1
EXHIBIT 2.15
-------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
dated as of the 12th day of January, 1999
by and between
RV CENTERS, INC.,
YOUNG'S RV CENTER, INC. a wholly-owned subsidiary of RV Centers, Inc.
and
▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------------------------------------------
2
TABLE OF CONTENTS
Page
RECITALS .........................................................................................................1
1. THE SALE.................................................................................................6
1.1 Agreement to Purchase and Sell..................................................................6
1.2 Purchase Price..................................................................................8
1.3 Prorations and Other Payments...................................................................8
1.4 Assumption of Liabilities.......................................................................9
1.5 Value Assigned to the Assets...................................................................10
2. DELIVERY OF CONSIDERATION...............................................................................10
2.1 Seller's Consideration.........................................................................10
2.2 Seller's Deliveries............................................................................10
3. CLOSING.................................................................................................10
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER............................................................11
4.1 Due Organization...............................................................................11
4.2 Authorization..................................................................................11
4.3 Ownership of the Company.......................................................................11
4.4 No Capital Interests...........................................................................11
4.5 Ownership of the Assets........................................................................11
4.6 Ownership in Other Entities....................................................................12
4.7 Predecessor Status; etc........................................................................12
4.8 Spin-offs......................................................................................12
4.9 Financial Statements...........................................................................12
4.10 Liabilities and Obligations....................................................................13
4.11 Accounts and Notes Receivable..................................................................13
4.12 Permits and Intangibles........................................................................14
4.13 Environmental Matters..........................................................................14
4.14 Personal Property..............................................................................16
4.15 Significant Customers and Suppliers; Material Contracts and Commitments........................16
4.16 Real Property..................................................................................17
4.17 Insurance......................................................................................17
4.18 Compensation; Employment Agreements; Labor Matters.............................................18
4.19 Employee Plans.................................................................................18
4.20 Compliance with ERISA..........................................................................19
4.21 Conformity with Law; Litigation................................................................20
-i-
3
4.22 Taxes..........................................................................................21
4.23 No Violations; No Consent Required, Etc........................................................21
4.24 Government Contracts...........................................................................22
4.25 Absence of Changes.............................................................................23
4.26 Deposit Accounts; Powers of Attorney...........................................................24
4.27 Validity of Obligations........................................................................25
4.28 Relations with Governments.....................................................................25
4.29 Disclosure.....................................................................................25
4.30 Prohibited Activities..........................................................................26
4.31 No Warranties or Insurance.....................................................................26
4.32 Interest in Customers and Suppliers and Related Party Transactions.............................26
4.33 Registration Statement.........................................................................26
4.34 Inventory......................................................................................26
4.35 Year 2000......................................................................................27
5. REPRESENTATIONS OF RV CENTERS...........................................................................27
5.1 Due Organization...............................................................................27
5.2 Authorization..................................................................................27
5.3 Capital Stock of RV Centers....................................................................28
5.4 Transactions in Capital Stock; Organization Accounting.........................................28
5.5 Subsidiaries...................................................................................28
5.6 No Violations..................................................................................28
5.7 Validity of Obligations........................................................................29
5.8 RV Centers Stock...............................................................................29
5.9 Business; Real Property; Material Agreements...................................................30
5.10 [Intentionally Left Blank].....................................................................30
5.11 Other Agreements...............................................................................30
5.12 Financial Statements...........................................................................30
5.13 Liabilities and Obligations....................................................................31
5.14 Conformity with Law; Litigation................................................................31
5.15 No Side Agreements.............................................................................31
5.16 Relations with Governments.....................................................................31
5.17 Other Agreements...............................................................................31
5.18 Registration Statement.........................................................................32
5.19 Disclosure.....................................................................................32
6. COVENANTS PRIOR TO CLOSING..............................................................................32
6.1 Access and Cooperation; Due Diligence..........................................................32
6.2 Conduct of Business Pending Closing............................................................33
6.3 Prohibited Activities..........................................................................34
6.4 No Shop........................................................................................35
6.5 Employment Agreements..........................................................................35
6.6 Notification of Certain Matters................................................................35
-ii-
4
6.7 Amendment of Schedules.........................................................................36
6.8 Cooperation in Preparation of Registration Statement...........................................37
6.9 Final Financial Statements.....................................................................37
6.10 Further Assurances.............................................................................37
6.11 Compliance with the ▇▇▇▇-▇▇▇▇▇ Act.............................................................37
6.12 Transfers of Permits and Intangibles...........................................................38
6.13 Dividends......................................................................................38
6.14 Authorized Capital.............................................................................38
6.15 Employee.......................................................................................38
6.16 Year 2000 Compliance Cost Estimates............................................................38
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER...........................................................39
7.1 Representations and Warranties; Performance of Obligations.....................................39
7.2 No Litigation..................................................................................39
7.3 Opinions.......................................................................................39
7.4 Registration Statement; Minimum Value..........................................................39
7.5 Consents and Approvals.........................................................................40
7.6 Good Standing Certificates.....................................................................40
7.7 No Material Adverse Change.....................................................................40
7.8 Closing of IPO.................................................................................40
7.9 Secretary's Certificate........................................................................40
7.10 Advisory Services Agreements...................................................................40
7.11 Other Founding Companies.......................................................................40
7.12 Management Lock-Up Agreements..................................................................41
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RV CENTERS.......................................................41
8.1 Representations and Warranties; Performance of Obligations.....................................41
8.2 No Litigation..................................................................................41
8.3 No Material Adverse Effect.....................................................................41
8.4 Seller's Release...............................................................................42
8.5 Termination of Related Party Agreements........................................................42
8.6 Opinion of Counsel.............................................................................42
8.7 Consents and Approvals.........................................................................42
8.8 Good Standing Certificates.....................................................................42
8.9 Registration Statement.........................................................................42
8.10 Advisory Services Agreements...................................................................43
8.11 Closing of IPO.................................................................................43
8.12 FIRPTA Certificate.............................................................................43
9. COVENANTS OF RV CENTERS AND THE SELLER AFTER CLOSING....................................................43
9.1 Preparation and Filing of Tax Returns..........................................................43
9.2 Directors......................................................................................44
9.3 Release From Guarantees; Repayment of Certain Obligations......................................44
-iii-
5
9.4 Access to Records..............................................................................44
9.5 Use of Name....................................................................................44
10. INDEMNIFICATION.........................................................................................44
10.1 Indemnification by the Seller..................................................................44
10.2 Indemnification by RV Centers..................................................................46
10.3 Third Person Claims............................................................................46
10.4 Exclusive Remedy...............................................................................47
10.5 Limitations on Indemnification.................................................................48
10.6 Tax Indemnification by the Seller..............................................................49
10.7 Bulk Sales Compliance..........................................................................49
11. TERMINATION OF AGREEMENT................................................................................49
11.1 Termination....................................................................................49
11.2 Liabilities in Event of Termination............................................................50
12. NONCOMPETITION..........................................................................................50
12.1 Prohibited Activities..........................................................................50
12.2 Damages........................................................................................51
12.3 Reasonable Restraint...........................................................................51
12.4 Severability; Reformation......................................................................51
12.5 Independent Covenant...........................................................................51
12.6 Materiality....................................................................................51
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION...............................................................52
13.1 The Seller.....................................................................................52
13.2 RV Centers.....................................................................................52
13.3 Damages........................................................................................53
13.4 Survival.......................................................................................53
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..................................................................55
16. REGISTRATION RIGHTS.....................................................................................55
16.1 Piggyback Registration Rights..................................................................55
16.2 Registration Procedures........................................................................56
16.3 Indemnification................................................................................57
16.4 Underwriting Agreement.........................................................................58
16.5 Rule 144 Reporting.............................................................................58
-iv-
6
16.6 Availability of Rule 144.......................................................................58
17. GENERAL.................................................................................................59
17.1 Cooperation....................................................................................59
17.2 Successors and Assigns.........................................................................59
17.3 Entire Agreement...............................................................................59
17.4 Counterparts...................................................................................59
17.5 Brokers and Agents.............................................................................59
17.6 Expenses.......................................................................................60
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...................................................................61
17.12 Remedies Cumulative............................................................................61
17.13 Captions.......................................................................................61
17.14 Amendments and Waivers.........................................................................61
17.15 Dispute Resolution.............................................................................62
17.16 References, Gender, Number.....................................................................62
17.17 Schedules and Annexes..........................................................................62
-v-
7
ANNEXES
Annex I - Consideration to Be Paid to the Seller
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 the Seller
Annex V - Form of Founder Advisory Agreement
SCHEDULES
4.1 Due Organization
4.7 Predecessor Status; etc
4.8 Spin-offs
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
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
-vi-
8
4.32 Interest in Customers and Suppliers and Related Party Transactions
4.34 Inventory in Interim Financial Statements
4.35 Year 2000
5.2 Authorization
5.3 Authorized Capital Stock of RV Centers
6.2 Conduct of Business Pending Closing
6.3 Prohibited Activities
6.5 Agreements
8.6 Termination of Related Party Agreements
8.10 Employment Agreements
9.3 Release From Guarantees; Repayment of Certain Obligations
15.2 Non-accredited Investors
17.5 Brokers and Agents
-vii-
9
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of the 12th
day of January, 1999, by and between RV Centers, Inc., a Delaware corporation
("RV Centers"), Young's RV Center, Inc., a California corporation and wholly
owned subsidiary of RV Centers (the "Buyer") and ▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Seller").
RECITALS
WHEREAS, RV Centers is engaged in the business of operating
recreational vehicle dealerships;
WHEREAS, the Seller is engaged, through a sole proprietorship d/b/a
Young's RV Center, in the business of operating a recreational vehicle
dealership located in the State of California (the "Business");
WHEREAS, the Seller desires to sell to the Buyer all of the Assets (as
defined below) used by or useful to the Seller in the conduct of the Business,
and the Buyer desires to purchase the Assets, upon the terms and conditions
hereinafter set forth;
WHEREAS, RV Centers is entering into other separate agreements (the
"Other Agreements") with each of the Other Founding Companies (as defined
herein) and their respective stockholders in order to acquire the capital stock
of additional recreational vehicle dealership companies;
WHEREAS, this Agreement and the Other Agreements constitute the "RV
Centers Plan of Organization;"
WHEREAS, the Seller, RV Centers and the stockholders of 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 Seller and the stockholders of each of the Other Founding Companies
will transfer the assets and/or capital stock of each of the Founding Companies
(as the case may be) to RV Centers or its Affiliates and the Seller and the
stockholders of each of the Founding Companies will acquire shares of RV Centers
Stock (as defined herein);
WHEREAS, the Seller has approved this Agreement as part of the RV
Centers Plan of Organization in order to transfer the Assets to the Buyer; and
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.
10
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means the Company and any member of a Relevant Group.
"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.
"Assets" has the meaning set forth in Section 1.1.
"Balance Sheet Date" means June 30, 1998.
"Business" has the meaning set forth in the recitals of this Agreement
"Buyer" has the meaning set forth in the first paragraph of this
Agreement.
"Charter" means the certificate of incorporation or articles of
incorporation of the subject corporation, 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" means the sole proprietorship of the Seller which is doing
business as Young's RV Center and owns and operates the Assets and the Business.
"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 Seller prior to the time this Agreement is
delivered by the Seller to RV Centers and the Buyer.
"Effective Time" means the effective time of the consummation of the
purchase and sale of the Assets, which shall occur on the Consummation Date.
"Environmental Law" has the meaning set forth in Section 4.13(c).
-2-
11
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning set forth in Section l.1(c).
"Expiration Date" has the meaning set forth in Section 4.
"Founding Companies" means: Ace Fogdall, Inc., an Iowa corporation,
American RV Centers, Inc., a Mississippi corporation, American RV Centers, Inc.,
a Tennessee 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,
Growth Ventures, Inc., a Texas corporation, Hall Enterprises, Inc., a Kentucky
corporation, Little Valley Auto & RV Sales, Inc., a West Virginia 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, and ▇▇▇
▇. ▇▇▇▇▇▇▇ 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 Seller, such term is
also intended to mean the knowledge of the Seller provided that Seller has made
inquiry of the management, officers, if any, and employees of the Company and
the Business.
"Lien" means any lien, pledge, mortgage, right of first refusal,
conditional sales contract, charge, restriction, security interest, encumbrance,
or other claim.
-3-
12
"Material Adverse Change" means a material adverse change in the
business, operations, properties, assets or condition (financial or otherwise),
of the subject entity (or business and operations with respect to a sole
proprietorship) 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 (or business and operations with respect to a sole
proprietorship) 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.
"Other Agreements" has the meaning set forth in the recitals of this
Agreement.
"Other Founding Companies" means all of the Founding Companies other
than the Company.
"Permitted Encumbrances" means (a) Liens for current property Taxes not
yet due and (b) Liens listed or described in the disclosure schedules attached
to the Agreement.
"Person" means an individual, partnership, joint venture, corporation,
limited liability company, sole proprietorship, 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
recitals of this Agreement.
"RV Centers Stock" means the common stock, par value $.01 per share, of
RV Centers.
-4-
13
"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.
"Seller" has the meaning set forth in the first paragraph of the
Agreement.
"State of Incorporation" means, as it relates to a referenced
corporation, the state of incorporation for such corporation.
"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
Registration Statement and any additional or substitute underwriter appointed by
RV Centers as identified in writing to the Seller.
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:
-5-
14
1. THE SALE
1.1 AGREEMENT TO PURCHASE AND SELL. (a) Subject to the terms and
conditions of this Agreement, the Company and the Seller agree to sell, convey,
transfer, assign and deliver to the Buyer, and the Buyer agrees to purchase from
the Company and the Seller, all of the Company's and the Seller's right, title
and interest in and to all assets, rights, franchises and properties used or
useful in the operation of the Business or otherwise relating thereto, whether
now or hereafter existing or acquired, on the Closing Date (which assets,
rights, franchises and properties are herein collectively referred to as the
"Assets" and individually referred to as an "Asset"), free and clear of all
Liens other than Permitted Encumbrances. The Assets shall include, without
limitation, the Assets described in Section 1.1(b); provided, however, that the
Assets shall not include any of the Excluded Assets.
(b) The Assets shall include, without limitation, the following:
(i) Leased Property. The leasehold estates on which the
Business or any part thereof is conducted, including the leasehold
estates created and/or otherwise evidenced by, or described in, the
leases described in Schedule 4.16 hereto (the "Leases") and including
all tenements, hereditaments, easements, rights-of-way and rights of
ingress or egress pertaining thereto (collectively, the "Leased
Property").
(ii) Fixtures and Improvements. All estates, rights, titles
and interests in and to all structures, fixtures, construction in
progress, improvements, betterments, installations and additions
constructed, erected or located on or attached or affixed to the Leased
Property (collectively, the "Fixtures and Improvements").
(iii) Equipment. All the furniture, fixtures, equipment,
machinery, apparatus, tools, dies, appliances, vehicles, implements,
spare parts, supplies, inventory, vehicles and all other tangible
personal property of every kind and description located either on the
Leased Property or elsewhere insofar as any of the foregoing relates to
the Business (collectively, the "Equipment"). The Equipment includes,
but is not limited to, all of the items listed in Schedule 4.14 hereto.
(iv) Permits. To the extent assignable, all right, title and
interest of the Company and Seller in, to and under all Licenses
relating to the Business or all or any of the Assets, including those
listed in Schedule 4.12 hereto.
(v) Intellectual Property. All right, title and interest of
the Company and Seller in, to and under all (1) trademarks, technology,
know-how, data, copyrights, trade names, service marks, licenses, trade
secrets, software programs, copyrights, patents, patent applications,
and other intellectual property (collectively, the "Intellectual
Property"), (2) the right to recover for infringement of any
Intellectual Property, and (3) all goodwill associated
-6-
15
with the Business in connection with which any of the Intellectual
Property is used (collectively, the "Intangible Assets").
(vi) Material Contracts. All rights under operating leases,
orders and contracts for products or services and other contracts and
agreements described in Schedule 4.15(b) hereto (such scheduled leases,
contracts and other agreements, and all rights (including, without
limitation, rights of refund, rebate and offset), privileges, deposits,
claims, causes of action and options relating or pertaining thereto or
any proceeds thereof.
(vii) Cash and Bank Accounts. All depository accounts
described in Schedule 4.26 hereto used in the Business and the cash
therein.
(viii) Books and Records. All books, records, papers and
instruments of whatever nature and wherever located that relate to the
Business or the Assets or which are necessary or appropriate in order
for RV Centers to conduct the Business in the manner in which it is
presently being conducted, including, without limitation (to the extent
the same exist), accounting and financial records, personnel and labor
relations records, sales and property tax records and returns, sales
records, customer lists and other customer data (including credit data)
and the supplier list and other supplier data relating to the purchase
of utilities and other supplies used in connection with the Business.
(ix) Prepaid Expenses and Current Assets. All prepaid rentals,
other prepaid expenses, bonds, deposits and financial assurance
requirements, and other current assets relating to any of the Assets or
the Business.
(x) Insurance Proceeds, Etc. All insurance proceeds and
insurance claims of the Company and Seller relating to all or any part
of the Assets or the Business (including rebates of insurance premiums)
and, to the extent transferable, the benefit of and the right to
enforce the covenants and warranties, if any, that the Company or the
Seller is entitled to enforce with respect to the Assets against the
Company's or the Seller's predecessors in title to the Assets.
(xi) Telephone Numbers; Computer Sites. All telephone numbers,
E-Mail and Web Site addresses that are used in the Business.
(xii) Accounts. All accounts receivable with respect to the
Business and all other rights of the Company to payment for goods sold
or leased or for services rendered, including without limitation those
which are not evidenced by instruments or chattel paper, whether or not
they have been earned by performance or have been written of or
reserved against as a bad debt or doubtful account in any Financial
Statements; together with all instruments and all documents of title
representing any of the foregoing, all rights in any merchandise or
goods which any of the same represent, and all rights, title, security
and guaranties in favor of the Company with respect to any of the
foregoing.
-7-
16
(xiii) Name. All rights to use the name "Young's RV Center".
(xiv) Goodwill. The goodwill and going concern value of the
Business.
(xv) Other Intangibles. All rights, title and interest of the
Company and the Seller in, to and under all rights, privileges, claims,
causes of action, and options relating or pertaining to the Business or
the above-referenced assets.
(xvi) Other Property. All other or additional privileges,
rights, interests, properties and assets of the Company or Seller of
every kind and description and wherever located that are used or
intended for use in connection with, or that are necessary to the
continued conduct of, the Business as presently being conducted.
(c) "Assets" shall not include any of the assets (the "Excluded
Assets") of the Company.
1.2 PURCHASE PRICE. The purchase price (the "Purchase Price") payable
to the Seller for the Assets shall be the cash amount and shares of RV Centers
stock referenced in Section 2.1 below.
1.3 PRORATIONS AND OTHER PAYMENTS. Operation of the Business until 8:00
a.m. (Pacific time) on the Closing Date shall be for the account of the Seller,
and thereafter for the account of the Buyer. Those items of revenue and expense
of the Business and other items hereinafter described shall be prorated and
adjusted between the Seller and the Buyer as of the Closing Date as follows:
(a) General Adjustment. Real estate taxes, personal property taxes,
lease payments and rents and any other receipts and expenses attributable to any
lease by the Company as lessee of the Leased Property, and other operating
income and expenses relating to the Leased Property, shall be prorated as of the
Closing Date between the Company and the Buyer. All business, license,
occupation, sales, use, withholding or similar taxes, or any other taxes of any
kind (other than real estate and personal property taxes which shall be prorated
as hereinbefore provided) relating to the Business or the Assets and
attributable to the period prior to the Closing Date shall be paid by the
Company, and all such taxes attributable to the period on and after the Closing
Date shall be paid by the Buyer. Payment by the Company of any obligations under
any contracts the benefit of which payment relates in whole or part to the
period on and after the Closing Date shall be adjusted between the Company and
the Buyer such that the Company shall receive credit or be reimbursed by the
Buyer for that portion of any obligation paid by the Company, the benefit of
which relates to the period on and after the Closing Date. Prepayments received
by the Company on any contracts and other deposits which the Company received
prior to the Closing Date for periods on and after the Closing Date shall
(except as otherwise expressly provided in this Agreement) be paid over and
delivered by the Company to the Buyer.
(b) Utilities. The Buyer shall make appropriate arrangements for
transfer of all necessary utility and other services in its own name to be
effective as of the Closing Date. In lieu of prorating power, gas and water
bills, the appropriate utilities will be requested to take meter readings as
close
-8-
17
to the Closing Date as possible, and to ▇▇▇▇ the Company for service prior to
such readings and to ▇▇▇▇ the Buyer for service thereafter. The readings may
occur before or after the Closing Date. With respect to telephone services, upon
receiving a copy of the next billing for telephone service following Closing,
the Company will either pay directly or reimburse the Buyer within five (5) days
after receipt thereof for those charges attributable to calls made before the
Closing Date. General monthly charges reflected by such billing for telephone
service will be prorated on the basis of the number of days the Company owned
the Leased Property during the period covered by the billing.
(c) Implementation of Prorations and Other Payments. Except for those
subsections in this Section 1.2 which provide for direct payment or credit or
earlier settlement and payment between the parties, within five (5) working days
following the Closing Date, the Seller and the Buyer shall undertake in good
faith mutually to agree upon and execute and deliver to each other a closing
statement setting forth the determination of the items to be prorated and
accounted for hereunder, and the net amount due, if any, to either the Seller or
the Buyer, as the case may be, shall be paid within two (2) business days
following the receipt of the final closing statement by certified or bank
cashier's check payable to the order of the party entitled thereto. If the
parties are unable within said five (5) day period to agree upon the appropriate
proration of or payment due for an item of revenue or expense or other item
pursuant to this Section 1.2, then the parties shall employ the Houston, Texas
office of Ernst & Young LLP, or such other nationally recognized accounting firm
as may be selected by the parties, as independent certified public accountants
("Accountant"), to determine the amount of the proration or payment as of the
Closing Date consistent with the provisions of this Agreement. Accountant shall
make such determination as promptly as possible, and in no event later than
forty-five (45) days following such employment. The amount of the proration or
payment as of Closing as determined by Accountant shall be final and binding
upon the parties, each of whom hereby consents to the procedure herein set
forth. The Accountant's fees and expenses shall be evenly divided between the
parties.
1.4 ASSUMPTION OF LIABILITIES. (a) Upon Closing, the Buyer shall assume
the obligations of the Company to perform under the Material Documents and the
Leases to the extent such rights and obligations have not been performed on the
Closing Date and are not then in default and accounts payable and other
obligations with respect to the Business as may be set forth in an Assumption
Agreement to be entered into between Seller and Buyer at Closing.
(b) Except as explicitly provided in Section 1.4(a), the
Buyer does not assume or agree to pay, perform or discharge, and shall not be
responsible for, any other liabilities or obligations of the Company or Seller,
whether, known or unknown, asserted or unasserted, accrued, absolute, contingent
or otherwise, including, without limitation, (i) any pending litigation matters,
including without limitation, those referenced in Schedule 4.21; (ii) any claims
under Environmental Laws; (iii) any obligations or liabilities relating to the
Excluded Assets; and (iv) any Taxes imposed by any governmental authority on the
Company or Seller, with respect to the Business or the Company's operations,
activities or this sale.
-9-
18
1.5 VALUE ASSIGNED TO THE ASSETS. On or before the Closing Date, the
Buyer and the Seller shall agree on the proportion of the consideration to be
allocated to each of the Assets purchased pursuant to this Agreement as shall
have been proposed by the Buyer and reasonably approved by the Seller, and the
Buyer and the Seller agree that they shall not thereafter take any position or
action inconsistent with such allocation in the filing of any Federal income tax
returns.
2. DELIVERY OF CONSIDERATION
2.1 SELLER'S CONSIDERATION. On the Consummation Date and upon the
delivery of the documents listed in Section 2.2 to the Buyer and RV Centers, the
Seller shall 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.
2.2 SELLER'S DELIVERIES. The Company and Seller shall deliver at the
Closing:
(i) an executed Assignment and ▇▇▇▇ of Sale for the Assets in
form satisfactory to RV Centers and the Buyer together with such other
or further documents or instruments of transfer for the Assets as RV
Centers and the Buyer may reasonably request or require in order to
complete the sale, transfer and delivery of the Assets to, and vest
title to the Assets in, the Buyer; and
(ii) other documents and instruments as will be necessary or
reasonably requested by RV Centers or the Buyer to effect the
transactions contemplated by this Agreement.
Simultaneously with such deliveries, Seller will take such
steps as are necessary to put the Buyer in actual possession and control of the
Assets.
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 referred to in Section 2 hereof; provided, that such
actions shall not include the actual completion of the purchase and sale of the
Assets or the delivery of the RV Centers Stock and cash referred to in Section
2.1 hereof, each of which actions shall only be taken upon the Consummation Date
as herein provided. The delivery of the conveyance documents necessary to effect
the transfer of the Assets, 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 of the documents conveying title to the Assets shall be delivered at the
Closing to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., to be held in trust until the Consummation
Date, and shall be returned immediately upon any termination of this Agreement
prior to the Consummation Date. Within 20 days after Pricing (x) all
transactions contemplated by this Agreement, including the delivery of shares
and cash which the Seller shall be entitled to receive pursuant to Annex I
hereof, shall be completed, and
-10-
19
(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) occurs 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 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 SELLER
Except as set forth in the disclosure schedules attached hereto and
except as otherwise qualified below, the Seller, represents and warrants that
all of the following representations and warranties in this Section 4 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 4.5 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 4.5 and
4.22.
4.1 DUE ORGANIZATION. The Company is a sole proprietorship under the
laws of the State of California. The Company has the requisite power and
authority to own and operate the Assets and carry on the 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 Assets or the
Business. Schedule 4.1 sets forth a list of all states in which the Company is
authorized or qualified to do business.
4.2 AUTHORIZATION. (i) The Seller has the authority to enter into and
bind himself to the terms of this Agreement and (ii) the Seller has the full
legal right, power and authority to enter into this Agreement and consummate the
transactions contemplated herein.
4.3 OWNERSHIP OF THE COMPANY. Seller owns 100% of the ownership
interests in the Business and in the Company as a sole proprietorship.
4.4 NO CAPITAL INTERESTS. No option, warrant, call, conversion right or
commitment of any kind exists which obligates the Seller to incorporate the
Company or to issue any equity or ownership interests in the Company or the
Business.
4.5 OWNERSHIP OF THE ASSETS. The Company is and at Closing the Company
will be the true and lawful owner of the Assets. No other Person will have on
the Closing Date any direct or indirect interest in any of the Assets. All
tangible property constituting part of the Assets is in good operating condition
and repair, subject to reasonable and ordinary wear and tear, and is fully
usable for its intended purpose. Upon execution and delivery to the Buyer of the
documents referenced in Section 2.2 above, the Buyer will acquire good, complete
and valid ownership of the Assets, free and
-11-
20
clear of all Liens except for Permitted Encumbrances. The Assets constitute all
of the property and other assets necessary to conduct the Business as it is
presently being conducted by the Company.
4.6 OWNERSHIP IN OTHER ENTITIES. Neither the Company nor Seller
presently owns, of record or beneficially, or controls, 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
or Seller, directly or indirectly, a participant in any joint venture,
partnership or other non-corporate entity, in each case involving or relating to
the Business.
4.7 PREDECESSOR STATUS; ETC. Set forth on Schedule 4.7 is a listing of
all predecessor companies, if any, 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 Business.
4.8 SPIN-OFFS. Except as set forth on Schedule 4.8, there has not been
any sale, spin-off or split-up by the Seller of the Company of material assets
involved in or relating to the Business 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, owner'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, owner'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, owner'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, owner's equity and cash
flows and the related notes and schedules are referred to herein as the
"Interim Financial Statements").
(iii) The Year-end Financial Statements and the Interim
Financial Statements are collectively referred to herein as the
"Financial Statements". The Financial Statements have been 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.
-12-
21
4.10 LIABILITIES AND OBLIGATIONS. Except as set forth on Schedule
4.10(a), as of the Balance Sheet Date, there are no liabilities or obligations
relating to the Assets or the Business 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 relating to or affecting the Assets or Business 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 Seller 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 Seller or the Company or
its officers, management, 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 relating to
the Business 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, 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.
-13-
22
4.12 PERMITS AND INTANGIBLES. The Company holds all licenses,
franchises, permits and other governmental authorizations ("Licenses") necessary
to conduct the Business, and the Seller has delivered to RV Centers a list that
is accurate and 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 Business. 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 the 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 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
the Business 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
the Business as presently conducted, (ii) none of the properties now or
previously owned or occupied by the Company and used in the Business 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 the 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
Company, 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
Business, (viii) there are no underground storage tanks on, in or under any
properties owned or
-14-
23
leased by the Company, 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 or the Business
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 of 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 or the Business 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 or the Business, 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
-15-
24
thereof, radon, asbestos or asbestos-containing material, urea formaldehyde foam
insulation, lead, fibers or polychlorinated biphenyls.
4.14 PERSONAL PROPERTY. Schedule 4.14 sets forth an accurate list of
(x) all personal property material to the Business included in "plant, property
and equipment" on the balance sheet of the Company, (y) all other personal
property owned by the Company and used or useful in the Business 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 the Company, relatives of Seller, or Affiliates of the
Seller. Except as set forth on Schedule 4.14, (i) all personal property material
to, and used by, the Company in the 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 Seller) 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 are 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 relating to the Business to which the Company
is a party or by which it or any of its properties are 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(a), 4.10(b), 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 or the Business and is not in
default in any material
-16-
25
respect under any contracts or agreements listed on Schedules 4.10(a), 4.10(b),
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 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 relating to the Business and 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 the Business, and, to the knowledge of the
Company, 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 Company, 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 or RV Centers 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. The Company does not own any real property.
Schedule 4.16 includes a list of all real property leased by the Company and
used or useful in the Business at the date hereof and all other real property,
if any, used by the Company in the conduct of the Business.
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 the Company 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 leased by the Company and
used or useful in the Business 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 Company the other parties thereto 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.
4.17 INSURANCE. The Seller has delivered to RV Centers (i) an accurate
list as of the Balance Sheet Date of all insurance policies relating to the
Business or the Assets, (ii) an accurate list of all insurance loss runs or
workers compensation claims received by the Company or the Seller 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 or the Seller
-17-
26
is required to carry pursuant to all of its contracts and other agreements and
pursuant to all applicable laws relating to the Business and Assets. 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 relating to the Business
or Assets has been canceled by the insurer and neither the Company nor the
Seller has been denied coverage.
4.18 COMPENSATION; EMPLOYMENT AGREEMENTS; LABOR MATTERS. (a) The Seller
has delivered to RV Centers an accurate list (which is set forth on Schedule
4.18) showing all officers, and key employees of the Company or Business,
listing all employment, compensation, change in control and severance agreements
with such officers and key employees (the "Employment 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 Seller has
provided to RV Centers true, complete and correct copies of all Employment
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, 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 the Assets or the Business 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 Company, 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 Company believes its
relationship with its employees to be good.
(c) Except as set forth in Schedule 4.18, (i) there are no significant
controversies pending or, to the knowledge of the Seller, 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 the Company
is liable for any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing.
4.19 EMPLOYEE PLANS. The Company has delivered to RV Centers an
accurate schedule (Schedule 4.19) listing all employee benefit plans and
compensation plans, programs or arrangements (the "Plans") which relate to the
Business and 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
-18-
27
Company does not sponsor, maintain or contribute to any plan, program, fund or
arrangement which relates to the Business 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 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 of 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 (the "PBGC") 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 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 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 Company, any such Plan listed in Schedule 4.19, nor, to the knowledge of the
Seller, 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 Seller, any
other Person has incurred any liability for excise tax or penalty due to the
Internal Revenue Service nor any liability to the
-19-
28
PBGC with respect to any Plan or breached any fiduciary duty with respect to any
Plan. The Seller 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 involving or relating to the Business or the Assets other
than violations that would not have a Material Adverse Effect on the Business or
the Assets and except to the extent set forth on Schedules 4.10 or 4.13, there
are no claims, actions, suits or proceedings, pending or, to the knowledge of
the Company, threatened against or affecting, 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 the
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.
-20-
29
4.22 TAXES.
(a) The Seller has timely filed all requisite Federal, state, local and
other income and payroll tax returns or extension requests with respect to the
Company or the Business 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 Seller 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 Seller with
respect to the Company or the Business has been paid or reflected as accrued as
of the Balance Sheet Date. The amounts shown as accruals for Taxes on the
Company Financial Statements are sufficient for the payment of all Taxes with
respect to the Company or the Business 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 the
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. 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 involving or
relating to the Business. 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 Seller has timely filed all requisite Federal, state, local and
other income and payroll tax returns or extension requests with respect to the
Company or the Business for all fiscal periods ended on or prior to the date
hereof; and there are no examinations in progress or claims pending against the
Seller 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 Seller with respect to the Business have been paid or
reflected as accrued. The amounts shown as accruals for Taxes on the Company's
Financial Statements are sufficient for the payment of all Taxes with respect to
the Company or the Business of the kinds indicated (including penalties and
interest) for all fiscal periods ended on or before that date.
4.23 NO VIOLATIONS; NO CONSENT REQUIRED, ETC.
(a) Except as set forth on Schedule 4.23(a), to the knowledge of the
Seller, neither the Company nor 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").
-21-
30
(b) Except as set forth on Schedule 4.23(b), the execution and delivery
of this Agreement by the Seller 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 result in the creation of any
Lien, upon any of the Assets under any of the terms, conditions or provisions of
(i) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to the Company, the Business or the Assets, or (ii) any Material
Document to which the Company or Seller is now a party or by which the Company,
Seller or any of the Assets may be bound or affected. The consummation by the
Seller and the Company 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) or (ii) of the preceding
sentence, subject, in the case of the terms, conditions or provisions of the
items described in clause (ii) above, to obtaining (prior to the Effective Time)
such consents as may be required from commercial lenders, lessors or other third
parties.
(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 transfer of the Assets or the consummation by the Seller of any
of the transactions contemplated herein in order to remain in full force and
effect, and consummation by the Company or Seller 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 Assets, 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 or the consummation by
the Company 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 Seller, 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.
-22-
31
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 Business;
(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 Business;
(iii) any change in the ownership of the Company or any grant
of any options, warrants, calls, conversion rights or commitments
respecting the Company or the Business;
(iv) any distribution in respect of the ownership interests in
the Company or the Business or any direct or indirect redemption,
purchase or other acquisition of any of the ownership interests in the
Company except for distributions that would be permitted under Section
6.3(iii);
(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, employees, consultants or agents, except for ordinary
and customary bonuses and salary increases for employees in accordance
with past practice or any payment of salary, bonus, sales commissions,
fees or any other form of compensation, directly or indirectly, to the
Seller or any members of his family in excess of the aggregate monetary
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 Business or Assets;
(vii) any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of the Company or the
Business to any person, including, without limitation, Affiliates of
the Company, except inventory sold or transferred in the ordinary
course of business;
(viii) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to the Company and involving or
relating to the Business, including without limitation any indebtedness
or obligation of the Company 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 the Business or
requiring consent of any party to the transfer and assignment of any
such assets, property or rights;
-23-
32
(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 Business;
(xi) any waiver of any material rights or claims relating to
the Business or Assets;
(xii) any amendment or termination of any material contract,
agreement, license, permit or other right to which the Company is a
party relating to the Business or Assets;
(xiii) any transaction by the Seller outside the ordinary
course of 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 and of which prior 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
(xvi) any occurrence that is reasonably likely to give rise to
a contingent liability which would have a Material Adverse Effect on
the Business or Assets 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 this Agreement of:
(i) the name of each financial institution in which the
Company has accounts or safe deposit boxes relating to the Business;
(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, is 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.
-24-
33
4.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by the Seller and the performance by the Seller of the transactions
contemplated herein have been duly and validly authorized by the Seller and this
Agreement is a valid and binding obligation of the Seller, 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, the Seller nor
any Affiliate of the Company or Seller 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 or Seller 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 Seller
as set forth in this Agreement, including the Annexes and Schedules hereto, the
completed Director and Officer Questionnaires of the Company to the extent such
Questionnaires have been completed, and the written information provided by the
Seller to RV Centers's environmental consultants do not contain an untrue
statement of a material fact concerning the Company or the Business or omit to
state a material fact concerning the Company or the Business 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 Seller acknowledges and agrees 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) none of RV
Centers, the Buyer or ▇▇▇▇▇ ▇▇▇▇▇ Funding I, L.L.C. or any of their officers,
directors, Affiliates, agents or representatives nor any Underwriter shall have
any liability to the Company or the Seller or any other person affiliated or
associated with the Company or the Seller 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) that the decision of the
Company 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 Assets, 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) The Seller has no present plan, intention, commitment or binding
agreement or arrangement to dispose of any shares of RV Centers Stock to be
received by the Seller as a result of
-25-
34
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, neither the Company nor any
officer, employee 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, business organization or
Person that is a client, supplier, customer, lessor, lessee or competitor of the
Company, or (ii) is a party to an agreement or 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
Seller in writing for inclusion in the Registration Statement contains any
untrue statement of a material fact concerning the Company or the Business 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
Business, in light of the circumstances under which they are made, not
misleading. The Seller will have the right to review and approve in advance any
statements made about the Company or the Business in the Registration Statement.
4.34 INVENTORY. Except as provided in Schedule 4.34, all of the
inventories of the Company 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.
-26-
35
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 which is included in the Assets 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 in the conduct of the Business.
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 shall
survive the Consummation Date until the Expiration Date except that the
representations and warranties set forth in Section 5.3 shall survive until the
date on which the applicable statute of limitations expires, which shall be the
"Expiration Date" for purposes of Section 5.3.
5.1 DUE ORGANIZATION. Each of RV Centers and the Buyer is a corporation
duly incorporated and organized, validly existing and in good standing under the
laws of its State of Incorporation, 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. Each of RV Centers and the Buyer 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 and the Buyer
executing this Agreement have the authority to enter into and bind RV Centers
and the Buyer to the terms of this Agreement and (ii) each of RV Centers and the
Buyer 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
or the Buyer to
-27-
36
authorize the execution and delivery and performance of this Agreement and all
of 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 and the Buyer, which approve this Agreement and the transactions
contemplated herein in all respects, certified by the Secretary or an Assistant
Secretary of RV Centers and the Buyer, 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 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 except for the Buyer.
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 except for the Buyer.
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 and the
Buyer 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
-28-
37
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
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 Assets, (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 Assets, (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, 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 RV
Centers or the Buyer or the consummation by RV Centers or the Buyer of the
transactions contemplated herein.
5.7 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by RV Centers and the Buyer and the performance of the transactions
contemplated herein have been duly and validly authorized by the Boards of
Directors of RV Centers and the Buyer 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 and the Buyer.
5.8 RV CENTERS STOCK. At the time of issuance thereof and delivery to
the Seller, the RV Centers Stock to be delivered to the Seller 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
-29-
38
presence or absence of a CUSIP number on any such certificate) to the RV Centers
Stock issued 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 Seller
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 Seller 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 the Seller 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 [INTENTIONALLY LEFT BLANK].
5.11 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.
-30-
39
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 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 and except for changes resulting from a stock purchase rather than an
asset purchase structure, the terms and conditions of the Other Agreements
(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.
-31-
40
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 Registration Statement prior to its effective
date), provided that the foregoing does not apply to any information that the
Company has furnished to RV Centers in writing specifically for inclusion in the
Registration Statement.
5.19 DISCLOSURE. The Draft Registration Statement delivered to the
Seller 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 Seller 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 Seller 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
Seller 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 relating to the Business 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 Seller 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 and the
Business 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 Seller access to all of RV Centers's sites,
properties, books and records and will furnish the Seller with such additional
financial and operating data and other information as to the business
-32-
41
and properties of RV Centers as the Seller may from time to time reasonably
request. RV Centers will cooperate with the Seller, 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. The Seller 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
Seller will cause the Company to:
(i) carry on the Business 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 the
Assets, 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 the Assets or Business, the nonperformance of which
could have a Material Adverse Effect on the Assets or Business;
(iv) use all reasonable efforts to keep in full force and
effect present insurance policies or other comparable insurance
coverage relating to the Assets or Business;
(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
Assets or Business;
(vii) maintain present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or
lease instruments involving or affecting the Business 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;
(viii) maintain or reduce present salaries and commission
levels for all officers, employees and agents involved in the Business
except for ordinary and customary bonus and
-33-
42
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 Seller or any member of
his 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) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures respecting the
Business, except if it is in the normal course of business (consistent
with past practice) or involves an amount, in the aggregate, not in
excess of $100,000 except for purchases and sales of recreational
vehicles inventory in the ordinary course of business;
(ii) create or assume any mortgage, pledge or other lien or
encumbrance upon any of the Assets, 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
Business, (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 herein as "Statutory Liens"),
or (3) liens set forth on Schedule 4.10, 4.15(b) and/or 4.16 hereto;
(iii) except as set forth in Schedule 6.3, sell, assign, lease
or otherwise transfer or dispose of any property or equipment relating
to the Business with a net book value in excess of $25,000 except in
the normal course of business;
(iv) consummate or enter into any commitment for the
acquisition of any business or the start-up of any new business
relating to the Business;
(v) merge or consolidate or agree to merge or consolidate with
or into any other corporation;
(vi) waive any material rights or claims of the Company
relating to the Business or Assets, provided that the Seller may
negotiate and adjust bills and accounts in the course of good faith
disputes with customers in a manner consistent with past practice,
provided,
-34-
43
further, that such adjustments shall not be deemed to be included in
Schedule 4.11 unless specifically listed thereon;
(vii) commit a material breach of or amend or terminate any
material agreement, permit, license or other right of the Company
relating to or involving the Business;
(viii) enter into any other transaction relating to or
involving the Business outside the ordinary course of its business or
prohibited hereunder; or
(ix) pay or agree to pay salary, bonus, sales commissions,
fees or any other form of compensation, directly or indirectly, to the
Seller or any member of his family in excess of the aggregate monthly
compensation provided for in Annex I hereto.
6.4 NO SHOP. Neither the Company, the Seller, nor any agent, officer,
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 or Business.
6.5 EMPLOYMENT AGREEMENTS. Except as disclosed on Schedule 6.5, the
Seller and the Company shall terminate employment agreements between the Company
and any employee listed on Schedule 8.10 hereto on or prior to the Consummation
Date. Such termination agreements are listed on Schedule 6.5 and copies thereof
are attached thereto.
6.6 NOTIFICATION OF CERTAIN MATTERS. The Seller shall give prompt
notice to RV Centers of the Seller'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 the Seller contained herein to
be untrue or inaccurate in any material respect at or prior to the Closing and
(ii) any material failure of the Seller or the Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by the
Seller or the Company hereunder. RV Centers shall give prompt notice to the
Seller 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
-35-
44
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 Seller; provided
however, that supplements and amendments to Schedules 4.10, 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 Seller that constitutes or
reflects an event or occurrence that would have a Material Adverse Effect on the
Company, the Assets or the Business 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 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
Seller seeks to amend or supplement a Schedule pursuant to this Section 6.7 to
reflect an item not known to RV Centers or the Seller, as applicable, 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 the Seller or RV Centers (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.
-36-
45
6.8 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The Seller
shall furnish or use reasonable efforts to cause to be furnished to RV Centers
and the Underwriters all of the information concerning the Seller and its
Affiliates, the Business and the Assets 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 Seller and its Affiliates, the Business and the
Assets 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 Seller agrees 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 Seller or its Affiliates, the Business and the Assets
becomes incorrect or incomplete in any material respect and to provide the
information needed to correct such inaccuracy. Subject to the Seller'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 Seller
or its Affiliates, the Business and the Assets, the Seller represents and
warrants as to such information, 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.
6.9 FINAL FINANCIAL STATEMENTS. The Seller 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 Seller 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
-37-
46
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 Seller shall use
commercially reasonable efforts to cause all trademarks, trade names, patents,
patent applications, copyrights and other intellectual property owned or held by
the Company or employees of the Company which are material to the operation of
the Business to be assigned or licensed to RV Centers for no additional
consideration.
6.13 DIVIDENDS. The Company may, after the Balance Sheet Date and
before the Consummation Date, pay to the Seller only the 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 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 EMPLOYEE. RV Centers will have the right but not the obligation to
offer employment to the employees or the Company. RV Centers will have no
liability for accrued wages (including salaries and commissions), severance pay,
sick leave or other benefits or any Plan of any type or nature on account of the
Company's employment of or termination of such employees. Any and all legal
requirements pertaining to such employment terminations will be borne by and be
the responsible of the Company.
6.16 YEAR 2000 COMPLIANCE COST ESTIMATES. Promptly upon execution
hereof, the Seller 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
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 Seller
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.
-38-
47
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of the Seller 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 Seller 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 Seller shall have the
right to terminate this Agreement, or in the alternative, waive any condition
not so satisfied. Any act or action of the Seller in consummating the Closing 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 and the Buyer 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
Seller.
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 Assets 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 Seller shall have received an opinion from counsel
for RV Centers and the Buyer, dated the Closing Date, in the form annexed hereto
as Annex III.
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, on terms such that the aggregate value of the cash and the number of
shares of RV Centers Stock to be received by the Seller is not less than the
Minimum Value set forth on Annex I.
-39-
48
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 Seller as a result of which
Seller 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
Seller 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.
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 Seller 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), By-Laws
(including amendments thereto), and resolutions of the boards of directors and,
if required, the stockholders of RV Centers and the Buyer approving RV Centers
and the Buyer entering into this Agreement and the consummation of the
transactions contemplated herein.
7.10 ADVISORY SERVICES AGREEMENTS. The Buyer shall have offered to
enter into an advisory services agreement, substantially in the form of Annex V,
with each of the persons listed in Schedule 8.10.
7.11 OTHER FOUNDING COMPANIES. If a sufficient number of the
transactions contemplated by the Other Agreements with the Other Founding
Companies are not consummated for any reason and as a result (i) RV Centers is
unable 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 or (ii) the combined revenue of the
Founding Companies for which the transactions contemplated by this Agreement and
the Other Agreements are consummated is less than $175 million based on the
12-month period ended December 31, 1998.
-40-
49
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 and the Buyer 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
8.11. The obligations of RV Centers and the Buyer 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,
8.3, 8.4, 8.5, and 8.11. As of the Closing Date or, with respect to the
conditions set forth in Sections 8.1, 8.2, 8.3, 8.5 and 8.11, as of the
Consummation Date, if any such conditions have not been satisfied, RV Centers
and the Buyer shall have the right to terminate this Agreement, or waive any
such condition. Any act or action of RV Centers and the Buyer 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.
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the Seller 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 Seller 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
Seller shall have delivered to RV Centers and the Buyer a certificate dated the
Closing Date and the Consummation Date, respectively, and signed by the Seller
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 Assets or the IPO.
8.3 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the Company or Business which would constitute a
Material Adverse Effect, and the Company or Business 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 the Business.
-41-
50
8.4 SELLER'S RELEASE. Seller shall have delivered to RV Centers and the
Buyer an instrument dated the Closing Date, which shall be effective only upon
the occurrence of the Consummation Date, releasing the Assets, the Business and
RV Centers and the Buyer from (i) any and all claims of the Seller against the
Assets, the Business and RV Centers and the Buyer and (ii) obligations of the
Company, RV Centers and the Buyer to the Seller, except for (A) continuing
obligations to Seller relating to his employment pursuant to employment
agreements entered into as specified in Section 8.10 hereof, (B) obligations
arising under this Agreement or the transactions contemplated hereby. 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.
8.5 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 8.5, all existing agreements between the Company and Affiliates of the
Seller (and between the Company and entities controlled by the Seller) shall
have been canceled effective prior to or as of the Consummation Date.
8.6 OPINION OF COUNSEL. RV Centers and the Underwriters shall have
received an opinion from Counsel to the Seller, dated the Closing Date,
substantially in the form annexed hereto as Annex IV.
8.7 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, the Seller 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 Assets and no
governmental agency or body shall have taken any other action or made any
request of RV Centers or the Buyer as a result of which RV Centers or the Buyer
deems it inadvisable to proceed with the transactions hereunder.
8.8 GOOD STANDING CERTIFICATES. The Seller shall have delivered to RV
Centers and the Buyer 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 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.
8.9 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC.
-42-
51
8.10 ADVISORY SERVICES AGREEMENTS. Each of the persons listed on
Schedule 8.10 shall have entered into an advisory services agreement
substantially in the form of Annex V hereto.
8.11 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 Seller shall have delivered to the
Underwriters such customary closing documents as they may reasonably request.
8.12 FIRPTA CERTIFICATE. The Seller shall have delivered to RV Centers
and the Buyer a certificate to the effect that he is not a foreign person
pursuant to Section 1.1445-2(b) of the Treasury regulations.
9. COVENANTS OF RV CENTERS AND THE SELLER AFTER CLOSING
9.1 PREPARATION AND FILING OF TAX RETURNS.
(i) The Seller shall file or cause to be filed all income 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. The Seller 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 Financial Statements) shown by such tax returns
to be due or otherwise attributable to such tax returns.
(ii) 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.
(iii) 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.
-43-
52
9.2 DIRECTORS. Upon execution of this Agreement by the Seller 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.
9.3 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS. RV
Centers shall use reasonable efforts to have the Seller released from any and
all guarantees of the Company's indebtedness, including bond obligations,
identified on Schedule 9.3. 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 9.3
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 Seller's personal liability shall be released. RV Centers will indemnify the
Seller against any loss or damage suffered as a result of the personal
guarantees.
9.4 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 the Seller, his 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 Seller (other than for
reasonable out-of-pocket expenses).
9.5 USE OF NAME. From and after the Closing, the Company and Seller
shall cease using the name "Young's RV Center" or any similar name.
10. INDEMNIFICATION
The Seller and RV Centers each make the following covenants that are
applicable to them, respectively:
10.1 INDEMNIFICATION BY THE SELLER. The Seller covenants and agrees
that he will indemnify, defend, protect and hold harmless RV Centers, the Buyer
and their respective Affiliates 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 Buyer
as a result of or arising from (i) any breach of the representations and
warranties of the Seller set forth herein or on the schedules or certificates
delivered in connection herewith, (ii) any breach of
-44-
53
any agreement on the part of the Seller 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, the Assets or the Business which was based upon and in conformity with
information provided in writing to RV Centers or its counsel by the Seller
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 Seller 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 Seller 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 Seller
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 the Seller shall not
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 the Seller.
The Seller covenants and agrees that he will indemnify, defend, protect
and hold harmless RV Centers, the Buyer and their respective Affiliates at all
times, from and after the date of this Agreement 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 Buyer as a result of or arising from (i) any debt, liability or
other obligation of the Company or relating to the Business which was incurred
prior to the Closing Date and is not expressly assumed by the Buyer, and (ii)
ownership or use of the Assets by the Company or the Seller or services provided
or business transacted by the Company prior to the Closing Date and which is not
expressly assumed by the Buyer
Each of RV Centers and the Buyer acknowledges and agrees that other
than the representations and warranties of the Seller specifically contained in
this Agreement, there are no representations or warranties of the Seller, either
express or implied, with respect to the transactions contemplated by this
Agreement, the Seller or his assets, liabilities and the Business.
RV Centers and the Seller 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 Seller 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
-45-
54
against the Seller 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 Seller 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 Seller as a result of or arising from (i) any breach
by RV Centers of its 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; (iii) all Assumed
Liabilities or (iv) 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 or any of the Founding Companies 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 Seller
specifically contained in this Agreement or other information furnished to RV
Centers by the Seller 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
-46-
55
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 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.
-47-
56
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 Seller until such time as the aggregate of all claims which
such persons may have against such Seller shall exceed an amount (the "Threshold
Amount") equal to one percent of the sum of (x) the cash paid to the Seller
pursuant to Section 2.1 and (y) the value of the RV Centers Stock delivered to
the Seller 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. Seller shall not assert any claim for
indemnification hereunder against RV Centers until such time as the aggregate of
all claims which Seller 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, the Seller shall
not 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 the Seller (valued as of the Consummation Date) in connection with
the purchase and sale of the Assets. 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.
(d) The Seller 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 the Seller by RV Centers pursuant to
Annex I. For the purpose of crediting the Seller 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 Buyer or any subsidiary of RV
Centers) 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.
-48-
57
(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 4.5, 4.22 and 4.29(c).
10.6 TAX INDEMNIFICATION BY THE SELLER. The Seller covenants and agrees
that he will indemnify, defend, protect and hold harmless RV Centers and the
Buyer from and against the entirety of any adverse consequences the Buyer or RV
Centers may suffer resulting from, arising out of, relating to, in the nature
of, or caused by any liability of the Company or Seller 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.
10.7 BULK SALES COMPLIANCE. Seller agrees to and does hereby indemnify
and hold the Buyer and RV Centers harmless from and against all claims, losses,
demands, damages, liabilities, costs and expenses resulting from or relating to
non-compliance by Seller or the Company with any applicable bulk transfer laws
in connection with the sale of Assets.
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 board of directors of RV Centers
and the Seller;
(ii) by the Seller, on the one hand, or by RV Centers (acting
through its board of directors), on the other hand, 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 Seller, 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 Seller, 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.
-49-
58
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.
12. NONCOMPETITION
12.1 PROHIBITED ACTIVITIES. The Seller 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
himself 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");
(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 the
Seller's own behalf or on behalf of any competitor which candidate was,
to the actual knowledge of the Seller 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.
-50-
59
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit the Seller 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, the Seller agrees that
the covenant set forth in Section 12.1 may be enforced by RV Centers, in the
event of breach by the Seller, 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
Seller 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
Seller 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 any of its Subsidiaries
conducts business during the term of this covenant.
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 the Seller
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 the Seller made in this Section 12 shall be effective, shall be
computed by excluding from such computation any time during which the Seller 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 Seller hereby agrees that this covenant is a
material and substantial part of this transaction.
-51-
60
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
13.1 THE SELLER. The Seller recognizes and acknowledges that he had in
the past, currently has, and in the future may possibly have, access to certain
confidential information of the Company or the Business, 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 Seller agrees that he 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 Seller as is required in the course of performing his duties
for RV Centers or its Affiliates 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 Seller, (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 Seller 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 the Seller of the provisions of this Section, RV Centers
shall be entitled to an injunction restraining the Seller 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,
Seller shall have none of the above-mentioned restrictions on their ability to
disseminate confidential information with respect to the Company or the
Business.
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, such as operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Company. 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 Seller, 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 Seller and provide the Seller
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
-52-
61
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 Seller
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 Seller 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 Sections 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.
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, the Seller shall
not (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. 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 the Seller 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 the Seller or
family members of the Seller 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 transferring Seller'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 transferring Seller's
indemnification obligations hereunder, or (c) for transfers of RV Centers Stock
to RV Centers pursuant to Section 10.5(d).
-53-
62
The certificates evidencing the RV Centers Stock delivered to the
Seller 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 ASSET PURCHASE AGREEMENT BETWEEN RV CENTERS, INC.,
YOUNG'S RV CENTERS, INC. AND ▇▇▇ ▇. ▇▇▇▇▇▇▇ 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.
15. FEDERAL SECURITIES ACT REPRESENTATIONS
15.1 COMPLIANCE WITH LAW. The Seller acknowledges that the shares of RV
Centers Stock to be delivered to the Seller 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 the Seller pursuant to this
Agreement is being acquired solely for his own account, for investment purposes
only, and with no present intention of distributing, selling or otherwise
disposing of it in connection with a distribution. The Seller covenants,
warrants and represents that none of the shares of RV Centers Stock issued to
the Seller 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.
-54-
63
15.2 ECONOMIC RISK; SOPHISTICATION. The Seller represents and warrants
that he is 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. The Seller 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
Seller has 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 Seller, and any
plans for additional acquisitions and the like. The Seller has asked any and all
questions in the nature described in the preceding sentence and all questions
have been answered to his satisfaction. Except as set forth on Schedule 15.2,
the Seller is an "accredited investor" as defined in Rule 501 of the 1933 Act.
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 the Seller
written notice of its intent to do so. Upon the written request of the Seller
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 the Seller
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 the Seller 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 Seller in accordance with the 1933 Act,
provided that RV Centers shall have the right to reduce pro rata the number of
shares of each seller 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 Seller 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.
-55-
64
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 Seller
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 Seller with copies of all such documents proposed
to be filed and provide the Seller an opportunity to comment on the
information therein relating to the Seller) as promptly as practical;
(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 for a period of not less than 120 days;
(iii) Furnish to the Seller upon his request 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 the Seller 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 Seller, 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 the Seller 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 the Seller, RV Centers will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of the
-56-
65
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, the Seller against all
losses, claims, damages, liabilities and expenses arising out of or resulting
from any 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 the Seller expressly
for use therein or by the Seller's failure to deliver a copy of the registration
statement or prospectus or any amendment or supplements thereto after RV Centers
has furnished the Seller with a sufficient number of copies of the same.
(b) In connection with any registration under Section 16.1,
the Seller 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 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
the Seller specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of the Seller under this Section
16.3 shall be limited to an amount equal to the net proceeds actually received
by the Seller 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
-57-
66
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.
16.4 UNDERWRITING AGREEMENT. In connection with each registration
pursuant to Sections 16.1 covering an underwritten registered offering, RV
Centers and the Seller 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 Seller shall be excluded
from any indemnification of the underwriters other than with respect to
information provided by the Seller 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 the Seller owns any restricted RV Centers
Common Stock, furnish to the Seller 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 the Seller may reasonably request in availing itself of any
rule or regulation of the SEC allowing the Seller 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 the Seller 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 Seller.
-58-
67
17. GENERAL
17.1 COOPERATION. The Seller 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
Seller will cooperate and use its reasonable efforts to have his and the
Company's present officers, authorized representatives and employees cooperate
with RV Centers on and after the Consummation Date in furnishing information,
evidence, testimony and 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 Seller.
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 Seller 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 Seller and RV Centers. 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 Seller
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.
-59-
68
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,
incurred by the Company or Seller in connection with this Agreement shall be
paid by the Seller; provided, however, that any such amount paid by the Seller
shall be disclosed to RV Centers in writing prior to Closing and deducted from
the cash payable to the Seller pursuant to Annex I. Upon consummation of the
transactions contemplated herein, BKF will pay up to $150,000 of the fees
charged by ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ L.L.P., counsel to Company and the Other
Founding Companies; Seller 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. The Seller 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 Assets. The Seller shall file all necessary
documentation and Returns with respect to such Transfer Taxes. In addition, the
Seller acknowledges that he, and not RV Centers, will pay all taxes due by him
upon receipt of the consideration payable pursuant to Section 3 hereof.
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.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) If to the Seller, addressed to him at his address set forth on the
signature pages hereto, with copies to:
-▇▇-
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Beam
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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.
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 and the Seller. 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 Assets and each future holder of
such RV Centers Stock.
-61-
70
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.
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 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.
-62-
71
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
YOUNG'S RV CENTER, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇-▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Social Security Number: ###-##-####
--------------------
-63-
72
SPOUSAL JOINDER
The undersigned spouse of ▇▇▇ ▇. ▇▇▇▇▇▇▇ executes this Spousal
Joinder to acknowledge (i) such spouse's acceptance of the terms of the
Agreement and to bind such spouse's community property interest, if any, in the
Assets or Business and (ii) that the decisions by ▇▇▇ ▇. ▇▇▇▇▇▇▇ in the
Agreement shall be effectively binding upon spouse's community property
interest, if any.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
-64-
73
ANNEX I -
YOUNG'S RV CENTER, INC.
TO THE ASSET PURCHASE AGREEMENT
DATED AS OF JANUARY 12, 1999
BY AND AMONG
RV CENTERS, INC.
YOUNG'S RV CENTER, INC.
AND
▇▇▇ ▇. ▇▇▇▇▇▇▇
CONSIDERATION TO BE PAID TO THE SELLER
AGGREGATE CONSIDERATION TO BE PAID TO SELLER
Three Million Two Hundred Seventy-Three Thousand Seven Hundred Fifty Dollars
($3,273,750) 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) One Hundred Twenty- Nine Thousand One Hundred (129,100)
shares of RV Centers Common Stock, and (B) One Million Six Hundred Sixty
Thousand Dollars ($1,660,000) cash; provided however, that the aggregate
consideration shall not be less than the minimum value set forth below.
Consideration to be paid:
------------------------------------
Percentage
Ownership of Shares of RV Centers
the Assets Common Stock Cash
------------ -------------------- ------------
▇▇▇ ▇▇▇▇▇▇▇ 100% 129,100 $ 1,660,000
MINIMUM VALUE: Two Million Nine Hundred Fifty-One Thousand Dollars ($2,951,000)
EXCLUDED ASSETS:
1. ▇▇▇ ▇. ▇▇▇▇▇▇▇ Life Insurance Policy from Prudential
Life Insurance Company in the amount of $1,000,000.
The policy expires in February 1999, annual premiums
are equal to $4,200 and there are no outstanding
policy loans.
2. 1995 Chevrolet Suburban. #▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇. (60,000
miles).
Page 1 of Annex I
74
ANNEX I -
YOUNG'S RV CENTER, INC.
3. 1990 Toyota Tercel. #▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇. (80,000
miles).
4. 1977 Ford van. #N62EVY88594. (140,000 miles).
ALLOWABLE DISTRIBUTIONS: With the exception of the following, no amounts will be
paid to Seller out of Company accounts subsequent to June 30, 1998:
1. An amount equal to the reasonably estimated federal
and state (net of federal benefit) income taxes owed
on sole proprietor 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 sole proprietor profits of the Company for the
period from January 1, 1999 to the Consummation Date.
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 Seller or any members of his family in excess of an aggregate of Nine
Thousand Dollars ($9,000) per month, such amounts to be taken by Seller as
distributions of owner's equity (not payroll compensation) as has been Seller's
past practice.
Page 2 of Annex I
75
ANNEX III
FORM OF OPINION OF COUNSEL
TO RV CENTERS, INC.
, 1999
---------------------------
---------------------------
---------------------------
Ladies and Gentlemen:
We have acted as counsel to RV Centers, Inc., a Delaware corporation
("RV Centers") and Young's RV Center, Inc., a California corporation (the
"Buyer"), in connection with the transactions contemplated by the Asset Purchase
Agreement (the "Agreement") dated as of January , 1999, among RV Centers, the
Buyer and ▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Seller"). This opinion is being delivered to you
pursuant to Section 7.3 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. The Buyer has been duly
incorporated and is validly existing and in good standing under the laws of the
State of California.
Page 1 of Annex III
76
2. The Agreement has been duly authorized, executed and delivered by RV
Centers and the Buyer and constitutes a legal, valid and binding agreement of RV
Centers and the Buyer, enforceable against it in accordance with its terms. Each
of RV Centers and the Buyer has taken all corporate action necessary to
authorize the execution, delivery and performance of the Agreement.
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 Seller 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 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 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:
Page 2 of Annex III
77
(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).
(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
78
ANNEX IV
FORM OF OPINION OF COUNSEL TO SELLER
,1999
RV Centers, Inc.
---------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
[Underwriters]
[International Underwriters, if any]
Ladies and Gentlemen:
We have acted as counsel to ▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Seller"), in
connection with the transactions contemplated by the Asset Purchase Agreement
(the "Agreement"), dated as of January , 1999, among RV Centers, Inc., a
Delaware corporation, Young's RV Center, Inc., a California corporation, and the
Seller. This opinion is being delivered to you pursuant to Section 8.6 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 Seller. In
addition, we have relied on certificates of the Seller 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 Seller and the Company have all requisite power and authority to
own and operate the Assets and to conduct the Business as currently conducted.
Page 1 of Annex IV
79
2. The Company is duly qualified to transact business 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 Assets or the Business.
3. 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 equity of the Company and there are no outstanding
or authorized options, warrants or rights of any character obligating the Seller
or the Company to issue or sell any equity or any securities convertible into or
exercisable or exchangeable for or evidencing the right to purchase or subscribe
for any equity.
4. The Agreement [and the Conveyance Documents] have been duly
authorized, executed and delivered by the Seller and constitute legal, valid and
binding agreements of the Seller, enforceable against the Seller in accordance
with their terms. Seller has the legal capacity to execute, deliver and perform
his obligations under the Agreement [, the Conveyance Documents] and the
Employment Agreement to which Seller is a party.
5. To our knowledge, the Company is not in default, nor has it 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, to which the Company is a party or by which the
Company, the Assets or the Business is bound.
6. To our knowledge, except to the extent set forth on Schedules and to
the Agreement, (a) the Seller and the Company are not in violation of any order
issued by any court or governmental agency involving or affecting the Assets or
the Business and [(b) there is no action, suit or proceeding pending or
threatened against the Seller or the Company before any court, arbitrator or
governmental authority involving or affecting the Assets or the Business.
7. 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 Seller or the Company, except for such notices, consents,
authorizations, approvals, orders or filings as have already been made or
obtained, as applicable.
8. To our knowledge, the execution of the Agreement and the performance
by the Seller and the Company of their obligations thereunder do not and will
not 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 Seller or the Company is a party or by which the Seller or the Company may
be bound or to which any of the Assets or the Business is subject.
9. 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 or any action
Page 2 of Annex IV
80
taken or to be taken by the Seller or the Company in connection with the
Agreement or the Employment Agreement, 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 or the
Business, (ii) on the ability of the Seller or the Company to perform his
obligations under the Agreement or (iii) on the ability of the Seller to perform
his obligations under the Employment Agreement.
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 4, 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.
(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 the Company is
not a named party.
(iv) Whenever our opinion is based on circumstances "to our
knowledge," we have relied exclusively on certificates of the
Seller 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 3 of Annex IV
81
ANNEX V
ADVISORY AGREEMENT
This Advisory Agreement (this "Agreement") dated as of the ___
day of ___________, 1999 is entered into by and between Young's RV Center, a
California sole proprietorship (the "Company"), and ▇▇▇ ▇▇▇▇▇▇▇ (the "Advisor")
as follows:
WHEREAS, the Company and its parent, RV Centers, Inc. and RV
Centers' other current and future subsidiaries are collectively referred to
herein as the "RV Centers Companies" and individually, as an "RV Centers
Company;"
WHEREAS, the RV Centers Companies are engaged in the sale and
servicing of recreational vehicles (the "Business"); and
WHEREAS, Advisor has valuable experience with and
understanding of the Company's business strategy and operations, and the Company
desires to engage Advisor to provide, and Advisor desires to provide, certain
consulting services to the Company on the terms and conditions provided herein;
NOW, THEREFORE, for and in consideration of the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Appointment of the Advisor. The Company hereby
engages the Advisor as an advisor, and the Advisor hereby agrees to provide,
consulting services and business advice to the Company in the operation of the
Business. The Advisor shall from time to time, as reasonably requested by the
Company, consult with and provide business advice to representatives of the
Company and RV Centers, Inc. concerning matters relating to the operation of the
Business.
Such services shall include, but not be limited to, consulting
with the Company and with RV Centers, Inc. as to the overall operations of the
Company, effectiveness of its management and development and implementation of
strategies to profitably grow and expand the Company's business. It is
understood and acknowledged by Advisor that, over the term of this Agreement,
the Company intends to utilize his services for a substantial portion of his
business-related time and advisor agrees to devote such time to the Company,
with the understanding that such time commitment will decrease during the term
of the Agreement. Advisor understands that the Company may require one hundred
percent of Advisor's business-related time during the first two to four months,
gradually decreasing to where, at the final month of the Agreement, Advisor
might be providing less than one-half of his time to the Company.
Page 1 of Annex V
82
Section 2. Consulting Fees.
(a) In consideration of the Advisor entering into this
Agreement and providing services as herein provided, the Company agrees to pay
to the Advisor a monthly fee in an amount equal to nine thousand dollars
($9,000.00). Such monthly fee shall be paid on the last regularly scheduled
payday of each month for Company's employees; the monthly fee shall be prorated,
based on a thirty day month, for the first and last months of this Agreement if
the Agreement does not commence or terminate as of the first or last day of a
month.
As an independent contractor, Advisor shall be responsible for the
payment of all income and any other taxes assessed upon all payments received by
the Advisor under this Agreement. Advisor hereby agrees to indemnify and hold
the RV Centers Companies harmless from and against any tax, withholding,
unemployment insurance and other employment-related obligations of Advisor.
Section 3. Reimbursement of Expenses. The Company shall
promptly pay or reimburse the Advisor for, or cause to be paid or reimbursed,
all business travel and other out-of-pocket expenses reasonably incurred by
Advisor 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 Advisor upon
submission of any request for reimbursement, and in a format and manner
consistent with the Company's expense reporting policy.
Section 4. Term and Termination. This Agreement shall be for a
term ("Term") commencing on the date hereof and continuing through [1 YEAR FROM
DATE HEREOF], [WITH A ONE YEAR RENEWAL OPTION]; provided that Advisor or the
Company can terminate this Agreement immediately upon 30 days notice for breach
by the other party if such breach is not cured within such 30 days.
Section 5. Non-Competition Agreement.
(a) Advisor recognizes that the Company's willingness to enter
into this Agreement, including the compensation arrangements set forth in
Section 2 above, and that certain Acquisition Agreement dated as of January 12,
1999 (the "Acquisition Agreement") by and among RV Centers, the Company,
Advisor, and the other stockholders set forth therein, if any, is based in
material part on Advisor's agreement to the provisions of this Section 5 and
that Advisor's breach of any of the provisions of this Section 5 could
materially damage the RV Centers Companies. Advisor will not, during the Term of
this Agreement, and for a period of one (1) year immediately following such
Term, 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
Page 2 of Annex V
83
competition with any RV Centers Company, within one hundred (100) miles
of any location where any of the RV Centers Companies conducts its
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;
(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 any 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
Advisor's own behalf or on behalf of any competitor, which candidate
was, to Advisor's knowledge after due inquiry, either called upon by an
RV Centers Company or for which the Company 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 Advisor 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.
(b) Because of the difficulty of measuring economic losses to
the Company as a result of a breach of the foregoing covenant, and because of
the immediate and irreparable damage that could be caused to the RV Centers
Companies for which they would have no other adequate remedy, Advisor agrees
that the foregoing covenant may be enforced by the Company, in the event of
breach by Advisor, by injunctions, restraining orders and orders of specific
performance issued by a court. Advisor 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 Section 5 impose a reasonable restraint on Advisor in light of the
activities and Business of the RV Centers Companies on the date hereof and the
current plans of the RV Centers Companies; but it is also the intent of the
Company and Advisor 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 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 the
Business enumerated under the Recitals above or the locations currently
established therefor, then Advisor
Page 3 of Annex V
84
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 Advisor shall cease to consult on behalf of the Company 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 Section 5, Advisor shall not be chargeable with a violation of this Section
5 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 Section 5 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 Section 5 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 Advisor against an RV Centers
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of such covenants. It is
specifically agreed that the period of one [(1) year] during which the
agreements and covenants of Advisor made in this Section 5 shall be effective,
shall be computed by excluding from such computation any time during which
Advisor is in violation of any provision of this Section 5.
Section 6. Return of Company Property. All records, designs,
patents, business plans, financial statements, manuals, memoranda, lists and
other property delivered to or compiled by Advisor 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 Advisor shall be
delivered promptly to the Company without request by it upon termination of this
Agreement.
Section 7. Inventions. Advisor 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 Advisor,
solely or jointly with another, during the Term of this Agreement and which are
directly related to the then current Business or activities of the Company and
which Advisor conceives as a result of consultation on behalf of the Company.
Advisor hereby assigns and agrees to assign all his interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Advisor
shall execute any and all applications, assignments or
Page 4 of Annex V
85
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.
Section 8. Trade Secrets. Advisor 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.
Section 9. Confidentiality.
(a) Advisor 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. Advisor further
acknowledges and agrees that Advisor 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 this Agreement and thereafter,
Advisor 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 Advisor. Advisor shall not, at any time
(either during or after the Term of this Agreement), 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 the Company, or permit any other person to do so except for the
benefit of the Company. In the event Advisor 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, Advisor 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 Advisor's cooperation to narrow the request or
demand or waive Advisor's compliance with the provisions of this Agreement. If,
failing the entry of a protective order or the receipt of a waiver hereunder,
Advisor is, in the opinion of his counsel, compelled to disclose Confidential
Information, Advisor may disclose only that portion of the Confidential
Information which Advisor's counsel advises Advisor in writing that Advisor is
compelled to disclose and Advisor will exercise his or her best efforts to
obtain assurance that confidential treatment will be accorded such Confidential
Information. In any event, Advisor will not oppose action by the Company to
obtain an appropriate protective order or other reliable assurance that
confidential
Page 5 of Annex V
86
treatment will be accorded the Confidential Information. Advisor 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 Agreement applies to all
Confidential Information, whether now known or later to become known to Advisor.
(c) Upon the termination of this Agreement, and upon written
request of the Company at any other time, Advisor 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 (5) days of any such request,
Advisor 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
any RV Centers Company (whether or not owned or developed by an RV Centers
Company and whether or not developed by Advisor) that is not generally known to
the public and has been generally treated by an RV Centers Company as
confidential information. Confidential Information includes, but is not limited
to, the following: all trade secrets of the RV Centers Companies; all
information that any RV Centers Company has marked as confidential or has
otherwise described to Advisor (either in writing or orally) as confidential;
all nonpublic information concerning the RV Centers Companies' 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
business records and plans; all personnel files; all financial information of or
concerning the RV Centers Companies; 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 RV
Centers Companies; 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 Advisor, or (iii) is received by Advisor, outside his
capacity as an advisor 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.
Section 10. Indemnification. In the event Advisor 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 Advisor), by reason of the fact that he is or was
performing 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 Advisor against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, as actually and reasonably
incurred by Advisor in connection therewith. In the event that both Advisor and
the
Page 6 of Annex V
87
Company are made a party to the same third-party action, complaint, suit or
proceeding, the Company agrees to engage competent legal representation, and
Advisor 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 Advisor, he may engage separate counsel and the Company shall pay
all reasonable attorneys' fees and reasonable expenses of such separate counsel.
Further, while Advisor is expected at all times to use his best efforts to
faithfully discharge his duties under this Agreement, Advisor cannot be held
liable to the Company for errors or omissions made in good faith where Advisor
has not exhibited gross, willful and wanton negligence and misconduct nor
performed criminal and fraudulent acts which materially damage the business of
the Company.
Section 11. Notices. Any and all notices, requests or other
communications hereunder shall be given in writing and delivered by regular
mail, overnight mail, hand delivery, or by registered or certified mail,
return-receipt requested, with first class postage prepaid, or by facsimile
transmission or overnight courier service to the parties at the following
addresses or facsimile numbers:
(a) if to the Company, to:
Young's RV Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
RV Centers, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to the Advisor, to:
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇-▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or at such other address or number as shall be designated by such party in a
notice to the other party given in accordance with this Section 10. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given: (i) in the case of a notice sent by facsimile, upon
transmission subject to telephone confirmation of receipt; (ii) when personally
Page 7 of Annex V
88
delivered; (iii) in the case of a notice sent by overnight courier, the next
business day after such notice is delivered to such courier; or (iv) in the case
of a notice sent by regular or certified mail return receipt requested, three
business days after it is duly deposited in the mails, in each case given or
addressed as aforesaid.
Section 12. Benefit and Burden. This Agreement shall inure to
the benefit of, and shall be binding upon, the parties hereto and their
respective successors and permitted assigns.
Section 13. No Third Party Rights. Nothing in this Agreement
shall be deemed to create any right in any creditor or other person or entity
not a party hereto and this Agreement shall not be construed in any respect to
be a contract in whole or in part for the benefit of any third party.
Section 14. Complete Agreement. This Agreement is not a
contract of employment nor is it a promise of future employment. Advisor is a
party to no other agreements, whether written or verbal, with any RV Centers
Company, or any of their respective officers, directors or representatives
covering the subject matter covered by this Agreement except for the Acquisition
Agreement. This Agreement is the final, complete and exclusive statement and
expression of the agreement between the Company and Advisor and of all the terms
of this Agreement, and it cannot be varied, contradicted or supplemented by
evidence of any prior or contemporaneous verbal or written agreements.
Section 15. Amendments and Waiver. No amendment, modification,
restatement or supplement of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any provision of this
Agreement shall be valid unless in writing and signed by the party against whom
that waiver is sought to be enforced. No failure or delay on the part of any
party hereto in exercising any right, power or privilege hereunder and no course
of dealing between the parties hereto shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. No notice to or demand on any party in any
case shall entitle such party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any party
to any other or further action in any circumstances without notice or demand.
Section 16. Assignments. The Advisor may assign its rights,
interests and obligations under this Agreement to a corporation or other
business entity in which he or his family has a controlling ownership and the
Company may assign its rights, interests and obligations under this Agreement to
a successor of all or substantially all of the business and/or assets of the
Company. Except for the foregoing, neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto and any
attempt to do so shall be null and void; provided, however, that in connection
with any assignment permitted pursuant to this Section 15, the assignee shall
expressly assume all of the obligations of the Advisor or Company hereunder, as
the case may be,
Page 8 of Annex V
89
and the Advisor or Company shall remain fully liable for the performance of all
such obligations in the manner prescribed in this Agreement.
Section 17. Counterparts. This Agreement may be executed in
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed an original and all of which taken
together shall constitute by one and the same agreement.
Section 18. Captions and Headings. The captions and headings
contained in this Agreement are inserted and included solely for convenience and
shall not be considered or given any effect in construing the provisions hereof
if any question of intent should arise.
Section 19. Construction. The parties acknowledge that each of
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by the parties hereto.
Section 20. Severability. Should any clause, sentence,
paragraph, subsection or Section of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement, and the parties hereto
agree that the part or parts of this Agreement so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom by the
parties hereto, and the remainder will have the same force and effectiveness as
if such stricken part or parts had never been included herein.
Section 21. 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 5, 6, 7, 8, and 9. 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.
Section 22. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
Page 9 of Annex V
90
Section 23. Survival. Sections 5, 6, 7, 8, 9 and 20 shall
survive the termination or expiration of this Agreement.
Section 24. Guarantee of Payments. RV Centers has executed
this Agreement for the limited purposes of Section 23. 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 Advisor hereunder.
Page 10 of Annex V
91
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and year first above written.
"ADVISOR" "COMPANY"
By:
------------------------------- -------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ Name:
-----------------------------------
Title:
----------------------------------
For Purposes of paragraph 23:
"RV CENTERS"
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer