TABLE OF CONTENTS

 

			Page
1.0.	CLOSING DATE		2
2.0.	SALE AND PURCHASE		2
2.1.	Shares		2
2.2.	Purchase Price		2
2.3.	Closing Deliveries		2
2.4.	Adjustments to Purchase Price; NBV Holdback		4
3.0.	INDIVIDUAL REPRESENTATIONS, COVENANTS AND WARRANTIES OF SELLERS		5
3.1.	Authority		5
3.2.	Stock Ownership		5
3.3.	Membership Interest		5
3.4.	No Accounting Change		5
3.5.	Absence of Claims		6
4.0.	REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE SELLERS AND THE COMPANIES		6
4.1.	Organization and Good Standing		6
4.2.	Authority; No Conflict		9
4.3.	Capitalization; Indebtedness		10
4.4.	Financial Statements		11
4.5.	No Undisclosed Liabilities		12
4.6.	Books and Records		13
4.7.	Assets: Condition and Sufficiency		13
4.8.	Real Estate		14
4.9.	Encumbrances		16
4.10.	Accounts Receivable		16
4.11.	Inventory		17
4.12.	Taxes		17
4.13.	No Material Adverse Change		19
4.14.	Employee Benefit Plans		19
4.15.	Compliance With Laws; Governmental Authorities		22
4.16.	Legal Proceedings; Orders		23
4.17.	Absence of Certain Changes And Events		23

 

 

4.18.	Contracts; No Defaults		26
4.19.	Insurance		28
4.20.	Environmental Matters		29
4.21.	Employees		31
4.22.	Labor Disputes; Compliance		31
4.23.	Intellectual Property		32
4.24.	Product Warranties; Product Liability; Safety and Recalls		33
4.25.	Brokers or Finders		34
4.26.	Banks		34
4.27.	Disclosure		34
4.28.	Anti-Takeover Statute Not Applicable		34
4.29.	Absence of Certain Payments		34
4.30.	Customers		35
5.0.	REPRESENTATIONS, COVENANTS AND WARRANTIES OF PURCHASER		35
5.1.	Authority		35
5.2.	Organization, Standing and Power		35
5.3.	No Conflict		35
5.4.	Investment Intent, Related Matters		36
5.5.	Litigation		36
5.6.	Brokers, Etc		36
5.7.	Financial Ability		36
6.0.	AGREEMENTS CONCERNING EMPLOYMENT AND COMPETITION		36
6.1.	Employment		36
6.2.	Competition		37
7.0.	PRE-CLOSING COVENANTS		38
7.1.	Operation of Business, Related Matters		38
7.2.	Preparation for Closing		38
7.3.	Consents		38
7.4.	HSR Filing		39
7.5.	Access to Companies		39
7.6.	Spreadsheet		39
7.7.	Expenses, Etc		40
7.9.	Public Communications		40
7.10.	Notification of Certain Matters		40
7.11.	Liquidation of the Subsidiary		40

 

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8.0.	ADDITIONAL COVENANTS		41
8.1.	Records: Cooperation		41
8.2.	No Securities Law Violation		41
8.3.	Further Assurances		41
8.4.	Tax Election under 338(h)(10)		41
8.5.	Continued Qualification as an S Corporation		43
8.6.	Tax Cooperation		43
8.7.	Tax Returns		43
8.8.	Payment of Taxes		44
8.9.	FIRPTA Certificate		44
8.10.	Tax Audits Relating to the Companies		44
8.11.	Environmental Remediation		45
9.0.	INDEMNIFICATION		46
9.1.	Indemnification of Purchaser		46
9.2.	Environmental Holdback		47
9.3.	Rules Regarding Indemnification		48
9.4.	Third Party Claims		50
9.5.	Claims Made by Sellers		51
10.0.	CONDITIONS TO THE OBLIGATION TO CLOSE OF PURCHASER		51
10.1.	Continued Accuracy of Representations and Warranties		51
10.2.	Performance of Agreements		51
10.3.	Sellers Closing Certificate		51
10.4.	No Material Adverse Change		51
10.5.	Legality; Governmental Authorization; Litigation		51
10.6.	Opinion of Counsel		52
10.7.	General		52
10.8.	Consents		52
10.9.	Employment Arrangements		52
10.10.	Release of Liens		52
10.11.	Spreadsheet		52
10.12.	Statement of Expenses		53
10.14.	Title Insurance		53
10.15.	Liquidation of the Subsidiary		53
11.0.	CONDITIONS TO THE OBLIGATION TO CLOSE OF THE SELLERS AND THE COMPANIES		53
11.1.	Continued Accuracy of Representations and Warranties		53

 

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11.2.	Performance of Agreements		53
11.3.	Purchaser’s Closing Certificate		53
11.4.	Legality; Governmental Authorization; Litigation		53
11.5.	General		53
12.0.	CLOSING DELIVERIES: SELLERS AND THE COMPANIES		54
12.1.	Share and Unit Certificates and Stock and Unit Powers		54
12.2.	Resignations		54
12.3.	Legal Opinion		54
12.4.	Records and Title Closing Documents		54
12.5.	Consents		54
12.6.	Other Documents		54
13.0.	CLOSING DELIVERIES: PURCHASER		54
14.0.	TERMINATION		55
14.1.	Termination		55
14.2.	Effect of Termination		55
14.3.	Casualty or Condemnation		55
15.0.	SELLERS’ REPRESENTATIVE		56
16.0.	MISCELLANEOUS		56
16.1.	Parties in Interest: Assignment		56
16.2.	Confidentiality		56
16.3.	Entire Agreement; Amendments		57
16.4.	Headings		57
16.5.	Notices		57
16.6.	Waiver		58
16.7.	Governing Law; Forum; No Jury		59
16.8.	Survival of Representations and Warranties		59
16.9.	Parent Guarantee		59

 

List of Schedules*

 

Schedule		Item
2.3		Bison Payment
3.4		Accounting Changes
3.5		Absence of Sellers’ Claims Against Companies
4.1		Organization and Good Standing
4.2		Conflict
4.3		Capitalization, Indebtedness
4.4		Financial Statements
4.5		Undisclosed Liabilities
4.7		Assets
4.8		Real Estate
4.9		Encumbrances
4.10		Liens on Accounts Receivable
4.11		Inventory Policy
4.12		Taxes
4.14		Employee Benefit Plans
4.14(j)		Benefits Affected by Transaction
4.15		Compliance with Laws
4.16		Legal Proceedings/Orders
4.17		Absence of Changes
4.17(a)(ii)		Tax Distribution Calculation
4.18		Contracts
4.19		Insurance
4.20		Environmental
4.21		Employees
4.22		Labor Disputes
4.23		Intellectual Property
4.24		Product Claims
4.26		Bank Accounts
4.30		Customers
5.3		Purchaser’s Required Notices or Consents
6.1		Employees; Terminated Employee Agreements
6.2(a)		Exceptions to Competitive Restrictions for Certain Sellers
7.1		Actions Not Requiring Purchaser’s Consent
7.2		Liens to be Released
10.8		Consents
10.10		Released Liens

 

* Omitted pursuant to Item 601 of Regulation S-K.  Monaco Coach Corporation agrees to supplementally furnish a copy of any omitted schedule to the Securities and Exchange Commission upon request.

 

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STOCK AND UNIT PURCHASE AGREEMENT

 

This Stock and Unit Purchase Agreement is entered into as of November 9, 2005 (“Agreement”), by and among William L. Warrick, Arlen J. Paul, Dennis Bailey, William Devos, Ruth A. Hollingsworth, Shannon E. Warrick, Bradford J. Warrick, William Lewis Warrick, Jodie D. Warrick, Helen L. Krizman, Warrick LP, William L. Warrick as Trustee of the William Warrick 1998 Irrevocable Trust for the Benefit of Shannon Elizabeth Warrick, William L. Warrick as Trustee of the William Warrick 1998 Irrevocable Trust for the Benefit of William Lewis Warrick, William L. Warrick as Trustee of the William Warrick 1998 Irrevocable Trust for the Benefit of Bradford James Warrick, and William L. Warrick as Trustee of the William Warrick 1998 Irrevocable Trust for the Benefit of Jodie Dawn Warrick, (sometimes referred to singly as “Seller” and collectively as “Sellers” and the last four named Sellers are sometimes referred to as the “Trusts”), Monaco Coach Corporation, a Delaware corporation (“Parent”), R-Vision Holdings LLC, a Delaware limited liability company and wholly-owned subsidiary of Parent (“Purchaser”), R-Vision, Inc. (“R-Vision”), A.J.P. R.V., Inc. (“AJP”), R-Vision Motorized LLC (“R-Vision Motorized”), Roadmaster LLC (“Roadmaster”) and Bison Manufacturing, LLC (“Bison”) (R-Vision, AJP, R-Vision Motorized, Roadmaster, Bison and the Subsidiary (as defined below) are collectively called the “Companies”) and William L. Warrick as representative of the Sellers.  Sellers have designated and authorized William L. Warrick to be their representative (“Sellers’ Representative”) regarding all matters relating to this Agreement, pursuant to Article 15.0.

 

RECITALS

 

Purchaser desires to buy, and Sellers desire to sell and transfer, all the issued and outstanding shares of the capital stock of R-Vision, all the issued and outstanding shares of the capital stock of AJP, all of the membership interests in R-Vision Motorized, all the membership interests in Roadmaster and all the membership interests in Bison.  R-Vision, R-Vision Motorized, Roadmaster and Bison are engaged in the business of the manufacture and sale of towable recreational vehicles, motorized recreational vehicles, cargo trailers and horse trailers (collectively, as facilitated by AJP, the “Business”).  AJP owns and leases real estate to R-Vision, R-Vision Motorized, Roadmaster and Bison.

 

Concurrently with the execution and delivery of this Agreement, certain employees of the Companies are entering into employment agreements with Parent (the “Employment Agreements”), which will become effective upon the Closing (as defined below).

 

AGREEMENT

 

Therefore, in consideration of the premises and of the mutual promises of the parties, the parties agree as follows:

 

 

1.0.           CLOSING DATE .

 

The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place as promptly as practicable, and no more than two business days, after the satisfaction or waiver of the conditions set forth in Article 10.0 and Article 11.0 hereof, at the offices of Barnes & Thornburg LLP, 121 West Franklin Street, Suite 200, Elkhart, Indiana, or at such other place or time as may be agreed to in writing by the parties (the “Closing Date”).  Time is of the essence in this Agreement and in connection with the transactions contemplated by it.

 

2.0.           SALE AND PURCHASE .

 

2.1.           Shares .  Subject to the terms and conditions of this Agreement, at the Closing:

 

a.              Sellers shall sell to Purchaser and Purchaser shall purchase from Sellers, free and clear of all liens and encumbrances, all of the issued and outstanding shares of the capital stock of R-Vision (the “R-Vision Shares”), all of the issued and outstanding shares of the capital stock of AJP (the “AJP Shares”), all of the membership interests in R-Vision Motorized ( “R-Vision Motorized Units”), all the membership interests in Roadmaster (“Roadmaster Units”) and all the membership interests in Bison (“Bison Units”) (the R-Vision Shares and the AJP Shares are sometimes collectively referred to as the “Shares”, and the R-Vision Motorized Units, Roadmaster Units and Bison Units are sometimes collectively referred to as the “Units”).

 

2.2.           Purchase Price .  The aggregate consideration (the “Purchase Price”) for the Shares and the Units shall be $60,000,000, less the amounts of the Sellers’ Obligations (as defined in Section 2.3.b), of which (i) $38,743,000 shall be for the R-Vision Shares, (ii) $9,000,000 shall be for the AJP Shares, (iii) $1,776,000 shall be for the R-Vision Motorized Units, (iv) $4,226,000 shall be for the Roadmaster Units and (v) $6,255,000 shall be for the Bison Units.  The Purchase Price shall be payable as provided in Section 2.3 and subject to the holdback provisions and adjustment as provided in Sections 2.4 and 9.2 of this Agreement.

 

2.3.           Closing Deliveries .

 

a.              At the Closing, Sellers shall deliver to Purchaser (in each case in such form reasonably satisfactory to Purchaser):

 

(i)             Certificates representing the R-Vision Shares, duly endorsed (or accompanied by duly executed stock powers), for transfer to Purchaser;

 

(ii)            Certificates representing the AJP Shares, duly endorsed (or accompanied by duly executed stock powers), for transfer to Purchaser;

 

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(iii)           A bill of sale, membership interest power or other evidence of transfer in respect of the R-Vision Motorized Units, duly executed in the name of Purchaser;

 

(iv)           A bill of sale, membership interest power or other evidence of transfer in respect of the Roadmaster Units, duly executed in the name of Purchaser;

 

(v)            A bill of sale, membership interest power or other evidence of transfer in respect of the Bison Units, duly executed in the name of Purchaser; and

 

(vi)           Such other documents, instruments, certificates and opinions as are required by Article 12.0 of this Agreement or as may be reasonably requested by Purchaser.

 

b.              At the Closing, Purchaser shall deliver:

 

(i)             the sum of $57,750,000 (the “Closing Payment”), on behalf of the Sellers and at their direction, as follows: (A) the sum of the Indebtedness (as defined in Section 4.3.g), in the amounts and to the accounts as set forth in the Spreadsheet (as defined in Section 7.6), (B) the Bison Payment as set forth and defined in Schedule 2.3, (C) the sum of the Transaction Expenses (as defined in Section 7.7), in the amounts and to the accounts as set forth in the Statement of Expenses (as defined in Section 7.7), (D) the sum of the Closing Compensation Liability (as defined in Section 6.1.b), in the amounts and to the accounts as set forth in the Spreadsheet and (E) the remainder of the Closing Payment (after the foregoing payments in (A), (B), (C) and (D) are made (such payments collectively, the “Sellers’ Obligations”)) by wire transfer to an account or accounts designated by Sellers’ Representative in writing at least one day before the Closing Date; and

 

(ii)            Such other documents, instruments, certificates and opinions as are required by Article 13.0 of this Agreement or as may be reasonably requested by Sellers’ Representative.

 

c.              Notwithstanding any other provision in this Agreement, the parties hereto shall have the right to deduct and withhold Taxes from any payments contemplated by this Agreement, including in connection with any Closing Compensation Liability, if such withholding is required by applicable law, and to request any necessary Tax forms, including Form W-4, Form W-9 or the appropriate series of Form W-8, as applicable, or any similar information from the recipients of payments contemplated by this Agreement. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been delivered and paid to the recipient of payments in respect of which such deduction and withholding was made.

 

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2.4.           Adjustments to Purchase Price; NBV Holdback .

 

a.              On behalf of the Sellers, as of the Closing, Purchaser shall retain $1,500,000 (the “NBV Holdback Amount”) from the Purchase Price (the “NBV Holdback”) and with respect to each Seller, Purchaser shall be deemed to have retained such Seller’s pro rata portion of the NBV Holdback Amount from the portion of the Purchase Price payable to such Seller for its respective Shares and/or Units, in order to provide security for Purchaser with respect to the NBV Adjustment (as defined below).

 

b.              The Purchase Price shall be decreased, dollar for dollar, to the extent the aggregate Net Book Value of the Companies as of the Closing is less than $31,300,000 (the “NBV Adjustment”).  As used herein, “Net Book Value” means the total assets minus the total liabilities of the Companies as of the Closing, determined in accordance with United States generally accepted accounting principles (“GAAP”), provided that it is agreed and acknowledged that the Companies recognize revenue upon shipment.

 

c.              Purchaser shall determine the Net Book Value of the Companies as of the Closing based on a physical inventory taken on October 28, 2005, which will be rolled forward to the Closing Date and an accounting review of the books and records of the Companies as of the Closing, conducted by Purchaser promptly after the Closing, computed in accordance with GAAP, provided that revenue shall be recognized upon shipment in accordance with the past practices of the Companies.  Sellers and Sellers’ accounting firm at Sellers’ expense shall observe that physical inventory and have full access to working papers, inventory tags and other relevant information.  Within 60 days after the Closing Date, Purchaser shall deliver to Sellers’ Representative the determination of the Net Book Value of the Companies as of the Closing setting forth the relevant information and computations for the Net Book Value (the “Determination”).  If within 30 days after delivery of the Determination, Sellers’ Representative does not object in writing to the Determination, setting forth in reasonable detail the basis for such objections, the Determination shall be binding and shall be used in determining the adjustments to the Purchase Price under this Section 2.4.  If, within 30 days after delivery of the Determination, Sellers’ Representative does object in writing to the Determination, setting forth in reasonable detail the basis for such objection, the parties shall negotiate in good faith to resolve their differences regarding the Net Book Value of the Companies as of the Closing, but if the parties do not reach agreement within 30 days after delivery of such written objection, the issues in dispute shall be submitted to a nationally recognized, independent accounting firm that is mutually acceptable to the parties (the “Independent Accountants”) for resolution of the issues in accordance with the provisions of this Section 2.4.  The determination of the Net Book Value of the Companies as of the Closing by such Independent Accountants shall be final and binding on the parties in determining the adjustments to the Purchase Price under this Section 2.4.  The fees and expenses of the Independent Accountants for the resolution of the dispute shall be shared by Purchaser and Sellers in inverse

 

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proportion to the respective amounts of the disputed matters which are resolved in their respective favor.

 

d.              Upon final determination of the Net Book Value of the Companies as of the Closing in accordance with Section 2.4.c (the “Final Determination”), Purchaser shall be entitled to permanently retain for its own account that portion of the NBV Holdback that is equal to the amount of the NBV Adjustment, if any.  If the NBV Holdback Amount is less than the NBV Adjustment, the remainder of the NBV Adjustment shall be promptly paid by Sellers’ Representative (on behalf of the Sellers) by wire transfer in immediately available funds to an account or accounts designated by Purchaser in writing.  If the NBV Holdback Amount is greater than the NBV Adjustment, the remainder of the NBV Holdback shall be promptly paid by Purchaser by wire transfer in immediately available funds to an account or accounts designated by Sellers’ Representative in writing.

 

3.0.           INDIVIDUAL REPRESENTATIONS, COVENANTS AND WARRANTIES OF SELLERS .

 

Each Seller represents, covenants and warrants to Purchaser as to such Seller as follows (representations by each of the Trusts are made by the trustee of such Trust solely in such trustee’s capacity as trustee of such Trust), which representations, covenants and warranties shall also be deemed to have been made as of the Closing Date.

 

3.1.           Authority .  This Agreement constitutes the legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms.  Such Seller has the absolute and unrestricted right, power, authority and capacity to execute and deliver this Agreement, and to perform such Seller’s obligations under this Agreement.  Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated by this Agreement directly or indirectly contravenes, conflicts with or results (with or without notice or lapse of time) in a violation of any agreement, order or contract to which such Seller or any of such Seller’s assets are subject or may be bound.

 

3.2.           Stock Ownership .  Such Seller owns of record and beneficially the number of R-Vision Shares and the AJP Shares specified in Section 4.3 as owned by such Seller, free and clear of all encumbrances and claims.

 

3.3.           Membership Interest .  Such Seller owns of record and beneficially the number of R-Vision Motorized Units, Roadmaster Units or Bison Units, specified in Section 4.3 as owned by such Seller, free and clear of all encumbrances and claims.

 

3.4.           No Accounting Change .  Except as provided in Schedule 3.4, since the first day of the 2002 fiscal year of the Companies, such Seller has not taken, and through and after the Closing such Seller will not take, any action, including filing any application with the IRS or other taxing authorities, requesting or which could result in a change in any Company’s method of accounting.

 

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3.5.           Absence of Claims .

 

a.              Except for accrued or vested rights to employees under the agreements and plans identified on Schedule 3.5, no such Seller has any claim against any Company, whether present or future, contingent or unconditional, fixed or variable, under any Contract or on any other basis whatsoever.

 

b.              There is no action, suit, claim or proceeding pending or to such Seller’s knowledge threatened against any such Seller with respect to which such Seller, whether in its capacity as a director, officer, member, employee, stockholder, agent or affiliate, has a right to indemnification from any Company related to facts and circumstances existing prior to the Closing, nor to such Seller’s knowledge are there any facts or circumstances that would give rise to such an action, suit, claim or proceeding.

 

c.              No such Seller has any action, suit or claim with respect to the Shares, the Units or the transactions contemplated hereby, whether present or future, contingent or unconditional, fixed or variable.

 

4.0.           REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE SELLERS AND THE COMPANIES.

 

Each of the Companies and the Sellers represents, covenants and warrants to Purchaser as follows (representations by each of the Trusts are made by the trustee of such Trust solely in such trustee’s capacity as trustee of such Trust), which representations, covenants and warranties shall be deemed to have been made as of the Closing Date.  When used in this Agreement: (i) references to the “knowledge of Sellers or Companies,” or similar phrase, means the knowledge of any individual Seller or individual trustee of a Seller which is a trust or any of Craig Swisher and Carlisle Roose, after making due inquiry of such persons that would reasonably be expected to have knowledge of such matters; (ii) references to “material” means, as appropriate given the context, an item or matter, the value or consequences of which is, or would be reasonably likely to result in a Loss (as defined below) of, $50,000 or more, individually or in the aggregate; (iii) references to “material adverse change” or “material adverse effect” means an event, change, circumstances or fact which results in, or would reasonably be expected to result in, individually or in the aggregate, a Loss of $50,000 or more in the total assets, total liabilities, Net Book Value, operations, results of operations, business or prospects of the Companies and (iv) references to “organizational documents” means the agreements, documents and materials that govern the operation and/or organization of the respective Company in accordance with applicable Legal Requirements.

 

4.1.           Organization and Good Standing .

 

a.              R-Vision is a corporation duly organized and validly existing under the laws of Indiana with full corporate power and authority to carry on its business as it is now being conducted, to own or hold under lease the properties and assets which it owns or holds under lease and perform all its obligations under the agreements and instruments to which it is a party or by which it is bound.

 

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Except as provided in Schedule 4.1, R-Vision is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which the ownership or leasing of the properties owned by it or the nature of the activities conducted by it requires such qualification.  Schedule 4.1 lists each such jurisdiction.  In excess of 50 percent of the outstanding voting securities of R-Vision are held by William L. Warrick, in his individual capacity.  R-Vision has delivered a true and correct copy of its organizational documents, each in full force and effect on the date hereof, to Purchaser.  The Board of Directors of R-Vision has not approved or proposed any amendment to such organizational documents and R-Vision is not in violation of any of the terms thereof.

 

b.              AJP is a corporation duly organized and validly existing under the laws of Indiana with full corporate power and authority to carry on its business as it is now being conducted, to own or hold under lease the properties and assets which it owns or holds under lease and perform all its obligations under the agreements and instruments to which it is a party or by which it is bound.  Except as provided in Schedule 4.1, AJP is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which the ownership or leasing of the properties owned by it or the nature of the activities conducted by it requires such qualification.  Schedule 4.1 lists each such jurisdiction.  In excess of 50 percent of the outstanding voting securities of AJP are held by William L. Warrick, in his individual capacity.  AJP has delivered a true and correct copy of its organizational documents, as amended to date, each in full force and effect on the date hereof, to Purchaser.  The Board of Directors of AJP has not approved or proposed any amendment to such organizational documents and AJP is not in violation of any of the terms thereof.

 

c.              R-Vision Motorized is a limited liability company duly organized and validly existing under the laws of Indiana with full limited liability company power and authority to carry on its business as it is now being conducted, to own or hold under lease the properties and assets which it owns or holds under lease and perform all its obligations under the agreements and instruments to which it is a party or by which it is bound.  Except as provided in Schedule 4.1, R-Vision Motorized is duly qualified to do business as a foreign limited liability company and is in good standing under the laws of each state or other jurisdiction in which the ownership or leasing of the properties owned by it or the nature of the activities conducted by it requires such qualification.  Schedule 4.1 lists each such jurisdiction.  Warrick, L.P. has the right to more than 50 percent of the profits of R-Vision Motorized, and has the right in the event of dissolution to more than 50 percent of the assets of R-Vision Motorized.  R-Vision Motorized has delivered a true and correct copy of its organizational documents, as amended to date, each in full force and effect on the date hereof, to Purchaser.  The members of R-Vision Motorized have not approved or proposed any amendment to such organizational documents and R-Vision Motorized is not in violation of any of the terms thereof.

 

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d.              Roadmaster is a limited liability company duly organized and validly existing under the laws of Indiana with full limited liability company power and authority to carry on its business as it is now being conducted, to own or hold under lease the properties and assets which it owns or holds under lease and perform all its obligations under the agreements and instruments to which it is a party or by which it is bound.  Except as provided in Schedule 4.1, Roadmaster is duly qualified to do business as a foreign limited liability company and is in good standing under the laws of each state or other jurisdiction in which the ownership or leasing of the properties owned by it or the nature of the activities conducted by it requires such qualification.  Schedule 4.1 lists each such jurisdiction.  Warrick, L.P. has the right to more than 50 percent of the profits of Roadmaster, and has the right in the event of dissolution to more than 50 percent of the assets of Roadmaster.  Roadmaster has delivered a true and correct copy of its organizational documents, as amended to date, each in full force and effect on the date hereof, to Purchaser.  The members of Roadmaster have not approved or proposed any amendment to such organizational documents and Roadmaster is not in violation of any of the terms thereof.

 

e.              Bison is a limited liability company duly organized and validly existing under the laws of Indiana with full limited liability company power and authority to carry on its business as it is now being conducted, to own or hold under lease the properties and assets which it owns or holds under lease and perform all its obligations under the agreements and instruments to which it is a party or by which it is bound.  Except as provided in Schedule 4.1, Bison is duly qualified to do business as a foreign limited liability company and is in good standing under the laws of each state or other jurisdiction in which the ownership or leasing of the properties owned by it or the nature of the activities conducted by it requires such qualification.  Schedule 4.1 lists each such jurisdiction.  Warrick, L.P. has the right to more than 50 percent of the profits of Bison, and has the right in the event of dissolution to more than 50 percent of the assets of Bison.  Bison has delivered a true and correct copy of its organizational documents, as amended to date, each in full force and effect on the date hereof, to Purchaser.  The members of Bison have not approved or proposed any amendment to such organizational documents and Bison is not in violation of any of the terms thereof.

 

f.               Warrick, L.P. is a limited partnership duly organized and validly existing under the laws of Indiana with full power and authority to carry on its business as it is now being conducted, to own or hold under lease the properties and assets which it owns or holds under lease and perform all its obligations under the agreements and instruments to which it is a party or by which it is bound.  No person or entity has the right to 50 percent or more of the profits of Warrick, L.P., or to 50 percent or more of the assets of Warrick, L.P. in the event of dissolution.  Warrick, L.P. has delivered a true and correct copy of its organizational documents, as amended to date, each in full force and effect on the date hereof, to Purchaser.  The partners of Warrick, L.P. have not approved or proposed any amendment to such organizational documents and Warrick, L.P. is not in violation of any of the terms thereof.

 

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g.              None of the Companies has any subsidiaries except that R-Vision owns 100% of the capital stock and rights to purchase and all other equity interests of R-Vision International, Inc. (the “Subsidiary”).  The Subsidiary is qualified as an Interest-Charge Domestic International Sales Corporation under Sections 991 through 997 of the Internal Revenue Code of 1986, as amended.

 

h.              None of the Companies is an “investment company” within the meaning of the Investment Company Act of 1940.

 

i.               Sellers have delivered or made available to Purchaser and Purchaser’s counsel, with written notice of such availability (“Made Available”), full, complete and correct copies of the organizational documents of each of the Companies, as currently in effect.

 

4.2.           Authority; No Conflict .  Except as set forth in Schedule 4.2, neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated by this Agreement will directly or indirectly:

 

a.              Contravene, conflict with or result (with or without notice or lapse of time) in a violation of (i) any of the provisions of the organizational documents of any of the Companies or, if applicable, of any of the Sellers, or (ii) any resolution adopted or passed by the board of directors, the shareholders, members or managing members of any of the Companies or, if applicable, of any of the Sellers;

 

b.              Contravene, conflict with or result (with or without notice or lapse of time) in a violation of any applicable federal, state, county, provincial, local or foreign statute, ordinance, regulation, treaty, statute, requirement, rule, code or rule of common law (“Legal Requirements”) or any judgment, decree or order to which any of the Sellers, the Companies, or any of the assets owned or used by any of the Companies, may be subject;

 

c.              Contravene, conflict with or result (with or without notice or lapse of time) in a violation of any of the terms or requirements of, or give any governmental body the right (with or without notice or lapse of time) to revoke, withdraw, suspend, cancel, terminate or modify any material governmental authorization that is held by any of the Companies or that otherwise relates to the business of, or any of the assets owned or used by, any of the Companies;

 

d.              Contravene or conflict with, in any material respect, or result (with or without notice or lapse of time) in a violation or breach of any of the provisions of, or give any person the right (with or without notice or lapse of time) to declare a default or exercise any remedy under, or to accelerate the maturity or performance of or cancel, terminate or modify, any contract to which any of the Companies is a party or under which any of the Companies has any rights, or by which any of the Companies, or any of the assets owned or used by any of the Companies, may be bound; or

 

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e.              Result (with or without notice or lapse of time) in the imposition or creation of any encumbrance upon or with respect to any of the assets owned or used by any of the Companies.

 

Except as required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) or as disclosed in Schedule 4.2, each of the Companies and the Sellers is not and will not be required to give any notice to or obtain any consent from any person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the transactions contemplated by this Agreement.

 

4.3.           Capitalization; Indebtedness .

 

a.              The authorized capital stock of R-Vision consists of 1,000 common shares of which 500 shares have voting rights and 500 shares have no voting rights, with no par value.  Sellers are the record and beneficial owners and holders of the R-Vision Shares as set forth on Schedule 4.3.

 

b.              The authorized capital stock of AJP consists of 2,000 shares of common stock, of which 1,000 shares have voting rights and 1,000 shares have no voting rights, with no par value.  Sellers are the record and beneficial owners and holders of the AJP Shares as set forth on Schedule 4.3.

 

c.              The authorized membership units of R-Vision Motorized consist of 1,000 capital units, of which 1,000 units are issued and outstanding.  Sellers are the record and beneficial owners of R-Vision Motorized Units as set forth on Schedule 4.3.

 

d.              The authorized membership units of Roadmaster consist of 1,000 capital units, of which 1,000 units are issued and outstanding.  Sellers are the record and beneficial owners of Roadmaster units as set forth on Schedule 4.3.

 

e.              The authorized membership units of Bison consist of 1,000 units, of which 1,000 units are issued and outstanding.  Sellers are the record and beneficial owners of Bison units as set forth on Schedule 4.3.

 

f.               The Shares and the Units set forth on Schedule 4.3 are the only equity securities of the Companies authorized or outstanding, and there are no securities or other rights, including derivatives such as options, warrants or convertibles authorized or outstanding which are convertible into equity securities of any of the Companies.  Except for matters disclosed on Schedule 4.3 which will be of no effect on and after the Closing, no legend or other reference to any purported encumbrance appears upon any certificate representing equity securities of any of the Companies and after the Closing all of such equity securities will be free and clear of all liens and encumbrances except such liens as may be granted by Purchaser.  All of the outstanding equity securities of each of the Companies have been duly authorized and validly issued and are fully paid and nonassessable.  There are no outstanding options, rights, conversion rights,

 

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agreements or commitments of any kind relating to the issuance, sale or transfer of any equity interests or shares or other securities of any of the Companies.  None of the outstanding equity securities or other securities of any of the Companies was issued in violation of the Securities Act of 1933, as amended, or the securities or blue sky laws of any nation, state, province or other jurisdiction.  On the Closing Date, none of the Companies will own, or have any option, right, agreement or commitment of any kind to acquire, any equity securities or other securities of any person or any direct or indirect equity or ownership interest in any other business.  Other than pursuant to this Agreement, none of the Sellers or the Companies has transferred, assigned or otherwise pledged (directly or indirectly), or agreed to transfer, assign or otherwise pledge (directly or indirectly), any equity securities, membership interests, partnership interests, profit participation rights, voting rights, or similar ownership interests of any class of equity security of any Company, or any securities exchangeable or convertible into or exercisable for such equity securities, membership interests, profit participation interests, partnership interests, voting rights, or similar ownership interests in any Company to any person.  Except as set forth on Schedule 4.3 there are no declared or accrued but unpaid dividends with respect to any of the Shares or the Units.  Except as contemplated hereby, there are no voting trusts, proxies, or other agreements or understandings with respect to the voting stock or membership interests of any Company.  There are no agreements to which any Company is a party relating to the registration, sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any of such Company’s equity interests.  At the Closing, Sellers shall deliver to Purchaser good and marketable title to the Shares and the Units, free and clear of all liens, pledges and encumbrances.

 

g.              For the purposes of this Agreement, “Indebtedness” shall mean all outstanding indebtedness, loans, promissory notes, guarantees or other arrangements for borrowed money of any of the Companies, or on any of the Companies’ behalf.  Schedule 4.3 sets forth the outstanding principal, accrued interest and applicable rate of interest on all Indebtedness as of the date hereof, as well as the identity of the persons holding such Indebtedness and any other material terms thereof.  Upon payment of the amounts set forth in the Spreadsheet, none of the Companies, Purchaser or Parent will have any further obligations with respect to the Indebtedness.

 

4.4.           Financial Statements .  The Sellers have delivered to Purchaser:

 

a.              The audited combined balance sheets of R-Vision and R-Vision Motorized, the compiled balance sheets of Bison and the Companies as a whole and the reviewed balance sheets of Roadmaster, at December 28, 2002, January 3, 2004 and January 1, 2005 and the related statements of income and statements of cash flows for each of the fiscal years ended December 28, 2002, January 3, 2004 and January 1, 2005 (these items are attached as Schedule 4.4 and are sometimes collectively referred to as the “Financials,” and the Companies’ Financials as of January 1, 2005 are sometimes referred to as the “most recent Financials”).  Such

 

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Financials are true, accurate and complete and fairly present the financial condition, cash flows and results of operations of the Companies as of their respective dates and for the periods referred to, all in accordance with GAAP (except as set forth on Schedule 4.4), consistently applied throughout the periods indicated and with each other; and during the last three years there have been no changes in any accounting principles or practices in preparing the Financials.

 

b.              Unaudited combined balance sheets of the Companies and related statements of income for the eight month period ending September 3, 2005 (the “Interim Financials”) are attached as Schedule 4.4.  The Interim Financials were prepared in accordance with GAAP (except as set forth on Schedule 4.4) consistently applied on a consistent basis throughout the periods indicated and consistent with each other, and present fairly, in all material respects, the financial condition and results of operations of the Companies as of the date of the Interim Financials, subject to the absence of footnotes.

 

c.              Each of the Companies has established and maintains, adheres to and enforces a system of internal accounting controls which are effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP (including the Financials), other than as set forth on Schedule 4.4, including policies and procedures that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Companies, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Companies are being made only in accordance with appropriate authorizations of management and the board of directors (or like body) of such Company and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Companies.  None of the Companies, their employees or former employees nor the Companies’ independent auditors has identified or been made aware of (a) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Companies, (b) any fraud, whether or not material, that involves the Companies’ management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Companies or (c) any claim or allegation regarding any of the foregoing.

 

4.5.           No Undisclosed Liabilities .  Except as set forth in Schedule 4.5, none of the Companies has any liabilities or obligations of any nature (known or unknown, absolute, accrued, contingent or otherwise including future obligations under benefit plans) that were not fully reflected or reserved against in the most recent Financials and in the Interim Financials as required under GAAP (other than as set forth on Schedule 4.4), except matters specifically required pursuant to this Agreement and liabilities and contractual obligations incurred in the regular and ordinary course of business consistent with past practices since the date of the most recent Financials, which

 

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in the aggregate are reasonably likely to have a material adverse effect on the properties, assets, business or financial condition of the Companies.

 

4.6.           Books and Records .  The books of account, minute books, stock record books and other records of each of the Companies, which have been Made Available to Purchaser, are complete and correct and have been maintained in accordance with sound business practices, including, but not limited to, the maintenance of a commercially reasonable system of internal controls.  The minute books of each of the Companies contain accurate and complete records of, as relevant, the articles of incorporation and bylaws, articles of organization and operating agreement or other governing documents, with all amendments, all meetings held of, original signed copies of all resolutions in writing of, and corporate action taken by, the shareholders, the Members or other governing body, the Boards of Directors and committees of the Boards of Directors or other governing body of each of the respective Companies and no meetings of any such shareholders or other equity owners, Boards of Directors, the Members or other governing body, or committee has been held for which minutes have not been prepared and are not contained in such minutes books and no resolutions have been passed or consented to by any such shareholders or other equity owners, Boards of Directors or other governing body or committee except those contained in such minutes books.  At the Closing, true and correct and complete originals of all of those books and records will be in the possession of the Companies.

 

4.7.           Assets:  Condition and Sufficiency .

 

a.              Except as set forth on Schedule 4.7, the buildings, plants, structures and equipment (whether owned or leased) of each of the Companies have no material defects, are in good operating condition and repair (ordinary wear and tear excepted) and are adequate for the uses to which they are being put, are not being operated beyond their capacity and none of such buildings, plants, structures or equipment is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost.

 

b.              None of the Companies has any present commitment for capital expenditures in excess of $50,000 in the aggregate to be made after the Closing, except as set forth on Schedule 4.7.

 

c.              Except as set forth on Schedule 4.7 each Company owns all the properties and assets (personal and mixed, tangible and intangible), free and clear of all encumbrances, reflected as owned in the books and records of that Company, including, but not limited to, all the properties and assets reflected in the most recent Financials (except for assets held under capitalized leases disclosed in the most recent Financials and personal property sold since the date of the most recent Financials in the regular and ordinary course of business), and all the properties and assets purchased or otherwise acquired by the respective Companies since the date of the most recent Financials (except for personal property acquired and sold since the date of the most recent Financials in the regular and ordinary course of business and consistent with past practice), which

 

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subsequently purchased or acquired properties and assets (other than inventory and short term investments) are listed in Schedule 4.7.

 

d.              Each Company owns, validly leases or has a valid license to use, free and clear of all encumbrances, except as set forth on Schedule 4.7, all the properties and assets (real, personal and mixed, tangible and intangible), trademarks and all other resources currently used in or required for operations of the respective Companies as currently conducted in the regular and ordinary course of business consistent with past practices or as currently proposed to be conducted by the Companies, and none of the Companies uses or requires the use of any properties or assets (except Leased Real Estate disclosed below) which are not owned, validly leased or licensed by the respective Companies, except for publicly available, incidental items with an aggregate value of less than $10,000.

 

4.8.           Real Estate .  None of the Companies owns or has ever owned any real property or interest in real property except that AJP owns fee title to the real property described and identified as owned by AJP on Schedule 4.8 (the “Owned Real Estate”).  The Companies lease the real property described and identified as leased by the Companies on Schedule 4.8 (the “Leased Real Estate”).  Except as set forth in Schedule 4.8, none of the Companies lease, sublease, license or otherwise use or occupy any real property.  Sellers have delivered to Purchaser correct and complete copies of all leases, subleases, licenses and other occupancy agreements (collectively, “leases”), of any of the Companies relating to the Leased Real Estate, including all modifications and amendments thereto.  The Leased Real Estate and the Owned Real Estate shall be collectively referred to herein as the “Real Estate.”

 

a.              Sellers have delivered to Purchaser copies of all leases, title insurance policies, opinions, abstracts and surveys in the possession of any of the Sellers or any Company relating to the Owned Real Estate.

 

b.              Based upon the owner’s title insurance policies and surveys which have been Made Available with respect to the Real Estate owned by the Companies, and to the knowledge of Sellers, all buildings, plants and structures owned or leased by any Company lie wholly within the boundaries of the Owned Real Estate and do not encroach upon the property of, or otherwise conflict with the property rights of, any other person.

 

c.              There is no pending condemnation or expropriation proceeding or special assessments with regard to all or part of the Real Estate and no such proceeding is planned by any governmental authority.

 

d.              All public utilities, including without limitation, water, sanitary and storm sewer, electricity, gas and telephone, presently used in the operation of the facility located on the Owned Real Estate enter through adjoining public streets or, if they pass through adjoining private land, do so in accordance with valid easements permitting said use and satisfactory to the applicable utility; and all public utilities are installed, operating and available in sufficient capacities to

 

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serve adequately the Real Estate for the purposes for which any Company is using the Real Estate as of the Closing and all installation and connection charges necessary for them have been paid in full.  The Companies currently hold all utilities, utility systems and utility connections, including but not limited to, the right to receive immediately and continuously consume water service, electrical service, and telephone service on and for the Real Estate in capacities that are adequate to operate the Real Estate for the purposes for which any Company is using the Real Estate as of the Closing free and clear of all qualifications and encumbrances other than the obligation to pay the applicable utility company the rate for utility consumption (the “Utility Reservations”) applicable to the Real Estate; and no Company has transferred, modified or encumbered any present or future interest, if any, of the Utility Reservations; the Utility Reservations currently held by any Company will not be affected by the transactions provided for in this Agreement.

 

e.              There is no agreement made by or binding on any Company with any governmental agency burdening the Real Estate or binding on any Company respecting construction of any easements, roads, sidewalks, or street lighting; there are no donations of land or payments (other than general real estate taxes) for parking, schools, parks, fire stations or other public facilities required of any Company or any owner of the Real Estate that were agreed to by or binding on any Company.  There is no existing, pending or threatened (i) change in limitations on use of streets or roads abutting the Owned Real Estate or (ii) special tax or assessment to be levied against any part of the Owned Real Estate.

 

f.               Except as disclosed on Schedule 4.8, each Company has full, uninterrupted and encumbered rights of ingress and egress from the Owned Real Estate, to and from public roads abutting or adjacent to the Real Estate for all pedestrians and vehicles utilizing the Owned Real Estate.

 

g.              There are no outstanding work orders or other requirements or notices relating to the Real Estate which have been issued by any police or fire department, sanitation, health or factory authorities or departments or by any federal state, municipal or other governmental authority, agency, department or board or any board of fire underwriters or any insurer or any notices or matters under discussion with any such departments or authorities relating to work orders or other requirements or notices.

 

h.              The Companies currently occupy all of the Real Estate for the operation of the Business, and there are no other parties occupying, or with a right to occupy, the Real Estate.  None of the Companies could be required to expend more than $10,000 in causing any Leased Real Estate to comply with the surrender conditions set forth in the applicable lease other than under leases to AJP.  The Companies have performed all of its obligations under any termination agreements other than under leases to AJP pursuant to which it has terminated any leases of real property that are no longer in effect and has no continuing liability with respect to such terminated real property leases.

 

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i.               Neither Sellers nor the Companies have any information or knowledge that there are any Legal Requirements or restrictions, or any change contemplated therein, or any judicial or administrative action, or any action by adjacent landowners, or natural or artificial conditions upon any Real Estate, or any other facts or conditions which could, in the aggregate, have a material adverse effect upon any Real Estate.  Neither the Sellers nor the Companies have received any notice from any insurance company of any defects or inadequacies in any Real Estate which could materially and adversely affect the insurability of such Real Estate.

 

j.               Except as disclosed on Schedule 4.8, all improvements existing on the Owned Real Estate have, if required, been constructed and installed in accordance with plans and specifications approved by all governmental authorities having jurisdiction and no improvements on or use of the Real Estate violate any Legal Requirements, restrictive covenants or easements affecting the Real Estate.

 

4.9.           Encumbrances .  All the respective Companies’ properties and assets shall as of the Closing be free and clear of all encumbrances and the Owned Real Estate shall not be subject to any encumbrances, rights of way, building use restrictions, exceptions, variances, reservations or limitations of any nature whatsoever, except non-monetary encumbrances reflected in the respective Companies’ owner’s title insurance policies Made Available to Purchaser and except, (i) with respect to all such properties and assets, liens for current taxes not yet due, and (ii) as to the Owned Real Estate, (a) minor imperfections of title, which are disclosed on Schedule 4.9 and labeled as such, none of which is substantial in amount, impairs the use of the property subject to them, or impairs the operations of any Company and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject to them (such exceptions, collectively, “Permitted Encumbrances”).  There are no pending or, to the knowledge of Sellers or the Companies, threatened, requests, applications or proceedings to alter the zoning or impose other restrictions applicable to the Real Estate.

 

4.10.         Accounts Receivable .  All accounts receivable of the Companies that are reflected on the most recent Financials or on the accounting records of the Companies as of the Closing Date (referred to collectively as the “Accounts Receivable”) represent or will represent valid obligations arising from sales actually made or services actually performed in the regular and ordinary course of business consistent with past practices, are carried at values determined in accordance with GAAP, are not subject to any valid set-off or counterclaim, do not represent obligations for goods sold on consignment, on approval or on a sale-or-return basis or subject to any other repurchase or return arrangement and are collectible except to the extent of reserves therefor set forth in the Financials or, for receivables arising subsequent to the most recent Financials, as reflected on the books and records of the Company (which receivables are recorded in accordance with GAAP).  The Companies have delivered to the Purchaser a list of all Accounts Receivable of the Companies (together with an aging schedule indicating a range of days elapsed since invoice) as of the date of the Interim Financials, which list is correct and complete in all material respects and sets forth the aging of such Accounts

 

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Receivable.  No person has any lien on any Accounts Receivable of the Companies except as disclosed on Schedule 4.10, and no request or agreement for deduction or discount has been made with respect to any Accounts Receivable of the Companies.

 

4.11.         Inventory .  All inventory of each of the Companies has been valued in accordance with the policy set forth on attached Schedule 4.11, consistently applied with the Financials.  All such inventory (i) is of commercially reasonable quality, (ii) is useable and saleable in a reasonably acceptable time period and (iii) is of a quantity that is appropriate for the size of the Business as conducted in the regular and ordinary course consistent with past practice.

 

4.12.         Taxes .

 

a.              For the purposes of this Agreement, the term “Tax” or, collectively, “Taxes” shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in clause (i) of this Section 4.12.a as a result of being a member of an affiliated, consolidated, combined or unitary group for any period, and (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) of this Section 4.12.a as a result of any express or implied obligation to indemnify any other person or as a result of any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor or transferor entity.

 

b.              Except as disclosed on Schedule 4.12, each of the Companies has filed or caused to be filed (on a timely basis) all required federal, state, local and foreign returns, estimates, information statements and reports (the “Tax Returns”) relating to any and all Taxes concerning or attributable to it or its operations.  Each of the Companies has delivered to Purchaser copies of, and Schedule 4.12 lists, all Tax Returns filed since December 2002.  All Taxes that such Company is or was required by Legal Requirements to withhold or collect or report (including all Taxes required to be paid or withheld with respect to its employees and other third parties and those payable under the Federal Insurance Contribution Act and Federal Unemployment Tax Act and corresponding state statutes) have been duly withheld or collected or reported and, to the extent required, have been timely paid to the proper federal, state, local or foreign governmental body or other person.  All Tax Returns filed by each Company are true and correct and completed in accordance with applicable Legal Requirements.  Each Company has timely paid, or made provision for the payment of, all Taxes that have or may have become due whether or not shown to be due on the Tax Returns, or otherwise, or pursuant

 

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to any assessment received by that Company, or pursuant to other federal, state, local or foreign requirements, except such Taxes, if any, as are set forth in Schedule 4.12 and are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the Financials.  The charges, accruals and reserves with respect to Taxes on the books of the respective Companies are adequate (determined in accordance with GAAP) and are at least equal to the respective Companies’ liability for Taxes.

 

c.              Except as set forth in Schedule 4.12, no Tax Return relating to any Company is presently being audited or examined, nor to the knowledge of the Sellers or the Companies, has any such audit or examination been proposed by any Tax Authority.  No adjustments or deficiencies to the Tax Returns filed by any Company have been made or proposed.  There exists no proposed tax assessment against any Company except as disclosed in the Financials or in Schedule 4.12.  Except as set forth in Schedule 4.12, no Company has given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other person) of any statute of limitations relating to the payment of Taxes of any Company or for which any Company may be liable.  There is no tax sharing agreement that will require any payment by any Company after the date of this Agreement.

 

d.              Except as set forth in Schedule 4.12, none of the Companies is, or has been at any time, a “United States Real Property Holding Corporation” within the meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”).

 

e.              None of the Companies has engaged in a “reportable transaction,” as set forth in Treas. Reg. § 1.6011-4(b), or any transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service has determined to be a tax avoidance transaction and identified by notice, regulation, or other form of published guidance as a “listed transaction,” as set forth in Treas. Reg. § 1.6011-4(b)(2).

 

f.               For federal and applicable state and local income Tax purposes, since its respective date of incorporation and through the date of this Agreement, each of R-Vision and AJP (together, the “S Corporations”) has properly qualified as, and has made valid and timely elections to be treated as, an “S corporation” within the meaning of Sections 1361 and 1362 of the Code and within the meaning of analogous state or local Legal Requirements in all jurisdictions in which each such S Corporation is subject to Tax.  Each S Corporation will qualify as an “S corporation” through and until the Closing Date in all jurisdictions in which the respective corporation is subject to Tax.  Since its respective date of incorporation, neither of the S Corporations has ever been subject to income Tax as a “C corporation” within the meaning of Section 1361(a) of the Code or within the meaning of analogous state or local Legal Requirements.  Neither of the S Corporations has, in the past ten years, acquired assets from another corporation in a transaction in which its Tax basis

 

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for the acquired assets was determined, in whole or in part, by reference to the Tax basis for the acquired assets (or any other property) in the hands of the transferor.

 

g.              Each of R-Vision Motorized, Roadmaster and Bison has been treated as a partnership for Tax purposes since its inception.

 

4.13.         No Material Adverse Change .  Except as disclosed in this Agreement and the Schedules to this Agreement, since the most recent combined balance sheet there has not been any material adverse change in the business, operations, properties, assets, liabilities (financial or otherwise), condition, results of operations of the Companies, or relationships with the respective Companies’ customers, vendors, employees or governmental bodies.

 

4.14.         Employee Benefit Plans .  Except as disclosed on Schedule 4.14:

 

a.              Schedule 4.14 lists:  (i) each “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including, but not limited to, any medical plan, life insurance plan, severance pay, short-term or long-term disability plan or dental plan; (ii) each “employee pension benefit plan,” as defined in Section 3(2) of ERISA, including, but not limited to, any excess benefit plan, top hat plan or deferred compensation plan or arrangement, nonqualified retirement plan or arrangement, qualified defined contribution or defined benefit arrangement; and (iii) each other material benefit plan, policy, program, arrangement or agreement, including, but not limited to, any material bonus or incentive plan, stock option, restricted stock, stock bonus, vacation pay, bonus program, service award, moving expense, deferred bonus plan, salary reduction agreement, change-of-control agreement, employment agreement, consulting agreement, or fringe benefit plan or program, which in all cases, is sponsored, contributed to or maintained by any of the Companies or other person that, together with a Company, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code (each a “Plan Affiliate”) or with respect to which any of the Companies or any Plan Affiliate have any liability or obligation to contribute.  (Each employee benefit plan, program or arrangement listed on Schedule 4.14 relating to current or former employees, officers or directors (or others of like capacity) of any Company or any Plan Affiliate is referred to herein as an “Employee Plan”). Each Employee Plan can be amended, terminated or otherwise discontinued after the Closing Date, without material liability to the Companies, Purchaser or any affiliates thereof (other than ordinary administration expenses), provided that Purchaser does not increase benefits in connection with any such amendment.

 

b.              The Sellers have made available to Purchaser:  (i) a correct and complete copy of each written Employee Plan and summary plan description as in effect on the date hereof; (ii) a copy of each trust agreement, insurance contract and other funding vehicle with respect to each such Employee Plan; (iii) a copy of the most recently received IRS determination, opinion, notification and advisory

 

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letters, if any, and any and all rulings or notices issued by a governmental authority relating to each Employee Plan; (iv) a copy of the Form 5500 Annual Report, if any, for the most recent plan year for each such Employee Plan and (v)  all communications material to any current or former Companies employees relating to any Employee Plan or proposed Employee Plan, in each case, relating to any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other events which would result in any material liability to the Companies.  The Companies do not have any plan or commitment to establish any new Employee Plan, to modify any Employee Plan (except to the extent required by Legal Requirements or to conform any such Employee Plan to the requirements of any applicable Legal Requirement, in each case as previously disclosed to Purchaser in writing), or to adopt or enter into any Employee Plan.

 

c.              Each Employee Plan (and each related trust, insurance contract and fund) (i) has been operated, maintained, funded and administered in compliance with its terms (except as otherwise required by Legal Requirements), (ii) materially complies in form and operation with all applicable requirements of ERISA, the Code, other applicable Legal Requirements, any applicable collective bargaining agreements, and with any applicable reporting and disclosure requirements, including but not limited to the requirement of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code (“COBRA”), and (iii) has been and is operated and funded in such a manner as to qualify, where appropriate, for both federal and state purposes, for income tax exclusions to its participants, tax-exempt income for its funding vehicle, and the allowance of deductions and credits at the time contributions are made thereto.  Each Employee Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service with respect to all law changes prior to the Economic Growth and Tax Relief Reconciliation Act of 2001, and nothing has occurred since the date of such determination that could reasonably be expected to adversely affect the qualified status of any Employee Plan.

 

d.              None of the Companies nor Plan Affiliates maintains, contributes to, is required to contribute to, has any actual or contingent liability (including withdrawal liability as defined in Section 4201 of ERISA) under or with respect to any employee benefit plan, program or arrangement which (i) is a “multiemployer plan” as defined in Section 4001 of ERISA, (ii) is a “multiemployer plan” within the meaning of Section 3(37) of ERISA, (iii) is a “multiple employer plan” within the meaning of Code Section 413(c), (iv) is a “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA, (v) is subject to the funding requirements of Section 412 of the Code or Title IV of ERISA, or (vi) provides for post-retirement medical, life insurance or other welfare-type benefits for current, future, retired or terminated directors, officers or employees of the Companies or any other person (other than as required by COBRA).  No asset of any of the Companies is subject to any lien or encumbrance arising under Section 4068 of ERISA.

 

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e.              There has been no “prohibited transaction,” as such term is defined in Section 406 of ERISA and Code Section 4975, with respect to any Employee Plan or any employee benefit plan, program, or arrangement of any kind maintained by a Plan Affiliate.  Except as could not reasonably be expected to result in material liability to the Companies, no fiduciary has any liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any Employee Plan.  No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any Employee Plan (other than routine claims for benefits) is pending or to the knowledge of Sellers or the Companies, threatened.

 

f.               The Companies have, for purposes of each relevant Employee Plan, correctly classified those individuals performing services for the Companies as common law employees, leased employees, independent contractors or agents of the Companies.

 

g.              All required reports and descriptions (including Form 5500 annual reports, summary annual reports, and summary plan descriptions) have been timely filed and/or distributed in accordance with the applicable requirements of ERISA and the Code with respect to each Employee Plan.  The requirements of COBRA have been met with respect to each Employee Plan and any employee benefit plan, program, or arrangement maintained by a Plan Affiliate that is an “employee welfare benefit plan” subject to COBRA.

 

h.              No Employee Plan or any other agreement, program, policy or other arrangement by or to which any of the Companies is a party, are bound or are otherwise liable, by its terms or in effect could reasonably be expected to require any payment or transfer of money, property or other consideration on account of or in connection with the transactions contemplated by this Agreement or any subsequent termination of employment under the current terms of such employment which payment could constitute an “excess parachute payment” within the meaning of Section 280G of the Code.

 

i.               To the knowledge of Sellers and the Companies, no Employee Plan is (i) a non-qualified deferred compensation plan as defined in Section 409A of the Code, and (ii) non-compliant with the requirements of Section 409A of the Code, based on a reasonable interpretation of the guidance issued by the Internal Revenue Service of the United States as of the date first stated above.

 

j.               Except as set forth on Schedule 4.14.j the execution of this Agreement and the consummation of the transactions contemplated hereby will not (either alone or upon the occurrence of any additional or subsequent events) constitute an event under any Employee Plan, trust or loan that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any current or former employees, officers or directors (or others of like capacity) of the Companies.  Upon payment of the amounts set forth

 

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in the Spreadsheet, none of the Companies, Purchaser or Parent will have any further obligations with respect to any such payment, acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits (other than as expressly set forth in this Agreement).

 

4.15.         Compliance With Laws; Governmental Authorities .

 

a.              Schedule 4.15.a identifies each governmental authorization that is held by any of the Companies or that otherwise relates to the business of, or to any of the assets owned or used by, any of the Companies.  Each of such authorizations is valid and in full force and effect.

 

b.              Except as set forth in Schedule 4.15.b:

 

(i)             (a) the Companies are in possession of all governmental authorizations required by applicable law (collectively, “Authorizations”), (b) the Companies are, and at all times have been, in compliance in all material respects with each Legal Requirement that is applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets, and (c) the Companies are, and at all times have been, in compliance in all material respects with all of the terms and requirements of each Authorization identified or required to be identified in Schedule 4.15;

 

(ii)            no event has occurred, and no condition or circumstance exists, that would (with or without notice or lapse of time) constitute or result directly or indirectly in a material violation by the Companies of, or a material failure on the part of the Companies to comply with, any Legal Requirement or any term or requirement of any governmental authorization identified or required to be identified on Schedule 4.15;

 

(iii)           none of the Companies or Sellers has received any notice or other communication (whether oral or written) from any governmental body or any other person regarding (a) any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement, or any term or requirement of any governmental authorization identified or required to be identified on Schedule 4.15; or (b) any actual, alleged, possible or potential obligation on the part of the Companies to undertake, or to bear all or any portion of the cost of, any remedial action of any nature;

 

(iv)           the Companies have complied in all material respects with all Legal Requirements relating to immigration matters relating to any of their respective current employees; and

 

(v)            all applications required to have been filed for the renewal of the governmental authorizations required to be identified in Schedule 4.15 have been duly filed on a timely basis with the appropriate

 

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governmental bodies, and all other filings required to have been made with respect to such governmental authorizations have been duly made on a timely basis with the appropriate governmental bodies.

 

4.16.         Legal Proceedings; Orders .

 

a.              Except as set forth in Schedule 4.16, there is no pending or ongoing proceeding, dispute, claim or investigation:

 

(i)             (a) that has been commenced by, or against any of the Companies or the Sellers, (b) that relates to the Business or (c) to the knowledge of Sellers and the Companies, could be reasonably expected to materially adversely affect the business of