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EXHIBIT 2.4
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ACQUISITION AGREEMENT
dated as of the 12th day of January, 1999
by and among
RV CENTERS, INC.
▇▇▇▇▇ MOTORS, INC.
and all of
the STOCKHOLDERS of ▇▇▇▇▇ MOTORS, INC.
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TABLE OF CONTENTS
Page
RECITALS .........................................................................................................1
1. ACQUISITION OF STOCK.....................................................................................5
1.1 Acquisition.....................................................................................5
1.2 Consideration...................................................................................5
1.3 Certain Information With Respect to the Capital Stock of the Company
and RV Centers..................................................................................5
2. DELIVERY OF CONSIDERATION................................................................................6
2.1 Stockholders' Consideration.....................................................................6
2.2 Stockholders' Deliveries........................................................................6
3. CLOSING..................................................................................................6
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.......................................................7
4.1 Due Organization................................................................................7
4.2 Authorization...................................................................................7
4.3 Capital Stock of the Company....................................................................8
4.4 Transactions in Capital Stock; Organization Accounting..........................................8
4.5 No Bonus Shares.................................................................................8
4.6 Subsidiaries; Ownership in Other Entities.......................................................8
4.7 Predecessor Status; etc.........................................................................9
4.8 Spin-off by the Company.........................................................................9
4.9 Financial Statements............................................................................9
4.10 Liabilities and Obligations....................................................................10
4.11 Accounts and Notes Receivable..................................................................10
4.12 Permits and Intangibles........................................................................11
4.13 Environmental Matters..........................................................................11
4.14 Personal Property..............................................................................13
4.15 Significant Customers and Suppliers; Material Contracts
and Commitments................................................................................13
4.16 Real Property..................................................................................14
4.17 Insurance......................................................................................15
4.18 Compensation; Employment Agreements; Labor Matters.............................................15
4.19 Employee Plans.................................................................................16
4.20 Compliance with ERISA..........................................................................16
4.21 Conformity with Law; Litigation................................................................17
4.22 Taxes..........................................................................................18
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4.23 No Violations; No Consent Required, Etc........................................................19
4.24 Government Contracts...........................................................................20
4.25 Absence of Changes.............................................................................20
4.26 Deposit Accounts; Powers of Attorney...........................................................22
4.27 Validity of Obligations........................................................................22
4.28 Relations with Governments.....................................................................22
4.29 Disclosure.....................................................................................22
4.30 Prohibited Activities..........................................................................23
4.31 No Warranties or Insurance.....................................................................23
4.32 Interest in Customers and Suppliers and Related Party Transactions.............................23
4.33 Registration Statement.........................................................................24
4.34 Inventory......................................................................................24
4.35 Year 2000......................................................................................24
4.36 Authority; Ownership...........................................................................25
4.37 Preemptive Rights..............................................................................25
5. REPRESENTATIONS OF RV CENTERS...........................................................................25
5.1 Due Organization...............................................................................25
5.2 Authorization..................................................................................25
5.3 Capital Stock of RV Centers....................................................................26
5.4 Transactions in Capital Stock; Organization Accounting.........................................26
5.5 Subsidiaries...................................................................................26
5.6 No Violations..................................................................................26
5.7 Validity of Obligations........................................................................27
5.8 RV Centers Stock...............................................................................27
5.9 Business; Real Property; Material Agreements...................................................28
5.10 Investment Representations.....................................................................28
5.11 Authorization of Other Agreements..............................................................28
5.12 Financial Statements...........................................................................28
5.13 Liabilities and Obligations....................................................................29
5.14 Conformity with Law; Litigation................................................................29
5.15 No Side Agreements.............................................................................29
5.16 Relations with Governments.....................................................................29
5.17 Other Agreements...............................................................................29
5.18 Registration Statement.........................................................................30
5.19 Disclosure.....................................................................................30
6. COVENANTS PRIOR TO CLOSING..............................................................................30
6.1 Access and Cooperation; Due Diligence..........................................................30
6.2 Conduct of Business Pending Closing............................................................31
6.3 Prohibited Activities..........................................................................32
6.4 No Shop........................................................................................33
6.5 Agreements.....................................................................................34
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6.6 Notification of Certain Matters................................................................34
6.7 Amendment of Schedules.........................................................................34
6.8 Cooperation in Preparation of Registration Statement...........................................35
6.9 Final Financial Statements.....................................................................36
6.10 Further Assurances.............................................................................36
6.11 Compliance with the ▇▇▇▇-▇▇▇▇▇ Act.............................................................36
6.12 Transfers of Permits and Intangibles...........................................................36
6.13 Dividends......................................................................................36
6.14 Authorized Capital.............................................................................36
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS
AND COMPANY.............................................................................................37
7.1 Representations and Warranties; Performance of Obligations.....................................37
7.2 No Litigation..................................................................................38
7.3 Opinions.......................................................................................38
7.4 Registration Statement; Minimum Value..........................................................38
7.5 Consents and Approvals.........................................................................38
7.6 Good Standing Certificates.....................................................................38
7.7 No Material Adverse Change.....................................................................38
7.8 Closing of IPO.................................................................................39
7.9 Secretary's Certificate........................................................................39
7.10 Employment Agreements..........................................................................39
7.11 Other Founding Companies.......................................................................39
7.12 Management Lock-Up Agreements..................................................................39
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RV CENTERS.......................................................39
8.1 Representations and Warranties; Performance of Obligations.....................................40
8.2 No Litigation..................................................................................40
8.3 Secretary's Certificate........................................................................40
8.4 No Material Adverse Effect.....................................................................40
8.5 Stockholders' Release..........................................................................40
8.6 Termination of Related Party Agreements........................................................41
8.7 Opinion of Counsel.............................................................................41
8.8 Consents and Approvals.........................................................................41
8.9 Good Standing Certificates.....................................................................41
8.10 Registration Statement.........................................................................41
8.11 Employment Agreements..........................................................................41
8.12 Closing of IPO.................................................................................41
8.13 FIRPTA Certificate.............................................................................41
8.14 Resignations of Directors......................................................................42
8.15 Lease Agreements...............................................................................42
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9. COVENANTS OF RV CENTERS AND THE STOCKHOLDERS
AFTER CLOSING...........................................................................................42
9.1 Preservation of Tax and Accounting Treatment...................................................42
9.2 Preparation and Filing of Tax Returns..........................................................42
9.3 Directors......................................................................................43
9.4 Release From Guarantees; Repayment of Certain Obligations......................................43
9.5 Access to Records..............................................................................44
10. INDEMNIFICATION.........................................................................................44
10.1 Indemnification by the Stockholders............................................................44
10.2 Indemnification by RV Centers..................................................................45
10.3 Third Person Claims............................................................................46
10.4 Exclusive Remedy...............................................................................47
10.5 Limitations on Indemnification.................................................................47
10.6 Tax Indemnification by the Stockholders........................................................48
11. TERMINATION OF AGREEMENT................................................................................48
11.1 Termination....................................................................................48
11.2 Liabilities in Event of Termination............................................................49
11.3 Return of Stock Certificates...................................................................49
12. NONCOMPETITION..........................................................................................49
12.1 Prohibited Activities..........................................................................49
12.2 Damages........................................................................................50
12.3 Reasonable Restraint...........................................................................50
12.4 Severability; Reformation......................................................................51
12.5 Independent Covenant...........................................................................51
12.6 Materiality....................................................................................51
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION...............................................................51
13.1 Stockholders...................................................................................51
13.2 RV Centers.....................................................................................52
13.3 Damages........................................................................................52
13.4 Survival.......................................................................................52
14. TRANSFER RESTRICTIONS...................................................................................53
14.1 Transfer Restrictions..........................................................................53
15. FEDERAL SECURITIES ACT REPRESENTATIONS..................................................................54
15.1 Compliance with Law............................................................................54
15.2 Economic Risk; Sophistication..................................................................54
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16. REGISTRATION RIGHTS.....................................................................................55
16.1 Piggyback Registration Rights..................................................................55
16.2 Registration Procedures........................................................................55
16.3 Indemnification................................................................................56
16.4 Underwriting Agreement.........................................................................58
16.5 Rule 144 Reporting.............................................................................58
16.6 Availability of Rule 144.......................................................................58
17. GENERAL.................................................................................................58
17.1 Cooperation....................................................................................58
17.2 Successors and Assigns.........................................................................59
17.3 Entire Agreement...............................................................................59
17.4 Counterparts...................................................................................59
17.5 Brokers and Agents.............................................................................59
17.6 Expenses.......................................................................................59
17.7 Notices........................................................................................60
17.8 Governing Law..................................................................................61
17.9 Exercise of Rights and Remedies................................................................61
17.10 Time...........................................................................................61
17.11 Reformation and Severability...................................................................62
17.12 Remedies Cumulative............................................................................62
17.13 Captions.......................................................................................62
17.14 Amendments and Waivers.........................................................................62
17.15 Dispute Resolution.............................................................................62
17.16 References, Gender, Number.....................................................................63
17.17 Sole Stockholder...............................................................................63
17.18 Schedules and Annexes..........................................................................63
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ANNEXES
Annex I - Consideration to Be Paid to Stockholders
Annex II - Certificate of Incorporation and By-Laws of RV Centers
Annex III - Form of Opinion of Counsel to RV Centers
Annex IV - Form of Opinion of Counsel to Company and Stockholders
Annex V - Form of Founder Employment Agreement
Annex VI - Form of Lease Agreement
SCHEDULES
4.1 Due Organization
4.2 Authorization
4.3 Capital Stock of the Company
4.4 Transactions in Capital Stock; Organization Accounting
4.5 No Bonus Shares
4.6 Subsidiaries; Ownership in Other Entities
4.7 Predecessor Status; etc
4.8 Spin-off by the Company
4.9 Financial Statements
4.10(a) Liabilities and Obligations
4.10(b) Trade Account Payables etc. and Copies of Loan Agreements
4.11 Accounts and Notes Receivable
4.12 Permits and Intangibles
4.13 Environmental Matters
4.14 Personal Property
4.15(a) Significant Customers and Suppliers
4.15(b) Material Contracts and Commitments
4.16 Real Property
4.17 Insurance
4.18 Compensation; Employment Agreements; Labor Matters
4.19 Employee Plans
4.20 Compliance with ERISA
4.21 Conformity with Law; Litigation
4.22 Taxes
4.23(a) Defaults
4.23(b) Violations or Defaults Arising From This Agreement
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4.23(c) Notices Required By Material Documents
4.23(e) Restrictions Imposed By Material Documents
4.24 Government Contracts
4.25 Absence of Changes
4.26 Deposit Accounts; Powers of Attorney
4.30 Prohibited Activities
4.31 No Warranties or Insurance
4.32 Interest in Customers and Suppliers and Related Party Transactions
4.34 Inventory in Interim Financial Statements
5.2 Authorization
5.3 Authorized Capital Stock of RV Centers
5.17 Unique Terms in Other Agreements
6.2 Conduct of Business Pending Closing
6.3 Prohibited Activities
6.5 Agreements
8.6 Termination of Related Party Agreements
8.11 Employment Agreements
9.4 Release From Guarantees; Repayment of Certain Obligations
12.1 Prohibited Activities
15.2 Non-accredited Investors
17.5 Brokers and Agents
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made as of the 12th day
of January, 1999, by and among RV Centers, Inc., a Delaware corporation ("RV
Centers"), ▇▇▇▇▇ Motors, Inc., a Colorado corporation (the "Company") and the
stockholders listed on the signature pages of this Agreement (the
"Stockholders"), who are all the stockholders of the Company.
RECITALS
WHEREAS, as of the date hereof, the Stockholders own, and as of the
Consummation Date the Stockholders will own, all of the issued and outstanding
capital stock of the Company (the "Company Stock");
WHEREAS, RV Centers is entering into other separate agreements
substantially similar to this Agreement (the "Other Agreements") with each of
the Other Founding Companies (as defined herein) and their respective
stockholders in order to acquire additional recreational vehicle dealership
companies;
WHEREAS, this Agreement and the Other Agreements constitute the "RV
Centers Plan of Organization;"
WHEREAS, the Stockholders and the boards of directors and the
stockholders of RV Centers and each of the Other Founding Companies that are
parties to the Other Agreements have approved and adopted the RV Centers Plan of
Organization as an integrated plan pursuant to which the Stockholders and the
stockholders of each of the Other Founding Companies (as defined herein) will
transfer the capital stock of each of the Founding Companies to RV Centers and
the stockholders of each of the Founding Companies will acquire shares of RV
Centers Stock (as defined herein);
WHEREAS, it is the intent of the parties that the transfer to RV
Centers of stock of the Company by the Stockholders in consideration for stock
of RV Centers qualify as a tax-free transfer of property under Section 351 of
the Code (as hereinafter defined);
WHEREAS, the Board of Directors of the Company has approved this
Agreement as part of the RV Centers Plan of Organization in order to transfer
the capital stock of the Company to RV Centers;
WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement or in any schedule attached hereto and not otherwise defined
shall have the following meanings for all purposes of this Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
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"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means the Company, any Subsidiary of the Company and
any member of a Relevant Group.
"Acquisition Consideration" means the cash and RV Centers Stock paid to
the Stockholders as consideration for the shares of Company Stock.
"Affiliate" means with respect to any person or entity, any other
person or entity that directly or indirectly, controls, is controlled by, or is
under common control with such person or entity.
"Balance Sheet Date" means June 30, 1998.
"Charter" means the certificate of incorporation or articles of
incorporation of the Company, as the case may be.
"Charter Documents" has the meaning set forth in Section 4.1.
"Closing" has the meaning set forth in Section 3.
"Closing Date" has the meaning set forth in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Stock" has the meaning set forth in the first recital of this
Agreement.
"Consummation Date" has the meaning set forth in Section 3.
"Delaware GCL" means the General Corporation Law of the State of
Delaware.
"Draft Registration Statement" means the draft of the Registration
Statement as included in the Private Placement Memorandum for RV Centers dated
January 5, 1999, and any corrections thereto and supplemental information
delivered by RV Centers to the Company for delivery to the Stockholders prior to
the time this Agreement is delivered by the Stockholders to RV Centers.
"Effective Time" means the effective time of the consummation of the
purchase and sale of the Company Stock, which shall occur on the Consummation
Date.
"Environmental Law" has the meaning set forth in Section 4.13(c).
"Expiration Date" has the meaning set forth in Section 4(A).
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"Founding Companies" means: Ace Fogdall, Inc., an Iowa corporation,
American RV Centers, Inc., a Tennessee corporation, American RV Centers, Inc., a
Mississippi corporation, ▇▇▇▇▇ Motors, Inc., a Colorado corporation, County Line
Select Cars, Inc., a Florida corporation, Dusty's Camper World of Bartow, Inc.,
a Florida corporation, Emerald Coast RV Center, Inc., a Florida corporation,
Hall Enterprises, Inc., a Kentucky corporation, Little Valley Auto & RV Sales,
Inc., a West Virginia corporation, Growth Ventures, Inc., a Texas corporation,
RVs Northwest, Inc., a Washington corporation, Saddleback Recreational Vehicles,
Inc., a California corporation, ▇▇▇▇▇ Motor Coach Sales, Inc., a New Jersey
corporation, ▇▇▇▇▇▇▇▇▇ Trailer Sales, Inc., a Pennsylvania corporation, ▇▇▇ ▇.
▇▇▇▇▇▇▇ d/b/a ▇▇▇▇▇'▇ ▇▇ Center, a sole proprietorship operating in California.
"GAAP" means generally accepted accounting principles as consistently
applied in the United States.
"▇▇▇▇-▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Hazardous Substance" has the meaning set forth in Section 4.13(d).
"Information Technology" has the meaning set forth in section 4.35.
"IPO" means the initial public offering of RV Centers Stock pursuant to
the Registration Statement.
"known," "knowledge" or "best knowledge," when used in reference to a
statement regarding the existence or absence of facts in this Agreement, is
intended by the parties to mean that the only information to be attributed to
such person is information actually known to (a) the person in the case of an
individual or (b) in the case of a corporation or other entity, an officer,
director or member. With respect to the "knowledge" of the Stockholders who are
officers, directors, employees, consultants or agents of the Company, such term
is also intended to mean that such Stockholder has made inquiry of the officers
and directors of the Company and its Affiliates, and with respect to the
representations made in Section 4.13, the Company's management.
"Material Adverse Change" means a material adverse change in the
business, operations, properties, assets or condition (financial or otherwise),
of the subject entity and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise),
of the subject entity and its Subsidiaries taken as a whole.
"Material Documents" has the meaning set forth in Section 4.23(a).
"Minimum Value" has the meaning set forth in Annex I.
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"Other Agreements" has the meaning set forth in the second recital of
this Agreement.
"Other Founding Companies" means all of the Founding Companies other
than the Company.
"Person" means an individual, partnership, joint venture, corporation,
limited liability company, bank, trust, unincorporated organization or other
entity.
"Plans" has the meaning set forth in Section 4.19.
"Pricing" means the date of determination by RV Centers and the
Underwriters of the public offering price of the shares of RV Centers Stock in
the IPO.
"Qualified Plans" has the meaning set forth in Section 4.20.
"RV Centers" has the meaning set forth in the first paragraph of this
Agreement.
"RV Centers Charter Documents" has the meaning set forth in Section
5.1.
"RV Centers Documents" has the meaning set forth in Section 5.6.
"RV Centers Plan of Organization" has the meaning set forth in the
fourth recital of this Agreement.
"RV Centers Stock" means the common stock, par value $.01 per share, of
RV Centers.
"Registration Statement" means that certain registration statement on
Form S-1 to be filed with the SEC covering the shares of RV Centers Stock to be
issued in the IPO, including the prospectus and all amendments and supplements
thereto.
"Relevant Group" means the Company and any affiliated, combined,
consolidated, unitary or similar group of which the Company is or was a member.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto (as amended or
supplemented pursuant to Section 6.7), which shall reference the relevant
sections of this Agreement, on which parties hereto disclose information as part
of their respective representations, warranties and covenants.
"SEC" means the United States Securities and Exchange Commission.
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"State of Incorporation" means, as it relates to a referenced
corporation, the state of incorporation for such corporation.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Subsidiaries" means with respect to a Person, any corporation or other
entity in which such Person owns a 50% or greater ownership interest.
"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, employment, payroll, excise, property, deed, stamp,
alternative or add-on minimum, or other taxes, assessments, duties, fees, levies
or other governmental charges, whether disputed or not, together with any
interest, penalties, additions to tax or additional amounts with respect
thereto.
"Underwriters" means the prospective underwriters identified in the
Draft Registration Statement and any additional or substitute underwriter
appointed by RV Centers as identified in writing to the Stockholders.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. ACQUISITION OF STOCK
1.1 ACQUISITION. Upon the terms and subject to the conditions
contained in this Agreement and in reliance upon the representations,
warranties, covenants and agreements contained in this Agreement, on the
Consummation Date, the Stockholders shall transfer to RV Centers and RV Centers
shall acquire from the Stockholders, all of the issued and outstanding shares of
capital stock of the Company as set forth in Annex I hereto.
1.2 CONSIDERATION. The consideration for the Company Stock shall be
as set forth on Annex I to this Agreement.
1.3 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE
COMPANY AND RV CENTERS. The respective designations and numbers of outstanding
shares and voting rights of each class of outstanding capital stock of the
Company and RV Centers as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and
outstanding capital stock of the Company is as set forth on Schedule
4.3 hereto; and
(ii) immediately prior to the Closing Date and the Consummation
Date, the authorized capital stock of RV Centers will consist of
20,000,000 shares of RV Centers
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Stock, of which the number of issued and outstanding shares will be set
forth in the Registration Statement, and 5,000,000 shares of preferred
stock, $.01 par value, of which no shares will be issued and
outstanding, all of which will be issued and outstanding except as
otherwise set forth in the Registration Statement.
2. DELIVERY OF CONSIDERATION
2.1 STOCKHOLDERS' CONSIDERATION. On the Consummation Date, the
Stockholders, who are now and on the Consummation Date will be, the holders of
all of the outstanding capital stock of the Company, shall, upon surrender of
certificates evidencing that capital stock, receive from RV Centers the
respective number of shares of RV Centers Stock and the amount of cash described
on Annex I hereto, which shall be payable by certified check or wire transfer.
The number of shares of RV Centers Stock in Annex I has been adjusted for the
stock split provided for in the Draft Registration Statement and will not be
adjusted upon the occurrence of such split.
2.2 STOCKHOLDERS' DELIVERIES. The Stockholders shall deliver at the
Closing the certificates representing Company Stock, duly endorsed in blank by
the Stockholders, or accompanied by blank stock powers, and with all necessary
transfer tax and other revenue stamps, acquired at the Stockholders' expense,
affixed and canceled. The Stockholders agree promptly to cure any deficiencies
with respect to the endorsement of the stock certificates or other documents of
conveyance with respect to such Company Stock or with respect to the stock
powers accompanying any Company Stock.
3. CLOSING
At or prior to the Pricing and subject to the satisfaction or waiver of
the conditions in Sections 7 and 8, the parties shall take all actions necessary
to effect the delivery of shares referred to in Section 2 hereof; provided, that
such actions shall not include the actual completion of the purchase and sale of
the Company Stock or the delivery of the RV Centers Stock and cash referred to
in Section 2 hereof, each of which actions shall only be taken upon the
Consummation Date as herein provided. The delivery of the Company Stock, which
shall occur at or prior to the Pricing (the "Closing"), shall take place on the
closing date (the "Closing Date") at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P, ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. All Company Stock shall be delivered
at the Closing to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., to be held in trust for the
Stockholders until the Consummation Date, and shall be returned immediately to
the Stockholders upon any termination of this Agreement prior to the
Consummation Date. Within 20 days after the Pricing (x) all transactions
contemplated by this Agreement, including the delivery of shares and cash which
the Stockholders are entitled to receive pursuant to Annex I hereof, shall be
completed, and (y) the closing with respect to the IPO shall occur and be
completed. The date on which the actions described in the preceding clauses (x)
and (y) occur shall be referred to as the "Consummation Date." During the period
from the Closing Date to the Consummation Date, this Agreement may only be
terminated by the Company if the underwriting agreement in respect of the IPO is
terminated pursuant to the terms of such underwriting agreement. This Agreement
shall in any event terminate
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if the Consummation Date does not occur within 20 days of the Pricing or the
Closing Date, whichever occurs first. Time is of the essence with respect to the
performance hereof.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
(A) Representations and Warranties of the Stockholders.
Except as set forth in the disclosure schedules attached hereto and
except as otherwise qualified below, each of the Stockholders, jointly and
severally, represents and warrants that all of the following representations and
warranties in this Section 4(A) are true at the date of this Agreement, and that
such representations and warranties shall survive the Consummation Date until
June 30, 2000 (the "Expiration Date"), except that the warranties and
representations set forth in Sections 4.3 and 4.22 hereof shall survive until
such time as the applicable limitations period has run, which shall be deemed to
be the Expiration Date for Sections 4.3 and 4.22. For purposes of this Section
4, the term "Company" shall mean and refer to the Company and all of its
Subsidiaries, if any.
4.1 DUE ORGANIZATION. The Company is a corporation duly incorporated
and organized, validly existing and in good standing under the laws of the State
of Incorporation, and has the requisite power and authority to carry on its
business as it is now being conducted. The Company is duly qualified or
authorized to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or authorization necessary except where the failure to be so
qualified or authorized would not have a Material Adverse Effect on the Company.
Schedule 4.1 sets forth a list of all states in which the Company is authorized
or qualified to do business. True, complete and correct copies of (i) the
Charter and By-laws, each as amended, of the Company (the "Charter Documents"),
and (ii) the stock records of the Company, are all attached to Schedule 4.1. The
Company has delivered to RV Centers complete and correct copies of all minutes
of meetings, written consents and other evidence, if any, of deliberations of or
actions taken by the Company's Board of Directors, any committees of the Board
of Directors and stockholders during the last three years.
4.2 AUTHORIZATION. (i) The officers or other representatives of the
Company executing this Agreement have the authority to enter into and bind the
Company to the terms of this Agreement and (ii) the Company has the full legal
right, power and authority to enter into this Agreement and consummate the
transactions contemplated herein. Copies of the most recent resolutions adopted
by the Board of Directors of the Company and the most recent resolutions adopted
by the Stockholders, which approve this Agreement and the transactions
contemplated herein in all respects, certified by the Secretary or an Assistant
Secretary of the Company as being in full force and effect on the date hereof,
are attached hereto as Schedule 4.2.
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4.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company is as set forth on Schedule 4.3. All of the issued and outstanding
shares of the capital stock of the Company are owned by the Stockholders in the
amounts set forth in Schedule 4.3, other than any treasury shares listed on
Schedule 4.3. Each Stockholder, severally, represents and warrants that except
as set forth on Schedule 4.3, the shares of capital stock of the Company owned
by such Stockholder are owned free and clear of all liens, security interests,
pledges, charges, voting trusts, restrictions, encumbrances and claims of every
kind. All of the issued and outstanding shares of the capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable, are owned of record and beneficially by the Stockholders and
further, such shares were offered, issued, sold and delivered by the Company in
compliance with all applicable state and Federal laws concerning the issuance of
securities. Further, none of such shares were issued in violation of any
preemptive rights of any past or present stockholder.
4.4 TRANSACTIONS IN CAPITAL STOCK; ORGANIZATION ACCOUNTING. Except as
set forth on Schedule 4.4, the Company has not acquired or redeemed any Company
Stock since January 1, 1995. Except as set forth on Schedule 4.4, (i) no option,
warrant, call, conversion right or commitment of any kind exists which obligates
the Company to issue any of its authorized but unissued capital stock; (ii) the
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof; and (iii) neither
the voting stock structure of the Company nor the relative ownership of shares
among any of its respective Stockholders has been altered or changed in
contemplation of the transactions contemplated herein and/or the RV Centers Plan
of Organization. There are no voting trusts, proxies or other agreements or
understandings to which the Company or any of the Stockholders is a party or is
bound with respect to the voting of any shares of capital stock of the Company.
Schedule 4.4 also includes complete and accurate copies of all stock option or
stock purchase plans, including a list of all outstanding options, warrants or
other rights to acquire shares of the Company's stock and the material terms of
such outstanding options, warrants or other rights.
4.5 NO BONUS SHARES. Except as set forth on Schedule 4.5, none of the
shares of Company Stock was issued pursuant to awards, grants or bonuses in
contemplation of the RV Centers Plan of Organization.
4.6 SUBSIDIARIES; OWNERSHIP IN OTHER ENTITIES. Except as set forth on
Schedule 4.6, the Company has no Subsidiaries. Except as set forth in Schedule
4.6, the Company does not presently own, of record or beneficially, or control,
directly or indirectly, any capital stock, securities convertible into capital
stock or any other equity interest in any corporation, association or business
entity nor is the Company, directly or indirectly, a participant in any joint
venture, partnership or other non-corporate entity.
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4.7 PREDECESSOR STATUS; ETC. Set forth on Schedule 4.7 is a listing
of all predecessor companies of the Company, including the names of any entities
acquired by the Company (by stock purchase, merger or otherwise) or owned by the
Company or from whom the Company previously acquired assets which are material
to the Company, in any case, from the earliest date upon which any Stockholder
acquired his or her stock in any Company. Except as disclosed on Schedule 4.7,
the Company has not been, within such period of time, a subsidiary or division
of another corporation or a part of an acquisition which was later rescinded,
nor, within such period of time, has the Company had any substantial operations
that have been discontinued or any operating plants or facilities that have been
discontinued, sold or spun off.
4.8 SPIN-OFF BY THE COMPANY. Except as set forth on Schedule 4.8,
there has not been any sale, spin-off or split-up of material assets of the
Company since January 1, 1995.
4.9 FINANCIAL STATEMENTS. Copies of the following financial
statements are attached hereto as Schedule 4.9:
(i) the balance sheets of the Company as of December 31, 1996
and 1997 and the related statements of operations, stockholder's equity
and cash flows for the two-year period ended December 31, 1997,
together with the related notes and schedules (such balance sheets, the
related statements of operations, stockholder's equity and cash flows
and the related notes and schedules are referred to herein as the
"Year-end Financial Statements"); and
(ii) the balance sheet of the Company as of the Balance Sheet
Date and the related statements of operations, stockholder's equity and
cash flows for the six-month period ended June 30, 1998 and on the
Balance Sheet Date, together with the related notes and schedules (such
balance sheets, the related statements of operations, stockholder's
equity and cash flows and the related notes and schedules are referred
to herein as the "Interim Financial Statements").
The Year-end Financial Statements and the Interim
Financial Statements are collectively referred to herein as the
"Financial Statements". The Financial Statements have been, and the
financial statements to be delivered pursuant to Section 6.9 will be,
prepared in accordance with GAAP applied on a consistent basis and
fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and
changes in financial position for the periods then ended. The Company's
books of account have been kept accurately in all material respects,
the transactions entered therein represent bona fide transactions, and
the revenues, expenses, assets and liabilities of the Company have been
properly recorded in such books in all material respects.
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4.10 LIABILITIES AND OBLIGATIONS. Except as set forth on Schedule
4.10(a), as of the Balance Sheet Date, the Company has no liabilities or
obligations of any kind, character or description, whether accrued, absolute,
secured or unsecured, contingent or otherwise, which are not reflected in the
Company Interim Financial Statements at the Balance Sheet Date. In addition,
except as set forth on Schedule 4.10(a), since the Balance Sheet Date, the
Company has not incurred any material liabilities or obligations of any kind,
character or description whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the ordinary course
of business and consistent with past operating practices. For each contingent
liability or other liability for which the amount is not fixed or is contested,
the Company has included on Schedule 4.10(a) the following information:
(i) a summary description of the liability together with the
following:
(A) copies of the principal documentation in the
possession of the Company or its directors,
officers, management, stockholders or key
employees relating thereto;
(B) amounts claimed and any other action or relief
sought; and (C) name of claimant and all other
parties to the claim, suit or proceeding;
(ii) the name of each court or agency before which such claim,
suit or proceeding is pending; and
(iii) the date such claim, suit or proceeding was instituted.
Schedule 4.10(b) sets forth an accurate list of all trade
accounts payable, accrued liabilities, indebtedness and other liabilities of the
Company as reflected in the Company Interim Financial Statements as of the
Balance Sheet Date. Schedule 4.10(b) also includes copies of all loan
agreements, floor plan financing agreements, warranty, indemnity or guarantee
agreements, bonds, mortgages, pledges or other security agreements to which the
Company is a party or by which its properties may be bound.
4.11 ACCOUNTS AND NOTES RECEIVABLE. Schedule 4.11 sets forth an
accurate list of the accounts and notes receivable of the Company, as of the
Balance Sheet Date, including any such amounts which are not reflected in the
balance sheet as of the Balance Sheet Date, and including all receivables from
and advances to employees and the Stockholders, which are identified as such.
Schedule 4.11 also sets forth an accurate aging of all accounts and notes
receivable as of the Balance Sheet Date showing amounts due in 30-day aging
categories. Except to the extent reflected on Schedule 4.11, such accounts,
notes and other receivables arose in connection with bona fide transactions, the
reserves reflected in the balance sheet as of the Balance Sheet Date are
adequate and such accounts, notes and other receivables are, subject to the
stated reserves, collectible.
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4.12 PERMITS AND INTANGIBLES. The Company holds all licenses,
franchises, permits and other governmental authorizations ("Licenses") necessary
to conduct the business of the Company, and the Company has delivered to RV
Centers a list that is accurate and a summary description (which is set forth on
Schedule 4.12) of all such Licenses, including any trademarks, trade names,
patents, patent applications and copyrights owned or held by the Company or any
of its employees (including interests in software or other technology systems,
programs and intellectual property) the absence of which would have a Material
Adverse Effect on the Company. Except as set forth on Schedule 4.12, the
Licenses and other rights listed on Schedule 4.12 are valid, held by the Company
and the Company has not received any notice that any Person intends to cancel,
terminate or not renew any such License or other right. Except as set forth on
Schedule 4.12, the Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Licenses and other rights listed on Schedule 4.12 and is not in violation
of any of the foregoing. Except as specifically provided in Schedule 4.12, the
consummation by the Company of the transactions contemplated in this Agreement
will not result in a default under or a breach or violation of, or adversely
affect the rights and benefits afforded to the Company by, any such Licenses or
other rights.
4.13 ENVIRONMENTAL MATTERS. (a) Except as specifically set forth in
Schedule 4.13 attached hereto, (i) the Company has conducted and is conducting
its businesses in compliance with all applicable Environmental Laws, including,
without limitation, having all environmental permits, licenses and other
approvals and authorizations required by Environmental Laws for the operation of
its business as presently conducted, (ii) none of the properties now or
previously owned or occupied by the Company contain any Hazardous Substance, the
existence of which imposes a requirement under Environmental Laws to remove,
remediate, reduce the levels of Hazardous Substances to levels below regulatory
action levels, or otherwise perform any response, corrective or preventive
measure or pay for any environmental response costs ("Environmental Response
Measures"), (iii) the Company has not received any written notices, demand
letters or requests for information from any Federal, state, local or foreign
governmental entity or third party indicating that the Company may be in
violation of, or liable for any Environmental Response Measures under, any
Environmental Law in connection with the ownership or operation of its business,
and has no reason to believe that any such written documentation may be
forthcoming, (iv) there have been and are no civil, criminal or administrative
actions, suits, demands, claims, hearings, consent orders, investigations or
proceedings pending or, to the knowledge of the Stockholders, threatened,
against the Company relating to any Environmental Law, (v) no reports have been
filed, or are required to be filed, by the Company concerning the release of any
Hazardous Substance or the threatened or actual violation of any Environmental
Law, (vi) no Hazardous Substance has been disposed of, released or transported
in violation of any applicable Environmental Law from any properties owned,
leased or operated by the Company as a result of any activity of the Company
during the time such properties were owned, leased or operated by the Company,
(vii) there have been and are no environmental investigations, studies, audits,
tests, reviews or other analyses regarding compliance or non-compliance with any
applicable Environmental Law conducted by or which are in the possession of the
Company relating to the activities of the Company prior to the date hereof,
(viii) there are no underground storage tanks on, in or under any properties
owned by the Company,
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there were no underground storage tanks owned or used by the Company on
properties formerly owned, leased or operated by the Company, and no underground
storage tanks have been closed or removed from any of such properties during the
time such properties were owned, leased or operated by the Company, (ix) there
is no asbestos or asbestos-containing material present in any of the properties
owned, leased or operated by the Company that is required to be removed or
otherwise abated under Environmental Laws, and no asbestos was removed from any
properties now or formerly owned, leased or operated during the time such
properties were owned, leased or operated by the Company, except in compliance
with Environmental Laws, (x) neither the Company nor any of its respective
properties are subject to any liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment or claim asserted or arising under any Environmental Law,
(xi) there are no environmental liabilities at sites not owned, operated or
leased by the Company, for which the Company could, in whole or in part, be
liable, and (xii) the Company has not been a contractee under any tolling
agreement, processing agreement or netback agreement with a third party.
(b) With respect to any past direct or indirect Subsidiaries or
Affiliates of the Company, the representations contained in Section 4.13(a)
shall apply to the assets and activities conducted by such entity while owned,
directly or indirectly, by the Company or affiliated therewith to the extent
that a failure of such representations to be true and correct could subject the
Company to liability.
(c) As used herein, "Environmental Law" means any federal, state, or
local, statute, ordinance, rule, regulation, code, license, permit,
authorization, order, judgment, decree, injunction, restriction or agreement
with any governmental entity, relating to (x) the protection, preservation or
restoration of the environment or to human health or safety or (y) the exposure
to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as amended and as in effect on the Closing Date. The
term Environmental Law includes, without limitation, (i) the Federal
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Toxic Substances Control Act,
the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational
Safety and Health Act of 1970, and similar law, regulation or requirement of any
governmental authority or agency having jurisdiction over the Company or its
property, each as amended and as in effect on the Closing Date, and (ii) any
common law or equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence, nuisance, trespass and strict
liability) that may impose liability or obligations for injuries or damages due
to, or threatened as a result of, the presence of, effects of or exposure to any
Hazardous Substance.
(d) As used herein, "Hazardous Substance" means any substance
regulated under any Environmental Law or the exposure to which is regulated by
any Environmental Law, and shall include, without limitation, any industrial
substance, petroleum or any derivative or by-product thereof, radon, asbestos or
asbestos-containing material, urea formaldehyde foam insulation, lead, fibers or
polychlorinated biphenyls.
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4.14 PERSONAL PROPERTY. Schedule 4.14 sets forth an accurate list of
(x) all personal property material to the operations of the Company included in
"plant, property and equipment" on the balance sheet of the Company, (y) all
other personal property owned by the Company with an individual net book value
in excess of $5,000 (i) as of the Balance Sheet Date and (ii) acquired since the
Balance Sheet Date and (z) all material leases and agreements in respect of
personal property, including, in the case of each of (x), (y) and (z), (1) true,
complete and correct copies of all such leases and agreements and (2) an
indication as to which assets are currently owned, or were formerly owned, by
Stockholders, relatives of Stockholders, or Affiliates of the Company. Except as
set forth on Schedule 4.14, (i) all personal property material to, and used by,
the Company in its business is either owned by the Company or leased by the
Company pursuant to a lease included on Schedule 4.14, (ii) all of the personal
property listed on Schedule 4.14 or replacement property thereof is in working
order and condition, ordinary wear and tear excepted and (iii) all leases and
agreements included on Schedule 4.14 are in full force and effect and constitute
valid and binding agreements of the Company and (to the knowledge of the
Stockholders) the other parties thereto (or their successors) in accordance with
their respective terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium, liquidation or
other similar laws and equity principles relating to creditors' rights
generally. For the purposes of this Section 4.14, "personal property" shall be
deemed to exclude personal property addressed by Sections 4.11 and 4.12 and
inventory of the Company.
4.15 SIGNIFICANT CUSTOMERS AND SUPPLIERS; MATERIAL CONTRACTS AND
COMMITMENTS
(a) Schedule 4.15(a) sets forth an accurate list of (i) all customers
(persons or entities) representing 5% or more of the Company's annual revenues
for fiscal year 1997, showing the approximate total sales to each such customer,
and (ii) all suppliers (persons or entities) representing 5% or more of the
Company's annual purchases of supplies for fiscal year 1997, showing the
approximate total purchases of supplies from each such supplier. Except to the
extent set forth on Schedule 4.15(a), none of such customers or suppliers has
canceled or substantially reduced or is currently attempting or threatening to
cancel a contract or substantially reduce utilization of the services provided
by the Company.
(b) The Company has listed on Schedule 4.15(b) all material
contracts, commitments and similar agreements to which the Company is a party or
by which it or any of its properties is bound (including, but not limited to,
contracts with significant customers or suppliers, joint venture or partnership
agreements, contracts with any labor organizations, strategic alliances and
options to purchase land), other than agreements listed on Schedules 4.10, 4.14
or 4.16, (i) in existence as of the Balance Sheet Date and (ii) entered into
since the Balance Sheet Date, and in each case has delivered true, complete and
correct copies of such agreements to RV Centers. Except as set forth on Schedule
4.15(b), the Company has complied with all commitments and obligations
pertaining to it and is not in default in any material respect under any
contracts or agreements listed on Schedules 4.10, 4.14, 4.15(b) or 4.16 and has
not received notice of a default under any such contract or agreement. Where
required prior to the execution of this Agreement under such contracts or
agreements, the Company has furnished notice of the Agreement to third parties
and has, where
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required prior to the execution of this Agreement, obtained consent from third
parties to enter into the transactions contemplated in this Agreement. The
Company has also indicated on Schedule 4.15(b) a list of all plans or projects
involving the opening of new operations, expansion of existing operations, or
the acquisition of any personal property, business or assets requiring, in any
event, the payment of more than $25,000 by the Company.
(c) Except as set forth on Schedule 4.15(b), since January 1, 1997,
the Company has not experienced any difficulties in obtaining any inventory
items necessary to the operation of its business, and, to the knowledge of the
Stockholders, no such shortage of supply of inventory items is threatened or
pending. Except as set forth in Schedule 4.15(b), to the knowledge of the
Stockholders, no customer or supplier of the Company has indicated that it will
cease to do business with, or substantially reduce its purchases from or sales
to, the Company by reason of or after the consummation of the transactions
contemplated hereby.
(d) Except as set forth on Schedule 4.15(b), the Company is not
required to provide any bonding or other financial security arrangements in any
amount in connection with any contract listed on Schedule 4.15(b).
4.16 REAL PROPERTY. Schedule 4.16 includes a list of all real property
owned or leased by the Company at the date hereof and all other real property,
if any, used by the Company in the conduct of its business. The Company has good
title to any real property owned by it that is shown on Schedule 4.16, and all
real property so owned is subject to no mortgage, pledge, lien, conditional
sales agreement, encumbrance, lease, possessory rights of third parties or
charge, except for:
(i) liens reflected on Schedules 4.10 or 4.16 as securing
specified liabilities (with respect to which no material default
exists);
(ii) liens for current taxes not yet payable and assessments
not in default and other inchoate liens for amounts not yet payable and
assessments not in default;
(iii) easements for utilities serving the property only; and
(iv) easements, covenants and restrictions and other exceptions
to title which do not adversely affect the current or contemplated use
of the property.
Copies of all leases and agreements in respect of such real property
leased by the Company, which are true, complete and correct, are attached to
Schedule 4.16, and an indication as to which such properties, if any, are
currently owned, or were formerly owned, by Stockholders or Affiliates of the
Company is included in Schedule 4.16. Copies of all title reports and title
insurance policies with respect to such real property owned by the Company and
in its possession or reasonably accessible to it are attached to Schedule 4.16.
Except as set forth on Schedule 4.16, all of such leases included on Schedule
4.16 are in full force and effect and constitute valid and binding agreements of
the Company and to the knowledge of the Stockholders the other parties thereto
in accordance
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with their respective terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium, liquidation or
other similar laws and equity principles relating to creditors' rights
generally.
4.17 INSURANCE. The Company has delivered to RV Centers (i) an
accurate list as of the Balance Sheet Date and as of the date hereof of all
insurance policies carried by the Company, (ii) an accurate list of all
insurance loss runs or workers compensation claims received by the Company for
the past three policy years and (iii) true, complete and correct copies of all
insurance policies currently in effect. Such insurance policies evidence all of
the insurance the Company is required to carry pursuant to all of its contracts
and other agreements and pursuant to all applicable laws. Except as set forth on
Schedule 4.17, all of such insurance policies are currently in full force and
effect and shall remain in full force and effect through the Consummation Date.
Since January 1, 1996, no insurance carried by the Company has been canceled by
the insurer and the Company has not been denied coverage.
4.18 COMPENSATION; EMPLOYMENT AGREEMENTS; LABOR MATTERS.
(a) The Company has delivered to RV Centers an accurate list (which
is set forth on Schedule 4.18) showing all officers, directors and key employees
of the Company, listing all employment, compensation, change in control and
severance agreements with such officers, directors and key employees (the
"Agreements") and the rate of compensation, and sales commissions, (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of (i) the Balance Sheet Date and (ii)
the date hereof. The Company has provided to RV Centers true, complete and
correct copies of all Agreements. Since the Balance Sheet Date, except as
disclosed on Schedule 4.18, there have been no increases in the compensation
payable or any special bonuses to any officer, director, key employee or other
employee, except ordinary salary increases implemented on a basis and in amounts
consistent with past practices.
(b) Except as set forth on Schedule 4.18, (i) the Company is not
bound by or subject to (and none of its respective assets or properties is bound
by or subject to) any arrangement with any labor union, (ii) no campaign to
establish such arrangement is in progress and (iii) to the knowledge of the
Stockholders, there is no pending or threatened labor dispute involving the
Company and any group of its employees nor has the Company experienced any labor
interruptions over the past three years. Except as set forth on Schedule 4.18,
the Stockholders believe that the Company's relationship with its employees is
good.
(c) Except as set forth in Schedule 4.18 attached hereto, (i) there
are no significant controversies pending or, to the knowledge of the
Stockholders, threatened between the Company and any of its employees, (ii) the
Company has complied in all material respects with all applicable laws relating
to the employment of labor, including, without limitation, any provisions
thereof relating to wages, hours, collective bargaining, and the payment of
social security and similar taxes, and (iii) the Company has not received notice
from any person asserting that the Company is liable for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing.
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4.19 EMPLOYEE PLANS. Schedule 4.19 lists all employee benefit plans
and compensation plans, programs or arrangements (the "Plans") which are
maintained by, contributed to or with respect to which there is or would be any
obligation or liability of the Company, including all employment agreements and
other agreements or arrangements containing "golden parachute" or other similar
provisions, incentive compensation agreements, and deferred compensation
agreements, together with true, complete and correct copies of such plans,
agreements and any trusts related thereto, and classifications of employees
covered thereby as of the Balance Sheet Date and as of the date of this
Agreement. Except for the Plans, if any, described on Schedule 4.19, the Company
does not sponsor, maintain or contribute to any plan, program, fund or
arrangement that constitutes an "employee benefit plan," and the Company does
not have any obligation to contribute to or accrue or pay any benefits under any
deferred compensation or retirement arrangement on behalf of any current or
former employee or employees (such as, for example, and without limitation, any
individual retirement account or annuity, any "excess benefit plan" (within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")). For the purposes of this Agreement, the term "employee
benefit plan" shall have the same meaning as is given that term in Section 3(3)
of ERISA. The Company has not sponsored, maintained or contributed to any
employee benefit plan other than the Plans set forth on Schedule 4.19, and the
Company is not or could not be required to contribute to any Plan pursuant to
the provisions of any collective bargaining agreement establishing the terms and
conditions or employment of any of the Company's employees.
Except as set forth on Schedule 4.19, the Company is not now, and will
not as a result of its past activities become, liable to the Pension Benefit
Guaranty Corporation or to any multiemployer employee pension benefit plan under
the provisions of Title IV of ERISA.
All Plans listed on Schedule 4.19 and the administration thereof are in
compliance in all material respects with their terms and all applicable
provisions of ERISA and the regulations issued thereunder, as well as with all
other applicable federal, state and local statutes, ordinances and regulations.
All accrued contribution obligations of the Company as of the Balance
Sheet Date with respect to any Plan listed on Schedule 4.19 have either been
fulfilled in their entirety or are fully reflected on the balance sheet of the
Company included in the Interim Financial Statements. All accrued contribution
obligations of the Company since the Balance Sheet Date with respect to any Plan
listed on Schedule 4.19 have been fulfilled or will be fully reflected on the
balance sheets delivered pursuant to Section 6.9.
4.20 COMPLIANCE WITH ERISA. All such Plans listed on Schedule 4.19
that are intended to qualify (the "Qualified Plans") under Section 401(a) of the
Code are, and have been from their inception, so qualified and are the subject
of a determination letter or notification letter issued by the Internal Revenue
Service, which letter covers the status of such Qualified Plans under the
provisions of the Tax Reform Act of 1986, and copies of such letters are
attached to Schedule 4.19. Except as disclosed on Schedule 4.20, all reports and
other documents required to be filed with any
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25
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed. Neither the Stockholders, any such Plan listed
in Schedule 4.19, nor the Company or, to the knowledge of the Stockholders, any
other person has engaged in any transaction with any Plan which is prohibited
under the provisions of Section 4975 of the Code or Section 406 of ERISA, and to
which no exemption under the Code or ERISA applies. No such Plan listed in
Schedule 4.19 has incurred an accumulated funding deficiency, as defined in
Section 412(a) of the Code and Section 302(l) of ERISA, whether or not waived;
and neither the Company nor, to the knowledge of the Stockholders, any other
person has incurred any liability for excise tax or penalty due to the Internal
Revenue Service or any liability to the Pension Benefit Guaranty Corporation
("PBGC") with respect to any Plan or breached any fiduciary duty with respect to
any Plan. The Company further represents that except as set forth on Schedule
4.20 hereto:
(i) With respect to any plan year for which the applicable
statutes of limitations has not expired, there have been no
terminations, partial terminations or discontinuations of contributions
to any Qualified Plan intended to qualify under Section 401(a) of the
Code without notice to and approval by the Internal Revenue Service;
(ii) no Plan listed in Schedule 4.19 is subject to the
provisions of Title IV of ERISA;
(iii) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any Plan listed in
Schedule 4.19;
(iv) the Company has not incurred liability under Section 4062
or Section 4069 of ERISA;
(v) no circumstances exist pursuant to which the Company could
have any direct or indirect liability whatsoever (including, but not
limited to, any liability to any multiemployer plan or the PBGC under
Title IV of ERISA or to the Internal Revenue Service for any excise tax
or penalty, or being subject to any statutory lien to secure payment of
any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than the Company that
is, or at any time was, a member of a "controlled group" (as defined in
Section 412(n)(6)(B) of the Code) that includes the Company; and
(vi) each Plan may be unilaterally terminated at any time by
the Company without material liability to the Company.
4.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth
on Schedule 4.21 or 4.13, the Company is not in violation of any law or
regulation or any order of any court or Federal, state, local or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over it other than violations that would not have a Material
Adverse Effect on the Company and except to the extent set forth on Schedules
4.10, 4.13 or 4.21,
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there are no claims, actions, suits or proceedings, pending or, to the knowledge
of the Stockholders, threatened against, the Company, at law or in equity, or
before or by any Federal, state, local or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
any of them and no written notice of any claim, action, suit or proceeding,
whether pending or threatened, has been received by the Company. Except as set
forth in Schedule 4.21, the Company has conducted and is now conducting its
business in compliance in all material respects with the requirements,
standards, criteria and conditions set forth in applicable Federal, state and
local statutes, ordinances, orders, approvals, variances, rules and regulations.
4.22 TAXES.
(a) The Company has timely filed all requisite Federal, state, local
and other income and payroll tax returns or extension requests for all fiscal
periods ended on or before the Balance Sheet Date; and except as set forth on
Schedule 4.22, there are no examinations in progress or claims pending against
the Company for federal, state, local and other Taxes (including penalties and
interest) for any period or periods prior to and including the Balance Sheet
Date and no notice of any claim for Taxes, whether pending or threatened, has
been received. All Taxes, including interest and penalties (whether or not shown
on any tax return), owed by the Company has been paid or reflected as accrued as
of the Balance Sheet Date. The amounts shown as accruals for Taxes on the
Company's Financial Statements are sufficient for the payment of all Taxes of
the kinds indicated (including penalties and interest) for all fiscal periods
ended on or before that date. Copies of (i) any tax examinations, (ii)
extensions of statutory limitations and (iii) the federal and local income tax
returns and franchise tax returns of Company for their last three (3) fiscal
years, or such shorter period of time as any of them shall have existed, are
attached hereto as Schedule 4.22 or have otherwise been delivered to RV Centers.
The Company has a taxable year ended as of the year end date in the Year-end
Financial Statements in Schedule 4.9. Except as set forth on Schedule 4.22, the
Company uses the accrual method of accounting for income tax purposes, and the
Company's methods of accounting have not changed in the past five years. The
Company is not an Investment Company as defined in Section 351(e)(1) of the
Code. Except as set forth on Schedule 4.22, the Company is not and has not been
a party to any tax sharing agreement or agreement of similar effect. Except as
set forth on Schedule 4.22, the Company is not and has not been a member of any
consolidated group. The Company has not received, been denied, or applied for
any private letter ruling during the last ten years.
(b) The Company has timely filed all requisite Federal, state, local
and other income and payroll tax returns or extension requests for all fiscal
periods ended on or prior to the date hereof; and except as set forth on
Schedule 4.22, there are no examinations in progress or claims pending against
the Company for federal, state, local and other Taxes (including penalties and
interest) for any period or periods ended on or prior to the date hereof and no
notice of any claim for Taxes, whether pending or threatened, has been received.
All Taxes, including interest and penalties (whether or not shown on any tax
return), owed by the Company have been paid or reflected as accrued. The amounts
shown as accruals for Taxes on the Company's Financial Statements are
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sufficient for the payment of all Taxes of the kinds indicated (including
penalties and interest) for all fiscal periods ended on or before that date.
(c) If the Company is an S corporation, the Company makes the
representations and warranties in this subsection 4.22(c). Except as disclosed
in the Year-end Financial Statements, the Company has been a validly existing S
corporation within the meaning of Sections 1361 and 1362 of the Code at all
times during its existence and the Company will be an S corporation up to and
including the day before the Closing Date. The Company would not be liable for
any tax under Section 1374 of the Code if its assets were sold for their fair
market value as of the Closing Date. Neither the Company nor any qualified
subchapter S subsidiary of the Company has, in the past 10 years, (A) acquired
assets from another corporation in a transaction in which the Company's tax
basis in the acquired assets was determined, in whole or part, by reference to
the tax basis of the acquired assets in the hands of the transferor or (B)
acquired the stock of any corporation which is a qualified subchapter S
subsidiary. The Stockholders shall pay, and they hereby indemnify RV Centers and
the Company against, all income taxes payable with respect to the Company's
operations for all periods through and including the Consummation Date.
4.23 NO VIOLATIONS; NO CONSENT REQUIRED, ETC.
(a) The Company is not in violation of any Charter Document. Except
as set forth on Schedule 4.23(a), neither the Company nor, to the knowledge of
the Stockholders, any other party thereto, is in default under any lease,
instrument, agreement, license, or permit set forth on Schedule 4.10(b), 4.12,
4.14, 4.15(b) or 4.16 (the "Material Documents").
(b) Except as set forth on Schedule 4.23(b), the execution and
delivery of this Agreement by each of the Company and the Stockholders do not
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company under any of the
terms, conditions or provisions of (i) the Charter Documents of the Company,
(ii) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to the Company or any of its properties or assets, or (iii) any
Material Document to which the Company or any of the Stockholders is now a party
or by which any of the Stockholders or the Company or any of its properties or
assets may be bound or affected. The consummation by the Company and the
Stockholders of the transactions contemplated herein will not result in any
material violation, conflict, breach, right of termination or acceleration or
creation of liens under any of the terms, conditions or provisions of the items
described in clauses (i) through (iii) of the preceding sentence, subject, in
the case of the terms, conditions or provisions of the items described in clause
(iii) above, to obtaining (prior to the Effective Time) such consents as may be
required from commercial lenders, lessors or other third parties.
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(c) Except as set forth on Schedule 4.23(c) and except for
requirements under the ▇▇▇▇- ▇▇▇▇▇ Act, none of the Material Documents requires
notice to, or the consent or approval of, any governmental agency or other third
party with respect to the consummation by the Company and the Stockholders of
any of the transactions contemplated herein in order to remain in full force and
effect, and consummation by the Company and the Stockholders of the transactions
contemplated herein will not give rise to any right to termination, cancellation
or acceleration or loss of any right or benefit.
(d) Except for (i) the filing of the Registration Statement, (ii) the
declaration of the effectiveness thereof by the SEC and filings with various
state blue sky authorities and (iii) any filing required under the ▇▇▇▇-▇▇▇▇▇
Act in connection with the purchase and sale of the Company Stock, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the Company and
the Stockholders or the consummation by the Company and the Stockholders of the
transactions contemplated herein.
(e) Except as set forth on Schedule 4.23(e), none of the Material
Documents prohibits the use or publication by the Company or RV Centers of the
name of any other party to such Material Document, and none of the Material
Documents prohibits or restricts the Company from providing services or selling
products to any other customer or potential customer of the Company, RV Centers
or any Other Founding Company.
4.24 GOVERNMENT CONTRACTS. Except as set forth on Schedule 4.24, the
Company is not a party to any governmental contract subject to price
redetermination or renegotiation.
4.25 ABSENCE OF CHANGES. Since June 30, 1998, except as set forth on
Schedule 4.25 or as otherwise contemplated herein, there has not been:
(i) any Material Adverse Change in the Company;
(ii) any material damage, destruction or loss to any property
or asset of the Company (whether or not covered by insurance) which has
caused a Material Adverse Effect on the Company;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or
commitments;
(iv) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the
Company except for distributions that are described in Annex I;
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(v) any increase in the compensation, bonus, sales commissions
or fee arrangement payable or to become payable by the Company to any
of its officers, directors, Stockholders, employees, consultants or
agents, except for ordinary and customary bonuses and salary increases
for employees in accordance with past practice; notwithstanding the
foregoing, the Company has not paid or agreed to pay salary, bonus,
sales commissions, fees or any other form of compensation, directly or
indirectly, to the Stockholders or any members of their family in
excess of the aggregate monthly compensation provided for in Annex I
hereto.
(vi) any work interruptions, labor grievances or claims filed,
or any similar event or condition of any character which has caused a
Material Adverse Effect on the Company;
(vii) any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of the Company to any
Person, including, without limitation, the Stockholders and their
Affiliates, except inventory sold in the ordinary course of business;
(viii) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the Company, including without limitation
any indebtedness or obligation of any Stockholders or any Affiliate
thereof;
(ix) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the
material assets, property or rights of the Company or requiring consent
of any party to the transfer and assignment of any such assets,
property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the
Company;
(xii) any amendment or termination of any material contract,
agreement, license, permit or other right to which the Company is a
party;
(xiii) any transaction by the Company outside the ordinary course
of its business;
(xiv) any cancellation or termination of a material contract
with a customer or client prior to the scheduled termination date other
than in the ordinary course of business of the Company and of which
notice has been given to RV Centers;
(xv) any other distribution of property or assets by the
Company other than in the ordinary course of business and other than
distributions of real estate and other assets as permitted by this
Agreement (including the Schedules hereto); or
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(xvi) any occurrence that is reasonably likely to give rise to a
contingent liability which would have a Material Adverse Effect on the
Company excluding occurrences due to general economic conditions,
legislative or regulatory developments or occurrences affecting the
recreational vehicle industry generally.
4.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The Company has delivered
to RV Centers an accurate schedule (which is set forth on Schedule 4.26) as of
the date of the Agreement of:
(i) the name of each financial institution in which the
Company has accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or have
access thereto.
All of the cash indicated on the Company's balance sheet as of June 30,
1998, was held in the accounts listed on Schedule 4.26, and as of the
Consummation Date, the Company will have no other accounts. Schedule 4.26 also
sets forth the name of each person, corporation, firm or other entity holding a
general or special power of attorney from the Company and a description of the
terms of such power.
4.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by the Company and the performance by the Company of the transactions
contemplated herein have been duly and validly authorized by the Board of
Directors and the Stockholders of the Company and this Agreement has been duly
and validly authorized by all necessary corporate action and is a valid and
binding obligation of the Company, subject to the effect of applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium,
liquidation or other similar laws and equity principles relating to creditors'
rights generally.
4.28 RELATIONS WITH GOVERNMENTS. None of the Company, any of the
Stockholders, nor any Affiliate of any of them has given or offered anything of
value to any governmental official, political party or candidate for government
office nor has it or any of them otherwise taken any action which would in any
case cause the Company to be in violation of the Foreign Corrupt Practices Act
of 1977, as amended, or any law of similar effect.
4.29 DISCLOSURE. (a) The representations and warranties of the
Stockholders as set forth in this Agreement, including the Annexes and Schedules
hereto, to the extent such representations and warranties relate to the Company
and the Stockholders, and the completed Director and Officer Questionnaires,
with respect to any Stockholder who has completed such Questionnaires do not
contain an untrue statement of a material fact concerning the Company or the
Stockholders or omit
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to state a material fact concerning the Company or the Stockholders necessary to
make the statements herein and therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing does
not apply to statements contained in or omitted from any of such documents made
or omitted in reliance upon information furnished in writing by the Other
Founding Companies, RV Centers and its Affiliates or any representatives or
agents of RV Centers and its Affiliates.
(b) The Stockholders acknowledge and agree that (i) there exists no
firm commitment, binding agreement, or promise or other assurance of any kind,
whether express or implied, oral or written, that a Registration Statement will
become effective or that the IPO pursuant thereto will occur; (ii) neither RV
Centers nor ▇▇▇▇▇ ▇▇▇▇▇ Funding I, L.L.C. or any of their officers, directors,
agents or representatives nor any Underwriter shall have any liability to the
Company, the Stockholders or any other person affiliated or associated with the
Company for any failure of the Registration Statement to become effective, the
IPO to occur at a particular price or within a particular range of prices or to
occur at all, the transactions contemplated by this Agreement to be successful
or the prospects for RV Centers described in the Registration Statement to be
realized; and (iii) the decision of Stockholders to enter into this Agreement,
or to vote in favor of or consent to the proposed purchase of RV Centers Stock
and sale of the Company Stock, has been or will be made independent of, and
without reliance upon, any statements, opinions or other communications, or due
diligence investigations which have been or will be made or performed by any
prospective Underwriter, relative to RV Centers or the prospective IPO.
(c) No Stockholder has any present plan, intention, commitment or
binding agreement or arrangement to dispose of any shares of RV Centers Stock to
be received by such Stockholder as a result of the transactions contemplated in
this Agreement, except for transfers permitted pursuant to Sections 14 and 15
hereof.
4.30 PROHIBITED ACTIVITIES. Except as set forth on Schedule 4.30, the
Company has not, between the Balance Sheet Date and the date hereof, taken any
of the actions (Prohibited Activities) set forth in Section 6.3.
4.31 NO WARRANTIES OR INSURANCE. Except as set forth on Schedule 4.31,
the Company has no liability to any person under any warranty relating to goods
sold or services provided by the Company and the Company does not offer or sell
insurance or consumer protection plans or other arrangements that could result
in the Company being required to make any payment to or perform any service for
any person.
4.32 INTEREST IN CUSTOMERS AND SUPPLIERS AND RELATED PARTY
TRANSACTIONS. Except as described on Schedule 4.32, no Stockholder, officer,
director or Affiliate of the Company (i) possesses, directly or indirectly, any
financial interest in, or is a director, officer, employee or Affiliate of, any
corporation, firm, association or business organization that is a client,
supplier, customer, lessor, lessee or competitor of the Company, or (ii) is a
party to an agreement or
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relationship, that involves the receipt by such person of compensation or
property from the Company other than through a customary employment
relationship.
4.33 REGISTRATION STATEMENT. None of the information supplied by the
Company in writing for inclusion in the Registration Statement contains any
untrue statement of a material fact concerning the Company or the Stockholders
or has omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein concerning the Company or the
Stockholders, in light of the circumstances under which they are made, not
misleading. The Stockholders will have the right to review and approve in
advance any statements made about the Company in the Registration Statement.
4.34 INVENTORY. Except as provided in Schedule 4.34, all of the
Company's inventories at June 30, 1998 are reflected on the Interim Financial
Statements. The values at which inventories are carried on the Interim Financial
Statements reflect the normal inventory valuation policies of the Company in
conformity with GAAP consistently applied. The inventories reflected on the
Interim Financial Statements or arising since the date thereof are currently
marketable and substantially all of such inventories can reasonably be
anticipated to be sold at normal ▇▇▇▇-ups within 180 days after the date hereof
in the ordinary course of business (subject to any reserve for obsolete,
off-grade or slow-moving items that is reflected in the Interim Financial
Statements) except for spare parts inventory which inventory is good and usable.
4.35 YEAR 2000. Except and to the extent described in Schedule 4.35,
the "Information Technology" (as defined below in this Section 4.35) of the
Company and its Subsidiaries is Year 2000 compliant. "Year 2000 compliant" means
that the Information Technology is designed to be used prior to, during and
after the calendar Year 2000 A.D. and the Information Technology used during
each such time period will accurately receive, provide and process date/time
data (including, but not limited to, calculating, comparing and sequencing)
from, into and between the 20th and 21st centuries, including the years 1999 and
2000, and leap-year calculations and will not malfunction, cease to function, or
provide invalid or incorrect results as a result of date/time data.
For purposes hereof, "Information Technology," means all computer
operated or micro processor controlled equipment, including, but not limited to
computer software, computer hardware and related software, all central
processing units, terminals, disk drives, tape drives, electronic memory units,
printers, keyboards, screens, peripherals (and other input/output devices),
modems and other communication controllers, and any and all parts and
appurtenances thereto, together with all intellectual property used in the
operation of such computer equipment and hardware, and other similar or related
items of automated, computerized, or software system(s) that are used or relied
on by the Company or its Subsidiaries in the conduct of their business.
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(B) Individual Representations and Warranties of Stockholders.
Each Stockholder severally represents and warrants that the
representations and warranties set forth below are true as of the date of this
Agreement, and that the representations and warranties set forth in Section 4(B)
shall survive the Consummation Date.
4.36 AUTHORITY; OWNERSHIP. Such Stockholder has the full legal right,
power and authority to enter into this Agreement. Such Stockholder owns
beneficially and of record all of the shares of the Company Stock identified on
Schedule 4.3 hereto as being owned by such Stockholder, and such Company Stock
is owned free and clear of all liens, encumbrances and claims of every kind.
4.37 PREEMPTIVE RIGHTS. Such Stockholder does not have, or hereby
waives, any preemptive or other right to acquire shares of Company Stock that
such Stockholder has or may have had. Nothing herein, however, shall limit or
restrict the rights of any Stockholder to acquire RV Centers Stock pursuant to
(i) this Agreement or (ii) any outstanding option, warrant or other rights
granted by RV Centers.
5. REPRESENTATIONS OF RV CENTERS
Except as set forth in the disclosure schedules attached hereto and
except otherwise qualified below, RV Centers represents and warrants that all of
the following representations and warranties in this Section 5 are true at the
date of this Agreement, and that such representations and warranties, except for
those in Section 5.3, shall survive the Consummation Date until June 30, 2000
(the "Expiration Date"). The representations and warranties set forth in Section
5.3 shall survive until the date on which the applicable statute of limitations
expires, which date shall be the "Expiration Date" for purposes of Section 5.3.
5.1 DUE ORGANIZATION. RV Centers is a corporation duly incorporated
and organized, validly existing and in good standing under the laws of the State
of Delaware, and it has the requisite power and authority to carry on its
business as it is now being conducted and as contemplated in the RV Centers Plan
of Organization. RV Centers is duly qualified or authorized to do business and
is in good standing in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification or
authorization necessary, except where the failure to be so qualified or
authorized to do business would not have a Material Adverse Effect. True,
complete and correct copies of the Certificate of Incorporation and By-laws, as
proposed to be amended, of RV Centers (the "RV Centers Charter Documents") are
attached hereto as Annex II.
5.2 AUTHORIZATION. (i) The officers of RV Centers executing this
Agreement have the authority to enter into and bind RV Centers to the terms of
this Agreement and (ii) RV Centers has the full legal right, power and authority
to enter into and perform this Agreement and consummate the transactions
contemplated herein. All corporate acts and other proceedings required to have
been taken by RV Centers to authorize the execution, delivery and performance of
this Agreement
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and all the transactions contemplated hereby have been duly and properly
authorized. Copies of the most recent resolutions adopted by the Board of
Directors of RV Centers, which approve this Agreement and the transactions
contemplated herein in all respects, certified by the Secretary or an Assistant
Secretary of RV Centers, as the case may be, as being in full force and effect
on the date hereof, are attached hereto as Schedule 5.2.
5.3 CAPITAL STOCK OF RV CENTERS. As of the date of this Agreement,
the authorized capital stock of RV Centers is as set forth on Schedule 5.3.
Immediately prior to the Closing Date and the Consummation Date, all of the
issued and outstanding shares of the capital stock of RV Centers will be as set
forth in the Registration Statement, free and clear of all liens, security
interests, pledges, charges, voting trusts, restrictions, encumbrances and
claims of every kind other than any restrictions described in the Registration
Statement. All of the issued and outstanding shares of the capital stock of RV
Centers has been duly authorized and validly issued, are fully paid and
nonassessable and such shares were offered, issued, sold and delivered by RV
Centers in compliance with all applicable state and Federal laws concerning the
issuance of securities. Further, none of such shares were issued in violation of
the preemptive rights of any past or present stockholder of RV Centers.
5.4 TRANSACTIONS IN CAPITAL STOCK; ORGANIZATION ACCOUNTING. Except
for the Other Agreements and except as set forth in the Draft Registration
Statement, (i) no option, warrant, call, conversion right or commitment of any
kind exists which obligates RV Centers to issue any of its authorized but
unissued capital stock; and (ii) RV Centers has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay any dividend or make any distribution in
respect thereof. The outstanding options, warrants or other rights to acquire
shares of the stock of RV Centers will be as described in the Registration
Statement.
5.5 SUBSIDIARIES. RV Centers has no subsidiaries. RV Centers does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity, and RV Centers,
directly or indirectly, is not a participant in any joint venture, partnership
or other non-corporate entity.
5.6 NO VIOLATIONS. (a) RV Centers is not in violation of any RV
Centers Charter Document. Neither RV Centers nor, to the best knowledge of RV
Centers, any other party thereto, is in default under any lease, instrument,
agreement, license, or permit to which RV Centers is a party, or by which RV
Centers, or any of its properties, is bound (collectively, the "RV Centers
Documents").
(b) The execution and delivery of this Agreement by RV Centers does
not violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or
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result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of RV Centers under any of the terms,
conditions or provisions of (i) the RV Centers Charter Documents, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to RV
Centers or any of its properties or assets, or (iii) any RV Centers Document.
The consummation by RV Centers of the transactions contemplated herein will not
result in any material violation, conflict, breach, right of termination or
acceleration or creation of liens under any of the terms, conditions or
provisions of the items described in clauses (i) through (iii) of the preceding
sentence, subject, in the case of the terms, conditions or provisions of the
items described in clause (iii) above, to obtaining (prior to the Effective
Time) such consents as may be required from commercial lenders, lessors or other
third parties.
(c) Except for (i) the filings with the SEC pursuant to the 1933 Act
in connection with the IPO and the purchase and sale of the Company Stock, (ii)
the declaration of the effectiveness thereof by the SEC and filings with various
state blue sky authorities, and (iii) any filings required under the ▇▇▇▇-▇▇▇▇▇
Act in connection with the transactions contemplated by the RV Centers Plan of
Organization, none of the RV Centers Documents requires notice to, or the
consent or approval of, any governmental agency or other third party with
respect to the consummation by RV Centers of any of the transactions
contemplated herein, and consummation by RV Centers of the transactions
contemplated herein will not give rise to any right to termination, cancellation
or acceleration or loss of any material right or benefit under any of the RV
Centers Documents.
(d) Except for (i) the filings with the SEC pursuant to the 1933 Act
in connection with the IPO and the purchase and sale of the Company Stock, (ii)
the declaration of the effectiveness thereof by the SEC and filings with various
state blue sky authorities, and (iii) any filings required under the ▇▇▇▇-▇▇▇▇▇
Act in connection with the transactions contemplated in the RV Centers Plan of
Organization, no declaration, filing or registration with, notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by RV
Centers or the consummation by RV Centers of the transactions contemplated
herein.
5.7 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by RV Centers and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of RV
Centers and this Agreement has been duly and validly authorized by all necessary
corporate action and is a legal, valid and binding obligation of RV Centers.
5.8 RV CENTERS STOCK. At the time of issuance thereof and delivery to
the Stockholders, the RV Centers Stock to be delivered to the Stockholders
pursuant to this Agreement will constitute valid, duly authorized and legally
issued shares of RV Centers, fully paid and nonassessable, and with the
exception of restrictions upon resale set forth in Sections 14 and 15 hereof,
will be identical in all substantive respects (which do not include the form of
certificate upon which it is printed or the presence or absence of a CUSIP
number on any such certificate) to the RV Centers Stock issued
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and outstanding as of the date hereof by reason of the provisions of the
Delaware GCL. The RV Centers Stock issued and delivered to the Stockholders
shall at the time of such issuance and delivery be free and clear of any liens,
claims or encumbrances of any kind or character. The shares of RV Centers Stock
to be issued to the Stockholders pursuant to this Agreement will not be
registered under the 1933 Act, except as provided in Section 16 hereof.
5.9 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. RV Centers was
formed in May, 1998 and has conducted only limited operations since that time.
RV Centers has not conducted any material business since the date of its
inception, except in connection with this Agreement, the Other Agreements and
the IPO. Except as described in the Draft Registration Statement, RV Centers
does not own and has not at any time owned any real property or any material
personal property and is not a party to any other material agreement other than
the Other Agreements, the agreements contemplated hereby and such agreements as
will be filed as Exhibits to the Registration Statement. Except as set forth in
the Registration Statement, RV Centers has not entered into any material
agreement with any of the Founding Companies or any of the stockholders of the
Founding Companies other than the Other Agreements and the agreements
contemplated in each of the Other Agreements and the Registration Statement,
including the employment agreements and leases referred to herein or entered
into in connection with the transactions contemplated herein and therein.
5.10 INVESTMENT REPRESENTATIONS. RV Centers represents that the
Company Stock is being acquired by RV Centers for its own account for investment
purposes only and not with a view to the distribution thereof within the meaning
of the 1933 Act.
5.11 AUTHORIZATION OF OTHER AGREEMENTS. The Other Agreements have been
duly authorized, executed and delivered by RV Centers and constitute the legal,
valid and binding obligation of RV Centers enforceable against RV Centers in
accordance with their respective terms, subject to the effect of applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium,
liquidation or other similar laws and equity principles relating to creditors'
rights generally.
5.12 FINANCIAL STATEMENTS. The unaudited pro forma financial
statements of RV Centers included in the Draft Registration Statement comply as
to form in all material respects to the applicable accounting requirements of
the 1933 Act and the regulations promulgated under the 1933 Act. Management of
RV Centers believes that the assumptions underlying the pro forma adjustments
utilized in the preparation of such pro forma financial statements are
reasonable, and such pro forma adjustments have been properly applied to the
historical financial amounts in the compilation of the pro forma financial
statements. Based on the representations in Section 4.9 of this Agreement and in
Section 4.9 of each of the Other Agreements, to the knowledge of RV Centers, the
pro forma financial information of RV Centers fairly presents the pro forma
financial position, results of operations and other information purported to be
shown therein at the respective dates and for the respective periods specified.
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5.13 LIABILITIES AND OBLIGATIONS. Except as set forth in the Draft
Registration Statement, as of the date of this Agreement, RV Centers has no
material liabilities or obligations of any kind, character or description,
whether accrued, absolute, secured or unsecured, contingent or otherwise, other
than liabilities incurred in the ordinary course of business and consistent with
past practices, liabilities or obligations set forth in or contemplated by this
Agreement and the Other Agreements and except for fees incurred in connection
with the transactions contemplated hereby and thereby.
5.14 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth
in the Draft Registration Statement, RV Centers is not in violation of any law
or regulation or any order of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over it and its stockholders and, there are no claims,
actions, suits or proceedings, pending or, to the knowledge of RV Centers,
threatened against or affecting, RV Centers, at law or in equity, or before or
by any Federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over it and no
notice of any claim, action, suit or proceeding, whether pending or threatened,
has been received. RV Centers has conducted and is conducting its businesses in
compliance in all material respects with the requirements, standards, criteria
and conditions set forth in applicable Federal, state and local statutes,
ordinances, permits, licenses, orders, approvals, variances, rules and
regulations and is not in violation, in any material respect, of any of the
foregoing.
5.15 NO SIDE AGREEMENTS. RV Centers has not entered into any agreement
with any of the Founding Companies or any of the stockholders of the Founding
Companies other than the Other Agreements and the agreements referred to in the
Other Agreements or the Draft Registration Statement, including the employment
agreements and/or advisory agreements and leases referred to herein or entered
into in connection with the transactions contemplated hereby and thereby. RV
Centers has not entered into any agreements providing for rights to register
shares of RV Centers Stock under the 1933 Act except as provided in Section 16
of this Agreement, in Section 16 of the Other Agreements and the Exhibits to the
Draft Registration Statement.
5.16 RELATIONS WITH GOVERNMENTS. Neither RV Centers nor any of its
directors, officers or Affiliates has given or offered anything of value to any
government official, political party or candidate for government office, nor has
RV Centers, any of its directors, officers or Affiliates of any of them
otherwise taken any action, which would cause RV Centers to be in violation of
the Foreign Corrupt Practices Act of 1977, as amended, or any law of similar
effect.
5.17 OTHER AGREEMENTS. The Other Agreements have been duly authorized,
executed and delivered by RV Centers and constitute the legal, valid and binding
obligation of RV Centers enforceable against RV Centers in accordance with their
respective terms. Except as disclosed on Schedule 5.17 or the Draft Registration
Statement, the terms and conditions of the Other Agreements and the employment
agreements, advisory agreements and leases attached as annexes thereto
(excluding the terms relating to the consideration payable by RV Centers
thereunder) are identical in all material respects to the terms and conditions
in this Agreement and its comparable Annexes.
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5.18 REGISTRATION STATEMENT. On the date of each filing of the
Registration Statement with the SEC the Registration Statement will comply, as
to form in all material respects with the requirements of the Form S-1
Registration Statement and applicable requirements under Federal laws and
regulations (except for the inclusion of all exhibits required to be filed
therewith with respect to the Draft Registration Statement and the Registration
Statement prior to its effective date), provided that the foregoing does not
apply to any information that the Company and the Stockholders have furnished to
RV Centers in writing specifically for inclusion in the Registration Statement.
5.19 DISCLOSURE. The Draft Registration Statement delivered to the
Company and the Stockholders does not as of the date hereof contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing does not apply to
statements contained in or omitted from any of such documents made or omitted in
reliance upon, and in conformity with, information furnished to RV Centers by
the Company or the Stockholders in writing specifically for inclusion in the
Registration Statement. The Registration Statement, when it becomes effective,
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and each prospectus included therein, on the date of
filing thereof with the SEC and at the Closing Date and the Consummation Date,
will not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing shall not apply to statements in or omissions from any such document
in reliance upon, and in conformity with, information furnished to RV Centers by
the Company or the Stockholders in writing specifically for inclusion therein.
6. COVENANTS PRIOR TO CLOSING
6.1 ACCESS AND COOPERATION; DUE DILIGENCE.
(a) Between the date of this Agreement and the Consummation Date, the
Company will afford to the officers and authorized representatives of RV Centers
reasonable access during normal business hours to all of the Company's sites,
properties, books and records and will furnish RV Centers with such additional
financial and operating data and other information as to the business and
properties of the Company as RV Centers may from time to time reasonably
request. The Company will cooperate with RV Centers, its representatives,
auditors and counsel in the preparation of any documents or other material which
may be required in connection with any documents or materials required by this
Agreement. RV Centers will treat all information obtained in connection with the
negotiation and performance of this Agreement or the due diligence
investigations conducted with respect to the Company as confidential in
accordance with the provisions of Section 13 hereof.
(b) Between the date of this Agreement and the Consummation Date, RV
Centers will afford to the officers and authorized representatives of the
Company and/or the Stockholder access
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to all of RV Centers's sites, properties, books and records and will furnish the
Company and/or the Stockholder with such additional financial and operating data
and other information as to the business and properties of RV Centers as the
Company and/or the Stockholder may from time to time reasonably request. RV
Centers will cooperate with the Company and/or the Stockholder, their
representatives, auditors and counsel in the preparation of any documents or
other material which may be required in connection with any documents or
materials required by this Agreement. The Company and/or the Stockholder will
cause all information obtained in connection with the negotiation and
performance of this Agreement (including information regarding each of the Other
Founding Companies) to be treated as confidential in accordance with the
provisions of Section 13 hereof.
6.2 CONDUCT OF BUSINESS PENDING CLOSING. Except as set forth on
Schedule 6.2, between the date of this Agreement and the Consummation Date, the
Company will:
(i) carry on its respective businesses in the ordinary course,
consistent with past practice, and not introduce any material new
method or changes in operation or accounting;
(ii) use all commercially reasonable efforts to maintain its
respective properties, equipment and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(iii) perform all of its obligations under agreements relating
to or affecting its assets, properties, equipment or rights, the
nonperformance of which could have a Material Adverse Effect on the
Company;
(iv) use all reasonable efforts to keep in full force and
effect present insurance policies or other comparable insurance
coverage;
(v) use reasonable efforts to maintain and preserve its
business organization intact, retain its respective key employees and
maintain its respective material relationships with suppliers,
customers and others having business relations with the Company;
(vi) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities, the
noncompliance with which could have a Material Adverse Effect on the
Company;
(vii) maintain present debt and lease instruments in accordance
with their terms and not enter into new or amended debt or lease
instruments without the knowledge and written consent of RV Centers
(which consent shall not be unreasonably withheld) provided that debt
or lease instruments may be replaced without the consent of RV Centers
if the replacement instruments are on terms at least as favorable to
the Company as the instruments being replaced;
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(viii) maintain or reduce present salaries and commission levels
for all officers, directors, employees and agents except for ordinary
and customary bonus and salary increases for employees in accordance
with past practices; notwithstanding the foregoing, the Company will
not pay or agree to pay salary, bonus, sales commissions, fees or any
other form of compensation, directly or indirectly, to the Stockholders
or any members of their family in excess of the aggregate monthly
compensation provided for in Annex I hereto; and
(ix) pay all of its obligations, including but not limited to
taxes, loans and manufacturers' invoices, as they become due and
payable and not prepay any of its obligations.
6.3 PROHIBITED ACTIVITIES. Except as set forth on Schedule 6.3 or on
Annex I to this Agreement, between the date hereof and the Consummation Date,
the Company will not, without prior written consent of RV Centers:
(i) make any change in its Charter Documents;
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind other than
in connection with the exercise of options or warrants listed in
Schedule 4.4;
(iii) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of its
stock;
(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except if it is
in the normal course of business (consistent with past practice) or
involves an amount per contract, commitment, liability or expenditure,
in the aggregate, not in excess of $100,000 except for purchases and
sales of recreational vehicles inventory in the ordinary course of
business;
(v) create or assume to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired, except (1) with respect to purchase money liens
incurred in connection with the acquisition of equipment, (excluding
rolling stock inventory) with an aggregate cost, per item, not in
excess of $25,000 necessary or desirable for the conduct of the
businesses of the Company, (2) (A) liens for taxes either not yet due
or being contested in good faith and by appropriate proceedings (and
for which contested taxes adequate reserves have been established and
are being maintained) or (B) materialmen's, mechanics', workers',
repairmen's, employees' or other like liens arising in the ordinary
course of business (the liens set forth in clause (2) being referred to
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herein as "Statutory Liens"), or (3) liens set forth on Schedule
4.10(b), 4.15(b) and/or 4.16 hereto;
(vi) sell, assign, lease or otherwise transfer or dispose of
any property or equipment with a net book value in excess of $25,000
except in the normal course of business;
(vii) consummate or enter into any commitment for the
acquisition of any business or the start-up of any new business;
(viii) merge or consolidate or agree to merge or consolidate with
or into any other corporation;
(ix) waive any material rights or claims of the Company,
provided that the Company may negotiate and adjust bills and accounts
in the course of good faith disputes with customers in a manner
consistent with past practice, provided, further, that such adjustments
shall not be deemed to be included in Schedule 4.11 unless specifically
listed thereon;
(x) commit a material breach of or amend or terminate any
material agreement, permit, license or other right of the Company;
(xi) enter into any other transaction outside the ordinary
course of its business or prohibited hereunder; or
(xii) pay or agree to pay salary, bonus, sales commissions, fees
or any other form of compensation, directly or indirectly, to the
Stockholders or any members of their family in excess of the aggregate
monthly compensation provided for in Annex I hereto.
6.4 NO SHOP. None of the Stockholders or the Company, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Consummation Date or the termination of this Agreement
in accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers
from any person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than RV
Centers or its authorized agents relating to,
any acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, the Company or a merger, consolidation, share exchange or
business combination of the Company.
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6.5 AGREEMENTS. Except as disclosed on Schedule 6.5, the Stockholders
and the Company shall terminate (i) any stockholders agreements, voting
agreements, voting trusts, options, warrants and employment agreements between
the Company and any employee listed on Schedule 8.11 hereto and (ii) except as
otherwise provided in this Agreement, any existing agreement between the Company
and any Stockholder, on or prior to the Consummation Date, provided that nothing
herein shall prohibit or prevent the Company from paying (either prior to or on
the Closing Date) notes or other obligations from the Company to the
Stockholders in accordance with the terms thereof, which terms have been
disclosed to RV Centers. Such termination agreements are listed on Schedule 6.5
and copies thereof are attached thereto.
6.6 NOTIFICATION OF CERTAIN MATTERS. The Stockholders and the Company
shall give prompt notice to RV Centers of the Company's or any Stockholder's
knowledge of (i) the occurrence or non-occurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
of the Company or the Stockholders contained herein to be untrue or inaccurate
in any material respect at or prior to the Closing and (ii) any material failure
of any Stockholder or the Company to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such person
hereunder. RV Centers shall give prompt notice to the Company of RV Centers's
knowledge of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
of RV Centers contained herein to be untrue or inaccurate in any material
respect at or prior to the Closing and (ii) any material failure of RV Centers
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder. The delivery of any notice pursuant to this
Section 6.6 shall not be deemed to (i) modify the representations or warranties
hereunder of the party delivering such notice, which modification may only be
made pursuant to Section 6.7, (ii) modify the conditions set forth in Sections 7
and 8, or (iii) limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
6.7 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until 24 hours prior
to the anticipated effectiveness of the Registration Statement to supplement or
amend promptly the Schedules hereto with respect to any matter hereafter arising
or discovered which, if existing or known at the date of this Agreement, would
have been required to be set forth or described in the Schedules or which may
have been omitted from the schedules previously provided by the Company;
provided however, that supplements and amendments to Schedules 4.10(b), 4.11,
4.14, 4.15(a), and 4.15(b) shall only have to be delivered at the Closing Date,
unless such Schedule is to be amended to reflect an event occurring other than
in the ordinary course of business. Notwithstanding the foregoing sentence, no
amendment or supplement to a Schedule prepared by the Company that constitutes
or reflects an event or occurrence that would have a Material Adverse Effect on
the Company may be made unless RV Centers consents to such amendment or
supplement; and provided further, that no amendment or supplement to a Schedule
prepared by RV Centers that constitutes or reflects an event or occurrence that
would have a Material Adverse Effect on RV Centers may be made unless a majority
of the Founding Companies consent to such amendment or supplement. For all
purposes of this
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Agreement, including without limitation for purposes of determining whether the
conditions set forth in Sections 7.1 and 8.1 have been fulfilled, the Schedules
hereto shall be deemed to be the Schedules as amended or supplemented pursuant
to this Section 6.7. In the event that the Company seeks to amend or supplement
a Schedule pursuant to this Section 6.7 to reflect an item not known to the
Company or the Stockholders at the time of entering into this Agreement or an
event occurring after the date of this Agreement, and RV Centers does not
consent, in its reasonable discretion, to such amendment or supplement, this
Agreement shall be deemed terminated by mutual consent as set forth in Section
11.1(i) hereof. In the event that RV Centers seeks to amend or supplement a
Schedule pursuant to this Section 6.7 and a majority of the Founding Companies
do not consent to such amendment or supplement, this Agreement shall be deemed
terminated by mutual consent as set forth in Section 11.1(i) hereof. No party to
this Agreement shall be liable to any other party if this Agreement shall be
terminated pursuant to the provisions of this Section 6.7 with respect to an
attempt to supplement or amend a Schedule to reflect an item not known to RV
Centers or the Company or Stockholders, as applicable, at the time of execution
or occurring after the date of execution of this Agreement. No amendment of or
supplement to a Schedule shall be made later than 24 hours prior to the
anticipated effectiveness of the Registration Statement, subject to the proviso
in the first sentence.
6.8 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The Company
and the Stockholders shall furnish or use reasonable efforts to cause to be
furnished to RV Centers and the Underwriters all of the information concerning
the Company and the Stockholders and their Affiliates as RV Centers may
reasonably request required for inclusion in, and will cooperate with RV Centers
and the Underwriters in the preparation of, the Registration Statement and the
prospectus included therein (including audited and unaudited financial
statements, prepared in accordance with GAAP, in form suitable for inclusion in
the Registration Statement). The parties hereto agree that the disclosure of
information with respect to the Company and the Stockholders and their
affiliates in the Registration Statement and while marketing the securities of
RV Centers in the IPO shall not be a violation of any confidentiality agreement,
including Article 13 of this Agreement, among the parties hereto or their
officers or stockholders. The Company and the Stockholders agree promptly to
advise RV Centers if at any time during the period in which a prospectus
relating to the offering is required to be delivered under the 1933 Act, any
information contained in the prospectus concerning the Company or the
Stockholders or their Affiliates becomes incorrect or incomplete in any material
respect and to provide the information needed to correct such inaccuracy.
Subject to the Company's right to review and approve such information in the
Registration Statement set forth in Section 4.33 above, only insofar as the
information relates solely to the Company or the Stockholders or their
affiliates, the Company represents and warrants as to such information with
respect to itself, and each Stockholder represents and warrants, as to such
information with respect to the Company and himself or herself, that the
Registration Statement will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
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6.9 FINAL FINANCIAL STATEMENTS. The Company shall provide at least
five (5) business days prior to the Consummation Date the consolidated balance
sheets of the Company, audited as of December 31, 1998 and unaudited as of the
end of all fiscal months following December 31, 1998 and ending at least 25 days
prior to the Consummation Date, and the consolidated statement of income, cash
flows and retained earnings of the Company, audited for the quarter ending
December 31, 1998 and unaudited for the same months as the balance sheets. Such
financial statements shall have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods indicated (except as noted therein),
and will present fairly the financial position and results of operations of the
Company for the periods indicated therein.
6.10 FURTHER ASSURANCES. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or
appropriate to carry out the transactions contemplated herein.
6.11 COMPLIANCE WITH THE ▇▇▇▇-▇▇▇▇▇ ACT. All parties to this Agreement
hereby recognize that one or more filings under the ▇▇▇▇-▇▇▇▇▇ Act may be
required in connection with the transactions contemplated herein. If it is
determined by the parties to this Agreement that filings under the ▇▇▇▇-▇▇▇▇▇
Act are required, then: (i) each of the parties hereto agrees to cooperate and
use its best efforts to comply with the ▇▇▇▇-▇▇▇▇▇ Act, (ii) such compliance by
the Stockholders and the Company shall be deemed a condition precedent in
addition to the conditions precedent set forth in Section 8 of this Agreement,
and such compliance by RV Centers shall be deemed a condition precedent in
addition to the conditions precedent set forth in Section 7 of this Agreement,
and (iii) the parties agree to cooperate and use their best efforts to cause all
filings required under the ▇▇▇▇- ▇▇▇▇▇ Act to be made. If filings under the
▇▇▇▇-▇▇▇▇▇ Act are required, the costs and expenses thereof (including filing
fees) shall be borne by RV Centers. The obligation of each party to consummate
the transactions contemplated in this Agreement is subject to the expiration or
termination of the waiting period under the ▇▇▇▇-▇▇▇▇▇ Act, if applicable.
6.12 TRANSFERS OF PERMITS AND INTANGIBLES. The Stockholders shall use
commercially reasonable efforts to cause all trademarks, trade names, patents,
patent applications, copyrights and other intellectual property owned or held by
employees of the Company which are material to the operations of the business of
the Company to be assigned or licensed to the Company for no additional
consideration.
6.13 DIVIDENDS. The Company may, after the Balance Sheet Date and
before the Consummation Date, pay to the Stockholder only the dividends or
distributions expressly permitted by Annex I hereto.
6.14 AUTHORIZED CAPITAL. Prior to the Consummation Date, RV Centers
shall maintain its authorized capital stock as set forth in the Registration
Statement filed with the SEC except for stock splits, such changes in authorized
capital stock as are made to respond to comments made by the SEC or requirements
of any exchange or automated trading system for which application is made
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to register the RV Centers Stock and any changes necessary or advisable in order
to permit the delivery of the opinion contemplated by Section 7.3 hereof.
6.15 YEAR 2000 COMPLIANCE COST ESTIMATES. Promptly upon execution
hereof, the Company and its Subsidiaries will undertake an investigation of all
Information Technology suppliers and vendors to determine whether all
Information Technology products purchased, leased, licensed or used by or in
connection with the Company or its Subsidiaries, or their respective Information
Technology, is Year 2000 compliant and, if not, the steps required to make it
Year 2000 compliant. Within thirty-five (35) days hereof, the Company shall
provide to RV Centers in writing an estimate of the total cost of, and the time
required, to make all the Company's Information Technology Year 2000 compliant.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY
The obligations of the Stockholders and the Company with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions,
except Section 7.8. The obligations of the Stockholders and the Company with
respect to actions to be taken on the Consummation Date are subject to the
satisfaction or waiver on or prior to the Consummation Date of the conditions
set forth in Sections 7.1, 7.2, 7.3, 7.5, 7.6, 7.7 and 7.8. As of the Closing
Date or, with respect to the conditions set forth in Sections 7.1, 7.2, 7.3,
7.5, 7.6, 7.7 and 7.8, as of the Consummation Date, if any such conditions have
not been satisfied, the Stockholders (acting in unison) shall have the right to
terminate this Agreement, or in the alternative, waive any condition not so
satisfied. Any act or action of the Stockholders in consummating the Closing or
delivering the certificates representing Company Stock as of the Consummation
Date shall constitute a waiver of any conditions not so satisfied. However, no
such waiver shall be deemed to affect the survival of the representations and
warranties of RV Centers contained in Section 5 hereof.
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of RV Centers contained in this Agreement shall
be true and correct in all material respects as of the Closing Date and the
Consummation Date as though such representations and warranties had been made as
of that time; all of the terms, covenants and conditions of this Agreement to be
complied with and performed by RV Centers on or before the Closing Date and the
Consummation Date shall have been duly complied with and performed in all
material respects; and certificates to the foregoing effect dated the Closing
Date and the Consummation Date, respectively, and signed by the President or any
Vice President of RV Centers shall have been delivered to the Stockholders.
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7.2 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the purchase and sale of the Company Stock or the IPO or
the consummation of the Other Agreements in a manner that would have a Material
Adverse Effect upon RV Centers or any of its stockholders or Subsidiaries.
7.3 OPINIONS. The Company shall have received (i) an opinion from
counsel for RV Centers, dated the Closing Date, in the form annexed hereto as
Annex III, and (ii) an opinion, from Ernst & Young LLP, dated the Closing Date,
that the RV Centers Plan of Organization will qualify as a tax-free transfer of
property under Section 351 of the Code and that the Stockholders will not
recognize gain to the extent the Stockholders exchange stock of the Company
Stock for RV Centers Stock (but not cash or other property) pursuant to the RV
Centers Plan of Organization.
7.4 REGISTRATION STATEMENT; MINIMUM VALUE. The Registration Statement
shall have been declared effective by the SEC and not subject to any stop order
proceedings and the underwriters named therein shall have agreed to acquire on a
firm commitment basis, subject to the conditions set forth in the underwriting
agreement, shares of RV Centers Stock on terms such that the aggregate value of
the cash and the shares of RV Centers Stock to be received by the Stockholders
is not less than the Minimum Value set forth on Annex I.
7.5 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made and no action
or proceeding shall have been instituted or threatened to restrain or prohibit
the transactions contemplated herein and no governmental agency or body shall
have taken any other action or made any request of the Company as a result of
which the Company deems it inadvisable to proceed with the transactions
hereunder. All consents and approvals of third parties listed on Schedule
4.23(c) shall have been obtained.
7.6 GOOD STANDING CERTIFICATES. RV Centers shall have delivered to
the Company a certificate, dated as of a date no later than ten days prior to
the Closing Date, duly issued by the Delaware Secretary of State and in each
state in which RV Centers is authorized to do business, showing that RV Centers
is in good standing and authorized to do business and that all state franchise
and/or income tax returns and taxes for RV Centers for all periods prior to the
Closing have been filed and paid and RV Centers shall be in good standing in
such states on the Closing Date and the Consummation Date.
7.7 NO MATERIAL ADVERSE CHANGE. No event or circumstance or series of
events shall have occurred with respect to RV Centers which would constitute a
Material Adverse Effect and no change in the disclosures in the Draft
Registration Statement shall have been made which reflects a Material Adverse
Effect on RV Centers.
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7.8 CLOSING OF IPO. The closing of the sale of the RV Centers Stock
to the Underwriters in the IPO shall have occurred on the Consummation Date.
7.9 SECRETARY'S CERTIFICATE. The Company shall have received a
certificate or certificates, dated the Closing Date and signed by the secretary
of RV Centers, certifying the truth and correctness of attached copies of RV
Centers's Certificate of Incorporation (including amendments thereto), ByLaws
(including amendments thereto), and resolutions of the board of directors and,
if required, the stockholders of RV Centers approving RV Centers's entering into
this Agreement and the consummation of the transactions contemplated herein.
7.10 EMPLOYMENT AGREEMENTS. The Company shall have offered to enter
into an employment agreement, substantially in the form of Annex V, with each of
the persons listed in Schedule 8.11.
7.11 OTHER FOUNDING COMPANIES. A sufficient number of the transactions
contemplated by the Other Agreements with the Other Founding Companies are
consummated and (i) RV Centers is able to list the RV Centers Stock on the New
York Stock Exchange, the American Exchange or The Nasdaq National Stock Market,
subject to official notice of issuance, on or prior to the Closing Date and (ii)
the combined revenue of the Founding Companies for which the transactions
contemplated by this Agreement and the Other Agreements are consummated is at
least $175 million based on the 12-month period ended December 31, 1998.
7.12 MANAGEMENT LOCK-UP AGREEMENTS. The Chairman, Vice Chairman, other
senior management of RV Centers, J. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, III and A. ▇▇▇▇ ▇▇▇▇▇ shall
have entered into agreements with RV Centers imposing substantially the same
transfer restrictions as provided in Section 14.1 hereof, on seventy-five
percent (75%) of the shares of RV Centers Stock held by such individuals, their
spouses and children and trusts for the benefit of such individuals.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RV CENTERS
The obligations of RV Centers with respect to actions to be taken on
the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions, except Section 8.12. The
obligations of RV Centers with respect to actions to be taken on the
Consummation Date are subject to the satisfaction or waiver on or prior to the
Consummation Date of the conditions set forth in Sections 8.1, 8.2, 8.4 and
8.12. As of the Closing Date or, with respect to the conditions set forth in
Sections 8.1, 8.2, 8.4 and 8.12, as of the Consummation Date, if any such
conditions have not been satisfied, RV Centers shall have the right to terminate
this Agreement, or waive any such condition. Any act or action of RV Centers in
consummating the Closing or delivering the certificates representing RV Centers
Stock as of the Consummation Date shall constitute a waiver of any conditions
not so satisfied. However, no such waiver shall be deemed to affect the survival
of the representations and warranties contained in Section 4 hereof.
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8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
the representations and warranties of the Stockholders and the Company contained
in this Agreement shall be true and correct in all material respects as of the
Closing Date and the Consummation Date with the same effect as though such
representations and warranties had been made on and as of such date; all of the
terms, covenants and conditions of this Agreement to be complied with or
performed by the Stockholders and the Company on or before the Closing Date or
the Consummation Date, as the case may be, shall have been duly performed or
complied with in all material respects; and the Stockholders shall have
delivered to RV Centers certificates dated the Closing Date and the Consummation
Date, respectively, and signed by them to such effect.
8.2 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the purchase and sale of the Company Stock or the IPO.
8.3 SECRETARY'S CERTIFICATE. RV Centers shall have received a
certificate, dated the Closing Date and signed by the secretary of the Company,
certifying the truth and correctness of attached copies of the Company Charter
(including amendments thereto), By-Laws (including amendments thereto), and
resolutions of the board of directors and the Stockholders approving the
Company's entering into this Agreement and the consummation of the transactions
contemplated herein.
8.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the Company which would constitute a Material Adverse
Effect, and the Company shall not have suffered any material loss or damages to
any of its properties or assets, whether or not covered by insurance, which
change, loss or damage materially affects or impairs the ability of the Company
to conduct its business.
8.5 STOCKHOLDERS' RELEASE. The Stockholders shall have delivered to
RV Centers an instrument dated the Closing Date, which shall be effective only
upon the occurrence of the Consummation Date, releasing the Company and RV
Centers from (i) any and all claims of the Stockholders against the Company and
RV Centers and (ii) obligations of the Company and RV Centers to the
Stockholders, except for (A) continuing obligations to Stockholders relating to
their employment by the Company pursuant to employment agreements entered into
as specified in Section 8.11 hereof, (B) obligations arising under this
Agreement or the transactions contemplated hereby and (C) claims of Stockholders
against the Company for unreimbursed business expenses incurred by the
Stockholders on behalf of the Company (other than expenses related to the
transactions contemplated by this Agreement) prior to the Consummation Date or
unreimbursed medical expenses of the Stockholders incurred prior to the
Consummation Date which are covered by the Company's existing health insurance
coverage. In the event that the Consummation Date does not occur, then the
release instrument referenced herein shall be void and of no further force or
effect.
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8.6 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 8.6, all existing agreements between the Company and the Stockholders
(and between the Company and entities controlled by the Stockholders) shall have
been canceled effective prior to or as of the Consummation Date.
8.7 OPINION OF COUNSEL. RV Centers and the Underwriters shall have
received an opinion from Counsel to the Company and the Stockholders, dated the
Closing Date, substantially in the form annexed hereto as Annex IV.
8.8 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all consents
and approvals of third parties listed on Schedule 4.23(c), other than
manufacturers of recreational vehicles, shall have been obtained; provided,
however, Company shall have used its best efforts, in cooperation with RV
Centers, to obtain the consent of the recreational vehicle manufacturers listed
in Schedule 4.23(c); and no action or proceeding shall have been instituted or
threatened to restrain or prohibit the purchase and sale of the Company Stock
and no governmental agency or body shall have taken any other action or made any
request of RV Centers as a result of which RV Centers deems it inadvisable to
proceed with the transactions hereunder.
8.9 GOOD STANDING CERTIFICATES. The Company shall have delivered to
RV Centers a certificate, dated as of a date no earlier than ten days prior to
the Closing Date, duly issued by the appropriate governmental authority in the
State of Incorporation and, unless waived by RV Centers, in each state in which
the Company is authorized to do business, showing the Company is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for the Company for all periods prior to the
Closing have been filed and paid.
8.10 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC.
8.11 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule
8.11 shall have entered into an employment agreement substantially in the form
of Annex V hereto.
8.12 CLOSING OF IPO. The closing of the sale of the RV Centers Stock
to the Underwriters in the IPO shall have occurred simultaneously with the
Consummation Date hereunder and the Stockholders shall have delivered to the
Underwriters such customary closing documents as they may reasonably request.
8.13 FIRPTA CERTIFICATE. Each Stockholder (other than the stockholders
which are foreign entities or foreign residents) shall have delivered to RV
Centers a certificate to the effect that he is not a foreign person pursuant to
Section 1.1445-2(b) of the Treasury regulations.
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8.14 RESIGNATIONS OF DIRECTORS. Any directors of the Company shall
have resigned as directors of the Company.
8.15 LEASE AGREEMENTS. If the Company leases property from any
Stockholder or Affiliate of a Stockholder, the Company and such Stockholder or
Affiliate shall have entered into a lease agreement, substantially in the form
attached as Annex VI hereto, and the Company shall be released from any
liability for loans used to purchase the property.
9. COVENANTS OF RV CENTERS AND THE STOCKHOLDERS AFTER CLOSING
9.1 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. Except as
contemplated by this Agreement or the Registration Statement, after the
Consummation Date, RV Centers shall not and shall not permit any of its
Subsidiaries to undertake any act that would jeopardize the tax-free status of
the exchange of Company Stock for RV Centers Stock (but not cash or other
property), including without limitation the retirement or reacquisition,
directly or indirectly, of all or part of the RV Centers Stock issued in
connection with the transactions contemplated herein.
9.2 PREPARATION AND FILING OF TAX RETURNS.
(i) The Company, if possible, or otherwise the Stockholders
shall file or cause to be filed all tax returns (federal, state, local
or otherwise) of any Acquired Party for all taxable periods that end on
or before the Consummation Date, and shall permit RV Centers to review
all such tax returns prior to such filings except with respect to
information pertaining to members of a consolidated group other than
the Company. Unless the Company is a C corporation, the Stockholders
shall pay or cause to be paid all Tax liabilities (in excess of all
amounts already paid with respect thereto or properly accrued or
reserved with respect thereto on the Company's Financial Statements)
shown by such tax returns to be due or otherwise attributable to such
tax returns.
(ii) If the Company is an S corporation, then upon filing the
final tax returns covering the Company's earnings for the year ended
December 31, 1998 and the period from January 1, 1999 to the
Consummation Date, Stockholders shall provide to RV Centers copies of
the Forms 1120S and Schedule K-1s and equivalent state income tax forms
so filed. If the amount of dividends or distributions made pursuant to
Annex I in anticipation of such taxes exceeds the "Calculated Tax
Amount," as defined below, for the applicable period, then Stockholders
shall repay any excess amount to the Company within 10 days of the
filing of the Form 1120S, or equivalent and provide a written
calculation of the Calculated Tax Amount. If the amount of dividends or
distributions made pursuant to Annex I in anticipation of such taxes is
less than the Calculated Tax Amount for the applicable period, then the
Company shall reimburse Stockholders for the amount of such deficiency
within 10 days of receiving a copy of the filed Form 1120S, Schedule
K-1s or equivalent and a written calculation of the Calculated Tax
Amount. The Calculated Tax Amount shall mean the amount of federal and
state income taxes that was owed on each Stockholder's income from
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the Company, for the periods from July 1, 1998 to December 31, 1998
and from January 1, 1999 to the Consummation Date, assuming a federal
tax rate of 39.6% and the applicable state tax rate (net of federal
benefits).
(iii) RV Centers shall file or cause to be filed all separate
Returns of, or that include, any Acquired Party for all taxable periods
ending after the Consummation Date.
(iv) Each party hereto shall, and shall cause its Subsidiaries
and Affiliates to, provide to each of the other parties hereto such
cooperation and information as any of them reasonably may request in
filing any Return, amended Return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or in conducting any
audit or other proceeding in respect of Taxes. Such cooperation and
information shall include providing copies of all relevant portions of
relevant Returns, together with relevant accompanying schedules and
relevant work papers, relevant documents relating to rulings or other
determinations by Taxing Authorities and relevant records concerning
the ownership and Tax basis of property, which such party may possess.
Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party
required to file Returns pursuant to this Agreement shall bear all
costs of filing such Returns.
(v) Each of the Company, RV Centers and each Stockholder shall
comply with the tax reporting requirements of Section 1.351-3 of the
Treasury Regulations promulgated under the Code, and treat the
transaction as a tax-free contribution under Section 351(a) of the Code
subject to gain, if any, recognized on the receipt of cash or other
property under Sections 351(b) or 357(c) of the Code.
9.3 DIRECTORS. Upon execution of this Agreement by the Company and
Stockholders and execution of similar agreements by the Other Founding Companies
and their stockholders, each Founding Company shall vote for five
representatives to become Directors of RV Centers. No cumulative voting is
permitted. RV Centers shall appoint those five persons receiving the most votes
as directors promptly following the Consummation Date. The other six persons
identified in the Registration Statement shall also be appointed Directors at
the same time, if not presently on the RV Centers Board of Directors.
9.4 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS. RV
Centers shall use reasonable efforts to have the Stockholders released from any
and all guarantees of the Company's indebtedness, including bond obligations,
identified on Schedule 9.4. Prior to obtaining the release of such guarantees,
RV Centers shall, if requested, provide its guarantee of such indebtedness to
the lenders thereof. In the event that RV Centers cannot obtain such releases
from the lenders of any such guaranteed indebtedness identified on Schedule 9.4
on or prior to 180 days subsequent to the Consummation Date, RV Centers shall
promptly pay off or otherwise refinance or retire such indebtedness such that
the Stockholders' personal liability shall be released. RV
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Centers will indemnify the Stockholders against any loss or damage suffered as a
result of the personal guarantees.
9.5 ACCESS TO RECORDS. RV Centers agrees (i) to hold all of the books
and records of the Company existing on the Consummation Date and not to destroy
or dispose of any such books and records for a period of 5 years from the
Consummation Date or such longer time as may be required by law, and (ii)
following the Consummation Date to afford Stockholders, their accountants and
counsel, during normal business hours, upon reasonable request, access to such
books, records and other data of the Company to the extent that such access may
be requested for a legitimate purpose at no cost to Stockholder (other than for
reasonable out-of-pocket expenses).
10. INDEMNIFICATION
The Stockholders and RV Centers each make the following covenants that
are applicable to them, respectively:
10.1 INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders covenant
and agree that they, jointly and severally, will indemnify, defend, protect and
hold harmless RV Centers and the Company at all times, from and after the date
of this Agreement until the Expiration Date (provided that for purposes of
Section 10.1(iii) below, the Expiration Date shall be the date on which the
applicable statute of limitations expires), from and against all claims, damages
(including consequential, punitive or exemplary), actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees, consulting fees and expenses
of investigation and environmental response) incurred by RV Centers and the
Company as a result of or arising from (i) any breach of the representations and
warranties of the Stockholders or the Company set forth herein or on the
schedules or certificates delivered in connection herewith, (ii) any breach of
any agreement on the part of the Stockholders or, prior to the Consummation
Date, the Company under this Agreement, or (iii) any liability under the 1933
Act, the 1934 Act or other Federal or state law or regulation, at common law or
otherwise, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact relating to the Company or the Stockholders which
was based upon and in conformity with information provided in writing to RV
Centers or its counsel by the Company or the Stockholders expressly for use in
the Registration Statement or any prospectus forming a part thereof and is
contained in the Registration Statement or any prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
relating to the Company or the Stockholders required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading to the extent such omission or alleged
omission is based upon the failure of the Company or the Stockholders to provide
to RV Centers the information containing that fact in any Schedule hereto or
otherwise to provide the information to RV Centers in writing, but such
indemnity shall not apply to the extent that such untrue statement (or alleged
untrue statement) was made in, or omission (or alleged omission) occurred in,
any preliminary prospectus and the
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Stockholders provided, in writing, corrected information to RV Centers counsel
and to RV Centers for inclusion in the final prospectus, and such information
was not so included or properly delivered, and provided further, that no
Stockholder shall be liable for any indemnification obligation pursuant to this
Section 10.1 to the extent solely attributable to a breach of any
representation, warranty or agreement made herein individually by any other
Stockholder.
RV Centers acknowledges and agrees that other than the representations
and warranties of the Company or the Stockholders specifically contained in this
Agreement, there are no representations or warranties of the Company or the
Stockholders, either express or implied, with respect to the transactions
contemplated by this Agreement, the Company or its assets, liabilities and
business.
RV Centers and the Company further acknowledge and agree that their
sole and exclusive remedy with respect to any and all claims for breach of this
Agreement and the transactions contemplated in this Agreement, shall be pursuant
to the indemnification provisions set forth in this Section 10. RV Centers and
the Company hereby waive to the fullest extent permitted under applicable law,
any and all other rights, claims and causes of action they or any indemnified
person may have against the Company or any Stockholder relating to this
Agreement or the transactions arising under or based upon any federal, state,
local or foreign statute, law, rule, regulation or otherwise.
10.2 INDEMNIFICATION BY RV CENTERS. RV Centers covenants and agrees
that it will indemnify, defend, protect and hold harmless the Stockholders at
all times from and after the date of this Agreement until the Expiration Date
(provided that for purposes of Section 10.2(iii) below, the Expiration Date
shall be the date on which the applicable statute of limitations expires), from
and against all claims, damages (including consequential, punitive or
exemplary), actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees, consulting fees and expenses of investigation and environmental
response) incurred by the Stockholders as a result of or arising from (i) any
breach by RV Centers of their representations and warranties set forth herein or
on the schedules or certificates delivered in connection herewith, (ii) any
breach of any agreement on the part of RV Centers under this Agreement; or (iii)
any liability under the 1933 Act, the 1934 Act or other Federal or state law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact relating to RV Centers
or any of the Founding Companies contained in any preliminary prospectus, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to RV
Centers, any of the Founding Companies or their respective stockholders,
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading, except to
the extent such statement or omission is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission, made therein in
reliance upon, and in conformity with, the representations and warranties of the
Company or the Stockholders
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specifically contained in this Agreement or other information furnished to RV
Centers by the Company or the Stockholders in writing specifically for inclusion
therein.
10.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter
the "Indemnified Party") has received notice of or has knowledge of any claim by
a person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 10.1, 10.2, or 10.6
hereof (hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or the commencement of such action or proceeding.
Such notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying Party shall not settle any such proceeding
without the written consent of the Indemnified Party. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records or information reasonably
requested by the Indemnifying Party that are in the Indemnified Party's
possession or control. All Indemnified Parties shall use the same counsel, which
shall be the counsel selected by Indemnifying Party, provided that if counsel to
the Indemnifying Party shall have a conflict of interest that prevents counsel
for the Indemnifying Party from representing Indemnified Party, Indemnified
Party shall have the right to participate in such matter through counsel of its
own choosing and Indemnifying Party will reimburse the Indemnified Party for the
reasonable expenses of its counsel.
After the Indemnifying Party has notified the Indemnified Party
of its intention to undertake to defend or settle any such asserted liability,
and for so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability, except (i) as set forth in the preceding sentence
and (ii) to the extent such participation is requested by the Indemnifying
Party, in which event the Indemnified Party shall be reimbursed by the
Indemnifying Party for reasonable additional legal expenses and out-of-pocket
expenses.
If the Indemnifying Party desires to accept a final and complete
settlement of any such Third Person claim involving only the payment of money
and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person. Upon agreement as to such settlement between said Third Person and
the Indemnifying Party, the Indemnifying Party shall, in exchange for a complete
release from the Indemnified Party, promptly pay to the Indemnified Party the
amount agreed to in such settlement and the Indemnified Party shall, from that
moment on, bear full responsibility for any additional costs of defense which
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it subsequently incurs with respect to such claim and all additional costs of
settlement or judgment. If the Indemnifying Party does not undertake to defend
such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party may
undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, and the Indemnified Party may settle such matter, and
the Indemnifying Party shall reimburse the Indemnified Party for the settlement
and any other liabilities or expenses incurred by the Indemnified Party in
connection therewith, provided, however, that under no circumstances shall the
Indemnified Party settle any Third Person claim without the written consent of
the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed. All settlements hereunder shall effect a complete release of the
Indemnified Party, unless the Indemnified Party otherwise agrees in writing.
10.4 EXCLUSIVE REMEDY. The indemnification provided for in this
Section 10 shall (except as prohibited by ERISA) be the exclusive remedy in any
action seeking damages or any other form of monetary relief brought by any party
to this Agreement against another party, provided that, nothing herein shall be
construed to limit the right of a party, in a proper case, to seek injunctive
relief for a breach of this Agreement.
10.5 LIMITATIONS ON INDEMNIFICATION. (a) RV Centers and the other
persons or entities indemnified pursuant to Section 10.1 or any other indemnity
hereunder, shall not assert any claim for indemnification pursuant to Section
10.1 against the Stockholders until such time as the aggregate of all claims
which such persons may have against such Stockholders shall exceed an amount
(the "Threshold Amount") equal to one percent of the sum of (x) the cash paid to
the Stockholders pursuant to Section 2.1 and (y) the value of the RV Centers
Stock delivered to the Stockholders pursuant to Section 2.1 valued at the
initial public offering price as set forth in the Registration Statement, and
then only to the extent of claims in excess of such sum. Stockholders shall not
assert any claim for indemnification hereunder against RV Centers until such
time as the aggregate of all claims which Stockholders may have against RV
Centers shall exceed the Threshold Amount.
(b) No person shall be entitled to indemnification under this Section
10 if and to the extent that such person's claim for indemnification is directly
or indirectly related to a breach by such person of any representation,
warranty, covenant or other agreement set forth in this Agreement.
(c) Notwithstanding any other term of this Agreement, no Stockholder
shall be liable under this Section 10 for an amount which exceeds eighty-five
percent (85%) of the amount of proceeds (including cash and RV Centers Stock)
received by such Stockholder (valued as of the Consummation Date) in connection
with the purchase and sale of the Company Stock. For purposes of this paragraph,
the RV Centers Stock shall be valued at the initial public offering price to the
public as set forth in the final prospectus deemed by Rule 430A of the 1933 Act
Regulations to constitute a part of the Registration Statement.
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(d) A Stockholder may pay any indemnification obligation under
Section 10 by means of the payment of cash or a combination of the payment of
cash and the delivery to RV Centers of shares of RV Centers Stock; provided that
the percentage of the indemnification obligation satisfied by means of the
delivery of shares of RV Centers Stock does not exceed the percentage of RV
Centers Stock comprising the total consideration paid to such Stockholder by RV
Centers to such Stockholder pursuant to Annex I. For the purpose of crediting
Stockholders for payments made to RV Centers by means of delivery of shares of
RV Centers Stock, the RV Centers Stock shall be valued at the average closing
price as reported on the New York Stock Exchange (or other national exchange or
quotation system) on the five trading days immediately preceding delivery of the
shares pursuant to this section.
(e) In determining the amount of any loss, liability or expense for
which any party is entitled to indemnification under this Agreement, the gross
amount thereof will be reduced by any correlative insurance proceeds or other
third party indemnity or reimbursement proceeds actually realized by such party
(or, in the case of RV Centers, by RV Centers, the Company or any Subsidiary of
RV Centers or the Company) and such correlative insurance proceeds or other
third party indemnity or reimbursement proceeds shall be net of any insurance
premium or other incremental cost or expense owed or payable to any third party
which becomes due as a result of such claim. RV Centers shall use commercially
reasonable efforts to pursue any available insurance coverage or other rights of
indemnity or reimbursement from third parties with respect to any such loss,
liability or expense.
(f) The limitations on liability set forth in this Section 10.5 shall
not apply to breaches of representations, warranties or covenants set forth in
Sections 4.3, 4.22 and 4.29(c).
10.6 TAX INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders
covenant and agree that they, jointly and severally, will indemnify, defend,
protect and hold harmless RV Centers and the Company from and against the
entirety of any adverse consequences the Company or RV Centers may suffer
resulting from, arising out of, relating to, in the nature of, or caused by any
liability of the Company and its subsidiaries for the unpaid Taxes of any past,
current or future member of the consolidated tax group of which the Company is
or was a member on or prior to the Consummation Date pursuant to Reg.
ss.1.1502-6 (or any similar provision of state, local, or foreign law), for any
periods prior to the Closing Date, as a transferee or successor, by contract, or
otherwise.
11. TERMINATION OF AGREEMENT
11.1 TERMINATION. This Agreement may be terminated at any time prior
to the Consummation Date solely:
(i) by mutual consent of the boards of directors of RV Centers
and the Company;
(ii) by the Stockholders or the Company (acting through its
board of directors), on the one hand, or by RV Centers (acting through
its board of directors), on the other hand,
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if the transactions contemplated by this Agreement to take place at the
Closing shall not have been consummated by July 31, 1999 unless the
failure of such transactions to be consummated is due to the willful
failure of the party seeking to terminate this Agreement to perform any
of its obligations under this Agreement to the extent required to be
performed by it prior to or on the Consummation Date;
(iii) by the Stockholders or the Company, on the one hand, or by
RV Centers, on the other hand, if a material breach or default shall be
made by the other party in the observance or in the due and timely
performance of any of the covenants or agreements contained herein, and
the curing of such default shall not have been made on or before the
Consummation Date or by the Stockholders or the Company, if the
conditions set forth in Section 7 hereof have not been satisfied or
waived as of the Closing Date or the Consummation Date, as applicable,
or by RV Centers, if the conditions set forth in Section 8 hereof have
not been satisfied or waived as of the Closing Date or the Consummation
Date, as applicable; or
(iv) pursuant to Section 3 hereof.
11.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in
Section 6.7, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement including, but not limited
to, legal and audit costs and out of pocket expenses.
11.3 RETURN OF STOCK CERTIFICATES. If at the time of termination
Stockholders have delivered their Company stock certificates, such certificates
will be promptly returned upon termination.
12. NONCOMPETITION
12.1 PROHIBITED ACTIVITIES. Except for the activities of the
Stockholders and their Affiliates as set forth in Schedule 12.1 (which shall be
deemed to be permitted activities under this Section 12.1), the Stockholders
will not, without the prior written consent of RV Centers, for a period of five
(5) years following the Consummation Date, for any reason whatsoever, directly
or indirectly, for themselves or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of whatever
nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business or operation selling any products or
services in direct competition with any products or services sold by RV
Centers or any Subsidiary thereof, within one hundred (100) miles of
where RV Centers or any Other Founding Company conducted business prior
to the Effective Time (the "Territory");
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(ii) call upon any person who is, at that time, within the
Territory, an employee of RV Centers or any Subsidiary thereof in a
sales or service representative or managerial capacity for the purpose
or with the intent of enticing such employee away from or out of the
employ of RV Centers or any Subsidiary thereof;
(iii) call upon any Person or entity which is, at that time, or
which has been, within one (1) year prior to the Consummation Date, a
customer of RV Centers or any Subsidiary thereof, of the Company or of
any of the Other Founding Companies within the Territory for the
purpose of soliciting or selling products or services in direct
competition with any products or services sold by RV Centers or any
Subsidiary thereof within the Territory;
(iv) call upon any prospective acquisition candidate, on any
Stockholder's own behalf or on behalf of any competitor which candidate
was, to the actual knowledge of such Stockholder after reasonable
inquiry, either called upon by RV Centers or any Subsidiary thereof or
for which RV Centers or any Subsidiary thereof made an acquisition
analysis, for the purpose of acquiring such entity; or
(v) disclose customers, whether in existence or proposed, of
the Company to any person, firm, partnership, corporation or business
for any reason or purpose whatsoever except to the extent that the
Company has in the past disclosed such information to the public for
valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit any Stockholder from acquiring as a passive investment (i) not more
than three percent (3%) of the capital stock of a competing business whose stock
is traded on a national securities exchange, the NASDAQ Stock Market or on an
over-the-counter or similar market, or (ii) not more than five percent (5%) of
the capital stock of a competing business whose stock is not publicly traded.
12.2 DAMAGES. Because of the difficulty of measuring economic losses
to RV Centers as a result of a breach of the covenant set forth in Section 12.1,
and because of the immediate and irreparable damage that could be caused to RV
Centers for which it would have no other adequate remedy, each Stockholder
agrees that the covenant set forth in Section 12.1 may be enforced by RV
Centers, in the event of breach by such Stockholder, by injunctions and
restraining orders.
12.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 12 impose a reasonable restraint on the
Stockholders in light of the activities and business of RV Centers and the
Subsidiaries thereof on the date of the execution of this Agreement and the
current plans of RV Centers; but it is also the intent of RV Centers and the
Stockholders that such covenants be construed and enforced in accordance with
the changing activities, business and locations of RV Centers and its
subsidiaries throughout the term of this covenant, including, with respect to
subparagraph 12.1(i), any new locations in which RV Centers or its subsidiaries
conducts business during the term of this covenant.
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12.4 SEVERABILITY; REFORMATION. The covenants in this Section 12 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
12.5 INDEPENDENT COVENANT. All of the covenants in this Section 12
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against RV Centers or any Subsidiary thereof, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by RV
Centers of such covenants. It is specifically agreed that the period of five (5)
years stated at the beginning of this Section 12, during which the agreements
and covenants of each Stockholder made in this Section 12 shall be effective,
shall be computed by excluding from such computation any time during which such
Stockholder is in violation of any provision of this Section 12. The covenants
contained in Section 12 shall not be affected by any breach of any other
provision hereof by any party hereto and shall have no effect if the
transactions contemplated in this Agreement are not consummated.
12.6 MATERIALITY. The Company and the Stockholders hereby agree that
this covenant is a material and substantial part of this transaction.
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
13.1 STOCKHOLDERS. The Stockholders recognize and acknowledge that
they had in the past, currently have, and in the future may possibly have,
access to certain confidential information of the Company, the Other Founding
Companies, and/or RV Centers, such as operational policies, customer lists, and
pricing and cost policies that are valuable, special and unique assets of the
Company's, the Other Founding Companies' and/or RV Centers's respective
businesses. The Stockholders agree that they will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to authorized representatives of RV
Centers, provided that such representatives agree to the confidentiality
provisions of this Section 13.1, (b) following the Closing, such information may
be disclosed by the Stockholders as is required in the course of performing
their duties for RV Centers or the Company and (c) to counsel and other
advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section 13.1, unless (i) such information
becomes known to the public generally through no fault of the Stockholders, (ii)
disclosure is required by law or the order of any governmental authority under
color of law, provided, that prior to disclosing any information pursuant to
this clause (ii), the Stockholders shall, if possible, give prior written notice
thereof to RV Centers and provide RV Centers with the opportunity to contest
such disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party. In the event of a breach or threatened breach by any of the
Stockholders of the provisions of this Section, RV Centers shall be
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entitled to an injunction restraining such Stockholders from disclosing, in
whole or in part, such confidential information. Nothing herein shall be
construed as prohibiting RV Centers from pursuing any other available remedy
for such breach or threatened breach, including the recovery of damages. In the
event the transactions contemplated in this Agreement are not consummated,
Stockholders shall have none of the above-mentioned restrictions on their
ability to disseminate confidential information with respect to the Company.
13.2 RV CENTERS. RV Centers recognizes and acknowledges that it had in
the past and currently has access to certain confidential information of the
Company and the Stockholders, such as operational policies, and pricing and
cost policies that are valuable, special and unique assets of the Company's
business. RV Centers agrees that, prior to the Closing, or if the transactions
contemplated in this Agreement are not consummated, it will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except (a) to authorized
representatives of the Company, provided that such representatives agree to the
confidentiality provisions of this Section 13.2, (b) to counsel and other
advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section 13.2, (c) to the Other Founding
Companies and their representatives pursuant to Section 6.1(a), unless (i) such
information becomes known to the public generally through no fault of RV
Centers, (ii) disclosure is required by law or the order of any governmental
authority under color of law, provided, that prior to disclosing any
information pursuant to this clause (ii), RV Centers shall, if possible, give
prior written notice thereof to the Company and the Stockholders and provide
the Company and the Stockholders with the opportunity to contest such
disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, and (d) to the public to the extent necessary or advisable in
connection with the filing of the Registration Statement and the IPO and the
securities laws applicable thereto. In the event of a breach or threatened
breach by RV Centers of the provisions of this Section, the Company and the
Stockholders shall be entitled to an injunction restraining RV Centers from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting the Company and the Stockholders from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
13.3 DAMAGES. Because of the difficulty of measuring economic losses
as a result of the breach of the foregoing covenants in Section 13.1 and 13.2,
and because of the immediate and irreparable damage that would be caused for
which they would have no other adequate remedy, the parties hereto agree that,
in the event of a breach by any of them of the foregoing covenants, the
covenant may be enforced against the other parties by injunctions and
restraining orders.
13.4 SURVIVAL. The obligations of the parties under this Article 13
shall survive the termination of this Agreement.
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14. TRANSFER RESTRICTIONS
14.1 TRANSFER RESTRICTIONS. For a period of two years from the Closing
Date, with respect to 80% of the shares of RV Centers Stock received by such
Stockholder pursuant to this Agreement, and for a period of one year from the
Closing Date, with respect to the remaining 20% of such shares, no Stockholder
shall (i) sell, assign, exchange, transfer, pledge, or otherwise dispose of any
such shares of RV Centers Stock or any securities convertible into,
exchangeable or exercisable for any such shares of RV Centers Stock, (ii) grant
any option to purchase, or otherwise enter into any contract or arrangement to
sell, assign, transfer, pledge or otherwise dispose of, any such shares of RV
Centers Stock, or (iii) enter into any swap, collar, short sale or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequences of ownership of the RV Centers Stock,
whether any such swap, collar, short sale, agreement or transaction is to be
settled by delivery of shares of RV Centers Stock or other securities, by the
delivery or payment of cash or otherwise. Provided, however, Stockholder may
pledge such shares as security, subject to the foregoing restrictions, for a
loan by a lender who acknowledges and agrees to such restrictions in writing.
The foregoing restrictions shall not apply, however, to (a) the sale of shares
of RV Centers Stock, and entering into agreements relating to the sale of
shares of RV Centers Stock, pursuant to Section 16 hereof, or (b) transfers to
(I) immediate family members of such Stockholder who agree to be bound by the
restrictions set forth in this Section 14.1, (II) trusts, limited partnerships
or other estate planning entities for the benefit of such Stockholder or family
members of such Stockholder which have agreed, through action taken by the
trustees, partners or other persons having authority to bind the trust, limited
partnership or other estate planning entity, to be bound by such restrictions
and to be liable for the transferring Stockholder's indemnification obligations
hereunder, (III) any charitable organization that qualifies for receipt of
charitable contributions under Section 170(c) of the Code which agrees to be
bound by such restrictions and to be liable for the transferring Stockholder's
indemnification obligations hereunder, or (c) for transfers of RV Centers Stock
to RV Centers pursuant to Section 10.5(d).
The certificates evidencing the RV Centers Stock delivered to the
Stockholders pursuant to Section 3 of this Agreement will bear a legend
substantially in the form set forth below and containing such other information
as RV Centers may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF WITHOUT
THE WRITTEN CONSENT OF THE ISSUER OR PURSUANT TO CERTAIN LIMITED EXCEPTIONS
CONTAINED IN SECTION 14.1 TO THAT CERTAIN ACQUISITION AGREEMENT BETWEEN RV
CENTERS, INC. AND ▇▇▇▇▇ MOTORS, INC. DATED JANUARY 12, 1999, AND THE ISSUER
SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, ASSIGNMENT,
EXCHANGE, TRANSFER, DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION PRIOR TO
_______ [INSERT THE ACTUAL SECOND ANNIVERSARY OF CLOSING DATE] EXCEPT FOR THE
ABOVE-REFERENCED LIMITED EXCEPTIONS. UPON THE WRITTEN REQUEST OF THE HOLDER OF
THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY
STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE.
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15. FEDERAL SECURITIES ACT REPRESENTATIONS
15.1 COMPLIANCE WITH LAW. The Stockholders acknowledge that the shares
of RV Centers Stock to be delivered to the Stockholders pursuant to this
Agreement have not been and will not be registered under the 1933 Act (except
as provided in Section 16 hereof) and therefore may not be resold without
compliance with the 1933 Act. The RV Centers Stock to be acquired by such
Stockholders pursuant to this Agreement is being acquired solely for their own
respective accounts, for investment purposes only, and with no present
intention of distributing, selling or otherwise disposing of it in connection
with a distribution. The Stockholders covenant, warrant and represent that none
of the shares of RV Centers Stock issued to such Stockholders will be offered,
sold, assigned, pledged, hypothecated, transferred or otherwise disposed of
except after full compliance with all of the applicable provisions of the 1933
Act and the rules and regulations of the SEC or pursuant to exceptions
therefrom. All the RV Centers Stock shall bear the following legend in addition
to the legend required under Section 14 of this Agreement:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THE ACT AND APPLICABLE SECURITIES LAW OR SUCH SHARES ARE
SOLD OR TRANSFERRED PURSUANT TO AN EXEMPTION THEREFROM.
15.2 ECONOMIC RISK; SOPHISTICATION. The Stockholders represent and
warrant that they are able to bear the economic risk of an investment in the RV
Centers Stock to be acquired pursuant to this Agreement and can afford to
sustain a total loss of such investment. Each Stockholder has substantial
knowledge and experience in making investment decisions of this type (or is
relying on qualified purchaser representatives with such knowledge and
experience in making this decision), and is capable, either individually or
with such purchaser representatives, of evaluating the merits and risks of this
investment. The Stockholders who are parties hereto have had an adequate
opportunity to ask questions and receive answers from the officers of RV
Centers concerning any and all matters relating to the transactions described
herein including, without limitation, the background and experience of the
current and proposed officers and directors of RV Centers, the plans for the
operations of the business of RV Centers, the business, operations and
financial condition of the Founding Companies other than the Company, and any
plans for additional acquisitions and the like. The Stockholders have asked any
and all questions in the nature described in the preceding sentence and all
questions have been answered to their satisfaction. Except as set forth on
Schedule 15.2, each Stockholder is an "accredited investor" as defined in Rule
501 of the 1933 Act.
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16. REGISTRATION RIGHTS
16.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the
Consummation Date, whenever RV Centers proposes to register any RV Centers
Stock for its own or others' accounts under the 1933 Act for a public offering,
other than (i) any shelf or other registration of shares to be used as
consideration for acquisitions of additional businesses by RV Centers and (ii)
registrations relating to employee benefit plans, RV Centers shall promptly
give each of the Stockholders written notice of its intent to do so. Upon the
written request of any of the Stockholders given within 10 days after receipt
of such notice, RV Centers shall cause to be included in such registration all
of the RV Centers Stock issued to such Stockholders pursuant to this Agreement
(including any stock issued as or issuable upon the conversion or exchange of
any convertible security, warrant, right or other security which is issued by
RV Centers as a stock split, dividend or other distribution with respect to, or
in exchange for, or in replacement of such RV Centers Stock) which any such
Stockholder requests, other than shares of RV Centers Stock which may be sold
under Rule 144(k) (or any similar or successor provision) promulgated under the
1933 Act, and other than shares of RV Centers Stock that have been theretofore
sold by the Stockholder in accordance with the 1933 Act, provided that RV
Centers shall have the right to reduce pro rata the number of shares of each
selling stockholder included in such registration to the extent that inclusion
of such shares could, in the written opinion of tax counsel to RV Centers or
its independent auditors, jeopardize the status of the transactions
contemplated hereby and by the Registration Statement as a tax-free
organization under Section 351 of the Code. In addition, if RV Centers is
advised in writing in good faith by any managing underwriter of an underwritten
offering of the securities being offered pursuant to any registration statement
under this Section 16.1 that the number of shares to be sold by persons other
than RV Centers is greater than the number of such shares which can be offered
without adversely affecting the success of the offering, RV Centers may reduce
pro rata (among the Stockholders and all other selling security holders in the
offering) the number of shares offered for the accounts of such persons (based
upon the number of shares held by such person) to a number deemed satisfactory
by such managing underwriter.
The right to cause RV Centers to register shares of
RV Centers Stock under this Agreement may be assigned to any transferee or
assignee of any Stockholder permitted under Section 14.1.
16.2 REGISTRATION PROCEDURES. Whenever RV Centers is required to
register shares of RV Centers Stock pursuant to Section 16.1, RV Centers will,
as expeditiously as possible:
(i) Prepare and file with the SEC a registration statement with
respect to such shares and use commercially reasonable efforts to
cause such registration statement to become effective (provided that
before filing a registration statement or prospectus or any amendments
or supplements or term sheets thereto, RV Centers will furnish a
representative of the Stockholders with copies of all such documents
proposed to be filed and provide the Stockholders an opportunity to
comment on the information therein relating to the Stockholders) as
promptly as practical;
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(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and the prospectus correct for a period of not
less than 120 days;
(iii) Furnish to each Stockholder who so requests such number of
copies of such registration statement, each amendment and supplement
thereto and the prospectus included in such registration statement
(including each preliminary prospectus and any term sheet associated
therewith), and such other documents as such Stockholder may
reasonably request in order to facilitate the disposition of the
relevant shares;
(iv) Use commercially reasonable efforts to register or qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the Stockholders, and to keep such
registration or qualification effective during the period such
registration statement is required to be kept effective, provided that
RV Centers shall not be required to become subject to taxation, to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions;
(v) Cause all such shares of RV Centers Stock to be listed or
included on any securities exchanges or trading systems on which
similar securities issued by RV Centers are then listed or included;
and
(vi) Notify each Stockholder at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act within
the period that RV Centers is required to keep the registration
statement effective of the happening of any event as a result of which
the prospectus included in such registration statement (as then in
effect), together with any associated term sheet, contains an untrue
statement of a material fact or omits any fact not misleading, and, at
the request of such Stockholder, RV Centers will prepare a supplement
or amendment to such prospectus so that, as thereafter delivered to
the purchasers of the covered shares, such prospectus will not contain
an untrue statement of material fact or omit to state any fact not
misleading.
All expenses incurred in connection with the registration under this
Article 16 and compliance with securities and blue sky laws (including all
registration, filing, listing, escrow agent, qualification, legal, printer and
accounting fees, but excluding underwriting commissions and discounts), shall
be borne by RV Centers.
16.3 INDEMNIFICATION.
(a) In connection with any registration under Section 16.1, RV
Centers shall indemnify, to the extent permitted by law, each selling
Stockholder (an "Indemnified Stockholder") against all losses, claims, damages,
liabilities and expenses arising out of or resulting from any
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untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or associated term
sheet or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading except insofar as the same are caused by or contained in or omitted
from any information furnished in writing to RV Centers by such Indemnified
Stockholder expressly for use therein or by any Indemnified Stockholder's
failure to deliver a copy of the registration statement or prospectus or any
amendment or supplements thereto after RV Centers has furnished such
Indemnified Stockholder with a sufficient number of copies of the same.
(b) In connection with any registration under Section 16.1, each
Stockholder shall furnish to RV Centers in writing such information as is
reasonably requested by RV Centers for use in any such registration statement
or prospectus and will indemnify, to the extent permitted by law, RV Centers,
its directors and officers and each person who controls RV Centers (within the
meaning of the ▇▇▇▇ ▇▇▇) against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement or material fact
or any omission or alleged omission of a material fact required to be stated in
the registration statement or prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading, but only to the extent
that such untrue or alleged untrue statement or omission or alleged omission is
contained in or omitted from information so furnished in writing by such
Stockholder specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of a Stockholder under this
Section 16.3 shall be limited to an amount equal to the net proceeds actually
received by such Stockholder from the sale of the relevant shares covered by
the registration statement.
(C) Any person entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnified parties'
reasonable judgment, a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Any failure to give prompt notice shall
deprive a party of its right to indemnification hereunder only to the extent
that such failure shall have adversely affected the indemnifying party. If the
defense of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent
shall not be unreasonably withheld). An indemnifying party that is not entitled
or elects not to assume the defense of a claim, will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party, a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim.
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16.4 UNDERWRITING AGREEMENT. In connection with each registration
pursuant to Sections 16.1 covering an underwritten registered offering, RV
Centers and each participating Stockholder agree to enter into a written
agreement with the managing underwriters in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such managing underwriters and companies of RV Centers's size and
investment stature, including a customary indemnification agreement; provided,
however, that the Stockholders shall be excluded from any indemnification of
the underwriters other than with respect to information provided by the
Stockholders to RV Centers or the managing underwriters specifically for use in
the registration statement.
16.5 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the SEC that may permit the sale of RV
Centers stock to the public without registration, RV Centers agrees to use
commercially reasonable efforts to:
(i) make and keep public information regarding RV Centers
available as those terms are understood and defined in Rule 144 under
the 1933 Act for a period of four years beginning 90 days following
the effective date of the Registration Statement;
(ii) file with the SEC in a timely manner all reports and other
documents required of RV Centers under the 1933 Act and the 1934 Act
at any time after it has become subject to such reporting
requirements; and
(iii) so long as a Stockholder owns any restricted RV Centers
Stock, furnish to each Stockholder forthwith upon written request a
written statement by RV Centers as to its compliance with the current
public information requirements of Rule 144 (at any time from and
after 90 days following the effective date of the Registration
Statement), and of the 1933 Act and the 1934 Act (any time after it
has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of RV Centers, and such other
reports and documents so filed as a Stockholder may reasonably request
in availing itself of any rule or regulation of the SEC allowing a
Stockholder to sell any such shares without registration.
16.6 AVAILABILITY OF RULE 144. RV Centers shall not be obligated to
register shares of RV Centers Stock held by a Stockholder at any time when the
resale provisions of Rule 144(k) (or any similar or successor provision)
promulgated under the 1933 Act are available to such Stockholder.
17. GENERAL
17.1 COOPERATION. The Company, the Stockholders and RV Centers shall
each deliver or cause to be delivered to the other on the Consummation Date,
and at such other times and places as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the purpose of
carrying out this Agreement. The Company will cooperate and use its reasonable
efforts to have the present officers, directors and employees of the Company
cooperate with RV Centers on and after the Consummation Date in furnishing
information, evidence, testimony and
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other assistance in connection with any tax return filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Consummation Date.
17.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors of RV Centers, and the heirs and legal representatives of the
Stockholders.
17.3 ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the
Stockholders, the Company and RV Centers and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement,
upon execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and subject to Section 6.7 may be
modified or amended only by a written instrument executed by the Stockholders,
the Company and RV Centers, acting through their respective officers or
trustees, duly authorized by their respective Boards of Directors. Any
disclosure made on any Schedule delivered pursuant hereto shall be deemed to
have been disclosed for purposes of any other Schedule required hereby,
provided that the Company shall make a good faith effort to cross reference
disclosure, as necessary or advisable, between related Schedules.
17.4 COUNTERPARTS. This Agreement may be executed simultaneously in
two (2) or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument. A
telecopied facsimile of an executed counterpart of this Agreement shall be
sufficient to evidence the binding agreement of each party to the terms hereof.
However, each party agrees to return to the other parties an original, duly
executed counterpart of this Agreement promptly after delivery of a telecopied
facsimile thereof.
17.5 BROKERS AND AGENTS. Except as disclosed on Schedule 17.5, each
party represents and warrants that it employed no broker or agent in connection
with this transaction and agrees to indemnify the other parties hereto against
all loss, cost, damages or expense arising out of claims for fees or commission
of brokers employed or alleged to have been employed by such indemnifying
party.
17.6 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, RV Centers will pay or reimburse ▇▇▇▇▇ ▇▇▇▇▇ Funding I,
L.L.C. and its Affiliates for the fees, expenses and disbursements of RV
Centers and its agents, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and any amendments thereto
and the IPO, including all costs and expenses incurred in the performance and
compliance with all conditions to be performed by RV Centers under this
Agreement, the fees and expenses of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., and any other
person or entity retained by RV Centers or ▇▇▇▇▇ ▇▇▇▇▇ Funding I, L.L.C.
("BKF") and the costs of preparing the Registration Statement. All expenses,
including, but not limited to, all professional fees of accountants, lawyers,
tax consultants and others,
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incurred by the Stockholders in connection with this Agreement shall be paid by
the Stockholders or the Company; provided, however, that any such amount paid
by the Company shall be disclosed to RV Centers in writing prior to Closing and
deducted from the cash payable to Stockholders pursuant to Annex I. Upon
consummation of the transactions contemplated herein, BKF will pay up to
$150,000 of the fees charged by ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇.▇., counsel to Company
and the Other Founding Companies; Stockholders and the stockholders of the
Other Founding Companies shall pay all amounts in excess of $150,000 to be
shared pro rata based upon the relative values of the Founding Companies. Each
Stockholder shall pay all sales, use, transfer, real property transfer,
recording, gains, stock transfer and other similar taxes and fees ("Transfer
Taxes") imposed in connection with the purchase and sale of the Company Stock,
other than Transfer Taxes, if any, imposed by the State of Delaware. Each
Stockholder shall file all necessary documentation and Returns with respect to
such Transfer Taxes. In addition, each Stockholder acknowledges that he, and
not the Company or RV Centers, will pay all taxes due by him upon receipt of
the consideration payable pursuant to Section 3 hereof. Without limiting
Stockholders' ability to rely on the tax opinion, the Stockholders acknowledge
that the risks of the transactions contemplated herein include tax risks, with
respect to which the Stockholders are relying partially on the opinion
contemplated by Section 7.3 hereof and representations by RV Centers.
17.7 NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the
same in person to an officer or agent of such party.
(a) If to RV Centers, addressed to:
RV Centers, Inc.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with copies to:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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(b) If to the Stockholders, addressed to them at their addresses set
forth on the signature pages hereto, with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(c) If to the Company, addressed to it at:
▇▇▇▇▇ Motors, Inc.
4120 Youngfield
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 17.7 from time to time.
17.8 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Delaware, excluding any conflicts of law rule or
principle that might refer same to the laws of another jurisdiction.
17.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or
of any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
17.10 TIME. Time is of the essence with respect to this Agreement.
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17.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby. No provision of this Agreement shall be interpreted or construed
against any party solely because that party or its legal representative drafted
such provision.
17.12 REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.
17.13 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
17.14 AMENDMENTS AND WAIVERS. Subject to Section 6.7, any term of this
Agreement may be amended and the observance of any term of this Agreement may
be waived only with the written consent of RV Centers, the Company and
Stockholders who hold or held at least 51% of the Company Stock. Any amendment
or waiver effected in accordance with this Section 17.14 shall be binding upon
each of the parties hereto, any other person receiving RV Centers Stock in
connection with the purchase and sale of the Company Stock and each future
holder of such RV Centers Stock.
17.15 DISPUTE RESOLUTION. Except with respect to disputes involving
parties other than the parties to this Agreement, no party to this Agreement
shall institute a proceeding in any court or administrative agency to resolve a
dispute arising under this Agreement before that party has sought to resolve
the dispute through direct negotiation with the other party or parties. If the
dispute is not resolved within two weeks after a demand for direct negotiation,
the parties shall attempt to resolve the dispute through mediation. If the
parties do not promptly agree on a mediator, the parties shall request the
Association of Attorney Mediators in ▇▇▇▇▇▇ County, Texas to appoint a mediator
certified by the Supreme Court of Texas. If the mediator is unable to
facilitate a settlement of the dispute within a reasonable period of time, as
determined by the mediator, the mediator shall issue a written statement to the
parties to that effect and any unresolved dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators in Houston, Texas,
in accordance with the rules promulgated by the American Arbitration
Association then in effect. Each party shall choose one arbitrator and those
arbitrators shall agree upon the third arbitrator; if they cannot agree upon a
third arbitrator within 20 days, the American Arbitration Association shall
appoint the third arbitrator. A decision by a majority of the arbitration panel
shall be final and binding. Judgment may be entered on the arbitrators' award
in any court having jurisdiction. The costs and expenses, including reasonable
attorneys' fees, of the prevailing party in any dispute arising under this
Agreement will be promptly paid by the other party or parties.
-62-
71
17.16 REFERENCES, GENDER, NUMBER. All references in this Agreement to
a "Section," or "subsection" shall be to a Section, or subsection of this
Agreement, unless the context requires otherwise. Unless the context otherwise
requires, the words "this Agreement," "hereof," "hereunder," "herein," or words
of similar import shall refer to this Agreement as a whole and not to a
particular Section, subsection, clause or other subdivision hereof. Whenever
the context requires, the words used herein shall include the masculine,
feminine and neuter gender, and the singular and the plural.
17.17 SOLE STOCKHOLDER. Notwithstanding anything in this Agreement to
the contrary, if there is only a single Stockholder, all references herein to
"Stockholders," "each of the Stockholders," "any Stockholder" and any other
reference to Stockholders in the plural context, as well as any reference to
any potential liability or obligation of the Stockholders being "joint and
several," shall be deemed to mean and include only the sole Stockholder of the
Company.
17.18 SCHEDULES AND ANNEXES. Each schedule and annex attached to this
Agreement is incorporated herein by reference and made a part hereof. The
disclosures made on any schedule or annex hereto with respect to any
representation or warranty shall be deemed to be made with respect to any other
representation or warranty requiring the same or similar disclosure to the
extent that the relevance of such disclosure to other representations and
warranties is evident from the face of such schedule or annex.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
RV CENTERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board,
Chief Executive Officer and
President
▇▇▇▇▇ MOTORS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
-63-
72
STOCKHOLDERS:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ###-##-####
------------------------------------ -----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Social Security Number
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-64-
73
ANNEX I -
▇▇▇▇▇ MOTORS, INC., d/b/a
CASEY'S RECREATIONAL SALES
TO THE ACQUISITION AGREEMENT
DATED AS OF JANUARY 12, 1999
BY AND AMONG
RV CENTERS, INC.
▇▇▇▇▇ MOTORS, INC., D/B/A CASEY'S RECREATIONAL SALES
AND ITS STOCKHOLDER
CONSIDERATION TO BE PAID TO THE STOCKHOLDER
AGGREGATE CONSIDERATION TO BE PAID TO STOCKHOLDER
Four Million Nine Hundred Fifty-Two Thousand Dollars ($4,952,000) in cash and
the value of outstanding Common Stock of RV Centers, Inc. ("RV Centers")
(assuming a public offering price of $12.50 per share), consisting of: (A) Two
Hundred Ninety-Eight Thousand (298,000) shares of RV Centers Common Stock, and
(B) One Million Two Hundred Twenty-Seven Thousand Dollars ($1,227,000) cash;
provided however, that the aggregate consideration shall not be less than the
minimum value set forth below.
Consideration to be paid to the
STOCKHOLDER:
------------------------------------
Number of
Company Shares of RV Centers
Stockholder Shares Owned Common Stock Cash
----------- ------------ -------------------- ------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,000 298,000 $ 1,227,000
MINIMUM VALUE: Four Million Two Hundred Fifty-Six Thousand Dollars ($4,256,000)
ASSETS TO BE REMOVED FROM THE COMPANY: RV Centers and the Stockholder agree
that, after the Balance Sheet Date, no assets other than the following assets,
along with any associated debt, may be removed from the Company, such assets to
become the property of the Stockholder and any associated debt to become the
liability of the Stockholder:
1. 1997 Ford Explorer
2. 1997 GMC Pickup
Page 1 of Annex I
74
ANNEX I -
▇▇▇▇▇ MOTORS, INC., d/b/a
CASEY'S RECREATIONAL SALES
3. 1998 Yamaha Snowmobile
4. 1997 Yamaha Snowmobile
ALLOWABLE DIVIDENDS: With the exception of the following, no dividends or
distributions will be paid subsequent to June 30, 1998:
1. An amount equal to the reasonably estimated federal and state
(net of federal benefit) income taxes owed on S-corporation
profits of the Company for the period from July 1, 1998 to
December 31, 1998.
2. An amount equal to the reasonably estimated federal and state
(net of federal benefit) income taxes owed on S-corporation
profits of the Company for the period from January 1, 1999 to
the Consummation Date.
3. If Company is an S Corporation at the date of this Agreement,
at any time and from time to time up until five days prior to
the Consummation Date, Company may distribute to the
Stockholder cash up to the lesser of (A) the amount of such
corporation's "accumulated adjustment account" (as such term
is used in the Internal Revenue Code of 1986, as amended) as
of the Consummation Date, and (B) the total amount of cash to
be paid to the Stockholder as provided above. If any such
distributions are made, Stockholder shall provide written
notice of the amount of such distributions to RV Centers no
later than five days prior to the Consummation Date, and the
total amount of such distributions shall be deducted from the
cash to be paid to the Stockholder pursuant to this Annex I.
4. A total of Two Hundred Thirteen Thousand Three Hundred Fifty
Dollars ($213,350) in distributions between July 1, 1998 and
December 31, 1998, applicable to a personal residence built
by the Stockholder.
5. Up to $159,000 in connection with the purchase and
development of property described in Schedule 6.3; provided
however, all such distributed amounts shall be repaid to the
Company by the Stockholder at the Closing.
ALLOWABLE MONTHLY COMPENSATION: The Company has not since June 30, 1998, and
will not after the date hereof, pay or agree to pay salary, bonus, sales
commissions, fees or any other form of compensation, directly or indirectly, to
the Stockholder or any members of his family in excess of
Page 2 of Annex I
75
ANNEX I -
▇▇▇▇▇ MOTORS, INC., d/b/a
CASEY'S RECREATIONAL SALES
an aggregate of Twelve Thousand Dollars ($12,000) per month (Eight Thousand
Dollars ($8,000) per month for the Stockholder and Four Thousand Dollars
($4,000) per month for the Stockholder's spouse). Notwithstanding the foregoing,
family members, who are not Stockholders and who are currently employed by the
Company and are disclosed on Schedule 4.18, may continue to receive their
current salary.
Page 3 of Annex I
76
ANNEX III
FORM OF OPINION OF COUNSEL
TO RV CENTERS, INC.
, 1998
----------------------------------
----------------------------------
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to RV Centers, Inc., a Delaware corporation
("RV Centers"), in connection with the transactions contemplated by the
Acquisition Agreement (the "Agreement") dated as of , 1998, among RV Centers,
[Founding Company] and the stockholders named therein (the "Stockholders").
This opinion is being delivered to you pursuant to Section 8.3 of the
Agreement. All capitalized terms used herein, unless expressly defined herein,
shall have the meanings ascribed to such terms in the Agreement.
We have examined originals, or copies certified or otherwise
identified to our satisfaction, of the Agreement and such documents and records
as we deemed to be necessary as a basis for the opinion hereinafter expressed.
With respect to such examination, we have assumed the genuineness of all
signatures appearing on all documents presented to us as originals, and the
conformity to the originals of all documents presented to us as conformed or
reproduced copies. We also have assumed the due execution and delivery of the
Agreement by all parties thereto other than RV Centers. In addition, we have
relied on certificates of officers of RV Centers and certificates of public
officials as to certain matters of fact relating to this opinion and have made
such investigations of law as we have deemed necessary and relevant as the
basis hereof.
Based upon the foregoing and such consideration of matters of law as
we deemed to be relevant, and subject to the limitations, qualifications and
assumptions set forth herein, we are of the following opinion:
1. RV Centers has been duly incorporated and is validly existing and
in good standing under the laws of the State of Delaware.
2. The Agreement has been duly authorized, executed and delivered by
RV Centers and constitutes a legal, valid and binding agreement of RV Centers,
enforceable against it in accordance with its terms. RV Centers has taken all
corporate action necessary to authorize the execution, delivery and performance
of the Agreement.
Page 1 of Annex III
77
3. The authorized capital stock of RV Centers consists of shares
of Common Stock, par value $.01 per share (the "RV Centers Common Stock");
and shares of Preferred Stock par value $.01 per share (the "Preferred
Stock"). As of , 1998, there were outstanding shares
of RV Centers Common Stock [and no shares of Preferred Stock] which were duly
and validly authorized and issued and, to our knowledge, fully paid and
nonassessable and not issued in violation of the preemptive rights of any
stockholder of RV Centers. Each share of RV Centers Common Stock to be issued to
the Stockholders has been duly and validly authorized and upon issuance on
consummation of the transactions set forth in the Agreement such shares will be
validly issued, fully paid and nonassessable and, to our knowledge, none of such
shares will have been issued in violation of the preemptive rights of any
stockholder of RV Centers.
4. To our knowledge, except as set forth in the Prospectus, (a) RV
Centers is not in violation of any order issued by any court or governmental
agency and (b) there is no action, suit or proceeding pending or threatened
against RV Centers before any court, arbitrator or governmental authority.
5. To our knowledge, RV Centers is not in default, nor has it received
any notice of default, under any contract or agreement to which it is a party,
except where such default would not have a material adverse effect on RV
Centers.
6. No notice to, consent, authorization, approval or order of any
court or governmental agency or body or, to our knowledge, any other person is
required in connection with the execution, delivery or performance by RV
Centers of the Agreement, except for such notices, consents, authorizations,
approvals or orders as have already been made or obtained.
7. The execution of the Agreement and the performance by RV Centers of
its obligations thereunder will not violate any of the terms or provisions of
its Certificate of Incorporation or Bylaws or, to our knowledge, conflict with,
violate or result in any breach of or default under any lease, instrument,
license, permit or any other agreement or instrument to which it is a party or
by which it may be bound or to which any of its properties is subject, except
where such violation, breach or default would not have a material adverse
effect on RV Centers and its subsidiaries, taken as a whole.
The opinions expressed herein are, with your concurrence, predicated
on and qualified in their entirety by the following:
(i) This opinion is limited to the laws of the State of Texas,
the General Corporation Law of the State of Delaware and the
relevant law of the United States of America (other than laws
applicable to patents, copyrights and trademarks).
Page 2 of Annex III
78
(ii) Our opinion in paragraph 2, above regarding the
enforceability of the Agreement is subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and
to principles of equity. Furthermore, the enforceability of
any indemnity and contribution obligations contained in the
Agreement may be limited under applicable law or public
policy.
(iii) In rendering the opinion herein related to the absence of any
litigation, suits or proceedings, we express no opinion with
respect to the possible effect of administrative and
legislative actions and proceedings as to which RV Centers is
not a named party.
(iv) Whenever our opinion is based on circumstances "to our
knowledge," we have relied exclusively on certificates of
officers (after discussion of the contents thereof with such
officers) of RV Centers or certificates of others as to the
existence or nonexistence of the circumstances upon which
such opinion is predicated. We have no reason to believe,
however, that any such certificate is untrue or inaccurate in
any material respect.
We understand that we have no obligation to update this opinion to
reflect any facts or circumstances occurring after the date hereof, provided
however, that unless we otherwise notify you on or prior to the Consummation
Date that this opinion may no longer be relied upon, you shall be entitled to
rely on this opinion as of the Consummation Date if it were dated on such date.
This opinion is delivered to you solely as a party to the Agreement
and may not be quoted, circulated or published in whole or in part, or
furnished to any other Person without our express consent. The opinions set
forth are limited to matters expressly set forth and no opinion is to be
implied or may be inferred beyond the matters expressly stated.
Very truly yours,
Page 3 of Annex III
79
ANNEX IV
FORM OF OPINION OF COUNSEL TO COMPANY
AND STOCKHOLDERS
,1998
RV Centers, Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
[Underwriters]
[International Underwriters, if any]
Ladies and Gentlemen:
We have acted as counsel to ____________________________, a
___________________ corporation (the "Company"), in connection with the
transactions contemplated by the Acquisition Agreement (the "Agreement"), dated
as of , 1998, among RV Centers, Inc., a Delaware corporation, the Company and
the stockholders named therein (the "Stockholders"). This opinion is being
delivered to you pursuant to Section 9.7 of the Agreement. All capitalized
terms used herein, unless expressly defined herein, shall have the meanings
ascribed to such terms in the Agreement.
We have examined originals, or copies certified or otherwise
identified to our satisfaction of the Agreement and such documents and records
as we deemed to be necessary as the basis for the opinion hereinafter
expressed. [Documents and records may be listed.] With respect to such
examination, we have assumed the genuineness of all signatures appearing on all
documents presented to us as originals, and the conformity to the originals of
all documents presented to us as conformed or reproduced copies. We also have
assumed the due execution and delivery of the Agreement by all parties thereto
other than the Company. In addition, we have relied on certificates of officers
of the Company and certificates of public officials as to certain matters of
fact relating to this opinion and have made such investigations of law as we
have deemed necessary and relevant as the basis hereof.
Based upon the foregoing and such consideration of matters of law as
we deemed to be relevant, and subject to the limitations, qualifications and
assumptions set forth herein, we are of the following opinion:
1. The Company [and each subsidiary of the Company] has been duly
incorporated and is validly existing and in good standing under the laws of the
State of __________________ and has
Page 1 of Annex III
80
all requisite corporate power and authority to own and operate its properties,
to lease the properties it operates under lease and to conduct its business as
currently conducted. [The Company has no subsidiaries.]
2. The Company [and each subsidiary] is duly qualified to transact
business as a foreign corporation in all jurisdictions in which the conduct of
its business requires such qualification, or in which the failure to qualify
would not have a materially adverse effect upon the business of the Company.
3. The authorized capital stock of the Company is as represented in
the Agreement and, based solely on our review of the stock records of the
Company, the outstanding capital stock of the Company is as represented in the
Agreement. Each share of such stock has been duly and validly authorized and
issued and, to our knowledge, is fully paid and nonassessable and was not
issued in violation of the preemptive rights of any stockholder.
All outstanding shares of capital stock of each subsidiary of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are owned, directly or indirectly through wholly owned
subsidiaries, by the Company free and clear of any liens, claims or
encumbrances.
4. To our knowledge, there are no outstanding securities of the
Company convertible into or exercisable or exchangeable for or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
[or any subsidiary] and there are no outstanding or authorized options,
warrants or rights of any character obligating the Company [or any subsidiary]
to issue or sell any shares of its capital stock or any securities convertible
into or exercisable or exchangeable for or evidencing the right to purchase or
subscribe for any shares of such stock.
5. The Agreement has been duly authorized, executed and delivered by
the Company and the Stockholders and constitutes a legal, valid and binding
agreement of the Company and the Stockholders, enforceable against the Company
and such Stockholders in accordance with its terms. The Company and its
Stockholders have taken all corporate and other action necessary to authorize
the execution, delivery and performance of the Agreement and the consummation
of the transactions contemplated thereby. Each Stockholder has the legal
capacity to execute, deliver and perform such Stockholders obligations under
the Agreement [and the Employment Agreement to which such Stockholder is a
party.]
6. To our knowledge, neither the Company nor any subsidiary is in
default, nor have they received any notice of default, in the performance of
any obligation, agreement or condition contained in any bond, debenture, note
or any other evidence of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the Company, to which the
Company [or any subsidiary] is a party or by which the Company [or any
subsidiary] or its property is bound.
Page 2 of Annex IV
81
7. To our knowledge, except to the extent set forth on Schedules and
to the Agreement, (a) [the Company is not] [Neither the Company nor any
subsidiary is] in violation of any order issued by any court or governmental
agency and [(b) there is no action, suit or proceeding pending or threatened
against the Company [or any subsidiary] before any court, arbitrator or
governmental authority].
8. No notice to, consent, authorization, approval or order of or
filings with any court or governmental agency or body or, to our knowledge, any
other person is required in connection with the execution, delivery or
performance of the Agreement, or the consummation of the transactions therein
contemplated, by the Company or any of the Stockholders, except for such
notices, consents, authorizations, approvals, orders or filings as have already
been made or obtained, as applicable.
9. The execution of the Agreement and the performance by the Company
and the Stockholders of their respective obligations thereunder do not and will
not violate any of the terms or provisions of the Company's [Articles] of
Incorporation or By-laws or, to our knowledge, conflict with, violate or result
in any breach of or default under any lease, instrument, license, permit or any
other agreement or instrument to which the Company [or any subsidiary] is a
party or by which the Company [or any subsidiary] may be bound or to which any
of the properties of the Company [or any subsidiary] is subject.
10. To our knowledge, there is no pending or threatened action, suit
or proceeding that (a) questions the validity of the Agreement [or the
Employment Agreement[s]] or any action taken or to be taken by the Company or
any Stockholder in connection with the Agreement [or the Employment
Agreement[s]], at law or in equity, before or by any governmental authority or
before any court or arbitrator or (b) if adversely determined, would have a
material adverse effect (i) on the condition (financial or other), earnings,
business, operations or prospects of the Company [and its subsidiaries, taken
as a whole], (ii) on the ability of the Company to perform its obligations
under the Agreement or (iii) on the ability of any Stockholder to perform his
[or her] obligations under the Agreement [or the Employment Agreement[s]].
The opinions expressed herein are, with your concurrence, predicated
on and qualified in their entirety by the following:
(i) This opinion is limited to the laws of the State of and the
relevant law of the United States of America (other than laws
applicable to patents, copyrights and trademarks). [As to
matters involving the law of the State of ______________, we
have relied upon and our opinion is subject to the
qualifications, limitations, exceptions and assumptions
contained in, the opinion of _____________________, a copy of
which is annexed hereto.]
(ii) Our opinion in Paragraph 5, above regarding the
enforceability of the Agreement is subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and
to principles of equity. Furthermore, the enforceability of
any indemnity and contribution obligations contained in this
Agreement may be limited under applicable law or public
policy.
Page 3 of Annex IV
82
(iii) In rendering the opinion herein related to the absence of any
litigation, suits or proceedings, we express no opinion with
respect to the possible effect of administrative and
legislative actions and proceedings as to which neither the
Company nor any subsidiary is not a named party.
(iv) Whenever our opinion is based on circumstances "to our
knowledge," we have relied exclusively on certificates of
officers (after discussion of the contents thereof with such
officers) of the Company or certificates of others as to the
existence or nonexistence of the circumstances upon which
such opinion is predicated. We have no reason to believe,
however, that any such certificate is untrue or inaccurate in
any material respect.
This opinion is delivered to you solely and may not be quoted,
circulated or published in whole or in part or delivered to any other person
without our express written consent. The Underwriters [and International
Underwriters] are entitled to rely upon this opinion.
Very truly yours,
Page 4 of Annex IV
83
ANNEX V
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between ▇▇▇▇▇
Motors, Inc., d/b/a Casey's Recreational Sales (the "Company"), a Colorado
corporation and a wholly-owned subsidiary of RV Centers, Inc. ("RV Centers"), a
Delaware corporation, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Executive") is hereby entered into
and effective as of the day of , 1999 (the "Effective Date"), the date of
the consummation of the initial public offering of the common stock of RV
Centers (the "IPO"). This Agreement hereby supersedes any other employment
agreements or understandings, written or oral, between and among the Company, RV
Centers and Executive.
RECITALS
RV Centers, the Company and the other current subsidiaries of RV
Centers are engaged primarily in the recreational vehicle dealer business
including, but not limited to, sales, service, parts and rentals. RV Centers,
the Company and the other current and future subsidiaries of RV Centers are
collectively referred to herein as the "RV Centers Companies" and individually,
as an "RV Centers Company."
Executive is employed hereunder by the Company in a confidential
relationship wherein Executive, in the course of his employment with the
Company, has and will continue to become familiar with and aware of information
as to the Company's and RV Centers' customers and specific manner of doing
business, including the processes, techniques and trade secrets utilized by the
Company and RV Centers, and future plans with respect thereto, all of which has
been and will be established and maintained at great expense to the Company and
RV Centers. This information is a trade secret and constitutes valuable
goodwill of the Company and RV Centers.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby
agreed as follows:
AGREEMENTS
1. Employment and Duties.
(a) The Company hereby employs Executive as President of the Company.
As such, Executive shall have responsibilities, duties and authority reasonably
accorded to, expected of and consistent with such office and will report
directly to the Board of Directors of the Company (the "Board") or such person
as the Board may direct. Additional or different duties, titles or positions,
however, may be assigned to Executive or (without limiting Executive's right to
terminate for Good Reason) may be taken from Executive from time to time,
provided that any such changes are consistent and compatible with Executive's
experience, background and managerial skills. Executive hereby accepts this
employment upon the terms and conditions herein contained and, subject to
paragraph 1(c), agrees to devote substantially all of his business time,
attention and efforts to promote and further the business and interests of the
Company and its affiliates.
Page 1 of Annex V
84
(b) Executive shall faithfully adhere to, execute and fulfill all
lawful policies established, promulgated and communicated by the Company.
(c) Executive shall not, during the term of his employment hereunder,
engage in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Executive's duties and
responsibilities hereunder. If Executive intends to engage in any other
business activity, he shall give written notice of such intent to the Board,
and the Board shall in good faith determine whether such activity will
interfere with Executive's duties and responsibilities hereunder, and Executive
agrees to accept such a determination by the Board. The foregoing limitations
shall not be construed as prohibiting Executive from making personal
investments in such form or manner as will neither require his services in the
operation or affairs of the companies or enterprises in which such investments
are made nor violate the terms of paragraph 3 hereof. Notwithstanding the
foregoing, Executive may continue to engage in those activities described on
Schedule 1(c) to the same extent Executive is engaged in such activities
currently and provided Executive continues to devote at least the same amount
of time to Executive's duties hereunder as Executive has devoted to the Company
prior to the Effective Date.
2. Compensation. For all services rendered by Executive, the Company
shall compensate Executive beginning upon consummation of the IPO as follows:
(a) Base Salary. The base salary payable to Executive shall be
$120,000 per year, payable on a regular basis in accordance with the Company's
standard payroll procedures, but not less than monthly. Such base salary shall
be reviewed by the Board on at least an annual basis and may be adjusted in
light of Executive's position, responsibilities, performance and other relevant
factors; provided, however, as adjusted the base salary may not be less than
the amount in effect on the Effective Date.
(b) Incentive Bonus Plan. For 1999 and subsequent years, it is the
intent of RV Centers and the Company to develop written Management Incentive
Bonus Plans setting forth the criteria under which Executive and other officers
and key employees will be eligible to receive year-end bonus awards.
(c) Executive Perquisites, Benefits and Other Compensation. Executive
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Admittance for participation and payment of all premiums
for coverage for Executive and Executive's dependent family members
under health, hospitalization, disability, dental, life and other
insurance plans that the Company may have in effect from time to time,
provided benefits provided to Executive under this clause (b)(ii)
shall be at least equal to such benefits provided to other RV Centers'
executives similarly situated.
Page 2 of Annex V
85
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Executive in the
performance of his services pursuant to this Agreement and in
accordance with Company and RV Centers' policies. All reimbursable
expenses shall be appropriately documented in reasonable detail by
Executive upon submission of any request for reimbursement, and in a
format and manner consistent with the Company's expense reporting
policy.
(iii) Four (4) weeks of paid vacation per year or such
greater amount as may be afforded officers and key employees under the
Company's or RV Centers' policies in effect from time to time.
(iv) The Company shall provide Executive with other executive
perquisites as may be available to or deemed appropriate for Executive
by the Board and participation in all other company-wide employee
benefits as are available from time to time to all RV Centers
Companies.
3. Non-Competition Agreement.
(a) Executive recognizes that the Company's willingness to enter into
this Agreement, including the compensation arrangements set forth in paragraph
2 above, and that certain Acquisition Agreement dated as of January 12, 1999
(the "Acquisition Agreement") among the Company, RV Centers, Executive and
other Company stockholders, if any, is based in material part on Executive's
agreement to the provisions of this paragraph 3 and that Executive's breach of
the provisions of this paragraph 3 could materially damage the Company.
Executive will not, during the period of employment by or with the Company, and
for a period of two (2) years immediately following the termination of his
employment under this Agreement, for any reason whatsoever (other than a
termination by the Company without "Good Cause" or by Executive for "Good
Reason," as each term is defined below, in which case for a period of one (1)
year immediately following the termination), directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, whether paid or unpaid, in any business in direct
competition with any current or future corporate affiliates of the
Company and the RV Centers Companies, within one hundred (100) miles
of any location where any of the RV Centers Companies conducts
business, including any territory serviced by any RV Centers Company;
(ii) call upon any person who is, at that time, an employee
of any of the RV Centers Companies for the purpose or with the intent
of enticing such employee away from or out of the employ of an RV
Centers Company;
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86
(iii) call upon any person or business entity which is, at
that time, or which has been, within two (2) years prior to that time,
a customer of an RV Centers Company, for the purpose of soliciting or
selling products or services in competition with any of the RV Centers
Companies;
(iv) call upon any prospective acquisition candidate, on
Executive's own behalf or on behalf of any competitor, which candidate
was, to Executive's knowledge after due inquiry of the company
approached, either called upon by an RV Centers Company or for which
RV Centers has made an acquisition analysis, for the purpose of
acquiring such entity; or
(v) voluntarily testify as an expert witness in recreational
vehicle matters for an adverse party to any RV Centers Company in
litigation or arbitration.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit: (1) Executive from acquiring as an investment not more than five
percent (5%) of the capital stock of a competing business, whose stock is
traded on a national securities exchange or on an over-the-counter or similar
market; (2) Executive leasing any real property currently owned by him or his
designee to any person or entity, including, without limitation, any person or
entity that will operate an automobile or RV dealership, service center or
other related activity on such real property; (3) management or ownership of or
employment as a salesperson at a dealership selling new or used boats, boating
equipment and other marine equipment and supplies, but not recreational
vehicles, so long as RV Centers or any of its affiliates do not operate a
dealership selling boats or marine equipment within 100 miles of the location
Executive desires to own or work from; or (4) employment as a manufacturer's
representative with any manufacturer of recreational vehicles, provided that
Executive is not involved in any way whatsoever with any dealership operations
that such manufacturer may own.
(b) Because of the difficulty of measuring economic losses to the
Company and RV Centers as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to the
Company and RV Centers for which they would have no other adequate remedy,
Executive agrees that the foregoing covenant may be enforced by RV Centers or
the Company, in the event of breach by Executive, by injunctions, restraining
orders and orders of specific performance issued by a court. Executive further
agrees to waive any requirement for the Company's securing or posting of any
bond in connection with such remedies.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Executive in light of the
activities and business of the RV Centers Companies on the Effective Date and
the current plans of the RV Centers Companies; but it is also the intent of the
Company and Executive that such covenants be construed and enforced in
accordance with the changing activities, business and locations of the RV
Centers Companies, throughout the term of the employment of Executive under
this Agreement. For example, if, during the term of this Agreement, an RV
Centers Company engages in new and different activities, enters a new business
or establishes new locations for its current activities or business in addition
to or other than the activities or
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87
business enumerated under the Recitals above or the locations currently
established therefor, then Executive will be precluded from soliciting the
customers or employees of such new activities and business or from directly
competing with such new activities or business within one hundred (100) miles
of its then-established operating locations through the term of this covenant.
It is further agreed by the parties hereto that, if Executive shall
cease to be employed hereunder and shall enter into a business or pursue other
activities not in competition with an RV Centers Company, or shall engage in
similar activities or business in locations the proximity and activities of
which do not violate clause (a) of this paragraph 3 Executive shall not be
chargeable with a violation of this paragraph 3 if an RV Centers Company shall
thereafter enter the same, similar or a competitive (i) business, (ii) course
of activities or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions
of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth herein are unreasonable, then it is the intention of the parties that
such restrictions be enforced to the fullest extent which the court deems
reasonable, and this Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Executive against an RV Centers
Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by RV Centers or the Company of such
covenants. It is specifically agreed that the period of two (2) years (or one
(1) year in certain circumstances as herein provided) following termination of
employment stated at the beginning of this paragraph 3, during which the
agreements and covenants of Executive made in this paragraph 3 shall be
effective, shall be computed by excluding from such computation any time during
which Executive is in violation of any provision of this paragraph 3.
4. Term; Termination; Rights on Termination. The initial term of this
Agreement shall begin on the Effective Date and continue for three (3) years
(the " Initial Term") unless terminated sooner as herein provided. After the
Initial Term, this Agreement shall continue thereafter on a year-to-year basis
(each such year is referred to herein as a "Renewal Term") on the same terms
and conditions contained herein in effect as of the time of renewal unless the
Company gives written notice of non-renewal at least ninety (90) days prior to
the end of the Initial Term or the then current Renewal Term, as the case may
be. If this Agreement is not renewed prior to the end of the Initial Term or
any subsequent Renewal Term, then Executive shall become an employee at-will at
the expiration of the term of the Agreement. If the Agreement is not renewed,
this Agreement, including the restrictions in paragraph 3, shall expire;
provided, however, Executive's obligations under paragraphs 6, 7, 8 and 9 and
all rights and liabilities which have accrued hereunder to either party prior
to such expiration shall survive. Non-renewal of the Agreement shall not be
"Good Reason" for Executive to terminate employment under subparagraph (d)
below nor shall it be considered a termination without "Good Cause" by the
Company.
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88
During the Initial Term or subsequent Renewal Terms, this Agreement
and Executive's employment may be terminated in any one of the following ways:
(a) Death. The death of Executive shall immediately terminate this
Agreement with no severance compensation due to Executive's estate.
(b) Disability. If, as a result of a long-term incapacity or
disability from which Executive is not reasonably likely to continue to full
employment, as such concept is defined in the insurance programs, from time to
time, maintained by the Company ("Long-Term Disability") due to physical or
mental illness or injury, and Executive shall have been absent from his
full-time duties hereunder for three (3) consecutive months, then, the Company
may terminate Executive's employment hereunder. Company shall give Executive
thirty (30) days advance written notice of such termination. Such notice may be
given before or after the end of such three (3) month period, but which shall
not be effective earlier than the last day of such three (3) month period
provided, however, such termination shall not be effective if Executive is able
to resume his full-time duties at the conclusion of such thirty (30) day notice
period.
If Executive shall have been absent from his full-time duties
hereunder for six (6) consecutive months as a result of a short-term incapacity
or disability from which Executive is reasonably likely to continue to full
employment, as such concept is defined in the insurance programs, from time to
time, maintained by the Company ("Short-Term Disability") due to physical or
mental illness or injury, then the Company may terminate Executive's employment
hereunder. Company shall give Executive thirty (30) days advance written notice
of such termination. Such notice may be given before or after the end of such
six (6) month period, but which shall not be effective earlier than the last
day of such six (6) month period. Provided, however, such termination shall not
be effective if Executive is able to resume his full-time duties at the
conclusion of such thirty (30) day notice period.
For purposes of the foregoing paragraphs, if the Company does not have
an insurance program which includes a definition of long-term disability or
short-term disability, such terms shall have the meanings generally ascribed to
them by the insurance industry.
During such three (3) month or six (6) month period, the Company shall
pay to Executive his base salary amount hereunder net of any disability
insurance payments under policies maintained by the Company or RV Centers which
are received by Executive; provided, however, that such payments shall be
netted only to the extent that the premiums for such insurance are borne by the
Company and are not paid or reimbursed by the Executive.
Also, Executive may terminate his employment hereunder if his health
should become impaired to an extent that makes the continued performance of his
duties hereunder hazardous to his physical or mental health or his life,
provided that Executive shall have furnished the Company with a written
statement from a qualified doctor to such effect and provided, further, that,
at the Company's request made within thirty (30) days of the date of such
written statement, Executive shall submit to an examination by a doctor
selected by the Company who is reasonably acceptable to Executive or
Executive's doctor and such doctor shall have concurred in the conclusion of
Executive's doctor.
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89
Notwithstanding the payments made pursuant to the provision of this
subparagraph (b) above, in the event this Agreement is terminated as a result
of Executive's incapacity or disability, Executive shall receive from the
Company, in a lump-sum payment due within ten (10) days of the effective date
of termination, the base salary at the rate then in effect for the greater of
(i) whatever time period is remaining under the Initial Term of this Agreement,
but for not more than two (2) years, or (ii) one (1) year.
(c) Good Cause. The Company may terminate this Agreement ten (10) days
after written notice to Executive for "Good Cause," which shall be limited to:
(i) Executive's breach of any material provision of this Agreement (continuing
for ten (10) days after receipt of written notice of need to cure); (ii)
Executive's gross negligence in the performance or intentional nonperformance
(continuing for ten (10) days after receipt of written notice of need to cure)
of any of Executive's material duties and responsibilities hereunder which is
harmful or injurious to the Company or RV Centers; (iii) Executive's
dishonesty, fraud or willful misconduct with respect to the business or affairs
of the Company or RV Centers which materially and adversely affects the
operations or reputation of the Company or RV Centers; (iv) Executive's
conviction of a felony crime; or (v) Executive's violation of the Company's
substance abuse policy that would result in discharge under such policy as
applied to the Company's employees generally. In the event of a termination for
Good Cause, as enumerated above, Executive shall have no right to any severance
compensation but shall receive all compensation due and payable through the
effective date of termination. Any termination for Good Cause must be approved
by at least fifty-one percent (51%) of the members of the RV Centers Board in
the form of a resolution duly adopted by the RV Centers Board and delivered to
the Executive, finding in the good faith opinion of the RV Centers Board that
Executive has engaged in the type of conduct set forth above and specifying the
particulars thereof. In the event of a termination for Good Cause, as
enumerated above, Executive shall have no right to any severance compensation,
but shall receive all compensation due and payable through the effective date
of termination.
(d) With or without Good Reason or Without Good Cause. At any time,
either Executive, with or without Good Reason, or the Company, without Good
Cause, may terminate this Agreement and Executive's employment; provided,
however, Executive may only be terminated without Good Cause by the Company
during the Initial Term hereof if such termination is approved by at least
fifty-one percent (51%) of the members of the Board of Directors of RV Centers.
Any such termination by Executive or the Company shall be effective thirty (30)
days after written notice of such termination is provided to the other party.
Should this Agreement be terminated by the Company without
Good Cause or by Executive with Good Reason during the Initial Term, Executive
shall receive from the Company an amount equal to the base salary at the rate
then in effect for the greater of (i) the time period remaining under the
Initial Term of this Agreement or (ii) one (1) year. Should this Agreement be
terminated by the Company without Good Cause or by Executive with Good Reason
during any
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90
Renewal Term, Executive shall receive from the Company an amount equal to the
base salary at the rate then in effect for the greater of (i) the time period
remaining under such Renewal Term or (ii) six (6) months. Such amount, in all
cases, shall be paid in equal monthly payments on the last regular payday of
each month for all Company employees. Further, any termination without Good
Cause by the Company or with Good Reason by Executive shall operate to shorten
the period set forth in paragraph 3(a) and during which the terms of paragraph
3 apply to one (1) year from the date of termination of employment. If
Executive resigns or otherwise terminates his employment without Good Reason,
Executive shall receive no severance compensation except as may be provided in
paragraph 11 hereof, but shall be entitled to reimbursement for reasonable
business expenses incurred prior to the date of resignation or termination as
provided in paragraph 2 hereof.
Executive shall be deemed to have "Good Reason" to terminate
this Agreement and employment hereunder upon the occurrence of any of the
following events:
(i) (A) Executive is requested to take on duties materially
inconsistent with Executive's managerial experience and abilities, (B)
there is a material reduction in authority, responsibilities or duties
to a position of clearly less stature or importance within RV Centers,
another RV Centers Company or the Company than the position described
in paragraph 1 hereof, or (C) Executive is requested to move his work
location to an area outside the greater metropolitan area of
Executive's present work location, and any such request by the Company
or any such material reduction, is not withdrawn within five (5)
business days after written notice from Executive that he is unwilling
to accept such proposed changes in duties or responsibilities or to
accept such move; Executive's failure to respond within five (5)
business days after receiving notification of any such proposed change
in Executive's duties, responsibilities, titles, or work location
shall be deemed an acceptance of such change by Executive; or
(ii) There is a "Change in Control" of the Company; for purposes of
this subparagraph (ii), "Change in Control" shall have the same
definition as in paragraph 11(e) except that in such definition the
term "Company" shall be substituted for "RV Centers" throughout the
definition other than in the third line of paragraph 11(e)(i).
Provided, however, if Executive is given at least five (5) business
days advance notice of such Change in Control, Executive's failure to
give notice of termination prior to the consummation of the Change in
Control shall be deemed acceptance of such Change in Control and such
event shall not constitute "Good Reason". If Executive is not given at
least five (5) business days advance notice, Executive's failure to
terminate this Agreement within ten (10) business days after receiving
such notice of a Change in Control shall be deemed an acceptance of
such Change in Control by Executive and such event shall not
constitute "Good Reason".
(iii) the Company breaches any material provision of this Agreement
(continuing for ten (10) business days after receipt of written notice
from Executive of the need to cure).
Executive acknowledges that certain changes in authority, responsibility or
duties will result from the acquisition and subsequent operation by RV Centers
of the Company (e.g., shift of responsibility
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91
for human resources, accounting, insurance and other activities to officers of
RV Centers, combining Company operations and locations with other RV Centers
Companies, establishment of regional management and regional lines of
authority) and agrees that such changes shall not be of a nature to constitute
Good Reason provided that Executive is treated consistently, in all material
respects, with executives in similar positions in other operating subsidiaries
of RV Centers.
Upon termination of this Agreement for any reason provided in (a)
through (d) above, Executive shall be entitled to receive all compensation
earned and/or accrued and all benefits and reimbursements due and/or accrued
through the effective date of termination. Additional compensation subsequent
to termination, if any, will be due and payable to Executive only to the extent
and in the manner expressly provided above or in paragraph 11. All other rights
and obligations of the Company and Executive under this Agreement shall cease
as of the effective date of termination, except that Executive's obligations
under paragraphs 3, 5, 6, 7 and 8 herein, the Company's obligations with
respect to severance payments, if any, and indemnification under paragraph 13
below, and RV Centers' obligations under paragraph 21 below shall survive such
termination in accordance with their terms if the Agreement is terminated
pursuant to (a) through (d) above or paragraph 11 below.
If Executive is terminated without cause or terminates his employment
hereunder with Good Reason, the Executive shall be entitled to receive a
prorated portion of any annual bonus, which under the bonus plan is based only
on a formula determination and is not discretionary, to which Executive was
entitled to receive for the year during which termination occurred had the
Executive not been terminated. If the formula for the bonus calls for the use
of full year numbers, the amount of such bonus shall be based on such numbers,
notwithstanding that such numbers include a period after termination.
(e) Change in Control of RV Centers. In the event of a "Change in
Control" of RV Centers (as defined below), refer to paragraph 11 below.
5. Return of Company Property. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Executive by or on behalf of any RV Centers
Company, their representatives, vendors or customers which pertain to the
business of any RV Centers Company shall be and remain the property of the RV
Centers Companies, and be subject at all times to their discretion and control.
Likewise, all correspondence, reports, records, charts, advertising materials
and other similar data pertaining to the business, activities or future plans
of the RV Centers Companies which is collected by Executive shall be delivered
promptly to the Company without request by it upon termination of Executive's
employment.
6. Inventions. Executive shall disclose promptly to the Company any
and all conceptions, designs, inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by
Executive, solely or jointly with another, during the period of employment and
which are directly related to the then current business or activities of the
Company and which Executive conceives as a result of his employment by the
Company. Executive hereby
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92
assigns and agrees to assign all his interests therein to the Company or its
nominee. Whenever requested to do so by the Company, Executive shall execute
any and all applications, assignments or other instruments that the Company
shall deem necessary to apply for and obtain Letters Patent of the United
States or any foreign country or to otherwise protect the Company's interest
therein.
7. Trade Secrets. Executive agrees that he will not, during or after
the term of this Agreement with the Company, disclose the specific terms of any
RV Centers Company's relationships or agreements with their significant vendors
or customers or any other significant and material trade secret of an RV
Centers Company, whether in existence or proposed, to any person, firm,
partnership, corporation or business for any reason or purpose whatsoever,
except in pursuit of the Company's business (e.g. interaction with outside
auditors and consultants engaged by the Company) or with lenders or potential
lenders consistent with policies of the Company.
8. Confidentiality.
(a) Executive acknowledges and agrees that all Confidential
Information (as defined below) of the Company is confidential and a valuable,
special and unique asset of the Company that gives the Company an advantage
over its actual and potential, current and future competitors. Executive
further acknowledges and agrees that Executive owes the Company a fiduciary
duty to preserve and protect all Confidential Information from unauthorized
disclosure or unauthorized use, that certain Confidential Information
constitutes "trade secrets" under applicable laws, and that unauthorized
disclosure or unauthorized use of the Company's Confidential Information could
irreparably injure the Company.
(b) Both during the term of Executive's employment and after the
termination of Executive's employment for any reason (including wrongful
termination), Executive shall hold all Confidential Information in strict
confidence, and shall not use any Confidential Information except for the
benefit of the Company, in accordance with the duties assigned to Executive.
Executive shall not, at any time (either during or after the term of
Executive's employment), disclose any Confidential Information to any person or
entity (except other employees of the Company who have a need to know the
information in connection with the performance of their employment duties), or
copy, reproduce, modify, decompile or reverse engineer any Confidential
Information, or remove any Confidential Information from the Company's
premises, without the prior written consent of the Chief Executive Officer of
RV Centers, or permit any other person to do so except for the benefit of the
Company. In the event Executive is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or other process) to disclose any Confidential
Information, Executive will provide the Company with immediate written notice
of any such request or requirement so that the Company may seek an appropriate
protective order or seek with Executive's cooperation to narrow the request or
demand or waive Executive's compliance with the provisions of this Agreement.
If, failing the entry of a protective order or the receipt of a waiver
hereunder, Executive is, in the opinion of his counsel, compelled to disclose
Confidential Information, Executive may disclose only that portion of the
Confidential Information which Executive's counsel advises Executive in writing
that Executive is compelled to disclose and Executive will exercise his or her
best efforts to obtain assurance that confidential treatment will be
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93
accorded such Confidential Information. In any event, Executive will not oppose
action by the Company to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be accorded the
Confidential Information. Executive shall take reasonable precautions to
protect the physical security of all documents and other material containing
Confidential Information (regardless of the medium on which the Confidential
Information is stored). This applies to all Confidential Information, whether
now known or later to become known to Executive.
(c) Upon the termination of Executive's employment with the Company
for any reason, and upon written request of the Company at any other time,
Executive shall promptly surrender and deliver to the Company all documents and
other written material of any nature containing or pertaining to any
Confidential Information and shall not retain any such document or other
material. Within five days of any such request, Executive shall certify to the
Company in writing that all such materials have been returned.
(d) As used in this Agreement, the term "Confidential Information"
shall mean any information or material known to or used by or for the Company
(whether or not owned or developed by the Company and whether or not developed
by Executive) that is not generally known to the public and has been generally
treated by the Company as confidential information. Confidential Information
includes, but is not limited to, the following: all trade secrets of the
Company; all information that the Company has marked as confidential or has
otherwise described to Executive (either in writing or orally) as confidential;
all nonpublic information concerning the Company's products, services,
prospective products or services, research, product designs, prices, discounts,
costs, marketing plans, marketing techniques, market studies, test data,
customers, customer lists and records, suppliers and contracts; all Company
business records and plans; all Company personnel files; all financial
information of or concerning the Company; all information relating to operating
system software, application software, software and system methodology,
hardware platforms, technical information, inventions, computer programs and
listings, source codes, object codes, copyrights and other intellectual
property; all technical specifications; any proprietary information belonging
to the Company; and all data and all computer system passwords and user codes.
"Confidential Information" shall not include information which (i) is
in the public domain to such an extent as to be readily available to
competitors of the RV Centers Companies, (ii) becomes generally known to the
public other than by disclosure by Executive, or (iii) is received by
Executive, outside his capacity as an employee of the Company, from a third
party which was under no legal obligation of confidentiality with an RV Centers
Company with respect to such information.
9. No Prior Agreements. Executive hereby represents and warrants to
the Company that the execution of this Agreement by Executive and his
employment by the Company and the performance of his duties hereunder will not
violate or be a breach of any agreement with a former employer, client or any
other person or entity. Further, Executive agrees to indemnify the Company for
any loss or damage, including, but not limited to, attorneys' fees and expenses
of investigation, the Company may incur based upon or arising out of any breach
of this paragraph 9.
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94
10. Assignment; Binding Effect. Executive understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement.
Subject to the preceding two sentences and the express provisions of paragraph
11 below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. Change in Control.
(a) Executive understands and acknowledges that RV Centers may be
merged or consolidated with or into another entity or that RV Centers may
undergo a "Change in Control" (as defined below). In the event a Change in
Control is initiated or occurs during the Initial Term, then the provisions of
this paragraph 11 shall be applicable.
(b) In the event of a Change in Control wherein Executive has not
received written notice at least five (5) business days prior to the
anticipated date of the event or transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agrees to perform, or continue to cause the Company to perform, the
Company's obligations under this Agreement in the same manner and to the same
extent that the Company is required to perform prior to such event or
transaction, then Executive may, at Executive's sole discretion, elect to
terminate his employment on the effective date of such Change in Control. In
such case, the applicable provisions of paragraph 4(d) will apply as though the
Company had terminated Executive without Good Cause; however, the amount of the
severance payments due Executive shall be triple the amount calculated under
the terms of paragraph 4(d), but shall in no event in the aggregate exceed six
(6) times Executive's annual base salary.
(c) For purposes of applying paragraph 4 under the circumstances
described in (b) above, in the case where Executive's employment under this
Agreement will terminate, the effective date of termination will be the closing
date of the transaction giving rise to the Change in Control and all
compensation, benefits and reimbursements due Executive under paragraph 2 above
must be paid in full by the Company at or prior to such closing. In the case
where Executive's employment under this Agreement does not terminate with a
Change in Control under (b) above, then for one (1) year following the closing
date of a Change in Control, if the Initial Term is ending during such one (1)
year period, the Company shall automatically renew this Agreement for one (1)
year pursuant to the second sentence of paragraph 4 above.
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(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, entity or group (as such terms are used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Act"), other than RV Centers or an employee benefit plan
of RV Centers, acquires, directly or indirectly, the beneficial
ownership (as defined in Section 13(d) of the Act)) of any voting
security of RV Centers and immediately after such acquisition such
person is, directly or indirectly, the beneficial owner of voting
securities representing 50% or more of the total voting power of all
of the then outstanding voting securities of RV Centers entitled to
vote generally in the election of directors;
(ii) the stockholders of RV Centers shall approve a merger,
consolidation, recapitalization or reorganization of RV Centers, or a
reverse stock split of outstanding voting securities, or consummation
of any such transaction if stockholder approval is not obtained, other
than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction being
beneficially owned by the holders of all of the outstanding voting
securities of RV Centers immediately prior to the transactions with
the voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or
(iii) the stockholders of RV Centers shall approve a plan of
complete liquidation or dissolution of RV Centers or an agreement for
the sale or disposition by RV Centers of all or a substantial portion
of RV Centers' assets (i.e., 50% or more of the total consolidated
assets of RV Centers).
(f) If it shall be finally determined that any payment made or benefit
provided to Executive in connection with a Change in Control of RV Centers,
whether or not made or provided pursuant to this Agreement, is subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, or any successor thereto, RV Centers or the Company shall pay
Executive an amount of cash (the "Additional Amount") such that the net amount
received by Executive after paying all applicable taxes on such Additional
Amount shall be equal to the amount that Executive would have received if
Section 4999 were not applicable.
13. Release. Notwithstanding anything in this Agreement to the
contrary, Executive shall not be entitled to receive any severance payments
pursuant to paragraphs 4 or 11 of this Agreement unless Executive has executed
(and not revoked) a general release of all claims Executive may have against
the Company and its affiliates relating to Executive's employment hereunder,
other than claims for unpaid compensation amounts required to be paid by the
Company pursuant to paragraph 2 hereof, in a form of such release acceptable to
the Company.
14. Indemnification. In the event Executive is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against Executive), by reason of the fact that he is or was performing
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services in good faith under this Agreement or as an executive officer of the
Company prior to the date of this Agreement, then the Company shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement, as actually and reasonably incurred by
Executive in connection therewith. In the event that both Executive and the
Company are made a party to the same third-party action, complaint, suit or
proceeding, the Company agrees to engage competent legal representation, and
Executive agrees to use the same representation, provided that if counsel
selected by the Company shall have a conflict of interest that prevents such
counsel from representing Executive, he may engage separate counsel and the
Company shall pay all reasonable attorneys' fees and reasonable expenses of
such separate counsel. Further, while Executive is expected at all times to use
his best efforts to faithfully discharge his duties under this Agreement,
Executive cannot be held liable to the Company for errors or omissions made in
good faith where Executive has not exhibited gross, willful and wanton
negligence and misconduct nor performed criminal and fraudulent acts which
materially damage the business of the Company.
15. Complete Agreement. Except as expressly set forth herein, this
Agreement is not a promise of future employment. Executive has no oral
representations, understandings or agreements with the Company or any of its
officers, directors or representatives covering the same subject matter as this
Agreement. This written Agreement is the final, complete and exclusive
statement and expression of the agreement between the Company and Executive,
and it cannot be varied, contradicted or supplemented by evidence of any prior
or contemporaneous oral or written agreements. This written Agreement may not
be later modified except by a further writing signed by a duly authorized
officer of the Company, RV Centers and Executive, and no term of this Agreement
may be waived except by a writing signed by the party waiving the benefit of
such term.
16. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: ▇▇▇▇▇ Motors, Inc. d/b/a Casey's Recreational Sales
4120 Youngfield
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: RV Centers, Inc.
Attention: President
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
To Executive: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Notice shall be deemed given and effective on the earlier of three (3) days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the other
party of such change in accordance with this paragraph 16.
Page 14 of Annex V
97
17. Severability; Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
18. Arbitration. Any unresolved dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by
arbitration; provided, however, the Company shall be entitled to bring an
action to enforce its rights under paragraphs 3, 5, 6, 7 and 8. The arbitration
shall be conducted before a panel of three (3) arbitrators in Houston, Texas,
in accordance with the National Rules for the Resolution of Employment Disputes
of the American Arbitration Association ("AAA") then in effect. Unless both
parties agree otherwise, the arbitrators will be those provided by the AAA. The
arbitrators shall not have the authority to add to, detract from or modify any
provision hereof nor to award punitive damages to any injured party. The
arbitrators shall have the authority to order back pay, severance compensation,
vesting of options (or cash compensation in lieu of vesting of options),
reimbursement of legal fees and costs, including those incurred to enforce this
Agreement, and interest thereon. A decision by a majority of the arbitration
panel shall be final and binding. Judgment may be entered on the arbitrators'
award in any court having jurisdiction. The AAA fees and all direct expenses
(e.g., room rental for a location to conduct the proceedings, reimbursement of
arbitrators' per diems and out-of-pocket expenses) of any arbitration
proceeding shall be borne evenly by the parties pending a final determination
by the arbitrators as to how the costs shall be borne between the parties.
19. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Texas, without regard to its conflicts of
laws provisions.
20. Counterparts. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
21. Guarantee of Payments. RV Centers has executed this Agreement for
the limited purposes of paragraph 21. In this connection, RV Centers hereby
unconditionally guarantees the punctual payment when due by the Company of all
obligations payable by the Company to the Executive hereunder.
Page 15 of Annex V
98
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"EXECUTIVE" "COMPANY"
By:
-------------------------- ------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Name:
----------------------------------------
Title:
---------------------------------------
For Purposes of paragraph 21:
"RV CENTERS"
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: Chairman, Chief Executive Officer
and President
Page 16 of Annex V
99
ANNEX VI
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "LEASE") is made and entered into as of
____________, 1999 by and between ___________________("LANDLORD"), and
______________________("TENANT").
In consideration of the rentals reserved hereunder and the duties, covenants and
obligations of the other hereunder, Landlord and Tenant hereby covenant and
agree as follows:
I.
1.01 DEMISE OF THE PREMISES. Landlord hereby leases, demises and lets to
Tenant, and Tenant hereby leases and takes from Landlord, that certain tract of
land (the "LAND") located in ______________________, and more particularly
described on Exhibit "A" attached hereto together with all buildings,
improvements and fixtures located thereon (the "IMPROVEMENTS") and the
non-exclusive use of all rights, easements, privileges and appurtenances
thereto (said Land, Improvements and appurtenances being hereinafter referred
to as the "PREMISES").
1.02 TERM. The term of this Lease shall commence on ___________, 1999 (the
"COMMENCEMENT DATE") and, unless sooner terminated or renewed and extended in
accordance with the terms and conditions set forth herein, shall expire on
_____________, 2002 (the "Initial Term"). If Tenant occupies the Premises prior
to the Commencement Date, it shall do so subject to all of the terms and
provisions of this Lease except for the obligation to pay Base Rental (as
hereinafter defined).
1.03 RENEWAL TERM. Landlord hereby grants to Tenant the right, privilege and
option to extend the initial term of this Lease for three (3) periods of three
(3) years each (the "RENEWAL TERMS"), beginning on the day following the
expiration of the Initial Term or the first or second Renewal Term, as
applicable, upon the same terms and conditions as herein contained. Tenant may
exercise each such option by delivering written notice to Landlord of Tenant's
exercise of such option at least three (3) months prior to the expiration of
the initial term or renewal term, as applicable, upon satisfaction of the
following terms and conditions: (i) that, at the time of the exercise of such
option and at the time the applicable Renewal Term begins, Tenant shall not be
in default in the performance of any of the terms, covenants and conditions
contained in this Lease after notice and the expiration of any applicable cure
periods; and (ii) that this Lease shall not have been theretofore terminated
and shall be in full force and effect at the date of the exercise of such
option and at the date the applicable Renewal Term begins. As used herein,
"TERM" shall mean the Initial Term of this Lease as described in Section 1.02
above, as extended and renewed by any Renewal Terms.
Page 1 of Annex VI
100
1.04 USE. The Premises are to be used for the operation of a recreational
vehicle dealership and servicing facility and related uses or any lawful
purpose with the prior written consent of Landlord, such consent not to be
unreasonably withheld or delayed.
II.
2.01 BASE RENTAL. Tenant hereby covenants and agrees to pay to Landlord at
Landlord's address set forth in Section 12.01 or such other address as Landlord
may designate from time to time in writing to Tenant, a base annual rental (the
"BASE RENTAL"). Base Rental shall be payable in 12 equal monthly installments
in advance on the first business day of each month during the Initial Term
except that all payments due hereunder for any fractional month of the
commencement or end of this Lease shall be prorated based upon the number of
days in such fractional month during the Term. All Base Rental or any other
sums due hereunder will be paid without notice, demand, abatement, deduction or
setoff except as otherwise set forth herein. Base Rental for the Initial Term
shall equal $182,400.
2.02 BASE RENTAL ADJUSTMENT FOR RENEWAL TERMS. The Base Rental for each Renewal
Term shall be calculated in accordance with the following formula:
Base Rental for the Renewal Term = Base Rental for the Initial Term x
(CPI2/CPI1)
In applying the above formula for rental adjustment, the following
definitions shall prevail:
(a) "CPI" means the monthly indexes of the National Consumer Price
Index for All Urban Consumers (All items: 1982-84 equals 100) issued by the
U.S. Department of Labor, Bureau of Labor Statistics or any successor agency
that shall issue the indexes.
(b) "CPI1" means the CPI as of the commencement date of the Initial
Term.
(c) "CPI2" means the CPI as of the commencement date of the Renewal
Term for which the adjustment of Base Rental is computed.
In the event that (i) the Bureau of Labor Statistics ceases to use the
1982-84 average of 100 as the basis of calculation, or (ii) a substantial
change is made in the number or characters of "market basket" items used in
determining the CPI, or (iii) Landlord and Tenant mutually agree in writing
that the CPI does not accurately reflect the purchasing power of the dollar, or
(iv) the CPI shall be discontinued for any reason, the Bureau shall be
requested to furnish a new index comparable to the CPI together with
information which will make possible the conversion to the new index in
Page 2 of Annex VI
101
computing the adjusted rental. If for any reason the Bureau does not furnish
such an index and such information, the parties shall thereafter accept and use
such other index or comparable statistics on the cost of living for the county
in which the Premises is located, as shall be computed and published by an
agency of the United States or by a responsible financial periodical of
recognized authority then to be selected by Landlord (but subject to reasonable
approval by Tenant).
2.03 TENANT'S MAINTENANCE AND REPAIRS. Except as otherwise notified to Tenant
in writing to Landlord prior to the Commencement Date, Landlord hereby
represents and warrants that as of the date hereof, the Improvements and all
structural and non-structural elements thereof (including all electrical,
mechanical, heating, ventilating, air conditioning, plumbing and other systems
serving the Premises) and all entryways, driveways, walkways and parking areas
are free of defects and in good repair and operating condition, normal wear and
tear excepted. From and after the Commencement Date and during the Term, Tenant
shall, at Tenant's sole cost and expense: (i) make non-structural repairs,
replacements and renewals necessary to keep the Premises in good condition,
order and repair as the same are in as of the Commencement Date, reasonable
wear and tear and damage by fire or other casualty or condemnation excepted;
(ii) keep all electrical, mechanical, heating, ventilating and air
conditioning, plumbing and any other systems serving the Premises in good order
and repair; (iii) keep all entryways, driveways, walkways and parking areas on
the Premises in good order and repair, and (iv) with respect only to capital
improvements constructed by Tenant under Section 5.01 below, structural repairs
necessary to keep such capital improvements in good condition, order and
repair, reasonable wear and tear and damage by fire or other casualty or
condemnation excepted. Notwithstanding anything contained herein to the
contrary, replacement of shingles, tar and gravel, membranes or other similar
exterior roofing material, if required, shall be Tenant's responsibility. In
the event that heating, ventilation and air conditioning systems (including
furnaces) must be replaced during the Term and no violation of the
representation in the first sentence of this Section 2.03 has occurred with
respect to such system, then Tenant will be responsible for such replacement
and the associated costs. In the event Tenant shall fail to fulfill its
obligations to repair and maintain the Premises in accordance with this Section
2.03, Landlord, notwithstanding anything herein to the contrary, shall have the
right upon not less than thirty (30) days' prior written notice to Tenant
(except in cases of emergency), to make such repairs and maintain the Premises
at the expense of Tenant, and Tenant shall promptly pay to Landlord the actual
cost thereof.
2.04 LANDLORD'S MAINTENANCE AND REPAIRS. From and after the Commencement Date
and during the Term, Landlord shall, at its own cost and expense, make all
necessary structural repairs, replacements and renewals to the Premises
including, but not limited to, maintaining the foundation, floor slabs,
exterior walls, structural roof members and all other structural supports of
such Improvements in good and sound condition. Landlord shall not, however, be
obligated to make structural repairs to any capital improvements constructed by
Tenant under Section 5.01 which repairs are the responsibility of Tenant under
Section 2.03 above. In the event Landlord shall fail
Page 3 of Annex VI
102
to fulfill its obligations to repair and maintain the Premises in accordance
with this Section 2.04, Tenant, notwithstanding anything herein to the
contrary, shall have the right, upon not less than thirty (30) days' prior
written notice to Landlord (except in the case of an emergency), to make such
repair and maintain the Premises at the expense of Landlord, and to deduct the
cost of the same from the Base Rental that shall thereafter become due. In the
event Landlord disputes the amount being offset by Tenant and Landlord prevails
through arbitration pursuant to Section 12.02 hereof, Tenant shall promptly
reimburse Landlord for such amount.
III.
3.01 UTILITIES. Landlord agrees to provide, at its cost, water, electricity and
telephone service connections into the Premises, but Tenant shall pay for all
water, gas, heat, lights, power, telephone, sewer, sprinkler charges and other
utilities and shall furnish all electric light bulbs and tubes. In the event of
a failure by Landlord to provide the service connections specified in this
Section 3.01 which is not caused by a failure of the applicable utility company
to provide actual service or another Force Majeure event as set forth in
Section 12.03(k) ("FAILURE OF SERVICES"), which such Failure of Services is not
cured within five (5) days, Tenant shall have the following rights:
(a) For each day or portion thereof that Failure of Services continues for more
than five (5) days, Tenant will be entitled to an abatement of Base Rental,
beginning with the inception of the sixth (6th) day and terminating on the day
such Failure of Services is completely cured by Landlord having resumed
furnishing the interrupted service.
(b) In the event Failure of Services is not completed cured by Landlord within
thirty (30) days, Tenant will have the option to terminate this Lease and all
of its obligations for the remaining balance of the Term by giving written
notice for such termination to Landlord within five (5) days of the expiration
of such thirty (30) day period.
IV.
4.01 CARE OF THE PREMISES. Tenant shall not commit any waste or damage to any
portion of the Premises, and shall, subject to Sections 2.03 and 2.04, at its
own cost and expense, maintain the Premises in good condition and repair. Upon
termination of this Lease, by lapse of time or otherwise, Tenant shall deliver
up the Premises to Landlord in as good condition as existed on the Commencement
Date, ordinary wear and tear only excepted. Upon such termination of this
Lease, Landlord shall have the right to re-enter and resume possession of the
Premises.
Page 4 of Annex VI
103
4.02 LAWS AND REGULATIONS; HAZARDOUS SUBSTANCES.
(a) Tenant shall use its diligent good faith efforts to comply with all laws,
ordinances, orders, rules, regulations and other requirements of governmental
authority pertaining to or governing Tenant's particular use and occupancy of
the Premises, whether now in force or hereafter enacted, and all applicable
federal, state or local laws, regulations, orders, judgments and decrees
regarding health, safety or the environment ("ENVIRONMENTAL LAWS"), including
without limitation the application for and maintenance of all required permits,
the submittal of all notices and reports, proper labeling, training and record
keeping, and timely and appropriate response to any release or other discharge
by Tenant of a substance under Environmental Laws.
(b) Landlord shall use its diligent good faith efforts to comply with all laws,
ordinances, orders, rules, regulations and other requirements of governmental
authority pertaining to or governing Landlord's ownership, maintenance and
repair of the Premises, whether now in force or hereafter enacted, including,
without limitation, the American Disabilities Act and all Environmental Laws,
including without limitation the application for and maintenance of all
required permits, the submittal of all notices and reports, proper labeling,
training and record keeping, and timely and appropriate response to any release
or other discharge by Landlord of a substance under Environmental Laws.
(c) Tenant shall indemnify, protect and hold harmless Landlord and each of its
officers, directors, employees, shareholders and respective subsidiaries from
and against all loss, cost, damage, expense and liability incurred by Landlord
in connection with the presence, emanation, migration, disposal, release or
threatened release of any oil or other petroleum products or hazardous
materials or substances on, within or to or from the Premises as a result of
(i) the operations of Tenant on the Premises after the Commencement Date and
(ii) the activities of third parties affiliated with Tenant or invited on the
Premises by Tenant after the Commencement Date. Landlord represents and
warrants to Tenant that as of the Commencement Date, the Premises do not
contain any oil or other petroleum products or hazardous materials or
substances, the existence of which imposes a requirement under any law or
regulation to remove, remediate, reduce the levels of such substances or
otherwise perform any response, corrective or preventive measure or pay for any
environmental response costs. Landlord shall indemnify, protect and hold
harmless Tenant and each of its officers, directors, employees, shareholders
and respective subsidiaries from and against all loss, cost damage, expense and
liability incurred by Tenant in connection with the presence, emanation,
migration, disposal, release or threatened release of any oil or other
petroleum products or hazardous materials or substances on, within, or to or
from the Premises as a result of (i) any activity or action by any party prior
to the Commencement Date or after the expiration of the Term, except any action
or activity, during the Term, of Tenant, its agents, employees, contractors or
any other party acting by or through or on behalf of Tenant, (ii) the condition
of the Premises prior to the Commencement Date or after the expiration of the
Term, including any future manifestations of such
Page 5 of Annex VI
104
conditions, except to the extent that any such condition is caused by or
attributable to the activities or the actions of the Tenant, its agents,
employees or contractors or by any other party acting by, through or under
Tenant which are taken during the Term or (iii) the actions or activities of
Landlord. Each party agrees that such party will promptly give written notice
to the other party of any investigation, claim, demand, lawsuit or other action
by any governmental or regulatory agency or private party involving the
Premises and any hazardous substance or environmental law of which such party
has actual notice. Notwithstanding the foregoing, Tenant acknowledges that it
can make no claim against the Landlord for indemnity or for breach of
representation or warranty under this Section 4.02(c) which claim is based upon
actions taken by or activities of the Tenant at the Premises prior to the
Commencement Date unless (i) notice of such claim is given to Landlord in
writing prior to June 30, 2000, or (ii) the Landlord had actual knowledge of
such matter and failed to disclose same, in writing, to Tenant prior to the
Commencement Date.
V.
5.01 ALTERATIONS TO THE PREMISES. Subject to the other provisions of this
Section 5.01, at any time and from time to time during the Term, Tenant may
perform such alteration, renovation, repair, refurbishment, and other work,
including the construction of new improvements (collectively called the
"ALTERATIONS") with regard to any Improvements as Tenant may elect. Any and all
alteration, renovation, repair, refurbishment, construction of new improvements
or other work with regard thereto shall be performed, in accordance with the
following "CONSTRUCTION STANDARDS" herein so referenced:
(i) All such construction or work shall be performed in a good
and workmanlike manner in accordance with good industry practice for
the type of work in question;
(ii) All such construction or work shall be done in compliance
with all applicable building codes, ordinances, and other laws or
regulations having jurisdiction;
(iii) No such construction or work shall be commenced until there
shall have been first obtained all licenses, permits, and
authorizations required by applicable laws;
(iv) Tenant shall have obtained and shall maintain in force and
effect the insurance coverage required in Section 7.01 with respect to
the type of construction or work in question;
(v) After commencement, such construction or work shall be
prosecuted with due diligence to its completion;
Page 6 of Annex VI
105
(vi) Tenant shall furnish Landlord with a copy of all plans and
specifications relating to each alteration to the extent that such
plans and specifications have been furnished to Tenant; and
(vii) Any such construction or work which has a cost in excess of
$25,000 shall be subject to the approval of Landlord. Such approval
shall not be unreasonably withheld and if no approval or disapproval
is expressed within 15 days of the receipt of the request and related
plans, the approval of Landlord shall be deemed to have been granted.
5.02 MECHANIC'S LIEN. Tenant shall not permit any mechanic's lien or liens to
be placed upon the Premises during the term hereof caused by or resulting from
any work performed, materials furnished, or obligation incurred by or at the
request of Tenant. If a lien is filed upon the interest of Landlord or Tenant
in the Premises, Tenant shall cause the same to be discharged of record or
bonded within one hundred twenty (120) days after the filing of same. If Tenant
shall fail to discharge such mechanic's lien within such period, then, in
addition to any other right or remedy of Landlord, Landlord may discharge the
same, either by paying the amount claimed to be due, or by procuring the
discharge of such lien by deposit in court or bonding. Any amount paid by
Landlord for any of the aforesaid purposes, or for the satisfaction of any
other lien not caused by Landlord, with interest thereon at the rate
hereinafter provided from the date of payment, shall be paid by Tenant to
Landlord immediately on demand as rent.
5.03 SIGNS. Tenant shall have the right to install signs upon the Premises,
subject to any applicable governmental law, ordinances, restrictive covenants,
regulations and other requirements. Tenant shall remove all such signs by the
termination of this Lease. Such installations and removals shall be made in
such manner as to avoid injury or defacement of the Improvements, and Tenant
shall repair any injury or defacement caused by such installation and/or
removal. Tenant shall not be obligated to remove any signs existing on the
Premises as of the Commencement Date.
VI.
6.01 CONDEMNATION.
(a) If the whole or any substantial part of the Premises should be taken for
any public or quasi-public use under governmental law, ordinance or regulation,
by right of eminent domain or by private purchase in lieu thereof, and the
taking would prevent or materially interfere with the use of the Premises for
the purpose for which they are being used, this Lease shall, at Tenant's
option, terminate and the Base Rental shall be abated during the unexpired
portion of this Lease, effective when the physical taking of said Premises
shall occur.
Page 7 of Annex VI
106
(b) If part of the Premises shall be taken for any public or quasi-public use
under any governmental law, ordinance or regulation, by right of eminent domain
or by private purchase in lieu thereof, and this Lease is not terminated as
provided in clause (a) above, this Lease shall not terminate but the Base
Rental payable hereunder during the unexpired portion of this Lease shall be
reduced based on the percentage of the Premises that is not usable.
(c) In the event of any such taking or private purchase in lieu thereof,
Landlord and Tenant shall each be entitled to receive and retain such separate
awards and/or portion of lump sum awards as may be allocated to their
respective interests in any condemnation proceedings.
6.02 CASUALTY.
(a) If the Improvements should be damaged or destroyed by fire, water, tornado,
hurricane, snowstorm or other casualty, Tenant shall give immediate written
notice thereof to Landlord.
(b) If the Improvements should be totally destroyed by fire, water, tornado,
hurricane, snowstorm or other casualty, or if they should be so damaged thereby
that restoration thereof cannot, in Landlord's reasonable judgment, be
completed within one hundred fifty (150) days after the date upon which
Landlord is notified by Tenant of such damage, this Lease shall, at Tenant's
option, terminate and the Base Rental shall be abated during the unexpired
portion of this Lease, effective upon the date of the occurrence of such
damage.
(c) If the Improvements should be damaged by any casualty and this Lease is not
terminated by Tenant pursuant to the foregoing provisions of this Section 6.02,
Landlord shall at its sole cost and expense thereupon proceed with reasonable
diligence to rebuild and repair such Improvements to substantially the
condition in which they existed prior to such damage. Notwithstanding the
previous sentence, Landlord's obligation to restore, rebuild and repair any
casualty during the Term of this Lease shall be limited to the extent of the
insurance proceeds received by Landlord. Landlord shall be entitled to receive
disbursements of insurance proceeds received by Tenant in respect of the
insurance for improvements Tenant is required to maintain hereunder as
restoration progresses for the costs Landlord incurs in connection with such
restoration. If all or a part of the Premises are untenantable, Base Rental
shall be reduced based on the percentage of the Premises that is not usable. In
the event that Landlord should fail to complete such repairs and rebuilding
within one hundred eighty (180) days after the date upon which Landlord is
notified by Tenant of such damage, Tenant may at its option terminate this
Lease by delivering written notice of termination to Landlord as Tenant's
exclusive remedy, whereupon all rights and obligations hereunder shall cease
and terminate.
Page 8 of Annex VI
107
VII.
7.01 INSURANCE. Tenant agrees to maintain standard fire and extended coverage
insurance covering the Improvements in an amount not less than 100% of the
replacement costs thereof, insuring against the perils of fire, lightening and
other perils as now or hereafter may be included in "All Risk" insurance
coverage, such coverage and endorsements to be as defined, provided and limited
in the standard bureau forms prescribed by the insurance regulatory authority
for the state in which the Premises are situated for use by insurance companies
admitted in such state for the writing of such insurance on risks located
within such state.
Tenant shall obtain and keep in full force (i) a policy of commercial general
liability and property damage insurance (including, but not limited to,
automobile, personal injury, broad form contractual liability and broad form
property damage), with combined single limits of liability (on an occurrence
basis) of not less than $1,000,000, and (ii) an "all risk" property policy
covering all of Tenant's personal property in, on or about the Premises,
containing an agreed amount endorsement in an amount not less than 100% of the
full replacement cost valuation, with proceeds of such policy to be used by
Tenant for the replacement of such personal property. Tenant shall be named as
the insured under the foregoing policies and Landlord and any mortgagees (whose
names shall have been furnished to Tenant) shall be named as additional
insureds.
All the insurance required to be maintained by Tenant under this Lease shall
(i) be issued by insurance companies authorized to do business in the state in
which the Premises are located, with a financial rating of at least A:XII for
any property insurance and A+ for any liability insurance as rated in the most
recent edition of Best's Insurance Reports, (ii) be issued as a primary policy,
and (iii) contain an endorsement requiring thirty (30) days' written notice
from the insurance company to both parties and to Landlord's lender, if any,
before cancellation or any material change in the coverage, scope, or amount of
any policy. A duplicate original policy, or certificate of the policy with the
actual policy attached shall be deposited with the other party on or before the
Commencement Date, and on the renewal of the policy a certificate of insurance
listing the insurance coverages required hereunder and naming Landlord, and any
mortgagee of Landlord (whose names have been furnished to Tenant), as
applicable, as additional insureds shall be deposited with the other party not
less than seven (7) days before expiration of the term of the policy.
7.02 HOLD HARMLESS.
(a) Tenant releases Landlord from all liability for any injury or damage to
person or property occurring in the Premises, and agrees to protect, defend,
indemnify and hold Landlord harmless from and against all liabilities, claims,
suits, actions and costs (including reasonable attorneys' fees and costs of
suit) arising out of or in connection with any such injury or caused by the
negligence or willful misconduct of Tenant, its partners, agents, servants,
employees or contractors.
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108
(b) Landlord hereby agrees to protect, defend, indemnify and hold Tenant
harmless from and against all liabilities, claims, suits, actions and costs
(including reasonable attorneys' fees and costs of suit) arising out of or in
connection with any injury or damage to person or property occurring in the
Premises, to the extent that such injury or damage is caused by the negligence
or willful misconduct of Landlord, its partners, agents, servants, employees or
contractors.
7.03 WAIVER OF CLAIMS AND RECOVERY RIGHTS. Anything in this Lease to the
contrary notwithstanding, Landlord and Tenant each, on behalf of themselves and
their respective heirs, successors, legal representatives, assigns and
insurers, hereby (a) waives any and all rights of recovery, claims, actions or
causes of action against the other and its respective officers, directors,
partners, shareholders, agents, servants, employees, guests, licensees or
invitees for any loss or damage that may occur to the Premises or any personal
property of such party therein, by reason of fire, the elements, or any other
cause which is required to be insured against under the terms of the insurance
policies referred to in Section 7.01 hereof, regardless of cause or origin,
including negligence of the other party hereto or its respective officers,
directors, partners, shareholders, agents, servants, employees, guests,
licensees or invitees, and (b) covenants that no insurer shall hold any right
of subrogation against such other party; provided, however, the waiver set
forth in this Section 7.03 shall not apply to any deductibles on insurance
policies carried by Landlord or Tenant or to any coinsurance penalty which
Landlord or Tenant might sustain. If the respective insurer of Landlord and
Tenant does not permit such a waiver without an appropriate endorsement to such
party's insurance policy, then Landlord and Tenant each shall notify its
insurer of the waiver set forth herein and to secure from such insurer an
appropriate endorsement to its respective insurance policy with respect to such
waiver.
7.04 TAXES DEFINED.
(a) Tenant shall be responsible for all Taxes during the Term of the Lease.
"Taxes" means all taxes, assessments, use and occupancy taxes and other charges
by any public authority, including penalties levied for failure by Tenant to
pay any of same in a timely manner, which shall or may during the Term be
assessed, levied, charged, confirmed or imposed by any governmental authority
upon the Premises or any part thereof. "Taxes" shall not include any income
tax, capital levy, estate, succession, inheritance or transfer taxes, or
similar tax of Landlord; any franchise tax imposed upon any owner of the fee of
the Premises; or any income, profits, or revenue tax, assessment, or charge
imposed upon the rent or other benefit received by Landlord under this Lease by
any municipality, county, state, the United States of America, or any other
governmental body.
(b) Tenant may, at its expense, contest the validity or amount of Taxes for
which it is responsible, in which event the payment thereof may be deferred, as
permitted by law, during the pendency of such contest, if diligently
prosecuted. Landlord shall cooperate with Tenant in connection with any such
contest but Landlord shall not be required to spend any sums or incur any
liability in cooperating with Tenant.
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109
VIII.
8.01 DEFAULT BY TENANT. The occurrence of any one or more of the following
events shall constitute an "EVENT OF DEFAULT" under this Lease:
(a) Tenant shall fail to pay any sum of Base Rental when due, and such failure
shall continue for ten (10) days after written notice to Tenant;
(b) Tenant shall fail in the performance of any of the other covenants or
conditions under this Lease, and such failure shall continue for thirty (30)
days after written notice to Tenant or, if such failure cannot reasonably be
cured within said thirty (30) day period despite Tenant's diligent good faith
efforts, the failure of Tenant to promptly commence its diligent good faith
efforts to cure such failure within said thirty (30) day period and to
thereafter diligently pursue such efforts; or
(c) the interest of Tenant under this Lease shall be levied on under execution
or other legal process; any petition shall be filed by or against Tenant to
declare Tenant a bankrupt or to delay, reduce or modify Tenant's debts or
obligations, or to reorganize or modify Tenant's capital structure; Tenant is
declared insolvent according to law; any assignment of Tenant's property shall
be made for the benefit of creditors; or a receiver or trustee is appointed for
Tenant or its property and such levy, execution, legal process, petition,
declaration, assignment or appointment is not removed or vacated within ninety
(90) days from the date of its creation, service or filing.
8.02 REMEDIES. Upon the occurrence of any Event of Default, at Landlord's
option, Landlord may (without further notice or grace) exercise any one or more
of the following remedies, in addition to all other rights and remedies
provided at law or in equity:
(a) Terminate this Lease and immediately repossess the Premises by forcible
entry and detainer suit or otherwise.
(b) Terminate Tenant's right of possession (but not this Lease) and immediately
repossess the Premises by forcible entry and detainer suit or otherwise,
without thereby releasing Tenant from any liability hereunder and without
terminating this Lease. After regaining possession of the Premises under this
Section 8.02(b), Landlord shall use commercially reasonable efforts to relet
the Premises on such terms and conditions as Landlord in its sole, good faith
judgment deems acceptable, and if the Premises are so relet, Tenant shall
receive credit against the sums otherwise payable to Landlord hereunder only
for the amount of the rentals actually received by Landlord under such new
lease.
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110
8.03 NON-WAIVER. Failure of Landlord to declare any default immediately upon
occurrence thereof, or delay in taking any action in connection therewith,
shall not waive such default, but Landlord shall have the right to declare any
such default at any time and take such action as might be lawful or authorized
hereunder, either in law or in equity.
8.04 HOLDING OVER. If Tenant continues in occupancy of the Premises after
expiration or termination of this Lease without the written consent of
Landlord, Tenant shall pay as rent for the holdover period (pro rated on a
daily basis) 125% of the Base Rental payable immediately prior to the
expiration or termination. No holding over by Tenant after the Term of this
Lease without the written consent of Landlord shall be construed to extend the
term hereof. Any holding over with the written consent of Landlord shall
constitute this a month-to-month tenancy, unless specifically stated otherwise
in such consent. The provisions of this paragraph shall survive the expiration
or termination of this Lease.
IX.
9.01 ASSIGNMENT OR SUBLEASE BY TENANT.
(a) Tenant may assign this Lease or sublet the Premises or any part thereof to
an Affiliate of Tenant without the prior consent of Landlord; provided,
however, that Tenant shall promptly notify Landlord of any such assignment or
subletting, and with respect to any assignment of this Lease, shall deliver a
written assumption in favor of Landlord of the duties, obligations and
liabilities of Tenant hereunder by such Affiliate. "Affiliate" shall mean any
corporation, limited liability company, partnership, sole proprietorship or
other entity controlling, controlled by, or under common control with the
Tenant. The term "control" (including the terms "controlling," "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or the policies
of an entity, whether through the ownership of voting securities, by contract
or otherwise.
(b) Except as provided in Section 9.01(a), Tenant shall not assign this Lease
or sublease all or any portion of the Premises without Landlord's prior written
consent in accordance with this Section 9.01(b) which consent shall not be
unreasonably withheld or delayed. Tenant shall give Landlord at least fifteen
(15) days advanced written notice of a proposed assignment or subletting to an
unaffiliated entity. Landlord shall then have a period of ten (10) days
following receipt of such notice within which to notify Tenant in writing
whether Landlord consents to the proposed assignment or subletting. Failure by
Landlord to respond to Tenant within such ten (10) day period shall be deemed
to be Landlord's approval of such assignment.
9.02 ASSIGNMENT BY LANDLORD. Landlord shall have the right to transfer and
assign its rights and obligations hereunder to any person or entity acquiring
ownership of the Premises, and in such event
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111
and upon such transfer no further liability or obligation shall thereafter
accrue against Landlord hereunder, but Landlord will remain liable for any
accrued and unpaid obligations to Tenant that are not expressly assumed in
writing by the successor Landlord.
X.
10.01 PEACEFUL ENJOYMENT. Landlord covenants that Tenant shall and may
peacefully have, hold and enjoy the Premises, subject to the other terms
hereof, provided that Tenant pays the rental and other sums herein recited to
be paid by Tenant and performs all of Tenant's covenants and agreements herein
contained. It is understood and agreed that this covenant shall be binding upon
Landlord only with respect to breaches occurring during its ownership of the
Landlord's interest hereunder.
XI.
11.01 SUBORDINATION. Tenant covenants and agrees with Landlord that this Lease
shall be subject and subordinate in all respects to any mortgage or deed of
trust or any ground lease which now encumbers or may hereafter encumber the
Premises, and to any advances made on the security thereof and to any and all
increases, renewals, modifications, consolidations, replacements and extensions
thereof, provided that Landlord shall use reasonable efforts to cause the owner
of any such mortgage, deed of trust or ground lease to enter into a written
non-disturbance and attornment agreement with Tenant, in form and content
reasonably satisfactory to Tenant, providing that in the event of foreclosure
or other rights asserted under the applicable mortgage, deed of trust or ground
lease by the holder or any assignee thereof (a) this Lease and all of the
rights of Tenant hereunder shall continue in full force and effect and shall
not be terminated or disturbed except in accordance with the provisions of this
Lease; and (b) Tenant will automatically become the tenant of such ground
lessor or successor in interest without any change in the terms or other
provisions of this Lease. Landlord hereby represents and warrants that, except
for the mortgage more fully described on Exhibit B attached hereto and made
apart hereof, it owns the Premises in fee simple and that the Premises is not
presently subject to any mortgage, deed of trust or ground lease.
11.02 ESTOPPEL CERTIFICATE. Tenant agrees, at any time and from time to time,
upon not less than twenty (20) days prior written request by Landlord, to
execute, acknowledge and deliver to Landlord an estoppel certificate certifying
that this Lease is unmodified and in full force and effect (or if there have
been modifications, that it is in full force and effect as modified, and
stating the modifications), that there have been no defaults thereunder by
Landlord or Tenant (or if there have been defaults, setting forth the nature
thereof), the date to which the Rent and other charges have been paid in
advance, if any, and such other matters as are reasonably requested by
Landlord, it being intended that any such statement delivered pursuant to this
section may be relied upon by any prospective purchaser or lender on all or any
portion of the Landlord's interest herein, or a holder of any mortgage or deed
of trust encumbering the Premises. Tenant's failure to deliver such statement
as provided herein shall constitute an event of default (as that term is
defined elsewhere in this Lease).
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112
11.03 DEFAULT BY LANDLORD. If Landlord shall default in the performance of any
of the terms, covenants, conditions, warranties or agreements of this Lease on
Landlord's part to be performed, and such default has a material adverse effect
on Tenant's use and enjoyment of the Premises, and if such default continues
for thirty (30) days after written notice to Landlord, and to any first lien
mortgagee or ground lessor of Landlord of which Tenant has notice (or, if such
failure cannot reasonably be cured within said thirty (30) day period despite
Landlord's or such mortgagee's or ground lessor's diligent good faith efforts,
the failure of Landlord or such mortgagee or ground lessor to promptly commence
its diligent good faith efforts to cure such failure within said thirty (30)
day period and to thereafter diligently pursue such efforts) Tenant may at its
option, in addition to all other remedies available at law or under this Lease:
(a) cure such default and invoice Landlord for the reasonable costs thereof, in
which event Tenant shall have the right to deduct from the rents payable
hereunder the amount of any such invoice not paid by Landlord within ten (10)
days of its receipt thereof; (b) institute legal proceedings against Landlord
to recover the damages incurred by Tenant on account of such default and/or to
enjoin such default; or (c) terminate this Lease.
XII.
12.01 NOTICES.
(a) Any notice or other communications to Landlord or Tenant required or
permitted to be given under this Lease (and copies of the same to be given to
the parties as below described) must be in writing and shall be effectively
given if delivered to the addresses for Landlord and Tenant set forth below, or
if sent by United States mail, certified or registered, return receipt
requested, to said addresses:
The address for notices to Landlord is:
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Facsimile No. ----------------------------
Page 14 of Annex VI
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The address for notices to Tenant is:
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Facsimile No. ----------------------------
(b) Any notice mailed shall be deemed to have been given on the second business
day following the date of deposit of such item in a depository of the United
States Postal Service. Notice effected other than by mail shall be deemed to
have been given at the time of actual delivery. Either party shall have the
right to change its address to which notices shall thereafter be sent by giving
the other written notice thereof.
12.02 ARBITRATION.
Except with respect to disputes involving parties other than the parties to
this Lease, no party to this Lease shall institute a proceeding in any court or
administrative agency to resolve a dispute arising under this Lease before that
party has sought to resolve the dispute through direct negotiation with the
other party, provided that nothing herein shall restrict the Landlord from
instituting a proceeding in any court or administrative agency with respect to
a failure by the Tenant to pay monetary amounts where there is no non-monetary
dispute involved. If the dispute is not resolved within two weeks after a
demand for direct negotiation, the parties shall attempt to resolve the dispute
through mediation. If the parties do not promptly agree on a mediator, the
parties shall request the Association of Attorney Mediators (or equivalent
organization) in the county where the Premises is located to appoint a
mediator. If the mediator is unable to facilitate a settlement of the dispute
within a reasonable period of time, as determined by the mediator, the mediator
shall issue a written statement to the parties to that effect and any
unresolved dispute or controversy arising under or in connection with this
Lease shall be settled exclusively by arbitration, conducted before a panel of
three arbitrators in _______________ [insert city in which property is
located], in accordance with the rules promulgated by the American Arbitration
Association then in effect. Each party shall choose one arbitrator and those
arbitrators shall agree upon the third arbitrator; if they cannot agree upon a
third arbitrator within 20 days, the American Arbitration Association shall
appoint the third arbitrator. A decision by a majority of the arbitration panel
shall be final and binding. Judgment may be entered on the arbitrators' award
in any court having jurisdiction. The costs and expenses, including reasonable
attorneys' fees, of the prevailing party in any dispute arising under this
Lease will be promptly paid by the other party or parties.
Page 15 of Annex VI
114
12.03 MISCELLANEOUS.
(a) This Lease shall be binding upon and inure to the benefit of the successors
and assigns of Landlord, and shall be binding upon and inure to the benefit of
Tenant, its successors, and, to the extent assignment may be approved by
Landlord hereunder, Tenant's assigns. The pronouns of any gender shall include
the other genders, and either the singular or the plural shall include the
other.
(b) All rights and remedies of Landlord under this Lease shall be cumulative
and none shall exclude any other rights or remedies allowed by law.
(c) This Lease may not be altered, changed or amended, except by an instrument
in writing executed by all parties hereto. The terms and provisions of all
Exhibits described herein and attached hereto are hereby made a part hereof for
all purposes. This Lease constitutes the entire agreement of the parties with
respect to the subject matter hereof, and all prior correspondence, memoranda,
agreements or understandings (written or oral) with respect hereto are merged
into and superseded by this Lease.
(d) If either party defaults in the performance of any of the terms, agreements
or conditions contained in this Lease and the other party places the
enforcement of this Lease, or any part thereof, or the collection of any rental
due or to become due hereunder, or recovery of the possession of the Premises,
in the hands of an attorney who files suit upon the same, and should such
non-defaulting party prevail in such suit, the defaulting party agrees to pay
the other party's reasonable legal fees.
(e) If any term or provision of this Lease, or the application thereof to any
person or circumstance, shall to any extent be invalid or unenforceable, the
remainder of this Lease, or the application of such provision to persons or
circumstances other than those as to which it is invalid or unenforceable,
shall not be affected thereby, and each provision of this Lease shall be valid
and shall be enforceable to the extent permitted by law.
(f) Landlord and Tenant hereby represent and warrant each to the other that
they have not employed any agents, brokers or other such parties in connection
with this Lease, and each agrees that they shall hold the other harmless from
and against any and all claims of all other agents, brokers or other such
parties claiming by, through or under the respective indemnifying party.
(g) This Lease may be executed and delivered in any number of counterparts,
each of which so executed and delivered shall be deemed to be an original and
all of which shall constitute one and the same instrument.
(h) This Lease shall be construed and enforced in accordance with the laws of
the state of which the Premises are located.
Page 16 of Annex VI
115
(i) If litigation is ever instituted by either party hereto to enforce, or to
seek damages for the breach of, any provision hereof, the prevailing party
therein shall be promptly reimbursed by the other party for all attorneys' fees
reasonably incurred by the prevailing party in connection with such litigation.
(j) It is the intention of Landlord and Tenant to hereby create the
relationship of landlord and tenant, and no other relationship whatsoever is
hereby created. Nothing in this Lease shall be construed to make Landlord and
Tenant partners or joint venturers or to render either party hereto liable for
any obligation of the other.
(k) As used herein "Force Majeure" means the occurrence of any event whereby
Landlord or Tenant shall be delayed or prevented from the performance of any
act required hereunder by reason of acts of God, strikes, lockouts, labor
troubles, failure or refusal of governmental authorities or agencies to timely
issue permits or approvals or conduct reviews or inspections, civil disorder,
restrictive governmental laws or regulations or other cause without fault and
beyond the control of the party obligated (financial inability excepted). If
Tenant or Landlord shall be delayed, hindered, or prevented from performance of
any of its obligations by reason of Force Majeure, the time for performance of
such obligation shall be extended for the period of such delay.
(l) Landlord and Tenant have fully negotiated the provisions of this Lease and,
notwithstanding any rule or principle of law to the contrary, no provision of
the Lease shall be construed in favor of or against either party by virtue of
the authorship or purported authorship thereof.
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IN TESTIMONY WHEREOF, the parties hereof have executed this Lease as of the
date first above written.
LANDLORD:
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TENANT:
By:
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Name:
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Title:
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Page 18 of Annex VI