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): March 6, 1996
HARLEY-DAVIDSON, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 1-9183 39-138235
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
3700 W. Juneau Avenue, Milwaukee, Wisconsin 53208
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 342-4680
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On March 6, 1996, Harley-Davidson, Inc. (the "Company")
completed the sale of substantially all of the assets of its Holiday
Rambler Recreational Vehicle Division (the "RV Division") to
Monaco Coach Corporation ("Monaco"). Monaco acquired the RV Division's
manufacturing operations located in Wakarusa, Indiana and 10 of its 14
Holiday World Recreational Vehicle Dealerships. Total consideration
consisted of approximately $22 million in cash, $3.0 million in preferred
stock of Monaco, a $12.0 million note from a Monaco subsidiary guaranteed
by Monaco and assumption by Monaco of certain liabilities of the acquired
operations in the approximate amount of $47 million. The amount of such
consideration was determined as a result of arm's length negotiations
between the parties and is subject to adjustment based on the final
statement of assets purchased and liabilities assumed, pursuant to the
purchase agreements. Additional proceeds are anticipated when the Company
disposes of the remaining four Holiday World dealerships. There is no
material relationship between Monaco and the Company or any of its
affiliates, directors or officers or any of their associates. The RV
Division employed approximately 1,450 people in connection with the
operations that Monaco acquired.
The foregoing summary description of the terms of the
transaction is qualified in its entirety by reference to the definitive
agreements relating to the transaction, attached as exhibits hereto, which
exhibits are incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
(b) Pro forma financial information.
1. Pro Forma Consolidated Balance Sheet as of December 31,
1995
(c) Exhibits.
2.1 Asset Purchase Agreement, dated as of March 4, 1996,
among Harley-Davidson, Inc., Holiday Holding Corp.,
Holiday World, Inc. (California), Holiday World, Inc.
(Texas), Holiday World, Inc. (Florida), Holiday World,
Inc. (Oregon), Holiday World, Inc. (Indiana), Holiday
World, Inc. (Washington), Holiday World, Inc. (New
Mexico), Monaco Coach Corporation, and MCC Acquisition
Corporation.
2.2 Asset Purchase Agreement, dated as of January 21,
1996, among Harley-Davidson, Inc., Holiday Rambler
LLC, State Road Properties L.P., and Monaco Coach
Corporation.
2.3 Amendment No. 1 dated as of March 4, 1996 to Asset
Purchase Agreement, dated as of January 21, 1996 among
Harley-Davidson, Inc., Holiday Rambler LLC, State Road
Properties L.P., and Monaco Coach Corporation.
2.4 Subordinated Promissory Note, dated March 4, 1996
between MCC Acquisition corporation and Holiday
Holding Corp.
HARLEY-DAVIDSON, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The pro forma consolidated balance sheet has been prepared assuming the
disposition of the Holiday Rambler Recreational Vehicle Division including
10 of its 14 Holiday World Recreational Vehicle Dealerships (collectively,
the RV Division) took place as of December 31, 1995. The historical
consolidated statement of operations for the year ended December 31, 1995
reflects income from continuing operations excluding the operating results
of the RV Division, which are included as part of discontinued operations.
The Company's debt structure and interest expense for the year ended
December 31, 1995 would not have been significantly impacted had the
disposition taken place at the beginning of 1995. The interest income
related to the note received in the transaction would not have been
significant; therefore, it was not deemed necessary to include a pro forma
statement of operations for the year ended December 31, 1995.
The unaudited pro forma consolidated balance sheet and notes thereto
should be read in conjunction with the consolidated financial statements
and notes thereto of the Company, incorporated by reference from the
Company's Annual Report on Form 10-K for the audited fiscal year ended
December 31, 1995 to be filed with the Commission by March 29, 1996.
The unaudited pro forma information is not necessarily indicative of the
consolidated results of operations or consolidated financial position that
would have resulted had the RV Division disposition occurred as described
above, nor is it necessarily indicative of the results of operations of
future periods or future consolidated financial position.
HARLEY-DAVIDSON, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1995
(Unaudited, in thousands)
Originally Pro Forma
ASSETS Reported Adjustments Pro Forma
Current assets:
Cash and cash equivalents $ 31,462 $ 22,350 (A)$ 53,812
Accounts receivable, net 134,210 134,210
Other current assets 115,018 115,018
Net assets from
discontinued operations 56,548 (10,050)(A) 46,498
--------- ------- ---------
Total current assets 337,238 12,300 349,538
Finance receivables, net 213,444 213,444
Investment in Monaco Coach
preferred stock - 3,000 (A) 3,000
Notes receivable - 12,000 (A) 12,000
Property, plant, and
equipment, net 284,775 284,775
Other assets 110,205 110,205
Net assets from
discontinued operations 55,008 (27,300)(A) 27,708
--------- -------- ---------
Total assets $1,000,670 $ 0 $1,000,670
========= ======= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Notes payable $ 2,327 $ 2,327
Accounts payable 102,563 102,563
Accrued expenses and other 127,956 127,956
Current maturities of
long-term debt 364
364
--------- ---------
Total current liabilities 233,210 233,210
Finance debt 164,330 164,330
Long-term liabilities 44,991 44,991
Postretirement health
care benefits 63,570 63,570
Commitments and contingencies
Total stockholders' equity 494,569 494,569
--------- -------- ----------
$1,000,670 $ 0 $1,000,670
========= ======== =========
See accompanying notes.
HARLEY-DAVIDSON, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
Note A. Pursuant to an Asset Purchase Agreement dated as of March 4,
1996, an Asset Purchase Agreement dated as of January 21, 1996 and
Amendment No. 1 dated as of March 4, 1996 to Asset Purchase Agreement
dated as of January 21, 1996 (collectively, the Agreement), the Company
completed the sale of its RV Division. Pursuant to the Agreement, the
Company received approximately $22 million in cash, $3 million of
preferred stock of Monaco and a $12 million subordinated promissory note.
The pro forma adjustments to cash and cash equivalents, notes receivable
and investment in Monaco preferred stock reflect the terms of the sale
pursuant to the Agreement.
The pro forma adjustments reflect the sale of certain assets or adjustment
to certain liabilities related to the Company's RV Division pursuant to
the Agreement.
Note B. No adjustment to the results of operations is necessary because
the entire Transportation Vehicles segment, of which the RV Division is a
part, was treated as discontinued operations in the Company's audited
financial statements at December 31, 1995. The interest income
related to the note received in the transaction would not have been
significant. The determination of amount of gain or loss is subject to
adjustment based on the final closing statement of assets purchased and
liabilities assumed, pursuant to the Agreement. The Company does not
anticipate a loss on the overall disposition of the Transportation
Vehicles segment.
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HARLEY-DAVIDSON, INC.
By: /s/ James L. Ziemer
James L. Ziemer
Vice President and Chief Financial
Officer
Date: March 21, 1996
<PAGE>
Exhibit Index
Number Description
2.1 Asset Purchase Agreement, dated as of March 4, 1996, among
Harley-Davidson, Inc., Holiday Holding Corp., Holiday World,
Inc. (California), Holiday World, Inc. (Texas), Holiday
World, Inc. (Florida), Holiday World, Inc. (Oregon), Holiday
World, Inc. (Indiana), Holiday World, Inc. (Washington),
Holiday World, Inc. (New Mexico), Monaco Coach Corporation,
and MCC Acquisition Corporation.
2.2 Asset Purchase Agreement, dated as of January 21, 1996, among
Harley-Davidson, Inc., Holiday Rambler LLC, State Road
Properties L.P., and Monaco Coach Corporation.
2.3 Amendment No. 1 dated as of March 4, 1996 to Asset Purchase
Agreement, dated as of January 21, 1996 among Harley-
Davidson, Inc., Holiday Rambler LLC, State Road Properties
L.P., and Monaco Coach Corporation.
2.4 Subordinated Promissory Note, dated March 4, 1996 between MCC
Acquisition corporation and Holiday Holding Corp.
ASSET PURCHASE AGREEMENT
among
HARLEY-DAVIDSON, INC.,
HOLIDAY HOLDING CORP.,
HOLIDAY WORLD, INC. (California),
HOLIDAY WORLD, INC. (Texas),
HOLIDAY WORLD, INC. (Florida),
HOLIDAY WORLD, INC. (Oregon),
HOLIDAY WORLD, INC. (Indiana),
HOLIDAY WORLD, INC. (Washington),
HOLIDAY WORLD, INC. (New Mexico),
MONACO COACH CORPORATION, and
MCC ACQUISITION CORPORATION
Dated as of March 4, 1996
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
Schedules
Schedule 1.1 - Description of Holiday World Stores
being
Purchased
Schedule 1.1(b) - Real Property
Schedule 1.1(e) - Excluded MIS and Software
Schedule 1.1(g) - Excluded Governmental Licenses and
Permits
Schedule 1.2(b) - Assets not being transferred
Schedule 1.2(f) - Excluded Contracts
Schedule 1.2(j) - Life Insurance Policies
Schedule 1.2(k) - Excluded Equipment
Schedule 2.3 - Exceptions to GAAP with respect to
Closing Balance Sheet
Schedule 2.3(a) - Preliminary Statement
Schedule 3.1(c) - Subsidiaries
Schedule 3.1(d) - Governmental Approvals and Notices;
Conflicts
Schedule 3.1(e) - Financial Information
Schedule 3.1(f) - Liens, Encumbrances and Restrictions
Schedule 3.1(h)(ii) - Material Contracts
Schedule 3.1(h)(iii) - Material Licenses and Permits
Schedule 3.1(h)(iv) - Location of Material Assets
Schedule 3.1(i) - Defects
Schedule 3.1(j) - Legal Proceedings
Schedule 3.1(l) - Defects in Patents,
Trademarks and Similar Rights
Schedule 3.1(m) - Defects in Government Licenses,
Permits and Related Approvals
Schedule 3.1(n) - Conduct of Business Other than in
Compliance with Regulatory and
Contractual Requirements
Schedule 3.1(o) - Employee Agreements and Plans
Schedule 3.1(p) - Certain Environmental Matters
Schedule 3.1(s) - Changes in Business Since December 31,
1995
Schedule 3.1(u) - Inter-Company Transactions
Schedule 3.1(v) - Returns of Inventory
Schedule 3.1(x) - Accounts Receivable
Schedule 3.1(y) - Product Warranties
Schedule 3.1(z) - In-Policy Warranty Claims and Recalls
Schedule 3.1(aa) - Product Liability Claims
Schedule 3.1(ab)(i) - Certain Real Property Matters
Schedule 3.1(ab)(v) - Operating and Management Agreements
Schedule 3.2(c) - Governmental Approvals and Notices;
Conflicts
Schedule 3.3 - Schedule of Survival Periods for
Certain Representations and Warranties
Schedule 4.2 - Special Business Practices
Schedule 4.8 - Certain Real Property
Schedule 4.9 - Floorplan Financing
Exhibits
EXHIBIT A - Form of Assumption Agreement
EXHIBIT B - Form of Note
TABLE OF CONTENTS
Page
1. Purchase and Sale of Assets; Assumption of Certain Liabilities . . 1
1.1. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . 1
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 3
1.3. Instruments of Conveyance and Transfer . . . . . . . . . . . 4
1.4. Further Assurances . . . . . . . . . . . . . . . . . . . . . 5
1.5. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . 5
1.6. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . 5
2. Closing; Payment of Purchase Price at Closing and Closing Adjustment
6
2.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2. Purchase Price and Payment . . . . . . . . . . . . . . . . . 6
2.3. Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . 7
2.4. Post-Closing Cash Settlement . . . . . . . . . . . . . . . . 8
3. Representations and Warranties . . . . . . . . . . . . . . . . . . 9
3.1. Representations and Warranties of Sellers . . . . . . . . . . 9
(a) Due Organization and Power . . . . . . . . . . . . . . . 9
(b) Authorization and Validity of Agreement . . . . . . . . . 9
(c) Related Parties . . . . . . . . . . . . . . . . . . . . . 10
(d) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which the Sellers are a Party . . . . 10
(e) Financial Statements . . . . . . . . . . . . . . . . . . 11
(f) Title to Properties and Absence of Liens and Encumbrances 11
(g) No Undisclosed Liabilities . . . . . . . . . . . . . . . 12
(h) List of Properties, Contracts, Permits and Other Data . . 12
(i) Defects . . . . . . . . . . . . . . . . . . . . . . . . . 14
(j) Legal Proceedings . . . . . . . . . . . . . . . . . . . . 14
(k) Labor Controversies . . . . . . . . . . . . . . . . . . . 14
(l) Patents, Trademarks and Similar Rights . . . . . . . . . 14
(m) Government Licenses, Permits and Related Approvals . . . 15
(n) Conduct of Business in Compliance with Regulatory and
Contractual Requirements . . . . . . . . . . . . . . . . 15
(o) Employee Benefit Plans . . . . . . . . . . . . . . . . . 15
(p) Environmental Matters . . . . . . . . . . . . . . . . . . 17
(q) Certain Fees . . . . . . . . . . . . . . . . . . . . . . 18
(r) Non-Foreign Status of Sellers . . . . . . . . . . . . . . 18
(s) Absence of Certain Changes . . . . . . . . . . . . . . . 18
(t) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 19
(u) Inter-Company Transactions . . . . . . . . . . . . . . . 19
(v) Inventory . . . . . . . . . . . . . . . . . . . . . . . . 19
(w) Accounts Receivable . . . . . . . . . . . . . . . . . . . 19
(x) Product Liability Claims . . . . . . . . . . . . . . . . 20
(y) Certain Real Property Matters . . . . . . . . . . . . . . 20
(z) No Other Representations or Warranties . . . . . . . . . 21
3.2. Representations and Warranties of Buyer . . . . . . . . . . . 21
(a) Due Organization and Power . . . . . . . . . . . . . . . 21
(b) Authorization and Validity of Agreement . . . . . . . . . 22
(c) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which Buyer is a Party . . . . . . . 22
(d) Certain Fees . . . . . . . . . . . . . . . . . . . . . . 22
(e) Financial Statements . . . . . . . . . . . . . . . . . . 23
(f) Absence of Certain Changes or Events . . . . . . . . . . 23
(g) No Other Representations or Warranties . . . . . . . . . 23
3.3. Expiration of Representations and Warranties . . . . . . . . 23
4. Transactions Prior to Closing . . . . . . . . . . . . . . . . . . . 24
4.1. Access to Information Concerning Properties and Records;
Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 24
4.2. Conduct of the Business of the Holiday World Division Pending the
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3. Further Actions . . . . . . . . . . . . . . . . . . . . . . . 25
4.4. Antitrust Laws . . . . . . . . . . . . . . . . . . . . . . . . 26
4.5. Notification . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.6. No Inconsistent Action. . . . . . . . . . . . . . . . . . . . 27
4.7. Preparation and Delivery of Audited Financial Statements . . . 27
4.8. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.9. Casualty Losses and Condemnation . . . . . . . . . . . . . . . 28
4.10. Repayment Restrictions . . . . . . . . . . . . . . . . . . . 28
5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 28
5.1. Conditions Precedent to Obligations of Buyer and the Sellers 28
(a) No Injunction, etc. . . . . . . . . . . . . . . . . . . 28
(b) Antitrust Matters . . . . . . . . . . . . . . . . . . . . 28
(c) Material Consents . . . . . . . . . . . . . . . . . . . . 29
(d) Closing of Manufacturing Transaction . . . . . . . . . . 29
5.2. Conditions Precedent to Obligations of Buyer . . . . . . . . 29
(a) Accuracy of Representations and Warranties . . . . . . . 29
(b) Performance of Agreements . . . . . . . . . . . . . . . . 29
(c) Officer's Certificate . . . . . . . . . . . . . . . . . . 30
(d) Completion of Audit . . . . . . . . . . . . . . . . . . . 30
(e) FIRPTA Compliance . . . . . . . . . . . . . . . . . . . . 30
5.3. Conditions Precedent to the Obligations of the Company and
Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Accuracy of Representations and Warranties . . . . . . . 30
(b) Performance of Agreements . . . . . . . . . . . . . . . . 30
(c) No Material Adverse Change . . . . . . . . . . . . . . . 31
(d) Officer's Certificate . . . . . . . . . . . . . . . . . . 31
(e) Assumption Agreement . . . . . . . . . . . . . . . . . . 31
6. Employee Relations and Benefits . . . . . . . . . . . . . . . 31
6.1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2. Effective Time . . . . . . . . . . . . . . . . . . . . . . . 31
6.3. Benefit Plans and Programs . . . . . . . . . . . . . . . . . 31
6.4. Welfare Plans. . . . . . . . . . . . . . . . . . . . . . . . 31
6.5. Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.6. Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . . 32
6.7. Warn Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2. No Liabilities in Event of Termination . . . . . . . . . . . 33
7.3. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 33
8. Transactions Subsequent to Closing . . . . . . . . . . . . . . . . 33
8.1. Post-Closing Access to Information and Assistance . . . . . . 33
8.2. Further Agreements . . . . . . . . . . . . . . . . . . . . . 33
8.3. Use of Corporate Name . . . . . . . . . . . . . . . . . . . . 34
8.4. No Competition . . . . . . . . . . . . . . . . . . . . . . . 34
8.5. Tax Assistance and Cooperation . . . . . . . . . . . . . . . 34
8.6. Floorplan Financing . . . . . . . . . . . . . . . . . . . . . 35
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.1. Public Announcements . . . . . . . . . . . . . . . . . . . . 35
9.2. Transfer Taxes and Recording Expenses . . . . . . . . . . . . 35
9.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 35
9.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 40
9.6. Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . 40
9.7. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . 40
9.8. Assignability . . . . . . . . . . . . . . . . . . . . . . . . 40
9.9. Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . 41
9.10. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.11. Section Headings; Table of Contents . . . . . . . . . . . . . 41
9.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . 41
9.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 41
9.14. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 41
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of March 4, 1996, among HARLEY-
DAVIDSON, INC., a Wisconsin corporation (the "Company"), HOLIDAY HOLDING
CORP., a Texas corporation ("HHC"), HOLIDAY WORLD, INC., a California
corporation, HOLIDAY WORLD, INC., a Texas corporation, HOLIDAY WORLD,
INC., a Florida corporation, HOLIDAY WORLD, INC., an Oregon corporation,
HOLIDAY WORLD, INC., an Indiana corporation, HOLIDAY WORLD, INC., a
Washington corporation and HOLIDAY WORLD, INC., a New Mexico corporation
(collectively, ("HW", and together with HHC, the "Sellers"), MONACO COACH
CORPORATION, a Delaware corporation ("Monaco") and MCC Acquisition
Corporation, a Delaware corporation (the "Buyer").
W I T N E S S E T H :
WHEREAS, Sellers desire to sell, transfer and assign to Buyer, and
Buyer desires to purchase and assume from Sellers, certain assets and
liabilities of the retail sales operation of the Holiday Rambler
Recreational Vehicle Division of Sellers, all upon and subject to the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
1. Purchase and Sale of Assets; Assumption of Certain Liabilities
1.1. Transfer of Assets. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or
waiver of the conditions set forth in this Agreement, on the Closing Date
(as defined in Section 2.1) and subject to the provisions of Section 1.2,
the Sellers shall sell, convey, assign, transfer and deliver to Buyer and
Buyer shall purchase and acquire from the Sellers, all of the assets,
rights, properties, claims, contracts, business and goodwill of the
Sellers at the Closing Date that are utilized in the retail sale and
servicing of new and used motor homes, conventional travel trailers, fifth
wheel travel trailers and other recreational vehicles and related parts
and accessories (such retail sales operation at the locations set forth in
Schedule 1.1 is hereinafter referred to as the "Holiday World Division"),
of every kind, nature, character and description, tangible and intangible,
real, personal or mixed, wherever located, including, without limitation,
the following:
(a) All of the Sellers' right, title and interest in and to the
Holiday World Division patents, patent registrations, patent
applications, trademarks, trademark registrations, trademark
applications, trade names, copyrights, copyright applications, copyright
registrations, franchises, permits, licenses, processes, formulas,
inventions, trade secrets and royalties, including all rights to sue for
past infringement, together with the goodwill associated therewith;
(b) The owned real property described on Schedule 1.1(b)(i) and
the leased real property set forth on Schedule 1.1(b)(ii), including all
buildings, structures and other improvements situated thereon
(individually, a "Store" and collectively, the "Stores"), and all
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Page
easements, privileges, rights-of-way, riparian and other water rights
and appurtenances pertaining to or accruing to the benefit of such
property, in each case subject to the matters described on Schedule
3.1(f) hereto;
(c) All equipment, furniture, furnishings, fixtures, machinery,
vehicles, tools, spare parts, supplies and other tangible personal
property used in the Holiday World Division's operations, except those
items set forth on Schedule 1.2(b) (collectively, the "Equipment") and
all warranties and guarantees, if any, express or implied, existing for
the benefit of the Sellers in connection with the Equipment to the
extent transferable;
(d) The Holiday World Division's inventory of products on hand at
the Stores or in the process of being shipped to the Stores, together
with the spare parts, supplies and promotional materials that are used
in connection with the operations of the Holiday World Division (the
"Inventory");
(e) All management information systems and software, to the extent
that such systems and software are transferable by the Sellers and
relate to the operations of the Stores, the ownership of the Assets (as
defined below) or the operations of the Holiday World Division, and
customer lists, vendor lists and catalogs, if any, except for the
systems and software items set forth on Schedule 1.1(e) hereto;
(f) All contracts, maintenance and service agreements, purchase
commitments for materials and other services, advertising and
promotional agreements, leases and other agreements related to the
Holiday World Division's business, whether or not entered into in the
ordinary course of the Holiday World Division's business, including but
not limited to, any agreements with suppliers, sales representatives,
distributors, agents, personal property lessors, personal property
lessees, licensors, licensees, consignors and consignees specified
therein, including without limitation, those contracts set forth on
Schedule 3.1(h)(ii) but excluding those contracts listed on Schedule
1.2(f) hereto;
(g) All licenses, permits or franchises issued by any federal,
state or municipal authority relating to the development, use,
maintenance or occupation of the Stores or the operations of the Holiday
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World Division to the extent that such licenses, permits or franchises
are transferable and relate to the operations of the Stores, the
ownership of the real property described on Schedule 1.1(b) hereto or
operations of the Holiday World Division, except for those licenses,
permits or franchises listed on Schedule 1.1(g) hereto;
(h) Accounts receivable of the Sellers (whether or not billed) to
the extent attributable to the operations of the Holiday World Division,
excluding intercompany receivables and receivables of HHC; and
(i) All rights to goods and services and all other economic
benefits arising out of prepayments, payments in advance and deposits by
the Sellers to the extent related to the Stores or the operations of the
Holiday World Division (collectively, the "Prepaid Assets"), including,
but not limited to, prepaid rents, service contracts and the costs of
producing and developing continuing marketing and advertising programs,
but excluding any prepaid taxes and excluding all prepaid assets of HHC.
The assets being sold, conveyed, assigned, transferred and delivered to
Buyer by the Sellers hereunder are sometimes hereinafter referred to as
the "Assets".
1.2. Excluded Assets. It is expressly understood and agreed that
the Assets shall not include the following (together, the "Excluded
Assets"):
(a) any capital stock of the Sellers;
(b) any assets referenced on Schedule 1.2(b) hereto;
(c) Any of the Holiday World Division Assets listed on any
Schedule that are consumed, sold or disposed of in the ordinary course
of business of the Holiday World Division prior to the Closing Date;
(d) Any refunds or credits with respect to any taxes paid or
incurred by Sellers (plus any related interest received from the
relevant taxing authority) and any prepaid taxes of Sellers;
(e) Except as expressly provided on Schedule 1.1(b), all owned
real property used by Sellers, including all buildings, structures and
other improvements situated thereon;
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(f) The Sellers' right, title and interest in and to the contracts
listed on Schedule 1.2(f);
(g) The assets that are subject to the asset purchase agreement,
dated January 21, 1996, governing the purchase of the design,
manufacturing, marketing, wholesale sale and factory servicing
operations of the recreational vehicles division ("R.V. Division") by
Buyer (the "Manufacturing Agreement");
(h) The intercompany receivables of Sellers;
(i) Cash consisting of cash on hand and in bank accounts less
outstanding checks and uncleared ACH transfers plus credit card and
other deposits in transit (excluding deposits received from customers
which have not been forfeited, returned or applied to a sale and license
fees received from customers which have not been returned or paid to the
licensing agency (together, "Customer Advances")), cash equivalents or
similar type investments, certificates of deposit, treasury bills and
other marketable securities of the Holiday World Division business;
(j) All bank accounts of Sellers';
(k) Any equipment, furniture, furnishings, fixtures, machinery,
vehicles, tools and other tangible personal property listed on Schedule
1.2(j) hereto; and
(l) Any equipment for the remediation of Hazardous Substances
located at a Store.
1.3. Instruments of Conveyance and Transfer. On the Closing Date
the Sellers shall (a) deliver or cause to be delivered to Buyer such
deeds, bills of sale, endorsements, consents, assignments, leasehold
documents (including (i) an assignment of the Sellers' entire interest
under the Camarillo, California lease (the "Lease") (pursuant to which
such Seller is occupying the Camarillo, California Store) and (ii) a
consent to such assignment by the landlord under the Lease in a form
reasonably satisfactory to Buyer, (iii) consent of any lenders holding an
interest in any property subject to the Lease together with an agreement
of such lenders not to disturb the tenancy of Buyer in the event of a
default or foreclosure, and (iv) a memorandum of the Lease in a form
reasonably satisfactory to Buyer) and other good and sufficient
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instruments of conveyance and assignment as shall be effective to vest in
Buyer all right, title and interest of the Sellers in and to the Assets,
including warranty deeds (or the equivalent thereof) for the appropriate
jurisdictions with any necessary modifications to such deeds required to
(i) conform with the local laws for recording such deeds and (ii) enable
Buyer to obtain title insurance policies from title companies), and such
affidavits or other documents as are reasonably required by Buyer's title
insurer as a condition to insuring title to the Stores without the survey
exception or other exceptions, (b) transfer to Buyer all the books,
records, files and other data relating to the Assets reasonably necessary
or useful for the continued operation of the Holiday World Division
business by Buyer.
1.4. Further Assurances. From time to time after the Closing
Date, the Sellers will execute and deliver, or cause to be executed and
delivered, such other instruments of conveyance, assignment, transfer and
delivery and will take such other actions as Buyer may reasonably request
in order to more effectively transfer, convey, assign, and deliver to
Buyer any of the Assets, or to enable Buyer to exercise and enjoy all
rights and benefits of the Sellers with respect thereto.
1.5. Assumed Liabilities. On the Closing Date, Buyer shall
deliver to the Sellers an undertaking (the "Assumption Agreement") in the
form attached hereto as Exhibit A whereby Buyer, on and as of the Closing
Date, assumes and agrees to pay, perform and discharge when due, subject
to the provisions of Section 1.6, the liabilities and obligations of the
Sellers relating to the Holiday World Division business or the Assets,
whether arising before or after the Closing Date and whether known or
unknown, fixed or contingent, to the extent the same are unpaid,
undelivered or unperformed on the Closing Date, including but not limited
to: (1) all obligations relating to the Holiday World Division business
under contracts, commitments and agreements (except those obligations
relating to contracts specifically excluded from the transfers
contemplated hereby), including, without limitation, commitments for
advertising, all unfulfilled purchase orders and sales commitments;
(2) all liabilities and obligations for returns of products sold by the
Holiday World Division prior to the Closing Date; (3) all liabilities and
obligations for consumer promotions and other marketing programs
applicable to the operations of the Holiday World Division; (4) all
obligations under the licenses, permits or franchises of the Holiday World
Division except those disclosed on Schedule 1.1(g) hereto; (5) all current
liabilities and accrued liabilities (excluding taxes referenced in 1.6(a))
arising out of the operations of the Holiday World Division, including,
but not limited to, (i) all products liability claims with respect to
products sold by the Sellers, (ii) all liabilities related to the
presence, disposal, escape, seepage, leakage, discharge, emission, release
or threatened release of any substances or materials or (iii) all
liabilities related to or arising from the laws and regulations governing
the sale of motor or recreational vehicles) and (6) all liabilities and
obligations for any taxes and expenses described as obligations of the
Buyer in Section 9.2 hereof. Buyer is not assuming, nor shall be deemed
to have assumed, any liability or obligation of the Sellers or the Company
of any kind or nature whatsoever, except as expressly provided in this
Agreement or the Assumption Agreement. The liabilities and obligations
assumed by Buyer in accordance with this Section 1.5 are sometimes
hereinafter referred to as the "Assumed Liabilities".
1.6. Excluded Liabilities. It is expressly understood and agreed
that Assumed Liabilities shall not include the following:
(a) Liabilities of either of the Sellers for any taxes (other than
accrued property taxes or any taxes which the Buyer is responsible for
pursuant to Section 9.2) arising from the operations of the Holiday
World Division prior to the Closing Date;
(b) Liabilities arising out of or related to the Excluded Assets;
(c) Liabilities to current, former or retired employees of the
Sellers arising out of or relating to their employment with Sellers or
their termination by Sellers; except for (i) liabilities for
Transitioned Employees for accrued vacation, whether vested or unvested,
(only to the extent that such accruals are consistent with Buyer's
accrued vacation policy) and accrued moving expenses and (ii)
liabilities arising out of Sellers' noncompliance with Section 6.7;
(d) All intercompany liabilities (other than the obligations to
Eaglemark Financial Services, Inc. and/or its subsidiaries);
(e) Liabilities of either of the Sellers to third parties for any
funded debt (excluding the mortgage loan on the real property located in
Tacoma, Washington), other than obligations to Eaglemark Financial
Services, Inc. and/or its subsidiaries (if applicable); and
(f) Except as otherwise provided herein, all debts, liabilities
and obligations that do not arise out of the business of the Holiday
World Division or the Assets.
2. Closing; Payment of Purchase Price at Closing and Closing
Adjustment
2.1. Closing Date. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 7.1 hereof, the closing with respect to the
transactions provided for in this Agreement (the "Closing") shall take
place at the offices of Simpson Thacher & Bartlett, at 10 a.m., New York
City time, on the first day of the Sellers' fiscal month immediately
following the satisfaction or waiver of all of the conditions to the
Closing set forth in Section 5 hereof, or at such other time, date and
place as shall be agreed upon by the Sellers and Buyer. The actual time
and date of the Closing are herein called the "Closing Date". All acts
and transactions occurring under this Agreement at the Closing shall be
effective as of 12:01 a.m. on the Closing Date (the "Effective Time").
2.2. Purchase Price and Payment. In consideration for the Assets,
and subject to the terms and conditions of this Agreement, Buyer shall on
the Closing Date (i) assume the Assumed Liabilities as provided in Section
1.5 hereof, (ii) transfer to HHC $1 million by wire transfer in
immediately available funds to an account designated in writing by HHC to
Buyer at least 2 business days prior to the Closing Date and (iii) deliver
to HHC a $12 million promissory note in the form attached hereto as
Exhibit B (the "Note"). The value tendered by Buyer pursuant to this
Section 2.2, as adjusted pursuant to the provisions of Section 2.3 below,
shall be hereinafter referred to as the "Purchase Price". The Purchase
Price and the Assumed Liabilities shall be allocated among the Assets in a
manner to be agreed upon by the Sellers and Buyer consistent with Section
1060 of the Code (as defined below). Buyer and the Sellers agree to act
in accordance with such allocations in all tax returns, tax reports and
tax filings filed on or after the Closing Date, unless otherwise required
by law.
2.3. Post-Closing Adjustment.
(a) Within 45 days following the Closing, Sellers shall, at their
expense, prepare, or cause to be prepared, and deliver to Buyer a
statement (the "Closing Statement") which shall set forth the book value
of the Assets less the Assumed Liabilities (the "Net Book Value") of the
Holiday World Division as of the Effective Time and, except as set forth
on Schedule 2.3 hereto, shall be prepared (i) in accordance with the
generally accepted accounting principles in the United States ("GAAP"), as
in effect on the date of such preparation and (ii) in a manner consistent
with the preparation of the statement setting forth the Net Book Value of
the Holiday World Division as of December 31, 1995 (the "Preliminary
Statement") attached hereto as Schedule 2.3(a).
(b) Buyer and Buyer's accountants shall, within 30 days after the
delivery by Sellers of the Closing Statement, complete their review of the
Net Book Value as derived from the Closing Statement. In the event that
Buyer determines that Net Book Value as derived from the Closing Statement
has not been determined in accordance with GAAP and in a manner consistent
with the preparation of the Preliminary Statement, as modified by the
exceptions set forth in Schedule 2.3, Buyer shall inform Sellers in
writing (the "Buyer's Objection"), setting forth a specific description of
the basis of Buyer's Objection and the adjustments to Net Book Value which
Buyer believes should be made, on or before the last day of such 30-day
period. Sellers shall then have 30 days to review and respond to Buyer's
Objection. If Sellers' and Buyer are unable to resolve all of their
disagreements with respect to the determination of the foregoing items
within 10 days following the completion of Sellers review of Buyer's
Objection, they shall refer their remaining differences to Deloitte &
Touche or another internationally recognized firm of independent public
accountants as to which Sellers and Buyer mutually agree (the "CPA Firm"),
who shall, acting as experts and not as arbitrators, determine on the
basis of the standards set forth in Section 2.3(a), and only with respect
to the remaining differences so submitted, whether and to what extent, if
any, Net Book Value as derived from the Closing Statement, requires
adjustment. Sellers and Buyer shall direct the CPA Firm to use its best
efforts to render its determination within 45 days. The CPA Firm's
determination shall be conclusive and binding upon Buyer and Sellers. The
fees and disbursements of the CPA Firm shall be shared equally by Buyer,
on the one hand, and Sellers, on the other hand. Buyer and Sellers shall
make readily available to the CPA Firm all relevant books and records and
any work papers (including those of the parties' respective accountants)
relating to the Preliminary Statement and the Closing Statement and all
other items reasonably requested by the CPA Firm. The "Adjusted Closing
Statement" shall be (i) the Closing Statement in the event that (x) no
Buyer's Objection is delivered to Sellers during the 30-day period
specified above, or (y) Sellers and Buyer so agree, (ii) the Closing
Statement, adjusted in accordance with the Buyer's Objection in the event
that Sellers do not respond to Buyer's Objection within the 30-day period
following receipt by Sellers of Buyer's Objection, or (iii) the Closing
Statement, as adjusted by either (x) the agreement of Sellers and Buyer or
(y) the CPA Firm.
(c) Buyer shall provide Sellers and their accountants full access
to the accounting records, any other information, including work papers of
their accountants, and to any employees to the extent reasonably necessary
for Sellers to prepare the Closing Statement. Buyer and its accountants
shall have the opportunity to observe the physical count of the Inventory
(which may begin prior to the Closing Date) in connection with the
preparation of the Closing Statement and shall have full access to all
information used by Sellers in preparing the Closing Statement, including
the work papers of its accountants.
(d) In the event the Net Book Value as derived from the Adjusted
Closing Statement is less than $21 million, Sellers and Buyer shall lower
the principal amount payable under the Note by an amount equal to the
product of (i) the difference between (x) $21 million and (y) Net Book
Value as derived from the Adjusted Closing Statement and (ii) 61.905%.
2.4. Post-Closing Cash Settlement. As promptly as practicable
after the Closing but in no event later than ten (10) business days after
the Closing Date, Buyer and Sellers shall prepare a statement comparing as
of immediately prior to the Closing Date (i) the amount of cash, petty
cash, cash in the Store registers and other Holiday World Division cash
not remaining in Sellers' possession upon Closing (collectively, the "Cash
on Hand") to (ii) the aggregate amount of the Customer Advances. If the
amount of the Cash on Hand exceeds the amount of the Customer Advances,
Buyer shall promptly pay the difference to Sellers and if the amount of
the Cash on Hand is less than the amount of the Customer Advances, Sellers
shall promptly pay the difference to Buyer. Any payments required
pursuant to this Section 2.4 shall be made by wire transfer of immediately
available funds to an account designated by the party receiving the funds.
3. Representations and Warranties
3.1. Representations and Warranties of Sellers. The Company and
the Sellers represent and warrant to Buyer as follows:
(a) Due Organization and Power. Each of the Company and the
Sellers is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and has the requisite
corporate power and authority to own, lease and operate its property to
be sold hereunder and to conduct the Holiday World Division business as
now conducted by it. The Company and each of the Sellers has all
requisite power and authority to enter into this Agreement and any other
agreement contemplated hereby and to perform their obligations hereunder
and thereunder, including the power and authority to convey good and
marketable title to Buyer with respect to the Assets owned by it. Each
of the Sellers is duly authorized, qualified or licensed to do business
as a foreign corporation, and is in good standing, in each of the
jurisdictions in which its right, title or interest in or to any of the
Assets held by it, or the conduct of the Holiday World Division business
by it, requires such authorization, qualification or licensing, except
where the failure to so qualify or to be in good standing would not,
individually or in the aggregate, have a material adverse effect on the
Assets, results of operations, business or financial condition of the
Holiday World Division (a "Material Adverse Effect").
(b) Authorization and Validity of Agreement. The execution,
delivery and performance by the Company and each Seller of this
Agreement and any other agreements contemplated hereby and the
consummation by each of them of the transactions contemplated hereby and
thereby have been duly authorized by the board of directors or other
applicable governing body of the Company and each Seller. No other
corporate, stockholder or similar action is necessary for the
authorization, execution, delivery and performance by the Company and
the Sellers of this Agreement and any other agreements contemplated
hereby and the consummation by the Sellers of the transactions
contemplated hereby or thereby. This Agreement and the other agreements
contemplated hereby have been, or will be at or prior to Closing, duly
executed and delivered by the Company and the Sellers, each constitute,
or will when so executed and delivered constitute, a valid and legally
binding obligation of the Company and the Sellers, enforceable against
each of them in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors
rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(c) Related Parties. Except as set forth on Schedule 3.1(c)
hereto, neither the Company nor the Sellers, directly or indirectly,
own, of record or beneficially, any outstanding equity interests or
control in any corporation, partnership, joint venture or other entity
(other than Sellers) which owns or leases any assets of the Holiday
World Division.
(d) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which the Sellers are a Party. Except as described
in Schedule 3.1(d) hereto, the execution, delivery and performance of
this Agreement and any other agreements contemplated hereby by the
Company and each Seller and the consummation by each of them of the
transactions contemplated hereby and thereby (i) will not violate (with
or without the giving of notice or the lapse of time or both), or
require any authorization, consent, approval, filing or notice under,
any provision of any law, rule or regulation, court order, judgment or
decree applicable to the Company and each Seller, except for such
violations the occurrence of which, and such consents, approvals,
filings or notices the failure of which to obtain or make, would not,
individually or in the aggregate, have a Material Adverse Effect and the
failure of which to obtain would not have a material adverse effect on
the Company or a Seller's ability to perform its obligations hereunder
and except for such consents, approvals, filings or notice requirements
which become applicable solely as a result of the specific regulatory
status of the Buyer or any of its affiliates, and (ii) will not conflict
with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of any Seller under, or result in the
creation of the right to accelerate, terminate, modify or cancel, or
result in the creation of a lien, charge or encumbrance upon a portion
of the properties, assets or business of the Holiday World Division
pursuant to, or require any notice under, the charter or by-laws of such
Seller, or any indenture, mortgage, deed of trust, lease, licensing
agreement, contract, instrument or other agreement to which such Seller
is a party or by which such Seller or any of the Assets held by such
Seller is bound, except for such conflicts, breaches, terminations,
defaults, accelerations or liens which would not, individually or in the
aggregate, have a Material Adverse Effect and the failure of which to
obtain would not have a material adverse effect on such Seller's ability
to perform its obligations hereunder. The parties hereto agree that no
event, occurrence or circumstance that would constitute a breach of a
representation or warranty contained in Section 3.2(c) will be a basis
for a breach of a representation or warranty contained in Section
3.1(d).
(e) Financial Statements. Schedule 3.1(e) hereto contains a
combined balance sheet as of December 31, 1995 and combined statement of
operations for the 12-month period then ended of the Holiday World
Division (collectively, the "Unaudited Financial Statements"). The
Unaudited Financial Statements were prepared in accordance with GAAP, as
in effect on the date of such financial statements and applied on a
consistent basis during the periods involved (except as may be indicated
in the comments to such Unaudited Financial Statements and Exhibit 2.3),
and such financial statements and comments fairly present, in all
material respects, the financial position and results of operations of
the Holiday World Division, as of their respective dates and for the
respective periods covered thereby. The audited combined financial
statements of the Holiday World Division and the R.V. Division delivered
to Buyer at Closing comply with the disclosure requirements of
Regulation S-X promulgated under the Securities Act, and have been
prepared on the same basis as the Unaudited Financial Statements and in
accordance with GAAP, as in effect on the date of such financial
statements and applied on a consistent basis during the periods involved
(except as may be indicated in the notes to such S-X Financial
Statements), and such financial statements fairly present, in all
material respects, the combined financial position and results of
operations of the Holiday World Division and the R.V. Division as of
their respective dates and for the respective periods covered thereby.
(f) Title to Properties and Absence of Liens and Encumbrances.
Except as set forth on Schedule 3.1(f) attached hereto, the Company and
the Sellers own all of the Assets (real, personal and mixed, tangible
and intangible) free and clear of all claims, liens, security interests,
charges, mortgages, pledges, easements, leases, encumbrances, licenses
or sublicenses, conditional sales or other title retention agreements or
other restrictions of any kind and nature (an "Encumbrance") other than
Permitted Encumbrances (as defined below), and the Sellers have good and
marketable title to all such Assets, free and clear of all Encumbrances
other than Permitted Encumbrances. Upon the delivery and payment for
the Assets as contemplated herein, Seller will convey to Buyer good and
marketable title to the Assets and all material real and personal
property, tangible and intangible, which is necessary to conduct the
Holiday World Division business as it is presently conducted, free and
clear of all exceptions to title or Encumbrances; except in each case
(1) as specifically set forth in Schedule 3.1(f), (2) liens for current
taxes not yet due and payable or being contested in good faith by
appropriate proceedings and for which adequate reserves have been
provided (if required by GAAP) on the Unaudited Financial Statements and
(3) such imperfections or exceptions to title, if any, as do not, and
could not reasonably be expected to, individually or in the aggregate,
materially diminish the aggregate value of the Assets or materially
interfere with the alienability, financeability, ownership, use,
occupancy or operation of any such property or materially impair or
interfere with the Holiday World Division business as presently
conducted (such exceptions, collectively, the "Permitted Encumbrances").
Notwithstanding the foregoing, (i) prior to Closing Buyer shall have the
right to examine title and object to any of the matters described in the
foregoing definition of "Permitted Encumbrances" and to object to any
inaccuracies in the legal descriptions of the Stores, and (ii) except as
set forth above, "Permitted Encumbrances" shall not in any event include
any mortgage, deed of trust, conditional sale or similar title retention
agreement, any option or right to lease or occupy, any purchase right or
option to purchase, or any monetary liens (including, without
limitation, mechanics', materialmen's or other statutory liens).
(g) No Undisclosed Liabilities. The Holiday World Division has no
liability (whether known or unknown, whether asserted or unasserted,
absolute or contingent, accrued or unaccrued, and whether liquidated or
unliquidated, including, without limitation, any liability for taxes)
that are of a nature required to be set forth on a balance sheet (or in
the notes thereto) in accordance with GAAP, other than liabilities and
obligations (i) reflected, provided for or reserved against in the
Unaudited Financial Statements or Preliminary Statement, as the case may
be, (ii) which have been specifically identified and disclosed herein or
on the schedules attached hereto, (iii) arising in the ordinary course
of business after December 31, 1995, which liabilities, if not
discharged, will be set forth on the Adjusted Closing Statement or (iv)
arising under or contemplated by this Agreement.
(h) List of Properties, Contracts, Permits and Other Data. The
following Schedules set forth certain information with respect to the
Assets on the date hereof:
(i) Schedules 1.1(b)(i) and 1.1(b)(ii) hereto contain a
complete and correct list of the real property utilized by the
Holiday World Division owned of record or beneficially by Sellers,
or leased by Sellers, that Buyer has determined to acquire in
accordance with the terms of this Agreement;
(ii) Schedule 3.1(h)(ii) hereto contains a complete and
correct list of all material contracts, maintenance and service
agreements, licenses of Intellectual Property (as defined below),
purchase commitments for materials and services, advertising,
promotional and marketing-related agreements, floor plan and
similar financing arrangements, leases under which either Seller is
a lessor or lessee and other agreements pertaining to the
operations of the Holiday World Division to which either Seller is
a party, the benefits of which are enjoyed in the operations of the
Holiday World Division or to which any of the Assets is subject,
except purchase orders for the purchase or sale of goods and
materials in the ordinary course of business;
(iii) Schedule 3.1(h)(iii) hereto contains a complete and
correct list of all material licenses, permits, or franchises
issued by governmental authorities relating to the use, maintenance
or occupation of the Store or Stores or the operations of the
Holiday World Division by each Seller (other than sales and use tax
permits, franchise tax registrations and foreign qualifications);
(iv) Schedule 3.1(o) hereto contains a complete and correct
list of all material employment and consulting agreements,
executive compensation plans, bonus plans, deferred compensation
agreements, severance pay arrangements, employee profit-sharing
plans, group life insurance, hospitalization insurance or other
plans or arrangements providing for benefits for Transitioned
Employees of each Seller (as defined in Section 6.1 below).
True and complete copies of all documents relating to the Holiday
World Division business of each Seller (including all amendments
thereto) referred to in Schedules 1.1(b), 3.1(h)(ii), 3.1(h)(iii) and
3.1(o) either have been delivered to Buyer or made available to Buyer or
shall be furnished upon request. Except as specified in the Schedules
hereto, all rights, licenses, leases, registrations, applications,
contracts, commitments and other arrangements relating to the Holiday
World Division business of each Seller referred to in such Schedules are
in full force and effect and are valid and enforceable in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by
proceedings in equity or at law) and except where the failure to be in
full force and effect and valid and enforceable would not individually
or in the aggregate have a Material Adverse Effect. Except as specified
in the Schedules hereto, neither Seller is in breach or default in the
performance of any obligation thereunder and no event has occurred or
has failed to occur whereby any of the other parties thereto have been
or will be released therefrom or will be entitled to refuse to perform
thereunder, except for such breaches, defaults and events which
individually or in the aggregate would not have a Material Adverse
Effect.
(i) Defects. Except as described on Schedule 3.1(i), (i) there
are no defects in the normal operating condition and repair of any Store
or Equipment currently used in connection with the Holiday World
Division business of Sellers, which defects individually or in the
aggregate would materially interfere with the current use thereof in the
normal operation of such Store or its Equipment as presently conducted
and (ii) the Inventory is, in all material respects, good and
merchantable.
(j) Legal Proceedings. Except as described in Schedule 3.1(j)
hereto and proceedings contemplated by Section 4.4 hereof, there is no
litigation, proceeding or governmental investigation relating to the
Holiday World Division to which any Seller is a party pending or, to the
actual knowledge of any Seller, threatened against any Seller relating
to the Assets or the Holiday World Division business of such Seller or
the transactions contemplated by this Agreement which would,
individually or in the aggregate, result in a Material Adverse Effect.
(k) Labor Controversies. There are no labor controversies pending
or, to the actual knowledge of any Seller, threatened, which would,
individually or in the aggregate, have a Material Adverse Effect. No
union or similar organization represents the Holiday World Division
Employees (as defined below) and, to the actual knowledge of Sellers, no
labor organization or group of employees of the Sellers has made a
demand for recognition, has filed a petition seeking a representation
proceeding or given the Sellers notice of an intention to hold an
election of a collective bargaining representative. Sellers have not
suffered any strike, slowdown, picketing or work stoppage by any group
of employees affecting the business of the Holiday World Division during
the past three years.
(l) Patents, Trademarks and Similar Rights. Except as described
on Schedule 3.1(l) hereto, each Seller owns, or is licensed to use, all
material patents, trade names, trademarks, copyrights, technology, trade
secrets, know-how, and processes ("Intellectual Property") used in the
business of Holiday World Division as presently conducted. To the
actual knowledge of the Sellers, no third party has interfered with,
infringed upon, misappropriated, or violated any material Intellectual
Property rights of the Company or the Sellers with respect to the
Holiday World Division in any material respect. Neither the Company nor
any Seller, in connection with the operations and business of the
Holiday World Division, has received within the past three years any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation, nor to the
knowledge of any Seller, has the Holiday World Division interfered with,
infringed upon, misappropriated, or violated any material Intellectual
Property rights of third parties in any material respect.
(m) Government Licenses, Permits and Related Approvals. Except as
described on Schedule 3.1(m) hereto, each Store has all licenses,
permits, consents, approvals, authorizations, qualifications and orders
of governmental authorities required for the conduct of the business of
Holiday World Division as presently conducted by it, except where the
failure to have such licenses, permits, consents, approvals,
authorizations, qualifications and orders would not, individually or in
the aggregate, have a Material Adverse Effect. Immediately prior to the
Closing all permits required for the conduct of the business of the
Holiday World Division as presently conducted shall be in full force and
effect.
(n) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Except as described on Schedule 3.1(n)
hereto, each Seller has conducted the business of the Holiday World
Division so as to comply in all material respects with all applicable
laws, ordinances, regulations, rights of concession, licenses, know-how
or other proprietary rights of others, the failure to comply with which
would, individually or in the aggregate, have a Material Adverse Effect.
(o) Employee Benefit Plans.
(i) Schedule 3.1(o) hereto identifies:
(1) Each "employee benefit plan" as such term is
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), that is covered by
ERISA and that is maintained or otherwise contributed to by
the Sellers or by any ERISA Affiliate (as defined below) of
either of the Sellers for the benefit of the employees
("Holiday World Division Employees") of the Holiday World
Division business of the Sellers (a "Plan" and, collectively,
the "Plans"), copies or descriptions of which have been
delivered or made available to Buyer (together with the most
recent determination letter issued by the Internal Revenue
Service (in the case of "Pension Benefit Plans" as defined in
Section 3(2) of ERISA) and the most recent Annual Report on
Form 5500 required to be filed by the Sellers in connection
with any Plan). For purposes of this Agreement, the term
"ERISA Affiliate" shall refer to all members of the group
consisting of all corporations and all trades or businesses
(whether or not incorporated) under common control with the
Sellers, or either of them.
(2) Each material plan or arrangement not subject to
ERISA maintained, or otherwise contributed to by the Sellers
or by any ERISA Affiliate of either of the Sellers for the
benefit of Holiday World Division Employees of the Sellers and
providing for deferred compensation, bonuses, stock options,
employee insurance coverage or any similar compensation or
welfare benefit plan (a "Benefit Arrangement"; such Benefit
Arrangements, together with the Plans are referred to herein
collectively as the "Employee Benefit Programs"), copies or
descriptions of which have been delivered or made available to
Buyer or shall be furnished upon request.
(ii) Each Employee Benefit Program has been maintained and
administered at all time substantially in compliance with its terms
and all applicable laws, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended
(the "Code"), applicable to such Employee Benefit Programs;
(iii) No "reportable event" (as such term is used in Section
4043 of ERISA), "prohibited transaction" (as such term is used in
Section 406 of ERISA or Section 4975 of the Code) or "accumulated
funding deficiency" (as such term is used in Section 412 of ERISA
or Section 4971 of the Code) has heretofore occurred with respect
to any Plan which would have a material adverse effect on the
results of operations or business of the Holiday World Division
taken as a whole or the ability of each Seller to perform its
obligations hereunder;
(iv) No material litigation or administrative or other
proceedings involving the Employee Benefit Programs of Sellers have
occurred or, to the actual knowledge of Sellers, are threatened;
(v) No Employee Benefit Plan of either Seller or any
affiliate of either Seller is subject to Title IV of ERISA or
Section 412 of the Code, and no such Employee Benefit Plan has been
terminated within the last six years; and
(vi) Except as set forth in Schedule 3.1(o) hereto, there are
no other employment agreements, contracts or understandings with
Holiday World Division Employees of either Seller.
(p) Environmental Matters. Except as set forth on Schedule 3.1(p)
attached hereto and the matters covered by the Environmental Matters
Agreement between the parties and attached hereto as Exhibit C:
(i) all of the Sellers' operations in, on, or at the Stores
(A) comply with all applicable federal, state, or local statutes,
regulations, ordinances, codes, or decrees regarding the
environment, health and safety (including, without limitation,
those protecting the quality (1) of the ambient air, soil, surface
water or groundwater, (2) or endangered plant or animal species or
(3) otherwise regulating the use, storage, transportation,
manufacture, processing, disposal, treatment, sale, or discharge of
any "Hazardous Substances" (as defined below)) in effect as of or,
to the extent applicable, at any time prior to, the date of this
Agreement (collectively, the "Environmental Laws"), and all
permits, licenses, registrations, and other authorizations required
under applicable Environmental Laws to operate the Stores as they
are currently operated, and (B) have so complied; except, in either
case, insofar as any failure to comply would not be expected to
have a Material Adverse Effect;
(ii) No petroleum products, asbestos, radioactive material,
or hazardous, acutely hazardous, or toxic substance or waste
defined and regulated as such under Environmental Laws, including
without limitation the federal Comprehensive Environmental
Response, Compensation and Liability Act and the federal Resource
Conservation and Recovery Act ("Hazardous Substances"), have been
produced, sold, used, stored, transported, handled, released,
discharged or disposed of at or from the Stores by any person in a
manner that (A) violated any applicable Environmental Law or (B)
caused Hazardous Substances to be left in the soil, groundwater,
surface water, ambient air or building materials of the Stores;
except in either case, in a manner that would not be expected to
have a Material Adverse Effect;
(iii) Sellers have not received written notice from any
governmental authority or any other person purporting to have the
authority to enforce any applicable Environmental Law, that the
Stores are in violation or allegedly in violation of, do not comply
or allegedly do not comply with, or are the basis for liability or
alleged liability under, any applicable Environmental Law, which
violation, noncompliance or liability has not been substantially
corrected. Neither Seller has any actual knowledge of any other
action, proceeding or claim pending or threatened (A) concerning
any Store under any Environmental Law or (B) to redress the
presence or alleged presence of any Hazardous Substances at or
emanating from any Store; except, in either case, for such actions,
proceedings, or claims that would not be expected to have a
Material Adverse Effect;
(iv) As of the Closing, other than Hazardous Substances
reasonably necessary for the conduct of the business of the Holiday
World Division which are properly stored in accordance with
applicable Environmental Laws, no Hazardous Substances are present
at any Store or in the soil, groundwater, surface water, ambient
air or building materials thereof, except as would not be expected
to have a Material Adverse Effect. Except as set forth in Schedule
3.1(p), there are no underground storage tanks present at any
Store.
(v) Prior to the Closing, no Hazardous Substances were
transported, transferred, recycled, stored, used, treated,
manufactured, released, sold, distributed or exposed to any person,
either by or on behalf of the Sellers or the Holiday World
Division, in violation of any applicable Environmental Law and, to
the actual knowledge of Sellers, no such activity has resulted in
the exposure of any person to a Hazardous Substance in a manner
which has caused cancer or other serious illness in, or the death
of, said person.
(vi) Sellers have delivered or made available to Buyer copies
of all environmental assessments of the Stores in the possession of
the Sellers a list of which is set forth on Schedule 3.1(p).
Sellers have complied or before Closing will comply in all material
respects with all disclosure obligations, if any, imposed upon
Sellers by Environmental Laws that are triggered by this purchase
and sale.
(q) Certain Fees. None of the Sellers, the Company or any of
their respective officers, directors or employees, on behalf of the
Sellers or the Company, has employed any broker or finder or incurred
any other liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby, except for
those brokers whose fees will be paid by Sellers.
(r) Non-Foreign Status of Sellers. Neither Seller is a "Foreign
Person" within the meaning of Section 1445 of the Code.
(s) Absence of Certain Changes. Except as set forth in Schedule
3.1(s), since December 31, 1995 (i) there has not been any material
adverse change in the business, assets, financial condition, operations,
or results of operations of the Holiday World Division, (ii) there has
not been any material change in the accounting policies of Sellers from
those applied in the preparation of the Unaudited Financial Statements
and (iii) the Company and the Sellers have conducted the business of the
Holiday World Division only in the ordinary course consistent with past
practice, except for such actions which would not be expected to have a
Material Adverse Effect or for actions contemplated by or otherwise
disclosed pursuant to this Agreement.
(t) Tax Matters. There have been timely filed (taking into
account any extensions granted) in respect of the Holiday World Division
business, all United States federal, state and local tax returns and
reports for all years and periods for which such returns and reports
were due to be filed prior to the Closing Date, except for such failures
to file timely that could not be expected to have a Material Adverse
Effect.
(u) Inter-Company Transactions. Other than arrangements between
any Seller and the R.V. Division or any Seller and Eaglemark Financial
Services, Inc. and/or its subsidiaries, Schedule 3.1(u) hereto contains
an accurate and complete summary of all material arrangements (including
the provision of products or services), relationships and transactions
between the Company (including any affiliate) and any of the Sellers,
that impact the financial information presented in the financial
statements referenced in Section 3.1(e) (including Schedule 3.1(e)).
Except as set forth on Schedules 3.1(e) or Schedule 3.1(u), the Company
and Sellers have no actual knowledge of any favorable pricing, purchase
or lease arrangements which will not continue to be available to Buyer
after the Closing on substantially equivalent terms.
(v) Inventory. All Inventory reflected on the Preliminary
Statement or acquired since December 31, 1995 was acquired and has been
maintained in the ordinary course of the business of the Holiday World
Division; consists substantially of a quality, quantity and condition
usable or saleable in the ordinary course of the business of the Holiday
World Division; is valued using a standard cost system which
approximates the lower of cost (on a "last in, first out" accounting
basis) or market and otherwise in accordance with GAAP; and to the
actual knowledge of the Sellers is not subject to any material
write-down or write-off for which appropriate reserves have not been
included in the Preliminary Statement. Except for five units sold at
manufacturer's standard cost to related parties, since December 31,
1995, no Inventory has been sold or disposed of except in the ordinary
course of the business of the Holiday World Division.
(w) Accounts Receivable. The accounts receivable of the Sellers
arising from the conduct of the business of the Holiday World Division
as reflected on the Preliminary Statement or arising since December 31,
1995, have arisen out of the bona fide sales and deliveries to customers
of the Holiday World Division or performance of services and other
business transactions in the ordinary course of the business of the
Holiday World Division, and are not subject to valid defenses, set-offs
or counter-claims. The allowance for collection losses on the
Preliminary Statement has been determined in all material respects in
accordance GAAP.
(x) Product Liability Claims. Schedule 3.1(x) hereto sets forth a
summary of each Product Liability Claim (as defined below) in excess of
$250,000 paid by the Sellers during the past five years, and each
outstanding Product Liability Claim in excess of $250,000. For purposes
of this Section 3.1(x), the term "Product Liability Claim" shall mean
any claim arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any vehicle or product
sold, leased, or delivered by the Holiday World Division.
(y) Certain Real Property Matters.
(i) Except as set forth on Schedule 3.1(y)(i), there is no
pending, or to the actual knowledge of Sellers, threatened,
condemnation or similar proceeding affecting any Store or any
portion thereof. There are no pending or, to Sellers' knowledge
threatened, special assessments or improvements or activities of
any governmental or quasi-governmental authority either planned, in
the process of construction, or completed which may give rise to
any special assessment against any Store or any portion thereof.
(ii) Neither Seller has received any written notice from any
insurance company of any defects or inadequacies in any Store or
any part thereof which could materially and adversely affect the
insurability of such Store or the premiums for the insurance
thereof. No written notice has been given by any insurance company
which has issued a policy with respect to any portion of any Store
or by any board of fire underwriters (or other body exercising
similar functions) requesting the performance of any repairs,
alterations or other work with which compliance has not been made.
(iii) There are no parties in possession of any portion of
any Store, whether as tenants, tenants at sufferance, trespassers
or otherwise, except Sellers.
(iv) To the actual knowledge of the Sellers, there is no law,
ordinance, order, regulation or requirement now in existence or
under active consideration by any governmental authority which
could require the owner of the Stores to make aggregate
expenditures in excess of $200,000, in the aggregate, to modify or
improve the Stores to bring them into compliance therewith and
there is no pending judicial or administrative action with respect
to the Stores.
(v) Except as set forth on Schedule 3.1(y)(v), there are
currently in existence no service, operating or management
agreements or arrangements requiring annual payments in excess of
$100,000 with respect to the Stores.
(vi) There are presently in existence water, sewer, gas and
electrical lines and surface drainage systems serving each Store
which have been licensed, permitted, completed, installed and paid
for and which are sufficient as licensed and permitted to service
the operations of each such Store when fully occupied and
operational. All utility lines serving each Store are located in
the right-of-way of public roadways to the boundary of the land on
which Store is situated.
(vii) Each Store has adequate access to and from completed,
dedicated and accepted public roads and there is no pending, or to
the actual knowledge of Sellers threatened, governmental proceeding
which could impair or curtail such access.
(viii) All improvements existent on the land on which the
Stores are located (including all drives and parking areas) are
private and have not been dedicated to any public authority and
each Store is segregated on the applicable tax rolls so that no
other property is included on any tax bill related to such Store.
(ix) Holiday World, Inc. (California) ("HW California") is
the sole owner and holder of the entire interest of the "Lessee"
under that certain Standard Industrial/Commercial Single Tenant
Lease--Net (the "Lease") dated July 1, 1993, between HAL Sales
Corporation, as lessor, and HW California, as lessee, regarding the
premises commonly known as 311 Daily Drive, Camarillo, Ventura
County, California, free and clear of any liens, restrictions,
encumbrances, options and rights of others. The Lease constitutes
the entire agreement between the "Lessor" and "Lessee" and there
are no other representations, covenants, conditions or agreements
between such Lessor and Lessee, except as expressly set forth in
the Lease, regarding the premises leased thereunder, any other
property of the lessor or the Lessee or any other matter
whatsoever. The Lease has not been modified or amended in any
respect, nor has HW California waived any right, remedy, term or
condition under the Lease, nor has HW California assigned any
interest in the Lease or subleased any interest in the premises
leased thereunder. The Lease is in full force and effect and
neither the Lessor nor the Lessee is in default thereunder, nor
does any condition or circumstance exist which, with the giving of
notice or the passage of time or both, could constitute such a
default. HW California has delivered to Buyer all documents in
Sellers' possession with respect to the Lease and/or the premises
leased thereunder.
(z) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 3.1, neither
Seller nor any other person or entity makes any other express or implied
representation or warranty to Buyer.
3.2. Representations and Warranties of Monaco and Buyer. Monaco
and Buyer jointly and severally represent and warrant to the Sellers as
follows:
(a) Due Organization and Power. Each of Monaco and Buyer is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation. Each of Monaco and Buyer has all
requisite power and authority to enter into this Agreement and any other
agreement contemplated hereby and to perform its obligations hereunder
and thereunder. Each of Monaco and Buyer is duly authorized, qualified
or licensed to do business as a foreign corporation, and is in good
standing, in each of the jurisdictions in which its right, title or
interest in or to any asset, or the conduct of its business, requires
such authorization, qualification or licensing, except where the failure
to so qualify or to be in good standing would not have a material
adverse effect on the ability of Monaco or Buyer to perform its
respective obligations hereunder or under any other agreement
contemplated hereby.
(b) Authorization and Validity of Monaco and Agreement. The
execution, delivery and performance by Monaco and Buyer of this
Agreement and any other agreements contemplated hereby and the
consummation by Monaco and Buyer of the transactions contemplated hereby
and thereby have been duly authorized by their respective Boards of
Directors. No other corporate or stockholder action is necessary for
the authorization, execution, delivery and performance by Monaco or
Buyer of this Agreement and any other agreement contemplated hereby and
the consummation by Monaco or Buyer of the transactions contemplated
hereby or thereby. This Agreement has been duly executed and delivered
by Monaco and Buyer and constitutes a valid and legally binding
obligation of Monaco and Buyer, enforceable against each of them in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which Buyer is a Party. Except as described in
Schedule 3.2(c), the execution, delivery and performance of this
Agreement and any other agreements contemplated hereby by Monaco and
Buyer and the consummation by each of them of the transactions
contemplated hereby and thereby (i) will not violate (with or without
the giving of notice or the lapse of time or both), or require any
consent, approval, filing or notice under, any provision of any law,
rule or regulation, court order, judgment or decree applicable to Monaco
or Buyer, except for such violations the occurrence of which, and such
consents, approvals, filings or notices the failure of which to obtain
or make, would not have a material adverse effect on Monaco's or Buyer's
ability to perform its obligations hereunder, and (ii) will not conflict
with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of Monaco or Buyer, under, the charter or
by-laws of Monaco or Buyer or any indenture, mortgage, deed of trust,
lease, licensing agreement, contract, instrument or other agreement to
which Monaco or Buyer is a party or by which Monaco or Buyer or any of
their respective assets or properties is bound, except for such
conflicts, breaches, terminations, defaults, accelerations or liens
which would not have a material adverse effect on Monaco's or Buyer's
ability to perform its obligations hereunder.
(d) Certain Fees. Neither Monaco, the Buyer nor any of their
officers, directors or employees, on behalf of Buyer, has employed any
broker or finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby, except for those brokers whose fees will be paid by
Monaco or Buyer.
(e) Financial Statements. Monaco has filed all required reports,
schedules, forms, statements and other documents with the Securities and
Exchange Commission (the "SEC") since January 1, 1994 (the "SEC
Documents"). As of their respective dates,the SEC Documents, including,
without limitation, the financial statements included in such SEC
Documents (i) complied in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended, as applicable, and the
rules and regulations of the SEC promulgated thereunder applicable to
such SEC Documents, (ii) in the case of the financial statements
included in such SEC Documents, were prepared in all material respects
in accordance with GAAP, as in effect on the date of such financial
statements and applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto), (iii) fairly present,
in all material respects, the financial position and results of
operations of Monaco, as of their respective dates and for the
respective periods covered thereby and (iv) none of the SEC Documents as
of such dates contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(f) Absence of Certain Changes or Events. Since September 30,
1995, except as described on Schedule 3.2(h) hereto or in the SEC
Documents filed prior to the date of this Agreement, there has not been
any change, occurrence or development that has had, or is reasonably
likely to have, a material adverse effect on the results of operations,
business or financial condition of Monaco and its subsidiaries taken as
a whole.
(g) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 3.2, neither
Monaco, the Buyer nor any other person or entity makes any other express
or implied representation or warranty to the Sellers.
3.3. Expiration of Representations and Warranties. Except for
those representations and warranties set forth in Schedule 3.3 attached
hereto which shall expire and terminate as set forth on such schedule, the
respective representations and warranties of the Company, Sellers, Monaco
and Buyer contained herein or in any certificate or other document
delivered prior to or on the Closing Date shall expire and be terminated
and extinguished on April 30, 1997. After expiration and termination of
the respective representation or warranty, the Company, Sellers, Monaco
and Buyer shall have no liability whatsoever with respect to any such
representation or warranty.
4. Transactions Prior to Closing
Intentionally Omitted
5. Conditions Precedent
Intentionally Omitted
6. Employee Relations and Benefits
6.1. Employment. Buyer shall offer employment to all employees of
the Holiday World Division, except for HHC employees. Employees who
accept such employment shall hereinafter be referred to as "Transitioned
Employees".
6.2. Effective Time. All Transitioned Employees shall become
employees of Buyer as of the Effective Time.
6.3. Benefit Plans and Programs. Buyer shall provide Transitioned
Employees with employee benefit plans, programs and policies which are
similar, in all material respects, to those provided to similarly situated
employees of Monaco, and Transitioned Employees shall commence
participation in such plans, programs and policies as of the Effective
Time and shall be granted past service credit for their employment with
Sellers with respect to such plans, programs and policies, including
vacation and severance, (with appropriate offsets so as not to duplicate
benefits); unless the provision of such past service credit would violate
applicable law or the terms of such plans, programs and policies as such
plans exist as of the date hereof.
6.4. Welfare Plans. Monaco shall cause to be waived all
eligibility waiting periods, actively-at-work provisions and pre-existing
condition exclusions for Transitioned Employees and their eligible
dependents under Monaco's welfare benefit plans and shall cause
Transitioned Employees and their dependents to be given credit under
Monaco's welfare benefit plans for deductible and out-of-pocket expenses
that they have satisfied under the Sellers' plans during the calendar year
in which the Closing Date occurs.
6.5. Rollovers. Monaco and Buyer agree to take such actions as
are necessary with respect to Monaco's defined contribution plans to
enable Transitioned Employees to make permitted rollovers of amounts
distributable to such employees from Sellers' savings plans under Section
401(k)(10) of the Internal Revenue Code of 1986, as amended.
6.6. Tax Reporting. Sellers shall prepare and furnish to each
Transitioned Employee a Form W-2 which shall reflect all wages and
compensation paid to Transitioned Employees for that portion of the
calendar year in which the Closing Date occurs during which the
Transitioned Employees were employed by Sellers. Sellers shall furnish to
Buyer the Form W-4 and Form W-5 for each Transitioned Employee. Buyer
shall send to the appropriate Social Security Administration office a duly
completed Form W-3 and accompanying copies of the duly completed Form W-2.
It is the intent of the parties hereunder that the obligations of Buyer
and Sellers under this Section 6.7 shall be carried out in accordance with
Section 5 of the Internal Revenue Service's Revenue Procedure 84-77.
6.7. Warn Act. Buyer and Sellers agree that for purposes of the
Worker Adjustment and Retraining Notification Act (the "WARN Act"), the
Closing Date shall be the "effective date" as such term is used in the
WARN Act. Sellers agree that they shall be responsible for any
notification required under the WARN Act with respect to the Holiday World
Division Employees who are not Transitioned Employees and shall indemnify
the Buyer and hold the Buyer harmless from and against all fines and other
payments which may become due under the WARN Act with respect to such
employees. Buyer agrees that after the Closing it shall be responsible
for any notification required under the WARN Act with respect to the
Transitioned Employees and Monaco and Buyer shall indemnify the Company,
Sellers and their respective affiliates and hold the Company, Sellers and
their respective affiliates harmless from and against all fines and other
payments which may become due under the WARN Act with respect to the
Transitioned Employees.
7. Fee and Expenses
7.1. Fees and Expenses. Except as otherwise stated in this
Agreement, all expenses incurred by the parties hereto shall be borne
solely and entirely by the party which has incurred such expenses.
8. Transactions Subsequent to Closing
8.1. Post-Closing Access to Information and Assistance.(a)For a
period of seven years after the Closing Date, each party hereto shall
provide, and shall cause its appropriate personnel to provide, when
reasonably requested to do so by another party, access to all tax,
financial and accounting records and any other records transferred to
Buyer or retained by the Company and the Sellers, as applicable, in
accordance with this Agreement. Neither party shall, nor shall it permit
its affiliates to, dispose of, alter or destroy any such books, records
and other data without giving 30 days' prior written notice to the other
party and permit the other parties hereto, at their expense, to examine,
duplicate or repossess such records, files, documents and correspondence.
(b) The Company and Sellers agree to cooperate with Buyer in the
preparation for and prosecution of the defense of any claim, action or
cause of action arising out of or relating to any liability relating to
the Holiday World Division business which arose prior to the Closing and
which has been assumed by Buyer, including, without limitation, by making
available evidence within the control of the Company or Sellers and
persons needed as witnesses employed by the Company or Sellers, in each
case as reasonably needed for such defense. Except as provided in Section
9.3, Buyer shall reimburse the Company and/or Sellers for their actual
out-of-pocket costs relating to their cooperation under this paragraph.
8.2. Further Agreements. Each Seller authorizes and empowers
Buyer on and after the Closing Date to receive and open all mail received
by Buyer relating to the business of the Holiday World Division or the
Assets and to deal with the contents of such communications in any proper
manner. The Sellers shall promptly deliver to Buyer any mail or other
communication received by them after the Closing Date pertaining to the
business of the Holiday World Division or the Assets and any cash, checks
or other instruments of payment to which Buyer is entitled. Buyer shall
promptly deliver to the Sellers any mail or other communication received
by it after the Closing Date pertaining to the assets and liabilities
described in Sections 1.2 and 1.6 hereof, and any cash, checks or other
instruments of payment in respect thereof.
8.3. Use of Corporate Name.Buyer shall not use the name Harley-
Davidson, Inc. or any derivative thereof in any manner, including in any
advertising or promotional materials, either prior to or after the Closing
Date. Monaco and Buyer agree that they will not object to HHC's
continued use of the name Holiday World in connection with the operation
of the four stores which are not being transferred to Buyer pursuant to
this Agreement.
8.4. No Competition. (a) During the period commencing on the
Closing Date and ending on the fifth anniversary of the Closing Date, the
Company and Sellers will not, and will cause any person that is or shall
become an affiliate of any of them not to, directly or indirectly conduct
or engage in the retail sale and servicing of new or used motor homes,
conventional travel trailers, fifth wheel travel trailers, other
recreational vehicles or related parts and accessories (the "Restricted
Business"). Notwithstanding the foregoing, none of the Company, Sellers
nor any of its existing or future affiliates shall be in violation of this
Section 8.4 if it continues to operate the assets excluded from sale
hereunder pursuant to Section 1.2 or if it owns less than 5% of the equity
securities of any business that is engaged in the Restricted Business
(except as otherwise contemplated by this Agreement).
(b) During the period commencing on the Closing Date and ending on
the fifth anniversary of the Closing Date, neither the Company nor the
Sellers will solicit (or assist or encourage the solicitation of) any of
the employees of Buyer or its affiliates, without the prior written
consent of Buyer.
(c) Inasmuch as the remedy at law for any breach by the Company or
the Sellers of the covenants contained in this Section 8.4 may be
inadequate, Buyer will be entitled to a temporary restraining order and to
preliminary and final injunctive relief to enforce such covenants, without
the necessity of posting a bond, in addition to any other remedies that
may be available. In the event one or more provisions, or any part
thereof, of the covenants contained in this Section 8.4 shall be held
unenforceable for any reason, or in the event any provision of such
covenants shall be held unenforceable as to any specific locality or any
specific activity, then this Section 8.4 shall be construed and enforced
to the maximum extent permitted by law in a manner consistent with the
intent of the parties as herein expressed.
8.5. Tax Assistance and Cooperation. After the Closing Date,
Buyer shall cooperate and shall cause its appropriate personnel to provide
Sellers with assistance with financial and tax matters relating to
Sellers' preparation of its tax returns and the payment of taxes,
including assistance in the payment of all sales and use taxes, income
taxes, franchise taxes and any other taxes related to Sellers' operation
of the Holiday World Division prior to the Closing Date. Sellers shall
reimburse Buyer for its actual out-of-pocket costs relating to their
cooperation and assistance under this paragraph.
8.6. Floorplan Financing. The Company agrees to provide floorplan
financing for Buyer, in accordance with the terms set forth on Schedule
8.6 hereto, for a period of time expiring one year after the Closing Date.
8.7. Environmental Audits. The Buyer and Sellers agree that the
fees and expenses for all environmental assessments and audits conducted
prior to the Closing Date will be paid by Buyer and shall be addressed to
Buyer; provided, that Sellers shall reimburse Buyer for 1/2 of the
expenses incurred in connection with the "phase II" audit work up to a
maximum of $37,500 and any "phase II" assessment or audit report will be
addressed to both Buyer and Sellers. Notwithstanding the foregoing, any
draft environmental report shall be provided to Sellers in order to
provide Sellers the opportunity to correct any factual errors in such
report prior to its issuance.
9. Miscellaneous
9.1. Public Announcements. Prior to the Closing Date, no news
release or other public announcement pertaining in any way to the
transactions contemplated by this Agreement will be made by either party
without the prior consent of the other party, unless in the opinion of
counsel to such party such release or announcement is required by law.
9.2. Transfer Taxes and Recording Expenses. Buyer shall pay and
shall indemnify each Seller and its affiliates against all sales, motor
vehicle, registration or similar taxes and recording expenses, if any,
required to be paid in connection with the transfer of the Assets
(including any interest charge, penalty or addition to tax with respect
thereto) without regard to whether such taxes or expenses are imposed on
Buyer or Sellers. Sellers agree to pay any gross receipt or income taxes
and to reimburse Buyer for one-half of the cost of any transfer taxes
(other than those set forth above) incurred in connection with the
consummation of this transaction.
9.3. Indemnification. (a) The Company and HHC shall jointly and
severally indemnify and hold Monaco, Buyer and their affiliates harmless
against and in respect of (i) all obligations and liabilities of the
Company and the Sellers, whether accrued, absolute, fixed, contingent or
otherwise, not expressly assumed by Monaco or Buyer pursuant to this
Agreement (including, without limitation, the Excluded Liabilities) or the
Assumption Agreement; provided, however, that neither the Company nor HHC
shall have any liability under this Section 9.3(a)(i) to Monaco or Buyer
to the extent the liability giving rise thereto has also given rise to any
liability included in the post-Closing adjustment provisions of Section
2.3, (ii) any actual Damages (as defined below) incurred or sustained by
Monaco or Buyer or their affiliates as a result of any breach by the
Company or the Sellers of their covenants contained herein which survive
the Closing; (iii) any actual Damages incurred or sustained by Monaco or
Buyer or their affiliates as a result of any breach by the Company or the
Sellers of the representations and warranties set forth in Section 3.1,
provided that (W) the Company and HHC shall be required to indemnify
Monaco, Buyer or their affiliates pursuant to this clause (iii) for any
such breach or breaches only to the extent that the aggregate actual
Damages resulting from such breaches exceeds $500,000, (X) neither the
Company nor HHC shall be required to indemnify Monaco, Buyer or their
affiliates pursuant to this clause (iii) in an aggregate amount in excess
of $2 million for the breaches of any representations or warranties,
(Y) Monaco, Buyer and their affiliates agree to aggregate its claims
pursuant to this clause (iii) so that the aggregate amount of the claims
is $25,000 or greater, and (Z) any claim for indemnification under this
clause (iii) must be made in writing in reasonable detail to the Company
and HHC by Monaco or the Buyer not later than April 30, 1997, or such
longer period with respect to a breach of a specific representation or
warranty that is set forth in Schedule 3.3; provided, further, that for
the purposes of this Section 9.3(a)(iii), the representations and
warranties of the Company and Sellers contained in Section 3.1 of this
Agreement which by their terms contain any qualification or limitation
with respect to a Material Adverse Effect, or are otherwise qualified or
limited with respect to materiality, shall be read without giving effect
to any such qualification or limitation and (iv) liabilities for taxes of
the Sellers, their affiliates, the Holiday World Division or the Assets
arising at any time with respect to periods ending prior to the Closing
Date (excluding property taxes and any taxes described as being the
obligations of Monaco or the Buyer in Section 9.2 of this Agreement). For
purposes of this Section 9.3, "Damages" shall mean any and all claims,
losses, liabilities, damages, deficiencies, costs and expenses (including
without limitation as a result of the defense, settlement or compromise of
any claim), including, without limitation, reasonable attorneys',
accountants' and expert witness fees, costs and expenses of investigation,
and costs and expenses incurred by an indemnified party in connection with
any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Section 9.3 or to enforce
an indemnified party's rights under this Section 9.3.
(b) Monaco and Buyer shall jointly and severally indemnify and
hold the Company, Sellers and their affiliates harmless against and in
respect of (i) all obligations and liabilities of Sellers and their
affiliates expressly assumed by Monaco or Buyer pursuant to this Agreement
or the Assumption Agreement; (ii) any actual Damages incurred or sustained
by the Company, the Sellers or their affiliates as a result of any breach
by Monaco or Buyer of their covenants contained herein which survive the
Closing; (iii) any actual Damages incurred or sustained by the Company,
the Sellers or their affiliates arising from the operations of the Holiday
World Division business on or after the Closing Date; (iv) any actual
Damages incurred or sustained by the Company or the Sellers as a result of
any breach by Monaco or Buyer of their representations and warranties
contained in Section 3.2 hereof; provided that any claim for
indemnification under this clause (iv) must be made in writing in
reasonable detail to Monaco or Buyer by the Company or a Seller not later
than April 30, 1997, or such longer period with respect to a breach of a
specific representation or warranty that is set forth in Schedule 3.3, and
shall be subject to the same limitations as are set forth in clauses (w),
(x) and (y) of Section 9.3(a)(iii); provided, further, that for the
purposes of this Section 9.3(b)(iv), the representations and warranties of
the Buyer contained in Section 3.2 of this Agreement which by their terms
contain any qualification or limitation with respect to a material adverse
effect, or are otherwise qualified or limited with respect to materiality,
shall be read without giving effect to any such qualification or
limitation; and (v) any and all taxes and expenses described as being the
obligations of the Buyer in Section 9.2.
(c) Promptly after receipt by an indemnified party under this
Section 9.3 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 9.3, notify the
indemnifying party in writing of the claim or the commencement of that
action, provided that the failure to notify the indemnifying party shall
not relieve it from any liability which it may have to the indemnified
party unless the indemnifying party is materially prejudiced in its
ability to defend such action. If any such claim shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled at its expense to participate
therein, and to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party, and to settle and compromise any
such claim or action; provided, however, that if the indemnified party has
elected to be represented by separate counsel pursuant to the proviso to
the following sentence or if such settlement or compromise does not
include an unconditional release of the indemnified party for any
liability arising out of such claim or action, such settlement or
compromise shall be effected only with the consent of the indemnified
party, which consent shall not be unreasonably withheld. After notice
from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under this Section 9.3 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, provided, however, that the indemnified party shall have
the right to employ counsel to represent it if, in the opinion of counsel
to the indemnified party, it is advisable for the indemnified party to be
represented by separate counsel due to actual or potential conflicts of
interest, and in that event the fees and expenses of such separate counsel
shall be paid by the indemnifying party; provided, that in no event shall
the indemnifying party be responsible for the fees of more than one
counsel. Buyer and the Company and the Sellers shall each render to each
other such assistance as may reasonably be requested in order to ensure
the proper and adequate defense of any such claim or proceeding.
(d) The indemnities provided in this Agreement shall survive the
Closing. The indemnity provided in this Section 9.3 shall be the sole and
exclusive contractual remedy of the indemnified party against the
indemnifying party at law or equity for any matter covered by paragraphs
(a) and (b).
(e) If the amount with respect to which any claim is made under
any of Sections 6.7, 9.2, 9.3(a) or 9.3(b) of this Agreement (an
"Indemnity Claim") gives rise to a currently realizable Tax Benefit (as
defined below) to the party making the claim, the indemnity payment shall
be reduced by the amount of the Tax Benefit available to the party making
the claim. To the extent such Indemnity Claim does not give rise to a
currently realizable Tax Benefit, if the amount with respect to which any
Indemnity Claim is made gives rise to a subsequently realized Tax Benefit
to the party that made the claim, such party shall refund to the
indemnifying party the amount of such Tax Benefit when, as and if
realized. For the purposes of this Agreement, any subsequently realized
Tax Benefit shall be treated as though it were a reduction in the amount
of the initial Indemnity Claim, and the liabilities of the parties shall
be redetermined as though both occurred at or prior to the time of the
indemnity payment. For purposes of this Section 9.3(e), a "Tax Benefit"
means an amount by which the tax liability of the party (or group of
corporations including the party) is reduced (including, without
limitation, by deduction, reduction of income by virtue of increased tax
basis or otherwise, entitlement to refund, credit or otherwise) plus any
related interest received from the relevant taxing authority. Where a
party has other losses, deductions, credits or items available to it, the
Tax Benefit from any losses, deductions, credits or items relating to the
Indemnity Claim shall be deemed to be realized proportionately with any
other losses, deductions, credits or items. For the purposes of this
Section 9.3(e), a Tax Benefit is "currently realizable" to the extent it
can be reasonably anticipated that such Tax Benefit will be realized in
the current taxable period or year or in any tax return with respect
thereto (including through a carryback to a prior taxable period) or in
any taxable period or year prior to the date of the Indemnity Claim. In
the event that there should be a determination disallowing the Tax
Benefit, the indemnifying party shall be liable to refund to the
indemnified party the amount of any related reduction previously allowed
or payments previously made to the indemnifying party pursuant to this
Section 9.3(e). The amount of the refunded reduction or payment shall be
deemed a payment under Sections 6.7, 9.2, 9.3(a) or 9.3(b) of this
Agreement and thus shall be paid subject to any applicable reductions
under this Section 9.3(e).
(f) The parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for tax purposes as an
adjustment to the Purchase Price, unless otherwise required by applicable
law.
(g) Each party and their affiliates shall be obligated in
connection with any claim for indemnification under this Section 9.3 to
use all commercially reasonable efforts to obtain any insurance proceeds
available to such Indemnitee with regard to the applicable claims. The
amount which the indemnifying party is or may be required to pay to any
indemnified party pursuant to this Section 9.3 shall be reduced
(retroactively, if necessary) by any insurance proceeds or other amounts
actually recovered by or on behalf of such indemnified party in reduction
of the related Damage. If an indemnified party shall have received the
payment required by this Agreement from an indemnifying party in respect
of Damages and shall subsequently receive insurance proceeds or other
amounts in respect of such Damages, then such indemnified party shall
promptly repay to the indemnifying party a sum equal to the amount of such
insurance proceeds or other amounts actually received.
(h) Each indemnified party shall be obligated in connection with
any claim for indemnification under this Section 9.3 to use all
commercially reasonable efforts to mitigate Damages upon and after
becoming aware of any event which could reasonably be expected to give
rise to such Damages.
(i) Notwithstanding anything to the contrary in this Section 9.3,
upon the occurrence of an Event of Default (as defined in the Note) under
the Note, the Company and the Sellers shall not be obligated to make any
further payments to any indemnified party for any claims made pursuant to
Section 9.3(a) unless and until the Event of Default has been cured by
Monaco or the Buyer. All claims received by the Company or the Sellers
prior to the expiration of the indemnification periods set forth in
Section 9.3(a)(iii)(z) shall be held by the Company or the Seller until
the Event of Default has been cured; provided, that if the defense of such
claim has been prejudiced or the damages have increased because of the
Company's or the Sellers' inaction in accordance with this Section 9.3(i),
the Company and Sellers' shall not be responsible for the damages
attributable to such prejudice or such increase in damages.
9.4. Notices. Except as otherwise set forth in this Agreement,
all notices, requests, demands and other communications which are required
or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, if telecopied or
mailed, first class mail, postage prepaid, return receipt requested, as
follows:
(a) If to the Company or Sellers:
Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, Wisconsin 53201
Attention: Timothy K. Hoelter, Esq.
Telecopy: (414) 935-4990
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert E. Spatt, Esq.
Telecopy: (212) 455-2502
(b) If to Buyer:
MCC Acquisition Corporation
91320 Coburg Industrial Way
Coburg, Oregon 97408
Attention: Kay L. Toolson
Telecopy: (503) 998-2158
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Henry P. Massey, Jr., Esq.
Telecopy: (415) 493-6811
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the date of
personal delivery or telecopy or on the third business day after the
mailing thereof.
9.5. Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the parties
hereto and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter
hereof, (except for the Transition Services Agreement and the
Environmental Matters Agreement between the parties).
9.6. Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.7. Bulk Sales Law. Buyer and the Sellers each agree to waive
compliance by the other with the provision of the bulk sales law of any
jurisdiction.
9.8. Assignability. This Agreement shall not be assignable by the
Sellers without the prior written consent of Buyer or by Buyer without the
prior written consent of the Sellers, provided, that Buyer may assign its
rights and delegate its duties hereunder to an affiliate or affiliates, so
long as Monaco and Buyer agree to be jointly and severally liable for all
obligations hereunder; provided, further, that Buyer may assign its rights
hereunder as collateral security to lenders providing acquisition
financing for this transaction and any replacement thereof. Each party
agrees that it will not assign any rights or obligations under this
Agreement to any party unless such party agrees to be bound by the terms
of this Agreement.
9.9. Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed
by the parties hereto. No waiver by either party of any of the provisions
hereof shall be effective unless explicitly set forth in writing and
executed by the party so waiving. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or agreements
contained herein, and in any documents delivered or to be delivered
pursuant to this Agreement and in connection with the Closing hereunder.
The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
9.10. Schedules. Any fact or item disclosed on any Schedule to
this Agreement shall be deemed disclosed on all other Schedules to this
Agreement to which such fact or item may reasonably apply so long as such
disclosure is in sufficient detail to enable a party hereto to identify
the facts or items to which it applies. Any fact or item disclosed on any
Schedule hereto shall not by reason only of such inclusion be deemed to be
material and shall not be employed as a point of reference in determining
any standard of materiality under this Agreement.
9.11. Section Headings; Table of Contents. The Section headings
contained in this Agreement and the Table of Contents to this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.12. Severability. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be
affected and shall remain in full force and effect.
9.13. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
9.14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Indiana without
regard to conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
HARLEY-DAVIDSON, INC.
By:
Title:
HOLIDAY RAMBLER LLC
By:
Title:
HOLIDAY HOLDING CORP.
By:
Title:
HOLIDAY WORLD, INC. (California)
By:
Title:
HOLIDAY WORLD, INC. (Texas)
By:
Title:
HOLIDAY WORLD, INC. (Florida)
By:
Title:
HOLIDAY WORLD, INC. (Oregon)
By:
Title:
HOLIDAY WORLD, INC. (Indiana)
By:
Title:
HOLIDAY WORLD, INC. (Washington)
By:
Title:
HOLIDAY WORLD, INC. (New Mexico)
By:
Title:
MONACO COACH CORPORATION
By:
Title:
MCC ACQUISITION CORPORATION
By:
Title:
<PAGE>
SCHEDULES TO ASSET PURCHASE AGREEMENT
Exhibit A
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated as of March 4, 1996 by MCC ACQUISITION
CORPORATION (the "Assignee"), in favor of HARLEY-DAVIDSON, INC., a
Wisconsin corporation (the "Company"), and HOLIDAY HOLDING CORP., a Texas
corporation ("HHC"), HOLIDAY WORLD, INC., a California corporation,
HOLIDAY WORLD, INC., a Texas corporation, HOLIDAY WORLD, INC., a Florida
corporation, HOLIDAY WORLD, INC., an Oregon corporation, HOLIDAY WORLD,
INC., an Indiana corporation, HOLIDAY WORLD, INC., a Washington
corporation and HOLIDAY WORLD, INC., a New Mexico corporation
(collectively, "HW", and together with HHC, the "Assignors").
W I T N E S S E T H :
-xlvi-
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of
January 21, 1996 (the "Purchase Agreement"), among the Company, the
Assignors, and the Assignee, the Assignors have sold, transferred,
assigned, conveyed and delivered to Assignee the properties, assets and
business comprising Assignors' Holiday World Division (the "Holiday World
Division"); and
WHEREAS, the Purchase Agreement requires that Assignee undertake to
assume and to agree to perform, pay or discharge certain liabilities and
obligations of Assignors relating to the business of the Holiday World
Division;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Assignors and Assignee agree as follows:
Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Purchase Agreement.
1. Assignee hereby undertakes, assumes and agrees to perform, pay
or discharge when due, to the extent not heretofore performed, paid or
discharged, and subject to the limitations contained in paragraph 2
hereof: (i) all obligations relating to the Holiday World Division
business under contracts, commitments and agreements (except those
obligations relating to contracts specifically excluded from transfer
under the Purchase Agreement), including, without limitation, commitments
for advertising, all unfulfilled purchase orders and sales commitments;
(ii) all liabilities and obligations for returns of Holiday World Division
products sold prior to the Closing Date; (iii) all liabilities and
obligations for trade promotion programs (including, without limitation,
trade allowance programs), consumer promotions and other marketing
programs applicable to Holiday World Division products; (iv) all
obligations under the licenses, permits or franchises of the Holiday World
Division, except those disclosed on Schedule 1.1(g) to the Purchase
Agreement; (v) all current liabilities and accrued liabilities (excluding
taxes referenced in Section 1.6(a) of the Purchase Agreement) arising out
of the operations of the Holiday World Division, including, but not
limited to, (a) all products liability claims with respect to products
manufactured by the Assignors, (b) all liabilities related to the
presence, disposal, escape, seepage, leakage, discharge, emission, release
or threatened release of any substances or materials, or (c) all
liabilities related to or arising from the laws and regulations governing
the manufacture or sale of motor or recreational vehicles) and (vi) all
liabilities and obligations for any taxes and expenses described as
obligations of the Assignee in Section 9.2 of the Purchase Agreement.
2. It is expressly understood that Assignee is not assuming or
agreeing to perform, pay or discharge:
(a) liabilities of either of the Assignors for any taxes (other
than accrued property taxes or any taxes which the Assignee is responsible
for pursuant to Section 9.2 of the Purchase Agreement) arising from the
operations of the Holiday World Division prior to the Closing Date;
(b) liabilities arising out of or related to the Excluded Assets;
(c) liabilities to current, former or retired employees of the
Assignors arising out of or relating to their employment with the
Assignors or their termination by the Assignors; except for (i)
liabilities for Transitioned Employees for accrued vacation, whether
vested or unvested, (only to the extent that such accruals are consistent
with Assignee's accrued vacation policy) and accrued moving expenses and
(ii) liabilities arising out of Assignors' noncompliance with Section 6.7
of the Purchase Agreement;
(d) intercompany liabilities (other than the obligations to
Eaglemark Financial Services, Inc. and/or its subsidiaries);
(e) liabilities of either of the Sellers to third parties for any
funded debt (excluding the mortgage loan on the real property located in
Tacoma, Washington) other than obligations to Eaglemark Financial
Services, Inc. and/or its subsidiaries (if applicable); and
(f) except as otherwise provided herein, all debts, liabilities
and obligations that do not arise out of the business of the Holiday World
Division or the Assets.
3. Nothing contained herein shall require Assignee to pay, perform
or discharge any liabilities or obligations expressly assumed hereunder so
long as Assignee shall in good faith contest or cause to be contested the
amount or validity thereof, provided that Assignee shall indemnify
Assignors and their affiliates and hold them harmless against any
liabilities, damages, claims and expenses, including the reasonable fees
and expenses of their counsel, which Assignors may incur as a result of
any such contest and Assignors shall have no obligation to participate in
any way on Assignee's behalf or otherwise in or with respect to any such
contest.
4. All notices, requests, demands and other communications which
are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally, if
telecopied or if mailed, first class mail, postage prepaid, return receipt
requested, as follows:
(a) If to Assignors:
c/o Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, Wisconsin 53201
Attention: Timothy K. Hoelter, Esq.
Telecopy: (414) 935-4990
and copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert E. Spatt, Esq.
Telecopy: (212) 455-2502
(b) If to Assignee:
Monaco Coach Corporation
91320 Coburg Industrial Way
Coburg, Oregon 97408
Attention: Kay L. Toolson
Telecopy: (503)998-2158
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Henry P. Massey, Jr.
Telecopy: (415) 493-6811
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the date of hand
delivery or on the third business day after the mailing thereof.
5. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on
any person other than the parties hereto or their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
6. This Agreement shall not be assignable by any Assignor (except
to an affiliate thereof) without the prior written consent of Assignee or
by Assignee without the prior written consent of each of the Assignors.
7. This Agreement may be amended, supplemented or otherwise
modified only by a written instrument executed by the parties hereto. No
waiver by either party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute
a waiver by the party taking such action of compliance with any covenants
or agreements contained herein and in any documents delivered or to be
delivered pursuant to this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
8. If any provision of this Agreement shall be declared by any
court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain
in full force and effect.
9. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together
shall be deemed to be one and the same instrument.
10. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Indiana without regard to
conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
HARLEY-DAVIDSON, INC.
By:
Title:
HOLIDAY RAMBLER LLC
By:
Title:
HOLIDAY HOLDING CORP.
By:
Title:
HOLIDAY WORLD, INC. (California)
By:
Title:
HOLIDAY WORLD, INC. (Texas)
By:
Title:
HOLIDAY WORLD, INC. (Florida)
By:
Title:
HOLIDAY WORLD, INC. (Oregon)
By:
Title:
HOLIDAY WORLD, INC. (Indiana)
By:
Title:
HOLIDAY WORLD, INC. (Washington)
By:
Title:
HOLIDAY WORLD, INC. (New Mexico)
By:
Title:
MONACO COACH CORPORATION
By:
Title:
MCC ACQUISITION CORPORATION
By:
Title:
ASSET PURCHASE AGREEMENT
among
HARLEY-DAVIDSON, INC.,
HOLIDAY RAMBLER LLC,
STATE ROAD PROPERTIES L.P.,
and
MONACO COACH CORPORATION
Dated as of January 21, 1996
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
Schedules
Schedule 1.1 - Description of R.V. Division
Line of Products
Schedule 1.1(b) - Real Property
Schedule 1.1(e) - Excluded MIS and Software
Schedule 1.1(g) - Excluded Governmental Licenses and
Permits
Schedule 1.2(b) - Assets Shared with other Divisions (not
being transferred)
Schedule 1.2(f) - Excluded Contracts
Schedule 1.2(j) - Life Insurance Policies
Schedule 1.2(k) - Excluded Equipment
Schedule 2.3 - Exceptions to GAAP with respect to
Closing Balance Sheet
Schedule 2.3(a) - Preliminary Statement
Schedule 3.1(c) - Subsidiaries
Schedule 3.1(d) - Governmental Approvals and Notices;
Conflicts
Schedule 3.1(e) - Financial Information
Schedule 3.1(f) - Liens, Encumbrances and Restrictions
Schedule 3.1(h)(ii) - Material Contracts
Schedule 3.1(h)(iii) - Material Licenses and Permits
Schedule 3.1(h)(iv) - Location of Material Assets
Schedule 3.1(i) - Defects
Schedule 3.1(j) - Legal Proceedings
Schedule 3.1(l) - Defects in Patents,
Trademarks and Similar Rights
Schedule 3.1(m) - Defects in Government Licenses,
Permits and Related Approvals
Schedule 3.1(n) - Conduct of Business Other than in
Compliance with Regulatory and
Contractual Requirements
Schedule 3.1(o) - Employee Agreements and Plans
Schedule 3.1(p) - Certain Environmental Matters
Schedule 3.1(s) - Changes in Business Since December 31,
1995
Schedule 3.1(u) - Inter-Company Transactions
Schedule 3.1(v) - Returns of Inventory
Schedule 3.1(x) - Accounts Receivable
Schedule 3.1(y) - Product Warranties
Schedule 3.1(z) - In-Policy Warranty Claims and Recalls
Schedule 3.1(aa) - Product Liability Claims
Schedule 3.1(ab)(i) - Certain Real Property Matters
Schedule 3.1(ab)(v) - Operating and Management Agreements
Schedule 3.2(c) - Governmental Approvals and Notices;
Conflicts
Schedule 3.2(h) - Material Adverse Changes in Business of
Buyer
Schedule 3.3 - Schedule of Survival Periods for
Certain Representations and Warranties
Schedule 4.2 - Special Business Practices
Schedule 4.8 - Certain Real Property
Schedule 6.7 - Minimum Employment Thresholds
Exhibits
EXHIBIT A - Form of Assumption Agreement
EXHIBIT B - Form of Certificate of Designations
EXHIBIT C - Form of Transition Services Agreement
EXHIBIT D - Form of Lease
EXHIBIT E - Form of Registration Rights Agreement
EXHIBIT F - Procedures for Post-Closing Payments By Buyer
TABLE OF CONTENTS
Page
1. Purchase and Sale of Assets; Assumption of Certain Liabilities . . 1
1.1. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . 1
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 4
1.3. Instruments of Conveyance and Transfer . . . . . . . . . . . 5
1.4. Further Assurances . . . . . . . . . . . . . . . . . . . . . 5
1.5. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . 5
1.6. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . 6
2. Closing; Payment of Purchase Price at Closing and Closing Adjustment
7
2.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2. Purchase Price and Payment . . . . . . . . . . . . . . . . . 7
2.3. Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . 8
2.4. Purchase of FMCA Units . . . . . . . . . . . . . . . . . . . 10
3. Representations and Warranties . . . . . . . . . . . . . . . . . . 10
3.1. Representations and Warranties of Sellers . . . . . . . . . . 10
(a) Due Organization and Power . . . . . . . . . . . . . . . 10
(b) Authorization and Validity of Agreement . . . . . . . . . 10
(c) Related Parties . . . . . . . . . . . . . . . . . . . . . 11
(d) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which the Sellers are a Party . . . . 11
(e) Financial Statements . . . . . . . . . . . . . . . . . . 12
(f) Title to Properties and Absence of Liens and Encumbrances 12
(g) No Undisclosed Liabilities . . . . . . . . . . . . . . . 13
(h) List of Properties, Contracts, Permits and Other Data . . 14
(i) Defects . . . . . . . . . . . . . . . . . . . . . . . . . 15
(j) Legal Proceedings . . . . . . . . . . . . . . . . . . . . 16
(k) Labor Controversies . . . . . . . . . . . . . . . . . . . 16
(l) Patents, Trademarks and Similar Rights . . . . . . . . . 16
(m) Government Licenses, Permits and Related Approvals . . . 16
(n) Conduct of Business in Compliance with Regulatory and
Contractual Requirements . . . . . . . . . . . . . . . . 17
(o) Employee Benefit Plans . . . . . . . . . . . . . . . . . 17
(p) Environmental Matters . . . . . . . . . . . . . . . . . . 19
(q) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . 21
(r) Non-Foreign Status of Sellers . . . . . . . . . . . . . . 21
(s) Absence of Certain Changes . . . . . . . . . . . . . . . 21
(t) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 21
(u) Inter-Company Transactions . . . . . . . . . . . . . . . 21
(v) Inventory . . . . . . . . . . . . . . . . . . . . . . . . 21
(w) Restricted Securities . . . . . . . . . . . . . . . . . . 22
(x) Accounts Receivable . . . . . . . . . . . . . . . . . . . 23
(y) Product Warranties . . . . . . . . . . . . . . . . . . . 24
(z) Warranty Claims . . . . . . . . . . . . . . . . . . . . . 24
(aa)Product Liability Claims . . . . . . . . . . . . . . . . . 24
(ab)Certain Real Property Matters . . . . . . . . . . . . . . 25
(ac)No Other Representations or Warranties . . . . . . . . . . 26
3.2. Representations and Warranties of Buyer . . . . . . . . . . . 26
(a) Due Organization and Power . . . . . . . . . . . . . . . 26
(b) Authorization and Validity of Agreement . . . . . . . . . 26
(c) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which Buyer is a Party . . . . . . . 27
(d) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . 27
(e) Financial Capacity . . . . . . . . . . . . . . . . . . . . 27
(f) Financial Statements . . . . . . . . . . . . . . . . . . 28
(g) Title to Preferred Stock . . . . . . . . . . . . . . . . . 28
(h) Absence of Certain Changes or Events . . . . . . . . . . 28
(i) No Other Representations or Warranties . . . . . . . . . . 28
3.3. Expiration of Representations and Warranties . . . . . . . . 28
4. Transactions Prior to Closing . . . . . . . . . . . . . . . . . . . 29
4.1. Access to Information Concerning Properties and Records;
Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 29
4.2. Conduct of the Business of the R.V. Division Pending the Closing
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3. Further Actions . . . . . . . . . . . . . . . . . . . . . . . 31
4.4. Antitrust Laws . . . . . . . . . . . . . . . . . . . . . . . 31
4.5. Notification . . . . . . . . . . . . . . . . . . . . . . . . 32
4.6. No Inconsistent Action. . . . . . . . . . . . . . . . . . . . 32
4.7. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.8. Certain Other Agreements . . . . . . . . . . . . . . . . . . 32
4.9. Preparation and Delivery of Audited Financial Statements . . . 33
4.10. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.11. Sale of Holiday World . . . . . . . . . . . . . . . . . . . 33
4.12. Redemption Restrictions . . . . . . . . . . . . . . . . . . 33
4.13. Casualty Losses and Condemnation . . . . . . . . . . . . . . 34
4.14. Release of Mortgage . . . . . . . . . . . . . . . . . . . . 34
5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 34
5.1. Conditions Precedent to Obligations of Buyer and the Sellers 34
(a) No Injunction, etc. . . . . . . . . . . . . . . . . . . 34
(b) Antitrust Matters . . . . . . . . . . . . . . . . . . . . 34
(c) Other Agreements . . . . . . . . . . . . . . . . . . . . 34
(c) Material Consents . . . . . . . . . . . . . . . . . . . 34
5.2. Conditions Precedent to Obligations of Buyer . . . . . . . . 35
(a) Accuracy of Representations and Warranties . . . . . . . 34
(b) Performance of Agreements . . . . . . . . . . . . . . . . 35
(c) No Material Adverse Change . . . . . . . . . . . . . . . 35
(d) Officer's Certificate . . . . . . . . . . . . . . . . . . 35
(e) Completion of Audit . . . . . . . . . . . . . . . . . . . 35
(f) FIRPTA Compliance . . . . . . . . . . . . . . . . . . . . 35
(g) Financing Condition . . . . . . . . . . . . . . . . . . . 35
(h) Environmental Condition . . . . . . . . . . . . . . . . 36
5.3. Conditions Precedent to the Obligations of the Company and
Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Accuracy of Representations and Warranties . . . . . . . 36
(b) Performance of Agreements . . . . . . . . . . . . . . . . 37
(c) No Material Adverse Change . . . . . . . . . . . . . . . 37
(d) Officer's Certificate . . . . . . . . . . . . . . . . . . 37
(e) Assumption Agreement . . . . . . . . . . . . . . . . . . 37
(f) Certificate of Designations . . . . . . . . . . . . . . . 37
6. Employee Relations and Benefits . . . . . . . . . . . . . . . 37
6.1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2. Effective Time . . . . . . . . . . . . . . . . . . . . . . . 37
6.3. Benefit Plans and Programs . . . . . . . . . . . . . . . . . 38
6.4. Welfare Plans. . . . . . . . . . . . . . . . . . . . . . . . 38
6.5. Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.6. Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . . 38
6.7. Warn Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.2. No Liabilities in Event of Termination . . . . . . . . . . . 39
7.3. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 39
8. Transactions Subsequent to Closing . . . . . . . . . . . . . . . . 40
8.1. Post-Closing Access to Information and Assistance . . . . . . 40
8.2. Further Agreements . . . . . . . . . . . . . . . . . . . . . 40
8.3. Use of Corporate Name . . . . . . . . . . . . . . . . . . . . 40
8.4. No Competition . . . . . . . . . . . . . . . . . . . . . . . 41
8.5. Incremental Wage Payments . . . . . . . . . . . . . . . . . . 41
8.6. Tax Assistance and Cooperation . . . . . . . . . . . . . . . 42
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.1. Public Announcements . . . . . . . . . . . . . . . . . . . . 42
9.2. Transfer Taxes and Recording Expenses . . . . . . . . . . . . 42
9.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 43
9.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.5. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 47
9.6. Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . 47
9.7. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . 48
9.8. Assignability . . . . . . . . . . . . . . . . . . . . . . . . 48
9.9. Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . 48
9.10. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.11. Section Headings; Table of Contents . . . . . . . . . . . . . 48
9.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . 48
9.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 49
9.14. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 49
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of January 21, 1996, among
HARLEY-DAVIDSON, INC., a Wisconsin corporation (the "Company"), HOLIDAY
RAMBLER LLC, an Indiana limited liability company ("HR"), STATE ROAD
PROPERTIES L.P., a Delaware limited partnership ("SRP" and together with
HR, the "Sellers"), and MONACO COACH CORPORATION, a Delaware corporation
("Buyer").
W I T N E S S E T H :
WHEREAS, Sellers desire to sell, transfer and assign to Buyer, and
Buyer desires to purchase and assume from Sellers, certain assets and
liabilities of the Holiday Rambler Recreational Vehicle Division of
Sellers, all upon and subject to the terms and conditions contained
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
1. Purchase and Sale of Assets; Assumption of Certain Liabilities
1.1. Transfer of Assets. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or
waiver of the conditions set forth in this Agreement, on the Closing Date
(as defined in Section 2.1) and subject to the provisions of Section 1.2,
the Sellers shall sell, convey, assign, transfer and deliver to Buyer and
Buyer shall purchase and acquire from the Sellers, all of the assets,
rights, properties, claims, contracts, business and goodwill of the
Sellers at the Closing Date that are utilized in the design, manufacture,
marketing, wholesale sale and factory servicing of Class A motor homes,
conventional travel trailers, fifth wheel travel trailers and related
parts and accessories, including the models set forth on Schedule 1.1 (the
"R.V. Division"), of every kind, nature, character and description,
tangible and intangible, real, personal or mixed, wherever located,
including, without limitation, the following:
(a) All of the Sellers' right, title and interest in and to the
R.V. Division patents, patent registrations, patent applications,
trademarks, trademark registrations, trademark applications, trade
names, copyrights, copyright applications, copyright registrations,
franchises, permits, licenses, processes, formulas, inventions, trade
secrets and royalties, including all rights to sue for past
infringement, together with the goodwill associated therewith;
(b) The owned real property in and around Wakarusa, Indiana and
Nappanee, Indiana described on Schedule 1.1(b) hereto, including all
buildings, structures and other improvements situated thereon
(individually, a "Plant" and collectively, the "Plants"), and all
easements, privileges, rights-of-way, riparian and other water rights
and appurtenances pertaining to or accruing to the benefit of such
property, in each case subject to the matters described on Schedule
3.1(f) hereto;
(c) All equipment, furniture, furnishings, fixtures, machinery,
vehicles, tools, tooling, molds, dies, spare parts, supplies and other
tangible personal property used in the R.V. Division's operations,
except those items set forth on Schedule 1.2(k) (collectively, the
"Equipment") and all warranties and guarantees, if any, express or
implied, existing for the benefit of the Sellers in connection with the
Equipment to the extent transferable;
(d) The R.V. Division inventory of finished products on hand at
the Plants or in transit (the "Finished Goods") (including the units to
be displayed at the Family Motor Coach Association R.V. Show and Sale
(the "FMCA Units")) and the raw materials and work in process for R.V.
Division products on hand at the Plants or in transit, together with the
spare parts, supplies and promotional materials that are used in
connection with the design, manufacture, marketing, wholesale sale or
factory servicing of R.V. Division products (the "Materials"; together
with the Finished Goods, the "Inventory");
(e) All management information systems and software, to the extent
that such systems and software are transferable by the Sellers and
relate to the operations of the Plants, the ownership of the Assets or
the design, manufacture, marketing, wholesale sale or factory servicing
of R.V. Division products, and customer lists, vendor lists, catalogs,
research material, technical information, trade secrets, technology,
know-how, specifications, designs, drawings, processes, and quality
control data, if any, except for the systems and software items set
forth on Schedule 1.1(e) hereto;
(f) All contracts, maintenance and service agreements, purchase
commitments for materials and other services, advertising and
promotional agreements, leases and other agreements related to the R.V.
Division's business, whether or not entered into in the ordinary course
of the R.V. Division's business, including but not limited to, any
agreements with suppliers, sales representatives, distributors, agents,
personal property lessors, personal property lessees, licensors,
licensees, consignors and consignees specified therein, including
without limitation, those contracts set forth on Schedule 3.1(h)(ii) but
excluding those contracts listed on Schedule 1.2(f) hereto;
(g) All licenses, permits or franchises issued by any federal,
state or municipal authority relating to the development, use,
maintenance or occupation of the Plants or the design, manufacture,
wholesale sale or factory servicing of R.V. Division products to the
extent that such licenses, permits or franchises are transferable and
relate to the operations of the Plants, the ownership of the real
property described on Schedule 1.1(b) hereto or the design, manufacture,
wholesale sale or factory servicing of R.V. Division products, except
for those licenses, permits or franchises listed on Schedule 1.1(g)
hereto;
(h) Accounts receivable of the Sellers (whether or not billed) to
the extent attributable to R.V. Division products sold and delivered to
a dealer or other customer or to a bona fide third-party transportation
company for delivery to a dealer or other customer prior to the
Effective Time (as defined below), or to the factory servicing of R.V.
Division products, excluding the intercompany receivables;
(i) All rights to goods and services and all other economic
benefits arising out of prepayments, payments in advance and deposits by
the Sellers to the extent related to the Plants or the design,
manufacturing, marketing, wholesale sale or factory servicing of R.V.
Division products (collectively, the "Prepaid Assets"), including, but
not limited to, prepaid rents, service contracts and the costs of
producing and developing continuing marketing and advertising programs,
but excluding any prepaid taxes.
The assets being sold, conveyed, assigned, transferred and delivered to
Buyer by the Sellers hereunder are sometimes hereinafter referred to as
the "Assets".
1.2. Excluded Assets. It is expressly understood and agreed that
the Assets shall not include the following (together, the "Excluded
Assets"):
(a) any equity or partnership interest in either of the Sellers or
any capital stock of Holiday Holding Corp., a Texas corporation, or its
subsidiaries;
(b) All assets of the Sellers used exclusively in the operations
of Sellers' Commercial Vehicle, B&B Molder and/or Holiday World
divisions, as well as those items shared by such divisions with the R.V.
Division referenced on Schedule 1.2(b) hereto;
(c) Any of the R.V. Division Assets listed on any Schedule that
are consumed, sold or disposed of in the ordinary course of business of
the R.V. Division prior to the Closing Date;
(d) Any refunds or credits with respect to any taxes paid or
incurred by Sellers (plus any related interest received from the
relevant taxing authority) and any prepaid taxes of Sellers;
(e) Except as expressly provided on Schedule 1.1(b), all owned
real property used by Sellers, including all buildings, structures and
other improvements situated thereon;
(f) The Sellers' right, title and interest in and to the contracts
listed on Schedule 1.2(f);
(g) All assets owned or leased by Holiday Holding Corp. and its
subsidiaries;
(h) The intercompany receivables of Sellers;
(i) Cash and cash equivalents or similar type investments,
certificates of deposit, treasury bills and other marketable securities
of the R.V. Division business;
(j) The life insurance policies held by the Sellers, including but
not limited to, those policies listed on Schedule 1.2(j) hereto;
(k) Any equipment, furniture, furnishings, fixtures, machinery,
vehicles, tools and other tangible personal property listed on Schedule
1.2(k) hereto; and
(l) Any equipment for the remediation of Hazardous Substances
located on a Plant.
1.3. Instruments of Conveyance and Transfer. On the Closing Date
the Sellers shall (a) deliver or cause to be delivered to Buyer such
deeds, bills of sale, endorsements, consents, assignments, and other good
and sufficient instruments of conveyance and assignment as shall be
effective to vest in Buyer all right, title and interest of the Sellers in
and to the Assets, including warranty deeds (or the equivalent thereof)
for the appropriate jurisdictions with any necessary modifications to such
deeds required to (i) conform with the local laws for recording such deeds
and (ii) enable Buyer to obtain title insurance policies from title
companies), and such affidavits or other documents as are reasonably
required by Buyer's title insurer as a condition to insuring title to the
Plants without the survey exception or other exceptions, (b) transfer to
Buyer all the books, records, files and other data relating to the Assets
reasonably necessary or useful for the continued operation of the R.V.
Division business by Buyer.
1.4. Further Assurances. From time to time after the Closing
Date, the Sellers will execute and deliver, or cause to be executed and
delivered, such other instruments of conveyance, assignment, transfer and
delivery and will take such other actions as Buyer may reasonably request
in order to more effectively transfer, convey, assign, and deliver to
Buyer any of the Assets, or to enable Buyer to exercise and enjoy all
rights and benefits of the Sellers with respect thereto.
1.5. Assumed Liabilities. On the Closing Date, Buyer shall
deliver to the Sellers an undertaking (the "Assumption Agreement") in the
form attached hereto as Exhibit A whereby Buyer, on and as of the Closing
Date, assumes and agrees to pay, perform and discharge when due, subject
to the provisions of Section 1.6, the liabilities and obligations of the
Sellers relating to the R.V. Division business or the Assets, whether
arising before or after the Closing Date and whether known or unknown,
fixed or contingent, to the extent the same are unpaid, undelivered or
unperformed on the Closing Date, including but not limited to: (1) all
obligations relating to the R.V. Division business under contracts,
commitments and agreements (except those obligations relating to contracts
specifically excluded from the transfers contemplated hereby), including,
without limitation, commitments for advertising, all unfulfilled purchase
orders and sales commitments; (2) all liabilities and obligations for
returns of R.V. Division products sold prior to the Closing Date; (3) all
liabilities and obligations for trade promotion programs (including,
without limitation, trade allowance programs), consumer promotions and
other marketing programs applicable to R.V. Division products; (4) all
obligations under the licenses, permits or franchises of the R.V. Division
except those disclosed on Schedule 1.1(g) hereto; (5) all current
liabilities and accrued liabilities (excluding taxes referenced in 1.6(a))
arising out of the operations of the R.V. Division, including, but not
limited to, (i) all products liability claims with respect to products
manufactured by the Sellers, (ii) all liabilities related to the presence,
disposal, escape, seepage, leakage, discharge, emission, release or
threatened release of any substances or materials or (iii) all liabilities
related to or arising from the laws and regulations governing the
manufacture or sale of motor or recreational vehicles) and (6) all
liabilities and obligations for any taxes and expenses described as
obligations of the Buyer in Section 9.2 hereof. Buyer is not assuming,
nor shall be deemed to have assumed, any liability or obligation of the
Sellers or the Company of any kind or nature whatsoever, except as
expressly provided in this Agreement or the Assumption Agreement. The
liabilities and obligations assumed by Buyer in accordance with this
Section 1.5 are sometimes hereinafter referred to as the "Assumed
Liabilities".
1.6. Excluded Liabilities. It is expressly understood and agreed
that Assumed Liabilities shall not include the following:
(a) Liabilities of either of the Sellers for any taxes (other than
accrued property taxes or any taxes which the Buyer is responsible for
pursuant to Section 9.2) arising from the operations of the R.V.
Division prior to the Closing Date;
(b) Liabilities arising out of or related to the Excluded Assets;
(c) Liabilities to current, former or retired employees of the
Sellers arising out of or relating to their employment with Sellers or
their termination by Sellers; except for (i) liabilities for
Transitioned Employees for accrued vacation, whether vested or unvested,
(only to the extent that such accruals are consistent with Buyer's
accrued vacation policy) and accrued moving expenses and (ii)
liabilities arising out of Buyer's noncompliance with Section 6.7;
(d) All intercompany liabilities except obligations under the
Eaglemark Financial Services Floor Plan Repurchase Agreement;
(e) Liabilities of either of the Sellers to third parties for any
funded debt; and
(f) Except as otherwise provided herein, all debts, liabilities
and obligations that do not arise out of the business of the R.V.
Division or the Assets.
2. Closing; Payment of Purchase Price at Closing and Closing
Adjustment
2.1. Closing Date. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 7.1 hereof, the closing with respect to the
transactions provided for in this Agreement (the "Closing") shall take
place at the offices of Simpson Thacher & Bartlett, at 10 a.m., New York
City time, on the first day of the Sellers' fiscal month immediately
following the satisfaction or waiver of all of the conditions to the
Closing set forth in Section 5 hereof, or at such other time, date and
place as shall be agreed upon by the Sellers and Buyer. The actual time
and date of the Closing are herein called the "Closing Date". All acts
and transactions occurring under this Agreement at the Closing shall be
effective as of 12:01 a.m. on the Closing Date (the "Effective Time").
2.2. Purchase Price and Payment. In consideration for the Assets
(other than the FMCA Units), and subject to the terms and conditions of
this Agreement, Buyer shall on the Closing Date (i) assume the Assumed
Liabilities as provided in Section 1.5 hereof, (ii) transfer to HR (a)
$27,738,762 by wire transfer in immediately available funds to an account
designated in writing by HR to Buyer at least 2 business days prior to the
Closing Date and (b) at Buyer's option either (x) an additional $4.6
million by wire transfer in the same manner as set forth above or (y)
100,000 shares of Buyer's Series A Convertible Preferred Stock, par value
$.01 per share (the "Preferred Stock"), having such rights, preferences,
privileges and restrictions as are set forth in the Certificate of
Designation for such stock attached hereto as Exhibit B (the "Certificate
of Designations") and (iii) transfer to SRP $1,261,238 by wire transfer in
immediately available funds to an account designated in writing by SRP to
Buyer at least 2 business days prior to the Closing Date. The value
tendered by Buyer pursuant to this Section 2.2, as adjusted pursuant to
the provisions of Section 2.3 below, shall be hereinafter referred to as
the "Purchase Price". The Purchase Price and the Assumed Liabilities
shall be allocated among the Assets in a manner to be agreed upon by the
Sellers and Buyer consistent with Section 1060 of the Code (as defined
below). Buyer and the Sellers agree to act in accordance with such
allocations in all tax returns, tax reports and tax filings filed on or
after the Closing Date, unless otherwise required by law.
2.3. Post-Closing Adjustment.
(a) Within 60 days following the Closing, Sellers shall, at their
expense, prepare, or cause to be prepared, and deliver to Buyer a
statement (the "Closing Statement") which shall set forth the book value
of the Assets less the Assumed Liabilities (the "Net Book Value") of the
R.V. Division as of the Effective Time and, except as set forth on
Schedule 2.3 hereto, shall be prepared (i) in accordance with the
generally accepted accounting principles in the United States ("GAAP"), as
in effect on the date of such preparation and (ii) in a manner consistent
with the preparation of the statement setting forth the Net Book Value of
the R.V. Division as of December 31, 1995 (the "Preliminary Statement")
attached hereto as Schedule 2.3(a).
(b) Buyer and Buyer's accountants shall, within 60 days after the
delivery by Sellers of the Closing Statement, complete their review of the
Net Book Value as derived from the Closing Statement. In the event that
Buyer determines that Net Book Value as derived from the Closing Statement
has not been determined in accordance with GAAP and in a manner consistent
with the preparation of the Preliminary Statement, as modified by the
exceptions set forth in Schedule 2.3, Buyer shall inform Sellers in
writing (the "Buyer's Objection"), setting forth a specific description of
the basis of Buyer's Objection and the adjustments to Net Book Value which
Buyer believes should be made, on or before the last day of such 60-day
period. Sellers shall then have 30 days to review and respond to Buyer's
Objection. If Sellers' and Buyer are unable to resolve all of their
disagreements with respect to the determination of the foregoing items
within 10 days following the completion of Sellers review of Buyer's
Objection, they shall refer their remaining differences to Deloitte &
Touche or another internationally recognized firm of independent public
accountants as to which Sellers and Buyer mutually agree (the "CPA Firm"),
who shall, acting as experts and not as arbitrators, determine on the
basis of the standards set forth in Section 2.3(a), and only with respect
to the remaining differences so submitted, whether and to what extent, if
any, Net Book Value as derived from the Closing Statement, requires
adjustment. Sellers and Buyer shall direct the CPA Firm to use its best
efforts to render its determination within 45 days. The CPA Firm's
determination shall be conclusive and binding upon Buyer and Sellers. The
fees and disbursements of the CPA Firm shall be shared equally by Buyer,
on the one hand, and Sellers, on the other hand. Buyer and Sellers shall
make readily available to the CPA Firm all relevant books and records and
any work papers (including those of the parties' respective accountants)
relating to the Preliminary Statement and the Closing Statement and all
other items reasonably requested by the CPA Firm. The "Adjusted Closing
Statement" shall be (i) the Closing Statement in the event that (x) no
Buyer's Objection is delivered to Sellers during the 60-day period
specified above, or (y) Sellers and Buyer so agree, (ii) the Closing
Statement, adjusted in accordance with the Buyer's Objection in the event
that Sellers do not respond to Buyer's Objection within the 30-day period
following receipt by Sellers of Buyer's Objection, or (iii) the Closing
Statement, as adjusted by either (x) the agreement of Sellers and Buyer or
(y) the CPA Firm.
(c) Buyer shall provide Sellers and their accountants full access
to the accounting records, any other information, including work papers of
their accountants, and to any employees to the extent reasonably necessary
for Sellers to prepare the Closing Statement. Buyer and its accountants
shall have the opportunity to observe the physical count of the Inventory
(which may begin prior to the Closing Date) in connection with the
preparation of the Closing Statement and shall have full access to all
information used by Sellers in preparing the Closing Statement, including
the work papers of its accountants.
(d) In the event the Net Book Value as derived from the Adjusted
Closing Statement is less than $33.6 million, Sellers shall make an
adjustment payment to Buyer in an amount equal to the difference between
(x) $33.6 million and (y) Net Book Value as derived from the Adjusted
Closing Statement. Any payment required by this first sentence of Section
2.3(d) shall be made by Sellers to Buyer within 5 business days after the
issuance of the Adjusted Closing Statement by delivering to Buyer such
number of shares of Preferred Stock, based on a stated value of $46 per
share and rounded to the nearest whole share, equal to such difference
and, if such difference exceeds $4.6 million, or if the Buyer elects to
pay cash in lieu of issuing the Preferred Stock, cash to the extent of
such excess.
(e) In the event the Net Book Value (excluding the FMCA Units) as
derived from the Adjusted Closing Statement is greater than $33.6 million
and the Finished Goods inventory (excluding the FMCA Units) as of the
Closing Date (the "Closing Finished Goods Inventory") exceeds $9.5
million, Sellers shall be paid an amount equal to the lesser of (i) the
excess of the Closing Finished Goods Inventory over $9.5 million, (ii) $1
million or (iii) the excess of the Net Book Value (excluding the FMCA
Units) as derived from the Adjusted Closing Statement over $33.6 million.
Any payment required to be made by Buyer to Sellers pursuant to this
Section 2.3(e) (the "Closing Finished Goods Inventory Payment") shall be
made in accordance with the procedures set forth in Exhibit F hereto.
2.4. Purchase of FMCA Units. Buyer agrees to pay Sellers the book
value of the FMCA Units within 60 days after the Closing Date, and the
Sellers agree to deliver to Buyer prior to or at the Closing a true and
complete list of the FMCA Units, including the book value of such units.
3. Representations and Warranties
3.1. Representations and Warranties of Sellers. The Company and
the Sellers represent and warrant to Buyer as follows:
(a) Due Organization and Power. Each of the Company and the
Sellers is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and has the requisite
corporate power and authority to own, lease and operate its property to
be sold hereunder and to conduct the R.V. Division business as now
conducted by it. The Company and each of the Sellers has all requisite
power and authority to enter into this Agreement and any other agreement
contemplated hereby and to perform their obligations hereunder and
thereunder, including the power and authority to convey good and
marketable title to Buyer with respect to the Assets owned by it. Each
of the Sellers is duly authorized, qualified or licensed to do business
as a foreign corporation, and is in good standing, in each of the
jurisdictions in which its right, title or interest in or to any of the
Assets held by it, or the conduct of the R.V. Division business by it,
requires such authorization, qualification or licensing, except where
the failure to so qualify or to be in good standing would not,
individually or in the aggregate, have a material adverse effect on the
Assets, results of operations, business or financial condition of the
R.V. Division (a "Material Adverse Effect").
(b) Authorization and Validity of Agreement. The execution,
delivery and performance by the Company and each Seller of this
Agreement and any other agreements contemplated hereby and the
consummation by each of them of the transactions contemplated hereby and
thereby have been duly authorized by the board of directors or other
applicable governing body of the Company and each Seller. No other
corporate, stockholder or similar action is necessary for the
authorization, execution, delivery and performance by the Company and
the Sellers of this Agreement and any other agreements contemplated
hereby and the consummation by the Sellers of the transactions
contemplated hereby or thereby. This Agreement and the other agreements
contemplated hereby have been, or will be at or prior to Closing, duly
executed and delivered by the Company and the Sellers, each constitute,
or will when so executed and delivered constitute, a valid and legally
binding obligation of the Company and the Sellers, enforceable against
each of them in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors
rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(c) Related Parties. Except as set forth on Schedule 3.1(c)
hereto, neither the Company nor the Sellers, directly or indirectly,
own, of record or beneficially, any outstanding equity interests or
control in any corporation, partnership, joint venture or other entity
which owns or leases any assets of the R.V. Division.
(d) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which the Sellers are a Party. Except as described
in Schedule 3.1(d) hereto, the execution, delivery and performance of
this Agreement and any other agreements contemplated hereby by the
Company and each Seller and the consummation by each of them of the
transactions contemplated hereby and thereby (i) will not violate (with
or without the giving of notice or the lapse of time or both), or
require any authorization, consent, approval, filing or notice under,
any provision of any law, rule or regulation, court order, judgment or
decree applicable to the Company and each Seller, except for such
violations the occurrence of which, and such consents, approvals,
filings or notices the failure of which to obtain or make, would not,
individually or in the aggregate, have a Material Adverse Effect and the
failure of which to obtain would not have a material adverse effect on
the Company or a Seller's ability to perform its obligations hereunder
and except for such consents, approvals, filings or notice requirements
which become applicable solely as a result of the specific regulatory
status of the Buyer or any of its affiliates, and (ii) will not conflict
with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of each Seller under, or result in the
creation of the right to accelerate, terminate, modify or cancel, or
result in the creation of a lien, charge or encumbrance upon a portion
of the properties, assets or business of the R.V. Division pursuant to,
or require any notice under, the charter or by-laws of such Seller, or
any indenture, mortgage, deed of trust, lease, licensing agreement,
contract, instrument or other agreement to which such Seller is a party
or by which such Seller or any of the Assets held by such Seller is
bound, except for such conflicts, breaches, terminations, defaults,
accelerations or liens which would not, individually or in the
aggregate, have a Material Adverse Effect and the failure of which to
obtain would not have a material adverse effect on such Seller's ability
to perform its obligations hereunder. The parties hereto agree that no
event, occurrence or circumstance that would constitute a breach of a
representation or warranty contained in Section 3.2(c) will be a basis
for a breach of a representation or warranty contained in Section
3.1(d).
(e) Financial Statements. Schedule 3.1(e) hereto contains a
combined balance sheet as of December 31, 1995 and a combined statement
of operations for the 12-month period then ended of the R.V. Division
(collectively, the "Unaudited Financial Statements"). The Unaudited
Financial Statements were prepared in accordance with GAAP, as in effect
on the date of such financial statements and applied on a consistent
basis during the periods involved (except as may be indicated in the
comments to such Unaudited Financial Statements), and such financial
statements and comments fairly present, in all material respects, the
financial position and results of operations of the R.V. Division, as of
their respective dates and for the respective periods covered thereby.
The S-X Financial Statements (as defined in Section 4.9) will be
prepared in accordance with GAAP, as in effect on the date of such
financial statements and applied on a consistent basis during the
periods involved (except as may be indicated in the notes to such S-X
Financial Statements), and such financial statements will fairly
present, in all material respects, the combined financial position and
results of operations of the R.V. Division and the combined retail sales
operations (to the extent purchased by Buyer) as of their respective
dates and for the respective periods covered thereby.
(f) Title to Properties and Absence of Liens and Encumbrances.
Except as set forth on Schedule 3.1(f) attached hereto, the Company and
the Sellers own all of the Assets (real, personal and mixed, tangible
and intangible) free and clear of all claims, liens, security interests,
charges, mortgages, pledges, easements, leases, encumbrances, licenses
or sublicenses, conditional sales or other title retention agreements or
other restrictions of any kind and nature (an "Encumbrance") other than
Permitted Encumbrances (as defined below), and the Sellers have good and
marketable title to all such Assets, free and clear of all Encumbrances
other than Permitted Encumbrances. Upon the delivery and payment for
the Assets as contemplated herein, Seller will convey to Buyer good and
marketable title to the Assets and all material real and personal
property, tangible and intangible, which is necessary to conduct the
R.V. Division business as it is presently conducted, free and clear of
all exceptions to title or Encumbrances; except in each case (1) as
specifically set forth in Schedule 3.1(f) (except for the Company's
mortgage described therein), (2) liens for current taxes not yet due and
payable or being contested in good faith by appropriate proceedings and
for which adequate reserves have been provided (if required by GAAP) on
the Unaudited Financial Statements and (3) such imperfections or
exceptions to title, if any, as do not, and could not reasonably be
expected to, individually or in the aggregate, materially diminish the
aggregate value of the Assets, materially interfere with the
alienability, financeability, ownership, use, occupancy or operation of
any such property, or materially impair or interfere with the R.V.
Division business (such exceptions, collectively, the "Permitted
Encumbrances"). Notwithstanding the foregoing, (i) Buyer shall have the
right to examine title and object to any of the matters described in the
foregoing definition of "Permitted Encumbrances" and to object to any
inaccuracies in the legal descriptions of the Plants, and (ii) except as
set forth above, "Permitted Encumbrances" shall not in any event include
any mortgage, deed of trust, conditional sale or similar title retention
agreement, any option or right to lease or occupy, any purchase right or
option to purchase, or any monetary liens (including, without
limitation, mechanics', materialmen's or other statutory liens).
(g) No Undisclosed Liabilities. The R.V. Division has no
liability (whether known or unknown, whether asserted or unasserted,
absolute or contingent, accrued or unaccrued, and whether liquidated or
unliquidated, including, without limitation, any liability for taxes)
that are of a nature required to be set forth on a balance sheet (or in
the notes thereto) in accordance with GAAP, other than liabilities and
obligations (i) reflected, provided for or reserved against in the
Unaudited Financial Statements or Audited Financial Statements, as the
case may be, (ii) which have been specifically identified and disclosed
herein or on the schedules attached hereto, (iii) arising in the
ordinary course of business after December 31, 1995, which liabilities,
if not discharged, will be set forth on the Adjusted Closing Statement
or (iv) arising under or contemplated by this Agreement.
(h) List of Properties, Contracts, Permits and Other Data. The
following Schedules set forth certain information with respect to the
Assets on the date hereof:
(i) Schedule 1.1(b) hereto contains a complete and correct
list of the real property utilized in the development and
manufacture of R.V. Division products owned of record or
beneficially by each Seller that Buyer has determined to purchase
in accordance with the terms of this Agreement;
(ii) Schedule 3.1(h)(ii) hereto contains a complete and
correct list of all material contracts, maintenance and service
agreements, licenses of Intellectual Property (as defined below),
purchase commitments for materials and services, advertising,
promotional and marketing-related agreements, bonding, guarantee,
contingent repurchase or other financial security arrangements on
which others rely in extending credit to any of the Sellers'
dealers, leases under which either Seller is a lessor or lessee and
other agreements pertaining to the design, manufacture, marketing,
wholesale sale or factory servicing of R.V. Division products to
which either Seller is a party, the benefits of which are enjoyed
in the design, manufacture, marketing, wholesale sale or factory
servicing of R.V. Division products or to which any of the Assets
is subject, except purchase orders for the purchase or sale of
goods and materials in the ordinary course of business;
(iii) Schedule 3.1(h)(iii) hereto contains a complete and
correct list of all material licenses, permits, or franchises
issued by governmental authorities relating to the use, maintenance
or occupation of the Plant or Plants or the design, manufacture,
marketing, wholesale sale or factory servicing of R.V. Division
products by each Seller (other than sales and use tax permits,
franchise tax registrations and foreign qualifications);
(iv) Schedule 3.1(h)(iv) hereto specifies the location in
which any material Assets are held; and
(v) Schedule 3.1(o) hereto contains a complete and correct
list of all material employment and consulting agreements,
executive compensation plans, bonus plans, deferred compensation
agreements, severance pay arrangements, employee profit-sharing
plans, group life insurance, hospitalization insurance or other
plans or arrangements providing for benefits for Transitioned
Employees of each Seller (as defined in Section 6.1 below), except
for any compensation or compensatory arrangement relating to the
sale of the R.V. Division (together, the "Retention Arrangements").
True and complete copies of all documents relating to the R.V.
Division business of each Seller (including all amendments thereto)
referred to in Schedules 1.1(b), 3.1(h)(ii), 3.1(h)(iii), 3.1(h)(iv) and
3.1(o) either have been delivered to Buyer or made available to Buyer or
shall be furnished upon request. Except as specified in the Schedules
hereto, all rights, licenses, leases, registrations, applications,
contracts, commitments and other arrangements relating to the R.V.
Division business of each Seller referred to in such Schedules are in
full force and effect and are valid and enforceable in accordance with
their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by
proceedings in equity or at law) and except where the failure to be in
full force and effect and valid and enforceable would not individually
or in the aggregate have a Material Adverse Effect. Except as specified
in the Schedules hereto, neither Seller is in breach or default in the
performance of any obligation thereunder and no event has occurred or
has failed to occur whereby any of the other parties thereto have been
or will be released therefrom or will be entitled to refuse to perform
thereunder, except for such breaches, defaults and events which
individually or in the aggregate would not have a Material Adverse
Effect.
(i) Defects. Except as described on Schedule 3.1(i), (i) there
are no defects in the normal operating condition and repair of the
Plants or Equipment currently used in connection with the R.V. Division
business of Sellers, which defects individually or in the aggregate
would materially interfere with the current use thereof in the normal
operation of such Plants or Equipment in the R.V. Division business
taken as a whole as presently conducted; (ii) the Finished Goods are, in
all material respects, good and merchantable; and (iii) the Materials
are, in all material respects, in good condition and usable for their
intended use.
(j) Legal Proceedings. Except as described in Schedule 3.1(j)
hereto and proceedings contemplated by Section 4.4 hereof, there is no
litigation, proceeding or governmental investigation relating to the
R.V. Division to which either Seller is a party pending or, to the
actual knowledge of either Seller, threatened against either Seller
relating to the Assets or the R.V. Division business of such Seller or
the transactions contemplated by this Agreement which would,
individually or in the aggregate, result in a Material Adverse Effect.
(k) Labor Controversies. There are no labor controversies pending
or, to the actual knowledge of either Seller, threatened, which would,
individually or in the aggregate, have a Material Adverse Effect. No
union or similar organization represents the R.V. Division Employees (as
defined below) and, to the actual knowledge of Sellers, no labor
organization or group of employees of the Sellers has made a demand for
recognition, has filed a petition seeking a representation proceeding or
given the Sellers notice of an intention to hold an election of a
collective bargaining representative. Sellers have not suffered any
strike, slowdown, picketing or work stoppage by any group of employees
affecting the business of the R.V. Division during the past three years.
(l) Patents, Trademarks and Similar Rights. Except as described
on Schedule 3.1(l) hereto, each Seller owns, or is licensed to use, all
material patents, trade names, trademarks, copyrights, technology, trade
secrets, know-how, and processes ("Intellectual Property") used in the
business of R.V. Division as presently conducted. To the actual
knowledge of the Sellers, no third party has interfered with, infringed
upon, misappropriated, or violated any material Intellectual Property
rights of the Company or the Sellers with respect to the R.V. Division
in any material respect. Neither the Company nor any Seller, in
connection with the operations and business of the R.V. Division, has
received within the past three years any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation, nor to the knowledge of any Seller, has
the R.V. Division interfered with, infringed upon, misappropriated, or
violated any material Intellectual Property rights of third parties in
any material respect.
(m) Government Licenses, Permits and Related Approvals. Except as
described on Schedule 3.1(m) hereto, each Seller has all licenses,
permits, consents, approvals, authorizations, qualifications and orders
of governmental authorities required for the conduct of the business of
R.V. Division as presently conducted by it, except where the failure to
have such licenses, permits, consents, approvals, authorizations,
qualifications and orders would not, individually or in the aggregate,
have a Material Adverse Effect. Immediately prior to the Closing all
permits required for the conduct of the business of the R.V. Division as
presently conducted shall be in full force and effect.
(n) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Except as described on Schedule 3.1(n)
hereto, each Seller has conducted the business of the R.V. Division so
as to comply in all material respects with all applicable laws,
ordinances, regulations, rights of concession, licenses, know-how or
other proprietary rights of others, the failure to comply with which
would, individually or in the aggregate, have a Material Adverse Effect.
(o) Employee Benefit Plans.
(i) Schedule 3.1(o) hereto identifies:
(1) Each "employee benefit plan" as such term is
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), that is covered by
ERISA and that is maintained or otherwise contributed to by
the Sellers or by any ERISA Affiliate (as defined below) of
either of the Sellers for the benefit of the employees ("R.V.
Division Employees") of the R.V. Division business of the
Sellers (a "Plan" and, collectively, the "Plans"), copies or
descriptions of which have been delivered or made available to
Buyer (together with the most recent determination letter
issued by the Internal Revenue Service (in the case of
"Pension Benefit Plans" as defined in Section 3(2) of ERISA)
and the most recent Annual Report on Form 5500 required to be
filed by the Sellers in connection with any Plan). For
purposes of this Agreement, the term "ERISA Affiliate" shall
refer to all members of the group consisting of all
corporations and all trades or businesses (whether or not
incorporated) under common control with the Sellers, or either
of them.
(2) Except for the Retention Arrangements, each
material plan or arrangement not subject to ERISA maintained,
or otherwise contributed to by the Sellers or by any ERISA
Affiliate of either of the Sellers for the benefit of R.V.
Division Employees of the Sellers and providing for deferred
compensation, bonuses, stock options, employee insurance
coverage or any similar compensation or welfare benefit plan
(a "Benefit Arrangement"; such Benefit Arrangements, together
with the Plans are referred to herein collectively as the
"Employee Benefit Programs"), copies or descriptions of which
have been delivered or made available to Buyer or shall be
furnished upon request.
(ii) Sellers have delivered to Buyer a copy, true and
complete in all material respects, of the ages, sex and wage rates
of each of the hourly R.V. Division Employees as of December 31,
1995.
(iii) Each Employee Benefit Program has been maintained and
administered at all time substantially in compliance with its terms
and all applicable laws, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended
(the "Code"), applicable to such Employee Benefit Programs;
(iv) No "reportable event" (as such term is used in Section
4043 of ERISA), "prohibited transaction" (as such term is used in
Section 406 of ERISA or Section 4975 of the Code) or "accumulated
funding deficiency" (as such term is used in Section 412 of ERISA
or Section 4971 of the Code) has heretofore occurred with respect
to any Plan which would have a material adverse effect on the
results of operations or business of the R.V. Division taken as a
whole or the ability of each Seller to perform its obligations
hereunder;
(v) No material litigation or administrative or other
proceedings involving the Employee Benefit Programs of Sellers have
occurred or, to the actual knowledge of Sellers, are threatened;
(vi) No Employee Benefit Plan of either Seller or any
affiliate of either Seller is subject to Title IV of ERISA or
Section 412 of the Code, and no such Employee Benefit Plan has been
terminated within the last six years; and
(vii) Except for the Retention Arrangements or as set forth
in Schedule 3.1(o) hereto, there are no other employment
agreements, contracts or understandings with R.V. Division
Employees of either Seller.
(p) Environmental Matters. Except as set forth on Schedule 3.1(p)
attached hereto:
(i) all of the Sellers' operations in, on, or at the Plants
(A) comply with all applicable federal, state, or local statutes,
regulations, ordinances, codes, or decrees regarding the
environment, health and safety (including, without limitation,
those protecting the quality (1) of the ambient air, soil, surface
water or groundwater, (2) or endangered plant or animal species or
(3) otherwise regulating the use, storage, transportation,
manufacture, processing, disposal, treatment, sale, or discharge of
any "Hazardous Substances" (as defined below)) in effect as of or,
to the extent applicable, at any time prior to, the date of this
Agreement (collectively, the "Environmental Laws"), and all
permits, licenses, registrations, and other authorizations required
under applicable Environmental Laws to operate the Plants as they
are currently operated, and (B) have so complied; except, in either
case, insofar as any failure to comply would not be expected to
have a Material Adverse Effect;
(ii) No petroleum products, asbestos, radioactive material,
or hazardous, acutely hazardous, or toxic substance or waste
defined and regulated as such under Environmental Laws, including
without limitation the federal Comprehensive Environmental
Response, Compensation and Liability Act and the federal Resource
Conservation and Recovery Act ("Hazardous Substances"), have been
produced, sold, used, stored, transported, handled, released,
discharged or disposed of at or from the Plants by any person in a
manner that (A) violated any applicable Environmental Law or (B)
caused Hazardous Substances to be left in the soil, groundwater,
surface water, ambient air or building materials of the Plants;
except in either case, in a manner that would not be expected to
have a Material Adverse Effect;
(iii) Sellers have not received written notice from any
governmental authority or any other person purporting to have the
authority to enforce any applicable Environmental Law, that the
Plants are in violation or allegedly in violation of, do not comply
or allegedly do not comply with, or are the basis for liability or
alleged liability under, any applicable Environmental Law, which
violation, noncompliance or liability has not been substantially
corrected. Neither Seller has any actual knowledge of any other
action, proceeding or claim pending or threatened (A) concerning
any Plant under any Environmental Law or (B) to redress the
presence or alleged presence of any Hazardous Substances at or
emanating from any Plant; except, in either case, for such actions,
proceedings, or claims that would not be expected to have a
Material Adverse Effect;
(iv) As of the Closing, other than Hazardous Substances
reasonably necessary for the conduct of the business of the R.V.
Division which are properly stored in accordance with applicable
Environmental Laws, no Hazardous Substances are present at any
Plant or in the soil, groundwater, surface water, ambient air or
building materials thereof, except as would not be expected to have
a Material Adverse Effect. Except as set forth in Schedule 3.1(p),
there are no underground storage tanks present at any Plant.
(v) Prior to the Closing, no Hazardous Substances were
transported, transferred, recycled, stored, used, treated,
manufactured, released, sold, distributed or exposed to any person,
either by or on behalf of the Sellers or the R.V. Division, in
violation of any applicable Environmental Law and, to the actual
knowledge of Sellers, no such activity has resulted in the exposure
of any person to a Hazardous Substance in a manner which has caused
cancer or other serious illness in, or the death of, said person.
(vi) Sellers have delivered or made available to Buyer copies
of all environmental assessments of the Plants in the possession of
the Sellers a list of which is set forth on Schedule 3.1(p).
Sellers have complied or before Closing will comply in all material
respects with all disclosure obligations, if any, imposed upon
Sellers by Environmental Laws that are triggered by this purchase
and sale.
For purposes of this Section 3.1(p), references to the "Plants"
shall be deemed to include the real property that will be leased to
Buyer in accordance with Section 4.8(a) herein.
(q) Certain Fees. None of the Sellers, the Company or any of
their respective officers, directors or employees, on behalf of the
Sellers or the Company, has employed any broker or finder or incurred
any other liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby, except for
those brokers whose fees will be paid by Sellers.
(r) Non-Foreign Status of Sellers. Neither Seller is a "Foreign
Person" within the meaning of Section 1445 of the Code.
(s) Absence of Certain Changes. Except as set forth in Schedule
3.1(s), since December 31, 1995 (i) there has not been any material
adverse change in the business, assets, financial condition, operations,
or results of operations of the R.V. Division, (ii) there has not been
any material change in the accounting policies of Sellers from those
applied in the preparation of the Unaudited Financial Statements and
(iii) the Company and the Sellers have conducted the business of the
R.V. Division only in the ordinary course consistent with past practice,
except for such actions which would not be expected to have a Material
Adverse Effect or for actions contemplated by or otherwise disclosed
pursuant to this Agreement.
(t) Tax Matters. There have been timely filed (taking into
account any extensions granted) in respect of the R.V. Division
business, all United States federal, state and local tax returns and
reports for all years and periods for which such returns and reports
were due to be filed prior to the Closing Date, except for such failures
to file timely that could not be expected to have a Material Adverse
Effect.
(u) Inter-Company Transactions. Schedule 3.1(u) hereto contains an
accurate and complete summary of all material arrangements (including
the provision of products or services), relationships and transactions
between the Company (including any affiliate) and either of the Sellers,
that impact the financial information presented in the financial
statements referenced in Section 3.1(e) (including Schedule 3.1(e)).
Except as set forth on Schedules 3.1(e) or Schedule 3.1(u), the Company
and Sellers have no actual knowledge of any favorable pricing, purchase
or lease arrangements which will not continue to be available to Buyer
after the Closing on substantially equivalent terms.
(v) Inventory. All Inventory reflected on the Preliminary
Statement or acquired since December 31, 1995 was acquired and has been
maintained in the ordinary course of the business of the R.V. Division;
consists substantially of a quality, quantity and condition usable or
saleable in the ordinary course of the business of the R. V. Division;
is valued using a standard cost system which approximates the lower of
cost (on a "last in, first out" accounting basis) or market and
otherwise in accordance with GAAP; and to the actual knowledge of the
Sellers is not subject to any material write-down or write-off for which
appropriate reserves have not been included in the Preliminary
Statement. Except as described on Schedule 3.1(v) hereto, the Sellers
are not under any liability or obligation with respect to the return of
Inventory in the possession of wholesalers, dealers or other customers.
Since December 31, 1995, no Inventory has been sold or disposed of
except in the ordinary course of the business of the R.V. Division or as
contemplated by Schedule 4.2.
(w) Restricted Securities.
(i) HR acknowledges that the Preferred Stock (including the
Common Stock into which such Preferred Stock is convertible)
(collectively, the "Stock") is characterized as "restricted
securities" under the federal securities laws inasmuch as the
Preferred Stock is being acquired in a transaction not involving a
public offering and has not been registered under the Securities
Act of 1933, as amended ("Securities Act"), and may not be sold,
transferred or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and that in the absence
of an effective Registration Statement covering the Stock or an
available extension from registration under the Securities Act, the
Stock must be held indefinitely.
(ii) HR is acquiring the Stock solely for its own account,
for investment purposes only, and with no present intention of
distributing, selling or otherwise disposing of the Stock, except
transfers to any of its affiliates.
(iii) HR is an "Accredited Investor" as that term is defined
in Rule 501(a) promulgated under the Securities Act.
(iv) HR understands and acknowledges that each certificate
evidencing any of the Stock shall be endorsed with the following
restrictive legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SUCH ACT AND IN ACCORDANCE WITH
THE TERMS OF THAT CERTAIN ASSET PURCHASE AGREEMENT DATED AS OF
JANUARY 21, 1996 AND THAT CERTAIN REGISTRATION RIGHTS AGREEMENT
DATED ______ __, 1996 BETWEEN THE COMPANY AND THE REGISTERED
HOLDER HEREOF, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF THE COMPANY."
(v) HR covenants that it shall not sell, transfer, assign,
pledge, hypothecate or otherwise dispose of the Stock at any
time prior to five business days after the final determination
of the Adjusted Closing Statement.
(vi) HR further covenants that, beginning five business
days after the final determination of the Adjusted Closing
Statement, except to the extent such restrictions are waived by
Buyer, HR shall not sell, transfer, assign, pledge, hypothecate
or otherwise dispose of the Stock without complying with the
restrictions on transfer described in the legend set forth in
Section 3.1(w)(iv).
(vii) HR further acknowledges that Buyer may, at its
option, place notations evidencing the foregoing restrictions on
its stockholders register, and may place appropriate "stop
transfer" instructions with its transfer agent that relate
solely to the restrictions on transfer set forth in this Section
3.1(w).
(x) Accounts Receivable. The accounts receivable of the
Sellers arising from the conduct of the business of the R.V. Division
as reflected on the Preliminary Statement or arising since December
31, 1995, have arisen out of the bona fide sales and deliveries to
dealers or other customers to bona fide third-party transportation
companies for delivery to dealers or other customers of the R.V.
Division or performance of services and other business transactions
in the ordinary course of the business of the R.V. Division, and are
not subject to valid defenses, set-offs or counter-claims. The
allowance for collection losses on the Preliminary Statement has been
determined in all material respects in accordance GAAP. Set forth on
Schedule 3.1(x) hereto is (i) a true, complete and accurate aging as
of December 31, 1995 of the accounts receivable of the R.V. Division,
and (ii) with respect to the obligations owed to the R.V. Division
which have been classified as bad debts, the name of each debtor and
the total amount due from each such debtor.
(y) Product Warranties. Schedule 3.1(y) hereto contains true,
complete and accurate copies of the R.V. Division's standard written
vehicle warranties issued by the Sellers in connection with the
conduct of the business of the R.V. Division during each of the past
five years, or otherwise currently outstanding with respect to the
R.V. Division's vehicles. No other product warranty or guarantee is
available with respect to the R.V. Division's products or services,
except for implied warranties of merchantability or fitness for a
particular use or any other warranties, if any, arising by operation
of law.
(z) Warranty Claims.
(i) Schedule 3.1(z) hereto sets forth (A) cumulative
average warranty cost per unit by model by month following
retail sale for model years 1993, 1994 and 1995 as of December
15, 1995, (B) average monthly warranty cost per unit by model by
month following retail sale for model years 1993, 1994 and 1995
as of December 15, 1995, (C) total warranty cost by model by
month for model years 1993, 1994 and 1995 as of December 15,
1995, and (D) the amounts HR booked to the RV Division Warranty
reserve upon the sale of each unit by model in 1995 which are
reflected on the Unaudited Financial Statements referred to in
Section 3.1(e); and
(ii) Schedule 3.1(z) hereto sets forth a summary of each
product recall of vehicles and products manufactured by the R.V.
Division during the past five fiscal years, describing in each
case the nature of the problem giving rise to such recall, the
number of vehicles or products recalled, and the aggregate costs
incurred for each such recall. Except as set forth on
Schedule 3.1(z), the Sellers have no knowledge of any defects
which could reasonably be expected to result in a future recall
of vehicles or products manufactured by the R.V. Division prior
to the Closing Date.
(aa) Product Liability Claims. Schedule 3.1(aa) hereto sets
forth a summary of each Product Liability Claim (as defined below) in
excess of $250,000 paid by the Company or the Sellers during the past
five years, and each outstanding Product Liability Claim in excess of
$250,000. Except as set forth on Schedule 3.1(aa), the Sellers have
no actual knowledge of any design or manufacturing defects which
could reasonably be expected to result in future Product Liability
Claims that would reasonably be expected to have a Material Adverse
Effect. For purposes of this Section 3.1(aa), the term "Product
Liability Claim" shall mean any claim arising out of any injury to
individuals or property as a result of the ownership, possession, or
use of any vehicle or product manufactured, sold, leased, or
delivered by the R.V. Division.
(ab) Certain Real Property Matters.
(i) Except as set forth on Schedule 3.1(ab)(i), there is
no pending, or to the actual knowledge of Sellers, threatened,
condemnation or similar proceeding affecting any Plant or any
portion thereof. There are no pending or, to Sellers' knowledge
threatened, special assessments or improvements or activities of
any governmental or quasi-governmental authority either planned,
in the process of construction, or completed which may give rise
to any special assessment against any Plant or any portion
thereof.
(ii) Neither Seller has received any written notice from
any insurance company of any defects or inadequacies in any
Plant or any part thereof which could materially and adversely
affect the insurability of such Plant or the premiums for the
insurance thereof. No written notice has been given by any
insurance company which has issued a policy with respect to any
portion of any Plant or by any board of fire underwriters (or
other body exercising similar functions) requesting the
performance of any repairs, alterations or other work with which
compliance has not been made.
(iii) There are no parties (other than Harley-Davidson
Motor Company--Plant 42) in possession of any portion of any
Plant, whether as tenants, tenants at sufferance, trespassers or
otherwise, except Sellers.
(iv) To the actual knowledge of the Sellers, there is no
law, ordinance, order, regulation or requirement now in
existence or under active consideration by any governmental
authority which could require the owner of the Plants to make
aggregate expenditures in excess of $200,000, in the aggregate,
to modify or improve the Plants to bring them into compliance
therewith and there is no pending judicial or administrative
action with respect to the Plants.
(v) Except as set forth on Schedule 3.1(ab)(v), there are
currently in existence no service, operating or management
agreements or arrangements requiring annual payments in excess
of $100,000 with respect to the Plants.
(vi) There is presently in existence water, sewer, gas and
electrical lines and surface drainage systems serving each Plant
which have been licensed, permitted, completed, installed and
paid for and which are sufficient as licensed and permitted to
service the operations of each Plant when fully occupied and
operational. All utility lines serving each Plant are located
in the right-of-way of public roadways to the boundary of the
land on which Plant is situated.
(vii) Each Plant has adequate access to and from
completed, dedicated and accepted public roads and there is no
pending, or to the actual knowledge of Sellers threatened,
governmental proceeding which could impair or curtail such
access.
(viii) All improvements existent on the land on which the
Plants are located (including all drives and parking areas) are
private and have not been dedicated to any public authority and
the Plants are segregated on the applicable tax rolls so that no
other property is included on any tax bill related to the
Plants.
(ac) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 3.1, neither
Seller nor any other person or entity makes any other express or
implied representation or warranty to Buyer.
3.2. Representations and Warranties of Buyer. Buyer represents
and warrants to the Sellers as follows:
(a) Due Organization and Power. Buyer is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation. Buyer has all requisite power and authority to enter
into this Agreement and any other agreement contemplated hereby and
to perform its obligations hereunder and thereunder. Buyer is duly
authorized, qualified or licensed to do business as a foreign
corporation, and is in good standing, in each of the jurisdictions in
which its right, title or interest in or to any asset, or the conduct
of its business, requires such authorization, qualification or
licensing, except where the failure to so qualify or to be in good
standing would not have a material adverse effect on the ability of
Buyer to perform its obligations hereunder or under any other
agreement contemplated hereby.
(b) Authorization and Validity of Agreement. The execution,
delivery and performance by Buyer of this Agreement and any other
agreements contemplated hereby and the consummation by Buyer of the
transactions contemplated hereby and thereby have been duly
authorized by its Board of Directors. No other corporate or
stockholder action is necessary for the authorization, execution,
delivery and performance by Buyer of this Agreement and any other
agreement contemplated hereby and the consummation by Buyer of the
transactions contemplated hereby or thereby. This Agreement has been
duly executed and delivered by Buyer and constitutes a valid and
legally binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or by
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which Buyer is a Party. Except as described in
Schedule 3.2(c), the execution, delivery and performance of this
Agreement and any other agreements contemplated hereby by Buyer and
the consummation by it of the transactions contemplated hereby and
thereby (i) will not violate (with or without the giving of notice or
the lapse of time or both), or require any consent, approval, filing
or notice under, any provision of any law, rule or regulation, court
order, judgment or decree applicable to Buyer, except for such
violations the occurrence of which, and such consents, approvals,
filings or notices the failure of which to obtain or make, would not
have a material adverse effect on Buyer's ability to perform its
obligations hereunder, and (ii) will not conflict with, or result in
the breach or termination of any provision of, or constitute a
default under, or result in the acceleration of the performance of
the obligations of Buyer, under, the charter or by-laws of Buyer or
any indenture, mortgage, deed of trust, lease, licensing agreement,
contract, instrument or other agreement to which Buyer is a party or
by which Buyer or any of its assets or properties is bound, except
for such conflicts, breaches, terminations, defaults, accelerations
or liens which would not have a material adverse effect on Buyer's
ability to perform its obligations hereunder.
(d) Certain Fees. Neither the Buyer nor any of its officers,
directors or employees, on behalf of Buyer, has employed any broker
or finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby, except for those brokers whose fees will be paid
by Buyer.
(e) Financial Capacity. Buyer has received a letter of non-
binding commitment that has not been revoked as of the date hereof, a
true and complete copy of which has been furnished to Sellers, to
obtain all funds necessary to enable Buyer to perform this Agreement
and any other agreements contemplated hereby and to provide working
capital reasonably believed necessary by Buyer to support its
combined operations after consummation of the transactions
contemplated hereby (the "Financing").
(f) Financial Statements. Buyer has filed all required
reports, schedules, forms, statements and other documents with the
Securities and Exchange Commission (the "SEC") since January 1, 1994
(the "SEC Documents"). As of their respective dates,the SEC
Documents, including, without limitation, the financial statements
included in such SEC Documents (i) complied in all material respects
with the requirements of the Securities Act, or the Securities
Exchange Act of 1934, as amended, as applicable, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC
Documents, (ii) in the case of the financial statements included in
such SEC Documents, were prepared in all material respects in
accordance with GAAP, as in effect on the date of such financial
statements and applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto), (iii)
fairly present, in all material respects, the financial position and
results of operations of the Buyer, as of their respective dates and
for the respective periods covered thereby and (iv) none of the SEC
Documents as of such dates contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances in which they were made, not
misleading.
(g) Title to Preferred Stock. At the Closing, Buyer will
deliver to HR good and marketable title to the Preferred Stock, free
and clear of all claims, liens, security interests, charges, leases,
encumbrances, licenses or sublicenses and other restrictions of any
kind and nature, except for those liens created by the Company or the
Sellers and subject to Sections 2.3(d) and 3.1(w) and restrictions on
transfer imposed under the applicable state and federal securities
laws. Upon issuance, the shares of Preferred Stock to be delivered
pursuant to the terms of the Agreement will be validly issued, fully
paid and non-assessable.
(h) Absence of Certain Changes or Events. Since September 30,
1995, except as described on Schedule 3.2(h) hereto or in the SEC
Documents filed prior to the date of this Agreement, there has not
been any change, occurrence or development that has had, or is
reasonably likely to have, a material adverse effect on the results
of operations, business or financial condition of Buyer and its
subsidiaries taken as a whole.
(i) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 3.2, neither
the Buyer nor any other person or entity makes any other express or
implied representation or warranty to the Sellers.
3.3. Expiration of Representations and Warranties. Except for
those representations and warranties set forth in Schedule 3.3 attached
hereto which shall expire and terminate as set forth on such schedule, the
respective representations and warranties of the Company, Sellers and
Buyer contained herein or in any certificate or other document delivered
prior to or on the Closing Date shall expire and be terminated and
extinguished on April 30, 1997. After expiration and termination of the
respective representation or warranty, the Sellers and Buyer shall have no
liability whatsoever with respect to any such representation or warranty.
4. Transactions Prior to Closing
4.1. Access to Information Concerning Properties and Records;
Confidentiality. Except as would be prohibited by applicable law, each
Seller agrees that, during the period commencing on the date hereof and
ending on the Closing Date, (i) it will give or cause to be given to Buyer
and its representatives (including its Financing sources and their
representatives) such access, during normal business hours, to the Plants,
properties, books and records of such Seller relating to the Assets or
business of R.V. Division including, without limitation, such Seller's
open order file, as Buyer may from time to time reasonably request,
(ii) it will furnish or cause to be furnished to Buyer such financial and
operating data and other information with respect to the business and
properties of the R.V. Division, including access to the work papers of
the Company's independent auditors, as Buyer may from time to time
reasonably request, (iii) Buyer and its representatives shall be entitled,
in consultation with such Seller, to such access to the representatives,
officers and employees of such Seller involved in the business of R.V.
Division as Buyer may reasonably request, (iv) it will cooperate with
Buyer and Buyer's representatives in the preparation of any environmental
assessment or audit report and it will allow Buyer and its representatives
to enter the Plants in order to conduct such environmental tests and
evaluations thereof as the Buyer shall reasonably request, including,
without limitation, soils and groundwater sampling, surveying,
environmental compliance reviews, structural, HVAC and roof inspections
and asbestos inspections. Any such environmental assessment or audit
report shall be prepared at Buyer's expense and shall be addressed to
Buyer; provided, that a draft of such report shall be provided to Sellers
in order to provide Sellers the opportunity to correct any factual errors
in such report prior to its issuance. Buyer agrees that it will continue
to treat all information so obtained from such Seller as "Information"
under the Confidentiality Agreement entered into between Buyer and the
Company dated November 16, 1995 and will continue to honor its obligations
thereunder.
4.2. Conduct of the Business of the R.V. Division Pending the
Closing Date. Each Seller agrees that, except as required or contemplated
by this Agreement and except for any actions taken by Sellers of the type
set forth in Schedule 4.2, or otherwise consented to in writing by Buyer,
during the period commencing on the date hereof and ending on the Closing
Date, it will:
(a) other than pursuant to its current business plan, a copy of
which has been provided to Buyer (the "1996 Plan"), operate the R.V.
Division business of such Seller only in the usual, regular and
ordinary manner, on a basis consistent with past practice and, to the
extent consistent with such operation, use commercially reasonable
efforts to preserve the R.V. Division's present business organization
intact, keep available the services of the present employees engaged
in the manufacture of the R.V. Division products and preserve its
present relationships with persons having business dealings with the
R.V. Division;
(b) maintain its books, accounts and records relating to the
R.V. Division business in the usual, regular and ordinary manner, on
a basis consistent with past practice, comply in all material
respects with all laws and contractual obligations applicable to the
R.V. Division or to the conduct of the R.V. Division's business and
perform all of its material obligations relating to the R.V. Division
business;
(c) other than pursuant to the 1996 Plan or in the ordinary
course of business, not (i) make any capital expenditures, (ii)
dispose of any of the fixed Assets owned by it or (iii) modify or
change in any material respect or enter into or terminate any
material contract relating to the R.V. Division business of such
Seller;
(d) not make any material change in its accounting policies
from those applied in the preparation of the Unaudited Financial
Statements; and
(e) other than pursuant to the 1996 Plan, not (i) permit or
allow any of the Assets owned by it to become subject to any
Encumbrances except Permitted Encumbrances, (ii) waive any claims or
rights relating to the R.V. Division business of such Seller, except
in the ordinary course of business and consistent with past practice
and except for waivers of intercompany obligations or claims or
rights which will not be assigned to Buyer hereunder, (iii) grant any
increase in the compensation of Transitioned Employees (as defined
below) of such Seller (including any such increase pursuant to any
bonus, pension, profit-sharing or other plan or commitment), except
for reasonable increases in the ordinary course of business and
consistent with past practice or as a result of contractual
arrangements or sales compensation plans existing on the date hereof
or (iv) enter into any agreements giving rise to obligations on the
part of such Seller with respect to the R.V. Division in excess of
$100,000 individually or $250,000 in the aggregate, except
commitments to purchase Materials and other trade obligations in the
ordinary course of business and consistent with the 1996 Plan.
4.3. Further Actions. Subject to the terms and conditions
hereof, the Sellers and Buyer agree to use commercially reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done,
all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement, including using all
reasonable efforts (without payment of money or commencement of litigation
or an obligation to defend any litigation challenging the transactions
contemplated by this Agreement): (i) to obtain prior to the Closing Date
all licenses, permits, consents, approvals, authorizations, qualifications
and orders of governmental authorities and parties to contracts with the
Sellers as are necessary for the consummation of the transactions
contemplated hereby, including but not limited to such consents and
approvals as may be required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "Antitrust Improvements Act");
(ii) to effect all necessary registrations and filings (including but not
limited to the filings contemplated by Section 4.4); and (iii) to furnish
to each other such information and assistance as reasonably may be
requested in connection with the foregoing (including but not limited to
the information and assistance contemplated by Sections 4.4). Where the
consent of any third party is required under the terms of any of the
leases or contracts to be assumed by Buyer hereunder, the Seller which is
a party to such lease or contract will take all reasonable and necessary
steps to obtain such consent on terms and conditions not materially less
favorable than as in effect on the date hereof or to otherwise provide
Buyer with the benefits of such leases or contracts. Each Seller and
Buyer shall cooperate fully with each other to the extent reasonably
required to obtain such consents.
4.4. Antitrust Laws.
(a) The Sellers shall timely and promptly make all filings
which may be required by it in connection with the consummation of
the transactions contemplated hereby under the Antitrust Improvements
Act. The Sellers shall furnish to Buyer such necessary information
and assistance as Buyer may reasonably request in connection with
Buyer's preparation of any necessary filings or submissions by it to
any governmental agency, including, without limitation, any filings
necessary under the provisions of the Antitrust Improvements Act.
The Sellers shall provide Buyer with the opportunity to make copies
of all correspondence, filings or communications (or memoranda
setting forth the substance thereof) between the Sellers or their
representatives, on the one hand, and the Federal Trade Commission
("FTC"), the Antitrust Division of the United States Department of
Justice (the "Antitrust Division") or members of their respective
staffs, on the other hand, with respect to this Agreement or the
transactions contemplated hereby.
(b) Buyer shall timely and promptly make all filings which are
required by it in connection with the consummation of the
transactions contemplated hereby under the Antitrust Improvements
Act. Buyer shall furnish to the Sellers such necessary information
and assistance as the Sellers may reasonably request in connection
with the Sellers' preparation of any necessary filings or submissions
by it to any governmental agency, including, without limitation, any
filings necessary under the provisions of the Antitrust Improvements
Act. Buyer shall provide the Sellers with the opportunity to make
copies of all correspondence, filings or communications (or memoranda
setting forth the substance thereof) between Buyer or its
representatives, on the one hand, and the FTC, the Antitrust Division
or members of their respective staffs, on the other hand, with
respect to this Agreement or the transactions contemplated hereby.
The filing fees for all filings required by the Antitrust
Improvements Act under this Section 4.4 and the expenses for
complying with any request of the FTC or the Antitrust Division shall
be borne equally by Buyer and Sellers.
4.5. Notification. Each Seller shall promptly notify Buyer and
Buyer shall promptly notify Sellers and keep such other party advised as
to (i) any litigation or administrative proceeding pending and known to
such party or, to its actual knowledge, threatened against such party
which challenges the transactions contemplated hereby; (ii) any material
damage or destruction of any of the Assets; and (iii) any material adverse
change in the results of operations or business of the R.V. Division or
the Buyer, as the case may be.
4.6. No Inconsistent Action. Subject to the provisions of
Sections 7.1 and 7.2, the Sellers and Buyer shall not take any action
inconsistent with their obligations under this Agreement or which could
materially hinder or delay the consummation of the transactions
contemplated by this Agreement.
4.7. Financing. Buyer will use commercially reasonable efforts
to obtain the Financing on the terms set forth in the letter of non-
binding commitment referenced in Section 3.2(e). Buyer agrees to keep
Sellers reasonably informed as to the status of the Financing and will
notify Sellers promptly of any material developments with respect to the
Financing.
4.8. Certain Other Agreements. The Sellers and Buyer agree to
execute on or prior to the Closing Date (a) leases for the real property
described on Schedule 4.8 hereto, and the leases shall be in the form
attached hereto as Exhibit D, (b) a registration rights agreement with
respect to the common stock issuable upon conversion of the Preferred
Stock in the form attached hereto as Exhibit E and (c) a Transition
Services Agreement in substantially the form attached hereto as Exhibit C.
4.9. Preparation and Delivery of Audited Financial Statements.
The Company, at its expense, shall cause to be prepared and delivered to
Buyer at or prior to the Closing audited combined financial statements of
the R.V. Division and the retail sales operations (if purchased by Buyer)
complying with the disclosure requirements of Regulation S-X promulgated
under the Securities Act, which financial statements shall include, among
other requirements, statements of operations and cash flows for each of
the three years ended prior to the Closing Date, combined balance sheets
as of the end of each of the last two years ended prior to the Closing
Date and supplemental information derived from such financial statements
showing the combining financial statements of the R.V. Division and the
retail sales operations to the extent purchased by Buyer (collectively,
the "S-X Financial Statements"). The Company shall take such further
actions as may be reasonably required to cause its independent auditors to
provide any consents with respect to the S-X Financial Statements that may
be required under applicable rules of the SEC.
4.10. Exclusivity. From the date hereof until the earlier of
the Closing or the termination of this Agreement, neither the Company nor
any Seller nor any of their respective directors, officers or agents will
solicit, encourage, initiate, or enter into any negotiations or
discussions with any person with respect to, any offer or proposal to
acquire the R.V. Division or the Assets or all or substantially all of the
business of the R.V. Division or the Assets (such offer or proposal, an
"Acquisition Proposal"), whether by merger, purchase of assets or
otherwise, or provide any confidential information or otherwise cooperate
with any person relating to an Acquisition Proposal. The Company and the
Sellers shall immediately cease and cause to be terminated any such
contacts or negotiations with third parties. The Company and the Sellers
shall promptly notify Buyer if any Acquisition Proposal is made by any
person with respect to any of the foregoing.
4.11. Sale of Holiday World. The Company and Buyer shall use
their reasonable efforts to enter into an asset purchase agreement with
respect to the sale by the Company to Buyer of certain assets of the
Company's Holiday World division, in accordance with the terms set forth
in the letter of intent dated of even date herewith.
4.12. Redemption Restrictions. Buyer agrees to use
commercially reasonable efforts to ensure that the covenants and
agreements set forth in the documents governing the Financing or in any
other documents related to the financing of the transactions contemplated
by this Agreement will not prohibit the redemption of the Preferred Stock
in accordance with the terms of the Certificate of Designations (including
redemption pursuant to the holder's right of election) in the absence of
an event of default as provided in such documents, including an event of
default that would be caused by such redemption.
4.13. Casualty Losses and Condemnation. In the event that,
prior to the Closing Date, any Plant shall be destroyed, contaminated or
materially damaged, or if condemnation proceedings are commenced against
any Plant or any material part thereof, then, to the extent that such
diminution in value is not reflected on the Adjusted Closing Statement,
Buyer shall be entitled to receive any and all insurance and condemnation
proceeds attributed to such casualty or condemnation actually received by
Sellers (less the reasonable cost of collection thereof).
4.14. Release of Mortgage. The Sellers agree that, prior to
Closing, HR's lease of Plants 1,3,5,6,7, 8 and 39 shall be terminated and
Plant 39 shall be released from the Company's mortgage.
5. Conditions Precedent
5.1. Conditions Precedent to Obligations of Buyer and the
Sellers. The respective obligations of Buyer and the Sellers to
consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) No Injunction, etc. No preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or
governmental authority or other legal restraint or prohibition which
restrains, enjoins or otherwise prohibits the transactions
contemplated hereby shall be in effect.
(b) Antitrust Matters. Any filings required to be made by
Buyer and the Sellers under the Antitrust Improvements Act shall have
been made, and the specified waiting periods thereunder shall have
expired.
(c) Other Agreements. The Sellers or the Company, as
applicable, and Buyer shall have executed and delivered to each other
the agreements contemplated by Section 4.8.
(d) Material Consents. All permits, consents, waivers,
clearances, approvals and authorizations of all third parties and
governmental bodies shall have been obtained, the absence of which,
in the aggregate, would have a Material Adverse Effect.
5.2. Conditions Precedent to Obligations of Buyer. The
obligations of Buyer under this Agreement are subject to the satisfaction
(or waiver by Buyer) at or prior to the Closing Date of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of the Company and Sellers contained
herein or in any certificate or document delivered to Buyer pursuant
hereto shall be true and correct in all respects on and as of the
Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the Closing
Date (except as contemplated or permitted by this Agreement and
except to the extent that any such representation or warranty is made
as of a specified date, in which case such representation or warranty
shall have been true and correct as of such date), except, in either
case, for such inaccuracies which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect
and, in either case, for such inaccuracies which have been cured
(including but not limited to by the granting of a post-Closing
indemnity for any damages related to such inaccuracies without regard
to, and without modifying, the basket and cap provisions of Section
9.3 herein); provided, that for the purposes of this Section 5.2(a),
the representations and warranties of the Company and Sellers
contained in Section 3.1 of this Agreement which by their terms
contain any qualification or limitation with respect to a Material
Adverse Effect, or are otherwise qualified or limited with respect to
materiality, shall be read without giving effect to any such
qualification or limitation.
(b) Performance of Agreements. The Company and the Sellers
shall in all material respects have performed all obligations and
agreements, and complied with all covenants and conditions, contained
in this Agreement to be performed or complied with by them prior to
or at the Closing Date.
(c) No Material Adverse Change. Since the date of this
Agreement, there shall not have occurred any change, occurrence or
development that has had, or is reasonably likely to have, a Material
Adverse Effect.
(d) Officer's Certificate. Buyer shall have received a
certificate, dated the Closing Date, of the President, Vice President
or a Partner of each Seller and the Company to the effect that, to
the best of the knowledge, information and belief of such officer,
the conditions specified in paragraphs (a), (b) and (c) above have
been fulfilled.
(e) Completion of Audit. The Company's independent accountants
shall have completed and delivered to Buyer the S-X Financial
Statements.
(f) FIRPTA Compliance. Buyer shall have received from each
Seller a properly executed statement in the form prescribed by
Treasury Regulation Section 1.1445-2(b)(2).
(g) Financing Condition. Buyer shall have received the
Financing or other comparable financing on terms at least as
favorable as those set forth in the letter of non-binding commitment
referenced in Section 3.2(e).
(h) Environmental Condition. No violations of any
Environmental Law, requirement for construction or installation of
capital equipment to comply with any Environmental Law, or
contamination by any Hazardous Substances, at any of the Plants shall
have been identified as existing as of the Closing Date by Buyer's
environmental consultant (Bruce Carter & Associates) (as set forth
and supported by facts and conditions specifically identified in a
written report by such consultant) which: (A) the owner or operator
of the Plant is required as of the Closing Date under applicable
Environmental Law to investigate, remediate or otherwise take action
to correct or in the case of construction or installation of capital
equipment, to perform; and (B) is reasonably expected in the sound
professional judgment of Buyer's environmental consultant to have a
present value cost, in the aggregate, of not less than $2 million to
the Buyer as the owner or operator of the Plants (assuming
consummation of this Agreement but without giving effect to any
indemnification provisions herein) to undertake such required
actions; except that Buyer shall not be entitled to rely on the
condition set forth in this Section 5.2(h) if the actions required by
the matters set forth above have been cured (including but not
limited to by the granting of a post-Closing indemnity to Buyer for
such violations or contamination without regard to, or without
modifying, the basket and cap provisions of Section 9.3 herein and
for which Buyer has the right to conduct and control such remediation
or other required action if it would materially interfere with the
conduct of the business of the R.V. Division by Buyer).
5.3. Conditions Precedent to the Obligations of the Company and
Sellers. The obligations of the Company and the Sellers under this
Agreement are subject to the satisfaction (or waiver by the Sellers) at or
prior to the Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Buyer contained herein or in any
certificate or document delivered to the Sellers pursuant hereto
shall be true and correct in all respects on and as of the Closing
Date, with the same force and effect as though such representations
and warranties had been made on and as of the Closing Date (except as
contemplated or permitted by this Agreement and except to the extent
that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been
true and correct as of such date), except, in either case, for such
inaccuracies which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the
Buyer's ability to perform its obligations hereunder and, in either
case, for such inaccuracies which have been cured (including but not
limited to by the granting of a post-Closing indemnity for any
damages related to such inaccuracies); provided, that for the
purposes of this Section 5.3(a), the representations and warranties
of the Buyer contained in Section 3.2 of this Agreement which by
their terms contain any qualification or limitation with respect to a
material adverse effect, or are otherwise qualified or limited with
respect to materiality, shall be read without giving effect to any
such qualification or limitation.
(b) Performance of Agreements. Buyer shall in all material
respects have performed all obligations and agreements, and complied
with all covenants and conditions, contained in this Agreement to be
performed or complied with by it prior to or at the Closing Date.
(c) No Material Adverse Change. Since the date of this
Agreement, there shall not have occurred any change, occurrence or
development that has had, or is reasonably likely to have, a material
adverse effect on the results of operations or business of Buyer and
its subsidiaries taken as a whole.
(d) Officer's Certificate. Each Seller shall have received a
certificate, dated the Closing Date, of the President or a Vice
President of Buyer to the effect that, to the best of the knowledge,
information and belief of such officer, the conditions specified in
paragraphs (a), (b) and (c) above have been fulfilled.
(e) Assumption Agreement. Buyer shall have executed and
delivered to the Sellers the Assumption Agreement in the form
attached hereto as Exhibit A.
(f) Certificate of Designations. The Buyer shall have filed
the Certificate of Designations with the Delaware Secretary of
State's office.
6. Employee Relations and Benefits
6.1. Employment. Buyer shall offer employment to such
employees of the R.V. Division as it in its discretion determines to
employ. No less than 10 business days prior to the Closing, Buyer shall
provide Seller with a list of such employees. Employees who accept such
employment shall hereinafter be referred to as "Transitioned Employees".
6.2. Effective Time. All Transitioned Employees shall become
employees of Buyer as of the Effective Time.
6.3. Benefit Plans and Programs. Buyer shall provide
Transitioned Employees with employee benefit plans, programs and policies
which are similar, in all material respects, to those provided to
similarly situated employees of Buyer, and Transitioned Employees shall
commence participation in such plans, programs and policies as of the
Effective Time and shall be granted past service credit for their
employment with Sellers with respect to such plans, programs and policies,
including vacation and severance, (with appropriate offsets so as not to
duplicate benefits); unless the provision of such past service credit
would violate applicable law or the terms of such plans, programs and
policies as such plans exist as of the date hereof.
6.4. Welfare Plans. Buyer shall cause to be waived all
eligibility waiting periods, actively-at-work provisions and pre-existing
condition exclusions for Transitioned Employees and their eligible
dependents under Buyer's welfare benefit plans and shall cause
Transitioned Employees and their dependents to be given credit under
Buyer's welfare benefit plans for deductible and out-of-pocket expenses
that they have satisfied under the Sellers' plans during the calendar year
in which the Closing Date occurs.
6.5. Rollovers. Buyer agrees to take such actions as are
necessary with respect to Buyer's defined contribution plans to enable
Transitioned Employees to make permitted rollovers of amounts
distributable to such employees from Sellers' savings plans under Section
401(k)(10) of the Internal Revenue Code of 1986, as amended.
6.6. Tax Reporting. Sellers shall prepare and furnish to each
Transitioned Employee a Form W-2 which shall reflect all wages and
compensation paid to Transitioned Employees for that portion of the
calendar year in which the Closing Date occurs during which the
Transitioned Employees were employed by Sellers. Sellers shall furnish to
Buyer the Form W-4 and Form W-5 for each Transitioned Employee. Buyer
shall send to the appropriate Social Security Administration office a duly
completed Form W-3 and accompanying copies of the duly completed Form W-2.
It is the intent of the parties hereunder that the obligations of Buyer
and Sellers under this Section 6.7 shall be carried out in accordance with
Section 5 of the Internal Revenue Service's Revenue Procedure 84-77.
6.7. Warn Act. Buyer and Sellers agree that for purposes of
the Worker Adjustment and Retraining Notification Act (the "WARN Act"),
the Closing Date shall be the "effective date" as such term is used in the
WARN Act. Buyer acknowledges and represents that it has no present intent
to engage in a "mass layoff" or "plant closing" with respect to the R.V.
Division as defined in the WARN Act. Subject to Buyer's compliance with
the last sentence of this Section 6.7, Sellers agree that they shall be
responsible for any notification required under the WARN Act with respect
to the R.V. Division Employees who are not Transitioned Employees and
shall indemnify the Buyer and hold the Buyer harmless from and against all
fines and other payments which may become due under the WARN Act with
respect to such employees. Buyer agrees that after the Closing it shall
be responsible for any notification required under the WARN Act with
respect to the Transitioned Employees and shall indemnify the Company,
Sellers and their respective affiliates and hold the Company, Sellers and
their respective affiliates harmless from and against all fines and other
payments which may become due under the WARN Act with respect to the
Transitioned Employees. Buyer agrees that for the period commencing at the
Effective Time and expiring 60 days from the Closing Date, it will employ
the minimum number of Sellers' employees set forth in Schedule 6.7 for
each of the designated facilities.
7. Termination
7.1. General. This Agreement may be terminated and the
transactions contemplated herein may be abandoned, (a) by mutual consent
of Buyer and the Company, (b) by either Buyer or the Company, if any
permanent injunction or action by any governmental authority preventing
the consummation of the Closing shall have become final and nonappealable
or (c) by any party by notice to the other party in the event that the
Closing Date shall not have occurred on or before March 31, 1996;
provided, however, that such date shall be extended until April 30, 1996
if the Closing Date shall not have occurred as of March 31, 1996 and the
only condition to Closing not satisfied as of such date shall be
compliance with, or the expiration of, the specified waiting periods under
the Antitrust Improvements Act (antitrust clearance) and, provided,
further, that if the Closing Date shall not have occurred on or before
such dates due to the act or omission of one of the parties in violation
of any provision of this Agreement, that party may not terminate the
Agreement pursuant to this clause (c) of Section 7.1.
7.2. No Liabilities in Event of Termination. In the event of
any termination of the Agreement as provided in Section 7.1 above, this
Agreement shall forthwith become wholly void and of no further force and
effect and there shall be no liability on the part of Buyer, the Sellers
or the Company, except that the obligations of Buyer under Sections 4.1
and 7.3 of this Agreement shall remain in full force and effect, and
except that termination shall not preclude any party from suing the other
party for breach of this Agreement.
7.3. Fees and Expenses. (a) Except as otherwise stated in this
Agreement, all expenses incurred by the parties hereto shall be borne
solely and entirely by the party which has incurred such expenses.
(b) If there is a termination of this Agreement because Buyer
has been unable to obtain its financing (including the Financing)
(regardless of whether the provisions of Section 4.7 have been satisfied),
in consideration of the effect the failure to consummate the sale would
have on the Sellers' relationships with their respective employees,
suppliers, customers and other constituents and the value of the R.V.
Division, Buyer shall pay Sellers a termination fee of $1 million. The
termination fee shall be paid to Sellers within 5 business days of the
termination of this Agreement and shall be made by wire transfer of
immediately available funds to an account designated by the Sellers.
8. Transactions Subsequent to Closing
8.1. Post-Closing Access to Information and
Assistance. (a) For a period of seven years after the Closing Date,
each party hereto shall provide, and shall cause its appropriate personnel
to provide, when reasonably requested to do so by another party, access to
all tax, financial and accounting records and any other records
transferred to Buyer or retained by the Company and the Sellers, as
applicable, in accordance with this Agreement. Neither party shall, nor
shall it permit its affiliates to, dispose of, alter or destroy any such
books, records and other data without giving 30 days' prior written notice
to the other party and permit the other parties hereto, at their expense,
to examine, duplicate or repossess such records, files, documents and
correspondence.
(b) The Company and Sellers agree to cooperate with Buyer in
the preparation for and prosecution of the defense of any claim, action or
cause of action arising out of or relating to any liability relating to
the R.V. Division business which arose prior to the Closing and which has
been assumed by Buyer, including, without limitation, by making available
evidence within the control of the Company or Sellers and persons needed
as witnesses employed by the Company or Sellers, in each case as
reasonably needed for such defense. Except as provided in Section 9.3,
Buyer shall reimburse the Company and/or Sellers for their actual out-of-
pocket costs relating to their cooperation under this paragraph.
8.2. Further Agreements. Each Seller authorizes and empowers
Buyer on and after the Closing Date to receive and open all mail received
by Buyer relating to the business of the R.V. Division or the Assets and
to deal with the contents of such communications in any proper manner.
The Sellers shall promptly deliver to Buyer any mail or other
communication received by them after the Closing Date pertaining to the
business of the R.V. Division or the Assets and any cash, checks or other
instruments of payment to which Buyer is entitled. Buyer shall promptly
deliver to the Sellers any mail or other communication received by it
after the Closing Date pertaining to the assets and liabilities described
in Sections 1.2 and 1.6 hereof, and any cash, checks or other instruments
of payment in respect thereof.
8.3. Use of Corporate Name. Buyer shall not use the name
Harley-Davidson, Inc. or any derivative thereof in any manner, including
in any advertising or promotional materials, either prior to or after the
Closing Date. HR shall be entitled to retain the corporate name Holiday
Rambler LLC in order to transition to a new corporate name for up to 12
months from the Closing Date so long as Sellers do not use the name in any
sales, marketing or similar activities after the Closing Date.
8.4. No Competition. (a) During the period commencing on the
Closing Date and ending on the fifth anniversary of the Closing Date, the
Company and Sellers will not, and will cause any person that is or shall
become an affiliate of any of them not to, directly or indirectly conduct
or engage in the design, manufacture, marketing, wholesale sale or factory
servicing of Class A motorhomes, conventional travel trailers or fifth
wheel travel trailers (the "Restricted Business"). Notwithstanding the
foregoing, none of the Company, Sellers nor any of its existing or future
affiliates shall be in violation of this Section 8.4 if it continues to
operate the assets excluded from sale hereunder pursuant to Section 1.2 or
if it owns less than 5% of the equity securities of any business that is
engaged in the Restricted Business (except as otherwise contemplated by
this Agreement).
(b) During the period commencing on the Closing Date and ending
on the fifth anniversary of the Closing Date, neither the Company nor the
Sellers will solicit (or assist or encourage the solicitation of) any of
the employees of Buyer or its affiliates, without the prior written
consent of Buyer.
(c) Inasmuch as the remedy at law for any breach by the Company
or the Sellers of the covenants contained in this Section 8.4 may be
inadequate, Buyer will be entitled to a temporary restraining order and to
preliminary and final injunctive relief to enforce such covenants, without
the necessity of posting a bond, in addition to any other remedies that
may be available. In the event one or more provisions, or any part
thereof, of the covenants contained in this Section 8.4 shall be held
unenforceable for any reason, or in the event any provision of such
covenants shall be held unenforceable as to any specific locality or any
specific activity, then this Section 8.4 shall be construed and enforced
to the maximum extent permitted by law in a manner consistent with the
intent of the parties as herein expressed.
8.5. Incremental Wage Payments. Sellers acknowledge that Buyer
expects to pay incentive, retention or other wage payments or benefits to
certain Transitioned Employees over and above the base salary rates or
benefits offered to such Transitioned Employees by Buyer (the "Incremental
Payments"). The Company and Sellers agree to reimburse Buyer for fifty
percent (50%) of such Incremental Payments (including any withholding
taxes or other deductions from the amounts actually paid to Transitioned
Employees) up to a maximum aggregate reimbursement by the Sellers of $1.25
million and only to the extent that such Incremental Payments (i)
compensate Transitioned Employees for the reduction in compensation and
benefits provided by Buyer when compared to the compensation and benefits
provided by Seller for the last full month prior to the Closing Date and
(ii) are made by Buyer in connection with services rendered on or before
the first anniversary of the Closing Date; provided, that Buyer pays such
Transitioned Employees compensation and benefits that is substantially
similar to, or greater than, the compensation and benefits that it pays to
its similarly situated employees. Sellers shall make such reimbursement
to Buyer within five (5) business days of receipt from Buyer of written
notice of Buyer's intention to make an Incremental Payment within ten (10)
business days from the date of the notice. Such notice shall be
accompanied by an officer's certificate executed by Buyer's President or
Chief Financial Officer certifying in reasonable detail the amount and the
recipients of such Incremental Payment. Buyer shall confirm the full
payment of such Incremental Payment Amount in the next succeeding notice.
8.6. Tax Assistance and Cooperation. After the Closing Date,
Buyer shall cooperate and shall cause its appropriate personnel to provide
Sellers with assistance with financial and tax matters relating to
Sellers' preparation of its tax returns and the payment of taxes,
including assistance in the payment of all sales and use taxes, income
taxes, franchise taxes and any other taxes related to Sellers' operation
of the R.V. Division prior to the Closing Date. Sellers shall reimburse
Buyer for its actual out-of-pocket costs relating to their cooperation and
assistance under this paragraph.
9. Miscellaneous
9.1. Public Announcements. The parties shall agree on a news
release describing the transactions contemplated by this Agreement to be
made promptly upon signing this Agreement. Prior to the Closing Date, no
news release or other public announcement pertaining in any way to the
transactions contemplated by this Agreement will be made by either party
without the prior consent of the other party, unless in the opinion of
counsel to such party such release or announcement is required by law.
9.2. Transfer Taxes and Recording Expenses. Buyer shall pay
and shall indemnify each Seller and its affiliates against all sales,
motor vehicle, registration or similar taxes and recording expenses, if
any, required to be paid in connection with the transfer of the Assets
(including any interest charge, penalty or addition to tax with respect
thereto) without regard to whether such taxes or expenses are imposed on
Buyer or Sellers. Sellers agree to pay any gross receipt or income taxes
and to reimburse Buyer for one-half of the cost of any transfer taxes
(other than those set forth above) incurred in connection with the
consummation of this transaction.
9.3. Indemnification. (a) The Company and HR shall jointly
and severally indemnify and hold Buyer and its affiliates harmless against
and in respect of (i) all obligations and liabilities of the Company and
the Sellers, whether accrued, absolute, fixed, contingent or otherwise,
not expressly assumed by Buyer pursuant to this Agreement (including,
without limitation, the Excluded Liabilities) or the Assumption Agreement;
provided, however, that neither the Company nor HR shall have any
liability under this Section 9.3(a)(i) to Buyer to the extent the
liability giving rise thereto has also given rise to any liability
included in the post-Closing adjustment provisions of Section 2.3, (ii)
any actual Damages (as defined below) incurred or sustained by Buyer or
its affiliates as a result of any breach by the Company or the Sellers of
their covenants contained herein which survive the Closing; (iii) any
actual Damages incurred or sustained by Buyer or its affiliates as a
result of any breach by the Company or the Sellers of the representations
and warranties set forth in Section 3.1, provided that (W) the Company and
HR shall be required to indemnify Buyer pursuant to this clause (iii) for
any such breach or breaches only to the extent that the aggregate actual
Damages resulting from such breaches to Buyer exceeds $300,000, (X)
neither the Company nor HR shall be required to indemnify Buyer pursuant
to this clause (iii) in an aggregate amount in excess of (1) $5 million
for the breaches of any representations or warranties contained in Section
3.1 (except for Section 3.1(p)) or (2) $10 million for the breaches of any
representations or warranties contained in Section 3.1(p), (Y) Buyer
agrees to aggregate its claims pursuant to this clause (iii) so that the
aggregate amount of the claims is $25,000 or greater, and (Z) any claim
for indemnification under this clause (iii) must be made in writing in
reasonable detail to the Company and HR by the Buyer not later than
April 30, 1997, or such longer period with respect to a breach of a
specific representation or warranty that is set forth in Schedule 3.3;
provided, further, that for the purposes of this Section 9.3(a)(iii), the
representations and warranties of the Company and Sellers contained in
Section 3.1 of this Agreement which by their terms contain any
qualification or limitation with respect to a Material Adverse Effect, or
are otherwise qualified or limited with respect to materiality, shall be
read without giving effect to any such qualification or limitation and
(iv) liabilities for taxes of the Sellers, their affiliates, the R.V.
Division or the Assets arising at any time with respect to periods ending
prior to the Closing Date (excluding property taxes and any taxes
described as being the obligations of the Buyer in Section 9.2 of this
Agreement). For purposes of this Section 9.3, "Damages" shall mean any
and all claims, losses, liabilities, damages, deficiencies, costs and
expenses (including without limitation as a result of the defense,
settlement or compromise of any claim), including, without limitation,
reasonable attorneys', accountants' and expert witness fees, costs and
expenses of investigation, and costs and expenses incurred by an
indemnified party in connection with any action, suit, proceeding, demand,
assessment or judgment incident to any of the matters indemnified against
in this Section 9.3 or to enforce an indemnified party's rights under this
Section 9.3.
(b) Buyer shall indemnify and hold the Company, Sellers and
their affiliates harmless against and in respect of (i) all obligations
and liabilities of Sellers and their affiliates expressly assumed by Buyer
pursuant to this Agreement or the Assumption Agreement; (ii) any actual
Damages incurred or sustained by the Company, the Sellers or their
affiliates as a result of any breach by Buyer of its covenants contained
herein which survive the Closing; (iii) any actual Damages incurred or
sustained by the Company, the Sellers or their affiliates arising from the
operations of the R.V. Division business on or after the Closing Date;
(iv) any actual Damages incurred or sustained by the Company or the
Sellers as a result of any breach by Buyer of its representations and
warranties contained in Section 3.2 hereof; provided that any claim for
indemnification under this clause (iv) must be made in writing in
reasonable detail to Buyer by the Company or a Seller not later than April
30, 1997, or such longer period with respect to a breach of a specific
representation or warranty that is set forth in Schedule 3.3, and shall be
subject to the same limitations as are set forth in clauses (w), (x) and
(y) of Section 9.3(a)(iii); provided, further, that for the purposes of
this Section 9.3(b)(iv), the representations and warranties of the Buyer
contained in Section 3.2 of this Agreement which by their terms contain
any qualification or limitation with respect to a material adverse effect,
or are otherwise qualified or limited with respect to materiality, shall
be read without giving effect to any such qualification or limitation; and
(v) any and all taxes and expenses described as being the obligations of
the Buyer in Section 9.2.
(c) Promptly after receipt by an indemnified party under this
Section 9.3 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 9.3, notify the
indemnifying party in writing of the claim or the commencement of that
action, provided that the failure to notify the indemnifying party shall
not relieve it from any liability which it may have to the indemnified
party unless the indemnifying party is materially prejudiced in its
ability to defend such action. If any such claim shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled at its expense to participate
therein, and to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party, and to settle and compromise any
such claim or action; provided, however, that if the indemnified party has
elected to be represented by separate counsel pursuant to the proviso to
the following sentence or if such settlement or compromise does not
include an unconditional release of the indemnified party for any
liability arising out of such claim or action, such settlement or
compromise shall be effected only with the consent of the indemnified
party, which consent shall not be unreasonably withheld. After notice
from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under this Section 9.3 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, provided, however, that the indemnified party shall have
the right to employ counsel to represent it if, in the opinion of counsel
to the indemnified party, it is advisable for the indemnified party to be
represented by separate counsel due to actual or potential conflicts of
interest, and in that event the fees and expenses of such separate counsel
shall be paid by the indemnifying party; provided, that in no event shall
the indemnifying party be responsible for the fees of more than one
counsel. Buyer and the Company and the Sellers shall each render to each
other such assistance as may reasonably be requested in order to ensure
the proper and adequate defense of any such claim or proceeding.
(d) The indemnities provided in this Agreement shall survive
the Closing. The indemnity provided in this Section 9.3 shall be the sole
and exclusive contractual remedy of the indemnified party against the
indemnifying party at law or equity for any matter covered by paragraphs
(a) and (b).
(e) If the amount with respect to which any claim is made under
any of Sections 6.7, 9.2, 9.3(a) or 9.3(b) of this Agreement (an
"Indemnity Claim") gives rise to a currently realizable Tax Benefit (as
defined below) to the party making the claim, the indemnity payment shall
be reduced by the amount of the Tax Benefit available to the party making
the claim. To the extent such Indemnity Claim does not give rise to a
currently realizable Tax Benefit, if the amount with respect to which any
Indemnity Claim is made gives rise to a subsequently realized Tax Benefit
to the party that made the claim, such party shall refund to the
indemnifying party the amount of such Tax Benefit when, as and if
realized. For the purposes of this Agreement, any subsequently realized
Tax Benefit shall be treated as though it were a reduction in the amount
of the initial Indemnity Claim, and the liabilities of the parties shall
be redetermined as though both occurred at or prior to the time of the
indemnity payment. For purposes of this Section 9.3(e), a "Tax Benefit"
means an amount by which the tax liability of the party (or group of
corporations including the party) is reduced (including, without
limitation, by deduction, reduction of income by virtue of increased tax
basis or otherwise, entitlement to refund, credit or otherwise) plus any
related interest received from the relevant taxing authority. Where a
party has other losses, deductions, credits or items available to it, the
Tax Benefit from any losses, deductions, credits or items relating to the
Indemnity Claim shall be deemed to be realized proportionately with any
other losses, deductions, credits or items. For the purposes of this
Section 9.3(e), a Tax Benefit is "currently realizable" to the extent it
can be reasonably anticipated that such Tax Benefit will be realized in
the current taxable period or year or in any tax return with respect
thereto (including through a carryback to a prior taxable period) or in
any taxable period or year prior to the date of the Indemnity Claim. In
the event that there should be a determination disallowing the Tax
Benefit, the indemnifying party shall be liable to refund to the
indemnified party the amount of any related reduction previously allowed
or payments previously made to the indemnifying party pursuant to this
Section 9.3(e). The amount of the refunded reduction or payment shall be
deemed a payment under Sections 6.7, 9.2, 9.3(a) or 9.3(b) of this
Agreement and thus shall be paid subject to any applicable reductions
under this Section 9.3(e).
(f) The parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for tax purposes as an
adjustment to the Purchase Price, unless otherwise required by applicable
law.
(g) Each party and their affiliates shall be obligated in
connection with any claim for indemnification under this Section 9.3 to
use all commercially reasonable efforts to obtain any insurance proceeds
available to such Indemnitee with regard to the applicable claims. The
amount which the indemnifying party is or may be required to pay to any
indemnified party pursuant to this Section 9.3 shall be reduced
(retroactively, if necessary) by any insurance proceeds or other amounts
actually recovered by or on behalf of such indemnified party in reduction
of the related Damage. If an indemnified party shall have received the
payment required by this Agreement from an indemnifying party in respect
of Damages and shall subsequently receive insurance proceeds or other
amounts in respect of such Damages, then such indemnified party shall
promptly repay to the indemnifying party a sum equal to the amount of such
insurance proceeds or other amounts actually received.
(h) Each indemnified party shall be obligated in connection
with any claim for indemnification under this Section 9.3 to use all
commercially reasonable efforts to mitigate Damages upon and after
becoming aware of any event which could reasonably be expected to give
rise to such Damages.
9.4. Notices. Except as otherwise set forth in this Agreement,
all notices, requests, demands and other communications which are required
or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, if telecopied or
mailed, first class mail, postage prepaid, return receipt requested, as
follows:
(a) If to the Company or Sellers:
Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, Wisconsin 53201
Attention: Timothy K. Hoelter, Esq.
Telecopy: (414) 935-4990
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert E. Spatt, Esq.
Telecopy: (212) 455-2502
(b) If to Buyer:
Monaco Coach Corporation
91320 Coburg Industrial Way
Coburg, Oregon 97408
Attention: Kay L. Toolson
Telecopy: (503) 998-2158
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Henry P. Massey, Jr., Esq.
Telecopy: (415) 493-6811
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the date of
personal delivery or telecopy or on the third business day after the
mailing thereof.
9.5. Entire Agreement. This Agreement (including the Exhibits
and Schedules hereto) constitutes the entire agreement between the parties
hereto and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter
hereof.
9.6. Binding Effect; Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.7. Bulk Sales Law. Buyer and the Sellers each agree to waive
compliance by the other with the provision of the bulk sales law of any
jurisdiction.
9.8. Assignability. This Agreement shall not be assignable by
the Sellers without the prior written consent of Buyer or by Buyer without
the prior written consent of the Sellers (such consents of either party
not to be unreasonably withheld), provided, that Buyer may assign its
rights and delegate its duties hereunder to an affiliate or affiliates, so
long as Buyer agrees to be jointly and severally liable for all
obligations hereunder; provided, further, that Buyer and its subsidiaries
may assign it rights hereunder as collateral security to lenders providing
acquisition financing for this transaction and any replacement thereof.
9.9. Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed
by the parties hereto. No waiver by either party of any of the provisions
hereof shall be effective unless explicitly set forth in writing and
executed by the party so waiving. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or agreements
contained herein, and in any documents delivered or to be delivered
pursuant to this Agreement and in connection with the Closing hereunder.
The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
9.10. Schedules. Any fact or item disclosed on any Schedule to
this Agreement shall be deemed disclosed on all other Schedules to this
Agreement to which such fact or item may reasonably apply so long as such
disclosure is in sufficient detail to enable a party hereto to identify
the facts or items to which it applies. Any fact or item disclosed on any
Schedule hereto shall not by reason only of such inclusion be deemed to be
material and shall not be employed as a point of reference in determining
any standard of materiality under this Agreement.
9.11. Section Headings; Table of Contents. The Section
headings contained in this Agreement and the Table of Contents to this
Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
9.12. Severability. If any provision of this Agreement shall
be declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be
affected and shall remain in full force and effect.
9.13. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
and all of which together shall be deemed to be one and the same
instrument.
9.14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Indiana without
regard to conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
HARLEY-DAVIDSON, INC.
By:
Title:
HOLIDAY RAMBLER LLC
By:
Title:
STATE ROAD PROPERTIES L.P.
By: HR LEASING CORP., its
General Partner
By:
Title:
MONACO COACH CORPORATION
By:
Title:
SCHEDULES TO ASSET PURCHASE AGREEMENT
Exhibit A
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated as of March , 1996 by MONACO COACH
CORPORATION, a Delaware corporation ("Assignee"), in favor of HARLEY-
DAVIDSON, INC., a Wisconsin corporation (the "Company"), HOLIDAY RAMBLER
LLC, an Indiana limited liability company ("HR"), and STATE ROAD
PROPERTIES L.P., a Delaware limited partnership ("SRP", and together with
HR, the "Assignors").
W I T N E S S E T H :
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of
January 21, 1996 (the "Purchase Agreement"), among the Company, the
Assignors, and the Assignee, the Assignors have sold, transferred,
assigned, conveyed and delivered to Assignee the properties, assets and
business comprising Assignors' R.V. Division (the "R.V. Division"); and
WHEREAS, the Purchase Agreement requires that Assignee undertake
to assume and to agree to perform, pay or discharge certain liabilities
and obligations of Assignors relating to the business of the R.V.
Division;
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt of which is hereby acknowledged,
the Assignors and Assignee agree as follows:
Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Purchase Agreement.
1. Assignee hereby undertakes, assumes and agrees to perform,
pay or discharge when due, to the extent not heretofore performed, paid or
discharged, and subject to the limitations contained in paragraph 2
hereof: (i) all obligations relating to the R.V. Division business under
contracts, commitments and agreements (except those obligations relating
to contracts specifically excluded from transfer under the Purchase
Agreement), including, without limitation, commitments for advertising,
all unfulfilled purchase orders and sales commitments; (ii) all
liabilities and obligations for returns of R.V. Division products sold
prior to the Closing Date; (iii) all liabilities and obligations for trade
promotion programs (including, without limitation, trade allowance
programs), consumer promotions and other marketing programs applicable to
R.V. Division products; (iv) all obligations under the licenses, permits
or franchises of the R.V. Division, except those disclosed on Schedule
1.1(g) to the Purchase Agreement; (v) all current liabilities and accrued
liabilities (excluding taxes referenced in Section 1.6(a) of the Purchase
Agreement) arising out of the operations of the R.V. Division, including,
but not limited to, (a) all products liability claims with respect to
products manufactured by the Assignors, (b) all liabilities related to the
presence, disposal, escape, seepage, leakage, discharge, emission, release
or threatened release of any substances or materials, or (c) all
liabilities related to or arising from the laws and regulations governing
the manufacture or sale of motor or recreational vehicles) and (vi) all
liabilities and obligations for any taxes and expenses described as
obligations of the Assignee in Section 9.2 of the Purchase Agreement.
2. It is expressly understood that Assignee is not assuming or
agreeing to perform, pay or discharge:
(a) liabilities of either of the Assignors for any taxes (other
than accrued property taxes or any taxes which the Assignee is responsible
for pursuant to Section 9.2 of the Purchase Agreement) arising from the
operations of the R.V. Division prior to the Closing Date;
(b) liabilities arising out of or related to the Excluded
Assets;
(c) liabilities to current, former or retired employees of the
Assignors arising out of or relating to their employment with the
Assignors or their termination by the Assignors; except for (i)
liabilities for Transitioned Employees for accrued vacation, whether
vested or unvested, (only to the extent that such accruals are consistent
with Assignee's accrued vacation policy) and accrued moving expenses and
(ii) liabilities arising out of Assignee's noncompliance with Section 6.7
of the Purchase Agreement;
(d) intercompany liabilities except obligations under the
Eaglemark Financial Services Floor Plan Repurchase Agreement;
(e) liabilities of either of the Sellers to third parties for
any funded debt; and
(f) except as otherwise provided herein, all debts, liabilities
and obligations that do not arise out of business of the R.V. Division or
the Assets.
3. Nothing contained herein shall require Assignee to pay,
perform or discharge any liabilities or obligations expressly assumed
hereunder so long as Assignee shall in good faith contest or cause to be
contested the amount or validity thereof, provided that Assignee shall
indemnify Assignors and their affiliates and hold them harmless against
any liabilities, damages, claims and expenses, including the reasonable
fees and expenses of their counsel, which Assignors may incur as a result
of any such contest and Assignors shall have no obligation to participate
in any way on Assignee's behalf or otherwise in or with respect to any
such contest.
4. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given if delivered
personally, if telecopied or if mailed, first class mail, postage prepaid,
return receipt requested, as follows:
(a) If to Assignors:
c/o Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, Wisconsin 53201
Attention: Timothy K. Hoelter, Esq.
Telecopy: (414) 935-4990
and copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert E. Spatt, Esq.
Telecopy: (212) 455-2502
(b) If to Assignee:
Monaco Coach Corporation
91320 Coburg Industrial Way
Coburg, Oregon 97408
Attention: Kay L. Toolson
Telecopy: (503)998-2158
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Henry P. Massey, Jr.
Telecopy: (415) 493-6811
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the date of hand
delivery or on the third business day after the mailing thereof.
5. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on
any person other than the parties hereto or their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
6. This Agreement shall not be assignable by any Assignor
(except to an affiliate thereof) without the prior written consent of
Assignee or by Assignee without the prior written consent of each of the
Assignors.
7. This Agreement may be amended, supplemented or otherwise
modified only by a written instrument executed by the parties hereto. No
waiver by either party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute
a waiver by the party taking such action of compliance with any covenants
or agreements contained herein and in any documents delivered or to be
delivered pursuant to this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
8. If any provision of this Agreement shall be declared by any
court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain
in full force and effect.
9. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
10. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Indiana without regard to
conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
HARLEY-DAVIDSON, INC.
By:
Title:
HOLIDAY RAMBLER LLC
By:
Title:
STATE ROAD PROPERTIES L.P.
By: HR LEASING CORP., its
General Partner
By:
Title:
MONACO COACH CORPORATION
By:
Title:
Exhibit C
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT, dated March __, 1996, among
HARLEY-DAVIDSON, INC., a Wisconsin corporation (the "Company"), HOLIDAY
RAMBLER LLC, an Indiana limited liability company ("HR"), STATE ROAD
PROPERTIES L.P., a Delaware limited liability partnership ("SRP"), and
together with HR, the "Sellers"), and MONACO COACH CORPORATION, a Delaware
corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of
January 21, 1996 (the "Purchase Agreement"), among the Company, the
Sellers and Buyer, the Sellers have sold, transferred, assigned, conveyed
and delivered to Buyer the properties, assets and business comprising the
R.V. Division line ("R.V. Division"); and
WHEREAS, in connection therewith, the Sellers and Buyer desire
that the Sellers provide for Buyer certain transition services as set
forth herein;
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt of which is hereby acknowledged,
the Sellers and Buyer agree as follows:
1. Transition Services. During the ___ month period (or such
other period as may be provided in Annex A attached hereto) commencing on
the date hereof (the "Transition Period"), the Sellers agree to provide to
Buyer or affiliates of Buyer, as may be requested from time to time by
Buyer and such affiliates, the same type, quality and relative level of
services as are set forth on Annex A attached hereto, which the Sellers
have provided to the R.V. Division at comparable times and periods during
the 24 full months preceding the date hereof. Such services will be
provided for charges as described in Annex A attached hereto.
2. Billing and Payment. Buyer agrees promptly to pay any bills
and invoices that it receives from the Sellers for services provided under
this Agreement, subject to receiving, if requested, any appropriate
support documentation for such bills and invoices. Such charges shall be
billed as of the end of each calendar month of the Transition Period and
the Sellers reserve the right to settle such charges by means of the cash
settlement procedures established pursuant to Section 3 below.
3. Cash Receipts/Disbursements. The Sellers agree promptly to
establish procedures relating to the timely settlement of cash receipts
and disbursements relating to the collection of accounts receivable and
payments for payroll and accounts payable made by the Sellers for Buyer's
account. These receipts/disbursements will be settled monthly and the
mode of payment will be bank check.
4. General Intent. The Sellers agree to use commercially
reasonable efforts to provide all transition assistance which Buyer or its
affiliates may reasonably request during the Transition Period. Buyer and
its affiliates agree to use commercially reasonable efforts to end their
need to use such assistance as soon as reasonably possible and in all
events (unless the parties otherwise agree) not later than the end of the
Transition Period. In particular, Buyer agrees to institute separate cash
management systems as soon as possible.
5. Validity of Documents. The parties hereto shall be entitled
to rely upon the genuineness, validity or truthfulness of any document,
instrument or other writing presented in connection with the Agreement
unless such document, instrument or other writing appears on its face to
be fraudulent, false or forged.
6. Partial Termination. Except as indicated on Annex A hereof,
all services initially chosen by Buyer and its affiliates hereunder are
only terminable by Buyer and its affiliates on 30 days prior written
notice. Any such termination shall be final.
7. Assignment. This agreement shall not be assignable in whole
or in part by either party hereto without the prior written consent of the
other, provided, that the Sellers may assign this Agreement in whole or in
part to an affiliate, successor or transferee thereof, but only to the
extent that a sale or other transfer of such Seller's operations
reasonably requires such transfer for the performance of its services
hereunder and provided further that Buyer may assign this Agreement to one
of its affiliates.
8. Confidentiality. The Sellers shall hold all information
relating to the R.V. Division confidential and will not disclose any of
such information to any party for a period of two years from the
expiration of this Agreement unless legally compelled to disclose such
information, provided, however, that the Sellers shall be entitled to
disclose such information to parties subject to standard confidentiality
agreements executed in connection with any sale or possible sale of the
business, stock or assets of the Sellers.
9. Effective Date. This Agreement shall become effective on
the Closing Date as such date is defined in the Purchase Agreement and
prior to such time shall have no force or effect. If the Purchase
Agreement is terminated as provided for therein prior to the Closing Date,
this Agreement shall terminate without any further action of the parties
hereto and neither party shall have any liability to the other with
respect to the provisions contained herein.
10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Indiana without reference to the
choice of law principles thereof. Any action to enforce, which arises out
of or in any way relates to, any of the provisions of this Agreement or
the Annex attached hereto shall be brought and prosecuted in such court or
courts located in Indiana as are permitted by law.
11. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
IN WITNESS WHEREOF, the parties have signed this Transition
Agreement on the date first set forth above.
HARLEY-DAVIDSON, INC.
By:
Title:
HOLIDAY RAMBLER LLC
By:
Title:
STATE ROAD PROPERTIES L.P.
By: HR LEASING CORP., its
General Partner
By:
Title:
MONACO COACH CORPORATION
By:
Title:
Annex A to Transition Services Agreement
R.V. Division
TRANSITION SERVICES
(All services will be priced at cost)
SERVICE METHODOLOGY FOR CHARGES
Consumer Information No Charge: Seller will forward all
correspondence directly to Buyer.
Purchasing/Commodities $[ ] per month
Engineering (Divisional) Project man hours charged at the following
rates:
- Design/Drafting: $[ ] per hour
- Engineering: $[ ] per hour
Centralized Financial - Plant: $[ ] per month
Systems/
Accounting Services
(See Annex A-1) - Plant Manufacturing
Cost System Maintenance:
Project man hours charged
at a rate of [$ ] per hour
- (Accounting Services): $[ ] per month
- (Financial Systems): $[ ] per
month
- Plant leased communication
line: $[ ] per month plus usage
Credit $[ ] per month
Customer Service $[ ] per month
Selling (Divisional) $[ ] per month + [ ]% of net invoice
value (brokerage)
Distribution Expense:
Warehousing A standard rate developed exclusively for
each distribution center (both public and
company operated) which is applied to the
product's gross shipping weight.
Transportation A standard rate developed for each unique
set of origin/destination points which is
applied to the product's gross shipping
weight (except transportation to customers
which is based on a weighted average of all
customer shipments from a specific
warehouse).
Any other services as the parties hereto shall mutually agree to
be provided shall be priced at cost.
Annex A-1 to Transition Services Agreement
R.V. Division
(All services will be priced at cost)
FINANCIAL SYSTEMS/ACCOUNTING SERVICES
Plant Monthly Cost
General Ledger $ [__]
Accounts Payable [__]
Payroll [__]
Fixed Assets [__]
Finished Product Inventory
Reporting System [ ]
$ [__]
Financial Systems:
General Ledger $ [__]
Accounts Payable [__]
Fixed Assets [__]
Accts. Receivable [__]
Payroll [ ]
TOTAL $ [__]
Account Services:
Payroll $ [__]
Accounts Payable [__]
Broker Commission Processing [__]
Sales Accounting [__]
Accounts Receivable Journal Processing [__]
Sales Allowance/Promotion Processing [__]
Finished Product Accounting
(samples, spoilage, etc.) [__]
Short Pay/Dispute Processing [ ]
TOTAL $ [__]
GRAND TOTAL $[___]
Amendment No. 1 dated as of March 4, 1996 to ASSET PURCHASE
AGREEMENT, dated as of January 21, 1996 among HARLEY-DAVIDSON, INC., a
Wisconsin corporation (the "Company"), HOLIDAY RAMBLER LLC, an Indiana
limited liability company ("HR"), STATE ROAD PROPERTIES L.P., a Delaware
limited partnership ("SRP" and together with HR, the "Sellers") and MONACO
COACH CORPORATION, a Delaware corporation ("Buyer") (the "Agreement").
W I T N E S S E T H:
WHEREAS, the parties to the Agreement desire to amend the
Agreement in accordance with Section 9.9 of the Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants of the parties hereto, it is hereby agreed as follows:
1. Amendment of Section 2.2. Section 2.2 of the Agreement is
hereby amended by deleting it in its entirety and substituting in lieu
thereof the following:
2.2 Purchase Price and Payment. In
consideration for the Assets, and subject to the terms
and conditions of this Agreement, Buyer shall on the
Closing Date (i) assume the Assumed Liabilities as
provided in Section 1.5 hereof, (ii) transfer to HR
(A) $21,088,762 by wire transfer in immediately
available funds to an account designated in writing by
HR to Buyer at least 2 business days prior to the
Closing Date and (b) at Buyer's option either (x) an
additional $3.0 million by wire transfer in the same
manner as set forth above or (y) 65,217 shares of
Buyer's Series A Convertible Preferred Stock, par
value $.01 per share (the "Preferred Stock"), having
such rights, preferences, privileges and restrictions
as are set forth in the Certificate of Designation for
such stock attached hereto as Exhibit B (the
"Certificate of Designations") and (iii) transfer to
SRP $1,261,238 by wire transfer in immediately
available funds to an account designated in writing by
SRP to Buyer at least 2 business days prior to the
Closing Date. The value tendered by Buyer pursuant to
this Section 2.2, as adjusted pursuant to the
provisions of Section 2.3 below, shall be hereinafter
referred to as the "Purchase Price". The Purchase
Price and the Assumed Liabilities shall be allocated
among the Assets in a manner to be agreed upon by the
Sellers and Buyer consistent with Section 1060 of the
Code (as defined below). Buyer and the Sellers agree
to act in accordance with such allocations in all tax
returns, tax reports and tax filings filed on or after
the Closing Date, unless otherwise required by law.
2. Amendment of Section 2.3(d). Section 2.3(d) of the
Agreement is hereby amended by deleting it in its entirety and
substituting in lieu thereof the following:
(d) In the event the Net Book Value as derived
from the Adjusted Closing Statement is less than $26.6
million, Buyer shall be paid an amount equal to the
difference between (x) $26.6 million and (y) Net Book
Value as derived from the Adjusted Closing Statement.
Any payment required by this first sentence of Section
2.3(d) shall be made by Sellers to Buyer within 5
business days after the issuance of the Adjusted
Closing Statement by wire transfer in immediately
available funds to an account designated by Buyer.
3. Amendment of Section 2.3(e). Section 2.3(e) of the
Agreement is hereby amended by deleting it in its entirety and
substituting in lieu therefor the following:
(e) In the event the Net Book Value as derived
from the Adjusted Closing Statement is greater than
$26.6 million, Sellers shall be paid an amount equal
to the excess of the Net Book Value as derived from
the Adjusted Closing Statement over $26.6 million.
Any payment required to be made by Buyer to Sellers
pursuant to this Section 2.3(e) shall be made by Buyer
by wire transfer in immediately available funds to an
account designated by Sellers.
4. Amendment of Section 9.3(a)(iii). Section 9.3(a)(iii) of
the Agreement is hereby amended by deleting it in its entirety and
substituting in lieu thereof the following:
(iii) any actual Damages incurred or sustained by Buyer as
a result of any breach by the Company or the Sellers of the
representations and warranties set forth in Section 3.1,
provided that (W) the Company and HR shall be required to
indemnify Buyer pursuant to this clause (iii) for any such
breach or breaches only to the extent that the aggregate
actual Damages resulting from such breaches exceeds
$300,000, (X) neither the Company nor HR shall be required
to indemnify Buyer pursuant to this clause (iii) in an
aggregate amount in excess of (1) $5 million for the
breaches of any representations or warranties contained in
Section 3.1 (except for Section 3.1(p)) or (2) $10 million
less the amount of any expenditures made by the Company or
HR pursuant to the terms of that certain Environmental
Matters Agreement dated as of March 4, 1996 among the
parties hereto; for the breaches of any representations or
warranties contained in Section 3.1(p)), (Y) Buyer agrees
to aggregate its claims pursuant to this clause (iii) so
that the aggregate amount of the claims is $25,000 or
greater, and (Z) any claim for indemnification under this
clause (iii) must be made in writing in reasonable detail
to the Company and HR by the Buyer not later than April 30,
1997, or such longer period with respect to a breach of a
specific representation or warranty that is set forth in
Schedule 3.3; provided, further, that for the purposes of
this Section 9.3(a)(iii), the representations and
warranties of the Company and Sellers contained in Section
3.1 of this Agreement which by their terms contain any
qualification or limitation with respect to a Material
Adverse Effect, or are otherwise qualified or limited with
respect to materiality, shall be read without giving effect
to any such qualification or limitation and
5. Effectiveness. This Amendment No. 1 shall become effective
as of the date first above written upon receipt by each party hereto of
counterparts of this Amendment No. 1, duly executed by the parties hereto.
Upon the effectiveness of this Amendment No. 1, all references in the
Agreement to the "Agreement" shall be deemed references to the Agreement
and this Amendment No. 1.
6. Limited Effect. Except as expressly amended, waived,
modified or supplemented hereby, all of the covenants and provisions of
the Agreement shall continue to be in full force and effect in accordance
with their respective terms. The amendments contained herein shall be
limited precisely as drafted and narrowly construed and shall not
constitute an amendment or waiver of any other provision of the Agreement.
7. GOVERNING LAW. THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF INDIANA WITHOUT
REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
8. Counterparts. This Amendment No. 1 may be executed by the
parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have caused this Amendment
No. 1 to be duly executed and delivered as of the date first above
written.
HARLEY-DAVIDSON, INC.
By: __________________________
Title:
HOLIDAY RAMBLER LLC
By: __________________________
Title:
STATE ROAD PROPERTIES L.P.
By: HR LEASING CORP., its
General Partner
By: __________________________
Title:
MONACO COACH CORPORATION
By: __________________________
Title:
SUBORDINATED PROMISSORY NOTE
$12,000,000 March 4, 1996
Los Angeles, California
FOR VALUE RECEIVED, MCC ACQUISITION CORPORATION, a Delaware
corporation ("Company") promises to pay to HOLIDAY HOLDING CORP., a Texas
corporation ("Holder"), or its registered assigns, the principal sum of
Twelve Million Dollars ($12,000,000), or such lesser amount as shall equal
the outstanding principal amount hereof, together with interest from the
date of this Note on the unpaid principal balance at the rate specified in
Section 2. All unpaid principal, together with any then unpaid and
accrued interest and other amounts payable hereunder, shall be due and
payable on the earlier of (i) the third anniversary of the date hereof, or
(ii) when, upon or after the occurrence of an Event of Default (as defined
below), such amounts are declared due and payable by Holder or become
automatically due and payable in accordance with the terms hereof.
The following is a statement of the rights of Holder and the
conditions to which this Note is subject, and to which Holder, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following
capitalized terms have the following meanings:
(a) "Asset Purchase Agreement" shall mean that certain
Asset Purchase Agreement, dated as of March 4, 1996, among Company,
Holder, Harley-Davidson, Inc., Holiday World, Inc. (California), Holiday
World, Inc. (Texas), Holiday World, Inc. (Florida), Holiday World, Inc.
(Oregon), Holiday World, Inc. (Indiana), Holiday World, Inc. (Washington),
Holiday World, Inc. (New Mexico) and Parent.
(b) "Company" includes the corporation initially executing
this Note and any Person which shall succeed to or assume the obligations
of Company under this Note.
(c) "Credit Agreement" shall mean that certain Credit
Agreement, dated as of March 5, 1996, among Parent, the financial
institutions named therein, and BT Commercial Corporation, as Agent for
such financial institutions, as it may be supplemented, amended, extended,
amended and restated or otherwise modified from time to time, together
with any credit, loan or note purchase agreement replacing or refinancing
such the obligations thereunder.
(d) "EBITDA" shall mean for any fiscal year the net income
(loss) of Company (excluding extraordinary gains and non-cash
extraordinary losses) for such fiscal year (i) plus all interest expense,
tax expense, depreciation and amortization (including amortization of
goodwill and other intangibles) for such period, (ii) less gains or plus
losses attributable to any fixed asset sales in the period, and (iii) plus
or minus any other non-cash charges which have been subtracted or added in
calculating consolidated net income for the period.
(e) "Event of Default" has the meaning given in Section 5
hereof.
(f) "Excess Cash Flow" shall mean for any fiscal year
EBITDA of Company for such fiscal year minus (or plus) any increases (or
decreases) in working capital, minus the sum of the following items for
that year: (i) interest expense paid in cash, (ii) taxes paid in cash,
(iii) principal payments on or mandatory redemptions of indebtedness, (iv)
capital expenditures paid in cash; and (v) environmental cleanup
expenditures paid in cash but not deducted in the determination of net
income.
(g) "Holder" shall mean the Person specified in the
introductory paragraph of this Note or any Person who shall at the time be
the registered holder of this Note.
(h) "Lien" shall mean, with respect to any property, any
security interest, mortgage, pledge, lien, claim, charge or other
encumbrance in, of, or on such property or the income therefrom,
including, without limitation, the interest of a vendor or lessor under a
conditional sale agreement, capital lease or other title retention
agreement, or any agreement to provide any of the foregoing, and the
filing of any financing statement or similar instrument under the Uniform
Commercial Code or comparable law of any jurisdiction.
(i) "Net Cash Proceeds" shall mean, with to any sale,
transfer or other voluntary or involuntary disposition of any assets of
Company (other than the sale of inventory or worn out or obsolete
equipment in the ordinary course of business), the aggregate amount of
cash consideration actually received by Company (including cash received
in payment of any delayed purchase price or upon a release from an escrow
or holdback, but only upon the actual receipt of such cash) in connection
with such transaction after deduction of (i) all reasonable and customary
fees, costs and expenses directly incurred by Company in connection
therewith, including without limitation, reasonable and customary finders
fees and reasonable fees and expenses of counsel, (ii) environmental
clean-up costs (or reserves with respect to estimated costs thereof)
associated or required in connection with the assets disposed of, and
(iii) any tax liability associated therewith.
(j) "Parent" shall mean Monaco Coach Corporation, a
Delaware corporation.
(k) "Permitted Liens" shall mean and include: (i) Liens
for taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith; (ii)
Liens of carriers, warehousemen, mechanics, materialmen, vendors, and
landlords incurred in the ordinary course of business for sums not overdue
or being contested in good faith; (iii) deposits under workers'
compensation, unemployment insurance and social security laws or to secure
the performance of bids, tenders, contracts (other than for the repayment
of borrowed money) or leases, or to secure statutory obligations of surety
or appeal bonds or to secure indemnity, performance or other similar bonds
in the ordinary course of business; (iv) Liens securing obligations under
a capital lease if such lease is permitted hereunder and such Liens do not
extend to property other than the property leased under such capital
lease; (v) Liens upon any equipment acquired or held by Company to secure
the purchase price of such equipment or indebtedness incurred solely for
the purpose of financing the acquisition of such equipment; (vi)
easements, reservations, rights of way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances
affecting real property in a manner not materially or adversely affecting
the value or use of such property; (vii) Liens constituting rights of set
off or banker's liens, whether statutory or contractual, in favor of
depository institutions at which Company maintains bank accounts in the
ordinary course of business; (viii) Liens consisting of negative pledges
on the assets of Company pursuant to the terms of the Credit Agreement;
(ix) Liens on inventory (and accessions thereto and replacements and
proceeds thereof) in favor of financial institutions providing financing
of inventory, but only to the extent that such Liens secure such
financing; and (x) existing Liens set forth on Schedule 1 hereto.
(l) "Person" shall mean and include an individual, a
partnership, a corporation (including a business trust), a joint stock
company, a limited liability company, an unincorporated association, a
joint venture or other entity or a governmental authority.
(m) "Senior Guarantee" shall mean that certain Guarantee,
dated as of March 5, 1996, executed by Company in favor of BT Commercial
Corporation, as Agent under the Credit Agreement, as it may be
supplemented, amended, extended, amended and restated or otherwise
modified from time to time, or any other guarantee required of obligations
under the Credit Agreement.
(n) "Senior Indebtedness" shall mean all amounts owing
from time to time under the terms of the Senior Guarantee and shall
include all of the obligations under the Credit Agreement which are the
subject of the Senior Guarantee.
2. Interest Payments.
(a) Rate of Interest. Interest shall accrue on the outstanding
principal balance of this Note at a rate equal to the prime lending rate
announced from time to time by Bankers Trust Company minus one-half of one
percent (0.5%), such rate to change from time to time as such prime
lending rate changes.
(b) Payments. Interest on this Note shall be payable in the
amount of Thirty Thousand Dollars ($30,000) on each March 31, June 30,
September 30 and December 31; provided that (i) on March 31, 1996, the
payment shall be prorated based upon the number of days in the calendar
quarter then ending and the number of days from (but not including) the
date hereof through (and including) March 31, 1996, and (ii) if the
interest accrued and unpaid on any such date is less than Thirty Thousand
Dollars ($30,000), the amount payable shall be the amount then accrued and
unpaid. Interest accrued, but not paid according to the preceding
sentence, shall continue to accrue until paid upon the maturity of this
Note or as set forth in Section 3 hereof.
3. Prepayments.
(a) Mandatory Prepayments. Company shall make mandatory
prepayments of this Note (i) on April 30 of each year commencing with
April 30, 1997, in an amount equal to fifty percent (50%) of Excess Cash
Flow determined for the then most recently ended fiscal year; and (ii)
within two (2) business days after Company actually receives any Net Cash
Proceeds, in an amount equal to the lesser of (A) the Net Cash Proceeds
actually received and (B) the outstanding unpaid principal and interest
payable under this Note. Any such prepayment will be applied first to
interest accrued and unpaid on this Note and second, if the amount of the
prepayment exceeds the amount of all such accrued and unpaid interest, to
the payment of principal of this Note.
(b) Optional Prepayments. Company may prepay this Note
voluntarily in whole or in part at any time and any such prepayment will
be applied first to interest accrued and unpaid on this Note and second,
if the amount of the prepayment exceeds the amount of all such accrued and
unpaid interest, to the payment of principal of this Note.
4. Certain Covenants.
(a) Negative Pledge. While any amount is outstanding under the
Note, without the prior written consent of Holder, the Company shall not
create, incur, assume or permit to exist any Lien on or with respect to
any of its assets or property of any character, whether now owned or
hereafter acquired, except for Permitted Liens.
(b) Dividends, Etc. Until all of the obligations hereunder are
paid in full, Company shall not (i) make any dividends or distributions on
its capital stock or (ii) make any payments to Parent in respect of
corporate services rendered.
5. Events of Default. The occurrence of any of the following
shall constitute an "Event of Default" under this Note:
(a) Failure to Pay. Company shall fail to pay (i) when due any
principal payment on the due date hereunder or (ii) any interest or other
payment required under the terms of this Note within five (5) days of the
date due; or
(b) Breach of Covenants. Company shall fail to observe or
perform the covenants set forth in Section 4 of this Note or any other
covenant or agreement set forth herein; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. Company or
Parent shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a substantial part
of its property, (ii) be unable, or admit in writing its inability, to pay
its debts generally as they mature, (iii) make a general assignment for
the benefit of its or any of its creditors, (iv) be dissolved or
liquidated, (v) become insolvent (as such term may be defined or
interpreted under any applicable statute), (vi) commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or consent to any such relief
or to the appointment of or taking possession of its property by any
official in an involuntary case or other proceeding commenced against it,
or (vii) take any action for the purpose of effecting any of the
foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings.
Proceedings for the appointment of a receiver, trustee, liquidator or
custodian of Company or Parent or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to Company or
Parent or the debts thereof under any bankruptcy, insolvency or other
similar law now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged
within thirty (30) days of commencement; or
(e) Payment Demand. The maturity of the Senior Indebtedness
shall have been accelerated by the holder(s) thereof pursuant to the terms
of the Credit Agreement and such holder(s) have made demand under the
Senior Guarantee; or
(f) Sale of Parent. The Parent shall sell, assign, transfer or
otherwise dispose of all or substantially all of its assets (other than
the grant of security interests therein).
6. Rights of Holder upon Default. Upon the occurrence or
existence of any Event of Default (other than an Event of Default referred
to in Sections 5(c) and 5(d)) and at any time thereafter during the
continuance of such Event of Default, Holder may by written notice to
Company, declare all outstanding obligations payable by Company hereunder
to be immediately due and payable without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived,
anything contained to the contrary notwithstanding. Upon the occurrence
or existence of any Event of Default described in Sections 5(c) and 5(d),
immediately and without notice, all outstanding obligations payable by
Company hereunder shall automatically become immediately due and payable,
without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived, anything contained herein to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, Holder may exercise any
other right, power or remedy permitted to it by law, either by suit in
equity or by action at law, or both.
7. Subordination. THIS NOTE IS SUBORDINATED AS AND TO THE
EXTENT SET FORTH IN THAT CERTAIN INTERCREDITOR AGREEMENT, DATED AS OF
MARCH 5, 1996, AMONG HOLDER AND BT COMMERCIAL CORPORATION, AS AGENT FOR
CERTAIN FINANCIAL INSTITUTIONS.
8. Successors and Assigns. Subject to the restrictions on
transfer described in Section 11 below, the rights and obligations of
Company and Holder of this Note shall be binding upon and benefit the
successors, assigns, heirs, administrators and transferees of the parties.
9. Waiver and Amendment. Any provision of this Note may be
amended, waived or modified upon the written consent of Company and
Holder.
10. Transfer of this Note. Transfers of this Note shall be
registered upon registration books maintained for such purpose by or on
behalf of Company. Prior to presentation of this Note for registration of
transfer, Company shall treat the registered holder hereof as the owner
and holder of this Note for the purpose of receiving all payments of
principal and interest hereon and for all other purposes whatsoever,
whether or not this Note shall be overdue.
11. Assignment by Company. Neither this Note nor any of the
rights, interests or obligations hereunder may be assigned, by operation
of law or otherwise, in whole or in part, by Company without the prior
written consent of Holder except in connection with an assignment in whole
to a successor corporation to Company, provided that such successor
corporation acquires all or substantially all of Company's property and
assets and Holder's rights hereunder are not impaired.
12. Notices. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered or mailed by registered or
certified mail, postage prepaid, or by recognized overnight courier or
personal delivery at the respective addresses of the parties as set forth
in the Asset Purchase Agreement or on the register maintained by Company.
Any party hereto may by notice so given change its address for future
notice hereunder. Notice shall conclusively be deemed to have been given
when received.
13. Payment. Payment shall be made in lawful tender of the
United States.
14. Usury. In the event any interest is paid on this Note
which is deemed to be in excess of the then legal maximum rate, then that
portion of the interest payment representing an amount in excess of the
then legal maximum rate shall be deemed a payment of principal and applied
against the principal of this Note.
15. Expenses; Waivers. If action is instituted to collect this
Note, Company promises to pay all reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees and costs,
incurred in connection with such action. Company hereby waives notice of
default, presentment or demand for payment, protest or notice of
nonpayment or dishonor and all other notices or demands relative to this
instrument.
16. Governing Law. This Note and all actions arising out of or
in connection with this Note shall be governed by and construed in
accordance with the laws of the State of Indiana, without regard to the
conflicts of law provisions of the State of Indiana or of any other state.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Company has caused this Note to be issued as
of the date first written above.
MCC ACQUISITION CORPORATION,
a Delaware corporation
By:
Name:
Title:
