1
EXHIBIT 10.16
STOCK PURCHASE AGREEMENT
AMONG
VAIL RESORTS, INC.,
▇▇▇▇▇▇▇ FOODS, INC.
AND
▇▇▇▇▇▇▇ RESORTS, INC.
JULY 22, 1996
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TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . 1
ARTICLE II - SALE AND PURCHASE OF ▇▇▇▇▇▇▇ STOCK;
CERTAIN PRE-CLOSING AND POST-CLOSING
MATTERS
2.1 Sale and Purchase of ▇▇▇▇▇▇▇ Stock. . . . . . 11
2.2 Purchase Price. . . . . . . . . . . . . . . . 11
2.3 Post-Closing Adjustments. . . . . . . . . . . 11
2.4 Vail Dividend . . . . . . . . . . . . . . . . 13
ARTICLE III - FOODS' REPRESENTATIONS AND WARRANTIES
3.1 ▇▇▇▇▇▇▇ Stock . . . . . . . . . . . . . . . . 13
3.2 Rights To Acquire ▇▇▇▇▇▇▇ Stock . . . . . . . 13
3.3 Transfer of the ▇▇▇▇▇▇▇ Stock . . . . . . . . 13
3.4 Corporate Standing of Foods . . . . . . . . . 14
3.5 Authority of Foods. . . . . . . . . . . . . . 14
3.6 Corporate Standing. . . . . . . . . . . . . . 15
3.7 Authority of ▇▇▇▇▇▇▇. . . . . . . . . . . . . 15
3.8 Qualifications To Do Business . . . . . . . . 16
3.9 Capital Stock of Subsidiaries . . . . . . . . 16
3.10 Corporate and Stock Transfer Records. . . . . 16
3.11 Employee Loans and Other Employee Interests
in ▇▇▇▇▇▇▇. . . . . . . . . . . . . . . . . . 17
3.12 ▇▇▇▇▇▇▇ Financial Statements; No Material
Adverse Change. . . . . . . . . . . . . . . . 17
3.13 Conduct of Business . . . . . . . . . . . . . 17
3.14 Dividends . . . . . . . . . . . . . . . . . . 19
3.15 Absence of Undisclosed Liabilities. . . . . . 19
3.16 Title to Property . . . . . . . . . . . . . . 20
3.17 Real Property . . . . . . . . . . . . . . . . 20
3.18 Personal Property . . . . . . . . . . . . . . 23
3.19 Litigation and Claims . . . . . . . . . . . . 24
3.20 Compliance with Laws. . . . . . . . . . . . . 24
3.21 Orders and Consent Decrees. . . . . . . . . . 24
3.22 Labor Agreements. . . . . . . . . . . . . . . 24
3.23 Employees . . . . . . . . . . . . . . . . . . 25
3.24 Contracts . . . . . . . . . . . . . . . . . . 25
3.25 Validity of Material Contracts. . . . . . . . 26
3.26 Trademarks and Copyrights . . . . . . . . . . 27
3.27 Powers of Attorney. . . . . . . . . . . . . . 28
3.28 Taxes . . . . . . . . . . . . . . . . . . . . 28
3.29 Employee Benefit Plans. . . . . . . . . . . . 30
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3.30 Environmental Matters . . . . . . . . . . . . 32
3.31 Liability and Casualty Insurance. . . . . . . 33
3.32 Consents or Approvals . . . . . . . . . . . . 33
3.33 Transaction Fees. . . . . . . . . . . . . . . 34
3.34 Bank Accounts . . . . . . . . . . . . . . . . 34
3.35 Ownership of ▇▇▇▇▇▇▇ Stock; ▇▇▇▇▇▇▇ Assets. . 34
3.36 Vail Stock Acquired For Foods' Account. . . . 34
3.37 United States Forest Service. . . . . . . . . 35
3.38 Passenger Tramway . . . . . . . . . . . . . . 35
3.39 Clean Water Act . . . . . . . . . . . . . . . 36
3.40 Keystone/Intrawest L.L.C. . . . . . . . . . . 37
3.41 Water Rights. . . . . . . . . . . . . . . . . 40
ARTICLE IV - VAIL'S REPRESENTATIONS AND WARRANTIES
4.1 Capital Stock . . . . . . . . . . . . . . . . 41
4.2 Transfer of the Vail Stock. . . . . . . . . . 41
4.3 Authority of Vail . . . . . . . . . . . . . . 41
4.4 Corporate Standing. . . . . . . . . . . . . . 42
4.5 Qualifications To Do Business . . . . . . . . 42
4.6 Capital Stock of Subsidiaries . . . . . . . . 43
4.7 Corporate Records . . . . . . . . . . . . . . 43
4.8 Employee Loans and Other Employee Interests
in Vail . . . . . . . . . . . . . . . . . . . 43
4.9 Vail Financial Statements; No Material
Adverse Change. . . . . . . . . . . . . . . . 44
4.10 Conduct of Business . . . . . . . . . . . . . 44
4.11 Dividends . . . . . . . . . . . . . . . . . . 46
4.12 Absence of Undisclosed Liabilities. . . . . . 46
4.13 Title to Property . . . . . . . . . . . . . . 46
4.14 Real Property . . . . . . . . . . . . . . . . 46
4.15 Personal Property . . . . . . . . . . . . . . 49
4.16 Litigation and Claims . . . . . . . . . . . . 50
4.17 Compliance with Laws. . . . . . . . . . . . . 50
4.18 Orders and Consent Decrees. . . . . . . . . . 50
4.19 Labor Agreements. . . . . . . . . . . . . . . 50
4.20 Employees . . . . . . . . . . . . . . . . . . 50
4.21 Contracts . . . . . . . . . . . . . . . . . . 51
4.22 Validity of Material Contracts. . . . . . . . 52
4.23 Trademarks and Copyrights . . . . . . . . . . 52
4.24 Powers of Attorney. . . . . . . . . . . . . . 53
4.25 Taxes . . . . . . . . . . . . . . . . . . . . 53
4.26 Employee Benefit Plans. . . . . . . . . . . . 56
4.27 Environmental Matters . . . . . . . . . . . . 58
4.28 Liability and Casualty Insurance. . . . . . . 58
4.29 Consents or Approvals . . . . . . . . . . . . 59
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4.30 Transaction Fees. . . . . . . . . . . . . . . 59
4.31 ▇▇▇▇▇▇▇ Stock Acquired for Vail's Account . . 59
4.32 United States Forest Service. . . . . . . . . 59
4.33 Passenger Tramway . . . . . . . . . . . . . . 60
4.34 Clean Water Act . . . . . . . . . . . . . . . 61
4.35 Water Rights. . . . . . . . . . . . . . . . . 61
4.36 Financing Commitment. . . . . . . . . . . . . 61
ARTICLE V - COVENANTS PENDING CLOSING
5.1 ▇▇▇▇▇▇▇ Operations. . . . . . . . . . . . . . 61
5.2 Vail Operations . . . . . . . . . . . . . . . 66
5.3 Due Diligence Review. . . . . . . . . . . . . 67
5.4 Insurance . . . . . . . . . . . . . . . . . . 68
5.5 Public Announcements. . . . . . . . . . . . . 68
5.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing; Investigations
or Litigation . . . . . . . . . . . . . . . . 68
5.7 No Solicitation . . . . . . . . . . . . . . . 69
5.8 Audit of ▇▇▇▇▇▇▇ Financial Statements;
Delivery of Additional Financial
Statements. . . . . . . . . . . . . . . . . . 69
5.9 Supplemental Disclosure . . . . . . . . . . . 70
5.10 Real Property Transfer Laws . . . . . . . . . 71
5.11 Cooperation . . . . . . . . . . . . . . . . . 71
5.12 Foods Receivables and Payables. . . . . . . . 71
5.13 Environmental Surveys . . . . . . . . . . . . 71
5.14 Affiliate Guarantors. . . . . . . . . . . . . 71
5.15 Notice of Certain Transactions. . . . . . . . 71
5.16 Guarantee Fees. . . . . . . . . . . . . . . . 72
ARTICLE VI - CONDITIONS TO CLOSING
6.1 Conditions of Vail. . . . . . . . . . . . . . 72
6.2 Conditions of Foods . . . . . . . . . . . . . 74
6.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ . . . . . . . . . . . . . . 74
6.4 No Litigation . . . . . . . . . . . . . . . . 74
6.5 Material Change in Market Circumstances . . . 75
ARTICLE VII - THE CLOSING
7.1 Place of Closing. . . . . . . . . . . . . . . 75
7.2 Date of Closing . . . . . . . . . . . . . . . 75
7.3 Effective Time of Closing . . . . . . . . . . 75
7.4 Delivery of Closing Documents . . . . . . . . 75
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ARTICLE VIII - CLOSING TRANSACTIONS
8.1 Transfer of ▇▇▇▇▇▇▇ Stock . . . . . . . . . . 76
8.2 Delivery of Vail Stock. . . . . . . . . . . . 76
8.3 Receipt . . . . . . . . . . . . . . . . . . . 76
8.4 Opinion of Counsel of Foods . . . . . . . . . 76
8.5 Opinion of Counsel of Vail. . . . . . . . . . 78
8.6 Good Standing Certificates. . . . . . . . . . 80
8.7 Corporate Resolutions of Foods. . . . . . . . 80
8.8 Corporate Resolutions of Vail . . . . . . . . 80
8.9 Certificate of Foods. . . . . . . . . . . . . 80
8.10 Certificate of Vail . . . . . . . . . . . . . 81
8.11 Shareholder Agreement . . . . . . . . . . . . 81
8.12 Resignation of ▇▇▇▇▇▇▇ Corporate Officers . . 81
8.13 Consents. . . . . . . . . . . . . . . . . . . 81
8.14 Ancillary Documents . . . . . . . . . . . . . 81
ARTICLE IX - ADDITIONAL COVENANTS
9.1 Commissions and Fees. . . . . . . . . . . . . 81
9.2 Costs and Expenses. . . . . . . . . . . . . . 82
9.3 Bank Accounts . . . . . . . . . . . . . . . . 82
9.4 Business Relationships. . . . . . . . . . . . 83
9.5 Insurance Proceeds. . . . . . . . . . . . . . 83
9.6 Further Action. . . . . . . . . . . . . . . . 83
9.7 Records . . . . . . . . . . . . . . . . . . . 84
9.8 Employee Benefit Plan Matters . . . . . . . . 84
9.9 Confidentiality Agreement . . . . . . . . . . 86
9.10 Tax Election. . . . . . . . . . . . . . . . . 87
9.11 Resale of ▇▇▇▇▇▇▇ Stock . . . . . . . . . . . 87
9.12 Non-Competition . . . . . . . . . . . . . . . 87
ARTICLE X - INDEMNIFICATION
10.1 Indemnification of Vail . . . . . . . . . . . 88
10.2 Indemnification of Foods. . . . . . . . . . . 88
10.3 Indemnification Procedure . . . . . . . . . . 89
10.4 Third Party Claims. . . . . . . . . . . . . . 89
10.5 Tax Indemnification . . . . . . . . . . . . . 90
10.6 Limitation of Indemnification . . . . . . . . 91
10.7 Procedures Relating to Indemnification of
Tax Claims. . . . . . . . . . . . . . . . . . 91
10.8 Survival of Representations and
Warranties. . . . . . . . . . . . . . . . . . 93
10.9 Survival of Indemnities . . . . . . . . . . . 93
10.10 Transfer Taxes. . . . . . . . . . . . . . . . 93
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10.11 Return Filings, Refunds and Credits . . . . . 94
10.12 Refunds from Carrybacks . . . . . . . . . . . 95
10.13 Termination of Tax Sharing Agreements . . . . 95
10.14 Payments. . . . . . . . . . . . . . . . . . . 95
ARTICLE XI - TERMINATION
11.1 Mutual Consent. . . . . . . . . . . . . . . . 96
11.2 Obligation To Close . . . . . . . . . . . . . 96
11.3 Final Closing Date. . . . . . . . . . . . . . 96
11.4 Obligations After Termination . . . . . . . . 96
ARTICLE XII - MISCELLANEOUS PROVISIONS
12.1 Entire Agreement. . . . . . . . . . . . . . . 96
12.2 Effect of Supplemental Information. . . . . . 96
12.3 Choice of Law . . . . . . . . . . . . . . . . 97
12.4 Venue . . . . . . . . . . . . . . . . . . . . 97
12.5 Notices . . . . . . . . . . . . . . . . . . . 97
12.6 Effective Date of Notice. . . . . . . . . . . 98
12.7 Amendments. . . . . . . . . . . . . . . . . . 99
12.8 Gender and Number . . . . . . . . . . . . . . 99
12.9 Assignments . . . . . . . . . . . . . . . . . 99
12.10 Headings and Captions . . . . . . . . . . . . 99
12.11 Schedules and Exhibits. . . . . . . . . . . . 99
12.12 Severability. . . . . . . . . . . . . . . . . 99
12.13 Counterparts. . . . . . . . . . . . . . . . . 99
12.14 Remedies. . . . . . . . . . . . . . . . . . . 100
12.15 Third-Party Beneficiaries . . . . . . . . . . 100
12.16 Binding Agreement . . . . . . . . . . . . . . 100
Exhibit A - Shareholder Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made
and entered into this 22nd day of July, 1996, by and among Vail
Resorts, Inc., a Delaware corporation ("Vail"), ▇▇▇▇▇▇▇ Foods,
Inc., a Nevada corporation ("Foods"), and ▇▇▇▇▇▇▇ Resorts, Inc., a
Colorado corporation ("▇▇▇▇▇▇▇").
WHEREAS, Foods is the owner of all the issued and
outstanding capital stock of ▇▇▇▇▇▇▇; and
WHEREAS, Foods desires to sell all of the capital stock
of ▇▇▇▇▇▇▇ to Vail in accordance with the terms and subject to the
conditions of this Agreement; and
WHEREAS, Vail desires to purchase all of the capital
stock of ▇▇▇▇▇▇▇ in accordance with the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises
and covenants contained herein, and subject to the terms and
conditions of this Agreement, Foods and Vail agree as follows:
ARTICLE I
DEFINITIONS
"Active ▇▇▇▇▇▇▇ Employee" shall have the meaning given it in Section
9.8(a).
"Adjusted Balance Sheet" shall mean the ▇▇▇▇▇▇▇ balance sheet as of
June 30, 1996, adjusted to remove the Excluded Assets, as set forth on Schedule
1.1.
"Affiliate" shall have the meaning given in the Shareholder Agreement.
"Affiliated Group" shall have the meaning given to it in Section 3.28(a).
"ANSI" shall have the meaning given it in Section 3.38(b).
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"Business Day" shall mean any day other than a Saturday, Sunday or
legal holiday for commercial banks in New York City or St. Louis, Missouri.
"Clean Water Act" shall have the meaning given it in Section 3.39(a).
"Closing" shall mean the consummation of the transactions contemplated
by this Agreement.
"Closing Contribution Adjustment" shall mean the lesser of (A) (i) the
Contribution Adjustment of ▇▇▇▇▇▇▇ for the period from August 1, 1996 through
the Closing Date, less (ii) the amount, if any, by which $6,676,000 exceeds the
Contribution Adjustment of ▇▇▇▇▇▇▇ for the period from July 1, 1996 through
July 31, 1996; and (B) the greater of (x) $18,000,000 and (y) the amount set
forth in the certificate of an officer of Foods delivered pursuant to Section
6.1(k).
"Closing Date" shall mean the fifth Business Day after the date on
which the last to be received of all authorizations, approvals, consents,
permits and licenses from governmental and regulatory bodies and third parties
set forth in this Agreement that are conditions to the consummation of the
transactions contemplated hereby have been obtained.
"Closing Date Statements" shall have the meaning given it in Section
2.3(a).
"Code" shall mean the Internal Revenue Code of
1986, as amended, and all regulations promulgated thereunder.
"Confidentiality Agreement" shall mean, collectively, (i) the
Confidentiality Agreement dated March 19, 1996 between Ralcorp Holdings, Inc.
and Apollo Advisors, L.P. and (ii) the Confidentiality and Exclusivity
Agreement dated May 16, 1996, as supplemented by a letter agreement dated July
10, 1996, between Ralcorp Holdings, Inc. and Apollo Advisors, L.P.
"Contribution Adjustment" shall mean for any period (i) the Net
Investment during such period, less (ii) EBITDA for such period, plus (iii) Net
Assets on the last day of such period, less (iv) Net Assets on the first day of
such period.
"Contribution Agreement" shall mean the Contribution Agreement between
▇▇▇▇▇▇▇ and Intrawest, dated February 7, 1994.
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"Corporate Officers" of ▇▇▇▇▇▇▇ are ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇; and of Vail are ▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, J. ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇.
"CPTSB" shall have the meaning given it in Section 3.38(a).
"EBITDA" shall mean for any period (i) earnings before interest and
taxes, plus (ii) depreciation and amortization expense, plus (iii)
other noncash charges (including, but not limited to, losses on sale of assets,
write down of assets or extraordinary charges), plus (iv) losses related to the
LLC or other investments, less (v) income related to the LLC or other
investments. All terms shall be calculated for ▇▇▇▇▇▇▇ and its subsidiaries on
a consolidated basis according to GAAP.
"Employee Benefit Plans" shall mean all employee benefit plans as such
term is defined in Section 3(3) of ERISA, but excluding all pension and
welfare plans which are Multiemployer Plans or are otherwise maintained
pursuant to a collective bargaining agreement and to which more than one
employer contributes and any other deferred compensation, stock option,
restricted stock or unit, performance share or unit, bonus, vacation,
severance, sick leave or other welfare or incentive plan.
"Environmental Claims" shall mean any and all administrative, regulatory
or judicial actions, suits, demands, liens, notices of noncompliance or
violation, investigations or proceedings relating to any Environmental Law or
Environmental Permit including, without limitation, (a) any demands or claims
by governmental or regulatory authorities for enforcement, cleanup, removal,
response or remedial action, (b) any demands or claims for damages pursuant to
any applicable Environmental Law, and (c) any demands or claims by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from any Hazardous Substance.
"Environmental Law" shall mean the following federal laws (including
related regulations) and all Colorado state or local equivalents
thereof: The Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986; the Emergency Planning and Community RighttoKnow Act; the Resource
Conservation and Recovery Act; the Federal Water
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Pollution Control Act; the Clean Air Act; the Clean Water Act; the Safe
Drinking Water Act; the Toxic Substances Control Act; the Oil Pollution Act of
1990; and the Hazardous Materials Transportation Act.
"Environmental Permit" shall mean a permit, identification number,
license or other written authorization required under any applicable
Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and all regulations promulgated thereunder.
"ERISA Affiliate" shall mean with respect to a party, (a) any entity that
is (or at any relevant time was) a member of a "controlled group of
corporations" with or under "common control" with such party (as such terms are
defined in Section 414(b) and (c) of the Code), or (b) any entity that is (or
at any relevant time was) a member of an "affiliated service group" (as such
term is defined in Section 414(m) of the Code) that includes such party.
"Excluded Assets" means those assets set forth on Schedule 1.1 as the
"Excluded Assets."
"Foods Affiliates" shall have the meaning given it in Section 9.12.
"GAAP" shall mean accounting principles which are (a) consistent with the
principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect from time to time, and (b) applied on a
basis consistent with prior periods.
"HartScottRodino" shall mean the HartScottRodino Antitrust Improvements
Act of 1976, as amended, and all regulations promulgated thereunder.
"Hazardous Substances" shall mean: (a) any chemical, material or
substance defined as, or included in the definition of, "hazardous
substances," "hazardous wastes," "hazardous materials," "toxic substances or
toxic pollutants," "contaminants," "toxic or hazardous chemicals" or
"pesticides" in any applicable Environmental Law, or (b) any petroleum or
petroleum product or asbestoscontaining materials in a condition that would
pose an imminent danger to public health.
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"Income Tax" or "Income Taxes" shall mean any tax or taxes imposed or
based on income, including, but not limited to, any income,
environmental, minimum or franchise tax based on income, alternative net worth
tax or single business tax, imposed by any foreign, federal, state, county or
local government, or any subdivision or agency thereof, and any interest,
penalty or expense relating to such taxes.
"Indebtedness" shall mean (i) any liability, contingent or otherwise, of
▇▇▇▇▇▇▇ or any of its subsidiaries (A) for borrowed money (whether or
not the recourse of the lender is to the whole of the assets of ▇▇▇▇▇▇▇ or any
of its subsidiaries or only to a portion thereof) or (B) evidenced by a note,
debenture or similar instrument or letter of credit (including a purchase money
obligation or other obligation relating to the deferred purchase price of
property and trade payables that are more than 30 days past due); (ii) any
liability of others of the kind described in the preceding clause (i) which
▇▇▇▇▇▇▇ or any of its subsidiaries has guaranteed or which is otherwise its
legal liability; (iii) any obligation secured by a lien to which the property
or assets of ▇▇▇▇▇▇▇ or any of its subsidiaries are subject, whether or not the
obligations secured thereby shall have been assumed by it or shall otherwise be
its legal liability; (iv) all capitalized lease obligations of ▇▇▇▇▇▇▇ or any
of its subsidiaries; and (v) any liability of ▇▇▇▇▇▇▇ or any of its
subsidiaries for debt owing to the National Bank of Australia relating to the
Conference Center. For purposes of this definition of Indebtedness,
Indebtedness of the LLC shall not be considered Indebtedness of ▇▇▇▇▇▇▇ or any
of its subsidiaries unless ▇▇▇▇▇▇▇ or any of its subsidiaries has guaranteed or
otherwise become liable with respect to such Indebtedness (other than by virtue
of the pledge of the Option Land).
"Intrawest" shall mean Intrawest Resorts, Inc., a Delaware Corporation.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" or "best knowledge" shall mean, when used in connection with
the representations and warranties and covenants herein, the knowledge,
after reasonable inquiry of the relevant facts and circumstances, of the
applicable party's Corporate Officers and not any other employees of the party
making the representation or warranty or covenant.
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"LLC" shall mean the Keystone/Intrawest Limited Liability Company formed
pursuant to the LLC Agreement.
"LLC Agreement" shall mean the Limited Liability Company Agreement between
▇▇▇▇▇▇▇ and Intrawest, dated February 7, 1994.
"Loss" shall mean any liability, loss, damage, assessment, obligation,
settlement payment, award, fine, penalty, judgment, cost or expense,
including reasonable attorneys' fees, auditors' fees and experts' fees (but
excluding punitive damages that may be imposed on or against the indemnified
party because of its egregious conduct after the Closing), suffered by a party
hereto, including expenses related to investigating, defending and settling
indemnifiable claims, but net of any insurance proceeds received by the injured
party with respect to a Loss.
"Management Agreement" shall mean the Real Estate Development Management
Services Agreement between Intrawest and the LLC, dated February 7, 1994.
"Material Adverse Change" shall mean, with respect to a party, any event,
occurrence or change or effect that is materially adverse to the
business, operations, results of operations or condition (financial or
otherwise) or prospects of such party and its subsidiaries, taken as a whole.
"Multiemployer Plan" shall mean, with respect to a party, any
"multiemployer plan" as defined in Section 3(37) of ERISA that such
party or any ERISA Affiliate of such party contributes to or is required to
contribute to, or under which such party or any ERISA Affiliate of such party
may incur any liability.
"Net Assets" shall mean (i) current assets (excluding cash and cash
equivalents and any Excluded Assets), less (ii) total liabilities
(excluding any liabilities which would be included in the definition of Total
▇▇▇▇▇▇▇ Indebtedness or liabilities to Foods or any of its Affiliates). All
terms shall be calculated for ▇▇▇▇▇▇▇ and its subsidiaries on a consolidated
basis according to GAAP.
"Net Investment" shall mean for any period (i) additions to property,
plant and equipment, plus (ii) cash investments in or loans to the LLC,
plus (iii) acquisitions for cash of real estate held for sale, less (iv) the
proceeds from
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the sale or disposal of any noncurrent assets (including real
estate held for sale and property, plant and equipment), less
(v) cash received from the LLC or any other investment. All
terms shall be calculated for ▇▇▇▇▇▇▇ and its subsidiaries on a
consolidated basis according to GAAP.
"Notice of Claim" shall mean a written notice delivered by a party
claiming a right of indemnification to a party that would be required
to indemnify an injured party or hold such injured party harmless in accordance
with the terms of this Agreement.
"Option Land" shall mean the "option land" as defined in the LLC Agreement.
"Permitted Debt Level" shall mean $165,000,000.
"Permitted Encumbrances" shall mean, collectively: (a) liens for Taxes,
fees, levies, duties or other governmental charges of any kind which
are not yet delinquent or are being contested in good faith by appropriate
proceedings; or (b) liens that arise by operation of law for work performed or
materials supplied to any of the real properties owned by ▇▇▇▇▇▇▇ or any of its
subsidiaries after the date hereof; or (c) easements, rightsofway, restrictions
and covenants, none of which (a) through (c) above, individually or in the
aggregate, would be material as to the particular site or asset in question as
it relates to its current or presently intended use.
"PreClosing Tax Period" shall have the meaning given it in Section 10.5(a).
"Ralcorp" means Ralcorp Holdings, Inc., a Delaware corporation.
"▇▇▇▇▇▇▇ Budget" means the 19961997 ▇▇▇▇▇▇▇ Budget (which includes
details as to estimated operating cash flow and capital expenditures
for the period commencing with July 1, 1996 and ending with December 31, 1996
on a monthtomonth basis) as set forth on Schedule 1.1(a) hereto.
"▇▇▇▇▇▇▇ Employee" shall mean an individual who (a) is employed by
▇▇▇▇▇▇▇ or any of its subsidiaries on the date of the Closing, or (b)
was employed by ▇▇▇▇▇▇▇ or any of its subsidiaries immediately prior to his or
her retirement or other termination of employment prior to the date of the
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Closing, or (c) is, as of the Closing, on any approved leave of absence
from employment with ▇▇▇▇▇▇▇ or any of its subsidiaries, including, but not
limited to, leave due to disability.
"▇▇▇▇▇▇▇ Employee Benefit Plans" has the meaning given it in Section
3.29(a).
"▇▇▇▇▇▇▇ Financial Statements" shall mean (i) the unaudited consolidated
balance sheets of ▇▇▇▇▇▇▇ as of September 30, 1994 and September 30,
1995, the consolidated statements of earnings and cash flow for the years ended
September 30, 1993, 1994 and 1995, the unaudited consolidated balance sheet of
▇▇▇▇▇▇▇ as of June 30, 1996 and the consolidated statement of earnings and cash
flow for the nine months ended June 30, 1996, and (ii) any other financial
statements of ▇▇▇▇▇▇▇ delivered to Vail pursuant to Section 5.8(b).
"▇▇▇▇▇▇▇ Leased Property" shall have the meaning given it in Section
3.17(a).
"▇▇▇▇▇▇▇ Participant" shall mean any ▇▇▇▇▇▇▇ Employee, or a dependent,
beneficiary or alternate payee of a ▇▇▇▇▇▇▇ Employee, who, on the date
of Closing, was participating in, or was otherwise entitled to benefits from,
an Employee Benefit Plan maintained for ▇▇▇▇▇▇▇ Employees by ▇▇▇▇▇▇▇ or Foods
or Ralcorp or one of their Affiliates.
"▇▇▇▇▇▇▇ Stock" shall mean all of the outstanding common stock of
▇▇▇▇▇▇▇, par value $10.00 per share.
"Retirement Plan" shall have the meaning given it in Section 9.8(b).
"Savings Plan" shall have the meaning given it in Section 9.8(b).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act of 1933" shall mean the Securities Act of 1933, as
amended, and all regulations promulgated thereunder.
"Shareholder Agreement" means the Shareholder Agreement, substantially in
the form of Exhibit A hereto, among Foods, Vail and Apollo Ski Partners, L.P.
15
-9-
"Straddle Period" shall have the meaning given it in Section 10.5(c).
"Tax" or "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including without limitation all federal, state, local or
foreign net income, gross income, gross receipts, license, payroll, employment,
excise, severance, stamp, documentary, occupation, windfall profits,
environmental (including Taxes under Section 59A of the Code), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, estimated alternative or addon minimum or
other tax, fee, assessment or charge of any kind whatsoever and shall include
all interest or penalties on Taxes, additions to tax or additional amounts
imposed by any taxing authority (domestic or foreign), whether or not disputed.
"Tax Claim" shall have the meaning given it in Section 10.7(a).
"Tax Indemnified Party" shall have the meaning given it in Section 10.7(a).
"Tax Indemnifying Party" shall have the meaning given it in Section
10.7(a).
"Tax Notice" shall have the meaning given it in Section 10.7(a).
"Tax Return" shall mean a return, declaration, report, claim for refund
or information return relating to Taxes including, without limitation,
any statement, information or documentation required to be provided to any
taxing authority with respect to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
"Tax Sharing Agreements" shall have the meaning given it in Section 10.13.
"Total ▇▇▇▇▇▇▇ Indebtedness" shall mean, as of any date, the sum of the
aggregate principal amount of and accrued interest on Indebtedness of
▇▇▇▇▇▇▇ and its subsidiaries as of such date.
"Uncleared ▇▇▇▇▇▇▇ Checks" shall have the meaning given it in Section
9.3(b).
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"USFS" and "USFS Permits" shall have the meanings given in Section 3.37(a).
"Vail Dividend" shall mean the distribution to the then existing
shareholders of Vail made prior to the Closing of the right to receive
up to $55 million in cash at one or more times prior to or subsequent to the
Closing Date.
"Vail Employee" shall mean an individual who (a) is employed by Vail or
any of its subsidiaries on the date of the Closing, or (b) was employed
by Vail or any of its subsidiaries immediately prior to his or her retirement
or other termination of employment prior to the date of the Closing, or (c) is,
as of the Closing, on any approved leave of absence from employment with Vail
or any of its subsidiaries, including, but not limited to, leave due to
disability.
"Vail Employee Benefit Plans" shall have the meaning given it in Section
4.26(a).
"Vail Financial Statements" shall mean (i) the consolidated balance sheet
of Vail as of September 30, 1995 and September 30, 1994, and the
related statements of earnings and cash flow for the year ended September 30,
1995 and September 30, 1994 and the period from October 9, 1992 through
September 30, 1993, as audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, (ii) the consolidated
balance sheet of Vail as of April 30, 1996 and the related statement of
earnings and cash flow for the seven months ended April 30, 1996 and (iii) any
other financial statements of Vail delivered to Foods pursuant to Section
5.8(d).
"Vail Leased Property" shall have the meaning given it in Section 4.14(a).
"Vail Stock" shall mean the Common Stock, $.01 par value, of Vail.
"Ventures" shall have the meaning given it in Section 3.9.
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ARTICLE II
SALE AND PURCHASE OF ▇▇▇▇▇▇▇ STOCK;
CERTAIN PRE-CLOSING AND POST-CLOSING MATTERS
2.1 Sale and Purchase of ▇▇▇▇▇▇▇ Stock. Upon the terms and subject to the
conditions contained in this Agreement, in reliance upon the representations,
warranties and agreements contained in this Agreement and in consideration of
the payment of the purchase price as provided in Section 2.2 below, on the date
of the Closing, Foods shall sell, transfer, convey, assign and deliver to Vail,
or its nominee, all of the issued and outstanding shares of ▇▇▇▇▇▇▇ Stock.
2.2 Purchase Price. Upon the terms and subject to the conditions
contained in this Agreement, in reliance upon the representations, warranties
and agreements contained in this Agreement and in consideration of the aforesaid
sale, transfer, conveyance, assignment and delivery of the outstanding shares of
▇▇▇▇▇▇▇ Stock, on the date of the Closing, Vail will deliver to Foods, or its
nominee, 3,777,203 shares of Vail Stock.
2.3 Post-Closing Adjustments.
(a) Within 30 days after the Closing Date, ▇▇▇▇▇▇▇ shall deliver to Foods
and Vail (i) an audited consolidated balance sheet of ▇▇▇▇▇▇▇ as of the Closing
Date, (ii) an audited consolidated income statement and statement of cash flows
of ▇▇▇▇▇▇▇ for the period from July 1, 1996 to the Closing Date, and (iii) a
statement from Price Waterhouse, the independent auditors of ▇▇▇▇▇▇▇, setting
forth the calculation of Total ▇▇▇▇▇▇▇ Indebtedness and the Closing Contribution
Adjustment (collectively, the "Closing Date Statements").
(b) Vail and Foods shall have 30 days to review the Closing Date
Statements after receipt thereof. Unless Vail or Foods deliver written notice
to the other party on or prior to the 30th day after receipt of the Closing Date
Statements of Vail's or Foods' objection to the Closing Date Statements and
specifying in reasonable detail all disputed items and the basis therefor, Vail
and Foods shall be deemed to have accepted and agreed to the Closing Date
Statements. If Vail or Foods so notify ▇▇▇▇▇▇▇ of their objection to the
Closing Date Statements, Vail and Foods shall, within 30 days following such
notice (the "Resolution Period"), attempt to resolve their
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-12-
differences, and any resolution by them as to any disputed
amounts shall be final, binding and conclusive.
(c) If, at the conclusion of the Resolution Period,
any amounts remain in dispute, then all such amounts remaining in
dispute shall be submitted to Deloitte & Touche LLP (the "Neutral
Auditors"). Each of Vail, Foods and ▇▇▇▇▇▇▇ agrees to execute,
if requested by the Neutral Auditors, a reasonable engagement
letter. In the event that Vail, Foods and ▇▇▇▇▇▇▇ are unable to
engage the Neutral Auditors within five days after the conclusion
of the Resolution Period then they shall engage KPMG Peat Marwick
LLP to act as alternative neutral auditors (the "Alternative
Neutral Auditors"). All fees and expenses relating to the work,
if any, to be performed by the Neutral Auditors or the
Alternative Neutral Auditors, as the case may be, shall be borne
(i) 50% by Vail and (ii) 50% by Foods. The Neutral Auditors or
the Alternative Neutral Auditors, as the case may be, shall act
as an arbitrator to determine, based solely on presentations by
Vail and Foods, and not by independent review, only those issues
still in dispute. Vail and Foods shall use their reasonable best
efforts to cause the determination of the Neutral Auditors or the
Alternative Neutral Auditors, as the case may be, to be made
within 30 days of submission as provided above, whether or not
such presentation by Foods and Vail have been made within such
period and shall be set forth in a written statement delivered to
Foods and Vail and shall be final, binding and conclusive.
(d) To the extent that the amount of Total ▇▇▇▇▇▇▇
Indebtedness exceeds or is less than the Permitted Debt Level on
the Closing Date, Foods will promptly pay to Vail, upon its
demand, an amount equal to such excess (or Vail will promptly pay
to Foods, upon its demand, an amount equal to such deficiency) in
immediately available funds.
(e) Prior to Closing, ▇▇▇▇▇▇▇ shall (i) incur third
party Indebtedness in an amount not exceeding the Permitted Debt
Level less the principal amount of third party Indebtedness of
▇▇▇▇▇▇▇ outstanding at such time (the "Foods Dividend Amount")
and (ii) shall dividend the Foods Dividend Amount to Foods prior
to Closing (the "Foods Dividend"). On the Closing Date, Vail
shall repay in full the third party Indebtedness incurred by
▇▇▇▇▇▇▇ to pay the Foods Dividend so that Foods and its
Affiliates are unconditionally released from any guarantee of
said Indebtedness. In addition, prior to Closing, ▇▇▇▇▇▇▇ shall
distribute to Foods the Excluded Assets.
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(f) Within 10 days after the Closing Date Statements
have been agreed to or have become final, Vail will deliver to
Foods, or its nominee, a number of shares of Vail Stock equal to
the excess, if any, of (a) the number obtained by dividing the
Closing Contribution Adjustment by the amount set forth on
Schedule 2.3(e) over (b) 96,120.
2.4 Vail Dividend. Prior to the Closing, Vail shall declare the Vail
Dividend to its then existing shareholders (and Foods shall not be entitled to
any participation therein).
ARTICLE III
FOODS' REPRESENTATIONS AND WARRANTIES
Foods represents and warrants that:
3.1 ▇▇▇▇▇▇▇ Stock. The ▇▇▇▇▇▇▇ Stock is the only authorized class of
capital stock of ▇▇▇▇▇▇▇. There are 100 shares of ▇▇▇▇▇▇▇ Stock authorized and
100 shares outstanding. All outstanding shares of ▇▇▇▇▇▇▇ Stock are duly
authorized, validly issued, fully paid and non-assessable. There are no
options, warrants, calls or agreements of any character for the issuance of
additional shares of ▇▇▇▇▇▇▇ Stock. There are no contracts for the
authorization or issuance of any other class of securities of ▇▇▇▇▇▇▇, and there
are no outstanding securities convertible or exchangeable into ▇▇▇▇▇▇▇ Stock.
3.2 Rights To Acquire ▇▇▇▇▇▇▇ Stock. Neither Foods nor ▇▇▇▇▇▇▇ or any of
its subsidiaries is a party to any agreement or understanding, oral or written,
which (a) grants an option or other right to acquire any of the ▇▇▇▇▇▇▇ Stock or
any other equitable interest in ▇▇▇▇▇▇▇, (b) grants a right of first refusal or
other such similar right upon the sale of any of the ▇▇▇▇▇▇▇ Stock, or (c)
restricts or affects the voting rights of any of the ▇▇▇▇▇▇▇ Stock.
3.3 Transfer of the ▇▇▇▇▇▇▇ Stock. The stock certificate(s) representing
all of the outstanding shares of ▇▇▇▇▇▇▇ Stock to be delivered to Vail, or its
nominee, at the Closing, and the signatures or endorsements thereon (or on stock
powers delivered therewith), when duly executed, shall be valid and genuine, and
shall transfer to and vest in Vail, or its nominee, good, valid, marketable and
indefeasible title to all of the outstanding shares of the ▇▇▇▇▇▇▇ Stock,
subject to
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-14-
no lien, security interest or other encumbrance on the ▇▇▇▇▇▇▇ Stock. Upon the
transfer of the ▇▇▇▇▇▇▇ Stock contemplated hereby, Vail will own the entire
equity interest in ▇▇▇▇▇▇▇.
3.4 Corporate Standing of Foods. Foods is a corporation duly organized,
validly existing and in good standing under the laws of the State of Missouri.
The execution and delivery of this Agreement, and such other agreements,
instruments and documents required to be executed by Foods in connection
herewith, do not, and the consummation of the transactions contemplated herein
and therein will not, conflict with, or result in any violation of, breach of or
default (with or without notice or lapse of time) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or the loss of a
benefit under, (a) any provision of the Articles of Incorporation or bylaws of
Foods, or (b) except as set forth on Schedule 3.4, any loan or credit agreement,
note, bond, mortgage, indenture, lease, contract, judgment, order, decree, writ
or injunction to which Foods is a party, or by which it or its properties or
assets are bound, or result in the creation or imposition of any lien upon any
such properties or assets.
3.5 Authority of Foods.
(a) Foods has taken all action required by its Articles of Incorporation
and its bylaws to authorize the execution and delivery of this Agreement, and
such other agreements, instruments and documents required to be executed by
Foods in connection herewith, and the performance of the transactions
contemplated herein and therein. Foods has all requisite corporate power and
authority to authorize the execution and delivery of this Agreement, and such
other agreements, instruments and documents required to be executed in
connection herewith, to consummate the transactions contemplated herein and
therein, and to take all other actions required to be taken by Foods pursuant to
the provisions hereof. This Agreement, and such other agreements, instruments
and documents required to be executed in connection herewith, when duly executed
and delivered, shall constitute a valid and binding obligation of Foods
enforceable in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
(b) No approvals on the part of any class (whether voting together or as
separate classes) of Foods' shareholders
21
-15-
are necessary to authorize this Agreement or any other agreements, instruments
and documents required to be executed in connection herewith, or the
transactions contemplated herein or therein.
3.6 Corporate Standing. Each of ▇▇▇▇▇▇▇ and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the corporate power and
authority to own its property and assets and to carry on its business in the
same manner as now being conducted. The execution and delivery of this
Agreement, and such other agreements, instruments and documents required to be
executed by ▇▇▇▇▇▇▇ in connection herewith, do not, and the consummation of the
transaction contemplated herein and therein will not, conflict with, or result
in any violation of, breach of or default (with or without notice or lapse of
time or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a benefit under, (a) any provision
of the Articles of Incorporation or bylaws of ▇▇▇▇▇▇▇ or any of its
subsidiaries, or (b) except as set forth on Schedule 3.6 hereto, any loan or
credit agreement, note, bond, mortgage, indenture, lease, contract, agreement,
instrument or permit, judgment, order, decree, writ or injunction to which
▇▇▇▇▇▇▇ or any of its subsidiaries is a party, or by which it or any of its
subsidiaries or its or any of its subsidiaries' properties or assets are bound,
or result in the creation or imposition of any lien upon any of such properties
or assets.
3.7 Authority of ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ has taken all action required by its
Articles of Incorporation and its by-laws to authorize the execution and
delivery of this Agreement, and such other agreements, instruments and documents
required to be executed by ▇▇▇▇▇▇▇ in connection herewith, and the performance
of the transactions contemplated herein and therein. ▇▇▇▇▇▇▇ has all requisite
corporate power and authority to authorize the execution and delivery of this
Agreement, and such other agreements, instruments and documents required to be
executed in connection herewith, to consummate the transactions contemplated
herein and therein, and to take all other actions required to be taken by
▇▇▇▇▇▇▇ pursuant to the provisions hereof. This Agreement, and such other
agreements, instruments and documents required to be executed in connection
herewith, when duly executed and delivered, shall constitute a valid and binding
obligation of ▇▇▇▇▇▇▇ enforceable in accordance with its terms except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization,
22
-16-
moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
3.8 Qualifications To Do Business. Each of ▇▇▇▇▇▇▇ and its subsidiaries
is duly qualified and in good standing as a foreign corporation and authorized
to do business in each jurisdiction set forth on Schedule 3.8 hereto. Each of
▇▇▇▇▇▇▇ and its subsidiaries is qualified and in good standing in every other
jurisdiction in which the ownership of its property or the conduct of its
business requires it to be qualified to do business, except in those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, result in a Material Adverse Change on ▇▇▇▇▇▇▇.
3.9 Capital Stock of Subsidiaries. The only direct or indirect
subsidiaries of ▇▇▇▇▇▇▇ are those listed on Schedule 3.9. hereto. Except as set
forth on Schedule 3.9 hereto, ▇▇▇▇▇▇▇ is directly or indirectly the record and
beneficial owner of all of the outstanding shares of capital stock of each of
its subsidiaries, there are no proxies with respect to such shares, and no
equity securities of any of such subsidiaries are or may be required to be
issued by reason of any options, warrants, scrip, rights to subscribe for, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any such subsidiary is bound to issue additional shares of
its capital stock or securities convertible into or exchangeable for such
shares. Other than as set forth on Schedule 3.9 hereto, all of such shares so
owned by ▇▇▇▇▇▇▇ are validly issued, fully paid and nonassessable and are owned
by it free and clear of any claim, lien or encumbrance of any kind with respect
thereto. Except as disclosed on Schedule 3.9 hereto, ▇▇▇▇▇▇▇ does not directly
or indirectly own any interest in any corporation, partnership, joint venture or
other business association or entity. For purposes of this Section 3.9, the
LLC, Clinton Ditch & Reservoir Company, Ski the Summit and Starfire Ventures
(collectively, the "Ventures") shall each be considered a subsidiary of ▇▇▇▇▇▇▇.
3.10 Corporate and Stock Transfer Records. True and correct copies of the
Articles of Incorporation and bylaws of ▇▇▇▇▇▇▇ have previously been delivered
to Vail. All minutes of ▇▇▇▇▇▇▇ contained in the minute books of ▇▇▇▇▇▇▇
accurately reflect the substance of all actions taken by shareholders of
23
-17-
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇'▇ Board of Directors. The ▇▇▇▇▇▇▇ Stock transfer register
is true, complete, correct and current.
3.11 Employee Loans and Other Employee Interests in ▇▇▇▇▇▇▇. Except as
set forth on Schedule 3.11, there are no outstanding loans by or to ▇▇▇▇▇▇▇ or
any of its subsidiaries to or from any ▇▇▇▇▇▇▇ Employee, other than (a)
emergency loans which do not exceed $10,000 in the aggregate, and none of which
exceed $1,000 individually, (b) housing loans which do not exceed $10,000 in the
aggregate, and none of which exceed $1,000 individually, (c) ordinary travel
advances or (d) employee charges not exceeding $5,000 individually, and $50,000
in the aggregate. Except as set forth on Schedule 3.11, no ▇▇▇▇▇▇▇ Employee
currently employed has any material interest, direct or indirect, in any lease
or contract of ▇▇▇▇▇▇▇.
3.12 ▇▇▇▇▇▇▇ Financial Statements; No Material Adverse Change. Except as
set forth on Schedule 3.12, the ▇▇▇▇▇▇▇ Financial Statements present fairly, in
all material respects, the consolidated financial position and results of
operations of ▇▇▇▇▇▇▇ and its subsidiaries as of the dates thereof, all in
conformity with GAAP applied on a consistent basis, except as set forth in the
notes to those financial statements, and EBITDA of ▇▇▇▇▇▇▇ and its subsidiaries
(excluding the Ventures) is at least $42,921,000 for the nine months ended June
30, 1996. Since June 30, 1996, there has not occurred a Material Adverse Change
of ▇▇▇▇▇▇▇, or any event that, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Change of ▇▇▇▇▇▇▇.
Neither this Section 3.12 nor any other Section in this Agreement shall be
construed as a representation or warranty as to the accuracy or attainability of
budgets or projections relating to or reflecting the business of Resorts.
3.13 Conduct of Business. Except as and to the extent set forth on
Schedule 3.13, since June 30, 1996, Foods on behalf of ▇▇▇▇▇▇▇ and its
subsidiaries has not, and ▇▇▇▇▇▇▇ and its subsidiaries have not:
(a) made any commitments for capital expenditures or commitments for
additions to property, plant, equipment or intangible capital assets other
than (i) those included in the ▇▇▇▇▇▇▇ Budget or (ii) commitments for
$100,000 or less made in the ordinary course of business;
(b) acquired (by merger, consolidation or acquisition of stock or assets)
any corporation, partnership,
24
-18-
joint venture, limited liability company or other business
organization, or division thereof, or entered into any
contract or agreement with respect thereto;
(c) incurred any obligations or liabilities (whether
absolute, accrued, contingent, or otherwise and whether due
or to become due), except for (i) Indebtedness which is
permitted to be incurred pursuant to Section 2.3 and
(ii) current liabilities incurred in the ordinary course of
business consistent with past practice; or experienced any
change in any assumptions underlying or methods of
calculating any bad debt, contingency or other reserve;
(d) sold, transferred or conveyed any of its properties or
assets used in ▇▇▇▇▇▇▇'▇ business or operations, except for
current assets sold or converted in the ordinary course of
business and consistent with past practice, or permitted or
allowed any of the properties or assets used in ▇▇▇▇▇▇▇'▇
business or operations to be mortgaged, pledged or subjected
to any lien or encumbrance, except liens or encumbrances for
taxes not yet delinquent and any mortgage, pledge, lien or
encumbrance created, assumed or incurred with respect to the
real estate development of the LLC but pertaining only to
the Option Land;
(e) paid, discharged or satisfied any claim, lien,
encumbrance or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due),
other than claims, liens, encumbrances or liabilities (i)
which are reflected or accrued for or reserved against in
the Adjusted Balance Sheet and which were paid, discharged
or satisfied since the date of the Adjusted Balance Sheet in
the ordinary course of business and consistent with past
practice, or (ii) which were incurred and paid, discharged
or satisfied since the date of the Adjusted Balance Sheet in
the ordinary course of business and consistent with past
practice;
(f) written down or determined to write down or
written up or determined to write up the value of any
inventory, or written off or determined to write off as
uncollectible any notes or accounts receivable or any
portion thereof, except for immaterial write-downs or
write-offs in the ordinary course of business, consistent
with past practice and at a rate no greater than during the
prior fifty-two (52) weeks;
25
-19-
(g) waived any material rights;
(h) granted any increase in the compensation of any director of
▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ Employee (including, without limitation, any increase
pursuant to any bonus, pension, profit-sharing or other plan), except for
increases (i) made pursuant to the terms of any existing Employee Benefit
Plan, or (ii) occurring in the ordinary course of business in accordance
with customary practice (for purposes of the foregoing, ordinary course of
business shall be deemed to include those customary increases granted
during ongoing negotiation of labor agreements);
(i) instituted or adopted any new Employee Benefit Plan for any
director of ▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇ Employee;
(j) directly or indirectly redeemed, purchased or otherwise acquired
or subdivided or reclassified any ▇▇▇▇▇▇▇ Stock;
(k) been involved in any labor dispute, litigation or governmental
investigation of any material nature;
(l) entered into any material agreement with any local, state or
federal governments or agencies; or entered into any consulting agreements
or sponsorship agreements requiring the payment of $100,000 or more or
having a term of one year or more;
(m) made any amendments to the Articles of Incorporation or bylaws of
▇▇▇▇▇▇▇ or any of its subsidiaries or any organizational or operational
documents related to the Ventures to which ▇▇▇▇▇▇▇ or any of its
subsidiaries is a party; or
(n) agreed, whether in writing or otherwise, to take any action
described in this Section 3.13.
3.14 Dividends. Since June 30, 1996, ▇▇▇▇▇▇▇ has not declared or paid any
dividends on its capital stock in cash, stock or other property (other than as
permitted by Section 2.3(e)).
3.15 Absence of Undisclosed Liabilities. Other than as set forth on
Schedule 3.15 or as set forth on other Schedules hereto, or as otherwise
included in the Adjusted Balance Sheet, there are no liabilities or obligations
of ▇▇▇▇▇▇▇ and
26
-20-
its subsidiaries of any nature, whether absolute, accrued, unmatured, contingent
or otherwise, that would be required to be reflected on the liability side of a
balance sheet prepared in accordance with GAAP or disclosed in the notes
thereto, without regard to materiality, other than liabilities incurred since
June 30, 1996 in the ordinary course of business related to ▇▇▇▇▇▇▇'▇
operations. Each of the reserves provided for on the Adjusted Balance Sheet has
been established and maintained in accordance with GAAP.
3.16 Title to Property. Except as set forth on Schedule 3.16, ▇▇▇▇▇▇▇ and
its subsidiaries hold fee simple title, subject only to Permitted Encumbrances,
to all of their respective owned real properties, and ▇▇▇▇▇▇▇ and its
subsidiaries hold a good and valid leasehold title and estate to all of the
▇▇▇▇▇▇▇ Leased Property, including, without limitation, all of such properties
and assets reflected on the Adjusted Balance Sheet and such assets which are
necessary for ▇▇▇▇▇▇▇ and its subsidiaries to conduct their business
substantially in the same manner as currently conducted. None of such owned or
leased properties (or such assets which are necessary for ▇▇▇▇▇▇▇ and its
subsidiaries to conduct their business substantially in the same manner as
presently conducted) are subject to any mortgage, deed of trust, pledge, lien,
security interest, conditional sale agreement, encumbrance, claim, mechanic's or
materialmen's lien, or charge of any kind, except liens shown on Schedule 3.16
as securing specific liabilities (with respect to which no default, or action or
omission which with the giving of notice or passage of time or both would
constitute a default, exists) and Permitted Encumbrances.
3.17 Real Property.
(a) All real property owned or leased (excluding property leased for
employee housing with leases having durations less than one year or annual
rental payments of less than $20,000) by ▇▇▇▇▇▇▇ and its subsidiaries is set
forth on Schedule 3.17(a)(i) (the "▇▇▇▇▇▇▇ Leased Property") and such real
property is identified in a manner that reflects the properties which are owned
and those which are leased. Except as set forth on Schedule 3.17(a)(ii), all
building and structures required to operate the business of ▇▇▇▇▇▇▇
substantially in the same manner as presently conducted located on the real
properties owned by ▇▇▇▇▇▇▇ and its subsidiaries and on the ▇▇▇▇▇▇▇ Leased
Property are in good operating condition and repair (considering the age of such
buildings and structures
27
-21-
and ordinary wear and tear excepted), and are usable for their current use.
(b) Except as set forth on Schedule 3.17(b), ▇▇▇▇▇▇▇ and its subsidiaries
have not received written notice regarding any of the following (except for
matters previously resolved): (x) any dispute from any contiguous property
owners concerning contiguous boundary lines, (y) that any of the said owned or
▇▇▇▇▇▇▇ Leased Properties (or the buildings, structures or improvements
thereon), or ▇▇▇▇▇▇▇'▇ and its subsidiaries' operations, violate the zoning or
planning laws, ordinances, rules or regulations of the city, county or state in
which they are located, or any building regulations or codes of such city,
county or state, or land use laws or regulations applicable to said properties,
and no such violations exist, or (z) any claims of others to rights over, under,
across or through any of the owned or ▇▇▇▇▇▇▇ Leased Properties by virtue of use
or prescription. Except as set forth on Schedule 3.17, ▇▇▇▇▇▇▇ has or is able
to obtain without a material penalty or material incremental cost, or has a
valid exemption from the requirement to obtain, all governmental permits
(excluding permits from the United States Forest Service, which are covered in
Section 3.37), approvals, authorizations or licenses required to conduct its
business in substantially the same manner as its business is currently
conducted.
(c) Foods and ▇▇▇▇▇▇▇ have either previously delivered to Vail or will so
deliver as soon as practicable prior to Closing lists of the most recently
issued real and personal (including vehicles) property tax assessments and tax
bills, if any, for ▇▇▇▇▇▇▇'▇ 1994 and 1995 fiscal years for all property owned
or leased by ▇▇▇▇▇▇▇ and its subsidiaries.
(d) Except as set forth on Schedule 3.17(d), (i) all real properties owned
by ▇▇▇▇▇▇▇ or its subsidiaries are free from agreements creating an obligation
to sell, lease or grant an option to sell or lease and (ii) all ▇▇▇▇▇▇▇ Leased
Property is free of all agreements creating an obligation to sublease, grant an
assignment of lease or grant an option to sublease.
(e) Except as set forth on Schedule 3.17(e), to the Knowledge of ▇▇▇▇▇▇▇,
all real properties owned by ▇▇▇▇▇▇▇ and its subsidiaries and ▇▇▇▇▇▇▇ Leased
Properties are currently zoned in the zoning category which permits operation of
said properties as now used, operated and maintained. To the Knowledge of
▇▇▇▇▇▇▇, the consummation of the transactions contemplated herein will not
result in a violation of any applicable
28
-22-
zoning ordinance or the termination of any applicable zoning variance now
existing.
(f) Schedule 3.17(f) lists all properties owned or leased by ▇▇▇▇▇▇▇ and
its subsidiaries which are not presently being used in the business or
operations of ▇▇▇▇▇▇▇ and its subsidiaries.
(g) All buildings, structures or improvements owned and/or leased by
▇▇▇▇▇▇▇ and its subsidiaries on any of the owned or leased real properties are
located entirely within the property boundary lines of such properties and do
not materially encroach onto adjoining lands, and there are no material
encroachments of buildings, structures or improvements from adjoining land onto
such properties.
(h) To the Knowledge of ▇▇▇▇▇▇▇, the developed owned real properties and
the ▇▇▇▇▇▇▇ Leased Property currently have access to, at or within their
property boundary lines to all gas, water, electricity, storm, sewer, sanitary
sewer, telephone, and all other utilities necessary or beneficial to the current
operation of the owned or leased properties, and all of such utilities are
adequate and sufficient for the current operation of such properties, subject to
normal interruptions in the ordinary course.
(i) ▇▇▇▇▇▇▇ and its subsidiaries hold a valid leasehold estate for each
▇▇▇▇▇▇▇ Leased Property, as shown on Schedule 3.17(a)(i), and enjoy peaceful and
undisturbed possession thereunder. All such leases are valid, binding and
enforceable in accordance with their terms, and are in full force and effect,
▇▇▇▇▇▇▇ and its subsidiaries have complied with all material obligations
thereunder, and there are no existing defaults by ▇▇▇▇▇▇▇ and its subsidiaries,
and, except as set forth in Schedule 3.17(i), there are no existing defaults by
any other party thereunder. No event has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute a default by ▇▇▇▇▇▇▇ and its subsidiaries and no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default by any other party
thereunder. Except as disclosed on Schedule 3.17(i), all such leases shall
continue in full force and effect (without default) after the Closing and the
consummation of the transactions contemplated by this Agreement without the
consent, approval or act of any other party, except to the extent that
enforceability may be limited
29
-23-
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general equitable
or fiduciary principles.
3.18 Personal Property. Except as set forth on Schedule 3.18(a), and
except for any immaterial exceptions, restrictions or limitations contained in
financing statements with respect to such property, ▇▇▇▇▇▇▇ and its subsidiaries
own, or have a valid lease or license with respect to, the tangible personal
property (including without limitation ski lift systems and snowmaking equipment
and systems) which is necessary for the operation of their business
substantially in the same manner as currently conducted, free and clear of all
liens, mortgages, pledges, security interests, charges or encumbrances other
than Permitted Encumbrances, and enjoy peaceful and undisturbed possession
thereunder. Except as set forth on Schedule 3.18(b) or as expressly set forth
in the ▇▇▇▇▇▇▇ Budget, all such property that is material to the operations of
▇▇▇▇▇▇▇ is in reasonably good operating condition and repair, ordinary wear and
tear excepted, and is suitable for the purposes for which it is used. Schedule
3.18(c) contains a list of each lease pursuant to which ▇▇▇▇▇▇▇ and its
subsidiaries lease personal property which involves payment over the remaining
term of such lease of more than $100,000 and which in each case is not
cancelable upon six months' notice or less without penalty of more than
$100,000. All such personal property leases are valid, binding and enforceable
in accordance with their terms and are in full force and effect, ▇▇▇▇▇▇▇ and its
subsidiaries have complied with all obligations thereunder and there are no
existing material defaults by ▇▇▇▇▇▇▇ and its subsidiaries or, to the Knowledge
of ▇▇▇▇▇▇▇, by any other party thereunder; no event has occurred which (whether
with or without notice, lapse of time or the happening or occurrence of any
other event) would constitute a material default by ▇▇▇▇▇▇▇ and its subsidiaries
thereunder; and no event has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a material default by any other party thereunder. Except as set forth
on Schedule 3.18(d), all personal property leases which are set forth on
Schedule 3.18(c) hereto shall continue in effect after the Closing and the
consummation of the transactions contemplated by this Agreement without the
consent, approval or act of any other party. All unperformed contracts to
purchase personal property to which ▇▇▇▇▇▇▇ and its subsidiaries are party which
provide for a purchase price of $100,000 or more are set forth on Schedule
3.18(e).
30
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3.19 Litigation and Claims. Schedule 3.19 sets forth all pending judicial
or administrative investigations, lawsuits, actions or proceedings against
▇▇▇▇▇▇▇ and its subsidiaries of which Foods or ▇▇▇▇▇▇▇ and its subsidiaries have
received written notice. Except as set forth on Schedule 3.19, there are no
actions, suits, investigations, administrative proceedings or orders pending or,
to Foods' Knowledge, threatened against (i) Foods, at law or in equity, which,
if adversely determined, would have an adverse effect on the ability of Foods to
perform the terms of this Agreement, or would interfere with the ability of Vail
to consummate the transactions contemplated herein, or (ii) ▇▇▇▇▇▇▇ or any of
its subsidiaries, at law or in equity.
3.20 Compliance with Laws. Except as set forth on Schedule 3.20, to the
Knowledge of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and its subsidiaries are not in violation of any
law, rule or regulation or in default in any material respect with respect to
any judgment, writ, injunction or decree of any federal, state or local
commission.
3.21 Orders and Consent Decrees. Except as set forth on Schedule 3.21, or
as specifically cross-referenced thereon from other Schedules hereto, ▇▇▇▇▇▇▇
and its subsidiaries are not party to, or bound by, any material judicial or
administrative order, judgment, decree or consent decree relating to any past or
present practice, omission, activity or undertaking. To the Knowledge of
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and its subsidiaries are not in default in any material respect
under any of the judicial or administrative orders, judgments, decrees or
consent decrees or conciliation or compliance agreements set forth on Schedule
3.21.
3.22 Labor Agreements. There are no binding agreements of any type with
any labor union, labor organization, collective bargaining unit or employee
group to which ▇▇▇▇▇▇▇ and its subsidiaries are bound except those set forth on
Schedule 3.22. All agreements that are set forth on Schedule 3.22 are legal and
valid and, except for those that are presently under negotiation or
renegotiation due to the expiration of their stated term, are in full force and
effect. Further:
(a) Except for negotiations ongoing as of the date hereof, or as otherwise
set forth on Schedule 3.22(a), ▇▇▇▇▇▇▇ and its subsidiaries have not agreed to
any terms and conditions to be added or deleted in future
31
-25-
negotiations or otherwise regarding the agreements set forth on Schedule 3.22.
(b) To the Knowledge of ▇▇▇▇▇▇▇, there are no threatened or active
strikes, work stoppages, boycotts or concerted actions against ▇▇▇▇▇▇▇ and its
subsidiaries, other than those threats which commonly arise as a result of
normal labor contract renegotiations.
(c) Except as set forth on Schedule 3.22(c), Foods has no notice of any
pending (i) proceedings under the National Labor Relations Act or before the
National Labor Relations Board, (ii) grievances or arbitrations, or (iii)
organizational drives or unit clarification requests, in each case against or
affecting ▇▇▇▇▇▇▇ or any of its subsidiaries.
3.23 Employees. Except as set forth on Schedule 3.23, ▇▇▇▇▇▇▇ and its
subsidiaries have not received any written notice from a governmental authority
or official during the past two years of any non-compliance with any federal,
state or local laws, regulations and legal requirements relating to the
employment of labor in connection with their business, including those laws,
regulations and legal requirements relating to wages, hours, benefits,
affirmative action, equal opportunity, including the Americans with Disabilities
Act and the Occupational Safety and Health Act, collective bargaining, workers'
compensation and the payment of social security, unemployment and employment
taxes.
3.24 Contracts. All contracts of ▇▇▇▇▇▇▇ or any of its subsidiaries which
involve aggregate payments after the date of this Agreement of $100,000 or more
are set forth on Schedule 3.24 or are specifically cross-referenced thereon from
other Schedules hereto. Except as set forth on Schedule 3.24, ▇▇▇▇▇▇▇ and its
subsidiaries are not party to or obligated under any written agreement or
contract that:
(a) provides for the employment of any Corporate Officer of ▇▇▇▇▇▇▇ not
terminable at will and without liability for additional payments or
compensation, other than severance and vacation pay payable in accordance with
the established policies of ▇▇▇▇▇▇▇ as set forth on Schedule 3.24;
(b) provides for (i) the employment of any consultant or broker for a term
that would exceed one (1) year
32
-26-
from the date of the Closing, or provides for payments that exceed $100,000, or
(ii) the employment of any independent attorney or accounting firm not
terminable at will;
(c) would prohibit or limit in any material respect ▇▇▇▇▇▇▇ or any of its
subsidiaries from engaging in its present business;
(d) requires the purchase of materials, inventories services or supplies
that has a remaining contractual term of more than one (1) year from the
Closing, or would require payments in the aggregate in excess of $100,000;
(e) involves the sale of any asset or property of ▇▇▇▇▇▇▇ or any of its
subsidiaries presently being used in ▇▇▇▇▇▇▇'▇ or any of its subsidiaries'
business or operations, other than in the normal course of business;
(f) relates to the borrowing of money or bank credit (including, but not
limited to, indentures, notes, installment obligations and capital leases) or
the mortgaging or pledging of any asset or property of ▇▇▇▇▇▇▇ or any of its
subsidiaries;
(g) guarantees the obligations of any supplier, customer or other third
party, other than endorsements in the ordinary course;
(h) is a forward, swap, option or swaption contract or any other financial
instrument with similar characteristics and/or generally characterized as a
"derivative" security to which ▇▇▇▇▇▇▇ or any of its subsidiaries are a party or
to which ▇▇▇▇▇▇▇ or any of its subsidiaries or any of their respective assets or
properties is subject or bound (including, without limitation, funds of ▇▇▇▇▇▇▇
invested by any other person); or
(i) includes any indemnity provisions for claims based on product
liability, environmental or employee or retiree liabilities and arises out of
any purchase or acquisition of another entity or business.
3.25 Validity of Material Contracts.
(a) Except as set forth on Schedule 3.25(a), ▇▇▇▇▇▇▇ and its subsidiaries
have not: (i) received any written claim
33
-27-
of breach or default from any party relating to any agreement, commitment or
contract listed on Schedule 3.24; or (ii) received any written notice of
termination from any party relating to any such agreement, commitment or
contract.
(b) Except as set forth on Schedule 3.25(b), ▇▇▇▇▇▇▇ and its subsidiaries
have not breached or defaulted in any material respect on any agreement,
commitment or contract listed on Schedule 3.24.
3.26 Trademarks and Copyrights.
(a) Schedule 3.26(a)(i) lists all registered trade- marks and copyrights
owned by ▇▇▇▇▇▇▇ and its subsidiaries and the jurisdictions in which such are
registered or in which an application has been filed for such registration.
Schedule 3.26(a)(ii) lists each license or sublicense (with a term exceeding one
year or with a royalty payment of more than $1,000) to which ▇▇▇▇▇▇▇ and its
subsidiaries are a party and pursuant to which any other person or entity is
authorized to use any such trademark or copyright. All trademarks and
copyrights listed on Schedule 3.26(a)(i) are owned by ▇▇▇▇▇▇▇ and its
subsidiaries and, except as disclosed on Schedule 3.26(a)(iii), are free and
clear of any known adverse claim of any third party.
(b) Except as set forth on Schedule 3.26(b), to the Knowledge of ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and its subsidiaries do not infringe or unlawfully or wrongly use any
trademark or copyright rights owned or claimed by any other party.
(c) To the Knowledge of ▇▇▇▇▇▇▇, except as disclosed on Schedule 3.26(c),
no third party is now making any infringing use of any ▇▇▇▇▇▇▇ trademark or
copyright.
(d) Except as disclosed on Schedule 3.26(d) or required to be disclosed on
Schedule 3.26(a)(ii), ▇▇▇▇▇▇▇ and its subsidiaries have not sold or otherwise
disposed of, or transferred or granted, any interest in such ▇▇▇▇▇▇▇ trademarks
or copyrights listed on Schedule 3.26(a)(i).
(e) To the Knowledge of ▇▇▇▇▇▇▇, no claims are being asserted by any
person against the use of any of the trademarks or copyrights listed on Schedule
3.26(a)(i), or challenging or questioning the validity or effectiveness of any
license or agreement related thereto. Except as disclosed on Schedule 3.26(e),
none of the ▇▇▇▇▇▇▇ trademarks or copyrights is
34
-28-
subject to any outstanding order, judgment or decree restricting the use thereof
by ▇▇▇▇▇▇▇ and its subsidiaries, or restricting the licensing thereof by ▇▇▇▇▇▇▇
and its subsidiaries to any other person or entity.
3.27 Powers of Attorney. Except as set forth on Schedule 3.27, neither
▇▇▇▇▇▇▇ nor any of its subsidiaries has any material outstanding revocable or
irrevocable Powers of Attorney or similar authorizations issued to any
individual who is not a ▇▇▇▇▇▇▇ Employee.
3.28 Taxes.
(a) ▇▇▇▇▇▇▇, the affiliated group, within the meaning of Section 1504 of
the Code, of which Ralcorp is the common parent and any other affiliated group,
within the meaning of Section 1504 of the Code, of which ▇▇▇▇▇▇▇ has been a
member at any time since its date of incorporation (an "Affiliated Group" and,
collectively, the "Affiliated Groups") have timely filed on or before the date
hereof all Tax Returns required to be filed in accordance with all applicable
laws (taking into account all extensions of due dates), and all such Tax Returns
are true, correct and complete and all amounts shown thereon as owing have been
paid. Except as set forth on Schedule 3.28(a): (i) all Tax bills or Tax
assessments received by or with respect to ▇▇▇▇▇▇▇ have been paid (to the extent
the Taxes shown thereon are due and owing); (ii) all Taxes with respect to
▇▇▇▇▇▇▇ and the Affiliated Groups (whether or not shown on any Tax Returns) have
been paid or accrued and all deficiencies for Taxes asserted or assessed by a
taxing authority against ▇▇▇▇▇▇▇ or an Affiliated Group have been paid or
finally settled or are being contested by appropriate proceedings; (iii) no
claim is currently being made by an authority in a jurisdiction where ▇▇▇▇▇▇▇ or
an Affiliated Group does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction; and (iv) there are no liens on any of the assets
of ▇▇▇▇▇▇▇ or an Affiliated Group that arose in connection with any failure (or
alleged failure) to pay any Tax. The term "▇▇▇▇▇▇▇" when used in this Section
3.28 means ▇▇▇▇▇▇▇ and its subsidiaries.
(b) ▇▇▇▇▇▇▇ and the Affiliated Groups have collected or withheld and paid
on a timely basis all Taxes required to have been collected or withheld and paid
to any taxing authority in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party.
35
-29-
(c) Except as set forth on Schedule 3.28(c), neither ▇▇▇▇▇▇▇ nor an
Affiliated Group has received any written notice of pending or threatened
actions, audits, proceedings or investigations for the assessment or collection
of Taxes.
(d) Except as set forth on Schedule 3.28(d), neither ▇▇▇▇▇▇▇ nor an
Affiliated Group has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency
(but only to the extent such waiver or extension is still in effect) nor are
there any outstanding requests for any extension of time within which to pay any
Taxes not yet paid. For all taxable periods subsequent to the fiscal year ended
September 30, 1990, Foods has provided to Vail (i) true, correct and complete
copies of federal Form 1120 pro forma returns for ▇▇▇▇▇▇▇ and all other
information (compiled in a true, correct and complete manner) relating to
income, deductions, credits and Taxes of ▇▇▇▇▇▇▇ that is not included in the pro
forma returns, (ii) all statements of federal Income Tax deficiencies assessed
against, or attributable to, ▇▇▇▇▇▇▇ or an Affiliated Group and (iii) a true,
correct and complete copy of any Tax Sharing Agreement to which ▇▇▇▇▇▇▇ is a
party and a true, correct and complete description of any such Tax Sharing
Agreement not reduced to writing.
(e) Except as set forth on Schedule 3.28(e), neither ▇▇▇▇▇▇▇ nor an
Affiliated Group has made, is obligated to make or is a party to any contract,
agreement, arrangement or plan covering any ▇▇▇▇▇▇▇ Employee that (taking into
account the transactions contemplated by this Agreement) could obligate it to
make any payments that would not be deductible under Section 162 of the Code (by
reason of being unreasonable in amount), Section 404, Section 162(m) or Section
280G of the Code.
(f) Schedule 3.28(f) sets forth the following information with respect to
▇▇▇▇▇▇▇ as of the most recent practicable date: (i) the tax basis of ▇▇▇▇▇▇▇'▇
assets; and (ii) the amount of any net operating loss, net capital loss, tax
credit or other carryover allocable to ▇▇▇▇▇▇▇.
(g) Except as set forth on Schedule 3.28(g), ▇▇▇▇▇▇▇ is not a party to any
joint venture, partnership or other arrangement or contract that could be
treated as a partnership for federal income tax purposes.
(h) The unpaid Taxes of ▇▇▇▇▇▇▇ do not exceed the reserve for Tax
liability as computed in a manner consistent
36
-30-
with the prior and customary accounting practice of ▇▇▇▇▇▇▇ (excluding any
reserve for deferred Taxes established to reflect timing differences between
book and tax income) set forth or included in the Adjusted Balance Sheet.
(i) All Consolidated Returns and Unitary Returns (as defined below), and
all state, local and foreign Tax Returns of ▇▇▇▇▇▇▇ and the Affiliated Groups
have been closed by applicable statute of limitations for all taxable years
ending on or before the dates shown on the attached Schedule 3.28(i).
"Consolidated Return" shall mean any consolidated federal Income Tax Return
filed by an Affiliated Group, and "Unitary Return" shall mean any Return with
respect to any Taxes, other than federal Income Taxes, filed, or required to be
filed, on a consolidated, combined or unitary basis by any group of corporations
of which ▇▇▇▇▇▇▇ is a member or has been a member at any time since its date of
incorporation.
(j) ▇▇▇▇▇▇▇ and the Affiliated Groups have made all payments of estimated
Taxes required to be made with respect to any of them under Section 6655 of the
Code and any comparable provisions of state, local and foreign law.
(k) No power of attorney has been granted by ▇▇▇▇▇▇▇ or an Affiliated
Group with respect to any matter relating to Taxes which is currently in force.
(l) No consent has been filed under Section 341(f) of the Code with
respect to ▇▇▇▇▇▇▇ or an Affiliated Group.
(m) Neither ▇▇▇▇▇▇▇ nor an Affiliated Group has incurred or assumed any
corporate acquisition indebtedness, as defined in Section 279(b) of the Code.
3.29 Employee Benefit Plans.
(a) All Employee Benefit Plans sponsored by Ralcorp, Foods or ▇▇▇▇▇▇▇ or
their Affiliates and covering ▇▇▇▇▇▇▇ Participants are set forth on Schedule
3.29(a) (the "▇▇▇▇▇▇▇ Employee Benefit Plans"). With respect to each ▇▇▇▇▇▇▇
Employee Benefit Plan, copies of the following have been delivered to Vail where
applicable: (i) the Plan document; (ii) a summary plan description; (iii) most
recent Annual Return/Report of Employee Benefit Plan, Form 5500 Series; (iv)
trust agreement; (v) insurance policy; and (vi) determination letter from the
IRS. The ▇▇▇▇▇▇▇ Employee Benefit Plans have in all material respects been
maintained and
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administered in compliance with applicable federal and state laws, regulations
and rules, including, but not limited to, ERISA and the Code. All contributions
required as of the Closing, by law or contract, to be made to each ▇▇▇▇▇▇▇
Employee Benefit Plan will have been timely made.
(b) No ▇▇▇▇▇▇▇ Employee Benefit Plan (or trust or other funding vehicle
pursuant thereto) is subject to any Tax under Section 511 of the Code that
remains unpaid and assessable against ▇▇▇▇▇▇▇ after the Closing.
(c) Neither ▇▇▇▇▇▇▇ nor any plan fiduciary of any ▇▇▇▇▇▇▇ Employee Benefit
Plan has engaged in any transaction in violation of Section 404 or 406 of ERISA,
or in any "prohibited transaction" as defined in Section 4975(c)(1) of the Code,
for which no exemption exists under Section 408 of ERISA, or in violation of
Section 4975(c)(2) or 4975(d) of the Code.
(d) Except as listed on Schedule 3.29(d), neither ▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇
Employee Benefit Plan is a party to any litigation with respect to ▇▇▇▇▇▇▇
Participants relating to, or seeking benefits under, any Employee Benefit Plan.
(e) Except as set forth on Schedule 3.29(e) and except as may be required
by the terms of a collective bargaining agreement or in connection with any
pending labor negotiations, neither ▇▇▇▇▇▇▇ nor any ERISA Affiliate has any
legally binding commitments to create any additional Employee Benefit Plans
which are intended to cover ▇▇▇▇▇▇▇ Employees, or to amend or modify any
existing Employee Benefit Plan with respect to benefits for ▇▇▇▇▇▇▇ Employees.
With respect to each collective bargaining agreement, there is no legally
binding commitment to create any additional Employee Benefit Plans which are
intended to cover ▇▇▇▇▇▇▇ Employees, to amend or modify any existing Employee
Benefit Plan which covers or has covered ▇▇▇▇▇▇▇ Employees, or to begin
contributing, or increase contributions, to a Multiemployer Plan, which would
materially increase the benefits to be provided under such collective bargaining
agreement.
(f) Except as described on Schedule 3.29(f), the execution and performance
of the transactions contemplated by this Agreement, and such other agreements,
instruments and documents required to be executed in connection therewith, shall
not constitute an event under any Employee Benefit Plan or agreement under which
▇▇▇▇▇▇▇ may incur any liability that will result in any payment (whether
severance pay or otherwise),
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acceleration, vesting or increase of benefits with respect to any ▇▇▇▇▇▇▇
Employee.
(g) Schedule 3.29(g) sets forth the policy as to severance benefits for
▇▇▇▇▇▇▇ Employees in effect at the Closing, as well as the names of each ▇▇▇▇▇▇▇
Employee that has a specific severance arrangement other than the policy.
(h) Each ▇▇▇▇▇▇▇ Employee Benefit Plan which is a retirement plan or a
savings plan has been established and operated so as to be qualified and tax
exempt under the provisions of Code Sections 401(a) and 501(a) from its adoption
to date and will be so as of the Closing. Neither Foods nor any of its
affiliates has, by its action or inaction, adversely affected the qualified
status of any such ▇▇▇▇▇▇▇ Employee Benefit Plan.
(i) Schedule 3.29(i) sets forth a summary of the retiree health and
retiree life insurance benefits provided at the Closing to all ▇▇▇▇▇▇▇ Employees
who are not covered by a collective bargaining agreement.
(j) All ▇▇▇▇▇▇▇ Employee Benefit Plans under which benefits are provided
under health maintenance and preferred provider organizations are set forth on
Schedule 3.29(j).
(k) Except as set forth on Schedule 3.29(k), neither ▇▇▇▇▇▇▇ (since
January 1, 1989) nor any ERISA Affiliate has been a party to any Multiemployer
Plan.
(l) Neither ▇▇▇▇▇▇▇ nor any of its ERISA Affiliates have incurred any
liability under Title IV of ERISA (other than for contributions not yet due or
for the payment of premiums not yet due), which liability has not been fully
paid as of the date hereof.
3.30 Environmental Matters. Except as set forth on Schedule 3.30:
(a) ▇▇▇▇▇▇▇ and its subsidiaries have obtained (or are capable of
obtaining without incurring any material incremental expense) all Environmental
Permits and all licenses and other authorizations and have made all
registrations and given all notifications that are required under any applicable
Environmental Law.
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(b) Except as set forth on Schedule 3.30(b), there is no Environmental
Claim pending (excluding any of the foregoing with respect to which Foods and/or
▇▇▇▇▇▇▇ have not received service of process or notice, as the case may be,
except if Foods and/or ▇▇▇▇▇▇▇ have Knowledge of the existence thereof) against
▇▇▇▇▇▇▇ and its subsidiaries under an Environmental Law.
(c) Except as set forth on Schedule 3.30(c), ▇▇▇▇▇▇▇ and its subsidiaries
are in compliance with all terms and conditions of their Environmental Permits,
and are in compliance with all applicable Environmental Laws.
(d) Except as set forth on Schedule 3.30(d), ▇▇▇▇▇▇▇ and its subsidiaries
did not generate, treat, store, transport, discharge, dispose of or release any
Hazardous Substances on any property now or previously owned, leased or used by
▇▇▇▇▇▇▇ and its subsidiaries.
3.31 Liability and Casualty Insurance. Schedule 3.31 sets forth a
description of each liability or casualty insurance policy (including, without
limitation, fire and product liability policies) including self-insurance
maintained on the property, assets and business of ▇▇▇▇▇▇▇ and its subsidiaries,
specifying the insurer, the amount of coverage, the type of insurance, the
policy number, the expiration date and the annual premium. All such policies:
(i) are valid, outstanding and enforceable policies; (ii) shall remain in full
force and effect until their respective expiration dates as set forth on
Schedule 3.31 without the payment of additional premiums other than additional
premiums required in the ordinary course prior to the Closing; and (iii) except
as noted on Schedule 3.31, shall not in any way be adversely affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement.
3.32 Consents or Approvals.
(a) All consents and approvals of any third party required by the terms
hereof or required to consummate the transactions contemplated herein have been
obtained or, prior to the Closing, will be obtained and shall remain in full
force and effect through the Closing.
(b) Except as set forth in Schedule 3.32, no consent, waiver, approval or
authorization, registration, declaration or filing with any court,
administrative agency or
40
-34-
commission or other governmental authority or instrumentality, domestic or
foreign, is required by or with respect to Foods or ▇▇▇▇▇▇▇ in connection with
the execution and delivery of this Agreement, and such other agreements,
instruments and documents required to be executed by Foods or ▇▇▇▇▇▇▇ in
connection herewith contemplated herein and therein, or the consummation by
Foods or ▇▇▇▇▇▇▇ of the transactions contemplated herein and therein.
3.33 Transaction Fees. Except as set forth on Schedule 3.33, neither
Foods, ▇▇▇▇▇▇▇ nor any member of their respective boards of directors has any
agreement or understanding, or has incurred any liability, requiring the payment
of a finder's fee, brokerage commission or like cost or charge to any person by
reason of this Agreement or the transactions contemplated herein. Foods is
solely responsible for all fees, commissions and other costs of the persons
listed on Schedule 3.33 and neither ▇▇▇▇▇▇▇ nor any of its subsidiaries has any
responsibility therefor.
3.34 Bank Accounts. Vail has been provided a listing of all ▇▇▇▇▇▇▇ and
its subsidiaries' bank accounts and lock boxes and Foods bank accounts and lock
boxes used by ▇▇▇▇▇▇▇ and its subsidiaries, including the names and locations of
all such banking institutions and depositories, the account numbers, and the
names of all persons authorized to draw thereon or to have access thereto.
3.35 Ownership of ▇▇▇▇▇▇▇ Stock; ▇▇▇▇▇▇▇ Assets. Foods is the owner of
record, and the legal and beneficial owner, of all of the outstanding shares of
▇▇▇▇▇▇▇ Stock, and Foods has the full right, power and authority to transfer,
convey and deliver good, valid, marketable and indefeasible title to such shares
of ▇▇▇▇▇▇▇ Stock to Vail, or its nominee, as called for under this Agreement,
free and clear of any liabilities, obligations, options, charges, encumbrances,
liens, claims, interests, powers of attorney, restrictions or contractual rights
of others of any kind whatsoever. Except as set forth on Schedule 3.35, none of
the assets used or useful in the business of ▇▇▇▇▇▇▇ and its subsidiaries is
owned by Foods or any of its Affiliates (other than ▇▇▇▇▇▇▇ and its
subsidiaries) and neither Foods nor any of its Affiliates (other than ▇▇▇▇▇▇▇
and its subsidiaries) owns directly or indirectly any asset included in the
Adjusted Balance Sheet.
3.36 Vail Stock Acquired for Foods' Account. The Vail Stock to be
acquired by Foods pursuant to this Agreement
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is being acquired for Foods' own account. Foods has no intention of
distributing or reselling such stock or any part thereof in any transaction that
would be in violation of the Securities Act of 1933, or the state securities law
of any state.
3.37 United States Forest Service.
(a) Except as set forth on Schedule 3.37(a), ▇▇▇▇▇▇▇'▇ operations and
those of its subsidiaries comply, in all material respects with the terms and
conditions set forth in each of the Term Special Use Permits issued by the
United States Department of Agriculture, Forest Service (the "USFS") to ▇▇▇▇▇▇▇
or its subsidiaries and all documents incorporated in such permits
(collectively, the "USFS Permits") and such permits are in full force and effect
and neither ▇▇▇▇▇▇▇ nor its subsidiaries have received any notice of default
under the USFS Permits;
(b) Except as set forth on Schedule 3.37(b), neither ▇▇▇▇▇▇▇ nor its
subsidiaries have received any written notice of nor have any Knowledge that the
USFS has any intention of amending, revoking or otherwise altering the terms or
conditions of any of the USFS Permits, or portion thereof, or the application of
the USFS Permits to ▇▇▇▇▇▇▇'▇ or its subsidiaries' operations;
(c) Except as set forth on Schedule 3.37(c), neither ▇▇▇▇▇▇▇ nor its
subsidiaries are engaged in any on-going dispute or disagreement with the USFS
over the interpretation or application of any term or condition of any of the
USFS Permits; and
(d) Except as set forth on Schedule 3.37(d), ▇▇▇▇▇▇▇ has no Knowledge of
any third-party permittee or commercial operator operating within the areas
permitted to ▇▇▇▇▇▇▇ or its subsidiaries under any of the USFS Permits.
3.38 Passenger Tramway.
(a) Except as set forth on Schedule 3.38(a), neither ▇▇▇▇▇▇▇ nor its
subsidiaries have had, in the past three (3) ski seasons, any passenger tramway
incidents that required reporting to the Colorado Passenger Tramway Safety Board
(the "CPTSB") under CPTSB laws, rules, regulations and standards.
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(b) Except as set forth on Schedule 3.38(b), each passenger tramway
operated by ▇▇▇▇▇▇▇ or its subsidiaries complies in all material respects with
current laws, rules, regulations and standards of CPTSB and the American
National Standards Institute ("ANSI") and, further, there are no defects or
conditions which are "grandfathered" under CPTSB or ANSI laws, rules,
regulations and standards.
(c) Except as set forth on Schedule 3.38(c), ▇▇▇▇▇▇▇ and its subsidiaries
have maintained in all material respects, each passenger tramway owned or
operated by ▇▇▇▇▇▇▇ or its subsidiaries according to all CPTSB laws, rules,
regulations and standards and all maintenance and replacement procedures and
standards recommended by the manufacturer, or manufacturer's successor, of each
such passenger tramway and, further, no such maintenance or replacement is now
outstanding or has been otherwise deferred or delayed beyond the manufacturer's
recommended maintenance and replacement schedule.
(d) Except as set forth on Schedule 3.38(d), neither ▇▇▇▇▇▇▇ nor its
subsidiaries have any Knowledge of any defect or condition that would preclude
or materially limit the normal operation of any passenger tramway owned or
operated by ▇▇▇▇▇▇▇ or its subsidiaries.
3.39 Clean Water Act.
(a) To ▇▇▇▇▇▇▇'▇ Knowledge, there have been no material discharges of
dredged or fill material into any waters of the United States, or any other
activity, on or within property owned or operated by ▇▇▇▇▇▇▇ or its subsidiaries
in violation of the Clean Water Act, 33 U.S.C. 1344, and its implementing
regulations (collectively, the "Clean Water Act"), other than discharges or
other activities pursuant to permits (the "Existing Permits").
(b) Except as described on Schedule 3.39(b), to ▇▇▇▇▇▇▇'▇ Knowledge, the
Existing Permits are in full force and effect and neither ▇▇▇▇▇▇▇, its
subsidiaries nor anyone acting for or on behalf of ▇▇▇▇▇▇▇ or its subsidiaries
has materially violated nor is currently and materially in violation of any of
the terms and conditions of the Existing Permits and there are no outstanding
mitigation requirements or unsatisfied conditions contained in any of the
Existing Permits. ▇▇▇▇▇▇▇ represents that it has all permits required under the
Clean Water Act.
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3.40 Keystone/Intrawest L.L.C.
(a) The LLC is duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite power and authority and
the legal right to own, lease and operate its properties and to carry on its
business as now being conducted. The LLC is duly qualified or licensed to do
business and in good standing in Colorado. True and correct copies of the LLC
Agreements (as amended) and the Certificate of Formation (the "Certificate")
filed with the Delaware Secretary of State have been delivered to Vail and,
except as described on Schedule 3.40(a), neither the LLC Agreement nor the
Certificate has been amended (whether in writing or via oral agreement or
understanding) and each of the LLC Agreement and the Certificate are in full
force and effect. The LLC is not in violation of its organizational documents.
(b) ▇▇▇▇▇▇▇ owns beneficially and of record an undivided 50% interest in
the LLC (the "▇▇▇▇▇▇▇ Interest") and has good and marketable title to the
▇▇▇▇▇▇▇ Interest, and ▇▇▇▇▇▇▇ has the absolute right to sell, assign and
transfer the ▇▇▇▇▇▇▇ Interest to Vail free and clear of all liens. There are no
existing options, warrants, calls, subscriptions or other rights or agreements
or commitments or claims of any nature granted by or binding upon ▇▇▇▇▇▇▇
granting or vesting in any party any claim or potential claim to the ▇▇▇▇▇▇▇
Interest. Intrawest owns beneficially and of record an undivided 50% interest in
the LLC.
(c) Except as set forth on Schedule 3.40(c), to ▇▇▇▇▇▇▇'▇ Knowledge,
neither delivery of this Agreement nor the consummation of the transactions
contemplated on the part of ▇▇▇▇▇▇▇ to be performed, nor the fulfillment of the
terms hereof, constitute a default under, require consent under, give any person
any right to terminate any (A) note, bond, mortgage, indenture or other monetary
obligation or instrument, or (B) any material license, contract or other
agreement, in either case, to which the LLC is a party or by which it or any of
its properties or assets may be bound.
(d) To ▇▇▇▇▇▇▇'▇ Knowledge, there are no actions, suits or proceedings
pending or threatened against the LLC.
(e) Except as set forth on Schedule 3.40(e) (which Schedule outlines the
current outstanding balance of any such debt) and to ▇▇▇▇▇▇▇'▇ Knowledge, the
LLC is not indebted to
44
-38-
any third party and is not currently obligated for the repayment
of any loan or debt.
(f) To ▇▇▇▇▇▇▇'▇ Knowledge, the LLC has obtained all of the governmental
licenses and permits required to own and operate its properties and business as
currently owned and operated, such licenses and permits are in full force and
effect, and no violation exists in respect of any such license or permit. To
▇▇▇▇▇▇▇'▇ Knowledge, the LLC has complied in all material respects with all
laws, regulations, ordinances and orders that relate to any of its properties
and assets.
(g) To ▇▇▇▇▇▇▇'▇ Knowledge, the LLC is not in default of any material
covenant or obligation under any agreement to which the LLC is a party, and no
events have occurred which with the passage of time or giving of notice would
constitute such a material default.
(h) ▇▇▇▇▇▇▇ is not in default under the LLC Agreement or the Contribution
Agreement and no events have occurred which with the passage of time or the
giving of notice would constitute such a default. ▇▇▇▇▇▇▇ has not waived any
material requirement set forth in the LLC Agreement or the Contribution
Agreement. To the Knowledge of ▇▇▇▇▇▇▇, Intrawest is not in default in any
material respect under the LLC Agreement or the Contribution Agreement or the
Management Agreement and no events have occurred that with the passage of time
or the giving of notice would constitute such a default.
(i) Except as set forth on Schedule 3.40(i), ▇▇▇▇▇▇▇ has not received any
distribution (in cash or other property) from the LLC.
(j) There are no bankruptcy, reorganization or arrangement proceedings
pending, being contemplated by or, to the Knowledge of ▇▇▇▇▇▇▇, threatened
against the LLC.
(k) Neither ▇▇▇▇▇▇▇ nor any of its subsidiaries has sold, conveyed,
transferred, assigned or otherwise disposed of any portion of the Option Lands.
(l) Except as set forth in Schedule 3.40(l), neither ▇▇▇▇▇▇▇ nor any of
its Subsidiaries has loaned money to or otherwise participated in any real
estate development project described in Section 3.02(b) of the LLC Agreement.
45
-39-
(m) ▇▇▇▇▇▇▇ has fully satisfied and fully performed all of its material
obligations under the Contribution Agreement and all transactions contemplated
therein have been fully performed and closed.
(n) ▇▇▇▇▇▇▇ has not made any Other Capital Contributions (as such term is
defined in the LLC Agreement), except as set forth in Schedule 3.40(n), and such
Schedule reflects all Capital Contributions made by ▇▇▇▇▇▇▇ to the LLC since the
LLC's formation.
(o) Neither ▇▇▇▇▇▇▇ nor Intrawest has made any Default Loans (as such term
is defined in the LLC Agreement), and ▇▇▇▇▇▇▇ has not received or given any
notice of a failure to make a Capital Contribution (as such term is defined in
the LLC Agreement). There are no outstanding requirements of either ▇▇▇▇▇▇▇ or
Intrawest to make Capital Contributions to the LLC.
(p) The current Annual Budget (as such term is defined in the LLC
Agreement), and each Project Budget (as such term is defined in the LLC
Agreement) has been delivered to Vail and, except as set forth on Schedule
3.40(p), to Resort's Knowledge there are currently no material deviations from
such budgets.
(q) Neither ▇▇▇▇▇▇▇ nor, to ▇▇▇▇▇▇▇'▇ Knowledge, Intrawest has committed
any act or omission that could cause a dissolution of the LLC under Article 10
of the LLC Agreement.
(r) As of the date of this Agreement, the LLC has commenced the
construction of a minimum of 260 residential units at the Base I Property (as
such term is defined in the LLC Agreement).
(s) As of the date of this Agreement, ▇▇▇▇▇▇▇ has not purchased any
Additional Property (as such term is defined in the LLC Agreement), and ▇▇▇▇▇▇▇
will not purchase any such Additional Property during the term of this
Agreement.
(t) True and correct copies of the Contribution Agreement and the
Management Services Agreement have been delivered to Vail and neither of such
agreements has been amended and each of such agreements are in full force and
effect.
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-40-
(u) ▇▇▇▇▇▇▇ has delivered to Vail, copies of the most currently available
LLC balance sheet and a summary of projects undertaken by the LLC which, to
▇▇▇▇▇▇▇'▇ Knowledge are true and correct.
(v) Except as described on Schedule 3.40(v), projects undertaken by the
LLC are not subject to requirements or agreements of any kind not contained in
the PUD which would require ▇▇▇▇▇▇▇ to provide for ski or lift access,
infrastructure improvements or employee housing in connection with any such
project.
(w) Except as set forth in Schedule 3.40(w), the LLC holds fee simple
title, subject only to Permitted Encumbrances, to all of its owned real
properties. None of the LLC's owned properties are subject to any mortgage,
deed of trust, pledge, lien, security interest, conditional sale agreement,
encumbrance, claim, mechanic's or materialmen's lien or charge of any kind,
except liens shown on Schedule 3.40(w) as securing specific liabilities and
Permitted Encumbrances or except as securing Indebtedness of the LLC relating to
development or infrastructure projects, a listing of which is set forth on
Schedule 3.40(w).
(x) To ▇▇▇▇▇▇▇'▇ Knowledge, the LLC is not in violation of any law, rule
or regulation or in default in any material respect with respect to any
judgment, writ, injunction or decree of any federal, state or local commission,
nor is the LLC party to, or bound by any material judicial or administrative
order, judgment, decree or consent decree relating to any past or present
practice or undertaking.
(y) To ▇▇▇▇▇▇▇'▇ Knowledge, the LLC has obtained (or is capable of
obtaining without incurring any material expense) all Environmental Permits and
all licenses and other authorizations and have made all registrations and given
all notifications that are required under any applicable Environmental Law. To
▇▇▇▇▇▇▇'▇ Knowledge, there is no Environmental claim pending against the LLC or
pertaining to property owned by the LLC, under an Environmental Law.
3.41 Water Rights.
The representations and warranties set forth on Schedule 3.41 are
incorporated herein by reference.
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ARTICLE IV
VAIL'S REPRESENTATIONS AND WARRANTIES
Vail represents and warrants that:
4.1 Capital Stock.
The authorized capital stock of Vail consists of 20,000,000 shares of Class
A Common Stock, par value $.01 per share (the "Class A Common Stock"),
40,000,000 shares of Vail Stock and 25,000,000 shares of Preferred Stock, par
value $.01 per share (the "Preferred Stock" and together with the Vail Stock and
Class A Common Stock the "Capital Stock"). As of the date of this Agreement,
there are 3,612,809 shares of Vail Stock issued and outstanding; 6,387,191
shares of Class A Common Stock issued and outstanding; and zero shares of
Preferred Stock issued and outstanding. All outstanding shares of Capital Stock
are duly authorized, validly issued, fully paid and non-assessable. Except as
set forth on Schedule 4.1, there are no options, warrants, calls or agreements
of any character for the issuance of additional shares of Capital Stock. Except
as set forth on Schedule 4.1, there are no contracts for the authorization or
issuance of any other class of securities of Vail, and there are no outstanding
securities convertible or exchangeable into Capital Stock.
4.2 Transfer of the Vail Stock.
The Vail Stock to be issued to Foods pursuant to this Agreement shall be
duly and validly authorized and, when issued and delivered pursuant to this
Agreement, shall be validly issued, fully paid and non-assessable and shall
transfer to and vest in Foods, or its nominee, good, valid, marketable and
indefeasible title to such shares of the Vail Stock, subject to no lien,
security interest or other encumbrance on such Vail Stock.
4.3 Authority of Vail.
(a) Vail has taken all action required by its Certificate of Incorporation
and its bylaws to authorize the execution and delivery of this Agreement, and
such other agreements, instruments and documents required to be executed by Vail
in connection herewith, and the performance of the transactions contemplated
herein and therein. Vail has all requisite corporate power and authority to
authorize the execution and delivery of this Agreement, and such other
agreements, instruments and documents required to be executed in connection
herewith, to consummate the transactions contemplated herein
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and therein, and to take all other actions required to be taken by Vail
pursuant to the provisions hereof. This Agreement, and such other agreements,
instruments and documents required to be executed in connection herewith, when
duly executed and delivered, shall constitute a valid and binding obligation of
Vail enforceable in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
(b) No approvals on the part of any class (whether voting together or as
separate classes) of Vail's shareholders are necessary to authorize this
Agreement or any other agreements, instruments and documents required to be
executed in connection herewith, or the transactions contemplated herein or
therein.
4.4 Corporate Standing.
Each of Vail and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its property and
assets and to carry on its business in the same manner as now being conducted.
The execution and delivery of this Agreement, and such other agreements,
instruments and documents required to be executed by Vail in connection
herewith, do not, and the consummation of the transaction contemplated herein
and therein will not, conflict with, or result in any violation of, breach of or
default (with or without notice or lapse of time or both) under, or give rise to
a right of termination, cancellation or acceleration of any obligation or the
loss of a benefit under, (a) any provision of the Certificate of Incorporation
or bylaws of Vail or any of its subsidiaries, or (b) except as set forth in
Schedule 4.4 hereto, any loan or credit agreement, note, bond, mortgage,
indenture, lease, contract, agreement, instrument or permit, judgment, order,
decree, writ or injunction to which Vail or any of its subsidiaries is a party,
or by which it or any of its subsidiaries or its or any of its subsidiaries'
properties or assets are bound, or result in the creation or imposition of any
lien upon any of such properties or assets.
4.5 Qualifications To Do Business.
Each of Vail and its subsidiaries is duly qualified and in good standing as
a foreign corporation and authorized to do business in each jurisdiction set
forth on Schedule 4.5 hereto. Each of Vail and its subsidiaries is qualified
and in good standing in every
49
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other jurisdiction in which the ownership of its property or the conduct of its
business requires it to be qualified to do business, except in those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, result in a Material Adverse Change of Vail.
4.6 Capital Stock of Subsidiaries.
The only direct or indirect subsidiaries of Vail are those listed on
Schedule 4.6 hereto. Except as set forth on Schedule 4.6 hereto, Vail is
directly or indirectly the record and beneficial owner of all of the outstanding
shares of capital stock of each of its subsidiaries, there are no proxies with
respect to such shares, and no equity securities of any of such subsidiaries are
or may be required to be issued by reason of any options, warrants, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any such subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any such subsidiary is
bound to issue additional shares of its capital stock or securities convertible
into or exchangeable for such shares. Other than as set forth on Schedule 4.6
hereto, all of such shares so owned by Vail are validly issued, fully paid and
nonassessable and are owned by it free and clear of any claim, lien or
encumbrance of any kind with respect thereto. Except as disclosed on Schedule
4.6 hereto, Vail does not directly or indirectly own any interest in any
corporation, partnership, joint venture or other business association or entity.
4.7 Corporate Records.
True and correct copies of the Certificate of Incorporation and bylaws of
Vail have previously been delivered to Foods.
4.8 Employee Loans and Other Employee Interests in Vail.
Except as set forth on Schedule 4.8, there are no outstanding loans by or
to Vail or any of its subsidiaries to or from any Vail Employee, other than (a)
emergency loans which do not exceed $10,000 in the aggregate, and none of which
exceed $1,000 individually, (b) housing loans which do not exceed $10,000 in the
aggregate, and none of which exceed $1,000 individually, or (c) ordinary travel
advances or (d) employee charges not exceeding $5,000 individually and $50,000
in the aggregate. Except as set forth on Schedule 4.8, no Vail Employee
currently employed has any material interest, direct or indirect, in any lease
or contract of Vail.
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4.9 Vail Financial Statements; No Material Adverse Change.
Except as set forth on Schedule 4.9, the Vail Financial Statements present
fairly, in all material respects, the consolidated financial position and
results of operations of Vail and its subsidiaries as of the dates thereof, all
in conformity with GAAP applied on a consistent basis, except as set forth in
the notes to those financial statements. Since April 30, 1996, there has not
occurred a Material Adverse Change of Vail, or any event that, individually or
in the aggregate, would reasonably be expected to result in a Material Adverse
Change of Vail. Neither this Section 4.9 nor any other Section in this
Agreement shall be construed as a representation or warranty as to the accuracy
or attainability of budgets or projections relating to or reflecting the
business of Vail.
4.10 Conduct of Business.
Except as and to the extent set forth on Schedule 4.10, since April 30,
1996, Vail and its subsidiaries have not:
(a) made any commitments for capital expenditures or commitments for
additions to property, plant, equipment or intangible capital assets other
than commitments for $100,000 or less made in the ordinary course of
business;
(b) acquired (by merger, consolidation or acquisition of stock or assets)
any corporation, partnership, joint venture, limited liability company or
other business organization, or division thereof, or entered into any
contract or agreement with respect thereto;
(c) incurred any obligations or liabilities (whether absolute, accrued,
contingent, or otherwise and whether due or to become due), except for
current liabilities incurred in the ordinary course of business consistent
with past practice; or experienced any change in any assumptions underlying
or methods of calculating any bad debt, contingency or other reserve;
(d) sold, transferred or conveyed any of its properties or assets used in
Vail's business or operations, except for current assets sold or converted
in the ordinary course of business and consistent with past practice, or
permitted or allowed any of the properties or assets used in Vail's
business or operations to be mortgaged, pledged or subjected to any lien or
encumbrance, except liens or encumbrances for taxes not yet delinquent;
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(e) paid, discharged or satisfied any claim, lien, encumbrance or
liability (whether absolute, accrued, contingent or otherwise and whether
due or to become due);
(f) written down or determined to write down or written up or determined
to write up the value of any inventory, or written off or determined to
write off as uncollectible any notes or accounts receivable or any portion
thereof, except for immaterial write-downs or write-offs in the ordinary
course of business, consistent with past practice and at a rate no greater
than during the prior fifty-two (52) weeks;
(g) waived any material rights;
(h) granted any increase in the compensation of any director of Vail or
Vail Employee (including, without limitation, any increase pursuant to any
bonus, pension, profit-sharing or other plan), except for increases (i)
made pursuant to the terms of any existing Employee Benefit Plan, or (ii)
occurring in the ordinary course of business in accordance with customary
practice (for purposes of the foregoing, ordinary course of business shall
be deemed to include those customary increases granted during ongoing
negotiation of labor agreements);
(i) instituted or adopted any new Employee Benefit Plan for any director
of Vail or any Vail Employee;
(j) directly or indirectly redeemed, purchased or otherwise acquired or
subdivided or reclassified any Vail Stock;
(k) been involved in any labor dispute, litigation or governmental
investigation of any material nature;
(l) entered into any material agreement with any local, state or federal
governments or agencies; or entered into any consulting agreements or
sponsorship agreements requiring the payment of $100,000 or more or having
a term of one year or more;
(m) made any amendments to the Certificate of Incorporation or bylaws of
Vail or any of its subsidiaries; or
(n) agreed, whether in writing or otherwise, to take any action described
in this Section 4.10.
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4.11 Dividends.
Since April 30, 1996, Vail has not declared or paid any dividends on its
capital stock in cash, stock or other property (other than the Vail Dividend).
4.12 Absence of Undisclosed Liabilities.
Other than as set forth on Schedule 4.12 or as set forth on other Schedules
hereto, or as otherwise included in the April 30, 1996 balance sheet of Vail,
there are no liabilities or obligations of Vail and its subsidiaries of any
nature, whether absolute, accrued, unmatured, contingent or otherwise, that
would be required to be reflected on the liability side of a balance sheet
prepared in accordance with GAAP or disclosed in the notes thereto, without
regard to materiality, other than liabilities incurred since April 30, 1996 in
the ordinary course of business related to Vail's operations.
4.13 Title to Property.
Except as set forth on Schedule 4.13, Vail and its subsidiaries hold fee
simple title, subject only to Permitted Encumbrances, to all of their respective
owned real property, and Vail and its subsidiaries hold a good and valid
leasehold title and estate to all of the Vail Leased Property, including,
without limitation such assets which are necessary for Vail and its subsidiaries
to conduct their business substantially in the same manner as currently
conducted. None of such owned or leased properties (or such assets which are
necessary for Vail and its subsidiaries to conduct their business substantially
in the same manner as presently conducted) are subject to any mortgage, deed of
trust, pledge, lien, security interest, conditional sale agreement, encumbrance,
claim, mechanic's or materialmen's lien, or charge of any kind, except liens
shown on Schedule 4.13 as securing specific liabilities (with respect to which
no default, or action or omission which with the giving of notice or passage of
time or both would constitute a default, exists) and Permitted Encumbrances.
4.14 Real Property.
(a) All real property owned or leased (excluding property leased for
employee housing with leases having durations less than one year or annual
rental payments of less than $20,000) by Vail and its subsidiaries is set forth
on Schedule 4.14(a)(i) (the "Vail Leased Property") and such real property is
identified in a manner that reflects the properties which are owned and those
which are leased. Except as set forth on Schedule 4.14(a)(ii), all buildings
and structures required to operate the business of Vail substantially in the
same manner
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as presently conducted located on the real properties owned by Vail and its
subsidiaries and on the Vail Leased Property are in good operating condition and
repair (considering the age of such buildings and structures and ordinary wear
and tear excepted), and are usable for their current use.
(b) Except as set forth on Schedule 4.14(b), Vail and its subsidiaries
have not received written notice regarding any of the following (except for
matters previously resolved): (x) any dispute from any contiguous property
owners concerning contiguous boundary lines, (y) that any of the said owned or
Vail Leased Properties (or the buildings, structures or improvements thereon),
or Vail's and its subsidiaries' operations, violate the zoning or planning laws,
ordinances, rules or regulations of the city, county or state in which they are
located, or any building regulations or codes of such city, county or state, or
land use laws or regulations applicable to said properties, and no such
violations exist, or (z) any claims of others to rights over, under, across or
through any of the owned or Vail Leased Properties by virtue of use or
prescription. Except as set forth on Schedule 4.14, Vail has or is able to
obtain without a material penalty or material incremental cost, or has a valid
exemption from the requirement to obtain, all governmental permits (excluding
permits from the United States Forest Service which are covered in Section
4.32), approvals, authorizations or licenses required to conduct its business in
substantially the same manner as its business is currently conducted.
(c) Vail has previously delivered to Foods or will so deliver as soon as
practicable prior to Closing lists of the most recently issued real and personal
(including vehicles) property tax assessments and tax bills, if any, for Vail's
1994 and 1995 fiscal years for all property owned or leased by Vail and its
subsidiaries.
(d) Except as set forth on Schedule 4.14(d)(i) all real properties owned
by Vail or its subsidiaries are free from agreements creating an obligation to
sell, lease or grant an option to sell or lease and (ii) all Vail Leased
Property is free of all agreements creating an obligation to sublease, grant an
assignment of lease or grant an option to sublease.
(e) Except as set forth on Schedule 4.14(e), to the Knowledge of Vail all
real properties owned by Vail and its subsidiaries and Vail Leased Properties
are currently zoned in the zoning category which permits operation of said
properties
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as now used, operated and maintained. To the Knowledge of Vail, the
consummation of the transactions contemplated herein will not
result in a violation of any applicable zoning ordinance or the
termination of any applicable zoning variance now existing.
(f) Schedule 4.14(f) lists all properties owned or leased by Vail and its
subsidiaries which are not presently being used in the business or operations of
Vail and its subsidiaries.
(g) All buildings, structures or improvements owned and/or leased by Vail
and its subsidiaries on any of the owned or leased real properties are located
entirely within the property boundary lines of such properties and do not
materially encroach onto adjoining lands, and there are no material
encroachments of buildings, structures or improvements from adjoining land onto
such properties.
(h) To the Knowledge of Vail, the developed owned real properties and the
Vail Leased Property currently have access to, at or within their property
boundary lines to all gas, water, electricity, storm, sewer, sanitary sewer,
telephone, and all other utilities necessary or beneficial to the current
operation of the owned or leased properties, and all of such utilities are
adequate and sufficient for the current operation of such properties, subject to
normal interruptions in the ordinary course.
(i) Vail and its subsidiaries hold a valid leasehold estate for each Vail
Leased Property, as shown on Schedule 4.14(a)(i), and enjoy peaceful and
undisturbed possession thereunder. All such leases are valid, binding and
enforceable in accordance with their terms, and are in full force and effect,
Vail and its subsidiaries have complied with all material obligations
thereunder, and there are no existing defaults by Vail and its subsidiaries,
and, except as set forth in Schedule 4.14(i), there are no existing defaults by
any other party thereunder. No event has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute a default by Vail and its subsidiaries and no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default by any other party
thereunder. Except as disclosed on Schedule 4.14(i), all such leases shall
continue in full force and effect (without default) after the Closing and the
consummation of the
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transactions contemplated by this Agreement without the consent, approval or act
of any other party, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general equitable
or fiduciary principles.
4.15 Personal Property.
Except as set forth on Schedule 4.15(a), and except for any immaterial
exceptions, restrictions or limitations contained in financing statements with
respect to such property, Vail and its subsidiaries own, or have a valid lease
or license with respect to, the tangible personal property (including without
limitation ski lift systems and snowmaking equipment and systems) which is
necessary for the operation of their business substantially in the same manner
as currently conducted, free and clear of all liens, mortgages, pledges,
security interests, charges or encumbrances other than Permitted Encumbrances,
and enjoy peaceful and undisturbed possession thereunder. Except as set forth
on Schedule 4.15(b), all such property that is material to the operations of
Vail is in reasonably good operating condition and repair, ordinary wear and
tear excepted, and is suitable for the purposes for which it is used. Schedule
4.15(c) contains a list of each lease pursuant to which Vail and its
subsidiaries lease personal property which involves payment over the remaining
term of such lease of more than $100,000 and which in each case is not
cancelable upon six months' notice or less without penalty of more than
$100,000. All such personal property leases are valid, binding and enforceable
in accordance with their terms and are in full force and effect, Vail and its
subsidiaries have complied with all obligations thereunder and there are no
existing material defaults by Vail and its subsidiaries or, to the Knowledge of
Vail, by any other party thereunder; no event has occurred which (whether with
or without notice, lapse of time or the happening or occurrence of any other
event) would constitute a material default by Vail and its subsidiaries
thereunder; and no event has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a material default by any other party thereunder. Except as set
forth on Schedule 4.15(d), all personal property leases which are set forth on
Schedule 4.15(c) hereto shall continue in effect after the Closing and the
consummation of the transactions contemplated by this Agreement without the
consent, approval or act of any other party. All unperformed contracts to
purchase personal property to which Vail and its
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subsidiaries are a party which provide for a purchase price of $100,000 or more
are set forth on Schedule 4.15(e).
4.16 Litigation and Claims.
Schedule 4.16 sets forth all pending judicial or administrative
investigations, lawsuits, actions or proceedings against Vail and its
subsidiaries of which Vail or Vail and its subsidiaries have received written
notice. Except as set forth on Schedule 4.16, there are no actions, suits,
investigations, administrative proceedings or orders pending or, to Vail's
Knowledge, threatened against (i) Vail, at law or in equity, which, if adversely
determined, would have an adverse effect on the ability of Vail to perform the
terms of this Agreement, or would interfere with the ability of Vail to
consummate the transactions contemplated herein, or (ii) against Vail or any of
its subsidiaries, at law or in equity.
4.17 Compliance with Laws.
Except as set forth on Schedule 4.17, to the Knowledge of Vail, Vail and
its subsidiaries are not in violation of any law, rule or regulation or in
default in any material respect with respect to any judgment, writ, injunction
or decree of any federal, state or local commission.
4.18 Orders and Consent Decrees.
Except as set forth on Schedule 4.18, or as specifically cross-referenced
thereon from other Schedules hereto, Vail and its subsidiaries are not a party
to, or bound by, any material judicial or administrative order, judgment, decree
or consent decree relating to any past or present practice, omission, activity
or undertaking. To the Knowledge of Vail, Vail and its subsidiaries are not in
default in any material respect under any of the judicial or administrative
orders, judgments, decrees or consent decrees or conciliation or compliance
agreements set forth on Schedule 4.18.
4.19 Labor Agreements.
There are no binding agreements of any type with any labor union, labor
organization, collective bargaining unit or employee group to which Vail and its
subsidiaries are bound.
4.20 Employees.
Except as set forth on Schedule 4.20, Vail and its subsidiaries have not
received any written notice from a governmental authority or official during the
past two years of any non-compliance with any federal, state or local laws,
regulations and legal requirements relating to the employment of labor in
connection with their business,
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including those laws, regulations and legal requirements relating to wages,
hours, benefits, affirmative action, equal opportunity, including the Americans
with Disabilities Act and the Occupational Safety and Health Act, collective
bargaining, workers' compensation and the payment of social security,
unemployment and employment taxes.
4.21 Contracts.
All contracts of Vail or any of its subsidiaries which involve aggregate
payments after the date of this Agreement of $100,000 or more are set forth on
Schedule 4.21 or are specifically cross-referenced thereon from other Schedules
hereto. Except as set forth on Schedule 4.21, Vail and its subsidiaries are not
a party to or obligated under any written agreement or contract that:
(a) provides for the employment of any Corporate Officer of Vail not
terminable at will and without liability for additional payments or
compensation, other than severance and vacation pay payable in accordance
with the established policies of Vail as set forth on Schedule 4.21;
(b) provides for (i) the employment of any consultant or broker for a
term that would exceed one (1) year from the date of the Closing, or
provides for payments that exceed $100,000, or (ii) the employment of any
independent attorney or accounting firm not terminable at will;
(c) would prohibit or limit in any material respect Vail or any of
its subsidiaries from engaging in their present business;
(d) requires the purchase of materials, inventories services or
supplies that has a remaining contractual term of more than one (1) year
from the Closing, or would require payments in the aggregate in excess of
$100,000;
(e) involves the sale of any asset or property of Vail or any of its
subsidiaries presently being used in Vail's or any of its subsidiaries'
business or operations, other than in the normal course of business;
(f) relates to the borrowing of money or bank credit (including, but
not limited to, indentures, notes, installment obligations and capital
leases) or the
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mortgaging or pledging of any asset or property of Vail or any of its
subsidiaries;
(g) guarantees the obligations of any supplier, customer or other third
party, other than endorsements in the ordinary course;
(h) is a forward, swap, option or swaption contract or any other financial
instrument with similar characteristics and/or generally characterized as a
"derivative" security to which Vail or any of its subsidiaries are a party
or to which Vail or any of its subsidiaries or any of their respective
assets or properties is subject or bound (including, without limitation,
funds of Vail invested by any other person); or
(i) includes any indemnity provisions for claims based on product
liability, environmental or employee or retiree liabilities and arises out
of any purchase or acquisition of another entity or business.
4.22 Validity of Material Contracts.
(a) Except as set forth on Schedule 4.22(a), Vail and its subsidiaries
have not: (i) received any written claim of breach or default from any party
relating to any agreement, commitment or contract listed on Schedule 4.21; or
(ii) received any written notice of termination from any party relating to any
such agreement, commitment or contract.
(b) Except as set forth on Schedule 4.22(b), Vail and its subsidiaries
have not breached or defaulted in any material respect on any agreement,
commitment or contract listed on Schedule 4.21.
4.23 Trademarks and Copyrights.
(a) Schedule 4.23(a)(i) lists all registered trade- marks and copyrights
owned by Vail and its subsidiaries and the jurisdictions in which such are
registered or in which an application has been filed for such registration.
Schedule 4.23(a)(ii) lists each license or sublicense (with a term exceeding one
year or with a royalty payment of more than $1,000) to which Vail and its
subsidiaries are a party and pursuant to which any other person or entity is
authorized to use any such trademark or copyright. All trademarks and
copyrights listed on Schedule 4.23(a)(i) are owned by Vail and its
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subsidiaries and, except as disclosed on Schedule 4.23(a)(iii), are free and
clear of any known adverse claim of any third party.
(b) To the Knowledge of Vail, Vail and its subsidiaries do not infringe or
unlawfully or wrongly use any trademark or copyright rights owned or
claimed by any other party.
(c) To the Knowledge of Vail, except as disclosed on Schedule 4.23(c), no
third party is now making any infringing use of any Vail trademark or
copyright.
(d) Except as disclosed on Schedule 4.23(d) or as required to be disclosed
on Schedule 4.23(a)(ii), Vail and its subsidiaries have not sold or
otherwise disposed of, or transferred or granted, any interest in such Vail
trademarks or copyrights listed on Schedule 4.23(a)(i).
(e) To the Knowledge of Vail, no claims are being asserted by any person
against the use of any of the trademarks or copyrights listed on Schedule
4.23(a)(i), or challenging or questioning the validity or effectiveness of
any license or agreement related thereto. Except as disclosed on Schedule
4.23(e), none of the Vail trademarks or copyrights is subject to any
outstanding order, judgment or decree restricting the use thereof by Vail
and its subsidiaries, or restricting the licensing thereof by Vail and its
subsidiaries to any other person or entity.
4.24 Powers of Attorney.
Except as set forth on Schedule 4.24, neither Vail nor any of its
subsidiaries has any material outstanding revocable or irrevocable Powers of
Attorney or similar authorizations issued to any individual who is not a Vail
Employee.
4.25 Taxes.
(a) Vail, the affiliated group, within the meaning of Section 1504 of the
Code, of which Vail is the common parent and any other affiliated group, within
the meaning of Section 1504 of the Code, of which Vail has been a member at any
time since its date of incorporation (an "Affiliated Group" and, collectively,
the "Affiliated Groups") have timely filed on or before the date hereof all Tax
Returns required to be filed in accordance with all applicable laws (taking into
account all extensions of due dates), and all such Tax Returns are true, correct
and complete and all amounts shown thereon as owing
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have been paid. Except as set forth on Schedule 4.25(a): (i) all Tax bills or
Tax assessments received by or with respect to Vail have been paid (to the
extent the Taxes shown thereon are due and owing); (ii) all Taxes with respect
to Vail and the Affiliated Groups (whether or not shown on any Tax Returns) have
been paid or accrued and all deficiencies for Taxes asserted or assessed by a
taxing authority against Vail or an Affiliated Group have been paid or finally
settled or are being contested by appropriate proceedings; (iii) no claim is
currently being made by an authority in a jurisdiction where Vail or an
Affiliated Group does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction; and (iv) there are no liens on any of the assets
of Vail or an Affiliated Group that arose in connection with any failure (or
alleged failure) to pay any Tax. The term "Vail" when used in this Section 4.25
means Vail and its subsidiaries.
(b) Vail and the Affiliated Groups have collected or withheld and paid on
a timely basis all Taxes required to have been collected or withheld and paid to
any taxing authority in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party.
(c) Except as set forth on Schedule 4.25(c), neither Vail nor an
Affiliated Group has received any written notice of pending or threatened
actions, audits, proceedings or investigations for the assessment or collection
of Taxes.
(d) Except as set forth on Schedule 4.25(d), neither Vail nor an
Affiliated Group has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency
(but only to the extent such waiver or extension is still in effect) nor are
there any outstanding requests for any extension of time within which to pay any
Taxes not yet paid. For all taxable periods subsequent to the fiscal year ended
December 31, 1989, Vail has provided to Foods (i) true, correct and complete
copies of federal Form 1120 pro forma returns for Vail and all other information
(compiled in a true, correct and complete manner) relating to income,
deductions, credits and Taxes of Vail that is not included in the pro forma
returns, (ii) all statements of federal Income Tax deficiencies assessed
against, or attributable to, Vail or an Affiliated Group and (iii) a true,
correct and complete copy of any Tax Sharing Agreement to which Vail is a party
and a true, correct and complete description of any such Tax Sharing Agreement
not reduced to writing.
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(e) Except as set forth on Schedule 4.25(e), neither Vail nor an
Affiliated Group has made, is obligated to make or is a party to any contract,
agreement, arrangement or plan covering any Vail Employee that (taking into
account the transactions contemplated by this Agreement) could obligate it to
make any payments that would not be deductible under Section 162 of the Code (by
reason of being unreasonable in amount), Section 404, Section 162(m) or Section
280G of the Code.
(f) Schedule 4.25(f) sets forth the following information with respect to
Vail as of the most recent practicable date: (i) the tax basis of Vail's
assets; and (ii) the amount of any net operating loss, net capital loss, tax
credit or other carryover allocable to Vail.
(g) Except as set forth on Schedule 4.25(g), Vail is not a party to any
joint venture, partnership or other arrangement or contract that could be
treated as a partnership for federal income tax purposes.
(h) The unpaid Taxes of Vail do not exceed the reserve for Tax liability
as computed in a manner consistent with the prior and customary accounting
practice of Vail (excluding any reserve for deferred Taxes established to
reflect timing differences between book and tax income).
(i) All Consolidated Returns and Unitary Returns (as defined below), and
all state, local and foreign Tax Returns of Vail and the Affiliated Groups have
been closed by applicable statute of limitations for all taxable years ending on
or before the dates shown on the attached Schedule 4.25(i). "Consolidated
Return" shall mean any consolidated federal Income Tax Return filed by an
Affiliated Group, and "Unitary Return" shall mean any Return with respect to any
Taxes, other than federal Income Taxes, filed, or required to be filed, on a
consolidated, combined or unitary basis by any group of corporations of which
Vail is a member or has been a member at any time since its date of
incorporation.
(j) Vail and the Affiliated Groups have made all payments of estimated
Taxes required to be made with respect to any of them under Section 6655 of the
Code and any comparable provisions of state, local and foreign law.
(k) Except as set forth on Schedule 4.25(k), no power of attorney has been
granted by Vail or an Affiliated
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Group with respect to any matter relating to Taxes which is currently in force.
(l) No consent has been filed under Section 341(f) of the Code with
respect to Vail or an Affiliated Group.
(m) Neither Vail nor an Affiliated Group has incurred or assumed any
corporate acquisition indebtedness, as defined in Section 279(b) of the Code.
4.26 Employee Benefit Plans.
(a) All Employee Benefit Plans sponsored by Vail and covering Vail
Participants are set forth on Schedule 4.26(a) (the "Vail Employee Benefit
Plans"). With respect to each Vail Employee Benefit Plan, copies of the
following have been delivered to Foods where applicable: (i) the Plan document;
(ii) a summary plan description; (iii) most recent Annual Return/Report of
Employee Benefit Plan, Form 5500 Series; (iv) trust agreement; (v) insurance
policy; and (vi) deter- mination letter from the IRS. The Vail Employee Benefit
Plans have in all material respects been maintained and administered in
compliance with applicable federal and state laws, regulations and rules,
including, but not limited to, ERISA and the Code. All contributions required as
of the Closing, by law or contract, to be made to each Vail Employee Benefit
Plan will have been timely made.
(b) No Vail Employee Benefit Plan (or trust or other funding vehicle
pursuant thereto) is subject to any Tax under Section 511 of the Code that
remains unpaid and assessable against Vail after the Closing.
(c) Neither Vail nor any plan fiduciary of any Vail Employee Benefit Plan
has engaged in any transaction in violation of Section 404 or 406 of ERISA, or
in any "prohibited transaction" as defined in Section 4975(c)(1) of the Code,
for which no exemption exists under Section 408 of ERISA, or in violation of
Section 4975(c)(2) or 4975(d) of the Code.
(d) Except as listed on Schedule 4.26(d), neither Vail nor any Vail
Employee Benefit Plan is a party to any litigation with respect to Vail
Participants relating to, or seeking benefits under, any Employee Benefit Plan.
(e) Except as set forth on Schedule 4.26(e), neither Vail nor any ERISA
Affiliate has any legally binding
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commitments to create any additional Employee Benefit Plans which are intended
to cover Vail Employees, or to amend or modify any existing Employee Benefit
Plan with respect to benefits for Vail Employees. With respect to each
collective bargaining agreement, there is no legally binding commitment to
create any additional Employee Benefit Plans which are intended to cover Vail
Employees, to amend or modify any existing Employee Benefit Plan which covers or
has covered Vail Employees, or to begin contributing, or increase contributions,
to a Multiemployer Plan, which would materially increase the benefits to be
provided under such collective bargaining agreement.
(f) Except as described on Schedule 4.26(f), the execution and performance
of the transactions contemplated by this Agreement, and such other agreements,
instruments and documents required to be executed in connection therewith, shall
not constitute an event under any Employee Benefit Plan or agreement under which
Vail may incur any liability that will result in any payment (whether severance
pay or otherwise), acceleration, vesting or increase of benefits with respect to
any Vail Employee.
(g) Each Vail Employee Benefit Plan which is a retirement plan or a
savings plan has been established and operated so as to be qualified and tax
exempt under the provisions of Code Sections 401(a) and 501(a) from its adoption
to date and will be so as of the Closing. Vail has not, by its action or
inaction, adversely affected the qualified status of any such Vail Employee
Benefit Plan.
(h) All Vail Employee Benefit Plans under which benefits are provided
under health maintenance and preferred provider organizations are set forth on
Schedule 4.26(h).
(i) Except as set forth on Schedule 4.26(i), neither Vail (since January
1, 1989) nor any ERISA Affiliate has been a party to any Multiemployer Plan in
either a "complete withdrawal" as defined in Section 4203 of ERISA or a "partial
withdrawal" as defined in Section 4205 of ERISA.
(j) Neither Vail nor any of its ERISA Affiliates have incurred any
liability under Title IV of ERISA (other than for contributions not yet due or
for the payment of premiums not yet due), which liability has not been fully
paid as of the date hereof.
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4.27 Environmental Matters. Except as set forth on Schedule 4.27:
(a) Vail and its subsidiaries have obtained (or are capable of
obtaining without incurring any material incremental expense) all
Environmental Permits and all licenses and other authorizations and have
made all registrations and given all notifications that are required under
any applicable Environmental Law.
(b) Except as set forth on Schedule 4.27(b), there is no
Environmental Claim pending (excluding any of the foregoing with respect to
which Vail has not received service of process or notice, as the case may
be, except if Vail has Knowledge of the existence thereof) against Vail and
its subsidiaries under an Environmental Law.
(c) Except as set forth on Schedule 4.27(c) Vail and its subsidiaries
are in compliance with all terms and conditions of their Environmental
Permits, and are in compliance with all applicable Environmental Laws.
(d) Except as set forth on Schedule 4.27(d) Vail and its subsidiaries
did not generate, treat, store, transport, discharge, dispose of or release
any Hazardous Substances on any property now or previously owned, leased or
used by Vail and its subsidiaries.
4.28 Liability and Casualty Insurance. Schedule 4.28 sets forth a
description of each liability or casualty insurance policy (including, without
limitation, fire and product liability policies) including self-insurance
maintained on the property, assets and business of Vail and its subsidiaries,
specifying the insurer, the amount of coverage, the type of insurance, the
policy number, the expiration date and the annual premium. All such policies:
(i) are valid, outstanding and enforceable policies; (ii) shall remain in full
force and effect until their respective expiration dates as set forth on
Schedule 4.28 without the payment of additional premiums other than additional
premiums required in the ordinary course prior to the Closing; and (iii) except
as noted on Schedule 4.28, shall not in any way be adversely affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement.
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4.29 Consents or Approvals.
(a) All consents and approvals of any third party required by the terms
hereof or required to consummate the transactions contemplated herein have been
obtained or, prior to the Closing, will be obtained and shall remain in full
force and effect through the Closing.
(b) Except as set forth in Schedule 4.29, no consent, waiver, approval or
authorization, registration, declaration or filing with any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by or with respect to Vail in
connection with the execution and delivery of this Agreement, and such other
agreements, instruments and documents required to be executed by Vail in
connection herewith contemplated herein and therein, or the consummation by Vail
of the transactions contemplated herein and therein.
4.30 Transaction Fees. Except as set forth on Schedule 4.30, neither Vail
nor any member of its board of directors has any agreement or understanding, or
has incurred any liability, requiring the payment of a finder's fee, brokerage
commission or like cost or charge to any person by reason of this Agreement or
the transactions contemplated herein. Vail is solely responsible for all fees,
commissions and other costs of the persons listed on Schedule 4.30 and neither
Vail nor any of its subsidiaries has any responsibility therefor.
4.31 ▇▇▇▇▇▇▇ Stock Acquired for Vail's Account. The ▇▇▇▇▇▇▇ Stock to be
acquired by Vail pursuant to this Agreement is being acquired for Vail's own
account. Vail has no intention of distributing or reselling such stock or any
part thereof in any transaction which would be in violation of the Securities
Act of 1933, or the state securities laws of any state.
4.32 United States Forest Service.
(a) Except as set forth on Schedule 4.32(a), Vail's operations and those
of its subsidiaries comply, in all material respects with the terms and
conditions of the USFS Permits issued by the USFS to Vail or its subsidiaries
and such permits are in full force and effect and neither Vail nor its
subsidiaries have received any notice of default under the USFS Permits;
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(b) Except as set forth on Schedule 4.32(b), neither Vail nor its
subsidiaries have received any written notice of nor have any Knowledge that the
USFS has any intention of amending, revoking or otherwise altering the terms or
conditions of any of the USFS Permits, or portion thereof, or the application of
the USFS Permits to Vail's or its subsidiaries' operations;
(c) Except as set forth on Schedule 4.32(c), neither Vail nor its
subsidiaries are engaged in any on-going dispute or disagreement with the USFS
over the interpretation or application of any term or condition of any of the
USFS Permits; and
(d) Except as set forth on Schedule 4.32(d), Vail has no Knowledge of any
third-party permittee or commercial operator operating within the areas
permitted to Vail or its subsidiaries under any of the USFS Permits.
4.33 Passenger Tramway.
(a) Except as set forth on Schedule 4.33(a), neither Vail nor its
subsidiaries have had, in the past three (3) ski seasons, any passenger tramway
incidents that required reporting to the CPTSB under CPTSB laws, rules,
regulations and standards.
(b) Except as set forth on Schedule 4.33(b), each passenger tramway
operated by Vail or its subsidiaries complies in all material respects with
current laws, rules, regulations and standards of CPTSB and the ANSI and,
further, there are no defects or conditions which are "grandfathered" under
CPTSB or ANSI laws, rules, regulations and standards.
(c) Except as set forth on Schedule 4.33(c), Vail and its subsidiaries
have maintained in all material respects, each passenger tramway owned or
operated by Vail or its subsidiaries according to all CPTSB laws, rules,
regulations and standards and all maintenance and replacement procedures and
standards recommended by the manufacturer, or manufacturer's successor, of each
such passenger tramway and, further, no such maintenance or replacement is now
outstanding or has been otherwise deferred or delayed beyond the manufacturer's
recommended maintenance and replacement schedule.
(d) Except as set forth on Schedule 4.33(d), neither Vail nor its
subsidiaries have any Knowledge of any defect or condition that would preclude
or materially limit the normal
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operation of any passenger tramway owned or operated by Vail or
its subsidiaries.
4.34 Clean Water Act.
(a) To Vail's Knowledge, there have been no material discharges of dredged
or fill material into any waters of the United States, or any other activity, on
or within property owned or operated by Vail or its subsidiaries in violation of
the Clean Water Act, other than discharges or other activities pursuant to
permits (the "Vail Existing Permits").
(b) Except as described on Schedule 4.34(b), to Vail's Knowledge, the Vail
Existing Permits are in full force and effect and neither Vail, its subsidiaries
nor anyone acting for or on behalf of Vail or its subsidiaries has materially
violated nor is currently and materially in violation of any of the terms and
conditions of the Vail Existing Permits and there are no outstanding mitigation
requirements or unsatisfied conditions contained in any of the Vail Existing
Permits. Vail represents that it has all permits required under the Clean Water
Act.
4.35 Water Rights. The representations and warranties set forth on
Schedule 4.35 are incorporated herein by reference.
4.36 Financing Commitment. Vail has obtained a commitment to lend Vail
sufficient funds to repay Indebtedness of ▇▇▇▇▇▇▇ up to the Foods Dividend
Amount from Nationsbank of Texas, N.A. and has provided Foods a true and correct
copy of such commitment. Vail has no Knowledge of any fact or circumstance that
may cause Nationsbank of Texas, N.A. not to loan such funds to Vail on or prior
to the Closing Date.
ARTICLE V
COVENANTS PENDING CLOSING
5.1 ▇▇▇▇▇▇▇ Operations. Until the Closing, Foods and ▇▇▇▇▇▇▇ shall use,
and shall cause ▇▇▇▇▇▇▇'▇ subsidiaries to use, their reasonable best efforts to
conduct ▇▇▇▇▇▇▇'▇ business in the usual and customary manner consistent with
past practice and exclusively through ▇▇▇▇▇▇▇ and its subsidiaries. Until the
Closing, ▇▇▇▇▇▇▇ shall, and shall cause its
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subsidiaries to, continue to make capital expenditures with respect to the
properties and resorts of ▇▇▇▇▇▇▇ as contemplated by the ▇▇▇▇▇▇▇ Budget and
shall make all expenditures reasonably necessary (including but not limited to
marketing and advertising expenditures and the hiring of seasonal employees) for
the ▇▇▇▇▇▇▇ resorts opening for the 1996-1997 ski season on a basis consistent
with past practice and in accordance with the ▇▇▇▇▇▇▇ Budget. Except with the
prior written approval of Vail (which approval shall not be unreasonably
withheld) or as specifically permitted by the terms of this Agreement, Foods
shall not permit ▇▇▇▇▇▇▇ to, and ▇▇▇▇▇▇▇ shall not and shall not permit any of
its subsidiaries to:
(a) enter into any employment agreement with any officer or director,
or any agreement to increase the compensation or benefits of any officer or
director (other than pursuant to normal merit salary reviews conducted in
the ordinary course of business after consultation with Vail);
(b) increase the compensation or benefits (including, without
limitation, increasing any severance benefits) of any ▇▇▇▇▇▇▇ Employee
except: (i) as required by law; (ii) in accordance with customary
negotiations of applicable labor or employment agreements to which ▇▇▇▇▇▇▇
or any of its subsidiaries is bound; (iii) pursuant to any changes in
Employee Benefit Plans as set forth on Schedule 3.30(f); or (iv) pursuant
to normal merit salary reviews conducted in the ordinary course of business
after consultation with Vail;
(c) make any payment under any existing Employee Benefit Plan not
required under the terms thereof, or modify, amend or terminate any
existing Employee Benefit Plan (except as required by law) to materially
increase the benefits under such plan, or adopt any new Employee Benefit
Plan;
(d) hire any new ▇▇▇▇▇▇▇ Employee at a grade level of director or
higher (other than replacement employees after consultation with Vail);
(e) merge with or into another corporation, or become a partner,
shareholder or participant in any joint venture, limited liability company
or other business organization; or acquire by purchase or otherwise all or
any part of the business or the assets of, or stock or other
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evidence of beneficial ownership in, any firm, corporation or other person;
(f) acquire or dispose of any material asset (other than current
assets in the ordinary course of business) or fail to execute all renewal
options on any ▇▇▇▇▇▇▇ Leased Property;
(g) permit any material change in any methods of calculating any bad
debt, or in the assumptions underlying such calculations;
(h) undertake any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due), except items
incurred in the ordinary course of business and consistent with past
practice, or permit any change in any assumptions underlying or methods of
calculating any bad debt, contingency or other reserves;
(i) permit or allow any of the properties (excluding the Option Land)
or assets used by ▇▇▇▇▇▇▇ or its subsidiaries in their business or
operations (whether real, personal or mixed, tangible or intangible) to be
mortgaged or pledged, or subjected to a lien, except for Permitted
Encumbrances;
(j) cancel or release any other debts or claims, or waive any rights
of substantial value or sell, transfer or convey any of its properties or
assets (whether real, personal or mixed, tangible or intangible), except in
the ordinary course of business and consistent with past practice;
(k) dispose of, or permit to lapse, or otherwise fail to use
reasonable efforts consistent with past practices, which may or may not
include the institution of litigation, to preserve the rights of ▇▇▇▇▇▇▇ or
any of its subsidiaries to use any material patent, trademark, service
▇▇▇▇, logo, trade dress, trade style, trade name, assumed name or copyright
or any registration or recording thereof or application therefor;
(l) dispose of, or permit to lapse, any material license, permit or
other form of material authorization; or dispose of or disclose to any
person, other than employees, consultants and representatives bound by
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confidentiality obligations or agreements, any trade secret, formula,
process or know-how;
(m) make any commitments for capital expenditures for replacements or
additions to property, plant or equipment, other than as required in the
ordinary course of business consistent with the ▇▇▇▇▇▇▇ Budget or otherwise
in the ordinary course in an aggregate amount not to exceed $100,000;
(n) declare, pay or make, or set aside for payment or making, any
dividend or other distribution in respect of its capital stock or other
securities (other than as permitted by Section 2.3 or 5.12 hereof), or
directly or indirectly redeem, purchase or otherwise acquire any of its
capital stock or other securities;
(o) issue, authorize or propose the issuance of any shares of its
capital stock, or subdivide or in any way reclassify any shares of its
capital stock;
(p) delay or defer payment of accounts payable or other obligations
of ▇▇▇▇▇▇▇ or any subsidiary, or accelerate collection of accounts
receivable or other obligations due ▇▇▇▇▇▇▇ or any subsidiary, in a manner
inconsistent with past practice, or otherwise make any material change in
any method of accounting or accounting practice;
(q) except pursuant to existing Employee Benefit Plans, pay, loan or
advance any amount to, or sell, transfer or lease, any property or asset
(whether real, personal, tangible or intangible) to, or enter into
agreement, arrangement or transaction with any of the Corporation Officers
or directors of ▇▇▇▇▇▇▇;
(r) terminate any material contract, lease, agreement or license
except for contracts, leases, agreements or licenses expiring in the
ordinary course of business pursuant to their terms, amend or suffer the
amendment of, or fail to perform all of its material obligations under, any
material contract, lease, agreement or license;
(s) enter into any contract, lease, license or permit, except
contracts entered into in the ordinary course of business;
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(t) fail to take such action as may be reasonably necessary to
maintain, preserve, renew and keep in full force and effect the corporate
existence, qualifications, material licenses, permits, registrations and
franchises of ▇▇▇▇▇▇▇ and its subsidiaries, or fail to comply with any law
applicable to the conduct of the businesses of ▇▇▇▇▇▇▇ and its subsidiaries
where the failure to comply is reasonably likely to result in a Material
Adverse Change;
(u) amend the certificate of incorporation or by-laws of ▇▇▇▇▇▇▇ or
any of its subsidiaries, or fail to take such action as may be reasonably
necessary to maintain, preserve, renew and keep in full force and effect
the corporate existence and qualifications of ▇▇▇▇▇▇▇ or any of its
subsidiaries;
(v) incur or become liable with respect to any Indebtedness that
would be required to be repaid as a result of the transactions contemplated
by this Agreement or that would not be prepayable at any time following the
Closing without premium or penalty;
(w) enter into any agreement with any local, state or Federal
government or agency; or enter into any consulting agreement or sponsorship
agreement requiring the payment of $100,000 or more or having a term of one
year or more;
(x) knowingly take any action that would render any representation or
warranty inaccurate in any material respect at the time of Closing;
(y) take any action with respect to, or make any material change in
its accounting or Tax policies or procedures, except as may be required by
changes in generally accepted accounting principles upon the advice of its
independent accountants;
(z) make or revoke any Tax election or settle or compromise any Tax
liability, or amend any Tax Return;
(aa) take any action or fail to take any action which would constitute
a material breach or default under the LLC Agreement;
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(bb) permit its representatives to the LLC's Management Committee (as
defined in the LLC Agreement) to act upon, ratify, or approve any Major
Decisions (as defined in the LLC Agreement); or
(cc) dispose of, transfer or assign its interest or any part thereof
in the LLC.
5.2 Vail Operations. Until the Closing, Vail shall conduct its business
in the usual and customary manner consistent with past practice and shall
continue to make capital expenditures with respect to its properties and resorts
as contemplated by its 1996 fiscal budget. Except with the prior written
consent of Foods or in furtherance of the transactions contemplated by this
Agreement, Vail shall not:
(a) merge with or into another corporation;
(b) issue, authorize or propose the issuance of any shares of its capital
stock or options to acquire capital stock other than (i) the issuance of
shares of capital stock issued pursuant to the options listed on Schedule
4.1, (ii) the issuance of up to 50,000 shares of Vail Stock to officers and
employees of Vail and (iii) the grant or issuance of options for up to
300,000 shares of Vail Stock to officers and employees of Vail minus the
number of shares issued pursuant to clause (ii), or subdivide or in any way
reclassify any shares of its capital stock (other than shares of capital
stock issued in connection with Vail's stock option plan or other existing
options);
(c) declare or pay any extraordinary dividend or any other dividend other
than the Vail Dividend; or
(d) fail to take such action as may be reasonably necessary to maintain,
preserve, renew and keep in full force and effect the corporate existence
and qualification of Vail or amend the Certificate of Incorporation or
by-laws of Vail, except as contemplated herein.
In addition to the foregoing, Vail will not take any action with respect
to, or make any material change in its accounting or Tax policies or procedures,
except as may be required by changes in generally accepted accounting principles
upon the advice of its independent accountants, or make or revoke any Tax
election or settle or compromise any Tax
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liability, or amend any Tax Return, without first consulting with
Foods, it being understood that Vail may undertake such action
after such consultation.
5.3 Due Diligence Review.
(a) Until the Closing, each of ▇▇▇▇▇▇▇ and ▇▇▇▇ shall permit each other
and their respective counsel, accountants, financial advisors and other
representatives access during normal business hours to the facilities, personnel
and accountants (including all audit work papers relating solely to ▇▇▇▇▇▇▇
and/or its subsidiaries) of ▇▇▇▇▇▇▇ and ▇▇▇▇ and to all of the properties,
operations, books, contracts and records of ▇▇▇▇▇▇▇ and Vail to the extent
relevant to the transactions contemplated herein, and shall furnish ▇▇▇▇▇▇▇ and
▇▇▇▇ during such period with all such information concerning the businesses and
operations of ▇▇▇▇▇▇▇ and Vail as ▇▇▇▇▇▇▇ or ▇▇▇▇ may reasonably request, except
to the extent that, in the reasonable opinion of counsel, such furnishing of
information would violate or suggest a violation of any federal, state or local
statute, rule, regulation or ordinance, or any confidentiality agreements with
respect to such information. In furtherance of the foregoing, promptly
following the execution of this Agreement ▇▇▇▇▇▇▇ shall (i) permit Vail and its
representatives to directly communicate with directors and third party
consultants (at Vail's expense to the extent that the expenses of such
consultants as a result of such communications exceed $10,000) of ▇▇▇▇▇▇▇ and to
physically visit and inspect all of ▇▇▇▇▇▇▇'▇ resorts and properties, (ii)
provide to Vail all information reasonably requested by Vail with respect to
real estate owned or leased by ▇▇▇▇▇▇▇ and its subsidiaries and (iii) use its
best efforts prior to the Closing to permit Vail and its representatives to have
access to all of the personnel, properties, books, contracts and records of the
LLC, including attending all meetings between representatives of ▇▇▇▇▇▇▇ and of
the LLC. Vail shall coordinate and schedule any access to ▇▇▇▇▇▇▇'▇ and the
LLC's facilities and employees through ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇.
(b) In the event of a material change to ▇▇▇▇▇▇▇'▇ or Vail's business or
operations, ▇▇▇▇▇▇▇ or ▇▇▇▇, as the case may be, shall notify the other party of
such material change and shall furnish such other party with all information
concerning such change as such other party may reasonably request, except to the
extent that, in the reasonable opinion of counsel, such furnishing of
information would violate or suggest a violation of any federal, state or local
statute, rule,
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regulation or ordinance or any confidentiality agreements with
respect to such information.
5.4 Insurance.
(a) Until the Closing, each of Foods and Vail shall use their best efforts
to maintain, in full force and effect, liability and casualty insurance policies
providing coverage substantially identical to the insurance coverage provided
under the policies of insurance now in effect for ▇▇▇▇▇▇▇ and ▇▇▇▇ and set forth
on Schedules 3.31 and 4.28, respectively. Such party shall notify the other
party in writing in the event of any cancellation of insurance coverage.
(b) ▇▇▇▇▇▇▇'▇ insurable interest in the insurance policies listed in
Schedule 3.31 shall terminate (except for the property policy) at the Closing.
Vail shall add ▇▇▇▇▇▇▇ as additional named insured under Vail's casualties
policies effective as of the Closing. Vail shall assume ▇▇▇▇▇▇▇'▇ property
policy under an assignment until the expiration of such policy.
(c) Foods will provide notice in the form of claim printouts to the
respective insurers of "claims made" excess liability policies.
5.5 Public Announcements. Until the Closing, the parties hereto shall
consult with each other and shall mutually agree upon any press release or
public announcement relating to the transactions contemplated herein and will
not issue any such press release or make any such public announcements prior to
such consultation and agreement, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange, or that counsel deems any party should make to the investing public
and its shareholders, provided that the party proposing to issue such press
release or make such public announcement will use reasonable efforts to consult
in good faith with the other parties before issuing any such press release or
making any such public announcement.
5.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing; Investigations or Litigation. Foods and
Vail shall (i) take all action necessary, as soon as reasonably practicable, to
make the filings required of Foods and Vail under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇, (ii)
endeavor to obtain early termination of the waiting period thereunder, (iii)
promptly comply with any request for
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additional information received by Foods or Vail from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇, (iv) use reasonable efforts to defend all lawsuits, other
legal proceedings, or investigations challenging this Agreement or the
transactions contemplated hereby (unless in the reasonable opinion of Vail, they
are unlikely to prevail in such matter), and (v) attempt to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby (unless in the
reasonable opinion of Vail, they are unlikely to prevail in such matter).
Without limiting the foregoing, each party will cooperate with the other parties
in connection with any filings required under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇, including (i)
furnishing to other parties, upon request, such information as shall reasonably
be required in connection with the preparation of the parties' filings under
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇, and (ii) with respect to the transactions contemplated by the
Agreement, coordinating responses and establishing reasonable schedules and
deadlines in connection with resolving any investigation, other inquiry, or
legal proceedings commenced by the Federal Trade Commission, the Antitrust
Division of the Department of Justice or any state attorney general.
5.7 No Solicitation. Unless and until this Agreement is terminated
pursuant to Article XI, Foods and ▇▇▇▇▇▇▇ shall not, and shall not permit any of
their Corporate Officers or directors to, (a) furnish any information concerning
the businesses of ▇▇▇▇▇▇▇ to any person (other than Vail) interested in
acquiring ▇▇▇▇▇▇▇ or, except in the ordinary course of business, any of its
assets, or (b) solicit any offer or enter into discussions or negotiations with
respect to any merger or sale of all or substantially all of the assets of
▇▇▇▇▇▇▇, or other acquisition transaction with respect to ▇▇▇▇▇▇▇, with any
persons other than Vail. Foods shall notify Vail promptly upon the receipt of
any such inquiry, contact or offer.
5.8 Audit of ▇▇▇▇▇▇▇ Financial Statements; Delivery of Additional
Financial Statements.
(a) Promptly following the execution of this Agreement, Foods, at its
expense, shall cause its independent public accountants to audit the ▇▇▇▇▇▇▇
Financial Statements (including the interim period ending June 30, 1996) and
cause such audit to be completed prior to August 31, 1996, together with the
delivery of such accountants' audit report with respect thereto. Foods shall
permit Vail and its accountants to have
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access to the auditors conducting such audit as well as their work papers
related thereto. Foods understands and agrees that such audited statements,
together with other relevant information concerning ▇▇▇▇▇▇▇ and its business,
will be included in a registration statement for the sale of Vail Common Stock
in a registered public offering.
(b) Until the Closing, Foods shall deliver to Vail interim consolidated
financial statements of ▇▇▇▇▇▇▇ as soon as practicable, but in no event later
than forty-five (45) days after the end of each fiscal quarter, consisting of a
balance sheet dated as of the last day of such fiscal quarter and related
statements of income and cash flow for such current and comparative prior year
and fiscal quarter, prepared in accordance with GAAP and consistent with past
practices, and thereafter such statements shall be considered ▇▇▇▇▇▇▇ Financial
Statements hereunder.
(c) To the extent not included within the ▇▇▇▇▇▇▇ Financial Statements,
Foods and Vail shall deliver to each other within twenty (20) days after the
period to which they relate unaudited monthly financial statements, including a
consolidated balance sheet and consolidated statements of earnings and cash flow
for the period then ended.
(d) Until the Closing, Vail shall make available to Foods interim
consolidated financial statements of Vail, as soon a practicable but in no event
later than forty-five (45) days after the end of each fiscal quarter, consisting
of a balance sheet dated as of the last day of such fiscal quarter, and related
statements of income, shareholders' equity and cash flow of such fiscal quarter,
prepared in accordance with GAAP and consistent with past practices, and
thereafter such statements shall be considered Vail Financial Statements
hereunder. In the event any such fiscal quarter shall be the last quarter of
the fiscal year, such statements shall be audited by independent public
accountants.
5.9 Supplemental Disclosure. Until the Closing, Foods and Vail shall have
the continuing obligation to promptly supplement the information contained in
the Schedules attached hereto with respect to any matter hereafter discovered
which was in existence on the date hereof and, if known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules.
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5.10 Real Property Transfer Laws. Foods and ▇▇▇▇▇▇▇ shall comply with any
real property transfer laws that may be triggered by this transaction and Foods
and Vail shall equally pay any and all taxes, if any, thereunder.
5.11 Cooperation. Prior to the Closing, the parties shall cooperate in
preparing, and proceed with due diligence and in good faith in filing, any and
all registration statements, filings, and other documents necessary to
consummate the transactions contemplated by this Agreement.
5.12 Foods Receivables and Payables. Immediately prior to the Closing,
(i) all amounts then owing by Foods or any affiliate of Foods to ▇▇▇▇▇▇▇ or any
of its subsidiaries shall be forgiven and extinguished and (ii) all amounts then
owing to Foods or any affiliate of Foods from ▇▇▇▇▇▇▇ or any of its subsidiaries
shall be contributed to ▇▇▇▇▇▇▇'▇ capital and extinguished.
5.13 Environmental Surveys. In order to assist in arranging the financing
necessary for the Closing, promptly following the execution of this Agreement
Vail, in consultation with Foods, shall retain, at Vail's expense, a reputable
environmental consulting firm reasonably acceptable to Foods to conduct a Phase
I Environmental Assessment and Compliance Audit of such of the properties of
▇▇▇▇▇▇▇ and its subsidiaries as Vail shall determine and, if recommended by such
firm, Phase II investigation of such properties. Foods, in consultation with
Vail, at its expense may have similar surveys done with respect to such of the
properties of Vail and its subsidiaries as Foods shall determine.
5.14 Affiliate Guarantors. In the event that Foods at any time Transfers
(as defined in the Shareholders Agreement) any Vail Stock to an Affiliate of
Foods, prior to making such Transfer Foods shall cause such Affiliate to execute
and deliver to Vail a guaranty of such Affiliate, in form and in substance
satisfactory to Vail, whereby such Affiliate shall unconditionally guaranty all
of Foods' obligations to Vail under Article X hereunder.
5.15 Notice of Certain Transactions. From the date of execution of this
Agreement until such time as Foods no longer has any liability under Article X
hereunder, Foods shall give Vail 20 days' prior written notice before taking any
of the following actions: (i) the distribution to shareholders of Foods'
indebtedness or of any substantial or material portion
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of the assets of Foods and its subsidiaries, taken as a whole (other than cash
dividends paid in the ordinary course); (ii) any consolidation or merger of
Foods with or into another entity or any sale of all or any substantial portion
of the assets of Foods and its subsidiaries taken as a whole; or (iii) the
voluntary dissolution, liquidation or winding up of Foods.
5.16 Guarantee Fees. Subject to Vail complying with Section 10.2(d),
Foods hereby promptly agrees to pay over to Vail any and all fees, commissions
or other amounts that Foods or any of its Affiliates may receive on or after the
Closing Date with respect to any Indebtedness of ▇▇▇▇▇▇▇ or its subsidiaries for
which Foods or any of its Affiliates remains liable for (as guarantor or
otherwise) after the Closing.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions of Vail. The obligation of Vail to close the transactions
contemplated herein is subject to the following conditions:
(a) performance of all covenants, obligations and agreements of Foods
in all material respects contained in this Agreement required to be
performed at or prior to the Closing;
(b) the representations and warranties of Foods contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and remain true and correct in all material respects on the date of
the Closing as if such representations and warranties are being made as of
the date of the Closing;
(c) the execution and delivery by Foods of all documents required to
be delivered by this Agreement at or prior to the Closing, including
without limitation the Shareholder Agreement;
(d) there shall not have occurred since June 30, 1996 a Material
Adverse Change of ▇▇▇▇▇▇▇, or any event that, individually or in the
aggregate, could reasonably
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be expected to result in a Material Adverse Change of ▇▇▇▇▇▇▇;
(e) Vail shall have received the audited ▇▇▇▇▇▇▇
Financial Statements contemplated by Section 5.8(a) and
there shall be no differences between such audited
statements and the unaudited ▇▇▇▇▇▇▇ Financial Statements
which are material;
(f) Vail shall have arranged sufficient financing
sources, on terms satisfactory to Vail, to repay all
Indebtedness of ▇▇▇▇▇▇▇ and its subsidiaries in full on the
Closing Date, and the Indebtedness relating to the
Conference Center shall be amended to the reasonable
satisfaction of Vail;
(g) the aggregate amount reflected in the ▇▇▇▇▇▇▇
Budget to have been spent on capital expenditures from
July 1, 1996 through the end of the month immediately
preceding the Closing Date shall not be more than $3,000,000
in excess of the aggregate amount of capital expenditures
actually made by Resorts and its subsidiaries from July 1,
1996 through the end of the month immediately preceding the
Closing Date;
(h) Vail shall have received consents and estoppel
certificates with respect to the transactions contemplated
by this Agreement from the LLC and the estate of ▇▇▇▇▇ ▇.
▇▇▇▇;
(i) all requisite consents and approvals from the
United States Forest Service with respect to the
transactions contemplated by this Agreement shall have been
received by ▇▇▇▇▇▇▇;
(j) there shall exist no material defaults by ▇▇▇▇▇▇▇
or any of its subsidiaries on any of the contracts or
agreements relating to the Ventures and there shall have
been no change in the percentage ownership of the Ventures
of ▇▇▇▇▇▇▇ from that which exists as of the date of this
Agreement; and
(k) Vail shall have received a certificate of an
officer of Foods setting forth Foods' estimate in good faith
of the amount determined pursuant to clause (A) in the
definition of Closing Contribution Adjustment and such
amount shall not exceed $18,000,000.
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Vail may waive any condition to the Closing; provided, however,
that such waiver shall not act as a waiver of any of Vail's
available rights or remedies against Foods pursuant to Article X
hereof.
6.2 Conditions of Foods. The obligation of Foods to close the
transactions contemplated herein is subject to the following conditions:
(a) performance of all covenants, obligations and agreements of Vail
contained in this Agreement required to be performed at or prior to the
Closing;
(b) the representations and warranties of Vail contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and remain true and correct in all material respects on the date of
the Closing (other than the representations and warranties set forth in
Section 4.10) as if such representations and warranties are being made as
of the date of the Closing;
(c) the execution and delivery by Vail and Apollo Ski Partners, L.P.
of all documents required to be delivered by this Agreement at or prior to
the Closing, including without limitation the Shareholder Agreement; and
(d) there shall not have occurred since April 30, 1996 a Material
Adverse Change of Vail, or any event that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Change of Vail.
Foods may waive any condition to the Closing; provided, however, that such
waiver shall not act as a waiver of any of Foods' available rights or remedies
against Vail pursuant to Article X hereof.
6.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. No party is obligated to close (a) until the
applicable waiting period (as may be extended) under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ shall
have expired or been terminated by the appropriate governmental agency, or (b)
if any challenge or objection has been made to the transactions contemplated
herein by such governmental agency unless any such challenge or objection made
has been withdrawn or resolved to the satisfaction of Vail in its sole
discretion.
6.4 No Litigation. The obligation of Foods and Vail to close the
transactions contemplated herein is subject to the
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condition that, upon Closing, there shall exist no bona fide
lawsuit or other legal action (or any administrative proceeding
or investigation) by any governmental authority that challenges
or seeks to enjoin or modify the transactions contemplated
herein, or any other lawsuit, action, proceeding or investigation
which, in Vail's reasonable opinion, could materially interfere
with the consummation of the transactions contemplated by this
Agreement.
6.5 Material Change in Market Circumstances. There shall not have occurred
any material adverse change in the financial markets in the United States or any
other calamity or crisis, the effect of which has resulted in a material adverse
effect on the market in the United States for equity securities in general.
ARTICLE VII
THE CLOSING
7.1 Place of Closing. The Closing will be held at such place as shall be
mutually agreed upon by the parties.
7.2 Date of Closing. The Closing shall occur on the Closing Date;
provided, however, if the conditions contained herein have not been met or
waived by December 31, 1996, this Agreement shall terminate.
7.3 Effective Time of Closing. The Closing shall be deemed effective at
11:59 p.m., Denver time, on the date of Closing.
7.4 Delivery of Closing Documents. All matters at the Closing shall be
considered to take place simultaneously, and no delivery of any document shall
be deemed complete until all documents are delivered and all transactions
contemplated herein are completed.
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ARTICLE VIII
CLOSING TRANSACTIONS
8.1 Transfer of ▇▇▇▇▇▇▇ Stock. At the Closing, Foods shall deliver to
Vail stock certificate(s) representing that whole number of the issued and
outstanding shares of ▇▇▇▇▇▇▇ Stock, duly and validly endorsed in blank by Foods
for transfer, or accompanied by duly and validly executed stock powers, with all
necessary stock transfer or other documentary stamps attached and any other
documents that are necessary to transfer legal valid title.
8.2 Delivery of Vail Stock. As consideration for the purchase of the
▇▇▇▇▇▇▇ Stock, Vail will deliver to Foods, or its nominee, 3,777,203 shares of
Vail Stock.
8.3 Receipt. At the Closing, after receipt of the Vail Stock, Foods shall
deliver to Vail an appropriate receipt for the Vail Stock.
8.4 Opinion of Counsel of Foods. At the Closing, Foods shall deliver to
Vail an Opinion of Counsel from counsel for Foods, dated as of the Closing, to
the effect that:
(a) Foods is a corporation duly organized, validly existing and in
good standing under the laws of the State of Missouri; and ▇▇▇▇▇▇▇ is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado;
(b) ▇▇▇▇▇▇▇ and each of its subsidiaries have the corporate power and
authority to own their properties and assets and carry on their business,
and are duly qualified and in good standing as a foreign corporation in
each jurisdiction set forth in Schedule 3.8 hereto;
(c) Foods (through a wholly owned subsidiary) is the record and
beneficial owner of all of the issued and outstanding ▇▇▇▇▇▇▇ Stock, and
the ▇▇▇▇▇▇▇ Stock certificate(s) or stock powers that have been duly
executed and delivered by Foods transfer all rights to such stock to Vail,
or its nominee, free and clear of any and all liens, encumbrances or rights
of any other party;
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(d) Foods has taken all action required by its
Articles of Incorporation and its by-laws, and ▇▇▇▇▇▇▇ has
taken all action required by its Articles of Incorporation
and by-laws, to authorize the execution and delivery of this
Agreement and such other agreements, instruments and
documents required to be executed in connection herewith;
(e) Foods and ▇▇▇▇▇▇▇ have the corporate power and
authority to execute and deliver this Agreement and, when
executed and delivered, this Agreement, and such other
agreements, instruments and documents required to be
executed in connection herewith, constitute legal, valid and
binding obligations of Foods and ▇▇▇▇▇▇▇, enforceable in
accordance with their terms, except that enforcement may be
limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and general principles of equity;
(f) The execution and delivery of this Agreement, and
such other agreements, instruments and documents required to
be executed in connection herewith, and the consummation of
the transactions contemplated herein and therein, do not
conflict with any provision of the Articles of Incorporation
or by-laws of Foods or conflict with any provision of the
Certificates of Incorporation or by-laws of Foods or ▇▇▇▇▇▇▇
or any of ▇▇▇▇▇▇▇'▇ subsidiaries;
(g) The authorized and outstanding capital stock of
▇▇▇▇▇▇▇ consists solely of 100 shares of ▇▇▇▇▇▇▇ Stock, with
all 100 shares owned of record and beneficially by Foods;
all outstanding shares of ▇▇▇▇▇▇▇ Stock are duly authorized,
validly issued, fully paid and non-assessable, and there are
no other shares of capital stock or other securities of
▇▇▇▇▇▇▇ outstanding;
(h) Neither the execution or delivery of this
Agreement, and such other agreements, instruments and
documents required to be executed in connection herewith,
nor the consummation of the transactions contemplated herein
and therein, to the knowledge of counsel: (i) violates any
statute, law, rule or regulation, or any order, award,
judgment or decree of any court or governmental authority
affecting ▇▇▇▇▇▇▇ or any of its subsidiaries or Foods;
(ii) causes (with or without notice, the passage of time or
both) the maturity of any debt, liability or obligations of
▇▇▇▇▇▇▇ or any of its subsidiaries or Foods to be
accelerated, or increases or will increase any such
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liability or obligation; or (iii) requires any filing with, the
notification of, or the obtaining of any authorization, consent or approval
of, any federal or state governmental or regulatory authority, other than
filings under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ and the approval of the U.S. Forest
Service, and licenses and permits as may be necessary for ▇▇▇▇▇▇▇ or any of
its subsidiaries to carry on its business subsequent to the Closing;
(i) Except as set forth in Schedule 3.19 of this Agreement, to the best
knowledge of counsel, there does not exist any action, proceeding or
investigation pending or threatened in writing against Foods or ▇▇▇▇▇▇▇ or
any of its subsidiaries attempting to enjoin this Agreement or the
transactions contemplated by this Agreement, and such other agreements,
instruments and documents required to be executed in connection herewith;
and
(j) ▇▇▇▇▇▇▇ is not (i) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940, or (ii) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Company Act of 1935.
8.5 Opinion of Counsel of Vail. At the Closing, Vail shall deliver to
Foods an Opinion of Counsel from counsel for Vail (which opinion may be made by
Vail's in-house counsel), with such counsel relying on opinions of other counsel
and such certificates of Corporate Officers of Vail as he or she deems
appropriate, dated as of the Closing, to the effect that:
(a) Vail is a corporation validly existing and in good standing under
the laws of the State of Delaware;
(b) Vail has the corporate power and authority to own its properties
and carry on its businesses as presently conducted;
(c) Vail has taken all action required by its Certificate of
Incorporation and by-laws to authorize the execution and delivery of this
Agreement, and such other agreements, instruments and documents required to
be executed in accordance herewith;
(d) Vail has the corporate power and authority to execute and deliver
this Agreement and, when executed and
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delivered, this Agreement, and such other agreements,
instruments and documents required to be executed in
connection herewith, constitute legal, valid and binding
obligations of Vail, enforceable in accordance with their
terms, except that enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and general
principles of equity;
(e) The execution and delivery of this Agreement, and
such other agreements, instruments and documents required to
be executed in connection herewith, and the consummation of
the transactions contemplated herein and therein, do not
conflict with any provision of the Certificate of
Incorporation or by-laws of Vail;
(f) Neither the execution or delivery of this
Agreement, and such other agreements, instruments and
documents required to be executed in connection herewith,
nor the consummation of the transactions contemplated herein
and therein, to the knowledge of counsel: (i) violates any
statute, law, rule or regulation, or any order, award,
judgment or decree of any court or governmental authority
affecting Vail; (ii) violates or conflicts with, or
constitutes a default under any provision of, any contract,
agreement or trust to which Vail is a party, or by which
Vail's assets are bound; (iii) causes (with or without
notice, the passage of time or both) the maturity of any
debt, liability or obligation of Vail to be accelerated, or
increases or will increase any such liability or obligation;
or (iv) requires any filing with, the notification of, or
the obtaining of any authorization, consent or approval of
any federal governmental or regulatory authority, other than
filings under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇;
(g) The authorized capital stock of Vail consists
solely of 25,000,000 shares of preferred stock, 20,000,000
shares of Class A Common Stock and 40,000,000 shares of
Common Stock; the Vail Stock issued to Foods pursuant to
this Agreement has been duly authorized and is validly
issued, fully paid and non-assessable; and
(h) To counsel's knowledge, there does not exist any
action, proceeding or investigation pending or threatened
against Vail attempting to enjoin this Agreement or the
transactions contemplated by this Agreement, and such
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other agreements, instruments and documents required to be executed in
connection herewith.
8.6 Good Standing Certificates. At the Closing, Foods shall deliver to
Vail a Certificate of Good Standing for each of Foods and ▇▇▇▇▇▇▇ from the
Secretary of State of their respective state of incorporation, dated not more
than fifteen (15) days prior to the Closing, with bring-down certificates as of
the date of the Closing if available from the applicable Secretary of State; and
Vail shall deliver to Foods Certificates of Good Standing for Vail from the
Secretary of State for the State of Delaware, dated not more than fifteen (15)
days prior to the Closing, with bring-down certificates as of the date of the
Closing.
8.7 Corporate Resolutions of Foods. At the Closing, Foods shall deliver
to Vail (x) a copy of the resolutions adopted by the Board of Directors of Foods
(or its Executive Committee), and a copy of the resolutions adopted by the Board
of Directors of Foods, authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein, duly certified to
as of the Closing by the appropriate corporate secretary or assistant secretary
and (y) the original corporate minute books and stock transfer records of
▇▇▇▇▇▇▇.
8.8 Corporate Resolutions of Vail. At the Closing, Vail shall deliver to
Foods a copy of the resolutions adopted by the Board of Directors of Vail (or
its Executive Committee), and a copy of the resolutions adopted by the Board of
Directors of Vail, authorizing the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein, duly certified to as
of the Closing by the appropriate corporate secretary or assistant secretary.
8.9 Certificate of Foods. At the Closing, Foods shall deliver to Vail
certificates signed by a corporate officer of Foods, on behalf of Foods, dated
as of the Closing, certifying (i) as to the truth and accuracy of the
representations and warranties made by Foods in this Agreement, and reaffirming
and remaking such representations and warranties of Foods as of the Closing and
(ii) that Foods has performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to the Closing Date.
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8.10 Certificate of Vail. At the Closing, Vail shall deliver to Foods
certificates, signed by a senior officer of Vail, on behalf of Vail, dated as of
the Closing, certifying (i) as to the truth and accuracy of the representations
and warranties made by Vail in this Agreement, and reaffirming and remaking such
representations and warranties of Vail as of the Closing and (ii) that Vail has
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Closing Date.
8.11 Shareholder Agreement. At the Closing, Foods, Vail and Apollo Ski
Partners, L.P. shall execute and deliver the Shareholder Agreement.
8.12 Resignation of ▇▇▇▇▇▇▇ Corporate Officers. At the Closing, Foods
shall deliver to Vail the executed resignation, dated as of the date of the
Closing and effective immediately prior to the Closing, for all of the members
of the board of directors of ▇▇▇▇▇▇▇ and each of its subsidiaries and, to the
extent requested by Vail, of the officers of ▇▇▇▇▇▇▇ and each of its
subsidiaries.
8.13 Consents. At the Closing, Foods and ▇▇▇▇▇▇▇ shall deliver to Vail
any consents from third parties required for the execution, delivery and
performance of this Agreement, and such other agreements, instruments and
documents required to be executed in connection herewith, and the consummation
of the transactions contemplated herein and therein.
8.14 Ancillary Documents. At the Closing, Foods shall deliver to Vail all
assignments, sublicenses, bills of sale or other instruments, in form acceptable
to Vail, as may be necessary or reasonably requested by Vail in order to
effectively sell, convey, transfer and assign to ▇▇▇▇▇▇▇ good and marketable
title to all assets used in ▇▇▇▇▇▇▇'▇ business or operations.
ARTICLE IX
ADDITIONAL COVENANTS
9.1 Commissions and Fees. Each party hereto shall pay any and all
finder's fees, brokerage commissions or like
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costs or charges to be paid by reason of the transactions contemplated herein
that may have been incurred by such party.
9.2 Costs and Expenses. Foods shall pay its own and ▇▇▇▇▇▇▇'▇ costs and
expenses, including fees of attorneys, accountants and financial advisors,
necessary in the preparation of this Agreement, and such other agreements,
instruments and documents required to be executed in connection herewith, and
the consummation of the transactions contemplated herein and therein. Vail shall
pay its own costs and expenses, including fees of attorneys, accountants and
financial advisors, necessary in the preparation of this Agreement, and such
other agreements, instruments and documents required to be executed in
connection herewith, and the consummation of the transactions contemplated
herein and therein. Notwithstanding the foregoing, Foods and Vail shall each
pay one-half of the fees of an economist jointly selected by them for
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ purposes.
9.3 Bank Accounts.
(a) Until the Closing, Foods shall continue to employ cash management
practices consistent with those employed immediately prior to the date of this
Agreement, including:
(i) continuing to collect funds generated from the business or
operations of ▇▇▇▇▇▇▇ from bank accounts and bank lock boxes of Foods or
▇▇▇▇▇▇▇ and through Foods' standard depository transfer system; and
(ii) continuing to fund the bank accounts of Foods or ▇▇▇▇▇▇▇ in
connection with cash disbursements related to the business or operations of
▇▇▇▇▇▇▇.
(b) All collection and concentration bank accounts used in ▇▇▇▇▇▇▇'▇
business (and all cash and checks therein) shall remain the property of Foods
after Closing. All disbursement accounts used in Resort's business shall remain
the property of Foods at Closing. All uncleared checks, drafts or other
withdrawal instruments written on such disbursements accounts prior to closing
("Uncleared ▇▇▇▇▇▇▇ Checks") shall be the responsibility of Foods after Closing.
Foods will assist ▇▇▇▇▇▇▇ in establishing its own bank accounts so that ▇▇▇▇▇▇▇
will be able to write checks, drafts or other withdrawal instruments for its own
account immediately after Closing.
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9.4 Business Relationships. Within five (5) Business Days after the
Closing, Vail or ▇▇▇▇▇▇▇ shall notify all banking institutions used by ▇▇▇▇▇▇▇
that ▇▇▇▇▇▇▇ has been acquired by Vail. In addition, Vail or ▇▇▇▇▇▇▇ and Foods
shall notify, in writing or by publication, the customers and suppliers of
▇▇▇▇▇▇▇ that ▇▇▇▇▇▇▇ has been acquired by Vail, and that the payment of any
account receivable shall be paid directly to ▇▇▇▇▇▇▇.
9.5 Insurance Proceeds.
(a) In the event Foods receives any amount of insurance proceeds (other
than self-insurance and insurance related to Employee Benefit Plans, lost
profits or business interruptions) in connection with any insurance policy
providing coverage for the properties and assets of ▇▇▇▇▇▇▇ for claims arising
after the date hereof, Foods shall promptly notify Vail of the receipt of such
proceeds, and with respect to amounts received prior to the Closing, shall
retain and deliver the aggregate amount of such insurance proceeds, net of any
amount of such proceeds used to replace or repair any properties or assets or
claims paid by Foods prior to the Closing, to Vail at the Closing, and shall
promptly deliver to Vail any such additional proceeds received after the
Closing.
(b) In the event Foods, subsequent to the Closing, receives any amount of
insurance proceeds (other than self-insurance and insurance related to Employee
Benefit Plans, lost profits or business interruption) in connection with any
insurance policy providing coverage for the properties and assets of ▇▇▇▇▇▇▇
(including any proceeds received under any general liability, workers'
compensation or excess coverage policy), then Foods shall promptly deliver all
of such proceeds to Vail, without any set-off, reduction or hold back
whatsoever.
9.6 Further Action. Subsequent to the Closing, Foods, Vail and ▇▇▇▇▇▇▇
shall each take such further action as may be reasonably requested by the other
in order to carry out the terms of this Agreement, and such other agreements,
instruments and documents required to be executed in connection herewith, and
consummate the transactions contemplated herein and therein. The parties shall,
on request, cooperate with one another by furnishing any additional information,
executing and delivering any additional documents and instruments, including
contract assignments, bills of sale and third party consents, and doing any and
all such other things as may be reasonably required by the parties or their
counsel.
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9.7 Records. Subsequent to the Closing, Vail and Foods shall provide, or
cause to be provided, to each other and each other's representatives, reasonable
access (for the purpose of examining and copying during normal business hours)
to the books and records of ▇▇▇▇▇▇▇ and Foods (insofar as they relate to
▇▇▇▇▇▇▇), including, but not limited to, accounting and Tax records and Tax
Returns, sales and purchase documents, notes, memoranda, test records and any
other electronic or written data ("Records") pertaining to periods or
occurrences prior to the Closing. Unless otherwise consented to in writing by
the other, the parties shall not, for a period of seven (7) years following the
Closing, destroy, alter or otherwise dispose of any of the books and records of
▇▇▇▇▇▇▇ or Foods (insofar as they relate to ▇▇▇▇▇▇▇) pertaining or relating to
periods prior to the Closing and, notwithstanding any other provision of this
Section 9.7, no party to this Agreement shall destroy, alter or otherwise
dispose of any tax or accounting records of ▇▇▇▇▇▇▇ or Foods (insofar as they
relate to ▇▇▇▇▇▇▇) without the written consent of all other parties to this
Agreement.
9.8 Employee Benefit Plan Matters.
(a) Vail's Obligations. Effective on the Closing Date, ▇▇▇▇, ▇▇▇▇▇▇▇ or
one of their subsidiaries shall become the employer of ▇▇▇▇▇▇▇ Employees
excluding those ▇▇▇▇▇▇▇ Employees whose employment has terminated prior to the
Closing Date and excluding those ▇▇▇▇▇▇▇ Employees on leave due to, or in a
waiting period prior to, a finding of total or long-term disability pursuant to
any ▇▇▇▇▇▇▇ Employee Benefit Plan that provides disability benefits (for
purposes hereof, ▇▇▇▇▇▇▇ Employees, other than those excluded in this Section
9.8, shall be referred to as "Active ▇▇▇▇▇▇▇ Employee(s)").
(b) Retention of Retirement Plans. As between the parties hereto, Ralcorp
shall retain the assets and sponsorship of the Ralcorp Holdings, Inc. Savings
Investment Plan, the ▇▇▇▇▇▇▇ Resorts, Inc. Savings Investment Plan (together the
"Savings Plans"), and the Ralcorp Holdings, Inc. Retirement Plan (the
"Retirement Plan") as applicable to employees or former employees of ▇▇▇▇▇▇▇ and
its subsidiaries, and shall retain the obligations for providing any benefits
accrued by such employees or former employees under such plans. Ralcorp shall
take such actions as may be necessary to cause the Savings Plans and the
Retirement Plan to provide that benefits accrued under such plans on or prior to
the Closing Date by the Active ▇▇▇▇▇▇▇ Employees shall be fully vested as of the
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Closing Date. Effective on the Closing Date, ▇▇▇▇▇▇▇ and its
subsidiaries shall no longer participate in the Savings Plans or
the Retirement Plan.
(c) Defined Contribution Plans. The parties agree that pursuant to the
terms of the Savings Plans, whichever is applicable, ▇▇▇▇▇▇▇ will distribute to
the Active ▇▇▇▇▇▇▇ Employees or retain in the Savings Plans vested benefits
accrued by the Active ▇▇▇▇▇▇▇ Employees in the Savings Plans. If requested by
Vail, Ralcorp shall distribute cash and participant loans from the Savings Plans
to participants who are Active ▇▇▇▇▇▇▇ Employees in "direct rollover
distributions" (as described in Section 401(a)(31) of the Code).
(d) Defined Benefit Plan. For purposes of determining the amount of
benefits payable under the Retirement Plan, (i) the compensation of each Active
▇▇▇▇▇▇▇ Employee shall only include compensation considered compensation
pursuant to the Retirement Plan and paid or payable to such Active ▇▇▇▇▇▇▇
Employees by ▇▇▇▇▇▇▇ or Foods or their affiliates for services prior to and
including the Closing Date and shall not include compensation paid or payable to
Active ▇▇▇▇▇▇▇ Employees by Vail for services after the Closing Date; and (ii)
the period of service shall be determined pursuant to the Retirement Plan and
shall only include the time prior to and including the Closing Date during which
such Active ▇▇▇▇▇▇▇ Employee provided services to ▇▇▇▇▇▇▇ or Foods or their
affiliates and shall not include any period of time after the Closing Date
during which services were provided by such Active ▇▇▇▇▇▇▇ Employee to Vail.
Whether Active ▇▇▇▇▇▇▇ Employees shall be fully vested in benefits they have
accrued as of the Closing shall be determined pursuant to the Retirement Plan
provisions regarding vesting.
(e) Severance. With respect to Active ▇▇▇▇▇▇▇ Employees who are
terminated by Vail or ▇▇▇▇▇▇▇ on or after the Closing Date, Vail shall be
responsible for severance benefits payable pursuant to severance plans, policies
and practices applicable to Active ▇▇▇▇▇▇▇ Employees at the time of their
termination; provided, that Vail shall not be responsible for, and Foods shall
indemnify and hold harmless Vail from, any severance claims or obligations due
to any Active ▇▇▇▇▇▇▇ Employee under any contractual or other agreement other
than the severance benefits payable under ▇▇▇▇▇▇▇'▇ general severance benefits
program set forth in Schedule 3.29(g)(2). Vail further agrees to provide any
required notice under the WARN Act for any termination of Active ▇▇▇▇▇▇▇
Employees by Vail on or after the Closing Date.
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(f) Vacation. Vail agrees, after the Closing Date, to credit each Active
▇▇▇▇▇▇▇ Employee with vacation benefits which accrued but have not yet been
taken, provided, however, that requested or scheduled vacations are subject to
Vail's business needs; provided further, however, that Vail shall be required to
credit vacation carried forward from previous periods only to the extent
reflected on the ▇▇▇▇▇▇▇ balance sheet as of the Closing Date.
(g) Employee Related Obligations. (1) Except as may be provided in this
Section (g), ▇▇▇▇▇▇▇ shall retain all liabilities for all obligations to the
employees or former employees of ▇▇▇▇▇▇▇ and its subsidiaries derived from
Employee Benefit Plans offered to such employees or former employees by ▇▇▇▇▇▇▇
or Foods or its affiliates which arise (medical and dental expenses arise when
the employee is provided with medical and dental care) at any time out of their
employment by ▇▇▇▇▇▇▇ on or immediately before the Closing Date.
(2) Except as otherwise specifically provided herein, Vail is not
obligated to provide any particular benefits to the Active ▇▇▇▇▇▇▇ Employees
after closing, and may change any benefit program in the future, including plans
and programs applicable to the Active ▇▇▇▇▇▇▇ Employees. Further, no agreement
between the parties hereto nor any action by Vail or Foods or its affiliates
shall be deemed to create any third-party beneficiary rights in any employees of
Vail or Foods or any affiliate of either. Prior to the Closing, Vail will
provide Foods with evidence, reasonably satisfactory to Foods, that Vail has in
place, effective as of the Closing, a health benefit program for Active ▇▇▇▇▇▇▇
Employees that provides substantially comparable benefits to the health benefit
program provided by Foods or its affiliates, and which does not exclude
preexisting conditions. After the Closing, Vail shall be responsible for such
coverage.
(h) On and after the Closing Date, Vail shall be responsible for
employee-related liabilities and obligations, with respect to the Active ▇▇▇▇▇▇▇
Employees, under any employee benefit plan and any other plans, practice and
programs of Vail which may be offered to Active ▇▇▇▇▇▇▇ Employees.
9.9 Confidentiality Agreement. The Confidentiality Agreement shall remain
in full force and effect until the Closing and (x) if the Closing occurs, only
the Confidentiality and Exclusivity Agreement dated May 16, 1996 between Ralcorp
Holdings, Inc. and Apollo Advisors, L.P. shall remain in full force
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and effect other than paragraphs 7, 8, or 9 of such agreement,
and (y) if the Closing does not occur and this Agreement is
terminated pursuant to Article XI, the Confidentiality Agreement
shall continue in accordance with its terms.
9.10 Tax Election. Vail shall not make a Section 338(h)(10) election
under Section 338 of the Code with respect to the acquisition of the ▇▇▇▇▇▇▇
Stock or the operations of ▇▇▇▇▇▇▇.
9.11 Resale of ▇▇▇▇▇▇▇ Stock. Foods shall not offer, sell or distribute
the shares of Vail Stock received in this transaction except in accordance with
the terms and conditions of the Shareholder Agreement.
9.12 Non-Competition.
(a) For a period beginning on the date hereof and ending five (5) years
hereafter, Foods agrees that it will not, and it will cause any entity that
Foods through one or more intermediaries, directly or indirectly controls or is
controlled by ("Foods Affiliates"), not to, within North America, directly or
indirectly, individually or as a member of any business organization, engage in
the ownership or operation of any ski resort business or facility or have any
interest in any entity engaged in the ownership or operation of any ski resort
business or facility; provided, that nothing set forth in this paragraph shall
prevent Foods or a Foods Affiliate from at any time owning shares issued by a
publicly traded corporation, including without limitation one that engages in
some or all of the activities described in this paragraph (in which activities
Foods or such Foods Affiliate will not participate); provided, further, that at
no time will Foods' or a Foods Affiliate's ownership in any such corporation
exceed five percent (5%) of the voting stock (other than the capital stock of
Vail if such ownership is in accordance with the terms of the Shareholder
Agreement) as may from time to time be issued by and outstanding from each such
publicly traded corporation.
(b) Foods agrees that any breach of the covenants contained in this
Section 9.12 would cause irreparable harm to Vail and ▇▇▇▇▇▇▇ and, therefore,
notwithstanding any right of Vail and ▇▇▇▇▇▇▇ to recover monetary damages with
respect to any such breach as set forth in this Section 9.12 or at law, Vail and
▇▇▇▇▇▇▇ will be entitled to equitable relief to enjoin any threatened or
continuing breach hereof. If the scope of any restriction contained in this
Section 9.12 is too broad to
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permit enforcement to its full extent, then such restriction shall be enforced
to the maximum extent permitted by law. Nothing herein stated shall be construed
as prohibiting any party from pursuing any other remedies available to that
party for a breach hereunder, including recovery of damages.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification of Vail. Foods shall indemnify and hereby hold
harmless Vail and, after the Closing, ▇▇▇▇▇▇▇ and their nominees, affiliates,
officers, directors, employees and agents against any Loss, in full as such Loss
is incurred, suffered as a result of: (a) any breach of any representation or
warranty made by Foods in this Agreement or in any other document, instrument or
agreement entered into in connection herewith; (b) any breach of any covenant
made by Foods, ▇▇▇▇▇▇▇ or Ralcorp in this Agreement or in any other document,
instrument or agreement entered into in connection herewith; and (c) any breach
of the Confidentiality Agreement made by Foods in favor of Vail; provided, that
such indemnification obligation shall only arise with respect to Losses
suffered or incurred as a result of any breach of any representation or warranty
to the extent such Losses (which, individually, must be at least $25,000) in the
aggregate exceed $1,000,000.
10.2 Indemnification of Foods. Vail and, after the Closing, ▇▇▇▇▇▇▇,
jointly and severally, shall indemnify and hold Foods, and its nominees,
affiliates, officers, directors, employees and agents, harmless against any
Loss, in full as such Loss is incurred, suffered as a result of: (a) any breach
of any representation or warranty made by Vail in this Agreement; (b) any breach
of any covenant made by Vail or, after the Closing, ▇▇▇▇▇▇▇ in this Agreement;
(c) any breach of the Confidentiality Agreement made by Apollo Advisors L.P. in
favor of Foods; and (d) ▇▇▇▇▇▇▇ or Vail failing to pay when due any and all
amounts due arising under Indebtedness of ▇▇▇▇▇▇▇ or its subsidiaries existing
at the Closing Date and for which Foods or any of its Affiliates remains liable
for (as guarantor or otherwise) after the Closing; provided, that such
indemnification obligation shall only arise with respect to Losses suffered or
incurred as a result of any breach of any representation or warranty to the
extent such Losses (which,
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individually, must be at least $25,000) in the aggregate exceed $1,000,000.
10.3 Indemnification Procedure. Upon obtaining knowledge of a Loss which
shall entitle an injured party to indemnification hereunder, the injured party
shall deliver a Notice of Claim to the indemnifying party. The Notice of Claim
shall state in reasonable detail the nature and estimated amount of any such
Loss giving rise to the right of indemnification hereunder. The indemnifying
party shall have thirty (30) Business Days after receipt of the Notice of Claim
to indemnify the injured party, whether or not it disputes its liability or the
amount thereof, and to set forth the basis for any objection. If the
indemnifying party fails to respond to the injured party within such thirty (30)
Business Days, the indemnifying party shall be deemed to have acknowledged its
responsibility for such Loss, and in such event, or if the indemnifying party
does not dispute its liability, then the indemnifying party shall pay and
discharge any such Loss which is not contested within sixty (60) days after
receipt of the Notice of Claim.
10.4 Third Party Claims. If any party believes it may suffer a Loss that
should entitle such party to indemnification under this Agreement because of a
lawsuit, claim or other action by a third party, such injured party shall
deliver a Notice of Claim to the party required to indemnify. Within thirty (30)
days after receiving a Notice of Claim, the indemnifying party may: (a)
acknowledge its liability and elect to assume the defense of the third party
claim at its sole cost and expense; or (b) dispute its liability in the Notice
of Claim. Any contest of a third party claim in which the indemnifying party
assumes such defense shall be conducted by attorneys employed by the
indemnifying party; provided that the injured party shall have the right to
participate with its own attorneys and at its own cost and expense. Such
indemnifying party may agree to any settlement it deems in its best interest,
but shall not settle any action where the settlement includes an injunction or
other order affecting the injured party without the prior approval of the
injured party, which shall not be unreasonably withheld. If the indemnifying
party does not assume the defense of the third party claim as provided for
herein, the injured party shall have the right to defend such claim and
effectuate any settlement thereof it deems appropriate, and within fifteen (15)
Business Days of any final resolution, the indemnifying party shall pay the
injured party any Loss the injured party suffered. If the indemnifying
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party is defending any third party action in good faith, its obligation to pay
the indemnified party with respect to the defended matter shall be suspended
until the matter has been finally adjudicated or settled.
10.5 Tax Indemnification.
(a) Notwithstanding any other provisions of this Agreement to the
contrary, Foods shall be liable for and shall indemnify Vail and its affiliates
and hold them harmless for, from and against (i) all liability for Taxes of
▇▇▇▇▇▇▇ and any of its subsidiaries (except as provided in Section 10.5(d) and
the immediately following paragraph) for all taxable periods ending on or before
the Closing Date and the portion of any Straddle Period ending on and including
the Closing Date (the "Pre-Closing Tax Periods"), including, without limitation,
any liability for Taxes imposed upon ▇▇▇▇▇▇▇ pursuant to Treasury Regulation "
1.1502-6 (and any comparable provision under applicable state or local law) as a
result of being a member of any Affiliated Group or any combined or unitary
group, and (ii) any liability for Taxes attributable to a breach by Foods of its
obligations under this Agreement.
(b) Vail shall indemnify Foods and its affiliates and hold them harmless
for, from and against all liability for Taxes of ▇▇▇▇▇▇▇ for any taxable period
ending after the Closing Date (except to the extent such taxable period began
before the Closing Date, in which case Vail's indemnity will, other than for
Taxes described in Section 10.5(a)(ii), cover only that portion of any such
Taxes that are not for the Pre-Closing Tax Period).
(c) In the case of any taxable period that includes (but does not end on)
the Closing Date (a "Straddle Period"), the Taxes of ▇▇▇▇▇▇▇ for the Pre-Closing
Tax Period shall be computed as if such taxable period ended on and included the
Closing Date.
(d) Foods shall not be liable for and shall not indemnify Vail and its
affiliates for, from and against all liability for Taxes, other than Income
Taxes, for the Pre-Closing Period (i) payment of which on a timely basis would
be made with an original Tax Return filed by ▇▇▇▇▇▇▇ after the Closing Date and
(ii) computation thereof is made in a manner consistent with the prior and
customary accounting practice of ▇▇▇▇▇▇▇.
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10.6 Limitation of Indemnification.
(a) The aggregate amount of all claims subject to indemnification under
Sections 10.1(a), (b) and (c) with respect to indemnification of Vail shall be
$185,000,000 and Sections 10.2(a), (b) and (c) with respect to indemnification
of Foods shall be $185,000,000 except (x) in the case of any Loss caused by the
indemnifying party's violation of law, bad faith, fraud or intentional
misconduct, for which liability shall not be subject to such limit and (y) in
the case of clause (d) of Section 10.2, for which there shall be no limit.
(b) The sole remedy of the parties hereto for any Loss against them or
their directors, officers, employees, agents, representatives, affiliates,
shareholders or subsidiaries related to or arising from in whatsoever manner
this Agreement and the other documents executed in contemplation of this
Agreement is the indemnification and other remedies specifically provided herein
(and therein with respect to such other documents). Therefore, no directors,
officers, employees, agents, representatives, affiliates, shareholders or
subsidiaries shall incur individual liability for matters arising hereunder
except to the extent that an Affiliate of Foods becomes a guarantor pursuant to
Section 5.14.
(c) An indemnifying party shall not be liable under Section 10.1 or 10.2,
as the case may be, for a loss resulting from any event relating to the other
party's breach, falsity, inaccuracy, incompleteness, misrepresentation or
nonfulfillment of a representation.
10.7 Procedures Relating to Indemnification of Tax Claims.
(a) If any taxing authority provides written notice of any claim, demand
or circumstance which, if successful, might result in any indemnity payment
pursuant to Section 10.5, the party seeking indemnification (the "Tax
Indemnified Party") shall promptly notify the other party (the "Tax Indemnifying
Party") in writing of such claim (the "Tax Claim"). If notice of a Tax Claim
("Tax Notice") is not given to the Tax Indemnifying Party within a reasonably
sufficient period of time to allow such Tax Indemnifying Party effectively to
contest such Tax Claim, such Tax Indemnifying Party shall not be liable to the
Tax Indemnified Party or any of its affiliates to the extent that such Tax
Indemnifying Party's position is actually prejudiced as a result thereof.
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(b) With respect to any Tax Claim for any taxable period ending on or
prior to the Closing Date which might result in an indemnity payment to Vail
pursuant to Section 10.5, Foods, within 30 days of receiving written notice of
such Tax Claim, may in its sole discretion elect to control all proceedings
taken in connection with such Tax Claim and, without limiting the foregoing, may
in its sole discretion and at its sole expense pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with any taxing
authority with respect thereto, and may, in its sole discretion, either pay the
Tax claimed and ▇▇▇ for a refund where applicable law permits such refund suits
or contest such Tax Claim in any permissible manner and in any forum permitted
by law. In the event that Foods fails to provide Vail with written notice of
Foods' election to contest such Tax Claim within such 30 day period, Foods shall
forfeit any right to control the contest of such Tax Claim. In no case shall
Vail or Ralston settle or otherwise compromise any Tax Claim referred to in the
immediately preceding sentence without Foods' prior written consent, which
consent shall not be unreasonably withheld. ▇▇▇▇, ▇▇▇▇▇▇▇ and each of their
affiliates shall cooperate with Foods in contesting any Tax Claim that Foods
elects to contest, which cooperation shall include, without limitation, the
reasonable retention and (upon Foods' request) the provision to Foods of records
and information which are reasonably relevant to such Tax Claim, for which Foods
shall reimburse Vail and ▇▇▇▇▇▇▇ for their out-of-pocket expenses incurred in
connection therewith.
(c) The contest of any Tax Claim that relates to (i) taxable periods
ending after the Closing Date and (ii) any Tax Claim that Foods does not elect
to control pursuant to Section 10.7(b), shall be controlled by Vail, and Foods
agrees and agrees to cause its affiliates to cooperate with Vail and its
affiliates in pursuing such contest.
(d) Notwithstanding the provisions of Section 10.7(b) above, with respect
to any Tax Claim that Foods elects to control, Foods may not settle, compromise
or otherwise dispose of the Tax Claim without first notifying Vail of Foods'
proposal for settling, compromising or disposing of the Tax Claim; provided,
however, that this Section 10.7(d) shall apply only if such settlement,
compromise or other disposition could adversely affect the tax liability of Vail
or ▇▇▇▇▇▇▇. After Foods has provided Vail with such written notice, Foods and
Vail shall cooperate as to how the Tax Claim will be handled, answered,
defended, compromised or settled, and Foods shall not
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settle, compromise or otherwise dispose of the Tax Claim until Foods and Vail
have mutually agreed to the manner of such settlement, compromise or
disposition.
10.8 Survival of Representations and Warranties. The representations and
warranties by Foods in Article III (with the exception of those representations
and warranties by Foods in Section 3.28 of this Agreement), and by Vail in
Article IV (with the exception of those representations and warranties by Vail
in Section 4.25 of this Agreement), and in any other document, certificate,
instrument or agreement executed in connection hereunder unless explicitly
provided otherwise in such document, certificate, instrument or agreement, shall
survive for a period of two (2) years following Closing and thereafter to the
extent a claim is made prior to such expiration. The representations and
warranties by Foods in Section 3.28 of this Agreement and by Vail in Section
4.25 of this Agreement shall survive as to any Tax covered by such
representations and warranties for so long as any statute of limitations for
such Tax remains open, in whole or in part, including, without limitation, by
reason of waiver of such statute of limitations. No party shall be entitled to
indemnification for breach of any representation and warranty set forth in
Articles III and IV of this Agreement and in any other document, certificate,
instrument or agreement executed in connection hereunder unless explicitly
provided otherwise in such document, certificate, instrument or agreement unless
a Notice of Claim for such breach has been given to the breaching party or
parties prior to the termination of the period of survival of such
representation and warranty as set forth herein.
10.9 Survival of Indemnities. The obligations of each party to indemnify
another party for a Loss arising under this Agreement shall survive the sale or
other transfer by a party of any asset or liability transferred, assumed or
retained pursuant to this Agreement.
10.10 Transfer Taxes. Notwithstanding any other provisions of this
Agreement to the contrary, Vail and Foods shall equally pay all sales, use,
stock transfer, stamp, duties, recording, real property transfer, gains and
similar taxes, if any, required to be paid in connection with the transactions
contemplated by this Agreement, it being agreed that none of such payments shall
be borne directly or indirectly by ▇▇▇▇▇▇▇ or Vail.
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10.11 Return Filings, Refunds and Credits.
(a) Except as noted in the immediately following
sentence, Ralcorp shall prepare or cause to be prepared and file
or cause to be filed on a timely basis (in each case, at its own
cost and expense and in a manner consistent with past practice)
all Tax Returns with respect to ▇▇▇▇▇▇▇ and with respect to an
Affiliated Group for taxable periods ending on or prior to the
Closing Date. Ralcorp agrees that ▇▇▇▇▇▇▇ shall sign and file
all Tax Returns prepared solely on behalf of ▇▇▇▇▇▇▇ and its
subsidiaries. For purposes of this Section 10.11(a), Affiliated
Group shall mean only such group of which Ralcorp is the common
parent. Ralcorp shall provide Vail with copies of all Returns
that Ralcorp prepares or causes to be prepared and filed and with
originals of all Returns that ▇▇▇▇▇▇▇ will sign and file.
Ralcorp shall pay or cause to be paid all Taxes shown on all such
Tax Returns, whether filed by Ralcorp or by ▇▇▇▇▇▇▇. Ralcorp
further agrees that Vail shall have a reasonable opportunity to
review and comment upon any Tax Return prior to Ralcorp's filing
of such Tax Return that could affect the Tax liability of Vail or
▇▇▇▇▇▇▇.
(b) Vail shall prepare or cause to be prepared and
shall file or cause to be filed on a timely basis all other Tax
Returns with respect to ▇▇▇▇▇▇▇. In connection therewith, Foods
shall be responsible for and shall pay any Taxes for which Foods
has agreed to indemnify Vail pursuant to Section 10.5. Vail
shall provide Foods with copies of any such Tax Returns covering
the Taxes described in Section 10.5 at least ten days prior to
the due date thereof (giving effect to any extensions thereto),
accompanied by a statement calculating Foods' indemnification
obligation pursuant to Section 10.5. Foods shall pay to Vail the
amount of Foods' indemnification obligation at least two business
days prior to the due date thereof (giving effect to any
extensions thereto) unless the parties are unable to agree on the
amount of Foods' indemnification obligation hereunder, in which
case Foods shall promptly pay the portion of the indemnification
that is not in dispute and the disputed portion shall be resolved
by independent accountants acceptable to both parties whose fees
and expenses shall be paid by Vail and Foods in proportion to
each party's respective liability for Taxes as determined by such
accountants, and Foods shall pay the amount determined by such
accountants within two days of such determination, together with
interest thereon from the original due date thereof to the date
of payment at a rate equal to 10% per annum.
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(c) Foods and Vail shall reasonably cooperate, and shall cause their
respective affiliates, officers, employees, agents, auditors and representatives
reasonably to cooperate, in preparing and filing all Tax Returns (including
amendments thereto and claims for refund), including maintaining and making
available to each other all records necessary in connection with Taxes and in
resolving all disputes and audits with respect to all taxable periods relating
to Taxes.
(d) Any refunds or credits of Taxes of ▇▇▇▇▇▇▇ for any taxable period
ending on or before the Closing Date, except as described in Section 10.12,
shall be for the account of Foods and shall be paid by Vail to Foods within ten
days after Vail receives such refund. Any refunds or credits of Taxes of
▇▇▇▇▇▇▇ for any taxable period beginning after the Closing Date shall be for the
account of Vail and shall be paid by Foods to Vail within ten days after Foods
receives such refund. Any refunds or credits of Taxes of ▇▇▇▇▇▇▇ for any
Straddle Period shall be allocated between Foods and Vail on the basis of an
"interim closing of the books."
10.12 Refunds from Carrybacks. If Ralcorp becomes entitled to a refund or
credit of Taxes for any period for which Foods is liable under Section 10.5(a)
to indemnify Vail and such Taxes are attributable solely to the carryback of
losses, credits of similar items from a taxable year or period that begins after
the Closing Date and attributable to ▇▇▇▇▇▇▇, Foods shall cause Ralcorp to pay
to Vail within ten days after Ralcorp receives such refund or credit the amount
of such refund or credit together with any interest received thereon.
10.13 Termination of Tax Sharing Agreements. Foods hereby agrees and
covenants that any obligation of ▇▇▇▇▇▇▇ pursuant to any agreements or
arrangements relating to the allocation or sharing of Taxes (the "Tax Sharing
Agreements") shall be terminated on or before the Closing Date, and no payments
pursuant to any such Tax Sharing Agreement shall be made after such termination.
10.14 Payments. Unless otherwise required by law, the parties shall treat
any payments made pursuant to this Article X as an adjustment to the amount of
the purchase price paid to Foods pursuant to Section 2.2 for federal, state and
local income tax purposes.
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ARTICLE XI
TERMINATION
11.1 Mutual Consent. This Agreement may be terminated at any time before
the Closing by the mutual consent of Foods and Vail.
11.2 Obligation To Close. This Agreement may be terminated by any party
upon giving written notice to the other parties, if a condition to the notifying
party's obligation to close pursuant to Article VI of this Agreement becomes
incapable of satisfaction other than as a result of the notifying party's breach
of its obligations hereunder.
11.3 Final Closing Date. This Agreement will terminate if the Closing has
not taken place on or before Decem- ber 31, 1996.
11.4 Obligations After Termination. Upon any termination of this
Agreement, the parties shall be released from all obligations or liabilities
arising hereunder except for: (i) liabilities arising from or out of
pre-termination breaches hereunder; (ii) liabilities arising out of the failure
or refusal of a party to consummate the Closing if all conditions precedent have
been met or waived; and (iii) obligations arising out of Sections 9.1, 9.2 and
9.9 of this Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Entire Agreement. This Agreement, including the attached Schedules
and Exhibits, constitutes the entire agreement between the parties hereto
relative to the subject matter hereof, and supersedes all prior written or oral
understandings, agreements, conditions, representations or warranties.
12.2 Effect of Supplemental Information. Pursuant to Section 5.9 hereof,
the parties have the obligation to supplement their respective Schedules with
additional information which is discovered between the date hereof and the
Closing which should have been disclosed on the Schedules hereto.
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Neither the supplementation of the Schedules pursuant to such obligation nor any
disclosure after the date hereof of the untruth of any representation and
warranty made in this Agreement shall operate as a cure of any breach involving
(a) the failure to disclose the information or (b) any untrue representation or
warranty made herein. Notwithstanding the foregoing, if such supplementation
(i) is consented to in writing by both parties, (ii) with respect to a
supplementation by Vail, discloses any fact or set of facts which, either singly
or in the aggregate with other facts disclosed in the Schedules, does not, or is
not reasonably likely to, result in a Material Adverse Change of Vail or (iii)
with respect to a supplementation by Foods, does not, or is not reasonably
likely to, result in additional liability for Vail in an amount in excess of
$100,000 in the aggregate with all other supplemental information, such
supplementation shall be deemed to cure any such untrue representation or
warranty, and such representation or warranty, as supplemented, shall be deemed
to have been amended accordingly.
12.3 Choice of Law. This Agreement shall be construed under and in
accordance with the laws of the State of Colorado without giving effect to the
conflict of laws provisions thereof.
12.4 Venue. Any action or legal proceedings to enforce this Agreement or
any of its terms, or for indemnification and the recovery of any Loss by a
party, shall be brought and prosecuted exclusively in such court or courts
located in the State of Colorado as provided by law, and the parties to this
Agreement consent to the jurisdiction of said court or courts and to service of
process by registered mail, return receipt requested, or in any other manner
provided by Colorado law.
12.5 Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, return receipt requested, and addressed as follows (the address for any
party may be changed by giving notice thereof to the other parties):
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If to Foods:
▇▇▇▇▇▇▇ Foods, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇ (prior to Closing):
▇▇▇▇▇▇▇ Foods, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Vail or ▇▇▇▇▇▇▇ (after the Closing):
Vail Resorts, Inc. (Delivery other than by
mail)
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or
Vail Resorts, Inc. (Mail Delivery)
▇.▇. ▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
12.6 Effective Date of Notice. Any notice or communication shall be
deemed to have been given on the next
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Business Day if sent by Federal Express or a similar overnight delivery service,
or on the third Business Day if sent by ordinary U.S. mail service.
12.7 Amendments. No changes, modifications, amendments or additions shall
be valid unless made in writing and signed by or on behalf of each party.
12.8 Gender and Number. Where appropriate in this Agreement, the
masculine pronoun shall include the feminine or neuter, and the singular shall
include the plural.
12.9 Assignments. No party hereto may assign this Agreement or any rights
or obligations hereunder except to the extent that written authorization for
such assignment is given by the other parties prior to such assignment.
12.10 Headings and Captions. All headings and captions used in the Table
of Contents and all section, Schedule and Exhibit headings and captions used in
this Agreement are for convenience only, and shall not be construed to either
limit or broaden the language of this Agreement or any particular section.
12.11 Schedules and Exhibits. The inclusion of any information in any
Schedule or Exhibit attached hereto shall not be deemed to be an admission or
acknowledgment that such information is material to the transaction, or
represents matters that are outside the ordinary course of business. The
Schedules and Exhibits attached hereto are incorporated herein by reference and
are made a part hereof for all purposes.
12.12 Severability. The invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
the remainder hereof in that jurisdiction or the validity or enforceability of
this Agreement, including that provision, in any other jurisdiction. To the
extent permitted by applicable law, each party waives any provision of law that
renders any provision hereof prohibited or unenforceable in any respect. If any
provision of this Agreement is held to be unenforceable for any reason, it shall
be adjusted rather than voided, if possible, in order to achieve the intent of
the parties to the extent possible.
12.13 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall
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constitute a single agreement, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
12.14 Remedies. Any forbearance or failure or delay in exercising any
remedy hereunder shall not be deemed to be a waiver of any other remedy a party
may be entitled to under this Agreement.
12.15 Third-Party Beneficiaries. This Agreement is not intended to confer
upon any non-party any rights or remedies hereunder. Any representation or
warranty made by Foods in this Agreement is made to Vail alone, and solely for
the purposes of selling the ▇▇▇▇▇▇▇ Stock, and Foods has not made and makes no
representation or warranty to any person other than Vail. Any representation or
warranty made by Vail in this Agreement is made to Foods alone, and solely for
the purpose of purchasing the ▇▇▇▇▇▇▇ Stock, and Vail has not made and makes no
representation or warranty to any person other than Foods.
12.16 Binding Agreement. This Agreement shall be deemed effective and
legally binding upon the parties when it has been executed and delivered by all
parties hereto. This Agreement shall inure to the benefit of the parties hereto
and their respective successors and assignees.
107
IN WITNESS WHEREOF, the parties have executed this
Agreement by an officer thereunto duly authorized, all as of the
day and year first above written.
▇▇▇▇▇▇▇ FOODS, INC.
By: /s/ J.R. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: J.R. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President and Chief
Financial Officer
▇▇▇▇▇▇▇ RESORTS, INC.
By: /s/ J.R. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: J.R. ▇▇▇▇▇▇▇▇▇▇
Title: President
VAIL RESORTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
RALCORP HOLDINGS, INC. (as to
Sections 9.8, 10.11 and 10.12
only)
By: /s/ J.R. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: J.R. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer and
Chief Financial Officer
108
EXHIBIT A
SHAREHOLDER AGREEMENT
Among
VAIL RESORTS, INC.
▇▇▇▇▇▇▇ FOODS, INC.
AND
APOLLO SKI PARTNERS, L.P.
----------, 1996
109
TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . 1
ARTICLE II - STANDSTILL AND VOTING PROVISIONS . . . . . . . 6
Section 2.1. Standstill Covenants . . . . . . . . . . . 6
Section 2.2. Acquisition of Vail Securities . . . . . . 8
Section 2.3. Voting of Vail Equity . . . . . . . . . . 9
Section 2.4. Restrictions on Certain Transactions
Prior to IPO . . . . . . . . . . . . . . . . . . 10
ARTICLE III - TRANSFER OF VAIL EQUITY . . . . . . . . . . . 10
Section 3.1. Restrictions on Transfer . . . . . . . . . 10
Section 3.2. Exceptions to Restrictions . . . . . . . . 10
Section 3.3. Improper Transfer . . . . . . . . . . . . 11
Section 3.4. Restrictive Legend . . . . . . . . . . . . 12
ARTICLE IV - RIGHT OF FIRST OFFER . . . . . . . . . . . . . 13
Section 4.1. Sales by Foods . . . . . . . . . . . . . . 13
ARTICLE V - REGISTRATION . . . . . . . . . . . . . . . . . . 14
Section 5.1. Demand Registration . . . . . . . . . . . 14
Section 5.2. Delay of Demand Registration . . . . . . . 16
Section 5.3. Piggyback Registration . . . . . . . . . . 17
Section 5.4. Delay of Piggyback Registration . . . . . 18
Section 5.5. Holdback Agreements . . . . . . . . . . . 18
Section 5.6. Right to Purchase in Lieu of
Registration . . . . . . . . . . . . . . . 19
ARTICLE VI - REGISTRATION EXPENSES . . . . . . . . . . . . . 19
Section 6.1. Registration Expenses . . . . . . . . . . 19
ARTICLE VII - REGISTRATION PROCEDURE . . . . . . . . . . . . 20
Section 7.1. Shareholder Information . . . . . . . . . 20
Section 7.2. Compliance . . . . . . . . . . . . . . . . 21
Section 7.3. Provision of Prospectuses . . . . . . . . 21
Section 7.4. Blue Sky Compliance . . . . . . . . . . . 22
Section 7.5. Listing of Vail Equity . . . . . . . . . . 22
Section 7.6. Stop Orders . . . . . . . . . . . . . . . 22
ARTICLE VIII - INDEMNIFICATION AND CONTRIBUTION . . . . . . 23
Section 8.1. Indemnification . . . . . . . . . . . . . 23
Section 8.2. Contribution . . . . . . . . . . . . . . . 27
ARTICLE IX - TAKE-ALONG RIGHTS . . . . . . . . . . . . . . . 28
Section 9.1. Take-Along Rights . . . . . . . . . . . . 28
-i-
110
Page
----
ARTICLE X - INITIAL PUBLIC OFFERING . . . . . . . . . . . . 29
Section 10.1. IPO Commitment . . . . . . . . . . . . . . 29
Section 10.2. Co-Manager . . . . . . . . . . . . . . . . 29
Section 10.3. Foods Initiated IPO . . . . . . . . . . . 30
ARTICLE XI - ADDITIONAL COVENANTS . . . . . . . . . . . . . 30
Section 11.1. Maintain Listing or Quotation . . . . . . 30
Section 11.2. Board of Directors . . . . . . . . . . . . 31
Section 11.3. No Inconsistent Agreements . . . . . . . . 31
Section 11.4. Rules 144 and 144A . . . . . . . . . . . . 31
Section 11.5. Limitations on Holdings of Foods
Associates . . . . . . . . . . . . . . . . 31
ARTICLE XII - MISCELLANEOUS . . . . . . . . . . . . . . . . 31
Section 12.1. Entire Agreement . . . . . . . . . . . . . 31
Section 12.2. Headings and Captions . . . . . . . . . . 31
Section 12.3. Choice of Law . . . . . . . . . . . . . . 32
Section 12.4. Venue . . . . . . . . . . . . . . . . . . 32
Section 12.5. Notices . . . . . . . . . . . . . . . . . 32
Section 12.6. Amendments . . . . . . . . . . . . . . . . 33
Section 12.7. Extended Meanings . . . . . . . . . . . . 33
Section 12.8. Successors and Assigns . . . . . . . . . . 33
Section 12.9. Severability . . . . . . . . . . . . . . . 34
Section 12.10. Counterparts . . . . . . . . . . . . . . . 34
Section 12.11. Remedies Cumulative . . . . . . . . . . . 34
Section 12.12. Binding Agreement . . . . . . . . . . . . 34
Section 12.13. Recapitalizations, Exchanges, Etc.,
Affecting Vail Securities . . . . . . . . 34
Section 12.14. Other Agreements . . . . . . . . . . . . . 35
Section 12.15. Termination . . . . . . . . . . . . . . . 35
Section 12.16. Enforcement . . . . . . . . . . . . . . . 35
Section 12.17. Confidentiality . . . . . . . . . . . . . 36
Section 12.18. Fiduciary Accounts . . . . . . . . . . . . 36
-ii-
111
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT, dated ___________, 1996 (the "Agreement"), is
among Vail Resorts, Inc., a Delaware corporation ("Vail"), ▇▇▇▇▇▇▇ Foods, Inc.,
a Nevada corporation ("Foods"), and Apollo Ski Partners, L.P., a Delaware
limited partnership ("Apollo") (Foods and Apollo and their respective legal
representatives, successors and assigns are referred to herein individually as a
"Shareholder" and collectively as the "Shareholders").
WHEREAS, pursuant to the Stock Purchase Agreement dated as of __________,
1996 (the "Purchase Agreement") by and among Vail, Foods and ▇▇▇▇▇▇▇ Resorts,
Inc., a Colorado corporation ("▇▇▇▇▇▇▇"), Vail acquired all of the outstanding
shares of capital stock of ▇▇▇▇▇▇▇ in exchange for [ ] shares of Common
Stock, par value $.01 per share, of Vail ("Vail Stock"); and
WHEREAS, Apollo owns [ ] shares of Vail Stock and [ ] shares of
Class A Common Stock, par value $.01 per share, of Vail ("Vail Class A Stock");
and
WHEREAS, the parties hereto desire to enter into this Agreement to provide
for certain rights and restrictions with respect to the shares of Vail Equity
(as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth herein, each of Vail and Foods agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms (whether used in the singular or plural) have the
meanings indicated herein. Any term used and not defined herein has the meaning
set forth in the Purchase Agreement.
"Affiliate" of a Person means any other Person that directly or indirectly
through one or more intermediaries Controls, is Controlled by or is under common
Control with such Person.
▇▇▇
-▇-
"▇▇▇▇▇▇" has the meaning set forth above in the recitals to this Agreement.
"Apollo Option Period" has the meaning set forth in Section 4.1(c) of this
Agreement.
"Associate" of a Person means any of such Person's directors, officers,
shareholders, representatives, trustees, employees, attorneys, advisors or
agents.
"Business Day" means any day other than a Saturday, Sunday or legal holiday
for commercial banks in New York City.
"Change of Control" means any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
other than Apollo or one or more Affiliates of Appollo, becomes the beneficial
owner of (i) more than 50% of the total outstanding Vail Securities or (ii) such
number of Vail Securities which would allow such person or group to elect a
majority of the Board of Directors of Vail.
"Closing" means the closing of the transactions contemplated by the
Purchase Agreement.
"Control" (including the terms "Controlling," "Controlled by" and "under
common Control with") means the possession of the power, directly or indirectly,
(a) to elect a majority of the board of directors (or equivalent governing body)
of the entity in question; or (b) to direct or cause the direction of the
management and policies of or with respect to the entity or assets in question,
whether through ownership of securities, by contract or otherwise.
"Demand Notice" has the meaning set forth in Section 5.1(a) of this
Agreement.
"Demand Registration" has the meaning set forth in Section 5.1(a) of this
Agreement.
"Discussion Period" has the meaning set forth in Section 10.3(b) of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
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"First Option" has the meaning set forth in Section 4.1(b) of this
Agreement.
"Foods" has the meaning set forth above in the recitals to this Agreement.
"Foods Initiated IPO" has the meaning set forth in Section 10.3(b) of this
Agreement.
"Foods Notice" has the meaning set forth in Section 10.3(b) of this
Agreement.
"GAAP" means accounting principles which are (a) consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors in effect from time to time and (b) applied on a basis
consistent with prior periods.
"Group" means any group of Persons within the meaning of Section 13(d)(3)
of the Exchange Act.
"IPO" means the consummation of an initial public offering of Vail Stock
pursuant to a registration statement filed with the Securities and Exchange
Commission.
"Loss" has the meaning set forth in Section 8.1(a)(i) of this Agreement.
"Marketable Number" has the meaning set forth in Section 5.1(e) of this
Agreement.
"Non-Qualified Transferee" has the meaning set forth in Section 9.1 of this
Agreement.
"Non-Requesting Shareholder" has the meaning set forth in Section 5.1(e) of
this Agreement.
"Person" means an individual, corporation, partnership, trust, incorporated
or unincorporated association, joint venture, joint stock company, limited
liability company, government (or an agency or political subdivision thereof) or
other entity of any kind.
"Piggyback Notice" has the meaning set forth in Section 5.3(a) of this
Agreement.
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"Piggyback Registration" has the meaning set forth in Section 5.3(a) of
this Agreement.
"Piggyback Shareholder" has the meaning set forth in Section 5.3(a) of this
Agreement.
"Private Sale" has the meaning set forth in Section 2.2 of this Agreement.
"Purchase Agreement" has the meaning set forth above in the recitals to
this Agreement.
"▇▇▇▇▇▇▇" has the meaning set forth above in the recitals to this
Agreement.
"Registration Statement" means any registration statement or comparable
document under Section 5 of the Securities Act through which a public sale or
disposition of Vail Securities may be registered other than a registration
statement (a) relating to an Employee Benefit Plan or similar plan or a business
combination or (b) on any form that is not available for a secondary offering.
"Requesting Shareholder" has the meaning set forth in Section 5.1(d) of
this Agreement.
"SEC" means the Securities and Exchange Commission or other federal agency
at the time administering the Securities Act, the Exchange Act or any successor
acts thereto.
"Second Option" has the meaning set forth in Section 4.1(c) of this
Agreement.
"Section 4.1 Shares" has the meaning set forth in Section 4.1(a) of this
Agreement.
"Section 5.6 Shares" has the meaning set forth in Section 5.6 of this
Agreement.
"Section 9.1 Shares" has the meaning set forth in Section 9.1 of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Shareholder" means Apollo or Foods and its permitted successors and
assigns.
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"Shareholder Indemnified Party" has the meaning set forth in Section 8.1(c)
of this Agreement.
"Transfer" with respect to all or any part of the Vail Equity means to
directly or indirectly (whether or not through an underwriter) sell, convey,
distribute, transfer (by merger or otherwise), assign, devise, exchange,
encumber, gift, pledge, hypothecate or otherwise dispose of such Vail Equity
(including without limitation the sale or disposition of an entity the primary
asset of which is Vail Equity).
"Transfer Notice" has the meaning set forth in Section 4.1(a) of this
Agreement.
"Trigger Date" has the meaning set forth in Section 10.3(a) of this
Agreement.
"Vail" has the meaning set forth above in the recitals to this Agreement.
"Vail Class A Stock" means the Class A Common Stock of Vail, par value $.01
per share.
"Vail Equity" means (i) shares of Vail Stock acquired by Foods at the
Closing and any other Vail Securities owned, beneficially or of record, by Foods
or any of its Affiliates at any time during the term of this Agreement and (ii)
shares of Vail Stock, Vail Class A Stock and any other Vail Securities owned,
beneficially or of record, by Apollo or any of its Affiliates at any time during
the term of this Agreement.
"Vail Indemnified Party" has the meaning set forth in Section 8.1(a) of
this Agreement.
"Vail Market Price" means the average of the closing sale prices of the
Vail Stock being valued on the New York Stock Exchange or, if the Vail Stock is
not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system of the principal
national securities exchange on which the Vail Stock is listed or admitted to
trading, for the twenty (20) trading days which end on the day immediately prior
to the date of the Demand Notice. If the Vail Stock is not listed or admitted
to trading on any national securities exchange, "Vail Market Price" means the
last quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
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-6-
Association of Securities Dealers, Inc. Automated Quotation System or such other
system then in use, for the twenty (20) trading days which end on the day
immediately prior to such date or, if on any such trading day the Vail Stock is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by two professional market makers making a market in the
Vail Stock, one selected in good faith by the board of directors of Vail and the
other selected in good faith by Foods. If the Vail Stock is not publicly held
or so listed or publicly traded, "Vail Market Price" means the cash price at
which a willing seller would sell and a willing buyer would buy such securities
in an arm's-length negotiated transaction without undue time restraints, as
determined in good faith by an investment banking firm selected by agreement
between Vail and Foods.
"Vail Option Period" has the meaning set forth in Section 4.1(b) of this
Agreement.
"Vail Securities" means the Vail Stock, Vail Class A Stock and any other
voting securities of Vail or its Affiliates, including any securities
convertible into or exercisable or exchangeable for any voting securities of
Vail.
"Vail Stock" has the meaning set forth above in the recitals to this
Agreement.
ARTICLE II
STANDSTILL AND VOTING PROVISIONS
Section 2.1 Standstill Covenants. Unless otherwise permitted in this
Agreement, Foods agrees that during the term of this Agreement, it will not,
directly or indirectly:
(a) acquire, offer to acquire, or agree to acquire by purchase or
otherwise, any Vail Securities except as a result of a stock split, stock
dividend or similar recapitalization by Vail;
(b) except in the ordinary course of business, acquire, offer to acquire,
or agree to acquire by purchase or otherwise, any assets of Vail;
(c) initiate, solicit, propose, seek to effect or negotiate, alone or with
any other Person, (i) any form of business combination transaction involving
Vail or any
117
-7-
Affiliate thereof, or (ii) any restructuring, recapitalization or similar
transaction with respect to Vail or any Affiliate thereof;
(d) initiate, solicit, propose, seek to effect, negotiate, or announce an
intent to make, alone or with any other Person, any tender offer, exchange
offer, merger, consolidation or share exchange for any Vail Securities, or
disclose an intent, purpose, plan or proposal with respect to Vail, any of its
Affiliates or any Vail Securities inconsistent with the provisions of this
Agreement;
(e) make, or in any way participate in, any "solicitation" of "proxies"
(as such terms are defined or used in Regulation 14A under the Exchange Act)
with respect to Vail or any of its Affiliates or become a "participant" in any
"election contest" (as such terms are defined or used in Rule 14a-11 under the
Exchange Act) involving Vail or any of its Affiliates;
(f) initiate, solicit or propose the approval of one or more shareholder
proposals with respect to Vail or any of its Affiliates or induce or attempt to
induce any other Person to initiate any such shareholder proposal;
(g) form, join or in any way participate in a Group with respect to the
Vail Securities;
(h) except as expressly provided herein, seek election to or seek to place
a representative on the board of directors of Vail or any of its Affiliates or
seek the removal of any member of the board of directors of Vail or any of its
Affiliates;
(i) except for participation on the board of directors of Vail, act in
concert with any other Person to seek to affect the management or board of
directors of Vail or any of its Affiliates or the business, operations or
affairs of Vail or any of its Affiliates;
(j) call or seek to have called any meeting of the shareholders of Vail or
any of its Affiliates;
(k) disclose to any third party or in any filing with any governmental
authority any intention, plan or arrangement inconsistent with any of the
foregoing or with
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-8-
the restrictions on transfer set forth in this Agreement; or
(l) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing, or
advise, assist, encourage or influence any other Person to take any action with
respect to any of the foregoing.
Section 2.2 Acquisition of Vail Securities. Notwithstanding Section 2.1
hereof, Foods may purchase in one or more open market transactions or otherwise
(including the IPO) that number of shares of Vail Securities necessary for Foods
to continue to account for its investment in Vail under the equity accounting
method under GAAP; provided, that in no event shall any such purchase result in
the ownership by Foods and its Affiliates of Vail Securities exceeding 23.5% of
the total outstanding Vail Securities. In the event that Vail proposes to
register or otherwise offer any Vail Securities for sale for its own account
(including the IPO) under the Securities Act (other than a registration of
securities in connection with a merger, an acquisition, an exchange offer or an
employee benefit plan maintained by Vail or its Affiliates or on Form S-4 or S-8
or any successor or similar form or by means of a shelf registration pursuant to
Rule 415 under the Securities Act) or in a transaction exempt from registration
under the Securities Act (a "Private Sale"), Vail will give written notice to
Foods of its intention to do so and of Foods' rights under this Section 2.2, at
least twenty (20) calendar days prior to the anticipated filing date of a
Registration Statement relating to such registration (or if such transaction is
a Private Sale a comparable period of time). Foods will have the right, but not
the obligation, to elect to purchase shares in such offering (including the
IPO), at the same price Vail is to receive for the shares to be sold for its
account provided that if such offering is not the IPO Foods shall only have such
purchase right if Apollo is purchasing Vail Securities in such offering, in
which case the number of Vail Securities that Foods may purchase in such
offering shall be equal to the number of shares proposed to be purchased by
Apollo multiplied by a fraction, the numerator of which is the total number or
shares of Vail Equity owned by Foods at such time and the denominator of which
is the sum of the total number of shares of Vail Equity owned by Apollo and
Foods at such time. In the event that the size of such offering is increased
after Foods has received notice of such offering, Foods will have the right, but
not the obligation, to proportionately increase its purchase of shares in
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such offering. Foods may exercise its purchase rights under this Section 2.2 by
notifying Vail of its election to purchase shares (which election shall be
irrevocable) in such offering within ten days of receiving notice from Vail
(failure by Foods to give such notice within such ten-business-day period shall
be deemed an election by Foods not to purchase Vail Securities in such
offering). Any purchase by Foods of Vail Securities pursuant to this Section
2.2 may not result in Foods and its Affiliates' ownership exceeding 23.5% of the
total outstanding Vail Securities. Foods shall not be entitled to a Piggyback
Registration with respect to any offering if it has elected to purchase Vail
Securities in such offering.
Section 2.3 Voting of Vail Equity. Foods agrees that during the term of
this Agreement, with respect to the election of directors of Vail, each class of
Vail Equity owned by Foods and its Affiliates shall be voted (i) "for" the
nominees recommended by the Board of Directors of Vail, provided Vail and Apollo
are in compliance with the terms of Section 11.2 of this Agreement, (ii) in
accordance with the recommendation of the Board of Directors of Vail on each
proposal of a security holder pursuant to Rule 14a-8 under the Exchange Act, so
long as the subject matter of such proposal does not fall within the proviso
hereto, and (iii) with respect to all other matters requiring a vote of the Vail
Equity, "for" any proposal in the same proportion as the votes cast "for" such
proposal by the holders of the Vail Securities of the same class (excluding the
Vail Equity owned by Foods), and "against" any proposal in the same proportion
as the votes cast "against" such proposal by the holders of each such class of
Vail Securities (excluding the Vail Equity owned by Foods) and that with respect
to broker non-votes and abstentions, each class of Vail Equity owned by Foods
will be voted in the same proportion as votes deemed "for," "against" or
"abstain," giving effect to broker non-votes and abstentions as required under
the laws and rules then applicable; provided, however, that Foods shall retain
the right to vote its Vail Equity in any manner it sees fit with respect to any
proposals for (1) the merger, consolidation or other business combination of
Vail or any subsidiary of Vail with or into any other corporation, (2) the sale,
lease, exchange, transfer or other disposition of all or substantially all of
the assets of Vail and all of its subsidiaries taken together as a single
business, (3) the creation of any other class of stock with voting rights and
(4) changes to the Certificate of Incorporation or Bylaws of Vail that adversely
affect Foods' rights under this Agreement. The provisions of this Section 2.3
shall apply to both the casting of votes at
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meetings of shareholders and execution of actions by written consent.
Section 2.4 Restrictions on Certain Transactions Prior to IPO. Prior to
the IPO, Vail shall not, without the prior written approval of Foods, (1) enter
into transactions with Apollo or its Affiliates that are not on an arm's-length
basis (other than the continuation or extension of contracts or arrangements
between Vail and Apollo and its Affiliates that are in existence as of the date
of this Agreement and have heretofore been disclosed to Foods), (2) permit (a)
the merger of Vail with or into any other corporation (other than a subsidiary
of Vail), (b) the sale, lease, exchange, transfer or other disposition of all or
substantially all of the assets of Vail and all of its subsidiaries taken
together as a single business, (c) the creation of any other class of stock with
voting rights that materially adversely affects Foods' rights under this
Agreement or (d) changes to the Certificate of Incorporation or Bylaws of Vail
that adversely affect Foods' rights under this Agreement, or (3) enter into any
material business not currently conducted by Vail that is not related to the
operation of ski resorts, real estate or the vacation, leisure and entertainment
industries.
ARTICLE III
TRANSFER OF VAIL EQUITY
Section 3.1 Restrictions on Transfer. During the term of this Agreement,
Foods agrees that it will not, and it will cause each of its Affiliates who
acquire Vail Equity not to, Transfer any Vail Equity, except as permitted by or
in accordance with this Agreement.
Section 3.2 Exceptions to Restrictions. Subject to all applicable laws,
the restrictions on Transfer set forth in Section 3.1 hereof shall not apply to
any of the following:
(a) a Transfer of some or all of the Vail Equity pro rata to all of the
holders of common stock of Foods as a dividend or distribution, in redemption of
the Foods Stock or pursuant to a similar transaction;
(b) a Transfer of some or all of the Vail Equity to an Affiliate of Foods,
provided that such Affiliate (i) shall agree to be bound by and subject to the
provisions of this Agreement, (ii) Foods shall remain liable
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for the performance by such Affiliate of its obligations under this Agreement
and (iii) such Affiliate shall have executed and delivered to Vail the guaranty
required by Section 5.14 of the Purchase Agreement;
(c) a Transfer of some or all of the Vail Equity in accordance with
Section 5.1 or 5.3 of this Agreement;
(d) a Transfer of some or all of the Vail Equity in any tender offer,
self-tender, exchange offer, going private transaction or other transaction
involving a Transfer which is recommended to shareholders of Vail by at least a
majority of the Board of Directors of Vail;
(e) subject to Section 4.1, a Transfer of some or all of the Vail Equity
with the prior written consent of a majority of the Board of Directors of Vail;
(f) subject to Section 4.1, a Transfer of some or all of the Vail Equity
pursuant to Rule 144 of the Securities Act if an IPO has not been consummated by
December 31, 1998;
(g) subject to Section 4.1, a Transfer of some or all of the Vail Equity
if an IPO has not been consummated by December 31, 1998 and such transferee
agrees to be bound by the terms of this Agreement; and
(h) subject to Section 4.1, a Transfer of some or all of the Vail Equity
on or after the date which is 18 months after the date of this Agreement,
provided that (i) the transferee agrees to be bound by and subject to the
provisions of this Agreement, (ii) after giving effect to such Transfer, the
transferee will not own, directly or indirectly, more than 10% of the then
outstanding Vail Securities and (iii) such transferee agrees with Vail and
Apollo not to thereafter purchase or otherwise acquire, directly or indirectly,
any additional Vail Securities if it would result in such transferee owning,
directly or indirectly, more than 10% of the then outstanding Vail Securities.
Section 3.3 Improper Transfer. Any attempt to Transfer any shares of Vail
Equity not in accordance with this Agreement will be null and void and Vail will
not give nor permit the transfer agent of Vail to give any effect to such
attempted Transfer in its stock records.
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Section 3.4 Restrictive Legend.
(a) A copy of this Agreement will be filed with the Secretary of Vail and
kept with the records of Vail. All certificates representing shares of Vail
Equity hereafter issued to or acquired by Foods or its successors or permitted
assigns, will bear the following legend (until such time as such shares are sold
pursuant to an effective registration statement or pursuant to Rule 144 under
the Securities Act) noted conspicuously on such certificates:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
ONLY, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED (BY MERGER OR OTHERWISE),
ASSIGNED, DEVISED, EXCHANGED, GIFTED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS
SUCH TRANSFER IS EXEMPT FROM REGISTRATION, AND AN ACCEPTABLE OPINION OF
COUNSEL IS DELIVERED TO VAIL RESORTS, INC. WITH REGARD TO SUCH EXEMPTION,
OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH STATE SECURITIES LAWS.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN THE SHAREHOLDER AGREEMENT, DATED , 1996.
NO TRANSFER OF THESE SHARES WILL BE EFFECTIVE UNLESS AND UNTIL THE TERMS
AND CONDITIONS OF SUCH SHAREHOLDER AGREEMENT HAVE BEEN COMPLIED WITH IN
FULL AND NO PERSON MAY REQUEST VAIL RESORTS, INC. TO RECORD THE TRANSFER OF
ANY SHARES IF SUCH TRANSFER IS IN VIOLATION OF SUCH SHAREHOLDER AGREEMENT.
A COPY OF THE SHAREHOLDER AGREEMENT IS ON FILE AT THE EXECUTIVE OFFICES OF
VAIL RESORTS, INC. AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF
SUCH SHARES UPON WRITTEN REQUEST. THE SHARES EVIDENCED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON VOTING PROVIDED FOR IN THE SHAREHOLDER
AGREEMENT AND NO VOTE OF SUCH SHARES THAT CONTRAVENES THE SHAREHOLDER
AGREEMENT SHALL BE EFFECTIVE.
(b) Until such time as the Vail Equity has been registered pursuant to a
registration statement under the Securities Act or sold pursuant to Rule 144 of
the Securities Act, the certificates representing Vail Equity (including,
without limitation, all certificates issued upon Transfer or in exchange or
substitution therefor) will also bear any legend required under any other
applicable laws, including state securities or blue sky laws.
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(c) Vail may make a notation on its records or give stop-transfer
instructions to any transfer agents or registrars for the Vail Equity in order
to implement the restrictions set forth in this Article III.
(d) In the event Foods acquires any other or additional Vail Securities,
Foods will submit all certificates representing such Vail Securities to Vail so
that any appropriate legend or legends required by this Section 3.4 may be
placed thereon.
ARTICLE IV
RIGHT OF FIRST OFFER
Section 4.1 Sales by Foods.
(a) Prior to any Transfer pursuant to Section 3.2(e), (f), (g) and (h),
Foods must first give written notice of its intent to make such Transfer (a
"Transfer Notice") to Vail and Apollo setting forth the number of shares of Vail
Equity (the "Section 4.1 Shares") that Foods desires to Transfer and the cash
price that Foods proposes to be paid for such Section 4.1 Shares and the other
terms and conditions of such proposed Transfer.
(b) Vail shall have the right, but not the obligation, to purchase the
Section 4.1 Shares (the "First Option") on the same terms and conditions as set
forth in such notice, which option shall be exercised by delivering to Foods
irrevocable written notice of its commitment to purchase the Section 4.1 Shares
within ten business days after receipt of the Transfer Notice (the "Vail Option
Period"). Failure by Vail to give such notice within such ten-business-day
period shall be deemed an election by Vail not to purchase the Section 4.1
Shares.
(c) In the event that Vail decides not to purchase the Section 4.1 Shares
pursuant to Section 4.1(b), then Apollo will have the right, but not the
obligation, to purchase the Section 4.1 Shares (the "Second Option") on the same
terms and conditions as set forth in the Transfer Notice, which option shall be
exercised by delivering to Foods irrevocable written notice of its commitment
to purchase the Section 4.1 Shares within five business days after the
termination of the Vail Option Period (the "Apollo Option Period"). Failure by
Apollo to give such notice within such five-business-day period shall
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be deemed an election by Apollo not to purchase the Section 4.1 Shares.
(d) Delivery of written notice by Vail or Apollo accepting the First
Option or the Second Option, as the case may be, shall constitute a contract
between Vail or Apollo, on the one hand, and Foods, on the other hand, for the
purchase and sale of the Section 4.1 Shares on the terms and conditions set
forth in the Transfer Notice. The purchase of any shares pursuant to the
exercise of the First Option or the Second Option, as the case may be, shall be
completed not later than 30 days following delivery of the Transfer Notice with
respect to the Section 4.1 Shares, subject to receipt of any required material
third-party or governmental approvals, compliance with applicable laws and the
absence of any injunction or similar legal order preventing such transaction. In
the event that neither the First Option nor the Second Option is exercised,
Foods shall have the right for a period of 45 days after the termination of the
Apollo Option Period to Transfer the Section 4.1 Shares at a price not less than
90% of the price contained in, and on terms and conditions no less favorable to
Foods than those set forth in, the Transfer Notice; provided that the Transferee
agrees to be bound by the terms and conditions of this Agreement (unless the
Transfer is pursuant to Rule 144 under the Securities Act).
ARTICLE V
REGISTRATION
Section 5.1 Demand Registration.
(a) After the consummation of an IPO or at such time prior to the
consummation of an IPO as is permitted by Section 10.3 with respect to a given
Shareholder, upon a Shareholder's written request specifying the intended manner
of disposition (including the number of shares of Vail Equity to be sold) (a
"Demand Notice"), Vail will use its best efforts to prepare and file with the
SEC, as expeditiously as possible, a Registration Statement on an available form
for which Vail then qualifies (but not including by means of a shelf
registration pursuant to Rule 415 under the Securities Act), which legal counsel
for Vail deems appropriate and which is available for the sale of Vail Equity
to permit an underwritten public offering of some or all of the shares of Vail
Equity then held by such Shareholder and use its best efforts to cause such
registration statement to become effective (a "Demand Registration").
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(b) A Demand Registration will not be deemed to have occurred until it has
become effective under the Securities Act (unless a Shareholder delivers a
Demand Notice and subsequently withdraws the Demand Notice, in which case such
Demand Registration will be deemed to have occurred unless such Shareholder
agrees to pay all reasonable out-of-pocket expenses associated with such
registration actually incurred by Vail); provided, however, that if, after a
Demand Registration has become effective, the offering of Vail Equity pursuant
to such Demand Registration is prohibited by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or a court, such
Demand Registration will be deemed not to have occurred (unless such prohibition
on the sale of the Vail Equity is based on actions or omissions of such
Shareholder, in which case such Demand Registration will be deemed to have
occurred unless such Shareholder agrees to pay all reasonable out-of-pocket
expenses associated with such registration actually incurred by Vail).
(c) Vail shall only be obligated to effect one Demand Registration per
Shareholder in any twelve month period under this Section 5.1; provided,
however, that Vail will not be required to register the Vail Equity pursuant to
a Demand Notice under this Section 5.1 if at such time (i) the shares of Vail
Equity which a Shareholder is requesting to be registered pursuant to this
Section 5.1 constitute less than 6.0% (or, if less, all of the shares of Vail
Equity owned by such Shareholder) of the outstanding Vail Securities so
requested to be registered or (ii) such Demand Notice is given within six (6)
months after the effective date of any other registration of any Vail Securities
under the Securities Act.
(d) The managing underwriter will be selected by the Shareholder
requesting registration pursuant to this Section 5.1 (the "Requesting
Shareholder"); provided, however, that such underwriter shall be subject to the
approval of Vail, which approval shall not be unreasonably withheld. In the
event there is one or more co-managers, the first such co-manager shall be
selected by Vail, provided that such co-manager shall be subject to the approval
of the Requesting Shareholder, which approval shall not be unreasonably withheld
or delayed, and all other co- managers will be selected by the Requesting
Shareholder.
(e) In connection with a Demand Registration, both the Shareholder not
requesting the Demand Registration (the "Non- Requesting Shareholder") and Vail
may elect to include
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additional shares of Vail Securities in such offering on the same terms and
conditions as the Vail Equity to be sold by the Requesting Shareholder;
provided, however, that if the managing underwriter(s) advises the Requesting
Shareholder, the Non- Requesting Shareholder and Vail that, in its judgment, the
number of shares proposed to be included in such offering exceeds the largest
number of Vail Securities which can be sold without having an adverse effect on
such offering, including the price at which such securities can be sold (the
"Marketable Number"), then the total number of shares to be included in such
offering shall be limited as follows: (i) first, all the shares of Vail Equity
that the Requesting Shareholder and the Non-Requesting Shareholder propose to
sell up to the Marketable Number, allocated pro rata between the Requesting
Shareholder and the Non-Requesting Shareholder on the basis of the relative
number of Vail Securities that the Requesting Shareholder and the Non-Requesting
Shareholder have proposed to be included in such registration, and (ii) second,
all the shares of Vail Securities that Vail proposes to sell, which does not
exceed the difference, if any, between the Marketable Number and that number of
shares which the Requesting Shareholder and the Non-Requesting Shareholder have
included pursuant to clauses (i) and (ii) above.
Section 5.2 Delay of Demand Registration. Notwithstanding anything to the
contrary in Article V hereof, in the event that Vail determines in its
reasonable judgment that it may be advisable to delay filing a Registration
Statement described in Section 5.1 hereof or to withdraw such Registration
Statement if such Registration Statement has already been filed, Vail may delay
filing such, or withdraw such previously filed, Registration Statement for a
period of not more than ninety (90) days from the date of receipt of the request
for the Demand Registration if Vail furnishes to the Requesting Shareholder a
certificate signed by an executive officer of Vail stating that Vail has
reasonably determined that (i) such a filing would adversely affect any proposed
financing or acquisition by Vail or (ii) such a filing would otherwise represent
an undue hardship for Vail; provided, however, that Vail will, at the request of
the Requesting Shareholder, file or refile, as the case may be, such
Registration Statement promptly after Vail, in its reasonable judgment,
determines that it is no longer advisable to delay filing or to continue the
withdrawal of such Registration Statement but in no event shall the filing or
re-filing of such Registration Statement be delayed more than the aforementioned
ninety (90) days.
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Section 5.3 Piggyback Registration.
(a) Right To Include Vail Equity.
(i) If Vail or any other Person (other than a Shareholder) at any time
proposes to register any Vail Securities under the Securities Act (other than a
registration of securities in connection with a merger, an acquisition, an
exchange offer or an employee benefit plan maintained by Vail or its Affiliates
or on Form S-4 or S-8 or any successor or similar form or by means of a shelf
registration pursuant to Rule 415 under the Securities Act to permit sales of
Vail Securities by employees, officers and directors of Vail), whether or not
for sale for its own account, in a manner which would permit registration of the
Vail Equity for sale to the public under the Securities Act, it will give
written notice to each Shareholder of its intention to do so and of such
Shareholder's rights under this Section 5.3(a)(i), at least twenty (20) calendar
days prior to the anticipated filing date of a Registration Statement relating
to such registration (a "Piggyback Notice"). Such Piggyback Notice will offer
each Shareholder the opportunity to include in such Registration Statement that
number of shares of Vail Equity as such Shareholder may request. Upon the
written request (the "Piggyback Registration") (which request will specify the
number of shares of Vail Equity intended to be disposed of by each Shareholder
pursuant to such Registration Statement) of each Shareholder (the "Piggyback
Shareholder") made within ten (10) calendar days after the receipt of the
Piggyback Notice, Vail will use its best efforts to effect the registration
under the Securities Act of all shares of Vail Equity which Vail has been so
requested to register; provided, however, that each Shareholder must sell its
Vail Equity requested to be included in such registration to the underwriter(s)
selected by Vail on the same terms and conditions as apply to other Persons,
including Vail, and if, at any time after receiving a reply from each
Shareholder to a Piggyback Notice and prior to the effective date of the
Registration Statement filed in connection with such registration, Vail decides
for any reason not to register any shares of Vail Securities, Vail will notify
each Shareholder and thereupon be relieved of its obligation to register any
Vail Equity in connection with such registration.
(ii) No registration, whether or not effected under this Section 5.3(a),
will relieve Vail of its obligations to effect Demand Registrations under
Section 5.1 hereof.
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(b) Priority in Piggyback Registrations. If the managing underwriter
advises Vail in writing that, in its opinion, the Marketable Number is less than
that intended to be included in a Registration Statement, Vail will include in
such Registration Statement (i) first, all of the Vail Securities Vail proposes
to sell for its own account, and (ii) second, the Vail Securities requested to
be included by the Shareholders and other Persons pursuant to Section 5.3(a)
hereof shall be allocated pro rata among the Shareholders on the basis of the
relative number of Vail Securities each Shareholder and such other Persons has
requested to be included in such registration.
Section 5.4 Delay of Piggyback Registration. Notwithstanding anything to
the contrary in this Article V, in the event that Vail determines in its
reasonable judgment that it may be advisable to delay filing a Registration
Statement described in Section 5.3 hereof or to withdraw such Registration
Statement if such Registration Statement has already been filed, Vail may delay
filing such, or withdraw such previously filed, Registration Statement in
accordance with the provisions of Section 5.2 hereof.
Section 5.5 Holdback Agreements.
(a) Whenever Vail effects an underwritten public offering of Vail Equity
pursuant to a registration statement (including the IPO), each Shareholder
agrees not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any Vail Securities (other
than as part of such registration) during the 15 days prior to, and during the
180-day period (or such shorter period as may be requested by the lead
underwriter for such offering) beginning on, the effective date of such
registration statement.
(b) In connection with underwritten public offering of Vail Equity
pursuant to a registration statement under this Agreement, Vail agrees not to
effect any public sale or distribution of any Vail Securities (other than as
part of such registration or in connection with any employee stock option or
other benefit plan or any private issuance of Vail Equity where the recipient
also agrees to be bound by the hold back arrangements applicable to Vail under
this Section 5.5) during the 15 days prior to, and during the 90-day period (or
such shorter period as may be requested by the lead underwriter for such
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offering) beginning on the effective date of, such registration statement.
Section 5.6 Right to Purchase in Lieu of Registration.
(a) Any time Vail receives a request for a Demand Registration or a
Piggyback Registration from Foods, Vail shall have the option to purchase all
but not less than all of the Vail Equity proposed to be disposed of in such
request (the "Section 5.6 Shares") at the Vail Market Price by delivering to
Foods, a notice of Vail's election to purchase the Section 5.6 Shares within
seven (7) days of receipt by Vail of the request for the Demand Registration or
Piggyback Registration, as the case may be, pursuant to Section 5.1 or Section
5.3(a), as the case may be.
(b) In the event that Vail decides not to purchase the Section 5.6 Shares
pursuant to Section 5.6(a), then Apollo will have the right, but not the
obligation, to purchase the Section 5.6 Shares at the Vail Market Price by
delivering to Foods a notice of Apollo's election to purchase the Section 5.6
Shares within seven (7) days of Vail deciding not to purchase the Section 5.6
Shares.
ARTICLE VI
REGISTRATION EXPENSES
Section 6.1 Registration Expenses.
(a) Subject to Section 5.1(b) of this Agreement, all expenses incident to
Vail's performance of or compliance with Articles V and VII of this Agreement to
effect Demand Registrations and Piggyback Registrations will be borne by Vail,
including, without limitation:
(i) all federal registration and filing fees;
(ii) subject to Section 7.4, fees and expenses of compliance with
securities or blue sky laws; provided, however, that Vail will in no event be
obligated to pay the fees and disbursements of counsel for the underwriters or
the Shareholders in connection with blue sky qualifications of the Vail Equity
under the laws of such jurisdictions as the managing underwriter(s) may
designate;
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(iii) printing, messenger, telephone and delivery expenses;
(iv) fees and disbursements of legal counsel for Vail;
(v) fees and disbursements of all independent certified public accountants
of Vail;
(vi) NASD fees and disbursements of the underwriters; provided, however,
that in all cases a Shareholder will pay all costs of discounts, commissions,
spreads or fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals relating to the distribution of the Vail
Equity being sold by such Shareholder;
(vii) fees and expenses of other Persons retained by Vail; and
(viii) listing or quotation fees and expenses required to be made pursuant
to Section 7.5 hereof in connection with the Registration Statement.
(b) Each of Vail and the Shareholders will pay its own respective internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the fees and
expenses of any Person, including special experts, retained by Vail or the
Shareholders, respectively.
ARTICLE VII
REGISTRATION PROCEDURE
Section 7.1 Shareholder Information. Each Shareholder will provide Vail
with such information about such Shareholder and the intended manner of
distribution of Vail Equity and otherwise cooperate with Vail and the
underwriter(s) as may be necessary in the reasonable opinion of Vail to satisfy
any obligation of Vail under this Agreement to register the Vail Equity under
federal or state securities laws and otherwise take actions related thereto. In
the event of the failure of a Shareholder to comply with the requirements of the
preceding sentence Vail may delay filing such, and withdraw such previously
filed, Registration Statement. Vail will file or refile, as the case may be,
such Registration Statement
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promptly following compliance with such requirements by a Shareholder; provided,
however, that a Shareholder will be responsible for any reasonable out-of-pocket
costs which arise out of such non-compliance. A Shareholder will immediately
notify Vail upon discovery that any information provided by such Shareholder
which is included in the prospectus that is included in a Registration
Statement, as then in effect, is untrue in any material respect, or omits to
state any material fact required to be stated therein or to make the information
stated therein not misleading in the light of the circumstances under which it
is presented.
Section 7.2 Compliance. Each Shareholder and Vail will comply with all
rules and regulations of the SEC and applicable state securities or blue sky
laws governing the manner of sale of securities in connection with the Transfer
of any of the Vail Equity pursuant to any Registration Statement.
Section 7.3 Provision of Prospectuses.
(a) Vail will furnish to each Shareholder such number of copies of a
summary prospectus or other prospectus, including a prospectus subject to
completion in conformity with the requirements of the Securities Act, and such
other documents as such Shareholder may reasonably request in writing, in order
to facilitate the public sale or other disposition of the Vail Equity of each
Shareholder included in a Registration Statement.
(b) At any time when a sale or other disposition of Vail Equity pursuant
to a Registration Statement is subject to a prospectus delivery requirement,
Vail will notify each Shareholder of the occurrence of any event that causes the
prospectus included in such Registration Statement, as then in effect, to
include an untrue statement of a material fact or to omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing and Vail will use
its best efforts, as expeditiously as possible, to either amend the prospectus
or otherwise take any actions so that use of the previous prospectus may be
legally resumed. Upon receipt of such a notice, each Shareholder will
immediately discontinue all sales or other dispositions of Vail Equity pursuant
to the Registration Statement. Each Shareholder may resume such sales or
dispositions only upon receipt of an amended prospectus or after such
Shareholder is advised by Vail that the use of the previous prospectus may be
legally resumed.
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Section 7.4 Blue Sky Compliance. Vail will use its best efforts to (a)
register or qualify the Vail Equity included in a Registration Statement under
the securities or blue sky laws of such jurisdictions as each Shareholder
reasonably requests and (b) do any and all other acts that may be reasonably
necessary or advisable to enable each Shareholder to consummate the public sale
or disposition of such securities in such jurisdictions; provided, however, that
Vail is not required to consent to, or take any action that would subject it to,
general service of process or taxation in any jurisdiction where it is not then
so subject, nor qualify to do business in any jurisdiction where it is not then
so qualified.
Section 7.5 Listing of Vail Equity. Vail will use its best efforts to
cause the Vail Equity when issued to be listed on all securities exchanges on
which any securities issued by Vail are then listed, or quoted on all automated
quotation systems on which any such securities of Vail are then quoted,
including, without limitation, entering into appropriate customary agreements
(including a listing application and indemnification agreement in customary
form).
Section 7.6 Stop Orders. Vail will promptly notify each Shareholder of
(a) the receipt by Vail of any notification with respect to the issuance by the
SEC of any stop order or order suspending the effectiveness of any Registration
Statement covering any Vail Equity or the initiation of any proceedings for that
purpose or (b) the receipt by Vail of any notification with respect to the
limitation, restriction or suspension of the offer or sale of Vail Equity in any
jurisdiction in which the Vail Equity was qualified to be sold, or the
initiation of any proceedings for such purpose. In the event that Vail notifies
each Shareholder of any such event, each Shareholder will immediately
discontinue all sales or other dispositions of Vail Equity pursuant to the
Registration Statement until such time that Vail notifies each Shareholder of
the lifting of such stop order or similar order; provided, however, that such a
stop order or similar order issued by a state securities or blue sky
administrator will apply only to offers and sales in such state, unless each
Shareholder is advised otherwise by Vail. Vail, with the cooperation of each
Shareholder, will use its best efforts to contest any such proceedings and to
obtain the withdrawal of any such order at the earliest possible date.
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ARTICLE VIII
INDEMNIFICATION AND CONTRIBUTION
Section 8.1 Indemnification.
(a) Indemnification by Foods.
(i) Foods agrees to indemnify and hold harmless Vail and its Affiliates
and Associates (each such Person being hereinafter referred to as a "Vail
Indemnified Party") from and against all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation and legal expenses)
(each a "Loss") arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
preliminary, final or summary prospectus covering the Vail Equity, or in any
amendment or supplement thereto, or in any document incorporated by reference
into any of the foregoing or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only if, and
only to the extent, such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to Vail or its representatives by or on behalf of Foods for use in the
preparation of such Registration Statement, preliminary, final or summary
prospectus or such amendment or supplement thereto, or such document
incorporated by reference. This indemnity will be in addition to any liability
which Foods may otherwise have. Foods will also indemnify the underwriter(s),
selling broker(s), dealer manager(s) and similar securities industry
professionals participating in the distribution, their officers and directors
and each Person who Controls such Persons to the same extent as provided above
with respect to the indemnification of a Vail Indemnified Party.
(ii) Foods also agrees to indemnify and hold harmless any Vail Indemnified
Party to the same extent as provided in clause (i) above from and against all
Losses arising out of any action or proceeding brought against any Vail
Indemnified Party in connection with the distribution or proposed distribution
of Vail Equity to the holders of Foods Stock; provided, however, that this
Section 8.1(a)(ii) shall not apply to any Losses for which Vail is responsible
as provided in Section 8.1(c) of this Agreement.
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(iii) If any action or proceeding (including any governmental
investigation or inquiry) is brought or asserted against a Vail Indemnified
Party in respect of which indemnity may be sought from Foods, such Vail
Indemnified Party will promptly notify Foods in writing of the commencement of
such action and Foods shall assume the defense thereof and have primary control
over any related suit or proceeding, including the employment of legal counsel
and the payment of all expenses in connection therewith; provided, however, that
the failure of any Vail Indemnified Party to give notice as provided herein
shall not relieve Foods of its obligations under this Section 8.1(a) except to
the extent that Foods is actually materially prejudiced by such failure to give
notice. A Vail Indemnified Party shall have the right to participate in and
jointly with Foods, to the extent that it may wish, and employ separate counsel
reasonably satisfactory to such Vail Indemnified Party, provided, however, that
Foods will not be liable to such Vail Indemnified Party for any legal or other
expenses incurred by such Vail Indemnified Party in connection therewith, unless
such Vail Indemnified Party shall have been advised by counsel that a conflict
of interest between such Vail Indemnified Party and Foods is likely to exist in
respect of such claim.
(b) Indemnification by Apollo.
(i) Apollo agrees to indemnify and hold harmless each Vail Indemnified
Party from and against all Losses arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or preliminary, final or summary prospectus covering the
Vail Equity, or in any amendment or supplement thereto, or in any document
incorporated by reference into any of the foregoing or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
but only if, and only to the extent, such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to Vail or its representatives by or on behalf of
Apollo for use in the preparation of such Registration Statement, preliminary,
final or summary prospectus or such amendment or supplement thereto, or such
document incorporated by reference. This indemnity will be in addition to any
liability which Apollo may otherwise have. Apollo will also indemnify the
underwriter(s), selling broker(s), dealer manager(s) and similar securities
industry professionals
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participating in the distribution, their officers and directors and each Person
who Controls such Persons to the same extent as provided above with respect to
the indemnification of a Vail Indemnified Party.
(ii) Apollo also agrees to indemnify and hold harmless any Vail
Indemnified Party to the same extent as provided in clause (i) above from and
against all Losses arising out of any action or proceeding brought against any
Vail Indemnified Party in connection with the distribution or proposed
distribution of Vail Equity to the holders of Apollo Stock; provided, however,
that this Section 8.1(b)(ii) shall not apply to any Losses for which Vail is
responsible as provided in Section 8.1(c) of this Agreement.
(iii) If any action or proceeding (including any governmental
investigation or inquiry) is brought or asserted against a Vail Indemnified
Party in respect of which indemnity may be sought from Apollo, such Vail
Indemnified Party will promptly notify Apollo in writing of the commencement of
such action and Apollo shall assume the defense thereof and have primary control
over any related suit or proceeding, including the employment of legal counsel
and the payment of all expenses in connection therewith; provided, however, that
the failure of any Vail Indemnified Party to give notice as provided herein
shall not relieve Apollo of its obligations under this Section 8.1(b) except to
the extent that Apollo is actually materially prejudiced by such failure to give
notice. A Vail Indemnified Party shall have the right to participate in and
jointly with Apollo, to the extent that it may wish, and employ separate counsel
reasonably satisfactory to such Vail Indemnified Party, provided, however, that
Apollo will not be liable to such Vail Indemnified Party for any legal or other
expenses incurred by such Vail Indemnified Party in connection therewith, unless
such Vail Indemnified Party shall have been advised by counsel that a conflict
of interest between such Vail Indemnified Party and Apollo is likely to exist
in respect of such claim.
(c) Indemnification by Vail.
(i) Vail agrees to indemnify and hold harmless each Shareholder and its
Affiliates and Associates (each such person being hereinafter referred to as a
"Shareholder Indemnified Party") from and against all Losses arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement,
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preliminary, final or summary prospectus covering the Vail Equity, or in any
amendment or supplement thereto, or in any document incorporated by reference
into any of the foregoing or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading, except insofar as
such Losses arise out of or are based solely upon any such untrue statement or
omission or allegation thereof based upon written information provided by or on
behalf of a Shareholder for inclusion in such Registration Statement,
preliminary, final or summary prospectus, or such amendment or supplement
thereto, or such document incorporated by reference; provided, however, that
Vail will not be liable in any such case to the extent that any such Loss arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any preliminary prospectus if (A) such
Shareholder failed to send or deliver a copy of the final prospectus with or
prior to the delivery of written confirmation of the sale of the Vail Equity
covered by the Registration Statement to the Person asserting such Loss, and (B)
the final prospectus corrected such untrue statement or omission; and provided,
further, that Vail will not be liable in any such case to the extent that any
such Loss arises out of or is based upon an untrue statement or omission in the
final prospectus, if such untrue statement or omission is corrected in an
amendment or supplement to the final prospectus and if, having previously been
furnished by or on behalf of Vail with copies of the final prospectus as so
amended or supplemented, such Shareholder thereafter fails to deliver such
prospectus as so amended or supplemented, prior to or concurrently with the sale
of the Vail Equity to the Person asserting such Loss who purchased such Vail
Equity which is the subject thereof. This indemnity will be in addition to any
liability which Vail may otherwise have. Vail will also indemnify the
underwriter(s), selling broker(s), dealer manager(s) and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who Controls such Persons to the same extent as
provided above with respect to the indemnification of a Shareholder Indemnified
Party.
(ii) If any action or proceeding is brought against a Shareholder
Indemnified Party in respect of which indemnity may be sought against such
Shareholder Indemnified Party, such Shareholder Indemnified Party will promptly
notify Vail in writing of the commencement of such action and Vail will assume
the defense thereof and have primary control over any
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related suit or proceeding, including the employment of legal counsel and the
payment of all expenses in connection therewith; provided, however, that the
failure of any Shareholder Indemnified Party to give notice as provided herein
shall not relieve Vail of its obligations under this Section 8.1(c) except to
the extent that Vail is actually materially prejudiced by such failure to give
notice. A Shareholder Indemnified Party shall have the right to participate in
and jointly with Vail, to the extent that it may wish, and employ separate
counsel reasonably satisfactory to such Shareholder Indemnified Party, provided,
however, that Vail will not be liable to such Shareholder Indemnified Party for
any legal or other expenses incurred by such Shareholder Indemnified Party in
connection therewith, unless such Shareholder Indemnified Party shall have been
advised by counsel that a conflict of interest between such Shareholder
Indemnified Party and Vail is likely to exist in respect of such claim.
Section 8.2 Contribution.
(a) If the Indemnification provided for in Section 8.1 hereof is
unavailable to a Vail Indemnified Party or Shareholder Indemnified Party under
Section 8.1(a), 8.1(b) or Section 8.1(c) hereof (other than by reason of the
exceptions provided in Sections 8.1(a), 8.1(b) and 8.1(c)) in respect of any
Losses referred to therein, then such indemnifying party, in lieu of
indemnifying such indemnified party, will contribute to the amount paid or
payable by such indemnified party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the indemnifying party, on
the one hand, and the indemnified party, on the other hand, in connection with
the statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault of the indemnifying
party, on the one hand, and the indemnified party, on the other hand, shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such indemnified
party and each parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable by each party as a result of the Losses referred to above will be
deemed to include, subject to the limitations set forth in Sections 8.1(a),
8.1(b) and 8.1(c) hereof, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
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(b) Notwithstanding the provisions of Section 8.2(a) hereof, no Person
found to be guilty of fraudulent misrepresentation shall be entitled to
contribution from any Person who is not found to be guilty of such fraudulent
misrepresentation.
ARTICLE IX
TAKE-ALONG RIGHTS
Section 9.1 Take-Along Rights. Apollo may not effect a Transfer (or a
series of related Transfers) of Vail Equity to one person or a related group of
persons if such Transfer would result in a Change of Control of Vail (other than
Transfers effected by sales of Vail Equity through underwriters in a public
offering or in the securities markets generally) (the "Section 9.1 Shares")
without first complying with this Section 9.1. If Apollo desires to Transfer
the Section 9.1 Shares, Apollo shall give written notice (the "Take-Along
Notice") to Foods stating (i) the name and address of the transferee (the
"Non-Qualified Transferee") and (ii) the price and terms upon which the
Non-Qualified Transferee proposes to purchase the Section 9.1 Shares. Foods
shall have the irrevocable option, but not the obligation (the "Take-Along
Option"), to sell to the Non-Qualified Transferee, up to a number of shares of
Vail Equity (the "Included Shares") determined in accordance with Section
9.1(a), at the price and on the terms set forth in the Take-Along Notice. The
Take-Along Option shall be exercised by Foods by giving written notice to
Apollo, within ten business days of receipt of the Take-Along Notice, indicating
its election to exercise the Take-Along Option. Failure by Foods to give such
notice within the ten business day period shall be deemed an election by Foods
not to sell its shares of Vail Equity pursuant to that Take-Along Notice. The
closing with respect to any sale to a Non-Qualified Transferee pursuant to this
Section 9.1 shall be held at the time and place specified in the Take-Along
Notice but in any event within 30 days of the date the Take-Along Notice is
given; provided that if through the exercise of reasonable efforts
Apollo is unable to cause such transaction to close within 30 days, such period
may be extended for such reasonable period of time as may be necessary to close
such transaction. Consummation of the sale of the Section 9.1 Shares by Apollo
to a Non-Qualified Transferee shall be conditioned upon consummation of the sale
by Foods to such Non-Qualified Transferee of the Included Shares, if any.
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(a) The number of Included Shares purchased from Foods shall be determined
by multiplying the number of Shares proposed to be purchased from Apollo by a
Non-Qualified Transferee by a fraction, the numerator of which is the total
number of shares of Vail Equity owned by Foods and the denominator of which is
the sum of the total number of shares of Vail Equity owned by Apollo and Foods.
(b) Apollo shall arrange for payment directly by the Non-Qualified
Transferee to Foods, upon delivery of the certificate or certificates
representing the Included Shares duly endorsed for transfer, together with such
other documents as the Non-Qualified Transferee may reasonably request. The
reasonable costs and expenses incurred by Apollo and Foods in connection with a
sale of shares of Vail Equity subject to this Section 9.1 shall be allocated pro
rata based upon the number of shares of Vail Equity sold by each Shareholder to
a Non-Qualified Transferee.
(c) If, at end of 30 days following the date on which a Take-Along Notice
was given, the sale of shares of Vail Equity by Apollo and the sale of the
Included Shares, if any, have not been completed in accordance with the terms of
the Non-Qualified Transferee's offer, all certificates representing the Included
Shares shall be returned to Foods, and all the restrictions on Transfer
contained in this Agreement with respect to shares of Vail Equity owned by
Apollo shall again be in effect.
ARTICLE X
INITIAL PUBLIC OFFERING
Section 10.1 IPO Commitment. Vail and Apollo hereby agree to use
reasonable efforts to consummate the IPO as soon as possible following the
Closing.
Section 10.2 Co-Manager. In connection with the IPO (unless the IPO is
effected by means of a Demand Registration by Foods), Foods shall select one of
the co-managers (other than the lead manager); provided, however, that such
co-manager shall be subject to the approval of Vail, which approval shall not be
unreasonably withheld.
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Section 10.3 Foods Initiated IPO.
(a) If the IPO has not been consummated on the later of (i) September 30,
1997 or (ii) nine months after the Closing (the "Trigger Date"), Apollo, Vail
and Foods agree to abide by the procedures of this Section 10.3.
(b) Following the Trigger Date, Apollo and Foods agree to discuss in good
faith for a period of 30 days (the "Discussion Period") the timing of the IPO.
At the conclusion of the Discussion Period, Foods may deliver a notice to Vail
within 30 days (the "Foods Notice") stating that it will request a Demand
Registration unless Vail consummates the IPO within three months from the date
of the Foods Notice. If at the conclusion of such three-month period the IPO
has not been consummated, during the next six months Foods shall have the right
to request a Demand Registration and consummate the IPO by means of such Demand
Registration. If at the conclusion of such six-month period the IPO has not
been consummated, Foods' right to request a Demand Registration to effect the
IPO shall be suspended for a twelve- month period. If at the conclusion of such
twelve-month period the IPO has not otherwise been consummated, during the next
six months Foods shall again have the right to request a Demand Registration and
consummate the IPO by means of such Demand Registration. If the IPO is
consummated by means of a Demand Registration by Foods (the "Foods Initiated
IPO"), then Foods shall select the lead manager for the Foods Initiated IPO;
provided, however, that such lead manager shall be subject to the approval of
Vail, which approval shall not be unreasonably withheld or delayed. Vail may
select one co-manager in connection with a Foods Initiated IPO, subject to the
approval of the lead manager for the Foods Initiated IPO, which approval shall
not be unreasonably withheld or delayed.
ARTICLE XI
ADDITIONAL COVENANTS
Section 11.1 Maintain Listing or Quotation. Vail hereby covenants and
agrees that it shall use its best efforts to maintain its listing of Vail
Securities on any securities exchanges on which Vail Securities are listed in
the future pursuant to Section 7.5 hereof and to maintain its quotation of Vail
Securities on any automated quotation systems on which Vail Securities are
quoted in the future pursuant to Section 7.5 hereto.
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Section 11.2 Board of Directors. Vail and the Shareholders agree to take
all actions necessary to cause the Board of Directors to consist of no more than
twenty directors. As long as Foods owns at least 10% of the outstanding Vail
Securities, Vail and the Shareholders agree to take all actions necessary for
Foods to be able to nominate and appoint two directors to the Board of Directors
of Vail, including without limitation Apollo nominating and electing such
directors as Class 1 directors elected by the holders of the Vail Class A Stock.
Section 11.3 No Inconsistent Agreements. Vail hereby covenants and agrees
that it shall not enter into any agreements governing the transfer or
registration of shares of Vail Securities which would materially adversely
affect Foods' rights under this Agreement without Foods' prior written consent.
Section 11.4 Rules 144 and 144A. Vail hereby covenants and agrees that it
will use its reasonable best efforts to file any reports required to be filed by
it under the Securities Act and the Exchange Act and it will take such further
action as Foods may reasonably request, all to the extent required from time to
time to enable Foods to sell its Vail Equity (subject to the terms hereof)
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 or 144A under the Securities Act, as such
Rules may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC.
Section 11.5 Limitations on Holdings of Foods Associates. Foods shall use
its best efforts to cause its Associates and Associates of its Affiliates not to
own, in the aggregate, 2% or more of the outstanding Vail Securities.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto relative to the subject matter hereof, and
supersedes all prior written or oral understandings, agreements, conditions or
representations.
Section 12.2 Headings and Captions. All headings and captions used in
this Agreement are for convenience only,
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and will not be construed to either limit or broaden the language of
this Agreement or any particular section.
Section 12.3 Choice of Law. This Agreement will be governed by and
construed under and in accordance with the laws of the State of New York,
without giving effect to the conflict of laws provisions thereof, except that
all matters relating to the internal affairs of Vail shall be governed by and
construed under and in accordance with the General Corporation Law of the State
of Delaware.
Section 12.4 Venue. Any action or legal proceedings to enforce this
Agreement or any of its terms, or for indemnification and the recovery of losses
as provided for in this Agreement by a party, may be brought and prosecuted in
such court or courts located in the State of New York as provided by law, and
the parties to this Agreement consent to the jurisdiction of said court or
courts and to service of process by registered mail, return receipt requested,
or by any other manner provided by New York law.
Section 12.5 Notices. Any notice or other communication required or
permitted hereunder is deemed delivered when delivered in person, when
transmitted by telecopier (which will also be sent concurrently by certified or
registered mail), on the next Business Day when sent by Federal Express or a
similar overnight delivery service, or on the third Business Day when sent by
registered or certified U.S. mail service as follows:
If to Foods:
▇▇▇▇▇▇▇ Foods, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Vail:
Vail Resorts, Inc. (Delivery other than
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇)
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Vail Resorts, Inc. (Mail Delivery)
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Apollo:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
The parties to this Agreement will promptly notify each other in
the manner provided in this Section 12.5 of any change in their
respective addresses. A notice of change of address will not be
deemed to have been given until received by the addressee.
Section 12.6 Amendments. No changes, modifications, amendments or
additions will be valid unless such be made in writing and signed by or on
behalf of each party.
Section 12.7 Extended Meanings. Words importing the singular number
include the plural and vice versa, and words importing the masculine gender
include the feminine and neuter genders.
Section 12.8 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided each of Foods and Vail shall have the
right to assign its rights and obligations under this Agreement as a whole (i)
in a transaction pursuant to Section 3.2(b), (g) or (h) or (ii) to the surviving
entity in a merger, consolidation, combination or other corporate transaction
involving it if the surviving entity agrees in writing to be bound by the terms
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hereof, and Apollo shall have the right to assign its rights and obligations
under this Agreement to any of its Affiliates or in a bona fide distribution of
its assets following dissolution or liquidation, provided each of the
distributees agrees in writing to be bound by the terms hereof.
Section 12.9 Severability. The invalidity or unenforceability of any
provision hereof in any jurisdiction will not affect the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. To the extent permitted by applicable law, each party waives any
provision of law that renders any provision hereof prohibited or unenforceable
in any respect. If any term, provision, covenant or restriction in this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the parties hereto will use their best efforts to find and employ
an alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction and the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect, in order to achieve the intent of the
parties to the extent possible.
Section 12.10 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which is deemed an original, but all of
which together constitute a single agreement, and it is not necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
Section 12.11 Remedies Cumulative. Except as otherwise expressly limited
herein, the remedies given to any party by this Agreement are in addition to all
remedies under any statute or rule of law. Any forbearance or failure or delay
in exercising any remedy hereunder is not deemed to be a waiver of any other
remedy a party may have under this Agreement.
Section 12.12 Binding Agreement. This Agreement will be deemed effective
and legally binding upon the parties when it has been executed and delivered by
all parties hereto. This Agreement will inure to the benefit of the parties
hereto and their successors and permitted assignees.
Section 12.13 Recapitalizations, Exchanges, Etc., Affecting Vail
Securities. The provisions of this Agreement apply to the full extent set forth
herein with respect to the Vail Equity, to any and all shares of capital stock
of Vail or
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any successor or assign of Vail (whether by merger,
consolidation, sale of assets or otherwise) which may be issued
in respect of or in exchange or substitution for Vail Equity and
will be appropriately adjusted for any stock dividends, splits,
reverse splits, combinations, recapitalizations and the like
occurring after the date hereof.
Section 12.14 Other Agreements. Nothing contained in this Agreement will
be deemed to be a waiver of, or release from, any obligations any party hereto
may have under any other agreement, including, without limitation, the Purchase
Agreement.
Section 12.15 Termination. This Agreement, and all rights and obligations
of each party hereto, shall terminate (i) upon agreement of each of the
Shareholders, (ii) upon the voluntary or involuntary dissolution of Vail, (iii)
upon the sale of all or substantially all of the assets of Vail or upon a Change
of Control of Vail, (iv) when Apollo and its Affiliates own less than 10% of the
shares of Vail Equity owned by Apollo on the date of this Agreement (adjusted
accordingly for any stock splits, stock dividends or similar recapitalizations
by Vail after the date hereof) or (v) when Foods and its Affiliates own less
than 10% of the outstanding Vail Securities. The provisions of Article VIII
hereof shall survive the termination of this Agreement.
Section 12.16 Enforcement. Each of Vail, Apollo and Foods agree that any
breach of the provisions contained in this Agreement by Vail, Apollo and/or
Foods would cause irreparable harm to the other and its Affiliates and
therefore, notwithstanding any right of Vail, Apollo and/or Foods to recover
monetary damages with respect to any such breach (a) as set forth in this
Agreement or (b) at law, Vail, Apollo and Foods will each be entitled to
equitable relief to enjoin any threatened or continuing breach of the other
hereof and, in the event of any action for specific performance, each party
shall waive the defense that a remedy at law would be adequate. If the scope of
any restriction contained in this Agreement is too broad to permit enforcement
to its fullest extent, then such restriction will be enforced to the maximum
extent permitted by law in the manner provided in Section 12.9 hereof. Nothing
herein stated will be construed as prohibiting any party from pursuing any other
remedies available to that party for a breach hereunder, including recovery of
damages.
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Section 12.17 Confidentiality. Each of Foods, Apollo and Vail
acknowledges that the other would be irreparably damaged if confidential
knowledge of its business and affairs were disclosed or utilized on behalf of
any Person. Each of Vail, Apollo and Foods covenants and agrees not to disclose
or use any such confidential information of the other unless such information
has been made available to the public generally (other than in violation of this
Section 12.17) or Vail, Apollo and/or Foods is required to disclose such
information by a governmental body or regulatory agency or by law in connection
with a transaction that is not otherwise prohibited hereby.
Section 12.18 Fiduciary Accounts. Vail, Apollo and Foods each acknowledge
and agree that this Agreement shall apply only to the Vail Securities owned by
Foods and Apollo for its own respective account and does not apply to any Vail
Securities which may be deemed to be beneficially owned or controlled by Foods
or their respective Affiliates and which shares are held in fiduciary accounts
in connection with any pension plans, profit sharing plans or other employee
benefit plans or held in any other fiduciary accounts.
147
IN WITNESS WHEREOF, the parties have executed this
Agreement by an officer thereunto duly authorized, all as of the
day and year first above written.
VAIL RESORTS, INC.
By:
----------------------------
Name:
Title:
▇▇▇▇▇▇▇ FOODS, INC.
By:
----------------------------
Name:
Title:
APOLLO SKI PARTNERS, L.P.
By:
----------------------------
Name:
Authorized Signatory