Washington are
Solvent. No transfer of property is being made by either and no obligation is
being incurred by either in connection with the transactions
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contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of either.
5.16 Reliance by Foothill; Cumulative. Each warranty and
representation contained in this Agreement automatically shall be deemed
repeated with each advance and shall be conclusively presumed to have been
relied on by Foothill regardless of any investigation made or information
possessed by Foothill. The warranties and representations set forth herein shall
be cumulative and in addition to any and all other warranties and
representations that Borrower now or hereafter shall give, or cause to be given,
to Foothill.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the Obligations
(other than contingent unliquidated Obligations pursuant to Section 10.3), and
unless Foothill shall otherwise consent in writing, Borrower shall do all of the
following:
6.1 Accounting System. Borrower shall maintain a standard and
modern system of accounting that facilitates preparation of financial statements
in accordance with GAAP with ledger and account cards or computer tapes, discs,
printouts, and records pertaining to the Collateral which contain information as
from time to time may be reasonably requested by Foothill.
6.2 Collateral Reports. Borrower shall deliver to Foothill:
(i) on a daily basis no later than two (2) Business Days after receipt, a
listing of the net cash proceeds from sales of portions of the Real Property,
collections of principal, interest and other fees on the Accounts, and other
business revenues, listed by category, which constitute the payments received by
Foothill through the Lock Box, and such other information as Foothill shall
request; (ii) no later than the tenth (10th) day of each month during the term
of this Agreement, a detailed aging, by total, of the Accounts, a reconciliation
statement, and a summary aging, by obligee, of all accounts payable and any book
overdraft, status of campground membership sales, operating reports for each
campground, and a listing of all pending sales, and the status of each, of
portions of the Collateral to be sold as referenced in Schedule 4.4; and (iii)
from time to time at such times as Foothill may reasonably require, collection
reports, sales journals, invoices, original delivery receipts, customer's
purchase orders, and other documentation therefor. Absent such a request by
Foothill,
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copies of all such documentation shall be held by Borrower as custodian for
Foothill. The obligations contained in Section 6.2(ii) above notwithstanding,
Borrower shall endeavor to provide the reports and materials called for therein
at all times specified therein with respect to the accounts and other financial
matters acquired pursuant to the purchase of the AIC stock as rapidly as
commercially reasonable as soon as such stock is acquired, but in any event
shall do so within ninety (90) days of the acquisition.
6.3 Schedules of Accounts. With such regularity as Foothill
shall reasonably require, Borrower shall provide Foothill with schedules
describing all Accounts. Foothill's failure to request such schedules or
Borrower's failure to execute and deliver such schedules shall not affect or
limit Foothill's security interests or other rights in and to the Accounts.
6.4 Financial Statements, Reports, Certificates. Borrower
agrees to deliver to Foothill: (a) as soon as available, but in any event within
thirty (30) days after the end of each month (unless such month constitutes a
fiscal quarter end month, in which such event within forty-five days, or unless
such month is a fiscal year end month, in which such event, within ninety days)
during each of Borrower's fiscal years, a consolidated balance sheet, income
statement, and cash flow statement covering Borrower's operations during such
period; and (b) as soon as available, but in any event within ninety (90) days
after the end of each of Borrower's fiscal years, consolidated financial
statements of Borrower for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Foothill and certified,
without any qualifications, by such accountants to have been prepared in
accordance with GAAP, together with a certificate of such accountants addressed
to Foothill stating that such accountants do not have knowledge of the existence
of any event or condition constituting an Event of Default, or that would, with
the passage of time or the giving of notice, constitute an Event of Default.
Such audited financial statements shall include a balance sheet, profit and loss
statement, and cash flow statement, and, if prepared, such accountants' letter
to management.
Together with the above, Borrower also shall deliver
to Foothill Borrower's Form 10-Q Quarterly Reports, Form 10-K Annual Reports,
and Form 8-K Current Reports, and any other filings made by Borrower with the
Securities and Exchange Commission, if any, within three (3) days of the date
within which the same are filed, or any other report, letter, or other written
communication that is provided by Borrower to its shareholders, and any other
report reasonably requested by
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Foothill relating to the Collateral and financial condition of Borrower.
Each month, together with the financial statements
provided pursuant to Section 6.4(a), Borrower shall deliver to Foothill a
certificate signed by its chief financial officer to the effect that: (i) all
financial statements have been prepared consistent with GAAP and fairly present
the financial condition of Borrower and all reports, statements, or computer
prepared information of any kind or nature delivered or caused to be delivered
to Foothill hereunder fairly present the financial condition of Borrower; (ii)
Borrower is in timely compliance with all of its covenants and agreements
hereunder; (iii) the representations and warranties of Borrower contained in
this Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of such certificate, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date); and (iv) on the date of delivery of such certificate
to Foothill there does not exist any condition or event that constitutes an
Event of Default (or, in each case, to the extent of any non-compliance,
describing such non-compliance as to which he or she may have knowledge and what
action Borrower has taken, is taking, or proposes to take with respect thereto).
Borrower shall have issued written instructions to
its independent certified public accountants authorizing them to communicate
with Foothill and to release to Foothill whatever financial information
concerning Borrower that Foothill may request. Borrower hereby irrevocably
authorizes and directs all auditors, accountants, or other third parties to
deliver to Foothill, at Borrower's expense, copies of Borrower's financial
statements, papers related thereto, and other accounting records of any nature
in their possession, and to disclose to Foothill any information they may have
regarding Borrower's business affairs and financial conditions.
6.5 Tax Returns. Borrower agrees to deliver to Foothill
copies of each of Borrower's future federal income tax returns, and any
amendments thereto, within thirty (30) days of the filing thereof with the
Internal Revenue Service.
6.6 Title to Equipment. Upon Foothill's request, Borrower
immediately shall deliver to Foothill, properly endorsed, any and all evidences
of ownership of, certificates of title, or applications for title to any items
of Equipment.
6.7 Maintenance of Equipment. Borrower shall keep and maintain
the Equipment in good operating condition and repair (ordinary wear and tear
excepted), and make all necessary
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replacements thereto so that the operating efficiency thereof shall at all times
be maintained and preserved consistent with past business practices.
6.8 Taxes. All assessments and taxes, whether real, personal,
or otherwise, due or payable by, or imposed, levied, or assessed against
Borrower or any of its property have been paid, and shall hereafter be paid in
full, before delinquency or before the expiration of any extension period.
Borrower shall make due and timely payment or deposit of all federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Foothill, on demand, appropriate certificates attesting
to the payment thereof or deposit with respect thereto. Borrower will make
timely payment or deposit of all tax payments and withholding taxes required of
it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Foothill with proof satisfactory to Foothill indicating that Borrower
has made such payments or deposits. Notwithstanding the foregoing Borrower shall
have the right to contest in good faith any such payment and may during such
contest period not pay the contested amounts unless the failure to so pay during
the contest period results in an uncurable liability or such contest period
extends beyond one year prior to a curtailment of redemption rights or uncurable
liability.
6.9 Insurance.
(a) Borrower, at its expense, shall keep the
Collateral (exclusive of the Real Property) insured against loss or damage by
fire, theft, explosion, sprinklers, and all other hazards and risks, and in such
amounts, as are ordinarily insured against by other owners in similar
businesses. Borrower also shall maintain business interruption, public
liability, and property damage insurance, as well as insurance against larceny,
embezzlement, and criminal misappropriation.
(b) Borrower will obtain and maintain insurance at
the levels and with the coverage as disclosed in the certificates of insurance
delivered to Foothill contemporaneously with the execution of this Agreement.
(c) All insurance required herein shall be written by
companies of recognized financial standing, reasonably satisfactory to Foothill.
Such insurance shall be in form reasonably satisfactory to Foothill, shall with
respect to hazard insurance and such other insurance as Foothill shall specify,
name as the loss payee thereunder Borrower and Foothill, as their interests may
appear, and shall contain a California Form 438BFU
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(NS) mortgagee endorsement, or its local equivalent. Every policy of insurance
referred to in this Section shall contain an agreement by the insurer that it
will not cancel such policy except after thirty (30) days' prior written notice.
(d) Original policies or certificates thereof
satisfactory to Foothill evidencing such insurance shall be delivered to
Foothill at least thirty (30) days prior to the expiration of the existing or
preceding policies. Borrower shall give Foothill prompt notice of any casualty
loss covered by such insurance and Foothill shall have the exclusive right to
adjust all casualty losses which individually exceed Twenty-Five Thousand
Dollars ($25,000) and which in the aggregate during any fiscal year exceed
Seventy-Five Thousand Dollars ($75,000) and which are payable under any such
insurance policies without any liability to Borrower whatsoever in respect of
such adjustments. Any monies received as payment for any loss under any
insurance policy including, but not limited to, the insurance policies mentioned
above, shall be paid over to Foothill to be applied at the option of Foothill
either to the prepayment of the Obligations without premium, in such order or
manner as Foothill may elect, or shall be disbursed to Borrower under stage
payment terms satisfactory to Foothill for application to the cost of repairs,
replacements or restorations. All restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property to destroyed prior to such damage or destruction. Upon the occurrence
of an Event of Default, all prepaid premiums shall be applied by Foothill to the
payment of the Obligations in such order or form as Foothill shall determine.
(e) Borrower shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 7.9, unless Foothill is included thereon as named
insured with the loss payable to Foothill under a standard California 438BFU
(NS) Mortgagee endorsement, or its local equivalent. Borrower shall immediately
notify Foothill whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and originals of such policies shall immediately thereafter be provided to
Foothill.
6.10 Financial Covenants. Borrower shall maintain:
(a) EBITDA of at least Nine Million Dollars
($9,000,000.00) measured on a fiscal quarter end basis for the trailing twelve
months;
and
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(b) Tangible Net Worth (Deficit). Tangible Net Worth
(Deficit) of no less than Two Million Dollars (2,000,000) measured on a fiscal
quarter end basis.
6.11 No Setoffs or Counterclaims. All payments hereunder and
under the other Loan Documents made by or on behalf of Borrower shall be made
without setoff or counterclaim and free and clear of, and without deduction or
withholding for or on account of, any federal, state, or local taxes.
6.12 Compliance with Laws. Borrower shall comply with the
requirements of all applicable laws, rules, regulations, and orders of any
governmental authority, including the Fair Labor Standards Act and the ADA, so
as to permit Borrower to uninterruptedly continue to run its business operations
at each site of the Real Property and Excluded Real Property.
6.13 Employee Benefits.
(a) Borrower shall deliver to Foothill a written
statement by the chief financial officer of Borrower specifying the nature of
any of the following events and the actions which Borrower proposes to take with
respect thereto promptly, and in any event within ten (10) days of becoming
aware of any of them, and when known, any action taken or threatened by the
Internal Revenue Service, PBGC, Department of Labor, or other party with respect
thereto: (i) an ERISA Event with respect to any Plan; (ii) the incurrence of an
obligation to pay additional premium to the PBGC under Section 4006(a)(3)(E) of
ERISA with respect to any Plan; and (iii) any lien on the assets of Borrower
arising in connection with any Plan.
(b) Borrower shall also promptly furnish to Foothill
copies prepared or received by Borrower or an ERISA Affiliate of: (i) at the
request of Foothill, each annual report (Internal Revenue Service Form 5500
series) and all accompanying schedules, actuarial reports, financial information
concerning the financial status of each Plan, and schedules showing the amounts
contributed to each Plan by or on behalf of Borrower or its ERISA Affiliates for
the most recent three (3) plan years; (ii) all notices of intent to terminate or
to have a trustee appointed to administer any Plan; (iii) all written demands by
the PBGC under Subtitle D of Title IV of ERISA; (iv) all notices required to be
sent to employees or to the PBGC under Section 302 of ERISA or Section 412 of
the IRC; (v) all written notices received with respect to a Multiemployer Plan
concerning (x) the imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA, (y) a termination described in Section 4041A of ERISA, or
(z) a reorganization or insolvency described in Subtitle E of Title IV of ERISA;
(vi) the adoption of any new
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Plan that is subject to Title IV of ERISA or Section 412 of the IRC by Borrower
or any ERISA Affiliate; (vii) the adoption of any amendment to any Plan that is
subject to Title IV of ERISA or Section 412 of the IRC, if such amendment
results in a material increase in benefits or Unfunded Benefit Liability; or
(viii) the commencement of contributions by Borrower or any ERISA Affiliate to
any Plan that is subject to Title IV of ERISA or Section 412 of the IRC.
6.14 Environmental Condition.
(a) Borrower shall keep or cause the Real Property
and the Excluded Real Property to be kept free of Hazardous Substances and not
cause or permit any of the foregoing real property to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, produce, or
process Hazardous Substances except in compliance with all applicable Acts
which, if not complied with, could reasonably be expected to have a material
adverse effect on Borrower's uninterruptedly continued business operations at
each site of the Real Property and Excluded Real Property.
(b) Borrower shall ensure compliance by all owners,
operators, and occupants of the Real Property and the Excluded Real Property
with all applicable Acts and will ensure that all such owners, operators and
occupants obtain and comply with any and all required approvals, registrations,
or permits which, if not complied with, could reasonably be expected to have a
material adverse effect on Borrower's uninterruptedly continued business
operations at each site of the Real Property and Excluded Real Property.
(c) Upon the reasonable request of Foothill, not to
occur more than once during the term of this Agreement, unless Foothill, acting
in good faith, reasonably believes there to be an environmental issue, Borrower
shall conduct and complete all investigations, studies, samplings, and testings
relative to Hazardous Substances at or affecting the Real Property and the
Excluded Real Property. Upon the written request of Foothill, not to occur more
than once during the term of this Agreement, unless Foothill, acting in good
faith, reasonably believes there to be an environmental issue, Borrower shall
provide Foothill at Borrower's sole cost and expense and without any liability
to Foothill, with an environmental site assessment or an environmental audit
report, or an update of such assessment or report, by an environmental
engineering firm acceptable to Foothill, all in scope, form, and content
satisfactory to Foothill, to assess with a reasonable degree of certainty the
presence or absence of Hazardous Substances and the potential cost in connection
with the Remediation of any Hazardous
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Substances at or related to the Real Property and the Excluded Real Property.
Upon demand of Foothill, and at Borrower's sole cost and expense, Borrower shall
promptly take all actions to Remediate the Real Property and the Excluded Real
Property which are required by federal, state, or local governmental agency or
political subdivision or which are reasonably necessary to mitigate a spill or a
violation of any Act or to allow the continued use of the Real Property and the
Excluded Real Property as historically used. All such work shall be performed by
one or more contractors selected by Borrower and approved in advance and in
writing by Foothill. Borrower shall proceed continuously and diligently with
such investigatory and remedial actions, provided that in all cases, such
actions shall be in accordance with all applicable requirements of all Acts. Any
such actions shall be performed in a good, safe, and workmanlike manner and
shall minimize any impact on the business or occupation at or near the Real
Property and the Excluded Real Property. Borrower shall pay all costs in
connection with such investigatory and remedial activities, including but not
limited to, all power and utility costs, any and all taxes or fees that may be
applicable to such activities. Borrower shall promptly provide to Foothill
copies of testing results and reports that are generated in compliance with the
above activities. Promptly upon completion of such investigation and
Remediation, Borrower shall permanently seal or cap all monitoring wells and
test holes to industrial standards and compliance with all Acts, remove all
associated equipment, and restore the Real Property and the Excluded Real
Property to the condition existing prior to the commencement of Remediation,
which shall include, without limitation, the repair of any surface damage,
including paving caused by such investigation or Remediation hereunder.
(d) The obligations of Borrower and the rights of
Foothill with respect to Hazardous Substances are in addition to and not in
substitution of the obligations of Borrower and the rights of Foothill under all
applicable, federal, state, and local laws, regulations, and ordinances relating
to health and safety, and protection of the environment. The obligations of
Borrower and the rights of Foothill, notwithstanding anything contained herein
or in any other document or agreement which may be construed to the contrary,
(i) shall not be subject to any antideficiency laws or protections, if any, (ii)
shall survive (y) a non-judicial sale, judicial sale or deed or other
transaction in lieu of such sale hereunder, and (z) the repayment of the
Obligations. In the event Borrower does not timely perform any of its
obligations with respect to Hazardous Substances, Foothill may perform such
obligations, but is not obligated to, at the expense of Borrower and such
expense shall be added to the Obligations and shall not cure Borrower's breach
under this Agreement.
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6.15 Compliance With The ADA.
(a) Borrower shall promptly provide Foothill with
copies of all notices or claims which may be received by Borrower and involving
claims made by any individual, entity or governmental agency as to any alleged
noncompliance of the Real Property with the requirements of the ADA.
(b) Borrower shall observe and comply in all material
respects with all obligations and requirements of the ADA as it applies to the
Real Property.
6.16 Post Closing Date Issues. Within ninety (90) days (unless
otherwise provided in Schedule 4.7) of the Closing Date, Borrower shall have
completed all of the items set forth in Section 4.7 to the satisfaction of
Foothill in its sole and absolute discretion.
6.17 The Real Property.
(a) Borrower shall use its best efforts to remove of
record all Satisfied Indebtedness Liens and to provide Foothill with
satisfactory evidence of same.
(b) At any time Foothill deems itself insecure, or
following an Event of Default, Borrower shall, to the fullest extent permitted
at law, and without breaching any provision of a prior Permitted Lien, duly
execute and deliver to Foothill Mortgages encumbering the Excluded Property.
6.18 Term Note Substitute Cash Collateral. On the dates set
forth below, the Term Loan Substitute Cash Collateral shall consist of at least
the following amounts:
December 31, 2001 $3,282,500.00
June 30, 2002 $6,565,000.00
To the extent otherwise permitted hereunder, Borrower may borrow such sums
pursuant to Section 2.1 hereof.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the Obligations
(other than contingent unliquidated Obligations pursuant to Section 10.3),
Borrower will not do any of the following without Foothill's prior written
consent:
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7.1 Indebtedness. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the
Term Note;
(b) Indebtedness set forth in the latest financial
statements of Borrower submitted to Foothill on or prior to the Closing Date;
(c) Indebtedness secured by Permitted Liens;
(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not materially impair the prospects of repayment of the Obligations by Borrower,
(ii) the net cash proceeds of such refinancings, renewals, or extensions do not
result in an increase in the aggregate principal amount of the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, refundings,
or extensions do not result in a shortening of the average weighted maturity of
the Indebtedness so refinanced, renewed, or extended, and (iv) to the extent
that Indebtedness that is refinanced was subordinated in right of payment to the
Obligations, then the subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to Foothill as those applicable to
the refinanced Indebtedness;
(e) other unsecured indebtedness which in the
aggregate does not exceed the sum of Five Hundred Thousand Dollars ($500,000);
(f) unsecured indebtedness between Borrowers, and any
modifications thereof; and
(g) the secured inter-company indebtedness assigned
to Foothill as Collateral which is referenced in Section 5.14(a).
7.2 Liens. Create, incur, assume, or permit to exist, directly
or indirectly, any lien on or with respect to any of its property or assets, of
any kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced under
Section 7.1(e) and so long as the replacement
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liens secure only those assets or property that secured the original
Indebtedness).
7.3 Restrictions on Fundamental Changes. Except after the
making of the Leisure Time Advance (at which such time AIC will merge into
Leisure Time - Washington), enter into any acquisition, merger, consolidation,
reorganization, or recapitalization, or reclassify its capital stock, or
liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of transactions, all or any substantial part of
its business, property, or assets, whether now owned or hereafter acquired, or
acquire by purchase or otherwise all or substantially all of the properties,
assets, stock, or other evidence of beneficial ownership of any Person, except
that (a) any Borrower may (i) merge into any other Borrower upon thirty (30)
days following delivery to Foothill of written notice of the intended merger,
and (ii) reincorporate in the State of Delaware upon thirty (30) days following
delivery to Foothill of written notice of the intended reincorporation, and (b)
Trails may issue shares of its capital stock from time to time.
7.4 Extraordinary Transactions and Disposal of Assets. Except
as contemplated in Section 3.2, enter into any transaction not in the ordinary
and usual course of Borrower's business, including the sale, lease, or other
disposition of, moving, relocation, or transfer, whether by sale or otherwise,
of any of Borrower's properties or assets.
7.5 Change Name. Change Borrower's name (except that OWC may,
with the prior written consent of Foothill, change its name), FEIN, corporate
structure or identity, or add any new fictitious name.
7.6 Guarantee. Guarantee or otherwise become in any way liable
with respect to the obligations of any Person not a Borrower except by
endorsement or instruments or items of payment for deposit to the account of
Borrower or which are transmitted or turned over to Foothill.
7.7 Restructure. Except as contemplated in Section 3.2, and
expressly permitted by Section 7.3 make any change in Borrower's financial
structure, the principal nature of Borrower's business operations, or the date
of its fiscal year.
7.8 Prepayments. Except in connection with a refinancing
permitted by Section 7.1(e), prepay any Indebtedness owing to any Person not a
Borrower. The foregoing
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notwithstanding, Borrowers may on an unsecured basis loan and repay monies
between themselves from time to time.
7.9 Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 Capital Expenditures. Make any capital expenditure, or
any commitment therefor, in excess of Three Million Eight Hundred Thousand
Dollars ($3,800,000).
7.11 Distributions. Except as expressly permitted in Section
7.13, and except between Borrowers, make any distribution or declare or pay any
dividends (in cash or in stock) on, or purchase, acquire, redeem, or retire any
of Borrower's capital stock, of any class, whether now or hereafter outstanding.
7.12 Accounting Methods. Modify or change its method of
accounting or enter into, modify, or terminate any agreement currently existing,
or at any time hereafter entered into with any third party accounting firm or
service bureau for the preparation or storage of Borrower's accounting records
without said accounting firm or service bureau agreeing to provide Foothill
information regarding the Collateral or Borrower's financial condition. Borrower
waives the right to assert a confidential relationship, if any, it may have with
any accounting firm or service bureau in connection with any information
requested by Foothill pursuant to or in accordance with this Agreement, and
agrees that Foothill may contact directly any such accounting firm or service
bureau in order to obtain such information.
7.13 Investments. Directly or indirectly make or acquire any
beneficial interest in (including stock, partnership interest, or other
securities of), or make any loan, advance, or capital contribution in excess of
One Hundred Thousand Dollars ($100,000) in any fiscal year, to, any Person not a
Borrower, except (i) payments as contemplated by the By-Law Amendment referred
to in Section 8.11, and (ii) investments in Cash Equivalents. Notwithstanding
the prior sentence, Thousand Trails, Inc. shall be permitted to purchase up to
$100,000 worth of Thousand Trails, Inc. stock per month at a price which is not
greater than the market price for such stock on such dates. Provided that
Borrower has availability under the Revolving Maximum Amount and provided that
all other conditions under the Loan Agreement have been satisfied, Borrower
shall be permitted to use the proceeds of Revolving Advances to purchase such
stock. Borrower shall be able to cumulate the $100,000 monthly cap on
repurchases of its own stock, so that any unused allowed sums can be carried
over into successive months, with a maximum carryover
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allowed amount of $500,000. Commencing July 31, 1999, the maximum carryover
allowed amount shall be increased to $600,000, and such maximum amount shall
increase by an additional $100,000 each successive month-end until the maximum
carryover allowed amount equals $1,000,000.
7.14 Transactions with Affiliates. Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower except for: (i) transactions that are in the ordinary course of
Borrower's business, upon fair and reasonable terms, that are fully disclosed to
Foothill, and that are no less favorable to Borrower than would be obtained in
arm's length transaction with a non-Affiliate, or (ii) transactions among
Borrowers.
7.15 Suspension. Suspend or go out of a substantial portion of
its non-resort business, except as contemplated by Section 4.4.
7.16 Compensation. Increase the annual fee or per-meeting fee
paid to directors during any year by more than fifteen percent (15%) over the
prior year; pay or accrue base compensation, during any year, to officers and
senior management in an aggregate amount in excess of one hundred fifteen
percent (115%) of such base compensation paid or accrued in the prior year,
exclusive of severance payments and exclusive of annual bonuses, such annual
bonuses being limited to 100% of base compensation in the case of the President
and Chief Executive Officer, 50% of base compensation in the case of other
executive officers and 25% of base compensation in the case of all other senior
management.
7.17 Use of Proceeds. Except for: (i) Five Million Dollars
($5,000,000) which may be used by Borrower for its working capital needs, and
(ii) using the proceeds of any Advances to partially or fully perform Borrower=s
obligations pursuant to Section 6.18 hereof; use the proceeds of any Advances
made hereunder for any purpose other than the purchase of the stock of AIC.
Borrower may use all Advances to purchase the stock of AIC if Borrower so
chooses. The Five Million Dollar ($5,000,000) working capital component of the
Revolving Maximum Amount may be repaid and reborrowed provided that Borrower has
complied with all of the other provisions of the Loan Agreement.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
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8.1 If Borrower fails to pay when due and payable or when
declared due and payable, any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts constituting Obligations);
8.2 If Borrower fails or neglects to perform, keep, or observe
any term, provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present or future
agreement between Borrower and Foothill;
8.3 If Borrower fails or neglects to perform, keep, or observe
any term, provision, condition, or agreement contained in the Mortgages;
8.4 If there is a material impairment of the prospect of
repayment of any portion of the Obligations owing to Foothill or a material
impairment of the value or priority of Foothill's security interests in the
Collateral;
8.5 If any material portion of Borrower's properties or assets
is attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any third Person;
8.6 If an Insolvency Proceeding is commenced by Borrower;
8.7 If an Insolvency Proceeding is commenced against Borrower
and any of the following events occur: (a) Borrower consents to the institution
of the Insolvency Proceeding against it; (b) the petition commencing the
Insolvency Proceeding is not timely controverted; (c) the petition commencing
the Insolvency Proceeding is not dismissed within forty-five (45) calendar days
of the date of the filing thereof; provided, however, that, during the pendency
of such period, Foothill shall be relieved of its obligation to make additional
advances hereunder; (d) an interim trustee is appointed to take possession of
all or a substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, Borrower; or (e) an order for
relief shall have been issued or entered therein;
8.8 If Borrower is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs;
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8.9 If a notice of lien, levy, or assessment in an amount in
excess of One Hundred Thousand Dollars ($100,000)(any amount equal to or less
than One Hundred Thousand Dollars ($100,000) will decrease the Revolving Maximum
Amount by such amount for so long as such lien is outstanding) is filed of
record with respect to any of Borrower's properties or assets by the United
States Government, or any department, agency, or instrumentality thereof, or by
any state, county, municipal, or governmental agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a lien,
whether choate or otherwise, upon any of Borrower's properties or assets and the
same is not paid on the payment date thereof;
8.10 If a judgment or other claim in an amount in excess of
One Hundred Thousand Dollars ($100,000)(any amount equal to or less than One
Hundred Thousand Dollars ($100,000) will decrease the Revolving Maximum Amount
by such amount for so long as such lien is outstanding and not sufficiently
bonded) becomes a lien or encumbrance upon any material portion of Borrower's
properties or assets;
8.11 If there is a default in any material agreement to which
Borrower is a party with one or more third Persons resulting in a right by such
third Persons, irrespective of whether exercised, to accelerate the maturity of
Borrower's obligations thereunder;
8.12 If Borrower makes any payment on account of Indebtedness
that has been contractually subordinated in right of payment to the payment of
the Obligations, except to the extent such payment is permitted by the terms of
the subordination provisions applicable to such Indebtedness;
8.13 If any material misstatement or misrepresentation exists
now or hereafter in any warranty, representation, statement, or report made to
Foothill by Borrower or any officer, employee, agent, or director of Borrower,
or if any such warranty or representation is withdrawn;
8.14 If (a) with respect to any Plan, there shall occur any of
the following which could reasonably be expected to have a material adverse
effect on the financial condition of Borrower: (i) the violation of any of the
provisions of ERISA; (ii) the loss by a Plan intended to be a Qualified Plan of
its qualification under Section 401(a) of the IRC; (iii) the incurrence of
liability under Title IV of ERISA; (iv) a failure to make full payment when due
of all amounts which, under the provisions of any Plan or applicable law,
Borrower or any ERISA Affiliate is required to make; (v) the filing of a notice
of intent to terminate a Plan under Sections 4041 or 4041A of ERISA;
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(vi) a complete or partial withdrawal of Borrower or an ERISA Affiliate from any
Plan; (vii) the receipt of a notice by the plan administrator of a Qualified
Plan that the PBGC has instituted proceedings to terminate such Plan or appoint
a trustee to administer such Plan; (viii) a commencement or increase of
contributions to, or the adoption of or the amendment of, a Plan; and (ix) the
assessment against Borrower or any ERISA Affiliate of a tax under Section 4980B
of the IRC; or (b) the Unfunded Benefit Liability of all of the Plans of
Borrower and its ERISA Affiliates shall, in the aggregate, exceeds One Hundred
Thousand Dollar ($100,000).
8.15 If: (a) there shall occur during any consecutive twelve
month period, one or more uninsured losses, thefts, damage or destruction of the
Real Property, or any part thereof, which individually exceed One Hundred
Thousand Dollars ($100,000) or which have an aggregate value in excess of One
Million Dollars ($1,000,000) inclusive of Borrower's deductible; or (b) an event
of default shall occur under any prior Permitted Lien, if any, on the Real
Property.
9. FOOTHILL'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence of an Event of
Default, and, except with respect to the exercised remedy of the appointment and
service of a receiver, during the continuance of an Event of Default, Foothill
may, at its election, without notice of its election and without demand, do any
one or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or
for the benefit of Borrower under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrower and Foothill;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of Foothill to make
advances, but without affecting Foothill's rights and security interests in the
Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Foothill considers
advisable, and in such cases, Foothill will credit Borrower's loan account with
only the net amounts received
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by Foothill in payment of such disputed Accounts after deducting all Foothill
Expenses incurred or expended in connection therewith;
(e) Without notice to or demand upon Borrower, make
such payments and do such acts as Foothill considers necessary or reasonable to
protect its security interests in the Collateral. Borrower agrees to assemble
the Collateral if Foothill so requires, and to make the Collateral available to
Foothill as Foothill may designate. Borrower authorizes Foothill to enter the
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien that in Foothill's determination appears to
conflict with its security interests and to pay all expenses incurred in
connection therewith. With respect to any of Borrower's owned premises, Borrower
hereby grants Foothill a license to enter into possession of such premises and
to occupy the same, without charge, for up to one hundred twenty (120) days in
order to exercise any of Foothill's rights or remedies provided herein, at law,
in equity, or otherwise;
(f) Without notice to Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of Section 9505 of the Code),
set off and apply to the Obligations any and all (i) balances and deposits of
Borrower held by Foothill (including any amounts received in the Lock Boxes), or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Foothill;
(g) Hold, as cash collateral, and apply in accordance
herewith, any and all balances and deposits of Borrower held by Foothill, and
any amounts received in the Lock Boxes, against the Obligations unless such
application is in violation of law or could adversely effect the full and
complete exercise of all of Foothill's rights and remedies, in which such events
Foothill shall hold, as cash collateral such sums to secure the full and final
repayment of all of the Obligations;
(h) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein or in the Mortgages) the Collateral. Foothill is hereby granted a
license or other right to use, without charge, Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Collateral, in completing production of, advertising for
sale, and selling
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any Collateral and Borrower's rights under all licenses and all franchise
agreements shall inure to Foothill's benefit;
(i) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Foothill determines is commercially reasonable. It is not necessary that the
Collateral be present at any such sale;
(j) Foothill shall give notice of the disposition of
the Collateral as follows:
(1) Foothill shall give Borrower and each
holder of a security interest in the Collateral who has filed with Foothill a
written request for notice, a notice in writing of the time and place of public
sale, or, if the sale is a private sale or some other disposition other than a
public sale is to be made of the Collateral, then the time on or after which the
private sale or other disposition is to be made;
(2) The notice shall be personally delivered
or mailed, postage prepaid, to Borrower as provided in Section 12, at least ten
(10) days before the date fixed for the sale, or at least ten (10) days before
the date on or after which the private sale or other disposition is to be made;
no notice needs to be given prior to the disposition of any portion of the
Collateral that is perishable or threatens to decline speedily in value or that
is of a type customarily sold on a recognized market. Notice to Persons other
than Borrower claiming an interest in the Collateral shall be sent to such
addresses as they have furnished to Foothill;
(3) If the sale is to be a public sale,
Foothill also shall give notice of the time and place by publishing a notice one
time at least five (5) days before the date of the sale in a newspaper of
general circulation in the county in which the sale is to be held;
(k) Foothill may credit bid and purchase at any
public sale; and
(l) Any deficiency that exists after disposition of
the Collateral as provided above will be paid immediately by Borrower. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Foothill to Borrower.
9.2 Remedies Cumulative. Foothill's rights and remedies under
this Agreement, the Loan Documents, and all other
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agreements shall be cumulative. Foothill shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by Foothill of one right or remedy shall be deemed an
election, and no waiver by Foothill of any Event of Default shall be deemed a
continuing waiver. No delay by Foothill shall constitute a waiver, election, or
acquiescence by it.
9.3 Foreclosure Not A Discharge. Foreclosure shall not operate
as a discharge to Borrower's Obligations to Foothill as to Hazardous Substances
and the indemnity provisions in Section 10; and in the event Borrower tenders a
deed in lieu of foreclosure for all or part of the Real Property, Borrower shall
deliver such property to Foothill (or its designee) free of any and all
Hazardous Substances which require Remediation. The indemnity provisions in
Section 10 shall not be discharged or affected in any way by foreclosure or by
Foothill's acceptance of a deed in lieu thereof, and the same shall continue for
a period equal to the longest living child born in Los Angeles County on January
1, 1994, plus twenty-one (21) years.
10. WAIVERS; INDEMNIFICATION.
10.1 Demand; Protest; etc. Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments, chattel
paper, and guarantees at any time held by Foothill on which Borrower may in any
way be liable.
10.2 Foothill's Liability for Collateral. So long as Foothill
complies with its obligations, if any, under Section 9207 of the Code, Foothill
shall not in any way or manner be liable or responsible for: (a) the safekeeping
of the Collateral; (b) any loss or damage thereto occurring or arising in any
manner or fashion from any cause; (c) any diminution in the value thereof; or
(d) any act or default of any carrier, warehouseman, bailee, forwarding agency,
or other Person. All risk of loss, damage, or destruction of the Collateral
shall be borne by Borrower.
10.3 Indemnification. Borrower agrees to defend, indemnify,
save, and hold all Indemnified Persons harmless against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other Person arising
out of or relating to the transactions contemplated by this Agreement or any
other Loan Document including, but not limited to, those claimed by any broker
or finder, and (b) all Losses, and (c) all Losses (including attorneys' fees)
suffered or incurred by any
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Indemnified Person, regardless of negligence, whether as a holder of security
interests in Real Property, as mortgagee in possession, or as successor in
interest to Borrower as owner of the Real Property by virtue of foreclosure or
acceptance of a deed or other transaction in lieu of foreclosure, or after
partial or total reconveyance of the mortgage, arising from, in respect of, as a
consequence of (whether foreseeable or unforeseeable) or in connection with the
use, storage, disposal, generation, transportation, spill, or treatment of any
Hazardous Substances at or related to the Real Property and the Excluded Real
Property whether or not originating or emanating from the Real Property and the
Excluded Real Property. Such indemnification shall not extend to the gross
negligence or willful misconduct of any Indemnified Person. This provision shall
survive the termination of this Agreement.
10.4 References in Mortgages. When this Amended and Restated
Loan and Security Agreement was drafted, paragraph numbering was altered. Under
the original Loan and Security Agreement dated July 10, 1996, as amended, this
Section 10 was numbered Section 11. To avoid needless modification to the
Mortgages, all references in the Mortgages to Section 11 shall be deemed to be
this Section 10. To avoid confusion, Mortgages executed pursuant to the
provisions of Section 3.2(l) (and Mortgages executed in the future) similarly
refer to Section 11, but in reality are referring to this Section 10.
11. TAXES AND EXPENSES REGARDING THE COLLATERAL.
If Borrower fails to pay any monies (whether taxes, rents,
assessments, insurance premiums, or otherwise) due to third Persons, or fails to
make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement or the Mortgages, then, to the extent
that Foothill determines that such failure by Borrower could have a material
adverse effect on Foothill's interests in the Collateral, in its discretion and
without prior notice to Borrower, Foothill may do any or all of the following:
(a) make payment of the same or any part thereof; (b) set up such reserves in
Borrower's loan account as Foothill deems necessary to protect Foothill from the
exposure created by such failure; or (c) obtain and maintain insurance policies
of the type described in Section 7.9, and take any action with respect to such
policies as Foothill deems prudent. Any such amounts paid by Foothill shall
constitute Foothill Expenses. Any such payments made by Foothill shall not
constitute an agreement by Foothill to make similar payments in the future or a
waiver by Foothill of any Event of Default under this Agreement. Foothill need
not inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance, or lien and the receipt of the usual
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official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other Loan Document shall
be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, or by prepaid telex, TWX, telefacsimile, or telegram
(with messenger delivery specified) to Borrower (only one notice need be given
with respect to all Borrowers) or to Foothill, as the case may be, at its
address set forth below:
If to Borrower: Thousand Trails, Inc.
2711 LBJ Freeway, Suite 200
Dallas, Texas 75234
Attn.: Chief Financial Officer
Telefacsimile No. (214) 488-5008
If to Foothill: FOOTHILL CAPITAL CORPORATION
11111 Santa Monica Boulevard
Suite 1500
Los Angeles, California 90025-3333
Attn.: Business Finance Division Manager
Telefacsimile No. (310) 479-2690
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other. All notices or demands sent in accordance with this Section 12, other
than notices by Foothill in connection with Sections 9504 or 9505 of the Code,
shall be deemed received on the earlier of the date of actual receipt or three
(3) days after the deposit thereof in the mail. Borrower acknowledges and agrees
that notices sent by Foothill in connection with Sections 9504 or 9505 of the
Code shall be deemed sent when deposited in the mail or transmitted by
telefacsimile or other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN
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ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAWS PRINCIPLES. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY OTHER
COURT IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH
HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF BORROWER
AND FOOTHILL WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
14. BORROWER AND FOOTHILL HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND FOOTHILL REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents (exclusive of original Accounts and original
evidences of Collateral), schedules, invoices, agings, or other papers delivered
to Foothill may be destroyed or otherwise disposed of by Foothill four (4)
months after they are delivered to or received by Foothill, unless Borrower
requests, in writing, the return of said documents, schedules, or other papers
and makes arrangements, at Borrower's expense, for their return. Foothill shall
keep all of the confidential information of Borrower confidential in accordance
with the standards applied to its own confidential information, except that it
may share such information to other financial institutions who may be acquiring
a participation interest in the financing contemplated hereby and who agree to
keep such information confidential.
15. GENERAL PROVISIONS.
15.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrower and Foothill.
15.2 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and assigns of each of the
parties; provided, however, that Borrower
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may not assign this Agreement or any rights or duties hereunder without
Foothill's prior written consent and any prohibited assignment shall be
absolutely void. No consent to an assignment by Foothill shall release Borrower
from its Obligations. Foothill may assign this Agreement and its rights and
duties hereunder and no consent or approval by Borrower is required in
connection with any such assignment. Foothill reserves the right to sell,
assign, transfer, negotiate, or grant participations in all or any part of, or
any interest in Foothill's rights and benefits hereunder. In connection with any
such assignment or participation, Foothill may disclose all documents and
information which Foothill now or hereafter may have relating to Borrower or
Borrower's business. To the extent that Foothill assigns its rights and
obligations hereunder to a third Person, Foothill shall thereafter be released
by Borrower from such assigned obligations and such assignment shall effect a
novation between Borrower and Foothill.
15.3 Section Headings. Headings and numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each section applies equally to this entire
Agreement.
15.4 Interpretation. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against Foothill
or Borrower, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by all parties and shall be construed
and interpreted according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.
15.5 Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
15.6 Amendments in Writing. This Agreement can only be amended
by a writing signed by both Foothill and Borrower.
15.7 Counterparts; Telefacsimile Execution. This Agreement may
be executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by
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telefacsimile also shall deliver a manually executed counterpart of this
Agreement but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement.
15.8 Revival and Reinstatement of Obligations. If the
incurrence or payment of the Obligations by Borrower or the transfer by such
parties to Foothill of any property of any such parties should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, and other voidable or
recoverable payments of money or transfers of property (collectively, a
"Voidable Transfer"), and if Foothill is required to repay or restore, in whole
or in part, any such Voidable Transfer, or elects to do so upon the reasonable
advice of its counsel, then, as to any such Voidable Transfer, or the amount
thereof that Foothill is required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of Foothill related thereto, the
liability of Borrower automatically shall be revived, reinstated, and restored
and shall exist as though such Voidable Transfer had never been made.
15.9 Lending Relationship. Nothing contained in the this
Agreement or any of the other Loan Documents shall be deemed or construed by the
parties hereto or by any third party to create the relationship of principal and
agent, partnership, joint venture, or any association between Borrower and
Foothill, it being expressly understood and agreed that nothing contained in
this Agreement or the other Loan Documents shall be deemed to create any
relationship between Borrower and Foothill other than the relationship of
borrower and lender.
15.10 Joint and Several Liability of Borrower. The liability
of each Borrower to Foothill is joint and several, and the relationships between
them, for purposes of the provisions of this Agreement only, shall be considered
a combination for a business purpose within the meaning of California Corporate
Code Sections 15,000 et seq.
15.11 Third Party Beneficiaries. This Agreements made and
entered into for the sole protection and benefit of the signatories and their
permitted successors and assigns.
15.12 Further Assurances with Respect to the Real Property.
With respect to items of Real Property for which Mortgages have been executed
prior to the Closing Date and for which title insurance is not being provided on
the Closing Date, Foothill and Borrower shall amend such Mortgages to reflect
the
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correct legal descriptions of the Real Property covered thereby after receipt of
the title policies therefor.
15.13 Integration. This Agreement, together with the other
Loan Documents, reflect the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or qualified
by any other agreement, oral or written, before the date hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Los Angeles, California.
"Foothill"
FOOTHILL CAPITAL CORPORATION,
a California corporation
By /s/ KATY J. BROOKS
----------------------------------
Title: Vice President
------------------------------
"Borrower"
NATIONAL AMERICAN CORPORATION
a Nevada corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
THOUSAND TRAILS, INC.,
a Delaware corporation, f/k/a
USTrails, Inc., a Nevada
corporation, and New Thousand
Trails, Inc., a Delaware corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
THOUSAND TRAILS (CANADA) INC.,
a British Columbian corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
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TT OFFSHORE, LTD.,
a Virginia corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
BEECH MOUNTAIN LAKES CORPORATION,
a Pennsylvania corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
CAROLINA LANDING CORPORATION,
a South Carolina corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
CARRIAGE MANOR CORPORATION,
a North Carolina corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
CHEROKEE LANDING CORPORATION,
a Tennessee corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
CHIEF CREEK CORPORATION,
a Tennessee corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
63
<PAGE> 69
COAST FINANCIAL SERVICES, INC.,
a Delaware corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
DIXIE RESORT CORPORATION,
a Mississippi corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
FOXWOOD CORPORATION,
a South Carolina corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
GL LAND DEVELOPMENT CORPORATION,
an Oklahoma corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
LAKE ROYALE CORPORATION,
a North Carolina corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
LAKE TANSI VILLAGE, INC.,
a Tennessee corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
64
<PAGE> 70
LML RESORT CORPORATION,
an Alabama corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
NATCHEZ TRACE WILDERNESS PRESERVE
CORPORATION, a Tennessee corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
OWC ACQUISITION CORP.,
a Delaware corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
QUAIL HOLLOW PLANTATION CORPORATION,
a Tennessee corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
QUAIL HOLLOW VILLAGE, INC.,
a Pennsylvania corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
RECREATION LAND CORPORATION,
a Pennsylvania corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
65
<PAGE> 71
RECREATION PROPERTIES, INC.,
a Mississippi corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
RESORT LAND CORPORATION,
an Arkansas corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
RESORT PARKS INTERNATIONAL, INC.,
f/k/a Shorewood Corporation, a
Georgia corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
TANSI RESORT, INC.,
a Tennessee corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
THE KINSTON CORPORATION,
a South Carolina corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
THE VILLAS OF HICKORY HILLS, INC.,
a Mississippi corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
66
<PAGE> 72
WESTERN FUN CORPORATION,
a Texas corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
WESTWIND MANOR CORPORATION,
a Texas corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
WOLF RUN MANOR CORPORATION,
a Pennsylvania corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
UST WILDERNESS MANAGEMENT
CORPORATION, a Nevada corporation
By /s/ WALTER B. JACCARD
----------------------------------
Title: Vice President
------------------------------
67
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SCHEDULE ERP
EXCLUDED REAL PROPERTY
SYSTEM CAMPGROUNDS
NAME STATE
Portion of Lake Tawakoni subject to lease TX
Portion of Lake Texoma subject to lease TX
La Conner WA
Portion of Cascade (Leisure Time) subject to lease WA
Resort Assets
NAME STATE
Beech Mountain PA
Lots (approx. 50)
FOXWOOD
Approximately 250 acres containing
subdivided lots subject to litigation SC
LAKE TANSI
Lots (approx. 30) TN
OFFICE LEASES
NAME STATE
Lease for Dallas Corporate Office TX
Lease for Gautier Corporate Office MS
Lease for RPI Corporate Office CA
Lease for Dallas Warehouse TX
Leases for One Person Regional Offices
MISCELLANEOUS PROPERTIES
Acreage, Jefferson County, WA
One lot, Pierce County, WA
One lot, Mason County, WA
One lot, Chelan County, WA
One lot, Whitman County, WA
One lot, Point Clear, MS
<PAGE> 74
SCHEDULE RP DEF-1
"Arizona Property" means that certain campground facility
located in Yavapai County, Arizona, commonly referred to as Verde Valley
Campground, which consists of approximately 300 acres, 289 full-hook-up
campsites, 44 water and power only hook-ups, additional tent sites, RV Storage,
two family centers, meeting rooms, TV rooms, trading post, a ballfield,
basketball court, laundromat, horseshoe, volleyball, shuffleboard, playground,
spa, and swimming pool facilities.
"BC Property" means that certain campground facility located
in New Westminster County, British Columbia, Canada, commonly referred to as
Cultus Lake Campground, which consists of 185 full-hook-up campsites, 10
overflow sites, rental trailers, RV storage, adult lodge, family center, trading
post, basketball court, laundromat, horseshoe, shuffleboard, and swimming pool
facilities.
"California Property" means the Donner Pass (CA) Property, the
Idyllwild (CA) Property, the Lake Minden (CA) Property, the Lake of the Springs
(CA) Property, the Oakzanita (CA) Property, the Palm Springs (CA) Property, the
Pio Pico (CA) Property, the Rancho Oso (CA) Property, the Russian River (CA)
Property, the San Benito (CA) Property, the San Jose (CA) Property, the
Snowflower (CA) Property, the Soledad Canyon (CA) Property, the Turtle Beach
(CA) Property, the Wilderness Lakes (CA) Property, the Windsor (CA) Property and
the Yosemite Lakes (CA) Property.
"Donner Pass (CA) Property" means that certain campground
facility located in Nevada and Placer Counties, California, commonly referred to
as Donner Pass Campground, which consists of approximately 364 acres, 80
full-hook-up campsites, 326 water and power only hook-ups, additional overflow
sites, rental trailers, motel units, RV storage area, family lodge, trading
post, playground, ballfield, basketball court, tennis courts, laundromat,
horseshoe, volleyball, shuffleboard, spa/sauna, and swimming lake facilities.
"Idyllwild (CA) Property" means that certain campground
facility located in Riverside County, California, commonly referred to as
Idyllwild Campground, which consists of approximately 200 acres, 220 summer
campsites, 100 winter campsites, rental trailers, RV storage, trading post, an
adult lodge, lodge, basketball court, video arcade, laundromat, horseshoe,
volleyball, shuffleboard, wading pool, swimming pool, and stocked trout pond
facilities.
<PAGE> 75
"Lake Minden (CA) Property" means that certain campground
facility located in Sutter County, California, commonly referred to as Lake
Minden Campground, which consists of 162 camp sites, rental trailers, garden
homes, adult lodge, TV room, video game room, trading post, playground,
encircled private lake with kayak, paddleboat, rowboat and sail boats, beach,
laundromat, horseshoe, and volleyball facilities.
"Lake of the Springs (CA) Property" means that certain
campground facility located in Yuba County, California, commonly referred to as
Lake of the Springs Campground, which consists of approximately 950 acres, 540
summer campsites, 225 winter campsites, RV Storage Area, adult lodge, family
center, trading post, private lake, boat rentals, laundromat, horseshoe,
basketball, volleyball, tennis court, swimming pool, and miniature golf
facilities.
"Oakzanita Springs (CA) Property" means that certain
campground facility located in San Diego County, California, commonly referred
to as Oakzanita Springs Campground, which consists of approximately 140 acres,
67 full-hook-up campsites, 54 water and power only hook-ups, 24 tent sites,
additional overflow sites, rental trailers, RV storage area, trading post,
family lodge, playground, basketball court, laundromat, horseshoe, volleyball,
shuffleboard, spa, wadding pool, swimming pool and miniature golf facilities.
"Palm Springs (CA) Property" means that certain campground
facility located in Riverside County, California, commonly referred to as Palm
Springs Campground, which consists of 397 full-hook-up campsites, rental
trailers, trading post, family center, TV room, laundromat, basketball court,
horseshoe, shuffleboard, spa, swimming pool and pickleball court.
"Pio Pico (CA) Property" means that certain campground
facility located in San Diego County, California, commonly referred to as Pio
Pico Campground, which consists of 250 full-hook-up campsites, 250 water and
power hook-up campsites, rental trailers, RV storage, trading post, adult lodge,
"north" lodge, activity center, youth center, family area, playground, picnic
areas, laundromat, baseball, volleyball, and basketball courts, horseshoe,
shuffleboard, spa, saunas, swimming pools, and miniature golf facilities.
"Rancho Oso (CA) Property" means that certain campground
facility located in Santa Barbara County, California, commonly referred to as
Rancho Oso Campground, which consists of 99 campsites, rental trailers, cabins,
garden homes, RV storage, country store, adult lodge, playground, horseback
riding, tennis court, laundromat, volleyball, horseshoe, spa, 2 swimming pools,
and pavilion facilities.
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"Russian River (CA) Property" means that certain campground
facility located in Sonoma, County, California, commonly referred to as Russian
River Campground, which consists of 125 water and power hook-up campsites,
rental trailers, family lodge, game room, laundromat, picnic deck, volleyball,
sport court, horseshoe, and river frontage with kayak rental facilities.
"San Benito (CA) Property" means that certain campground
facility located in San Benito County, California, commonly referred to as San
Benito Campground, which consists of 435 full-hook-up campsites, 75 water and
power hook-up campsites, rental trailers, RV storage, trading post, adult lodge,
family center, playground, laundromat, volleyball, and basketball courts,
shuffleboard, spa, swimming pools, and miniature golf facilities.
"San Jose (CA) Property" means that certain campground
facility located in Santa Clara County, California, commonly referred to as San
Jose Campground, which consists of 298 water and power hook-up campsites, rental
trailers, RV Storage area, trading post, adult lodge, family center, playground,
laundromat, ball field, sports courts, horseshoe, shuffleboard, miniature golf,
and swimming pool facilities.
"Snowflower (CA) Property" means that certain campground
facility located in Placer County, California, commonly referred to as
Snowflower Campground Pass, which consists of a lake, 300 campsites, rental
trailers and hostel rooms, family lounge, snack bar, laundromat, downhill
skiing, cross country skiing, volleyball court, horseshoe, shuffleboard, sauna,
swimming pool, beach, canoe and paddleboat facilities.
"Soledad Canyon (CA) Property" means that certain campground
facility located in Los Angeles County, California, commonly referred to as
Soledad Canyon Campground, which consists of 477 full-hook-up campsites, 376
water and power hook-up campsites, rental trailers, RV storage, store, adult
lodge, family lodge, arcade, laundromat, kitchen facility, ball field,
playgrounds, volleyball, tennis, and basketball courts, horseshoe, shuffleboard,
spa, swimming pools, and miniature golf facilities.
"Turtle Beach (CA) Property" means that certain campground
facility located in San Joaquin County, California, commonly referred to as
Turtle Beach Campground.
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"Wilderness Lakes (CA) Property" means that certain campground
facility located in Riverside County, California, commonly referred to as
Wilderness Lakes Campground, which consists of 519 campsites, rental trailers,
adult lodge, lodge, recreation center, teen room, laundromat, country store,
ball fields, playground, volleyball, tennis and basketball courts, horseshoe,
shuffleboard, 3 spas, 2 swimming pools, fishing canals, and 18 hole miniature
golf facilities.
"Windsor (CA) Property" means that certain campground facility
located in Sonoma County, California, commonly referred to as Windsor
Campground, which consists of 61 full hook-up campsites, 34 water and power
hook-up campsites, rental trailers, 2 garden homes, adult lodge, pool table,
family lodge, family pool, tether ball, and playground facilities.
"Yosemite Lakes (CA) Property" means that certain campground
facility located in Tuolumne County, California, commonly referred to as
Yosemite Lakes Campground, which consists of 254 full-hook-up campsites, 130
tent sites, rental trailers, 10 bunkhouse cabins, 10 yurts, 6 garden homes,
adult lodge, family lodge, country store, laundromat, playground, bike rentals,
horseback riding, volleyball and basketball courts, horseshoe, shuffleboard,
fishing canals, miniature golf facilities, horseback riding, and beach, lake and
river with kayak and paddleboat facilities.
"Florida Property" means that certain campground facility
located in Orlando, Lake County, Florida, commonly referred to as Orlando
Campground, which consists of 254 full-hook-up campsites, 130 tent sites, rental
trailers, adult lodge, family lodge, laundromat, playground, volleyball and
basketball courts, horseshoe, shuffleboard, fishing canals, miniature golf
facilities and beach, lake and river with kayak and paddleboat.
"Indiana Property" means the Horseshoe Lakes (IND) Property
and the Indian Lakes (IND) Property.
"Horseshoe Lakes (IND) Property" means that certain campground
facility located in Vermillion County, Indiana, commonly referred to as
Horseshoe Lake Campground, which consists of 11 lakes, 109 full-hook-up
campsites, 9 power and water hook-up campsites, 25 overflow sites, rental
trailers, family center, laundromat, sheltered picnic area, baseball field,
basketball court, tennis courts, volleyball court, bocce ball court, horseshoe,
shuffleboard, miniature golf facilities, lake fishing, swimming lake, and
swimming pool facilities.
"Indian Lakes (IND) Property" means that certain campground
facility located in Ripley County, Indiana, commonly referred to as Indian Lakes
Campground, which consists of 7
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lakes, 44 full-hook-up campsites, 1202 power and water hook-up campsites, rental
cabins, RV storage, convenience store, adult lodge, family lodge, pavilion,
laundromat, picnic area, ball field, lighted basketball and tennis courts,
volleyball court, bocce ball court, horseshoe, shuffleboard, playground, indoor
swimming pool, 2 outdoor swimming pools, miniature golf facilities, 9 hole golf
course, lakes, boat dock and launch, aqua-cycles, canoes, and paddleboats
facilities.
"Michigan Property" means that certain campground facility
located in St. Clair County, Michigan, commonly referred to as St. Clair
Campground, which consists of 80 full hook-up campsites, 70 water and power
hook-up campsites, 13 rental trailers, trading post, laundromat family center,
game room, basketball and volley ball court, big toy playground, horseshoe,
shuffleboard, swimming pool, cross-country skiing, sledding, and ice skating
facilities.
"Mississippi Property" means the Indian Point (MS) Property.
"Indian Point (MS) Property" means that certain campground
facility located in Jackson County, Mississippi, commonly referred to as Indian
Point Campground, which consists of approximately 140 acres, bayou frontage, 60
full-hook-up campsites, 54 power and water hook-up campsites, rental trailers,
16 rental cabins, country store, adult lodge, family lodge, indoor and outdoor
pavilion, basketball and volleyball court, miniature golf, horseshoe,
shuffleboard, swimming pools, river and bayou marina, docks, boat launches, and
pontoon boats facilities.
"Nevada Property" means that certain campground facility
located in Clark County, Nevada, commonly referred to as Las Vegas Campground,
which consists of 214 full hook-up campsites, rental trailers, trading post,
laundromat, family center, basketball court, horseshoe, shuffleboard, and
swimming pool facilities.
"New Jersey Property" means that certain campground facility
located in Atlantic County, New Jersey, commonly referred to as Chestnut Lakes
Campground, which consists of 64 full hook-up campsites, 116 power and water
hook-up campsites, 50 water only campsites, rental trailers, 5 garden homes,
country store, laundromat, adult lounge, conference room, clubhouse, video game
room, TV room, volleyball court, horseshoe, shuffleboard, tetherball, lake,
canoes, and swimming pool facilities.
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"North Carolina Property" means the Forest Lake (NC) Property.
"Forest Lake (NC) Property" means that certain campground
facility located in Davie County, North Carolina, commonly referred to as Forest
Lake Campground, which consists of 246 full hook-up campsites, 12 tent sites
(water and power only), rental trailers, 18 cabins, trading post, laundromat,
adult activity center, video game room, miniature golf, softball field,
basketball court, lighted tennis courts, volleyball court, horseshoe,
shuffleboard, spa, 2 swimming pools, lake, and swimming beach facilities.
"Ohio Property" means the Kenisee Lake (OH) Property and the
Wilmington (OH) Property.
"Kenisee Lake (OH) Property" means that certain campground
facility located in Ashtabula County, Ohio, commonly referred to as Kenisee Lake
Campground, which consists of several lakes, the largest of which is 30 acres,
78 full hook-up campsites, 1 water and power hook-up campsite, 41 overflow
sites, rental trailers, activity center, family center, gazebo, game room,
laundromat, miniature golf, frisbee golf course, basketball volleyball and
pickleball courts, shuffleboard, cross-country skiing, fishing lakes, lakes,
docks, jon boats, and spa facilities.
"Wilmington (OH) Property" means that certain campground
facility located in Clinton County, Ohio, commonly referred to as Wilmington
Campground, which consists of a lake, 1006 full hook-up campsites, 26 water and
power hook-up campsites, 20 overflow sites, rental trailers, RV storage trading
post, laundromat, adult lodge, family lodge, meeting room, picnic area,
playground, 9 hole miniature golf, basketball courts, tennis courts, volleyball
courts, horseshoe, shuffleboard, spa, enclosed swimming pool, lake, and canoes
facilities.
"Oregon Property" means the Bend (OR) Property, the Pacific
City (OR) Property, and the South Jetty (OR) Property.
"Bend (OR) Property" means that certain campground facility
located in Deschutes County, Oregon, commonly referred to as Bend Campground,
which consists of 301 full hook-up campsites, 50 overflow sites, rental
trailers, 3 rental yurts, 4 cottages, RV storage, convenience store, laundromat,
adult lodge, hot tub, family center, movie house, driving range, playgrounds,
miniature golf, frisbee golf course, basketball court, tennis courts, volleyball
court, horseshoe, swimming pools and wading pool facilities.
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"Pacific City (OR) Property" means that certain campground
facility located in Tillamook County, Oregon, commonly referred to as Pacific
City Campground, which consists of 61 full hook-up campsites, 244 water and
power hook-up campsites, overflow sites, rental trailers, RV storage, trading
post, laundromat, beauty/barber shop, adult lodge, family center, children's
play area, basketball courts, horseshoe, shuffleboard, wading pool, enclosed
swimming pool and wading pool facilities.
"South Jetty (OR) Property" means that certain campground
facility located in Lane County, Oregon, commonly referred to as South Jetty
Campground, which consists of 40 full hook-up campsites, 130 water and power
hook-up campsites, overflow sites, rental trailers (including one handicapped
accessible), 2 garden homes, RV storage, country store, laundromat, adult lodge,
family lodge, teen center, video game room, pavilion, hot tubs, dry sauna,
playground, badminton, volleyball courts, sports court, horseshoe, shuffleboard,
family pool and pool facilities.
"Pennsylvania Property" means the Hershey Campground (PA)
Property.
"Hershey Campground (PA) Property" means that certain
campground facility located in Lebanon County, Pennsylvania, commonly referred
to as Hershey Campground, which consists of 250 full-hook-up campsites, 32 water
and power hook-up campsites, 10 additional overflow sites, rental trailers,
adult lodge, family center, game room, laundry facilities, pavilion, recreation
center, country store, covered bridge, basketball court, double tennis court,
fishing dock, nature trail, pickleball court, playground, shuffleboard,
volleyball courts, spa, swimming pool and wading pool, and miniature golf
facilities.
"South Carolina Property" means the Carolina Landing (SC)
Property.
"Carolina Landing (SC) Property" means that certain campground
facility located in Oconee County, South Carolina, commonly referred to as
Carolina Landing Campground, which consists of 60 full-hook-up campsites, 120
water and power hook-up campsites, 150 additional overflow sites on lake
frontage property with 18 rental cabins, arts and crafts pavilion, country
store, family lodge, laundry facilities, TV room, basketball court, horseshoe
pits, pingpong, tennis courts, volleyball court, pool tables, miniature golf,
indoor and outdoor pool and boat dock facilities.
"Tennessee Property" means the Cherokee Landing (TN) Property
and the Natchez Trace (TN) Property.
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"Cherokee Landing (TN) Property" means that certain campground
facility located in Hardeman County, Tennessee, commonly referred to as Cherokee
Landing Campground, which consists of 296 water and power hook-up campsites, 30
rental cabins, clubhouse, family lodge, laundry facilities, television rooms,
video/game room, pet path, basketball court, badminton, family pool, horseshoe
pits, nature trails, pingpong, pool tables, shuffleboard, soccer field, softball
field, tennis court, volleyball courts, lake, fishing, and miniature golf
facilities.
"Natchez Trace (TN) Property" means that certain campground
facility located in Lewis & Lawrence Counties, Tennessee, commonly referred to
as Natchez Trace Campground, which consists of 126 full-hook-up campsites, 368
water and power hook-up campsites, 159 additional overflow sites, 58 rental
cabins, adult lodge, conference rooms, country store, exercise room, family
lodge, laundry facilities, pavilions, running track, video/game room, basketball
court, handball, horseshoe pits, lighted tennis courts, nature trails, pingpong,
playground, pool tables, racquetball, running track, sauna and swimming pools,
shuffleboard, softball field, volleyball court, miniature golf, beach, lake,
boat dock, fish cleaning station, with canoe, rowboat, and pontoon boat
facilities.
"Texas Property" means the Bay Landing (TX) Property, the
Colorado River (TX) Property, the Lake Conroe (TX) Property, the Lake Tawakoni
(TX) Property, the Lake Texoma (TX) Property, the Lake Whitney (TX) Property,
and the Medina Lake (TX) Property.
"Bay Landing (TX) Property" means that certain campground
facility located in Wise County, Texas, commonly referred to as Bay Landing
Campground, which consists of 250 campsites, rental trailers, 1 garden home, 30
rental cabins and 4 rental A-frames, adult lounge, family center, video/game
room, pavilions, snack bar, laundry facilities, basketball court, softball
field, volleyball court, horseshoe pits, nature trails, pingpong, playground,
pool tables, shuffleboard, boat launch, beach, lake, bicycles, swimming pool and
miniature golf facilities.
"Colorado River (TX) Property" means that certain campground
facility located in Colorado County, Texas, commonly referred to as Colorado
River Campground, which consists of 59 full-hook-up campsites, 69 water and
power only hookups, additional overflow sites, rental trailers, lodge, cabana,
chapel, activity center, trading post, game room, hot tub, laundry facilities,
RV storage, shuffleboard, horseshoe pits, tennis courts, volleyball courts,
basketball courts, pickleball
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courts, miniature golf, swimming pool, river, lake, boat ramp and boat rental
facilities.
"Lake Conroe (TX) Property" means that certain campground
facility located in Montgomery County, Texas, commonly referred to as Lake
Conroe Campground, which consists of 355 full-hook-up campsites, 30 water and
power only hook-ups, rental trailers, a family center, trading post, basketball
court, horseshoe pits, shuffleboard, tennis courts, volleyball courts, walking
course, swimming pool, spa, miniature golf, two ponds, lake, boat ramp, and
bicycle and boat rental facilities.
"Lake Tawakoni (TX) Property" means that certain campground
facility located in Rains County, Texas, commonly referred to as Lake Tawakoni
Campground, which consists of 251 full-hook-up campsites, 68 water and power
only hook-ups, 100 additional overflow sites, rental units, adult lodge, chapel,
crappie house, family center, superhost building, laundry facilities, trading
post, video game room, horseshoe pits, nature trails, pickleball courts,
shuffleboard, volleyball court, RV storage, fish cleaning station, miniature
golf, spas, swimming pools, marina, and 6 miles of lake frontage with boat ramp
and boat storage facilities.
"Lake Texoma (TX) Property" means that certain campground
facility located in Grayson County, Texas, commonly referred to as Lake Texoma
Campground, which consists of 100 full-hook-up campsites, 48 water and power
only hook-ups, rental trailers and 18 rental cabins, adult lodge, cabins, family
center, laundry facilities, trading post, basketball court, horseshoe pits,
nature trails, shuffleboard courts, volleyball courts, RV storage, children's
pool, miniature golf, spas, swimming pools, lake, boat ramp/courtesy dock, and
fishing dock.
"Lake Whitney (TX) Property" means that certain campground
facility located in Hill County, Texas, commonly referred to as Lake Whitney
Campground, which consists of 141 full-hook-up campsites, 81 water and power
hook-up campsites, 16 additional overflow sites, 6 tent sites, rental trailers,
rental trailers, adult lodge, family lodge, laundry facilities, pavilion and
kitchen, propane, RV storage and RV supply store, basketball court, horseshoe
pits, nature trails, pickleball court, shuffleboard, tennis courts, volleyball
courts, adult pool and spa, family swimming pool and miniature golf facilities.
"Medina Lake (TX) Property" means that certain campground
facility located in Bandera County, Texas, commonly referred to as Medina Lake
Campground, which consists of 220 full-hook-up campsites, 167 water and power
hook-up campsites, rental trailers, adult lodge, cabana, family center, trading
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post, shuffleboard courts, volleyball courts, spa, swimming pool, wading pool,
miniature golf, lake, boat ramp and dock, fish dock, and fish cleaning station.
"Virginia Property" means the Chesapeake Bay (VA) Property,
the Lynchburg (VA) Property, and the Virginia Landing (VA) Property.
"Chesapeake Bay (VA) Property" means that certain campground
facility located in Gloucester County, Virginia, commonly referred to as
Chesapeake Bay Campground, which consists of 355 full-hook-up campsites, 18
water and power only hook-ups, rental trailers and 18 rental cabins, adult
lounge, chapel, family center, fire ring, game room, laundry facilities,
playground, sanitary station, horseshoe pits, shuffleboard, tennis court,
volleyball court, basketball court, beach, fishing, boat launch, adult pool,
family pool, indoor spa, and miniature golf facilities.
"Lynchburg (VA) Property" means that certain campground
facility located in Campbell County, Virginia, commonly referred to as Lynchburg
Campground, which consists of 191 full-hook-up campsites, 32 water and power
only hook-ups, rental trailers, adult lodge, family center, game room, laundry
facilities, pavilion, athletic field, basketball courts, horseshoe pits,
playground, shuffleboard courts, tennis court, volleyball court, wilderness
trail, fishing lakes, miniature golf, swimming beach, swimming pool and spa.
"Virginia Landing (VA) Property" means that certain campground
facility located in Accomack County, Virginia, commonly referred to as Virginia
Landing Campground, which consists of 200 water and power hook-up campsites, 46
additional overflow sites, rental trailers, 19 rental cabins, adult lodge,
country store, family lodge, laundry facilities, clam beds, horseshoe pits,
pingpong, pool tables, shuffleboard, softball field, volleyball court, miniature
golf, nine-hole pitch and putt golf course, family pool, river, fish cleaning
station, paddle boats, and boat dock and boat launch on shorefront property.
"Washington Property" means the Birch Bay (WA) Property, the
Chehalis (WA) Property, the LaConner (WA) Property, the Leavenworth (WA)
Property, the Little Diamond (WA) Property, the Long Beach (WA) Property, the
Mt. Vernon (WA) Property, and the Rainier (WA) Property.
"Birch Bay (WA) Property" means that certain campground
facility located in Whatcom County, Washington, commonly referred to as Birch
Bay Campground, which consists of 198 full-hook-up campsites, 8 tent sites, 10
additional overflow sits, rental
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trailers and 1 garden rental home, adult lodge, family lodge, country store,
laundry facilities, tetherball, pet path, horseshoe pits, playground, and
swimming pool.
"Chehalis (WA) Property" means that certain campground
facility located in Lewis County, Washington, commonly referred to as Chehalis
Campground, which consists of approximately 35 full-hook-up campsites, 290 water
and power hook-up campsites, 1 rental cabin, 2 garden rental homes, rental
trailers, adult lodge, amphitheater, family center, gazebo, laundry facilities,
trading post, ballfield, basketball court, horseshoe pits, playground, RV
storage, shuffleboard, tennis courts, volleyball court, sauna, spa, swimming
pools, wading pool, and miniature golf facilities.
"Leavenworth (WA) Property" means that certain campground
facility located in Chelan County, Washington, commonly referred to as
Leavenworth Campground, which consists of 48 full-hook-up campsites, 212 water
and power hook-up campsites, rental trailers, and 1 hostel which includes 7
sleeping rooms, a kitchen, living room, bathrooms and showers; adult lodge,
family center, game room, big screen TV, laundry facilities, game room, trading
post, ballfield, basketball courts, hiking trail, horseshoe pits, playground, RV
storage area, restrooms, shuffleboard, tennis courts, tetherball, volleyball
court, miniature golf, wading pool and swimming pool facilities.
"Little Diamond (WA) Property" means that certain campground
facility located in Pend Oreille County, Washington, commonly referred to as
Little Diamond Campground, which consists of approximately 541 water and power
hook-up campsites, rental trailers, 1 garden rental home, 1 rental cabin, 1
rental granite lodge, country store, family lodge, laundry facilities, outdoor
pavilions, picnic area, horseshoe pits, nature trails, softball field, stable,
volleyball court, spa, swimming pool, cross-country skiing, fish cleaning
station, fishing and swimming lake, boat launch, beach with fishing boat, bike
rental, canoe and paddleboat facilities.
"Long Beach (WA) Property" means that certain campground
facility located in Pacific County, Washington, commonly referred to as Long
Beach Campground, which consists of 120 full-hook-up campsites, 60 additional
overflow sites, rental trailers, family lodge, laundry facilities, private
picnic/tenting area, basketball court, horseshoe pits, nature trails,
playground, pool table, volleyball court, hot tub and swimming pool, video
games, fish cleaning station, beach and river with bike rental facilities.
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"Mt. Vernon (WA) Property" means that certain campground
facility located in Skagit County, Washington, commonly referred to as Mt.
Vernon Campground, which consists of 17 full-hook-up campsites, 220 water and
power hook-up campsites, 3 tent sites, rental trailers, adult lounge, coffee
shop/snack bar, family center, group rental area, laundromat, ballfields,
basketball court, horseshoe pits, nature trails, pickleball court, playground,
RV storage, shuffleboard, video games, volleyball court, spa, swimming pool and
wading pool and miniature golf facilities.
"Rainier (WA) Property" means that certain campground facility
located in Lewis County, Washington, commonly referred to as Rainier Campground,
which consists of approximately 109 acres, 120 full-hook-up campsites, 536 water
and power hook-up campsites, additional overflow sites, rental trailers, 2
garden rental homes, adult lodge, country store, exercise room, family lodge,
food service, laundry facilities, pavilions, RV storage, tanning booth, movie
rentals, basketball court, cross-country skiing, horseshoe pits, pingpong,
playgrounds, pool table, softball field, volleyball court, walking trail, sauna,
spa and swimming pool facilities.
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SCHEDULE RP DEF-2
SUPPLEMENTAL REAL PROPERTY DEFINITIONS
EFFECTIVE AS OF THE MAKING OF THE LEISURE TIME ADVANCE
"Oregon Property" additionally means the Neskowin Creek (OR)
Property, the Seaside (OR) Property, and the Whaler's Rest (OR) Property.
"Neskowin Creek (OR) Property" means that certain campground
facility located in Tillamook County, Oregon, commonly referred to as Neskowin
Creek Resort, which consists of over 125 full hook-up campsites, large log cabin
clubhouse, indoor family swimming pool, laundromat, barbeque facilities, a
volleyball area, tennis courts, basketball courts, horseshoe pits, and a
children's play area.
"Seaside (OR) Property" means that certain campground facility
located in Clatsop County, Oregon, commonly referred to as Seaside Resort, which
consists of over 250 full hook-up campsites, large clubhouse area including
restaurant facilities, heated indoor family swimming pool complex including
adult jacuzzi, adult exercise room, men's and women's bath house including
shower facilities, laundromat, a volleyball area, tennis courts, basketball
courts, horseshoe pits, and two children's play areas.
"Whaler's Rest (OR) Property" means that certain campground
facility located in Lincoln County, Oregon, commonly referred to as Whaler's
Rest Resort, which consists of over 150 full hook-up campsites, two large
clubhouses, indoor family swimming pool complex including adult jacuzzi, three
bath houses including shower and restroom facilities, laundromat, convenience
store, restaurant facility, tennis court, small basketball court, horseshoe
pits, and shuffle board court.
"Washington Property" additionally means the Cascade (WA)
Property, the Crescent Bar (WA) Property, the Grandy Creek (WA) Property, the
Oceana (WA) Property, the Paradise (WA) Property, the Thunderbird (WA) Property,
and the Warden Lake (WA) Property.
"Cascade (WA) Property" means that certain campground facility
located in King County, Washington, commonly referred to as Cascade Resort,
which consists of 150 full-hook-up campsites, a large clubhouse with kitchen
facilities, a craft room, a rec room, an adult exercise room, men's and women's
restrooms with showers, adjacent large heated swimming pool complex with adult,
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family and children's pools along with a large jacuzzi, a second bath house with
restrooms and showers, barbeque facilities, convenience store, mini-arcade room,
basketball, tennis and shuffleboard courts, horseshoe pits, volleyball area, two
playgrounds, and a putt-putt golf course.
"Crescent Bar (WA) Property" means that certain campground
facility located in Grant County, Washington, commonly referred to as Crescent
Bar Resort, which consists of over 100 full hookup campsites, clubhouse with
restaurant, gazebo, a children's play area, horseshoe pits and basketball,
tennis and volleyball courts, laundromat, pool area with family pool and
children's wading facilities, large adult jacuzzi, men=s and women's restrooms
and shower facilities.
"Grandy Creek (WA) Property" means that certain campground
facility located in Skagit County, Washington, commonly referred to as Grandy
Creek Resort, which consists of over 200 full-hook-up campsites, clubhouse with
adult and children's areas, men's and women's restrooms with showers, a pool
complex including a family swimming pool, a children's wading pool and large
adult jacuzzi, near full-length basketball court, children's play area,
convenience store, horseshoe pits, and a volleyball court.
"Oceana (WA) Property" means those certain two campground
facility located in Grays Harbor County, Washington, commonly referred to as
Oceana I and Oceana II Resorts, which consist of over 100 full or partial
hook-up campsites, two clubhouses with television and gathering rooms, one with
a kitchen, three separate bath houses with restrooms and showers, and two
clam-cleaning stations, large adult jacuzzi, children's play area, horseshoe
pits, volleyball area, horse corrals, and two bridges providing access to the
Pacific Ocean.
"Paradise (WA) Property" means that certain campground
facility located in Lewis County, Washington, commonly referred to as Paradise
Resort, which consists of over 350 full hook-up campsites, two private lakes,
heated swimming pool complex, clubhouse consisting of a gathering area, kitchen
facility, and convenience store, with lake view deck, two lakeside horseshoe
pits, pool complex consisting of adult and family pools, children's wading pool,
and an extra-large jacuzzi, putt-putt golf, tennis and shuffleboard courts,
basketball and volleyball areas, children's playground areas, craft and game
rooms and two bath house facilities with restrooms and showers.
"Thunderbird (WA) Property" means that certain campground
facility located in Snohmish County, Washington, commonly referred to as
Thunderbird Resort, which consists of
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over 120 campsites (including tent sits), large swimming pool complex with adult
and family swimming pools, a children's wading pool and a large adult jacuzzi,
barn/clubhouse with restaurant, covered picnic shelters, shuffleboard and
volleyball courts, horseshoe pits, children's play areas, putt-putt golf course,
convenience store, and restroom/shower facilities.
"Warden Lake (WA) Property" means that certain campground
facility located in Grant County, Washington, commonly referred to as Warden
Lake Resort, which consists of 35 RV sites and 30 tent sites, two-level
clubhouse with an activity area, eating area and kitchen, men's and women's
restrooms and showers, children's play area and horseshoe pits.
<PAGE> 89
SCHEDULE P-1
PERMITTED LIENS
The Known Prior Monetary Liens
With respect to the Excluded Real Property, (i) Satisfied Indebtedness Liens,
(ii) exceptions, encumbrances and other matters filed for record, (iii) any
encroachments which a survey would disclose and (iv) the terms and conditions of
any lease creating the Borrower's interest therein.
Those items set forth on the 6 pages following this page, numbers P-1(a) -
P-1(f)
<PAGE> 90
SCHEDULE 3.2(b)
REAL PROPERTY TO BE MORTGAGED CONCURRENTLY
WITH THE LEISURE TIME ADVANCE
The Neskowin Creek (OR) Property
The Seaside (OR) Property
The Whaler's Rest (OR) Property
The Cascade (WA) Property
The Crescent Bar (WA) Property
The Grandy Creek (WA) Property
The Oceana (WA) Property
The Paradise (WA) Property
The Thunderbird (WA) Property
The Warden Lake (WA) Property.
<PAGE> 91
SCHEDULE 4.4
SCHEDULE OF REAL PROPERTY TO BE SOLD
<TABLE>
<CAPTION>
MINIMUM NET
ASSET PROCEEDS OF SALE
- ----- ----------------
<S> <C>
TT/NACO SYSTEM CAMPGROUNDS*
Bay Landing $1,328,000
Birch Bay 1,400,000
Carolina Landing 728,000
Cherokee Landing 456,000
Chestnut Lake 560,000
Colorado River 464,000
Donner Pass 1,560,000
Indian Point 904,000
Kenisee Lake 454,000
Long Beach 680,000
Mount Vernon 1,056,000
Natchez Trace 2,440,000
Raineer Park 984,000
Turtle Beach 275,000
Wilmington 584,000
LEISURE TIME CAMPGROUNDS*
Grandy Creek 780,000
Neskowin 1,280,000
Thunderbird 868,000
Warden Lake 272,000
*80% of values from current appraisals.
EXCESS ACREAGE ASSOCIATED WITH CAMPGROUNDS
Carolina Landing Acreage 40,000
Indian Lakes Golf Course 300,000
Lake of the Springs Acreage 176,000
Little Diamond Acreage 128,000
Mount Vernon Acreage 240,000
Oceana Acreage 380,000
Wilderness Acreage 460,000
</TABLE>
<PAGE> 92
<TABLE>
<S> <C>
MISCELLANEOUS PROPERTIES
Acreage, Jefferson County, WA 20,000
One lot, Pierce County, WA -0-
One lot, Mason County, WA -0-
One lot, Chelan County, WA -0-
One lot, Whitman County, WA -0-
One lot, Point Clear, MS -0-
</TABLE>
<PAGE> 93
SCHEDULE 5.7-1
LIST OF PENDING LITIGATION
AS OF DECEMBER 3, 1999
THOUSAND TRAILS, INC.
NATIONAL AMERICAN CORPORATION
PENDING LITIGATION
AS OF DECEMBER 3, 1999
INSURED CLAIMS
1. JOSEPH MILLER V. THOUSAND TRAILS, INC., ET. AL., filed in the Superior
Court of California, County of San Diego. Plaintiff allegedly sustained
personal injuries on August 26, 1990 when he slipped and fell on the
steps in the swimming pool at one of the Company's campgrounds.
Plaintiff alleges that the Company was negligent in its maintenance and
operation of the campgrounds and asks for unspecified damages and
costs.
2. WILLIAM NELSON V. THOUSAND TRAILS, INC., ET. AL., filed in Superior
Court of California, County of Riverside. In this action, plaintiff
allegedly sustained personal injuries when a security gate came down
and struck his shoulder as he was leaving one of the Company's
campgrounds. Plaintiff alleges that the Company was negligent in its
maintenance and operation of the campground and asks for unspecified
damages and costs.
3. ELIZABETH HOLTON V. UST WILDERNESS MANAGEMENT CORPORATION ("UST"),
filed in U.S. District Court for the Southern District of Utah. In this
action, plaintiff allegedly sustained personal injuries when she was
struck by a rock dislodged by hikers at a campground operated by UST, a
subsidiary of Thousand Trails. Plaintiff alleges that UST was negligent
in its maintenance and operation of the campground and asks for
unspecified damages and costs.
4. MARTHA MOORE V. THOUSAND TRAILS, INC., filed in Small Claims Court,
Ottawa, Illinois. In this action, plaintiff allegedly sustained
personal injuries on June 2, 1996, when she slipped and fell at one of
the Company's campgrounds. Plaintiff alleges that the Company was
negligent in its maintenance and operation of the campground and asks
for unspecified damages and costs.
<PAGE> 94
5. MARY ANN LINDQUIST, ET AL V. THOUSAND TRAILS, INC., ET. AL., filed in
Superior Court of California, County of Los Angeles. In this action,
plaintiff allegedly sustained personal injuries in a motor vehicle
accident at one of the Company's campgrounds. Plaintiff alleges that
the Company was negligent in its maintenance and operation of the
campground and asks for unspecified damages and costs.
6. PROGRESSIVE COUNTY MUTUAL INSURANCE COMPANY V. THOUSAND TRAILS, INC.,
ET. AL., filed in the District Court of Colorado County, Texas. In this
action, plaintiff paid to repair damages to its insured's recreational
vehicle that was caused by a falling tree branch at one of the
Company's campgrounds. Plaintiff alleges that the Company was negligent
in its maintenance and operation of the campground and asks for
unspecified damages and costs.
7. PATRICIA M. CRAIG, ET. AL., V. BEECH MOUNTAIN LAKES CORPORATION, ET.
AL., filed in the Court of Common Pleas of Luzerne County,
Pennsylvania. In this action, plaintiff allegedly sustained personal
injuries at the Beech Mountain resort. Plaintiff alleges that a
subsidiary of the Company was negligent in its maintenance and
operation of the resort and asks for unspecified damages and costs.
8. DOROTHY M. KEIFLINE V. RECREATION LAND CORPORATION, ET. AL., filed in
Court of Common Pleas of Clearfield County, Pennsylvania. In this
action, plaintiff allegedly sustained personal injuries at the Treasure
Lake Resort. Plaintiff alleges that a subsidiary of the Company was
negligent in its maintenance and operation of the resort and asks for
unspecified damages and costs.
9. MARIANNE PARAN V. NATIONAL AMERICAN CORPORATION ("NACO"), ET. AL.,
filed in Superior Court of California, County of Sonoma. In this
action, plaintiff allegedly sustained personal injuries at the
waterslide adjacent to one of the Company's campgrounds. Plaintiff
alleges that the Company was negligent in its maintenance and operation
of the waterslide and asks for unspecified damages and costs.
10. HILDA MACIAS V. NATIONAL AMERICAN CORPORATION ("NACO"), ET. AL., filed
in Superior Court of California, County of Sonoma. In this action,
plaintiff allegedly sustained personal injuries at the waterslide
adjacent to one of the Company's campgrounds. Plaintiff alleges that
the Company was negligent in its maintenance and operation of the
waterslide and asks for unspecified damages and costs.
<PAGE> 95
11. EDITH KITCHEL V. WESTERN FUN CORPORATION, filed with the 271st District
Court of Wise County, Texas. In this action, plaintiff allegedly
sustained personal injuries when she slipped and fell at a campground
owned and operated by a subsidiary of the Company. Plaintiff alleges
that such subsidiary was negligent in its maintenance of the campground
and asks for unspecified damages and costs.
12. JUDITH BARTZ V. SILVERWOODS ASSOCIATION, INC., ET. AL., filed in Court
of Common Pleas of Clearfield County, Pennsylvania. In this action,
plaintiff allegedly sustained personal injuries when she slipped and
fell at the Treasure Lake Resort. Plaintiff alleges that a subsidiary
of the Company was negligent in its maintenance and operation of the
resort and ask for unspecified damages and costs.
13. HAYDEE CARDONE V. QUAIL HOLLOW VILLAGE, INC., ET. AL., filed in Court
of Common Pleas of Luzerne County, Pennsylvania. In this action,
plaintiff allegedly sustained personal injuries when she slipped and
fell in the pool area at the Beech Mountain Resort. Plaintiff alleges
that a subsidiary of the Company was negligent in its maintenance and
operation of the such facility and ask for unspecified damages and
costs.
14. STEVE TURGEON V. RECREATION LAND CORPORATION, ET. AL., filed in Court
of Common Pleas of Clearfield County, Pennsylvania. In this action,
plaintiff allegedly sustained personal injuries on October 16, 1994,
when he slipped and fell at the Treasure Lake Resort. Plaintiff alleges
that a subsidiary of the Company was negligent in its maintenance and
operation of the resort and ask for unspecified damages and costs.
15. ANGELA MUELLER V. BEECH MOUNTAIN LAKES CORPORATION, ET. AL., filed in
Court of Common Pleas of Luzerne County, Pennsylvania. In this action,
plaintiff allegedly sustained personal injuries at the Beech Mountain
Resort. Plaintiff alleges that a subsidiary of the Company was
negligent in its maintenance and operation of the resort and ask for
unspecified damages and costs. No complaint has been filed.
16. ANDRE MASTERS VS. FLEETWOOD ENTERPRISES, INC., ET AL., INCLUDING
THOUSAND TRAILS, INC., filed in the Superior Court of California. In
this action, plaintiff allegedly sustained personal injuries in a
trailer at one of the Company's campgrounds. Plaintiff alleges that the
Company
<PAGE> 96
was negligent in its maintenance and operation of the campground and
asks for unspecified damages and costs.
17. BARBARA J. BELL V. THOUSAND TRAILS, INC., filed in Superior Court of
California, County of Riverside. In this action, plaintiff allegedly
sustained personal injuries from an explosion in a trailer at one of
the Company's campgrounds. Plaintiff alleges that the Company was
negligent in its maintenance and operation of the campground and asks
for unspecified damages and costs.
18. DOREEN WIENER, ET. VIR. V. THOUSAND TRAILS, INC., filed in the Circuit
Court of Lake County. In this action, plaintiff allegedly sustained
personal injuries at one of the Company's campgrounds. Plaintiff
alleges that the Company was negligent in its maintenance and operation
of the campground and asks for unspecified damages and costs.
19. RACHELLE LAVERGNE VS. UST WILDERNESS MANAGEMENT CORPORATION ("UST"),
ET. AL., filed in the United States District Court for the District of
Oregon. In this action, plaintiff allegedly sustained personal injuries
at a campground operated by UST, a subsidiary of Thousand Trails.
Plaintiff alleges that UST was negligent in its maintenance and
operation of the campground and asks for unspecified damages and costs.
20. HAYDEE CORDONE VS. RESORT CONDOMINIUMS, ET AL INCLUDING USTRAILS, INC.,
filed in the Common Pleas Court in Luzerne County, Pennsylvania. In
this action, plaintiff allegedly sustained personal injuries while
falling at the Quail Hollow Village timeshare properties in Drums,
Pennsylvania. Plaintiff alleges that the Company was negligent in its
maintenance and operation of the campground and asks for unspecified
damages and costs.
The above cases have been tendered to the Company's insurance carrier to defend.
The insurance carrier accepted the defense of the case described in paragraph 1
above subject to a reservation of rights.
UNINSURED CLAIMS
1. NATIONAL AMERICAN CORPORATION ("NACO"), ET. AL. V. RECLAMATION DISTRICT
NO. 17, ET. AL., filed in Superior Court of California, County of San
Joaquin. In this action, plaintiff seeks to recover damages to NACO's
Turtle Beach campground that were allegedly caused by defendants'
wrongful cutting of a dike during a period of flooding.
<PAGE> 97
2. SANDRA ANDERSON V. NATIONAL AMERICAN CORPORATION ("NACO"), filed in the
District Court of the State of Oregon for Lane County. Plaintiff is a
former sales representative of NACO who alleges that NACO failed to pay
commissions due and owing. The plaintiff is not actively pursuing this
lawsuit and the Company believes that it will eventually be dismissed
for want of prosecution.
3. DIANA OLSEN V. NATIONAL AMERICAN CORPORATION ("NACO"), filed with the
California Workers Compensation Appeals Board. Plaintiff has filed a
claim under Labor Code Section 132(a) alleging that NACO terminated her
employment in retaliation for her filing a workers' compensation claim.
NACO's insurance carrier is defending the Section 132(a) claim;
however, by law, a violation of Section 132(a) is an uninsurable risk.
4. VILLAS OF HICKORY HILLS, INC. V. GENE THOMPSON, filed in the County
Court of Jackson County, Mississippi. In this action, plaintiff seeks
to recover from defendant certain amounts owing for rent, restaurant,
bar and pro shop billings which remain unpaid. The Company is not
actively pursuing this lawsuit.
5. JOEL LEVY V. NATIONAL AMERICAN CORPORATION ("NACO"), ET. AL., filed in
Superior Court of California, County of Los Angeles. Plaintiff is the
husband of a former employee at NACO's Cypress campground who is now
deceased. Plaintiff alleges that the employment of this former employee
was unlawfully terminated as a result of her age and false statements
allegedly made by her supervisor. Plaintiff asks for unspecified
damages and costs. The Company intends to vigorously defend this
lawsuit. The plaintiff is not actively pursuing this lawsuit and the
Company believes that it will eventually be dismissed for want of
prosecution.
6. ELIZABETH B. CURTIS V. NATIONAL AMERICAN CORPORATION, ET. AL., filed in
the Circuit Court of Accomack County, Virginia. In this action,
plaintiff alleged three causes of action relating to the termination of
her employment. The court has dismissed the first two causes of action.
The third cause of action alleges a breach of plaintiff's employment
contract and asks for damages of $50,000 and costs. The plaintiff is
not actively pursuing this lawsuit and the Company believes that it
will eventually be dismissed for want of prosecution.
7. THOMAS O'CONNOR V. RECREATION LAND CORPORATION, filed with the
Pennsylvania Human Relations Commission. In this
<PAGE> 98
action, plaintiffs allege that they are handicapped and were not given
equal housing for handicapped individuals while staying at the Treasure
Lake Resort. Plaintiff asks for unspecified damages and costs. The
Company intends to vigorously defend this lawsuit.
8. EULA H. POWELL VS. FOXWOOD HILLS PROPERTY OWNERS' ASSOCIATION, ET. AL.,
filed in the Court of Common Pleas of Anderson County, South Carolina.
Plaintiff purchased a lot at the Foxwood Resort from a subsidiary of
NACO. In this action, plaintiff alleges that the subsidiary of NACO
breached its contract with plaintiff by failing to complete certain
improvements at the Foxwood Resort. Plaintiff asks for unspecified
damages and costs. The Company intends to vigorously defend this
lawsuit.
9. JOSEPH I. ASKREN VS. THOUSAND TRAILS, INC., filed in the Marion County
Small Claims Court, Warren Township Division in Indianapolis, Indiana.
In this action, plaintiff alleges that the Company made certain
misrepresentations to plaintiff in connection with the sale of
plaintiff's membership camping contract. Plaintiff asks for damages of
$6,000.00. The Company intends to settle this lawsuit.
10. FOXWOOD PROPERTY OWNERS ASSOCIATION, INC. VS. FOXWOOD CORPORATION,
filed in state court in Seneca, South Carolina. In this action, the
plaintiff alleges that a subsidiary of the Company owes in excess of
$2.5 million for past due maintenance fees on subdivided lots owned by
such subsidiary at the Foxwood Resort. The Company denies the claim and
is vigorously defending this lawsuit.
11. TREASURE LAKE PROPERTY OWNERS ASSOCIATION VS. RESORT LAND CORPORATION,
ET AL., filed in the Court of Common Pleas of Clearfield County,
Pennsylvania. In this action, the plaintiff alleges that a subsidiary
of the Company owes in excess of $403,031 for past due maintenance fees
on subdivided lots owned by such subsidiary at the Treasure Lake
Resort. The Company is currently examining its options relative to this
matter.
12. VINCENT & ASSOCIATES, INC. D/B/A REMAX COUNTRYSIDE VS. NACO CORPORATION
D/B/A NATIONAL AMERICAN CORPORATION, JEFFERSON RESORT CORPORATION AND
USTRAILS, INC. BROKERS' COMMISSION, filed in the Circuit Court for
Jefferson County, Missouri. Plaintiff is claiming a real estate
commission from Defendant. Defendant denies same and will vigorously
defend this matter.
<PAGE> 99
13. WILLIAM J. CRADDOCK VS. CHEROKEE LANDING CORPORATION, filed in the
Court of General Sessions in Hardeman County, Tennessee. Plaintiff is
claiming breach of contract with damages of $9,068.50. The Company
intends to settle this lawsuit.
14. MEMBER LAWSUITS. The Company is typically a defendant in a small number
of lawsuits commenced by members seeking to rescind their membership
contracts based on alleged violations of consumer protection and/or
debt collection laws. It is the Company's practice to settle these
lawsuits for an amount which, to date, has not exceeded $10,000 per
member; however, a similar lawsuit against NACO that was taken to trial
resulted in a jury verdict and judgment against NACO in excess of
$800,000.
THREATENED CLAIMS
1. FOXWOOD PURCHASERS. Certain Foxwood purchasers are claiming breach of
promises for the timely completion of improvements. Total exposure
should not exceed $4 million. A class action lawsuit has not been filed
as of this date.
2. INDIAN POINT PURCHASERS. A ruling by the Mississippi Supreme Court in
1992 held that membership contracts sold in Mississippi are subject to
the Mississippi Timeshare Act. As NACO did not comply with the
Mississippi Timeshare Act in connection with its sale of membership
contracts at the Indian Point campground, these membership contracts
are purportedly subject to rescission at the option of the purchasers.
To date, no purchasers have requested rescission of their contracts
based on this court ruling.
3. BEECH MOUNTAIN PURCHASERS. Certain individuals have threatened a class
action lawsuit claiming that lots they purchased at the Beech Mountain
Resort are wetlands and are of no value. Most purchases were made over
13 years ago. All purchases were made on-site, with each individual
purchaser viewing his/her lot before signing a contract. There is no
lawsuit filed as of this date.
4. VILLAGE H PROPERTY OWNERS ASSOCIATION (VIRGINIA LANDING). The Village H
POA is threatening a lawsuit regarding the closure of the Virginia
Landing campground during the winter months.
<PAGE> 100
SCHEDULE 5.7-2
LIST OF LITIGATION TO BE EFFECTIVE
AS OF THE MAKING OF THE LEISURE TIME ADVANCE
As of December ____, 1999
<PAGE> 101
SCHEDULE 5.12
ADA DISCLOSURES
Settlement Agreement and General Release of All Claims, dated as of November
1997, between Johnnie Lacy and Thousand Trails, Inc., related to that certain
class action lawsuit entitled, Johnnie Lacy, et. al. v. Thousand Trails, Inc.,
USDC Case No. C-96-00441-SAW.
