EXHIBIT 99.4
The indebtedness evidenced by this instrument is subordinated to the prior
payment in full of the Senior Debt (as defined in the Intercreditor and
Subordination Agreement hereinafter referred to) pursuant to, and to the extent
provided in, the Intercreditor and Subordination Agreement dated March 15, 2002
by the maker hereof and the payee named herein in favor of the Senior Lender
referred to in such Intercreditor and Subordination Agreement.
SECURED PROMISSORY NOTE
Dated: November 11, 2002
$3,300,000.00
Holiday RV Superstores, Inc., a Delaware corporation (the "Company"),
promises to pay to AGI Holding Corp., a Delaware corporation, or assigns (the
"Payee") the principal sum of Three Million Three Hundred Thousand and No/100
Dollars ($3,300,000.00).
1. PAYMENT OF PRINCIPAL, INTEREST AND FEES.
(a) INTEREST. Interest shall accrue commencing the date hereof
on the unpaid principal balance of this Note balance from time to time
outstanding at the rate of twelve and three-quarters percent (12.75%) per annum.
Interest shall be computed hereunder based on a 365-day year.
(b) PAYMENTS. Interest for the period from the date hereof
through December 13, 2002 shall be due and payable on December 14, 2002.
Thereafter, interest shall be payable monthly on the first day of each calendar
month until payment in full of this Note beginning on January 1, 2003. The
entire outstanding principal balance hereof, together with all accrued but
unpaid interest thereon and all other sums due hereunder, shall be due and
payable in full on November 15, 2004.
2. PREPAYMENT. The Company shall have the option of prepaying
this Note in whole or in part at any time and from time to time without penalty
or premium. All payments shall be applied first to accrued interest and then to
principal balances.
3. CONVERSION RIGHT. Payee shall have the right, from time to
time at Payee's option, to convert all or a portion of the amount owing under
this Promissory Note into the Company's common stock, par value $.01 per share
(the "Common Stock") at $1.99 per share subject to adjustment as herein provided
(the "Conversion Price"). The Conversion Price shall be subject to adjustment
from time to time as follows:
(i) COMMON STOCK ISSUED AT LESS THAN THE CONVERSION PRICE OR
LESS THAN FAIR MARKET VALUE. If the Company shall issue any Common
Stock other than Excluded Stock (as hereinafter defined) without
consideration, for a consideration per share less than the Conversion
Price in effect immediately prior to such issuance or for less than the
fair market value of the Common Stock, the Conversion Price in effect
immediately prior to each such issuance shall immediately (except as
provided below) be reduced to the price equal to the price determined
by multiplying such Conversion Price by a fraction, the numerator of
which is (1) an amount equal to the sum of (A) the number of shares of
Common Stock outstanding immediately prior to such issuance and (B) the
number of shares of Common Stock issued in such issuance had such
shares been issued at a price per share equal to the greater of (x) the
Conversion Price immediately prior to such issuance or (y) the fair
market value immediately prior to such issuance, and the denominator of
which is (2) the total number of shares of Common Stock outstanding
immediately after such issuance.
For purposes of any adjustment of the Conversion Price
pursuant to this clause (i), the following provisions shall be
applicable:
(A) CASH. In the case of the issuance of Common Stock for
cash, the amount of the consideration received by the Company shall be
deemed to be the amount of the cash proceeds received by the
Corporation for such Common Stock plus any discounts, commissions,
taxes or other expenses allowed, paid, granted or incurred by the
Company for any underwriting or otherwise in connection with the
issuance and sale thereof.
(B) CONSIDERATION OTHER THAN CASH. In the case of the issuance
of Common Stock (otherwise than upon the conversion of shares of
Capital Stock or other securities of the Company) for a consideration
in whole or in part other than cash, including securities acquired in
exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed to be
the fair value thereof as reasonably determined by the Board of
Directors, irrespective of any accounting treatment.
(C) OPTIONS AND CONVERTIBLE SECURITIES. In the case of the
issuance of (i) options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time exercisable), (ii)
securities by their terms convertible into or exchangeable for Common
Stock (whether or not at the time so convertible or exchangeable) or
(iii) options, warrants or rights to purchase such convertible or
exchangeable securities (whether or not at the time exercisable):
(1) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options, warrants or
other rights to purchase or acquire Common Stock shall be
deemed to have been issued at the time such options, warrants
or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in subclauses
(A) and (B) above), if any, received by the Company upon the
issuance of such options, warrants or rights plus the maximum
aggregate amount of additional consideration (set forth in the
instruments relating thereto, without regard to any provision
contained therein for subsequent adjustments of such
consideration) payable to the Company upon the exercise of
such options, warrants or other rights to purchase or acquire
Common Stock;
(2) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities, or upon the
exercise of options, warrants or other rights to purchase or
acquire such convertible or exchangeable securities and the
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subsequent conversion or exchange thereof, shall be deemed to
have been issued at the time such securities were issued or
such options, warrants or rights were issued and for a
consideration equal to the consideration, if any, received by
the Company for any such securities and related options,
warrants or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional
consideration (determined in the manner provided in subclauses
(A), (B), and (C)(1), above), if any, to be received by the
Company upon the conversion or exchange of such securities, or
upon the exercise of any related options, warrants or rights
to purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange thereof;
(3) on any change in the number of shares of Common
Stock deliverable upon exercise of any such options, warrants
or rights or conversion or exchange of such convertible or
exchangeable securities or any change in the consideration to
be received by the Company upon such exercise, conversion or
exchange, including, but not limited to, a change resulting
from the anti-dilution provisions thereof, the Conversion
Price as then in effect shall forthwith be readjusted to such
Conversion Price as would have been obtained had an adjustment
been made upon the issuance of such options, warrants or
rights not exercised prior to such change, or of such
convertible or exchangeable securities not converted or
exchanged prior to such change, upon the basis of such change;
(4) on the expiration or cancellation of any such
options, warrants or rights, or the termination of the right
to convert or exchange such convertible or exchangeable
securities, if the Conversion Price shall have been adjusted
upon the issuance thereof, the Conversion Price shall
forthwith be readjusted to such Conversion Price as would have
been obtained had an adjustment been made upon the issuance of
such options, warrants, rights or exchangeable securities on
the basis of the issuance only the number of shares of Common
Stock actually issued upon the exercise of such options,
warrants or rights, or upon the conversion or exchange of such
convertible or exchangeable securities; and
(5) if the Conversion Price shall have been adjusted
upon the issuance of any such options, warrants, rights or
convertible or exchangeable securities, no further adjustment
of the Conversion Price shall be made for the actual issuance
of Common Stock upon the exercise, conversion or exchange
thereof.
(D) EXCLUDED STOCK. "Excluded Stock" shall mean (1) shares of
Common Stock issued or reserved for issuance by the Company as a stock
dividend payable in shares of Common Stock, or upon any subdivision or
split-up of the outstanding shares of Common Stock or preferred stock,
or upon conversion or exercise of shares of currently outstanding
shares of preferred stock or currently outstanding warrants; (2) the
issuance of up to 300,000 shares of Common Stock to be issued or
reserved for issuance to employees, consultants, officers or directors
of the Company pursuant to the Company's 1999 Stock Compensation
Program and up to 3,000,000 shares of Common Stock to be issued or
reserved for issuance to employees, consultants, officers or directors
of the Company pursuant to the Company's 2002 Stock Compensation
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Program, provided the exercise price for any options is at least equal
to the fair market value of the Common Stock at the time the option was
granted and the sales price for any shares of Common Stock issued under
such plan is at least equal to the fair market value of the Common
Stock at the time the shares are sold other than pursuant to the
exercise of an option under such a plan; (3) shares of Common Stock or
options or warrants for shares of Common Stock issued or reserved for
issuance by the Company pursuant to the acquisition of stock or assets
of an unaffiliated Person, provided that the consideration received by
the Company for such shares of Common Stock shall be at least equal to
the fair market value of the Common Stock at the time of such
acquisition and the aggregate number of shares of Common Stock issued
under this clause (3) and clause (4) below shall not exceed 1,000,000
shares; (4) shares of Common Stock or options or warrants for shares of
Common Stock issued or reserved for issuance by the Company to
equipment lessors, banks, financial institutions or similar entities in
connection with commercial credit arrangements, equipment financing or
similar transactions, provided that the aggregate number of shares of
Common Stock issued under this clause (4) and clause (3) above shall
not exceed 1,000,000 shares; (5) shares of Common Stock issued or
reserved for issuance by the Company as a dividend or other
distribution in connection with which an adjustment to the Conversion
Price is made pursuant to clause (ii) or (iii); (6) issuance of
securities in a public offering in which all of the Company's Series A
Preferred Stock and Series AA-2 Preferred Stock will be converted,
provided that such offering is made pursuant to a firm underwriting
agreement and the net proceeds to the Company are at least $15 million;
and (7) shares of Common Stock issued pursuant to currently outstanding
options, warrants, notes, convertible securities or other rights to
acquire securities of the Company which were outstanding as of the
date. All shares of Excluded Stock which the Company has reserved for
issuance shall be deemed to be outstanding for all purposes of
computations under this paragraph 3.
(ii) STOCK DIVIDENDS, SUBDIVISIONS, RECLASSIFICATIONS OR
COMBINATIONS. If the Company shall (i) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii)
subdivide or reclassify the outstanding Common Stock into a greater
number of shares, or (iii) combine or reclassify the outstanding Common
Stock into a smaller number of shares, the Conversion Price in effect
at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification
shall be proportionately adjusted so that the Payee shall be entitled
to receive the number of shares of Common Stock which the Payee would
have owned or been entitled to receive had the portion of this
Promissory Note so converted been converted immediately prior to such
date. Successive adjustments in the Conversion Price shall be made
whenever any event specified above shall occur.
(iii) CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE. In
case of any consolidation with or merger of the Company with or into
another corporation, or in case of any sale, lease or conveyance to
another corporation of the assets of the corporation as an entirety or
substantially as an entirety, Payee shall after the date of such
consolidation, merger, sale, lease or conveyance be convertible into
the number of shares of stock or other securities or property
(including cash) to which the Common Stock issuable (at the time of
such consolidation, merger, sale, lease or conveyance) upon conversion
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of this Promissory Note would have been entitled upon such
consolidation, merger, sale, lease or conveyance; and in any such case,
if necessary, the provisions set forth herein with respect to the
rights and interests thereafter of Payee shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to any
shares of stock or other securities or property thereafter deliverable
on the conversion of this Promissory Note.
(iv) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENT. All
calculations under this paragraph 3 shall be made to the nearest cent
or to the nearest one hundredth (1/100th) of a share, as the case may
be. Any provisions of this paragraph 3 to the contrary notwithstanding,
no adjustment in the Conversion Price shall be made if the amount of
such adjustment would be less than $0.01, but any such amount shall be
carried forward and an adjustment with respect thereto shall be made at
the time of and together with any subsequent adjustment which, together
with such amount and any other amount or amounts so carried forward,
shall aggregate $0.01 or more.
(v) TIMING OF ISSUANCE OF ADDITIONAL COMMON STOCK UPON CERTAIN
ADJUSTMENTS. In any case in which the provisions of this paragraph 3
shall require that an adjustment shall become effective immediately
after a record date for an event, the Company may defer until the
occurrence of such event (A) issuing to the Payee for any portion of
this Promissory Note converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable
upon such conversion by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such conversion
before giving effect to such adjustment and (B) paying to such holder
any amount of cash in lieu of a fractional share of Common Stock
pursuant to this paragraph 3; provided that the Company upon request
shall deliver to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares, and
such cash, upon the occurrence of the event requiring such adjustment.
(vi) STATEMENT REGARDING ADJUSTMENTS. Whenever the Conversion
Price shall be adjusted as provided in this paragraph 3, the Company
shall forthwith notify Payee in writing and file at the principal
office of the Company, a statement showing in detail the facts
requiring such adjustment and the Conversion Price that shall be in
effect after such adjustment. Each such statement shall be signed by
the Company's Chief Financial Officer. Where appropriate, such copy may
be given in advance and may be included as part of a notice required to
be mailed under the provisions of this clause (vi).
4. DEFAULTS AND REMEDIES. This Note is delivered by the Company to
Payee pursuant to the loan and security agreement dated March 12, 2002, as
amended by amendment no. 1 dated October 9, 2002 and amendment no. 2 dated as of
November 11, 2002 (the "Loan Agreement") among the Company, the subsidiaries of
the Company, Payee, XXXX Finance Co, LLC, The Xxxxxxx Xxxxx Living Trust u.t.a.
dated September 15, 1997, and Xxxxxxx Xxxxx. If an Event of Default (as defined
in the Loan Agreement) occurs and is continuing, then the Payee may declare the
principal of and interest on the Note to be due and payable immediately. No
course of dealing on the part of the Payee nor any delay or failure on the part
of the Payee to exercise any right shall operate as a waiver of such right or
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otherwise prejudice the Payee's rights, powers and remedies. If an Event of
Default occurs, the Company will pay to the Payee all costs and expenses,
including but not limited to reasonable attorneys' fees, incurred by the Payee
in collecting any sums due on this Note or in otherwise enforcing any of the
Payee's rights, powers and remedies.
5. SECURITY. This Note is secured by a lien in favor of the Payee on
all of the Company's assets and properties and by guaranties by the subsidiaries
of the Company which guaranties are secured by a lien in favor of the Payee on
all of each guarantor's assets and properties.
6. GOVERNING LAW AND CONSTRUCTION. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF DELAWARE, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Wherever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but, if any provision
of this Note or any other statement, instrument or transaction contemplated
hereby or relating hereto shall be held to be prohibited or invalid under such
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note or any other statement, instrument or
transaction contemplated hereby or relating hereto.
7. CONSENT TO JURISDICTION. AT THE OPTION OF PAYEE, THIS NOTE MAY BE
ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS,
MINNESOTA; AND THE COMPANY CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN
THE EVENT THE COMPANY COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS NOTE, PAYEE AT ITS OPTION SHALL BE ENTITLED TO HAVE
THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED IF
SUCH TRANSFER CAN BE ACCOMPLISHED UNDER APPLICABLE LAW. IF SUCH TRANSFER CANNOT
BE ACCOMPLISHED UNDER APPLICABLE LAW, PAYEE AT ITS OPTION SHALL BE ENTITLED TO
HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
8. MISCELLANEOUS. Payee shall have all of the benefits of the
provisions of the Loan Agreement, including the security and guaranties provided
thereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the date first written above.
HOLIDAY RV SUPERSTORES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
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