ASSET PURCHASE AGREEMENT
among
HARLEY-DAVIDSON, INC.,
HOLIDAY HOLDING CORP.,
HOLIDAY WORLD, INC. (California),
HOLIDAY WORLD, INC. (Texas),
HOLIDAY WORLD, INC. (Florida),
HOLIDAY WORLD, INC. (Oregon),
HOLIDAY WORLD, INC. (Indiana),
HOLIDAY WORLD, INC. (Washington),
HOLIDAY WORLD, INC. (New Mexico),
MONACO COACH CORPORATION, and
MCC ACQUISITION CORPORATION
Dated as of March 4, 1996
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
Schedules
Schedule 1.1 - Description of Holiday World Stores
being
Purchased
Schedule 1.1(b) - Real Property
Schedule 1.1(e) - Excluded MIS and Software
Schedule 1.1(g) - Excluded Governmental Licenses and
Permits
Schedule 1.2(b) - Assets not being transferred
Schedule 1.2(f) - Excluded Contracts
Schedule 1.2(j) - Life Insurance Policies
Schedule 1.2(k) - Excluded Equipment
Schedule 2.3 - Exceptions to GAAP with respect to
Closing Balance Sheet
Schedule 2.3(a) - Preliminary Statement
Schedule 3.1(c) - Subsidiaries
Schedule 3.1(d) - Governmental Approvals and Notices;
Conflicts
Schedule 3.1(e) - Financial Information
Schedule 3.1(f) - Liens, Encumbrances and Restrictions
Schedule 3.1(h)(ii) - Material Contracts
Schedule 3.1(h)(iii) - Material Licenses and Permits
Schedule 3.1(h)(iv) - Location of Material Assets
Schedule 3.1(i) - Defects
Schedule 3.1(j) - Legal Proceedings
Schedule 3.1(l) - Defects in Patents,
Trademarks and Similar Rights
Schedule 3.1(m) - Defects in Government Licenses,
Permits and Related Approvals
Schedule 3.1(n) - Conduct of Business Other than in
Compliance with Regulatory and
Contractual Requirements
Schedule 3.1(o) - Employee Agreements and Plans
Schedule 3.1(p) - Certain Environmental Matters
Schedule 3.1(s) - Changes in Business Since December 31,
1995
Schedule 3.1(u) - Inter-Company Transactions
Schedule 3.1(v) - Returns of Inventory
Schedule 3.1(x) - Accounts Receivable
Schedule 3.1(y) - Product Warranties
Schedule 3.1(z) - In-Policy Warranty Claims and Recalls
Schedule 3.1(aa) - Product Liability Claims
Schedule 3.1(ab)(i) - Certain Real Property Matters
Schedule 3.1(ab)(v) - Operating and Management Agreements
Schedule 3.2(c) - Governmental Approvals and Notices;
Conflicts
Schedule 3.3 - Schedule of Survival Periods for
Certain Representations and Warranties
Schedule 4.2 - Special Business Practices
Schedule 4.8 - Certain Real Property
Schedule 4.9 - Floorplan Financing
Exhibits
EXHIBIT A - Form of Assumption Agreement
EXHIBIT B - Form of Note
TABLE OF CONTENTS
Page
1. Purchase and Sale of Assets; Assumption of Certain Liabilities . . 1
1.1. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . 1
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 3
1.3. Instruments of Conveyance and Transfer . . . . . . . . . . . 4
1.4. Further Assurances . . . . . . . . . . . . . . . . . . . . . 5
1.5. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . 5
1.6. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . 5
2. Closing; Payment of Purchase Price at Closing and Closing Adjustment
6
2.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2. Purchase Price and Payment . . . . . . . . . . . . . . . . . 6
2.3. Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . 7
2.4. Post-Closing Cash Settlement . . . . . . . . . . . . . . . . 8
3. Representations and Warranties . . . . . . . . . . . . . . . . . . 9
3.1. Representations and Warranties of Sellers . . . . . . . . . . 9
(a) Due Organization and Power . . . . . . . . . . . . . . . 9
(b) Authorization and Validity of Agreement . . . . . . . . . 9
(c) Related Parties . . . . . . . . . . . . . . . . . . . . . 10
(d) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which the Sellers are a Party . . . . 10
(e) Financial Statements . . . . . . . . . . . . . . . . . . 11
(f) Title to Properties and Absence of Liens and Encumbrances 11
(g) No Undisclosed Liabilities . . . . . . . . . . . . . . . 12
(h) List of Properties, Contracts, Permits and Other Data . . 12
(i) Defects . . . . . . . . . . . . . . . . . . . . . . . . . 14
(j) Legal Proceedings . . . . . . . . . . . . . . . . . . . . 14
(k) Labor Controversies . . . . . . . . . . . . . . . . . . . 14
(l) Patents, Trademarks and Similar Rights . . . . . . . . . 14
(m) Government Licenses, Permits and Related Approvals . . . 15
(n) Conduct of Business in Compliance with Regulatory and
Contractual Requirements . . . . . . . . . . . . . . . . 15
(o) Employee Benefit Plans . . . . . . . . . . . . . . . . . 15
(p) Environmental Matters . . . . . . . . . . . . . . . . . . 17
(q) Certain Fees . . . . . . . . . . . . . . . . . . . . . . 18
(r) Non-Foreign Status of Sellers . . . . . . . . . . . . . . 18
(s) Absence of Certain Changes . . . . . . . . . . . . . . . 18
(t) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 19
(u) Inter-Company Transactions . . . . . . . . . . . . . . . 19
(v) Inventory . . . . . . . . . . . . . . . . . . . . . . . . 19
(w) Accounts Receivable . . . . . . . . . . . . . . . . . . . 19
(x) Product Liability Claims . . . . . . . . . . . . . . . . 20
(y) Certain Real Property Matters . . . . . . . . . . . . . . 20
(z) No Other Representations or Warranties . . . . . . . . . 21
3.2. Representations and Warranties of Buyer . . . . . . . . . . . 21
(a) Due Organization and Power . . . . . . . . . . . . . . . 21
(b) Authorization and Validity of Agreement . . . . . . . . . 22
(c) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which Buyer is a Party . . . . . . . 22
(d) Certain Fees . . . . . . . . . . . . . . . . . . . . . . 22
(e) Financial Statements . . . . . . . . . . . . . . . . . . 23
(f) Absence of Certain Changes or Events . . . . . . . . . . 23
(g) No Other Representations or Warranties . . . . . . . . . 23
3.3. Expiration of Representations and Warranties . . . . . . . . 23
4. Transactions Prior to Closing . . . . . . . . . . . . . . . . . . . 24
4.1. Access to Information Concerning Properties and Records;
Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 24
4.2. Conduct of the Business of the Holiday World Division Pending the
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3. Further Actions . . . . . . . . . . . . . . . . . . . . . . . 25
4.4. Antitrust Laws . . . . . . . . . . . . . . . . . . . . . . . . 26
4.5. Notification . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.6. No Inconsistent Action. . . . . . . . . . . . . . . . . . . . 27
4.7. Preparation and Delivery of Audited Financial Statements . . . 27
4.8. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.9. Casualty Losses and Condemnation . . . . . . . . . . . . . . . 28
4.10. Repayment Restrictions . . . . . . . . . . . . . . . . . . . 28
5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 28
5.1. Conditions Precedent to Obligations of Buyer and the Sellers 28
(a) No Injunction, etc. . . . . . . . . . . . . . . . . . . 28
(b) Antitrust Matters . . . . . . . . . . . . . . . . . . . . 28
(c) Material Consents . . . . . . . . . . . . . . . . . . . . 29
(d) Closing of Manufacturing Transaction . . . . . . . . . . 29
5.2. Conditions Precedent to Obligations of Buyer . . . . . . . . 29
(a) Accuracy of Representations and Warranties . . . . . . . 29
(b) Performance of Agreements . . . . . . . . . . . . . . . . 29
(c) Officer's Certificate . . . . . . . . . . . . . . . . . . 30
(d) Completion of Audit . . . . . . . . . . . . . . . . . . . 30
(e) FIRPTA Compliance . . . . . . . . . . . . . . . . . . . . 30
5.3. Conditions Precedent to the Obligations of the Company and
Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Accuracy of Representations and Warranties . . . . . . . 30
(b) Performance of Agreements . . . . . . . . . . . . . . . . 30
(c) No Material Adverse Change . . . . . . . . . . . . . . . 31
(d) Officer's Certificate . . . . . . . . . . . . . . . . . . 31
(e) Assumption Agreement . . . . . . . . . . . . . . . . . . 31
6. Employee Relations and Benefits . . . . . . . . . . . . . . . 31
6.1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2. Effective Time . . . . . . . . . . . . . . . . . . . . . . . 31
6.3. Benefit Plans and Programs . . . . . . . . . . . . . . . . . 31
6.4. Welfare Plans. . . . . . . . . . . . . . . . . . . . . . . . 31
6.5. Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.6. Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . . 32
6.7. Warn Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2. No Liabilities in Event of Termination . . . . . . . . . . . 33
7.3. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 33
8. Transactions Subsequent to Closing . . . . . . . . . . . . . . . . 33
8.1. Post-Closing Access to Information and Assistance . . . . . . 33
8.2. Further Agreements . . . . . . . . . . . . . . . . . . . . . 33
8.3. Use of Corporate Name . . . . . . . . . . . . . . . . . . . . 34
8.4. No Competition . . . . . . . . . . . . . . . . . . . . . . . 34
8.5. Tax Assistance and Cooperation . . . . . . . . . . . . . . . 34
8.6. Floorplan Financing . . . . . . . . . . . . . . . . . . . . . 35
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.1. Public Announcements . . . . . . . . . . . . . . . . . . . . 35
9.2. Transfer Taxes and Recording Expenses . . . . . . . . . . . . 35
9.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 35
9.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 40
9.6. Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . 40
9.7. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . 40
9.8. Assignability . . . . . . . . . . . . . . . . . . . . . . . . 40
9.9. Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . 41
9.10. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.11. Section Headings; Table of Contents . . . . . . . . . . . . . 41
9.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . 41
9.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 41
9.14. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 41
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of March 4, 1996, among HARLEY-
DAVIDSON, INC., a Wisconsin corporation (the "Company"), HOLIDAY HOLDING
CORP., a Texas corporation ("HHC"), HOLIDAY WORLD, INC., a California
corporation, HOLIDAY WORLD, INC., a Texas corporation, HOLIDAY WORLD,
INC., a Florida corporation, HOLIDAY WORLD, INC., an Oregon corporation,
HOLIDAY WORLD, INC., an Indiana corporation, HOLIDAY WORLD, INC., a
Washington corporation and HOLIDAY WORLD, INC., a New Mexico corporation
(collectively, ("HW", and together with HHC, the "Sellers"), MONACO COACH
CORPORATION, a Delaware corporation ("Monaco") and MCC Acquisition
Corporation, a Delaware corporation (the "Buyer").
W I T N E S S E T H :
WHEREAS, Sellers desire to sell, transfer and assign to Buyer, and
Buyer desires to purchase and assume from Sellers, certain assets and
liabilities of the retail sales operation of the Holiday Rambler
Recreational Vehicle Division of Sellers, all upon and subject to the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
1. Purchase and Sale of Assets; Assumption of Certain Liabilities
1.1. Transfer of Assets. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or
waiver of the conditions set forth in this Agreement, on the Closing Date
(as defined in Section 2.1) and subject to the provisions of Section 1.2,
the Sellers shall sell, convey, assign, transfer and deliver to Buyer and
Buyer shall purchase and acquire from the Sellers, all of the assets,
rights, properties, claims, contracts, business and goodwill of the
Sellers at the Closing Date that are utilized in the retail sale and
servicing of new and used motor homes, conventional travel trailers, fifth
wheel travel trailers and other recreational vehicles and related parts
and accessories (such retail sales operation at the locations set forth in
Schedule 1.1 is hereinafter referred to as the "Holiday World Division"),
of every kind, nature, character and description, tangible and intangible,
real, personal or mixed, wherever located, including, without limitation,
the following:
(a) All of the Sellers' right, title and interest in and to the
Holiday World Division patents, patent registrations, patent
applications, trademarks, trademark registrations, trademark
applications, trade names, copyrights, copyright applications, copyright
registrations, franchises, permits, licenses, processes, formulas,
inventions, trade secrets and royalties, including all rights to sue for
past infringement, together with the goodwill associated therewith;
(b) The owned real property described on Schedule 1.1(b)(i) and
the leased real property set forth on Schedule 1.1(b)(ii), including all
buildings, structures and other improvements situated thereon
(individually, a "Store" and collectively, the "Stores"), and all
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easements, privileges, rights-of-way, riparian and other water rights
and appurtenances pertaining to or accruing to the benefit of such
property, in each case subject to the matters described on Schedule
3.1(f) hereto;
(c) All equipment, furniture, furnishings, fixtures, machinery,
vehicles, tools, spare parts, supplies and other tangible personal
property used in the Holiday World Division's operations, except those
items set forth on Schedule 1.2(b) (collectively, the "Equipment") and
all warranties and guarantees, if any, express or implied, existing for
the benefit of the Sellers in connection with the Equipment to the
extent transferable;
(d) The Holiday World Division's inventory of products on hand at
the Stores or in the process of being shipped to the Stores, together
with the spare parts, supplies and promotional materials that are used
in connection with the operations of the Holiday World Division (the
"Inventory");
(e) All management information systems and software, to the extent
that such systems and software are transferable by the Sellers and
relate to the operations of the Stores, the ownership of the Assets (as
defined below) or the operations of the Holiday World Division, and
customer lists, vendor lists and catalogs, if any, except for the
systems and software items set forth on Schedule 1.1(e) hereto;
(f) All contracts, maintenance and service agreements, purchase
commitments for materials and other services, advertising and
promotional agreements, leases and other agreements related to the
Holiday World Division's business, whether or not entered into in the
ordinary course of the Holiday World Division's business, including but
not limited to, any agreements with suppliers, sales representatives,
distributors, agents, personal property lessors, personal property
lessees, licensors, licensees, consignors and consignees specified
therein, including without limitation, those contracts set forth on
Schedule 3.1(h)(ii) but excluding those contracts listed on Schedule
1.2(f) hereto;
(g) All licenses, permits or franchises issued by any federal,
state or municipal authority relating to the development, use,
maintenance or occupation of the Stores or the operations of the Holiday
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World Division to the extent that such licenses, permits or franchises
are transferable and relate to the operations of the Stores, the
ownership of the real property described on Schedule 1.1(b) hereto or
operations of the Holiday World Division, except for those licenses,
permits or franchises listed on Schedule 1.1(g) hereto;
(h) Accounts receivable of the Sellers (whether or not billed) to
the extent attributable to the operations of the Holiday World Division,
excluding intercompany receivables and receivables of HHC; and
(i) All rights to goods and services and all other economic
benefits arising out of prepayments, payments in advance and deposits by
the Sellers to the extent related to the Stores or the operations of the
Holiday World Division (collectively, the "Prepaid Assets"), including,
but not limited to, prepaid rents, service contracts and the costs of
producing and developing continuing marketing and advertising programs,
but excluding any prepaid taxes and excluding all prepaid assets of HHC.
The assets being sold, conveyed, assigned, transferred and delivered to
Buyer by the Sellers hereunder are sometimes hereinafter referred to as
the "Assets".
1.2. Excluded Assets. It is expressly understood and agreed that
the Assets shall not include the following (together, the "Excluded
Assets"):
(a) any capital stock of the Sellers;
(b) any assets referenced on Schedule 1.2(b) hereto;
(c) Any of the Holiday World Division Assets listed on any
Schedule that are consumed, sold or disposed of in the ordinary course
of business of the Holiday World Division prior to the Closing Date;
(d) Any refunds or credits with respect to any taxes paid or
incurred by Sellers (plus any related interest received from the
relevant taxing authority) and any prepaid taxes of Sellers;
(e) Except as expressly provided on Schedule 1.1(b), all owned
real property used by Sellers, including all buildings, structures and
other improvements situated thereon;
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(f) The Sellers' right, title and interest in and to the contracts
listed on Schedule 1.2(f);
(g) The assets that are subject to the asset purchase agreement,
dated January 21, 1996, governing the purchase of the design,
manufacturing, marketing, wholesale sale and factory servicing
operations of the recreational vehicles division ("R.V. Division") by
Buyer (the "Manufacturing Agreement");
(h) The intercompany receivables of Sellers;
(i) Cash consisting of cash on hand and in bank accounts less
outstanding checks and uncleared ACH transfers plus credit card and
other deposits in transit (excluding deposits received from customers
which have not been forfeited, returned or applied to a sale and license
fees received from customers which have not been returned or paid to the
licensing agency (together, "Customer Advances")), cash equivalents or
similar type investments, certificates of deposit, treasury bills and
other marketable securities of the Holiday World Division business;
(j) All bank accounts of Sellers';
(k) Any equipment, furniture, furnishings, fixtures, machinery,
vehicles, tools and other tangible personal property listed on Schedule
1.2(j) hereto; and
(l) Any equipment for the remediation of Hazardous Substances
located at a Store.
1.3. Instruments of Conveyance and Transfer. On the Closing Date
the Sellers shall (a) deliver or cause to be delivered to Buyer such
deeds, bills of sale, endorsements, consents, assignments, leasehold
documents (including (i) an assignment of the Sellers' entire interest
under the Camarillo, California lease (the "Lease") (pursuant to which
such Seller is occupying the Camarillo, California Store) and (ii) a
consent to such assignment by the landlord under the Lease in a form
reasonably satisfactory to Buyer, (iii) consent of any lenders holding an
interest in any property subject to the Lease together with an agreement
of such lenders not to disturb the tenancy of Buyer in the event of a
default or foreclosure, and (iv) a memorandum of the Lease in a form
reasonably satisfactory to Buyer) and other good and sufficient
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instruments of conveyance and assignment as shall be effective to vest in
Buyer all right, title and interest of the Sellers in and to the Assets,
including warranty deeds (or the equivalent thereof) for the appropriate
jurisdictions with any necessary modifications to such deeds required to
(i) conform with the local laws for recording such deeds and (ii) enable
Buyer to obtain title insurance policies from title companies), and such
affidavits or other documents as are reasonably required by Buyer's title
insurer as a condition to insuring title to the Stores without the survey
exception or other exceptions, (b) transfer to Buyer all the books,
records, files and other data relating to the Assets reasonably necessary
or useful for the continued operation of the Holiday World Division
business by Buyer.
1.4. Further Assurances. From time to time after the Closing
Date, the Sellers will execute and deliver, or cause to be executed and
delivered, such other instruments of conveyance, assignment, transfer and
delivery and will take such other actions as Buyer may reasonably request
in order to more effectively transfer, convey, assign, and deliver to
Buyer any of the Assets, or to enable Buyer to exercise and enjoy all
rights and benefits of the Sellers with respect thereto.
1.5. Assumed Liabilities. On the Closing Date, Buyer shall
deliver to the Sellers an undertaking (the "Assumption Agreement") in the
form attached hereto as Exhibit A whereby Buyer, on and as of the Closing
Date, assumes and agrees to pay, perform and discharge when due, subject
to the provisions of Section 1.6, the liabilities and obligations of the
Sellers relating to the Holiday World Division business or the Assets,
whether arising before or after the Closing Date and whether known or
unknown, fixed or contingent, to the extent the same are unpaid,
undelivered or unperformed on the Closing Date, including but not limited
to: (1) all obligations relating to the Holiday World Division business
under contracts, commitments and agreements (except those obligations
relating to contracts specifically excluded from the transfers
contemplated hereby), including, without limitation, commitments for
advertising, all unfulfilled purchase orders and sales commitments;
(2) all liabilities and obligations for returns of products sold by the
Holiday World Division prior to the Closing Date; (3) all liabilities and
obligations for consumer promotions and other marketing programs
applicable to the operations of the Holiday World Division; (4) all
obligations under the licenses, permits or franchises of the Holiday World
Division except those disclosed on Schedule 1.1(g) hereto; (5) all current
liabilities and accrued liabilities (excluding taxes referenced in 1.6(a))
arising out of the operations of the Holiday World Division, including,
but not limited to, (i) all products liability claims with respect to
products sold by the Sellers, (ii) all liabilities related to the
presence, disposal, escape, seepage, leakage, discharge, emission, release
or threatened release of any substances or materials or (iii) all
liabilities related to or arising from the laws and regulations governing
the sale of motor or recreational vehicles) and (6) all liabilities and
obligations for any taxes and expenses described as obligations of the
Buyer in Section 9.2 hereof. Buyer is not assuming, nor shall be deemed
to have assumed, any liability or obligation of the Sellers or the Company
of any kind or nature whatsoever, except as expressly provided in this
Agreement or the Assumption Agreement. The liabilities and obligations
assumed by Buyer in accordance with this Section 1.5 are sometimes
hereinafter referred to as the "Assumed Liabilities".
1.6. Excluded Liabilities. It is expressly understood and agreed
that Assumed Liabilities shall not include the following:
(a) Liabilities of either of the Sellers for any taxes (other than
accrued property taxes or any taxes which the Buyer is responsible for
pursuant to Section 9.2) arising from the operations of the Holiday
World Division prior to the Closing Date;
(b) Liabilities arising out of or related to the Excluded Assets;
(c) Liabilities to current, former or retired employees of the
Sellers arising out of or relating to their employment with Sellers or
their termination by Sellers; except for (i) liabilities for
Transitioned Employees for accrued vacation, whether vested or unvested,
(only to the extent that such accruals are consistent with Buyer's
accrued vacation policy) and accrued moving expenses and (ii)
liabilities arising out of Sellers' noncompliance with Section 6.7;
(d) All intercompany liabilities (other than the obligations to
Eaglemark Financial Services, Inc. and/or its subsidiaries);
(e) Liabilities of either of the Sellers to third parties for any
funded debt (excluding the mortgage loan on the real property located in
Tacoma, Washington), other than obligations to Eaglemark Financial
Services, Inc. and/or its subsidiaries (if applicable); and
(f) Except as otherwise provided herein, all debts, liabilities
and obligations that do not arise out of the business of the Holiday
World Division or the Assets.
2. Closing; Payment of Purchase Price at Closing and Closing
Adjustment
2.1. Closing Date. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 7.1 hereof, the closing with respect to the
transactions provided for in this Agreement (the "Closing") shall take
place at the offices of Simpson Thacher & Bartlett, at 10 a.m., New York
City time, on the first day of the Sellers' fiscal month immediately
following the satisfaction or waiver of all of the conditions to the
Closing set forth in Section 5 hereof, or at such other time, date and
place as shall be agreed upon by the Sellers and Buyer. The actual time
and date of the Closing are herein called the "Closing Date". All acts
and transactions occurring under this Agreement at the Closing shall be
effective as of 12:01 a.m. on the Closing Date (the "Effective Time").
2.2. Purchase Price and Payment. In consideration for the Assets,
and subject to the terms and conditions of this Agreement, Buyer shall on
the Closing Date (i) assume the Assumed Liabilities as provided in Section
1.5 hereof, (ii) transfer to HHC $1 million by wire transfer in
immediately available funds to an account designated in writing by HHC to
Buyer at least 2 business days prior to the Closing Date and (iii) deliver
to HHC a $12 million promissory note in the form attached hereto as
Exhibit B (the "Note"). The value tendered by Buyer pursuant to this
Section 2.2, as adjusted pursuant to the provisions of Section 2.3 below,
shall be hereinafter referred to as the "Purchase Price". The Purchase
Price and the Assumed Liabilities shall be allocated among the Assets in a
manner to be agreed upon by the Sellers and Buyer consistent with Section
1060 of the Code (as defined below). Buyer and the Sellers agree to act
in accordance with such allocations in all tax returns, tax reports and
tax filings filed on or after the Closing Date, unless otherwise required
by law.
2.3. Post-Closing Adjustment.
(a) Within 45 days following the Closing, Sellers shall, at their
expense, prepare, or cause to be prepared, and deliver to Buyer a
statement (the "Closing Statement") which shall set forth the book value
of the Assets less the Assumed Liabilities (the "Net Book Value") of the
Holiday World Division as of the Effective Time and, except as set forth
on Schedule 2.3 hereto, shall be prepared (i) in accordance with the
generally accepted accounting principles in the United States ("GAAP"), as
in effect on the date of such preparation and (ii) in a manner consistent
with the preparation of the statement setting forth the Net Book Value of
the Holiday World Division as of December 31, 1995 (the "Preliminary
Statement") attached hereto as Schedule 2.3(a).
(b) Buyer and Buyer's accountants shall, within 30 days after the
delivery by Sellers of the Closing Statement, complete their review of the
Net Book Value as derived from the Closing Statement. In the event that
Buyer determines that Net Book Value as derived from the Closing Statement
has not been determined in accordance with GAAP and in a manner consistent
with the preparation of the Preliminary Statement, as modified by the
exceptions set forth in Schedule 2.3, Buyer shall inform Sellers in
writing (the "Buyer's Objection"), setting forth a specific description of
the basis of Buyer's Objection and the adjustments to Net Book Value which
Buyer believes should be made, on or before the last day of such 30-day
period. Sellers shall then have 30 days to review and respond to Buyer's
Objection. If Sellers' and Buyer are unable to resolve all of their
disagreements with respect to the determination of the foregoing items
within 10 days following the completion of Sellers review of Buyer's
Objection, they shall refer their remaining differences to Deloitte &
Touche or another internationally recognized firm of independent public
accountants as to which Sellers and Buyer mutually agree (the "CPA Firm"),
who shall, acting as experts and not as arbitrators, determine on the
basis of the standards set forth in Section 2.3(a), and only with respect
to the remaining differences so submitted, whether and to what extent, if
any, Net Book Value as derived from the Closing Statement, requires
adjustment. Sellers and Buyer shall direct the CPA Firm to use its best
efforts to render its determination within 45 days. The CPA Firm's
determination shall be conclusive and binding upon Buyer and Sellers. The
fees and disbursements of the CPA Firm shall be shared equally by Buyer,
on the one hand, and Sellers, on the other hand. Buyer and Sellers shall
make readily available to the CPA Firm all relevant books and records and
any work papers (including those of the parties' respective accountants)
relating to the Preliminary Statement and the Closing Statement and all
other items reasonably requested by the CPA Firm. The "Adjusted Closing
Statement" shall be (i) the Closing Statement in the event that (x) no
Buyer's Objection is delivered to Sellers during the 30-day period
specified above, or (y) Sellers and Buyer so agree, (ii) the Closing
Statement, adjusted in accordance with the Buyer's Objection in the event
that Sellers do not respond to Buyer's Objection within the 30-day period
following receipt by Sellers of Buyer's Objection, or (iii) the Closing
Statement, as adjusted by either (x) the agreement of Sellers and Buyer or
(y) the CPA Firm.
(c) Buyer shall provide Sellers and their accountants full access
to the accounting records, any other information, including work papers of
their accountants, and to any employees to the extent reasonably necessary
for Sellers to prepare the Closing Statement. Buyer and its accountants
shall have the opportunity to observe the physical count of the Inventory
(which may begin prior to the Closing Date) in connection with the
preparation of the Closing Statement and shall have full access to all
information used by Sellers in preparing the Closing Statement, including
the work papers of its accountants.
(d) In the event the Net Book Value as derived from the Adjusted
Closing Statement is less than $21 million, Sellers and Buyer shall lower
the principal amount payable under the Note by an amount equal to the
product of (i) the difference between (x) $21 million and (y) Net Book
Value as derived from the Adjusted Closing Statement and (ii) 61.905%.
2.4. Post-Closing Cash Settlement. As promptly as practicable
after the Closing but in no event later than ten (10) business days after
the Closing Date, Buyer and Sellers shall prepare a statement comparing as
of immediately prior to the Closing Date (i) the amount of cash, petty
cash, cash in the Store registers and other Holiday World Division cash
not remaining in Sellers' possession upon Closing (collectively, the "Cash
on Hand") to (ii) the aggregate amount of the Customer Advances. If the
amount of the Cash on Hand exceeds the amount of the Customer Advances,
Buyer shall promptly pay the difference to Sellers and if the amount of
the Cash on Hand is less than the amount of the Customer Advances, Sellers
shall promptly pay the difference to Buyer. Any payments required
pursuant to this Section 2.4 shall be made by wire transfer of immediately
available funds to an account designated by the party receiving the funds.
3. Representations and Warranties
3.1. Representations and Warranties of Sellers. The Company and
the Sellers represent and warrant to Buyer as follows:
(a) Due Organization and Power. Each of the Company and the
Sellers is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and has the requisite
corporate power and authority to own, lease and operate its property to
be sold hereunder and to conduct the Holiday World Division business as
now conducted by it. The Company and each of the Sellers has all
requisite power and authority to enter into this Agreement and any other
agreement contemplated hereby and to perform their obligations hereunder
and thereunder, including the power and authority to convey good and
marketable title to Buyer with respect to the Assets owned by it. Each
of the Sellers is duly authorized, qualified or licensed to do business
as a foreign corporation, and is in good standing, in each of the
jurisdictions in which its right, title or interest in or to any of the
Assets held by it, or the conduct of the Holiday World Division business
by it, requires such authorization, qualification or licensing, except
where the failure to so qualify or to be in good standing would not,
individually or in the aggregate, have a material adverse effect on the
Assets, results of operations, business or financial condition of the
Holiday World Division (a "Material Adverse Effect").
(b) Authorization and Validity of Agreement. The execution,
delivery and performance by the Company and each Seller of this
Agreement and any other agreements contemplated hereby and the
consummation by each of them of the transactions contemplated hereby and
thereby have been duly authorized by the board of directors or other
applicable governing body of the Company and each Seller. No other
corporate, stockholder or similar action is necessary for the
authorization, execution, delivery and performance by the Company and
the Sellers of this Agreement and any other agreements contemplated
hereby and the consummation by the Sellers of the transactions
contemplated hereby or thereby. This Agreement and the other agreements
contemplated hereby have been, or will be at or prior to Closing, duly
executed and delivered by the Company and the Sellers, each constitute,
or will when so executed and delivered constitute, a valid and legally
binding obligation of the Company and the Sellers, enforceable against
each of them in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors
rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(c) Related Parties. Except as set forth on Schedule 3.1(c)
hereto, neither the Company nor the Sellers, directly or indirectly,
own, of record or beneficially, any outstanding equity interests or
control in any corporation, partnership, joint venture or other entity
(other than Sellers) which owns or leases any assets of the Holiday
World Division.
(d) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which the Sellers are a Party. Except as described
in Schedule 3.1(d) hereto, the execution, delivery and performance of
this Agreement and any other agreements contemplated hereby by the
Company and each Seller and the consummation by each of them of the
transactions contemplated hereby and thereby (i) will not violate (with
or without the giving of notice or the lapse of time or both), or
require any authorization, consent, approval, filing or notice under,
any provision of any law, rule or regulation, court order, judgment or
decree applicable to the Company and each Seller, except for such
violations the occurrence of which, and such consents, approvals,
filings or notices the failure of which to obtain or make, would not,
individually or in the aggregate, have a Material Adverse Effect and the
failure of which to obtain would not have a material adverse effect on
the Company or a Seller's ability to perform its obligations hereunder
and except for such consents, approvals, filings or notice requirements
which become applicable solely as a result of the specific regulatory
status of the Buyer or any of its affiliates, and (ii) will not conflict
with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of any Seller under, or result in the
creation of the right to accelerate, terminate, modify or cancel, or
result in the creation of a lien, charge or encumbrance upon a portion
of the properties, assets or business of the Holiday World Division
pursuant to, or require any notice under, the charter or by-laws of such
Seller, or any indenture, mortgage, deed of trust, lease, licensing
agreement, contract, instrument or other agreement to which such Seller
is a party or by which such Seller or any of the Assets held by such
Seller is bound, except for such conflicts, breaches, terminations,
defaults, accelerations or liens which would not, individually or in the
aggregate, have a Material Adverse Effect and the failure of which to
obtain would not have a material adverse effect on such Seller's ability
to perform its obligations hereunder. The parties hereto agree that no
event, occurrence or circumstance that would constitute a breach of a
representation or warranty contained in Section 3.2(c) will be a basis
for a breach of a representation or warranty contained in Section
3.1(d).
(e) Financial Statements. Schedule 3.1(e) hereto contains a
combined balance sheet as of December 31, 1995 and combined statement of
operations for the 12-month period then ended of the Holiday World
Division (collectively, the "Unaudited Financial Statements"). The
Unaudited Financial Statements were prepared in accordance with GAAP, as
in effect on the date of such financial statements and applied on a
consistent basis during the periods involved (except as may be indicated
in the comments to such Unaudited Financial Statements and Exhibit 2.3),
and such financial statements and comments fairly present, in all
material respects, the financial position and results of operations of
the Holiday World Division, as of their respective dates and for the
respective periods covered thereby. The audited combined financial
statements of the Holiday World Division and the R.V. Division delivered
to Buyer at Closing comply with the disclosure requirements of
Regulation S-X promulgated under the Securities Act, and have been
prepared on the same basis as the Unaudited Financial Statements and in
accordance with GAAP, as in effect on the date of such financial
statements and applied on a consistent basis during the periods involved
(except as may be indicated in the notes to such S-X Financial
Statements), and such financial statements fairly present, in all
material respects, the combined financial position and results of
operations of the Holiday World Division and the R.V. Division as of
their respective dates and for the respective periods covered thereby.
(f) Title to Properties and Absence of Liens and Encumbrances.
Except as set forth on Schedule 3.1(f) attached hereto, the Company and
the Sellers own all of the Assets (real, personal and mixed, tangible
and intangible) free and clear of all claims, liens, security interests,
charges, mortgages, pledges, easements, leases, encumbrances, licenses
or sublicenses, conditional sales or other title retention agreements or
other restrictions of any kind and nature (an "Encumbrance") other than
Permitted Encumbrances (as defined below), and the Sellers have good and
marketable title to all such Assets, free and clear of all Encumbrances
other than Permitted Encumbrances. Upon the delivery and payment for
the Assets as contemplated herein, Seller will convey to Buyer good and
marketable title to the Assets and all material real and personal
property, tangible and intangible, which is necessary to conduct the
Holiday World Division business as it is presently conducted, free and
clear of all exceptions to title or Encumbrances; except in each case
(1) as specifically set forth in Schedule 3.1(f), (2) liens for current
taxes not yet due and payable or being contested in good faith by
appropriate proceedings and for which adequate reserves have been
provided (if required by GAAP) on the Unaudited Financial Statements and
(3) such imperfections or exceptions to title, if any, as do not, and
could not reasonably be expected to, individually or in the aggregate,
materially diminish the aggregate value of the Assets or materially
interfere with the alienability, financeability, ownership, use,
occupancy or operation of any such property or materially impair or
interfere with the Holiday World Division business as presently
conducted (such exceptions, collectively, the "Permitted Encumbrances").
Notwithstanding the foregoing, (i) prior to Closing Buyer shall have the
right to examine title and object to any of the matters described in the
foregoing definition of "Permitted Encumbrances" and to object to any
inaccuracies in the legal descriptions of the Stores, and (ii) except as
set forth above, "Permitted Encumbrances" shall not in any event include
any mortgage, deed of trust, conditional sale or similar title retention
agreement, any option or right to lease or occupy, any purchase right or
option to purchase, or any monetary liens (including, without
limitation, mechanics', materialmen's or other statutory liens).
(g) No Undisclosed Liabilities. The Holiday World Division has no
liability (whether known or unknown, whether asserted or unasserted,
absolute or contingent, accrued or unaccrued, and whether liquidated or
unliquidated, including, without limitation, any liability for taxes)
that are of a nature required to be set forth on a balance sheet (or in
the notes thereto) in accordance with GAAP, other than liabilities and
obligations (i) reflected, provided for or reserved against in the
Unaudited Financial Statements or Preliminary Statement, as the case may
be, (ii) which have been specifically identified and disclosed herein or
on the schedules attached hereto, (iii) arising in the ordinary course
of business after December 31, 1995, which liabilities, if not
discharged, will be set forth on the Adjusted Closing Statement or (iv)
arising under or contemplated by this Agreement.
(h) List of Properties, Contracts, Permits and Other Data. The
following Schedules set forth certain information with respect to the
Assets on the date hereof:
(i) Schedules 1.1(b)(i) and 1.1(b)(ii) hereto contain a
complete and correct list of the real property utilized by the
Holiday World Division owned of record or beneficially by Sellers,
or leased by Sellers, that Buyer has determined to acquire in
accordance with the terms of this Agreement;
(ii) Schedule 3.1(h)(ii) hereto contains a complete and
correct list of all material contracts, maintenance and service
agreements, licenses of Intellectual Property (as defined below),
purchase commitments for materials and services, advertising,
promotional and marketing-related agreements, floor plan and
similar financing arrangements, leases under which either Seller is
a lessor or lessee and other agreements pertaining to the
operations of the Holiday World Division to which either Seller is
a party, the benefits of which are enjoyed in the operations of the
Holiday World Division or to which any of the Assets is subject,
except purchase orders for the purchase or sale of goods and
materials in the ordinary course of business;
(iii) Schedule 3.1(h)(iii) hereto contains a complete and
correct list of all material licenses, permits, or franchises
issued by governmental authorities relating to the use, maintenance
or occupation of the Store or Stores or the operations of the
Holiday World Division by each Seller (other than sales and use tax
permits, franchise tax registrations and foreign qualifications);
(iv) Schedule 3.1(o) hereto contains a complete and correct
list of all material employment and consulting agreements,
executive compensation plans, bonus plans, deferred compensation
agreements, severance pay arrangements, employee profit-sharing
plans, group life insurance, hospitalization insurance or other
plans or arrangements providing for benefits for Transitioned
Employees of each Seller (as defined in Section 6.1 below).
True and complete copies of all documents relating to the Holiday
World Division business of each Seller (including all amendments
thereto) referred to in Schedules 1.1(b), 3.1(h)(ii), 3.1(h)(iii) and
3.1(o) either have been delivered to Buyer or made available to Buyer or
shall be furnished upon request. Except as specified in the Schedules
hereto, all rights, licenses, leases, registrations, applications,
contracts, commitments and other arrangements relating to the Holiday
World Division business of each Seller referred to in such Schedules are
in full force and effect and are valid and enforceable in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by
proceedings in equity or at law) and except where the failure to be in
full force and effect and valid and enforceable would not individually
or in the aggregate have a Material Adverse Effect. Except as specified
in the Schedules hereto, neither Seller is in breach or default in the
performance of any obligation thereunder and no event has occurred or
has failed to occur whereby any of the other parties thereto have been
or will be released therefrom or will be entitled to refuse to perform
thereunder, except for such breaches, defaults and events which
individually or in the aggregate would not have a Material Adverse
Effect.
(i) Defects. Except as described on Schedule 3.1(i), (i) there
are no defects in the normal operating condition and repair of any Store
or Equipment currently used in connection with the Holiday World
Division business of Sellers, which defects individually or in the
aggregate would materially interfere with the current use thereof in the
normal operation of such Store or its Equipment as presently conducted
and (ii) the Inventory is, in all material respects, good and
merchantable.
(j) Legal Proceedings. Except as described in Schedule 3.1(j)
hereto and proceedings contemplated by Section 4.4 hereof, there is no
litigation, proceeding or governmental investigation relating to the
Holiday World Division to which any Seller is a party pending or, to the
actual knowledge of any Seller, threatened against any Seller relating
to the Assets or the Holiday World Division business of such Seller or
the transactions contemplated by this Agreement which would,
individually or in the aggregate, result in a Material Adverse Effect.
(k) Labor Controversies. There are no labor controversies pending
or, to the actual knowledge of any Seller, threatened, which would,
individually or in the aggregate, have a Material Adverse Effect. No
union or similar organization represents the Holiday World Division
Employees (as defined below) and, to the actual knowledge of Sellers, no
labor organization or group of employees of the Sellers has made a
demand for recognition, has filed a petition seeking a representation
proceeding or given the Sellers notice of an intention to hold an
election of a collective bargaining representative. Sellers have not
suffered any strike, slowdown, picketing or work stoppage by any group
of employees affecting the business of the Holiday World Division during
the past three years.
(l) Patents, Trademarks and Similar Rights. Except as described
on Schedule 3.1(l) hereto, each Seller owns, or is licensed to use, all
material patents, trade names, trademarks, copyrights, technology, trade
secrets, know-how, and processes ("Intellectual Property") used in the
business of Holiday World Division as presently conducted. To the
actual knowledge of the Sellers, no third party has interfered with,
infringed upon, misappropriated, or violated any material Intellectual
Property rights of the Company or the Sellers with respect to the
Holiday World Division in any material respect. Neither the Company nor
any Seller, in connection with the operations and business of the
Holiday World Division, has received within the past three years any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation, nor to the
knowledge of any Seller, has the Holiday World Division interfered with,
infringed upon, misappropriated, or violated any material Intellectual
Property rights of third parties in any material respect.
(m) Government Licenses, Permits and Related Approvals. Except as
described on Schedule 3.1(m) hereto, each Store has all licenses,
permits, consents, approvals, authorizations, qualifications and orders
of governmental authorities required for the conduct of the business of
Holiday World Division as presently conducted by it, except where the
failure to have such licenses, permits, consents, approvals,
authorizations, qualifications and orders would not, individually or in
the aggregate, have a Material Adverse Effect. Immediately prior to the
Closing all permits required for the conduct of the business of the
Holiday World Division as presently conducted shall be in full force and
effect.
(n) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Except as described on Schedule 3.1(n)
hereto, each Seller has conducted the business of the Holiday World
Division so as to comply in all material respects with all applicable
laws, ordinances, regulations, rights of concession, licenses, know-how
or other proprietary rights of others, the failure to comply with which
would, individually or in the aggregate, have a Material Adverse Effect.
(o) Employee Benefit Plans.
(i) Schedule 3.1(o) hereto identifies:
(1) Each "employee benefit plan" as such term is
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), that is covered by
ERISA and that is maintained or otherwise contributed to by
the Sellers or by any ERISA Affiliate (as defined below) of
either of the Sellers for the benefit of the employees
("Holiday World Division Employees") of the Holiday World
Division business of the Sellers (a "Plan" and, collectively,
the "Plans"), copies or descriptions of which have been
delivered or made available to Buyer (together with the most
recent determination letter issued by the Internal Revenue
Service (in the case of "Pension Benefit Plans" as defined in
Section 3(2) of ERISA) and the most recent Annual Report on
Form 5500 required to be filed by the Sellers in connection
with any Plan). For purposes of this Agreement, the term
"ERISA Affiliate" shall refer to all members of the group
consisting of all corporations and all trades or businesses
(whether or not incorporated) under common control with the
Sellers, or either of them.
(2) Each material plan or arrangement not subject to
ERISA maintained, or otherwise contributed to by the Sellers
or by any ERISA Affiliate of either of the Sellers for the
benefit of Holiday World Division Employees of the Sellers and
providing for deferred compensation, bonuses, stock options,
employee insurance coverage or any similar compensation or
welfare benefit plan (a "Benefit Arrangement"; such Benefit
Arrangements, together with the Plans are referred to herein
collectively as the "Employee Benefit Programs"), copies or
descriptions of which have been delivered or made available to
Buyer or shall be furnished upon request.
(ii) Each Employee Benefit Program has been maintained and
administered at all time substantially in compliance with its terms
and all applicable laws, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended
(the "Code"), applicable to such Employee Benefit Programs;
(iii) No "reportable event" (as such term is used in Section
4043 of ERISA), "prohibited transaction" (as such term is used in
Section 406 of ERISA or Section 4975 of the Code) or "accumulated
funding deficiency" (as such term is used in Section 412 of ERISA
or Section 4971 of the Code) has heretofore occurred with respect
to any Plan which would have a material adverse effect on the
results of operations or business of the Holiday World Division
taken as a whole or the ability of each Seller to perform its
obligations hereunder;
(iv) No material litigation or administrative or other
proceedings involving the Employee Benefit Programs of Sellers have
occurred or, to the actual knowledge of Sellers, are threatened;
(v) No Employee Benefit Plan of either Seller or any
affiliate of either Seller is subject to Title IV of ERISA or
Section 412 of the Code, and no such Employee Benefit Plan has been
terminated within the last six years; and
(vi) Except as set forth in Schedule 3.1(o) hereto, there are
no other employment agreements, contracts or understandings with
Holiday World Division Employees of either Seller.
(p) Environmental Matters. Except as set forth on Schedule 3.1(p)
attached hereto and the matters covered by the Environmental Matters
Agreement between the parties and attached hereto as Exhibit C:
(i) all of the Sellers' operations in, on, or at the Stores
(A) comply with all applicable federal, state, or local statutes,
regulations, ordinances, codes, or decrees regarding the
environment, health and safety (including, without limitation,
those protecting the quality (1) of the ambient air, soil, surface
water or groundwater, (2) or endangered plant or animal species or
(3) otherwise regulating the use, storage, transportation,
manufacture, processing, disposal, treatment, sale, or discharge of
any "Hazardous Substances" (as defined below)) in effect as of or,
to the extent applicable, at any time prior to, the date of this
Agreement (collectively, the "Environmental Laws"), and all
permits, licenses, registrations, and other authorizations required
under applicable Environmental Laws to operate the Stores as they
are currently operated, and (B) have so complied; except, in either
case, insofar as any failure to comply would not be expected to
have a Material Adverse Effect;
(ii) No petroleum products, asbestos, radioactive material,
or hazardous, acutely hazardous, or toxic substance or waste
defined and regulated as such under Environmental Laws, including
without limitation the federal Comprehensive Environmental
Response, Compensation and Liability Act and the federal Resource
Conservation and Recovery Act ("Hazardous Substances"), have been
produced, sold, used, stored, transported, handled, released,
discharged or disposed of at or from the Stores by any person in a
manner that (A) violated any applicable Environmental Law or (B)
caused Hazardous Substances to be left in the soil, groundwater,
surface water, ambient air or building materials of the Stores;
except in either case, in a manner that would not be expected to
have a Material Adverse Effect;
(iii) Sellers have not received written notice from any
governmental authority or any other person purporting to have the
authority to enforce any applicable Environmental Law, that the
Stores are in violation or allegedly in violation of, do not comply
or allegedly do not comply with, or are the basis for liability or
alleged liability under, any applicable Environmental Law, which
violation, noncompliance or liability has not been substantially
corrected. Neither Seller has any actual knowledge of any other
action, proceeding or claim pending or threatened (A) concerning
any Store under any Environmental Law or (B) to redress the
presence or alleged presence of any Hazardous Substances at or
emanating from any Store; except, in either case, for such actions,
proceedings, or claims that would not be expected to have a
Material Adverse Effect;
(iv) As of the Closing, other than Hazardous Substances
reasonably necessary for the conduct of the business of the Holiday
World Division which are properly stored in accordance with
applicable Environmental Laws, no Hazardous Substances are present
at any Store or in the soil, groundwater, surface water, ambient
air or building materials thereof, except as would not be expected
to have a Material Adverse Effect. Except as set forth in Schedule
3.1(p), there are no underground storage tanks present at any
Store.
(v) Prior to the Closing, no Hazardous Substances were
transported, transferred, recycled, stored, used, treated,
manufactured, released, sold, distributed or exposed to any person,
either by or on behalf of the Sellers or the Holiday World
Division, in violation of any applicable Environmental Law and, to
the actual knowledge of Sellers, no such activity has resulted in
the exposure of any person to a Hazardous Substance in a manner
which has caused cancer or other serious illness in, or the death
of, said person.
(vi) Sellers have delivered or made available to Buyer copies
of all environmental assessments of the Stores in the possession of
the Sellers a list of which is set forth on Schedule 3.1(p).
Sellers have complied or before Closing will comply in all material
respects with all disclosure obligations, if any, imposed upon
Sellers by Environmental Laws that are triggered by this purchase
and sale.
(q) Certain Fees. None of the Sellers, the Company or any of
their respective officers, directors or employees, on behalf of the
Sellers or the Company, has employed any broker or finder or incurred
any other liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby, except for
those brokers whose fees will be paid by Sellers.
(r) Non-Foreign Status of Sellers. Neither Seller is a "Foreign
Person" within the meaning of Section 1445 of the Code.
(s) Absence of Certain Changes. Except as set forth in Schedule
3.1(s), since December 31, 1995 (i) there has not been any material
adverse change in the business, assets, financial condition, operations,
or results of operations of the Holiday World Division, (ii) there has
not been any material change in the accounting policies of Sellers from
those applied in the preparation of the Unaudited Financial Statements
and (iii) the Company and the Sellers have conducted the business of the
Holiday World Division only in the ordinary course consistent with past
practice, except for such actions which would not be expected to have a
Material Adverse Effect or for actions contemplated by or otherwise
disclosed pursuant to this Agreement.
(t) Tax Matters. There have been timely filed (taking into
account any extensions granted) in respect of the Holiday World Division
business, all United States federal, state and local tax returns and
reports for all years and periods for which such returns and reports
were due to be filed prior to the Closing Date, except for such failures
to file timely that could not be expected to have a Material Adverse
Effect.
(u) Inter-Company Transactions. Other than arrangements between
any Seller and the R.V. Division or any Seller and Eaglemark Financial
Services, Inc. and/or its subsidiaries, Schedule 3.1(u) hereto contains
an accurate and complete summary of all material arrangements (including
the provision of products or services), relationships and transactions
between the Company (including any affiliate) and any of the Sellers,
that impact the financial information presented in the financial
statements referenced in Section 3.1(e) (including Schedule 3.1(e)).
Except as set forth on Schedules 3.1(e) or Schedule 3.1(u), the Company
and Sellers have no actual knowledge of any favorable pricing, purchase
or lease arrangements which will not continue to be available to Buyer
after the Closing on substantially equivalent terms.
(v) Inventory. All Inventory reflected on the Preliminary
Statement or acquired since December 31, 1995 was acquired and has been
maintained in the ordinary course of the business of the Holiday World
Division; consists substantially of a quality, quantity and condition
usable or saleable in the ordinary course of the business of the Holiday
World Division; is valued using a standard cost system which
approximates the lower of cost (on a "last in, first out" accounting
basis) or market and otherwise in accordance with GAAP; and to the
actual knowledge of the Sellers is not subject to any material
write-down or write-off for which appropriate reserves have not been
included in the Preliminary Statement. Except for five units sold at
manufacturer's standard cost to related parties, since December 31,
1995, no Inventory has been sold or disposed of except in the ordinary
course of the business of the Holiday World Division.
(w) Accounts Receivable. The accounts receivable of the Sellers
arising from the conduct of the business of the Holiday World Division
as reflected on the Preliminary Statement or arising since December 31,
1995, have arisen out of the bona fide sales and deliveries to customers
of the Holiday World Division or performance of services and other
business transactions in the ordinary course of the business of the
Holiday World Division, and are not subject to valid defenses, set-offs
or counter-claims. The allowance for collection losses on the
Preliminary Statement has been determined in all material respects in
accordance GAAP.
(x) Product Liability Claims. Schedule 3.1(x) hereto sets forth a
summary of each Product Liability Claim (as defined below) in excess of
$250,000 paid by the Sellers during the past five years, and each
outstanding Product Liability Claim in excess of $250,000. For purposes
of this Section 3.1(x), the term "Product Liability Claim" shall mean
any claim arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any vehicle or product
sold, leased, or delivered by the Holiday World Division.
(y) Certain Real Property Matters.
(i) Except as set forth on Schedule 3.1(y)(i), there is no
pending, or to the actual knowledge of Sellers, threatened,
condemnation or similar proceeding affecting any Store or any
portion thereof. There are no pending or, to Sellers' knowledge
threatened, special assessments or improvements or activities of
any governmental or quasi-governmental authority either planned, in
the process of construction, or completed which may give rise to
any special assessment against any Store or any portion thereof.
(ii) Neither Seller has received any written notice from any
insurance company of any defects or inadequacies in any Store or
any part thereof which could materially and adversely affect the
insurability of such Store or the premiums for the insurance
thereof. No written notice has been given by any insurance company
which has issued a policy with respect to any portion of any Store
or by any board of fire underwriters (or other body exercising
similar functions) requesting the performance of any repairs,
alterations or other work with which compliance has not been made.
(iii) There are no parties in possession of any portion of
any Store, whether as tenants, tenants at sufferance, trespassers
or otherwise, except Sellers.
(iv) To the actual knowledge of the Sellers, there is no law,
ordinance, order, regulation or requirement now in existence or
under active consideration by any governmental authority which
could require the owner of the Stores to make aggregate
expenditures in excess of $200,000, in the aggregate, to modify or
improve the Stores to bring them into compliance therewith and
there is no pending judicial or administrative action with respect
to the Stores.
(v) Except as set forth on Schedule 3.1(y)(v), there are
currently in existence no service, operating or management
agreements or arrangements requiring annual payments in excess of
$100,000 with respect to the Stores.
(vi) There are presently in existence water, sewer, gas and
electrical lines and surface drainage systems serving each Store
which have been licensed, permitted, completed, installed and paid
for and which are sufficient as licensed and permitted to service
the operations of each such Store when fully occupied and
operational. All utility lines serving each Store are located in
the right-of-way of public roadways to the boundary of the land on
which Store is situated.
(vii) Each Store has adequate access to and from completed,
dedicated and accepted public roads and there is no pending, or to
the actual knowledge of Sellers threatened, governmental proceeding
which could impair or curtail such access.
(viii) All improvements existent on the land on which the
Stores are located (including all drives and parking areas) are
private and have not been dedicated to any public authority and
each Store is segregated on the applicable tax rolls so that no
other property is included on any tax bill related to such Store.
(ix) Holiday World, Inc. (California) ("HW California") is
the sole owner and holder of the entire interest of the "Lessee"
under that certain Standard Industrial/Commercial Single Tenant
Lease--Net (the "Lease") dated July 1, 1993, between HAL Sales
Corporation, as lessor, and HW California, as lessee, regarding the
premises commonly known as 311 Daily Drive, Camarillo, Ventura
County, California, free and clear of any liens, restrictions,
encumbrances, options and rights of others. The Lease constitutes
the entire agreement between the "Lessor" and "Lessee" and there
are no other representations, covenants, conditions or agreements
between such Lessor and Lessee, except as expressly set forth in
the Lease, regarding the premises leased thereunder, any other
property of the lessor or the Lessee or any other matter
whatsoever. The Lease has not been modified or amended in any
respect, nor has HW California waived any right, remedy, term or
condition under the Lease, nor has HW California assigned any
interest in the Lease or subleased any interest in the premises
leased thereunder. The Lease is in full force and effect and
neither the Lessor nor the Lessee is in default thereunder, nor
does any condition or circumstance exist which, with the giving of
notice or the passage of time or both, could constitute such a
default. HW California has delivered to Buyer all documents in
Sellers' possession with respect to the Lease and/or the premises
leased thereunder.
(z) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 3.1, neither
Seller nor any other person or entity makes any other express or implied
representation or warranty to Buyer.
3.2. Representations and Warranties of Monaco and Buyer. Monaco
and Buyer jointly and severally represent and warrant to the Sellers as
follows:
(a) Due Organization and Power. Each of Monaco and Buyer is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation. Each of Monaco and Buyer has all
requisite power and authority to enter into this Agreement and any other
agreement contemplated hereby and to perform its obligations hereunder
and thereunder. Each of Monaco and Buyer is duly authorized, qualified
or licensed to do business as a foreign corporation, and is in good
standing, in each of the jurisdictions in which its right, title or
interest in or to any asset, or the conduct of its business, requires
such authorization, qualification or licensing, except where the failure
to so qualify or to be in good standing would not have a material
adverse effect on the ability of Monaco or Buyer to perform its
respective obligations hereunder or under any other agreement
contemplated hereby.
(b) Authorization and Validity of Monaco and Agreement. The
execution, delivery and performance by Monaco and Buyer of this
Agreement and any other agreements contemplated hereby and the
consummation by Monaco and Buyer of the transactions contemplated hereby
and thereby have been duly authorized by their respective Boards of
Directors. No other corporate or stockholder action is necessary for
the authorization, execution, delivery and performance by Monaco or
Buyer of this Agreement and any other agreement contemplated hereby and
the consummation by Monaco or Buyer of the transactions contemplated
hereby or thereby. This Agreement has been duly executed and delivered
by Monaco and Buyer and constitutes a valid and legally binding
obligation of Monaco and Buyer, enforceable against each of them in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) No Governmental Approvals or Notices Required; No Conflict
with Instruments to which Buyer is a Party. Except as described in
Schedule 3.2(c), the execution, delivery and performance of this
Agreement and any other agreements contemplated hereby by Monaco and
Buyer and the consummation by each of them of the transactions
contemplated hereby and thereby (i) will not violate (with or without
the giving of notice or the lapse of time or both), or require any
consent, approval, filing or notice under, any provision of any law,
rule or regulation, court order, judgment or decree applicable to Monaco
or Buyer, except for such violations the occurrence of which, and such
consents, approvals, filings or notices the failure of which to obtain
or make, would not have a material adverse effect on Monaco's or Buyer's
ability to perform its obligations hereunder, and (ii) will not conflict
with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of Monaco or Buyer, under, the charter or
by-laws of Monaco or Buyer or any indenture, mortgage, deed of trust,
lease, licensing agreement, contract, instrument or other agreement to
which Monaco or Buyer is a party or by which Monaco or Buyer or any of
their respective assets or properties is bound, except for such
conflicts, breaches, terminations, defaults, accelerations or liens
which would not have a material adverse effect on Monaco's or Buyer's
ability to perform its obligations hereunder.
(d) Certain Fees. Neither Monaco, the Buyer nor any of their
officers, directors or employees, on behalf of Buyer, has employed any
broker or finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby, except for those brokers whose fees will be paid by
Monaco or Buyer.
(e) Financial Statements. Monaco has filed all required reports,
schedules, forms, statements and other documents with the Securities and
Exchange Commission (the "SEC") since January 1, 1994 (the "SEC
Documents"). As of their respective dates,the SEC Documents, including,
without limitation, the financial statements included in such SEC
Documents (i) complied in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended, as applicable, and the
rules and regulations of the SEC promulgated thereunder applicable to
such SEC Documents, (ii) in the case of the financial statements
included in such SEC Documents, were prepared in all material respects
in accordance with GAAP, as in effect on the date of such financial
statements and applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto), (iii) fairly present,
in all material respects, the financial position and results of
operations of Monaco, as of their respective dates and for the
respective periods covered thereby and (iv) none of the SEC Documents as
of such dates contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(f) Absence of Certain Changes or Events. Since September 30,
1995, except as described on Schedule 3.2(h) hereto or in the SEC
Documents filed prior to the date of this Agreement, there has not been
any change, occurrence or development that has had, or is reasonably
likely to have, a material adverse effect on the results of operations,
business or financial condition of Monaco and its subsidiaries taken as
a whole.
(g) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 3.2, neither
Monaco, the Buyer nor any other person or entity makes any other express
or implied representation or warranty to the Sellers.
3.3. Expiration of Representations and Warranties. Except for
those representations and warranties set forth in Schedule 3.3 attached
hereto which shall expire and terminate as set forth on such schedule, the
respective representations and warranties of the Company, Sellers, Monaco
and Buyer contained herein or in any certificate or other document
delivered prior to or on the Closing Date shall expire and be terminated
and extinguished on April 30, 1997. After expiration and termination of
the respective representation or warranty, the Company, Sellers, Monaco
and Buyer shall have no liability whatsoever with respect to any such
representation or warranty.
4. Transactions Prior to Closing
Intentionally Omitted
5. Conditions Precedent
Intentionally Omitted
6. Employee Relations and Benefits
6.1. Employment. Buyer shall offer employment to all employees of
the Holiday World Division, except for HHC employees. Employees who
accept such employment shall hereinafter be referred to as "Transitioned
Employees".
6.2. Effective Time. All Transitioned Employees shall become
employees of Buyer as of the Effective Time.
6.3. Benefit Plans and Programs. Buyer shall provide Transitioned
Employees with employee benefit plans, programs and policies which are
similar, in all material respects, to those provided to similarly situated
employees of Monaco, and Transitioned Employees shall commence
participation in such plans, programs and policies as of the Effective
Time and shall be granted past service credit for their employment with
Sellers with respect to such plans, programs and policies, including
vacation and severance, (with appropriate offsets so as not to duplicate
benefits); unless the provision of such past service credit would violate
applicable law or the terms of such plans, programs and policies as such
plans exist as of the date hereof.
6.4. Welfare Plans. Monaco shall cause to be waived all
eligibility waiting periods, actively-at-work provisions and pre-existing
condition exclusions for Transitioned Employees and their eligible
dependents under Monaco's welfare benefit plans and shall cause
Transitioned Employees and their dependents to be given credit under
Monaco's welfare benefit plans for deductible and out-of-pocket expenses
that they have satisfied under the Sellers' plans during the calendar year
in which the Closing Date occurs.
6.5. Rollovers. Monaco and Buyer agree to take such actions as
are necessary with respect to Monaco's defined contribution plans to
enable Transitioned Employees to make permitted rollovers of amounts
distributable to such employees from Sellers' savings plans under Section
401(k)(10) of the Internal Revenue Code of 1986, as amended.
6.6. Tax Reporting. Sellers shall prepare and furnish to each
Transitioned Employee a Form W-2 which shall reflect all wages and
compensation paid to Transitioned Employees for that portion of the
calendar year in which the Closing Date occurs during which the
Transitioned Employees were employed by Sellers. Sellers shall furnish to
Buyer the Form W-4 and Form W-5 for each Transitioned Employee. Buyer
shall send to the appropriate Social Security Administration office a duly
completed Form W-3 and accompanying copies of the duly completed Form W-2.
It is the intent of the parties hereunder that the obligations of Buyer
and Sellers under this Section 6.7 shall be carried out in accordance with
Section 5 of the Internal Revenue Service's Revenue Procedure 84-77.
6.7. Warn Act. Buyer and Sellers agree that for purposes of the
Worker Adjustment and Retraining Notification Act (the "WARN Act"), the
Closing Date shall be the "effective date" as such term is used in the
WARN Act. Sellers agree that they shall be responsible for any
notification required under the WARN Act with respect to the Holiday World
Division Employees who are not Transitioned Employees and shall indemnify
the Buyer and hold the Buyer harmless from and against all fines and other
payments which may become due under the WARN Act with respect to such
employees. Buyer agrees that after the Closing it shall be responsible
for any notification required under the WARN Act with respect to the
Transitioned Employees and Monaco and Buyer shall indemnify the Company,
Sellers and their respective affiliates and hold the Company, Sellers and
their respective affiliates harmless from and against all fines and other
payments which may become due under the WARN Act with respect to the
Transitioned Employees.
7. Fee and Expenses
7.1. Fees and Expenses. Except as otherwise stated in this
Agreement, all expenses incurred by the parties hereto shall be borne
solely and entirely by the party which has incurred such expenses.
8. Transactions Subsequent to Closing
8.1. Post-Closing Access to Information and Assistance.(a)For a
period of seven years after the Closing Date, each party hereto shall
provide, and shall cause its appropriate personnel to provide, when
reasonably requested to do so by another party, access to all tax,
financial and accounting records and any other records transferred to
Buyer or retained by the Company and the Sellers, as applicable, in
accordance with this Agreement. Neither party shall, nor shall it permit
its affiliates to, dispose of, alter or destroy any such books, records
and other data without giving 30 days' prior written notice to the other
party and permit the other parties hereto, at their expense, to examine,
duplicate or repossess such records, files, documents and correspondence.
(b) The Company and Sellers agree to cooperate with Buyer in the
preparation for and prosecution of the defense of any claim, action or
cause of action arising out of or relating to any liability relating to
the Holiday World Division business which arose prior to the Closing and
which has been assumed by Buyer, including, without limitation, by making
available evidence within the control of the Company or Sellers and
persons needed as witnesses employed by the Company or Sellers, in each
case as reasonably needed for such defense. Except as provided in Section
9.3, Buyer shall reimburse the Company and/or Sellers for their actual
out-of-pocket costs relating to their cooperation under this paragraph.
8.2. Further Agreements. Each Seller authorizes and empowers
Buyer on and after the Closing Date to receive and open all mail received
by Buyer relating to the business of the Holiday World Division or the
Assets and to deal with the contents of such communications in any proper
manner. The Sellers shall promptly deliver to Buyer any mail or other
communication received by them after the Closing Date pertaining to the
business of the Holiday World Division or the Assets and any cash, checks
or other instruments of payment to which Buyer is entitled. Buyer shall
promptly deliver to the Sellers any mail or other communication received
by it after the Closing Date pertaining to the assets and liabilities
described in Sections 1.2 and 1.6 hereof, and any cash, checks or other
instruments of payment in respect thereof.
8.3. Use of Corporate Name.Buyer shall not use the name Harley-
Davidson, Inc. or any derivative thereof in any manner, including in any
advertising or promotional materials, either prior to or after the Closing
Date. Monaco and Buyer agree that they will not object to HHC's
continued use of the name Holiday World in connection with the operation
of the four stores which are not being transferred to Buyer pursuant to
this Agreement.
8.4. No Competition. (a) During the period commencing on the
Closing Date and ending on the fifth anniversary of the Closing Date, the
Company and Sellers will not, and will cause any person that is or shall
become an affiliate of any of them not to, directly or indirectly conduct
or engage in the retail sale and servicing of new or used motor homes,
conventional travel trailers, fifth wheel travel trailers, other
recreational vehicles or related parts and accessories (the "Restricted
Business"). Notwithstanding the foregoing, none of the Company, Sellers
nor any of its existing or future affiliates shall be in violation of this
Section 8.4 if it continues to operate the assets excluded from sale
hereunder pursuant to Section 1.2 or if it owns less than 5% of the equity
securities of any business that is engaged in the Restricted Business
(except as otherwise contemplated by this Agreement).
(b) During the period commencing on the Closing Date and ending on
the fifth anniversary of the Closing Date, neither the Company nor the
Sellers will solicit (or assist or encourage the solicitation of) any of
the employees of Buyer or its affiliates, without the prior written
consent of Buyer.
(c) Inasmuch as the remedy at law for any breach by the Company or
the Sellers of the covenants contained in this Section 8.4 may be
inadequate, Buyer will be entitled to a temporary restraining order and to
preliminary and final injunctive relief to enforce such covenants, without
the necessity of posting a bond, in addition to any other remedies that
may be available. In the event one or more provisions, or any part
thereof, of the covenants contained in this Section 8.4 shall be held
unenforceable for any reason, or in the event any provision of such
covenants shall be held unenforceable as to any specific locality or any
specific activity, then this Section 8.4 shall be construed and enforced
to the maximum extent permitted by law in a manner consistent with the
intent of the parties as herein expressed.
8.5. Tax Assistance and Cooperation. After the Closing Date,
Buyer shall cooperate and shall cause its appropriate personnel to provide
Sellers with assistance with financial and tax matters relating to
Sellers' preparation of its tax returns and the payment of taxes,
including assistance in the payment of all sales and use taxes, income
taxes, franchise taxes and any other taxes related to Sellers' operation
of the Holiday World Division prior to the Closing Date. Sellers shall
reimburse Buyer for its actual out-of-pocket costs relating to their
cooperation and assistance under this paragraph.
8.6. Floorplan Financing. The Company agrees to provide floorplan
financing for Buyer, in accordance with the terms set forth on Schedule
8.6 hereto, for a period of time expiring one year after the Closing Date.
8.7. Environmental Audits. The Buyer and Sellers agree that the
fees and expenses for all environmental assessments and audits conducted
prior to the Closing Date will be paid by Buyer and shall be addressed to
Buyer; provided, that Sellers shall reimburse Buyer for 1/2 of the
expenses incurred in connection with the "phase II" audit work up to a
maximum of $37,500 and any "phase II" assessment or audit report will be
addressed to both Buyer and Sellers. Notwithstanding the foregoing, any
draft environmental report shall be provided to Sellers in order to
provide Sellers the opportunity to correct any factual errors in such
report prior to its issuance.
9. Miscellaneous
9.1. Public Announcements. Prior to the Closing Date, no news
release or other public announcement pertaining in any way to the
transactions contemplated by this Agreement will be made by either party
without the prior consent of the other party, unless in the opinion of
counsel to such party such release or announcement is required by law.
9.2. Transfer Taxes and Recording Expenses. Buyer shall pay and
shall indemnify each Seller and its affiliates against all sales, motor
vehicle, registration or similar taxes and recording expenses, if any,
required to be paid in connection with the transfer of the Assets
(including any interest charge, penalty or addition to tax with respect
thereto) without regard to whether such taxes or expenses are imposed on
Buyer or Sellers. Sellers agree to pay any gross receipt or income taxes
and to reimburse Buyer for one-half of the cost of any transfer taxes
(other than those set forth above) incurred in connection with the
consummation of this transaction.
9.3. Indemnification. (a) The Company and HHC shall jointly and
severally indemnify and hold Monaco, Buyer and their affiliates harmless
against and in respect of (i) all obligations and liabilities of the
Company and the Sellers, whether accrued, absolute, fixed, contingent or
otherwise, not expressly assumed by Monaco or Buyer pursuant to this
Agreement (including, without limitation, the Excluded Liabilities) or the
Assumption Agreement; provided, however, that neither the Company nor HHC
shall have any liability under this Section 9.3(a)(i) to Monaco or Buyer
to the extent the liability giving rise thereto has also given rise to any
liability included in the post-Closing adjustment provisions of Section
2.3, (ii) any actual Damages (as defined below) incurred or sustained by
Monaco or Buyer or their affiliates as a result of any breach by the
Company or the Sellers of their covenants contained herein which survive
the Closing; (iii) any actual Damages incurred or sustained by Monaco or
Buyer or their affiliates as a result of any breach by the Company or the
Sellers of the representations and warranties set forth in Section 3.1,
provided that (W) the Company and HHC shall be required to indemnify
Monaco, Buyer or their affiliates pursuant to this clause (iii) for any
such breach or breaches only to the extent that the aggregate actual
Damages resulting from such breaches exceeds $500,000, (X) neither the
Company nor HHC shall be required to indemnify Monaco, Buyer or their
affiliates pursuant to this clause (iii) in an aggregate amount in excess
of $2 million for the breaches of any representations or warranties,
(Y) Monaco, Buyer and their affiliates agree to aggregate its claims
pursuant to this clause (iii) so that the aggregate amount of the claims
is $25,000 or greater, and (Z) any claim for indemnification under this
clause (iii) must be made in writing in reasonable detail to the Company
and HHC by Monaco or the Buyer not later than April 30, 1997, or such
longer period with respect to a breach of a specific representation or
warranty that is set forth in Schedule 3.3; provided, further, that for
the purposes of this Section 9.3(a)(iii), the representations and
warranties of the Company and Sellers contained in Section 3.1 of this
Agreement which by their terms contain any qualification or limitation
with respect to a Material Adverse Effect, or are otherwise qualified or
limited with respect to materiality, shall be read without giving effect
to any such qualification or limitation and (iv) liabilities for taxes of
the Sellers, their affiliates, the Holiday World Division or the Assets
arising at any time with respect to periods ending prior to the Closing
Date (excluding property taxes and any taxes described as being the
obligations of Monaco or the Buyer in Section 9.2 of this Agreement). For
purposes of this Section 9.3, "Damages" shall mean any and all claims,
losses, liabilities, damages, deficiencies, costs and expenses (including
without limitation as a result of the defense, settlement or compromise of
any claim), including, without limitation, reasonable attorneys',
accountants' and expert witness fees, costs and expenses of investigation,
and costs and expenses incurred by an indemnified party in connection with
any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Section 9.3 or to enforce
an indemnified party's rights under this Section 9.3.
(b) Monaco and Buyer shall jointly and severally indemnify and
hold the Company, Sellers and their affiliates harmless against and in
respect of (i) all obligations and liabilities of Sellers and their
affiliates expressly assumed by Monaco or Buyer pursuant to this Agreement
or the Assumption Agreement; (ii) any actual Damages incurred or sustained
by the Company, the Sellers or their affiliates as a result of any breach
by Monaco or Buyer of their covenants contained herein which survive the
Closing; (iii) any actual Damages incurred or sustained by the Company,
the Sellers or their affiliates arising from the operations of the Holiday
World Division business on or after the Closing Date; (iv) any actual
Damages incurred or sustained by the Company or the Sellers as a result of
any breach by Monaco or Buyer of their representations and warranties
contained in Section 3.2 hereof; provided that any claim for
indemnification under this clause (iv) must be made in writing in
reasonable detail to Monaco or Buyer by the Company or a Seller not later
than April 30, 1997, or such longer period with respect to a breach of a
specific representation or warranty that is set forth in Schedule 3.3, and
shall be subject to the same limitations as are set forth in clauses (w),
(x) and (y) of Section 9.3(a)(iii); provided, further, that for the
purposes of this Section 9.3(b)(iv), the representations and warranties of
the Buyer contained in Section 3.2 of this Agreement which by their terms
contain any qualification or limitation with respect to a material adverse
effect, or are otherwise qualified or limited with respect to materiality,
shall be read without giving effect to any such qualification or
limitation; and (v) any and all taxes and expenses described as being the
obligations of the Buyer in Section 9.2.
(c) Promptly after receipt by an indemnified party under this
Section 9.3 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 9.3, notify the
indemnifying party in writing of the claim or the commencement of that
action, provided that the failure to notify the indemnifying party shall
not relieve it from any liability which it may have to the indemnified
party unless the indemnifying party is materially prejudiced in its
ability to defend such action. If any such claim shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled at its expense to participate
therein, and to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party, and to settle and compromise any
such claim or action; provided, however, that if the indemnified party has
elected to be represented by separate counsel pursuant to the proviso to
the following sentence or if such settlement or compromise does not
include an unconditional release of the indemnified party for any
liability arising out of such claim or action, such settlement or
compromise shall be effected only with the consent of the indemnified
party, which consent shall not be unreasonably withheld. After notice
from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under this Section 9.3 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, provided, however, that the indemnified party shall have
the right to employ counsel to represent it if, in the opinion of counsel
to the indemnified party, it is advisable for the indemnified party to be
represented by separate counsel due to actual or potential conflicts of
interest, and in that event the fees and expenses of such separate counsel
shall be paid by the indemnifying party; provided, that in no event shall
the indemnifying party be responsible for the fees of more than one
counsel. Buyer and the Company and the Sellers shall each render to each
other such assistance as may reasonably be requested in order to ensure
the proper and adequate defense of any such claim or proceeding.
(d) The indemnities provided in this Agreement shall survive the
Closing. The indemnity provided in this Section 9.3 shall be the sole and
exclusive contractual remedy of the indemnified party against the
indemnifying party at law or equity for any matter covered by paragraphs
(a) and (b).
(e) If the amount with respect to which any claim is made under
any of Sections 6.7, 9.2, 9.3(a) or 9.3(b) of this Agreement (an
"Indemnity Claim") gives rise to a currently realizable Tax Benefit (as
defined below) to the party making the claim, the indemnity payment shall
be reduced by the amount of the Tax Benefit available to the party making
the claim. To the extent such Indemnity Claim does not give rise to a
currently realizable Tax Benefit, if the amount with respect to which any
Indemnity Claim is made gives rise to a subsequently realized Tax Benefit
to the party that made the claim, such party shall refund to the
indemnifying party the amount of such Tax Benefit when, as and if
realized. For the purposes of this Agreement, any subsequently realized
Tax Benefit shall be treated as though it were a reduction in the amount
of the initial Indemnity Claim, and the liabilities of the parties shall
be redetermined as though both occurred at or prior to the time of the
indemnity payment. For purposes of this Section 9.3(e), a "Tax Benefit"
means an amount by which the tax liability of the party (or group of
corporations including the party) is reduced (including, without
limitation, by deduction, reduction of income by virtue of increased tax
basis or otherwise, entitlement to refund, credit or otherwise) plus any
related interest received from the relevant taxing authority. Where a
party has other losses, deductions, credits or items available to it, the
Tax Benefit from any losses, deductions, credits or items relating to the
Indemnity Claim shall be deemed to be realized proportionately with any
other losses, deductions, credits or items. For the purposes of this
Section 9.3(e), a Tax Benefit is "currently realizable" to the extent it
can be reasonably anticipated that such Tax Benefit will be realized in
the current taxable period or year or in any tax return with respect
thereto (including through a carryback to a prior taxable period) or in
any taxable period or year prior to the date of the Indemnity Claim. In
the event that there should be a determination disallowing the Tax
Benefit, the indemnifying party shall be liable to refund to the
indemnified party the amount of any related reduction previously allowed
or payments previously made to the indemnifying party pursuant to this
Section 9.3(e). The amount of the refunded reduction or payment shall be
deemed a payment under Sections 6.7, 9.2, 9.3(a) or 9.3(b) of this
Agreement and thus shall be paid subject to any applicable reductions
under this Section 9.3(e).
(f) The parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for tax purposes as an
adjustment to the Purchase Price, unless otherwise required by applicable
law.
(g) Each party and their affiliates shall be obligated in
connection with any claim for indemnification under this Section 9.3 to
use all commercially reasonable efforts to obtain any insurance proceeds
available to such Indemnitee with regard to the applicable claims. The
amount which the indemnifying party is or may be required to pay to any
indemnified party pursuant to this Section 9.3 shall be reduced
(retroactively, if necessary) by any insurance proceeds or other amounts
actually recovered by or on behalf of such indemnified party in reduction
of the related Damage. If an indemnified party shall have received the
payment required by this Agreement from an indemnifying party in respect
of Damages and shall subsequently receive insurance proceeds or other
amounts in respect of such Damages, then such indemnified party shall
promptly repay to the indemnifying party a sum equal to the amount of such
insurance proceeds or other amounts actually received.
(h) Each indemnified party shall be obligated in connection with
any claim for indemnification under this Section 9.3 to use all
commercially reasonable efforts to mitigate Damages upon and after
becoming aware of any event which could reasonably be expected to give
rise to such Damages.
(i) Notwithstanding anything to the contrary in this Section 9.3,
upon the occurrence of an Event of Default (as defined in the Note) under
the Note, the Company and the Sellers shall not be obligated to make any
further payments to any indemnified party for any claims made pursuant to
Section 9.3(a) unless and until the Event of Default has been cured by
Monaco or the Buyer. All claims received by the Company or the Sellers
prior to the expiration of the indemnification periods set forth in
Section 9.3(a)(iii)(z) shall be held by the Company or the Seller until
the Event of Default has been cured; provided, that if the defense of such
claim has been prejudiced or the damages have increased because of the
Company's or the Sellers' inaction in accordance with this Section 9.3(i),
the Company and Sellers' shall not be responsible for the damages
attributable to such prejudice or such increase in damages.
9.4. Notices. Except as otherwise set forth in this Agreement,
all notices, requests, demands and other communications which are required
or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, if telecopied or
mailed, first class mail, postage prepaid, return receipt requested, as
follows:
(a) If to the Company or Sellers:
Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, Wisconsin 53201
Attention: Timothy K. Hoelter, Esq.
Telecopy: (414) 935-4990
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert E. Spatt, Esq.
Telecopy: (212) 455-2502
(b) If to Buyer:
MCC Acquisition Corporation
91320 Coburg Industrial Way
Coburg, Oregon 97408
Attention: Kay L. Toolson
Telecopy: (503) 998-2158
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Henry P. Massey, Jr., Esq.
Telecopy: (415) 493-6811
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the date of
personal delivery or telecopy or on the third business day after the
mailing thereof.
9.5. Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the parties
hereto and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter
hereof, (except for the Transition Services Agreement and the
Environmental Matters Agreement between the parties).
9.6. Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.7. Bulk Sales Law. Buyer and the Sellers each agree to waive
compliance by the other with the provision of the bulk sales law of any
jurisdiction.
9.8. Assignability. This Agreement shall not be assignable by the
Sellers without the prior written consent of Buyer or by Buyer without the
prior written consent of the Sellers, provided, that Buyer may assign its
rights and delegate its duties hereunder to an affiliate or affiliates, so
long as Monaco and Buyer agree to be jointly and severally liable for all
obligations hereunder; provided, further, that Buyer may assign its rights
hereunder as collateral security to lenders providing acquisition
financing for this transaction and any replacement thereof. Each party
agrees that it will not assign any rights or obligations under this
Agreement to any party unless such party agrees to be bound by the terms
of this Agreement.
9.9. Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed
by the parties hereto. No waiver by either party of any of the provisions
hereof shall be effective unless explicitly set forth in writing and
executed by the party so waiving. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or agreements
contained herein, and in any documents delivered or to be delivered
pursuant to this Agreement and in connection with the Closing hereunder.
The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
9.10. Schedules. Any fact or item disclosed on any Schedule to
this Agreement shall be deemed disclosed on all other Schedules to this
Agreement to which such fact or item may reasonably apply so long as such
disclosure is in sufficient detail to enable a party hereto to identify
the facts or items to which it applies. Any fact or item disclosed on any
Schedule hereto shall not by reason only of such inclusion be deemed to be
material and shall not be employed as a point of reference in determining
any standard of materiality under this Agreement.
9.11. Section Headings; Table of Contents. The Section headings
contained in this Agreement and the Table of Contents to this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.12. Severability. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be
affected and shall remain in full force and effect.
9.13. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
9.14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Indiana without
regard to conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
HARLEY-DAVIDSON, INC.
By:
Title:
HOLIDAY RAMBLER LLC
By:
Title:
HOLIDAY HOLDING CORP.
By:
Title:
HOLIDAY WORLD, INC. (California)
By:
Title:
HOLIDAY WORLD, INC. (Texas)
By:
Title:
HOLIDAY WORLD, INC. (Florida)
By:
Title:
HOLIDAY WORLD, INC. (Oregon)
By:
Title:
HOLIDAY WORLD, INC. (Indiana)
By:
Title:
HOLIDAY WORLD, INC. (Washington)
By:
Title:
HOLIDAY WORLD, INC. (New Mexico)
By:
Title:
MONACO COACH CORPORATION
By:
Title:
MCC ACQUISITION CORPORATION
By:
Title:
SCHEDULES TO ASSET PURCHASE AGREEMENT
Exhibit A
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated as of March 4, 1996 by MCC ACQUISITION
CORPORATION (the "Assignee"), in favor of HARLEY-DAVIDSON, INC., a
Wisconsin corporation (the "Company"), and HOLIDAY HOLDING CORP., a Texas
corporation ("HHC"), HOLIDAY WORLD, INC., a California corporation,
HOLIDAY WORLD, INC., a Texas corporation, HOLIDAY WORLD, INC., a Florida
corporation, HOLIDAY WORLD, INC., an Oregon corporation, HOLIDAY WORLD,
INC., an Indiana corporation, HOLIDAY WORLD, INC., a Washington
corporation and HOLIDAY WORLD, INC., a New Mexico corporation
(collectively, "HW", and together with HHC, the "Assignors").
W I T N E S S E T H :
-xlvi-
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of
January 21, 1996 (the "Purchase Agreement"), among the Company, the
Assignors, and the Assignee, the Assignors have sold, transferred,
assigned, conveyed and delivered to Assignee the properties, assets and
business comprising Assignors' Holiday World Division (the "Holiday World
Division"); and
WHEREAS, the Purchase Agreement requires that Assignee undertake to
assume and to agree to perform, pay or discharge certain liabilities and
obligations of Assignors relating to the business of the Holiday World
Division;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Assignors and Assignee agree as follows:
Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Purchase Agreement.
1. Assignee hereby undertakes, assumes and agrees to perform, pay
or discharge when due, to the extent not heretofore performed, paid or
discharged, and subject to the limitations contained in paragraph 2
hereof: (i) all obligations relating to the Holiday World Division
business under contracts, commitments and agreements (except those
obligations relating to contracts specifically excluded from transfer
under the Purchase Agreement), including, without limitation, commitments
for advertising, all unfulfilled purchase orders and sales commitments;
(ii) all liabilities and obligations for returns of Holiday World Division
products sold prior to the Closing Date; (iii) all liabilities and
obligations for trade promotion programs (including, without limitation,
trade allowance programs), consumer promotions and other marketing
programs applicable to Holiday World Division products; (iv) all
obligations under the licenses, permits or franchises of the Holiday World
Division, except those disclosed on Schedule 1.1(g) to the Purchase
Agreement; (v) all current liabilities and accrued liabilities (excluding
taxes referenced in Section 1.6(a) of the Purchase Agreement) arising out
of the operations of the Holiday World Division, including, but not
limited to, (a) all products liability claims with respect to products
manufactured by the Assignors, (b) all liabilities related to the
presence, disposal, escape, seepage, leakage, discharge, emission, release
or threatened release of any substances or materials, or (c) all
liabilities related to or arising from the laws and regulations governing
the manufacture or sale of motor or recreational vehicles) and (vi) all
liabilities and obligations for any taxes and expenses described as
obligations of the Assignee in Section 9.2 of the Purchase Agreement.
2. It is expressly understood that Assignee is not assuming or
agreeing to perform, pay or discharge:
(a) liabilities of either of the Assignors for any taxes (other
than accrued property taxes or any taxes which the Assignee is responsible
for pursuant to Section 9.2 of the Purchase Agreement) arising from the
operations of the Holiday World Division prior to the Closing Date;
(b) liabilities arising out of or related to the Excluded Assets;
(c) liabilities to current, former or retired employees of the
Assignors arising out of or relating to their employment with the
Assignors or their termination by the Assignors; except for (i)
liabilities for Transitioned Employees for accrued vacation, whether
vested or unvested, (only to the extent that such accruals are consistent
with Assignee's accrued vacation policy) and accrued moving expenses and
(ii) liabilities arising out of Assignors' noncompliance with Section 6.7
of the Purchase Agreement;
(d) intercompany liabilities (other than the obligations to
Eaglemark Financial Services, Inc. and/or its subsidiaries);
(e) liabilities of either of the Sellers to third parties for any
funded debt (excluding the mortgage loan on the real property located in
Tacoma, Washington) other than obligations to Eaglemark Financial
Services, Inc. and/or its subsidiaries (if applicable); and
(f) except as otherwise provided herein, all debts, liabilities
and obligations that do not arise out of the business of the Holiday World
Division or the Assets.
3. Nothing contained herein shall require Assignee to pay, perform
or discharge any liabilities or obligations expressly assumed hereunder so
long as Assignee shall in good faith contest or cause to be contested the
amount or validity thereof, provided that Assignee shall indemnify
Assignors and their affiliates and hold them harmless against any
liabilities, damages, claims and expenses, including the reasonable fees
and expenses of their counsel, which Assignors may incur as a result of
any such contest and Assignors shall have no obligation to participate in
any way on Assignee's behalf or otherwise in or with respect to any such
contest.
4. All notices, requests, demands and other communications which
are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally, if
telecopied or if mailed, first class mail, postage prepaid, return receipt
requested, as follows:
(a) If to Assignors:
c/o Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, Wisconsin 53201
Attention: Timothy K. Hoelter, Esq.
Telecopy: (414) 935-4990
and copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert E. Spatt, Esq.
Telecopy: (212) 455-2502
(b) If to Assignee:
Monaco Coach Corporation
91320 Coburg Industrial Way
Coburg, Oregon 97408
Attention: Kay L. Toolson
Telecopy: (503)998-2158
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Henry P. Massey, Jr.
Telecopy: (415) 493-6811
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the date of hand
delivery or on the third business day after the mailing thereof.
5. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on
any person other than the parties hereto or their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
6. This Agreement shall not be assignable by any Assignor (except
to an affiliate thereof) without the prior written consent of Assignee or
by Assignee without the prior written consent of each of the Assignors.
7. This Agreement may be amended, supplemented or otherwise
modified only by a written instrument executed by the parties hereto. No
waiver by either party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute
a waiver by the party taking such action of compliance with any covenants
or agreements contained herein and in any documents delivered or to be
delivered pursuant to this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
8. If any provision of this Agreement shall be declared by any
court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain
in full force and effect.
9. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together
shall be deemed to be one and the same instrument.
10. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Indiana without regard to
conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
HARLEY-DAVIDSON, INC.
By:
Title:
HOLIDAY RAMBLER LLC
By:
Title:
HOLIDAY HOLDING CORP.
By:
Title:
HOLIDAY WORLD, INC. (California)
By:
Title:
HOLIDAY WORLD, INC. (Texas)
By:
Title:
HOLIDAY WORLD, INC. (Florida)
By:
Title:
HOLIDAY WORLD, INC. (Oregon)
By:
Title:
HOLIDAY WORLD, INC. (Indiana)
By:
Title:
HOLIDAY WORLD, INC. (Washington)
By:
Title:
HOLIDAY WORLD, INC. (New Mexico)
By:
Title:
MONACO COACH CORPORATION
By:
Title:
MCC ACQUISITION CORPORATION
By:
Title: