<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 26, 1998
Booth Creek Ski Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-26091 84-1359604
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
Highway 267 and Northstar Drive
Truckee, California 96160
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (916) 562-1010
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On February 26, 1998, Booth Creek Ski Holdings, Inc. (the "Company")
acquired Loon Mountain Recreation Corporation ("LMRC"), the owner and operator
of the Loon Mountain ski resort located in New Hampshire. The acquisition of
LMRC (the "Loon Mountain Acquisition") was effected pursuant to an Agreement and
Plan of Merger, dated September 18, 1997, as amended as of December 22, 1997,
by and among the Company, as assignee of Booth Creek Ski Group, Inc.
("Parent"), LMRC Acquisition Corp. and LMRC.
The aggregate net purchase price for the Loon Mountain Acquisition,
determined through negotiations between the Company and LMRC, was approximately
$29.0 million (including the assumption of debt which was repaid in connection
with the acquisition). The Loon Mountain Acquisition was financed through (i)
proceeds from the offering at par of $17,500,000 aggregate principal amount of
the Company's 12 1/2% Series C Senior Notes due 2007 (the "Offering") issued
under the Indenture, dated as of March 18, 1997, as amended and supplemented
(the "Indenture"), among the Company, the Guarantors named therein and Marine
Midland Bank, as trustee, (ii) a capital contribution of $10.5 million to the
Company by Parent (the "Equity Financing"), and (iii) available cash on hand
and borrowings under the Amended and Restated Credit Agreement dated as of
March 18, 1997, as amended, among the Company, certain of its subsidiaries and
BankBoston, N.A. (the "Senior Credit Facility").
In connection with the Loon Mountain Acquisition, the Company amended
(the "Senior Credit Facility Amendment") the Senior Credit Facility to, among
other things, increase the maximum borrowing availability thereunder to $25.0
million and modify certain covenants.
Prior to the consummation of the Loon Mountain Acquisition, the Company
solicited consents from the holders of its 12 1/2% Series B Senior Notes due
2007 to, among other things, (i) permit the Offering, (ii) permit the
consummation of the Senior Credit Facility Amendment, (iii) modify the
definitions of "Change of Control" and "Restricted Subsidiary" in the
Indenture, and (iv) make minor modifications to certain other Indenture
provisions. On February 20, 1998, the Company received sufficient consents to
effect such actions and entered into a supplemental indenture modifying the
Indenture, which became effective on February 26, 1998 upon the consummation of
the Loon Mountain Acquisition and Equity Financing.
2
<PAGE> 3
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Page
----
Loon Mountain Recreation Corporation Consolidated
Balance Sheets as of October 26, 1997 and
October 27, 1996 (unaudited).......................... F-1
Loon Mountain Recreation Corporation
Consolidated Statements of Operations and
Retained Earnings for the periods from
May 1, 1997 to October 26, 1997 and
May 1, 1996 to October 27, 1996 (unaudited)........... F-2
Loon Mountain Recreation Corporation
Consolidated Statements of Cash Flows for the
periods from May 1, 1997 to October 26, 1997
and from May 1, 1996 to October 27, 1996 (unaudited).. F-3
Notes to Consolidated Financial Statements
(unaudited)........................................... F-4
Report of Independent Accountants .................... F-5
Loon Mountain Recreation Corporation
Consolidated Balance Sheets as of
April 30, 1997 and 1996............................... F-6
Loon Mountain Recreation Corporation
Consolidated Statement of Operations and Retained
Earnings for the years ended April 30, 1997 and 1996.. F-7
Loon Mountain Recreation Corporation
Consolidated Statement of Cash Flows for the
years ended April 30, 1997 and 1996................... F-8
Notes to Consolidated Financial Statements............ F-9
(b) Pro Forma Financial Information.............................. F-16
Booth Creek Ski Holdings, Inc. Unaudited Pro Forma
Condensed Consolidated Balance Sheet as of
October 31, 1997...................................... F-17
Notes to Unaudited Pro Forma Condensed Balance Sheet.. F-18
3
<PAGE> 4
Booth Creek Ski Holdings, Inc. Unaudited Pro Forma Condensed
Consolidated Statement of Operations for the year ended
October 31, 1997 ............................................. F-19
Notes to Unaudited Pro Forma Statement of Operations ......... F-20
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of September 18, 1997
by and among Booth Creek Ski Group, Inc., LMRC Acquisition
Corp. and Loon Mountain Recreation Corporation (exhibits and
schedules omitted).
2.2 First Amendment to Merger Agreement, dated December 22, 1997,
by and among Booth Creek Ski Group, Inc. LMRC Acquisition
Corp. and Loon Mountain Recreation Corporation.
2.3 Amendment No. 4 to the Credit Agreement, as amended and
restated as of February 23, 1998, among Booth Creek Ski
Holdings, Inc., the Borrowers named therein and BankBoston,
N.A. (exhibits and schedules omitted).
2.4 Securities Purchase Agreement, dated as of February 23, 1998,
by and among Booth Creek Ski Holdings, Inc., the Guarantors
named therein and CIBC Oppenheimer Corp.
2.5 Amended and Restated Securities Purchase Agreement, dated as
of February 26, 1998, among Booth Creek Ski Group, Inc.,
Booth Creek Ski Holdings, Inc. the Subsidiary Guarantors, as
defined therein and each of John Hancock Mutual Life
Insurance Company and CIBC WG Argosy Merchant Fund 2, L.L.C.
4.1 Supplemental Indenture No. 2 to Indenture dated as of
February 20, 1998, by and among Booth Creek Ski Holdings,
Inc., the Guarantors named therein and Marine Midland Bank,
as trustee.
4.2 Supplemental Indenture No. 3 to Indenture dated as of
February 26, 1998, by and among Booth Creek Ski
Holdings, Inc., the Guarantors named therein and
Marine Midland Bank, as trustee.
4.3 Registration Rights Agreement, dated as of February 26, 1998,
by and among Booth Creek Ski Holdings, Inc., the Subsidiary
Guarantors named therein and CIBC Oppenheimer Corp.
99.1 Press Release, dated February 26, 1998, announcing acquisition
of Loon Mountain Recreation Corporation.
4
<PAGE> 5
LOON MOUNTAIN RECREATION CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
OCTOBER 26, OCTOBER 27,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ -- $ 9
Accounts receivable....................................... 69 259
Inventories............................................... 393 397
Prepaid expenses.......................................... 19 36
------- -------
Total current assets.................................... 481 701
Land held for resale........................................ 705 705
Property and equipment, at cost:
Land and land improvements................................ 2,528 2,440
Slopes and trails......................................... 1,569 1,562
Buildings................................................. 8,018 7,396
Ski lifts................................................. 8,727 8,591
Operating equipment....................................... 7,003 6,576
Snowmaking equipment...................................... 7,592 7,554
Construction in progress.................................. 3,281 1,736
------- -------
38,718 35,855
Less accumulated depreciation and amortization............ 18,377 16,591
------- -------
20,341 19,264
Deferred tax assets......................................... 222 326
Other assets................................................ 69 81
------- -------
Total assets............................................ $21,818 $21,077
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 519 $ 191
Current portion of long-term debt......................... 2,865 1,820
Current portion of obligations under capital leases....... 70 128
Accrued expenses.......................................... 636 471
Advance deposits and deferred revenue..................... 812 856
------- -------
Total current liabilities............................... 4,902 3,466
Long-term debt, less current portion........................ 9,482 10,317
Obligations under capital leases, less current portion...... 165 --
Accrued stock options....................................... 55 61
------- -------
Total liabilities....................................... 14,604 13,844
Commitments and contingencies
Stockholders' equity:
Preferred stock, 7% noncumulative, par value $100
(callable at $107 per share); authorized 2,250 shares;
none issued or outstanding at October 26, 1997 (1,461
shares issued at October 27, 1996 including 127 shares
held in treasury)....................................... -- 146
Common stock, par value $.10; authorized 750,000 shares;
issued 671,100 including 80,830 and 81,385 shares held
in treasury............................................. 67 67
Additional paid-in capital................................ 71 61
Retained earnings......................................... 7,619 7,514
Less cost of treasury stock............................... (543) (555)
------- -------
Total stockholders' equity.............................. 7,214 7,233
------- -------
Total liabilities and stockholders' equity.............. $21,818 $21,077
======= =======
</TABLE>
See accompanying notes.
F-1
<PAGE> 6
LOON MOUNTAIN RECREATION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
MAY 1, 1997 TO MAY 1, 1996 TO
OCTOBER 26, OCTOBER 27,
1997 1996
-------------- --------------
<S> <C> <C>
Revenues:
Food and beverage......................................... $ 856 $ 797
Mountain Club............................................. 81 56
Summer programs........................................... 807 821
Real estate commissions................................... 84 83
Retail sales.............................................. 315 347
Other..................................................... 81 95
------- -------
2,224 2,199
Expenses:
Employee costs............................................ 1,991 1,998
Depreciation and amortization............................. 272 259
Utilities................................................. 122 138
Materials, supplies and maintenance....................... 469 499
Purchases for resale...................................... 456 470
Interest.................................................. 467 484
Insurance................................................. 201 255
Marketing................................................. 329 236
Administrative............................................ 167 116
Outside services.......................................... 597 205
U.S. Forest Service lease................................. 18 26
Property taxes............................................ 145 140
Real estate commission.................................... 42 42
Other..................................................... 11 13
------- -------
5,287 4,881
------- -------
Loss before income taxes.................................... (3,063) (2,682)
Income tax benefit.......................................... 1,225 1,073
------- -------
Net loss.................................................... (1,838) (1,609)
Retained earnings, beginning of period...................... 9,535 9,162
Dividends................................................... (78) (39)
------- -------
Retained earnings, end of period............................ $ 7,619 $ 7,514
======= =======
</TABLE>
See accompanying notes.
F-2
<PAGE> 7
LOON MOUNTAIN RECREATION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
MAY 1, 1997 TO MAY 1, 1996 TO
OCTOBER 26, OCTOBER 27,
1997 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................... $(1,838) $(1,609)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.......................... 272 259
Deferred income tax benefit............................ (1,225) (1,073)
Net changes in operating assets and liabilities:
Accounts receivable.................................. 240 (150)
Inventories.......................................... 5 (34)
Prepaid expenses..................................... 17 57
Accounts payable..................................... (27) (351)
Accrued expenses..................................... (241) (452)
Advance deposits and deferred revenue................ 746 801
------- -------
Net cash used in operating activities............. (2,051) (2,552)
------- -------
Cash flows from investing activities:
Purchases of property and equipment....................... (1,902) (835)
------- -------
Net cash used in investing activities............. (1,902) (835)
------- -------
Cash flows from financing activities:
Proceeds from seasonal line of credit..................... 1,998 1,718
Proceeds from revolving credit loan....................... 1,902 1,470
Proceeds from option exercise............................. 1 2
Redemption of preferred stock............................. (133) --
Payment of capital lease obligations...................... 10 --
Payment of dividends...................................... (78) (39)
------- -------
Net cash provided by financing activities......... 3,700 3,151
------- -------
Net decrease in cash........................................ (253) (236)
Cash, beginning of period................................. 253 245
------- -------
Cash, end of period....................................... $ -- $ 9
======= =======
</TABLE>
See accompanying notes.
F-3
<PAGE> 8
LOON MOUNTAIN RECREATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
OCTOBER 26, 1997 AND OCTOBER 27, 1996
1. ORGANIZATION AND BASIS OF PRESENTATION
Loon Mountain Recreation Corporation (the "Company") provides facilities
for skiing and other outdoor recreational activities in Lincoln, New Hampshire.
Loon Realty Corp., a wholly-owned subsidiary of the Company, owns land held for
future development adjacent to land owned or leased by the Company, and also
conducts real estate brokerage operations under the name of Loon Mountain Real
Estate Company.
The accompanying consolidated financial statements as of October 26, 1997
and October 27, 1996 and for the periods from May 1, 1997 to October 26, 1997
and May 1, 1996 to October 27, 1996 are unaudited, but include all adjustments
(consisting only of normal recurring adjustments) which, in the opinion of
management of the Company, are considered necessary for a fair presentation of
the Company's financial position at October 26, 1997 and October 27, 1996, and
its operating results and cash flows for the periods from May 1, 1997 to October
26, 1997 and from May 1, 1996 to October 27, 1996. Due to the highly seasonal
nature of the Company's business, the results for the interim periods are not
necessarily indicative of results for the entire year. Certain information and
footnote disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principles have been omitted
pursuant to generally accepted accounting principles applicable for interim
periods. The unaudited interim financial statements should be read in
conjunction with the following note and the audited financial statements of the
Company as of April 30, 1997 and 1996 and for the years then ended.
2. CONTINGENCIES
Restore: The North Woods v. Department of Agriculture. This case is pending
in the United States District Court for the District of New Hampshire. It was
filed in 1997 under NEPA arising out of the decision by the Forest Service to
allow the Company to install a new pipeline connecting the new infiltration
gallery in the Pemigewasset River to the up-mountain pump house. The
infiltration gallery, which had been properly permitted by the State authorities
and the Army Corps of Engineers, was installed to improve the draw of water from
the river.
Forest Service authorization was required because the pipeline connecting
that infiltration gallery to the up-mountain pump house runs across the forest
land upon which the Company operates. Restore asserted that the Forest Service
permit was improperly issued based upon a variety of procedural grounds. Restore
sought an injunction prohibiting further work on the pipeline and a declaration
that the permit was improperly issued.
The Company intervened as defendant. The Forest Service and the Company
asserted various defenses. On January 20, 1998, the District Court held that the
pipeline may be analyzed and approved by the Forest Service separately from the
South Mountain expansion, but that the Forest Service violated NEPA by failing
to consider the potential environmental effects of the resulting asserted
increase in snowmaking capacity. Whether this failure warrants injunctive relief
will be addressed at a future hearing. The Company would expect the pipeline to
be re-approved following further proceedings by the Forest Service. However, no
assurance can be given regarding the outcome or timing of this litigation or any
resulting Forest Service review.
3. SUBSEQUENT EVENTS
In August, 1997, the Company established an additional revolving credit
agreement for $2,570,000. Interest is fixed at 8.75% and availability reduces
annually through April 30, 2002.
On February 26, 1998, the Company and Booth Creek Ski Holdings, Inc., as
assignee of Booth Creek Ski Group, Inc., executed a plan of merger pursuant
to which Booth Creek Ski Holdings, Inc. acquired all of the outstanding common
shares of the Company for a net purchase price of approximately $29.0 million
(including the assumption of debt which was repaid in connection with the
acquisition).
F-4
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
June 20, 1997
To the Board of Directors of
Loon Mountain Recreation Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and retained earnings and of cash
flows present fairly, in all material respects, the financial position of Loon
Mountain Recreation Corporation and its subsidiary at April 30, 1997 and 1996,
and the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
F-5
<PAGE> 10
LOON MOUNTAIN RECREATION CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30,
----------------------------
1997 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 253,207 $ 245,125
Accounts receivable....................................... 308,987 109,122
Inventories............................................... 397,854 362,384
Prepaid expenses.......................................... 35,681 94,100
------------ ------------
Total current assets................................... 995,729 810,731
------------ ------------
Land held for resale........................................ 704,585 704,585
------------ ------------
Property and equipment, at cost:
Land and land improvements................................ 2,528,129 2,440,615
Slopes and trails......................................... 1,569,151 1,562,261
Buildings................................................. 8,071,249 7,450,389
Ski lifts................................................. 8,678,616 8,591,498
Operating equipment....................................... 6,877,410 6,393,338
Snow making equipment..................................... 7,587,786 7,553,955
Construction in progress.................................. 1,505,082 1,028,971
------------ ------------
36,817,423 35,021,027
Less accumulated depreciation and amortization............ (18,104,712) (16,332,113)
------------ ------------
18,712,711 18,688,914
------------ ------------
Other assets................................................ 69,142 81,220
------------ ------------
Total assets........................................... $ 20,482,167 $ 20,285,450
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 545,720 $ 543,274
Current portion of long-term debt (Note 2)................ -- 101,538
Current portion of obligations under capital leases
(Note 6)............................................... 69,819 129,405
Income taxes payable (Note 7)............................. 95,346 116,306
Accrued expenses (Note 9)................................. 782,071 763,691
Advance deposits.......................................... 66,577 54,555
Current portion of deferred revenue....................... -- 42,370
------------ ------------
Total current liabilities.............................. 1,559,533 1,751,139
------------ ------------
Long-term debt, less current portion (Note 2)............... 8,447,000 8,847,000
Obligations under capital leases, less current portion
(Note 6).................................................. 155,463 --
Deferred income taxes (Note 7).............................. 1,003,453 747,082
Accrued stock options....................................... 56,892 59,890
------------ ------------
Total liabilities...................................... 11,222,341 11,405,111
Commitments and contingencies (Note 9 and 10)
Stockholders' equity (Notes 3 and 5):
Preferred stock, 7% noncumulative, par value $100
(callable at $107 per share); authorized 2,250 shares;
issued 1,461 shares including 127 shares held in
treasury............................................... 146,100 146,100
Common stock, par value $.10; authorized 750,000 shares;
issued 671,100 including 80,830 and 81,385 shares held
in treasury............................................ 67,110 67,110
Additional paid-in capital................................ 67,543 60,616
Retained earnings......................................... 9,534,687 9,162,184
------------ ------------
Less cost of treasury stock (Note 3)........................ 555,614 555,671
------------ ------------
Total stockholders' equity............................. 9,259,826 8,880,339
------------ ------------
Total liabilities and stockholders' equity............. $ 20,482,167 $ 20,285,450
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 11
LOON MOUNTAIN RECREATION CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------
1997 1996
---- ----
<S> <C> <C>
Revenues:
Winter lifts.............................................. $ 8,472,756 $ 8,114,876
Food and beverage......................................... 3,192,605 2,724,752
Ski school................................................ 950,173 880,718
Ski rental and repair..................................... 874,212 720,949
Mountain Club............................................. 157,493 251,522
Summer programs........................................... 821,108 727,123
Real estate commissions................................... 148,814 147,569
Concessions............................................... 150,209 165,110
Retail sales.............................................. 356,906 384,289
Property services......................................... 176,062 186,546
Locker and baskets........................................ 82,901 81,759
Daycare................................................... 186,549 179,081
Other..................................................... 156,448 229,084
----------- -----------
15,726,236 14,793,378
----------- -----------
Expenses:
Employee costs............................................ 5,581,416 5,341,257
Depreciation and amortization............................. 1,884,162 1,752,455
Utilities................................................. 1,327,907 1,289,700
Materials, supplies and maintenance....................... 1,072,836 1,056,828
Purchases for resale...................................... 1,225,112 1,156,491
Interest (net of capitalized interest of $72,507 and
$156,161).............................................. 909,619 762,887
Insurance (Note 9)........................................ 684,271 848,509
Marketing................................................. 742,936 874,455
Administrative............................................ 379,185 301,995
Outside services.......................................... 577,467 514,061
U.S. Forest Service lease (Note 6)........................ 221,394 176,088
Property taxes............................................ 264,123 256,102
Real estate commission.................................... 75,590 73,494
Other..................................................... 39,923 86,426
----------- -----------
14,985,941 14,490,748
----------- -----------
Income before income tax expense............................ 740,295 302,630
Income tax expense (Note 7)................................. 299,455 118,013
----------- -----------
Net income.................................................. 440,840 184,617
Retained earnings, beginning of year........................ 9,162,184 9,034,084
Dividends................................................... 68,337 56,517
----------- -----------
Retained earnings, end of year.............................. $ 9,534,687 $ 9,162,184
=========== ===========
Earnings per share of common and common share equivalent.... $ .72 $ .29
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE> 12
LOON MOUNTAIN RECREATION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 440,840 $ 184,617
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,896,240 1,752,455
Deferred income taxes.................................. 256,371 36,192
Decrease in deferred revenues.......................... (42,370) (42,630)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable........... (199,865) 100,987
Increase in inventory................................ (35,470) (71,853)
(Increase) decrease in prepaid expenses.............. 58,419 (68,879)
Increase in accounts payable......................... 2,446 347,414
Increase in accrued expenses......................... 20,960 103,325
Increase (decrease) in advance deposits.............. 12,022 (2,380)
(Decrease) increase in income taxes payable.......... (20,960) 73,419
Other................................................ (3,120) 8,074
---------- ----------
Net cash provided by operating activities......... 2,385,513 2,420,741
---------- ----------
Cash flows from investing activities:
Proceeds from sale of property and equipment........... 21,725 24,835
Purchases of property and equipment.................... (1,623,562) (5,229,137)
---------- ----------
Net cash used by investing activities............. (1,601,837) (5,204,302)
---------- ----------
Cash flows from financing activities:
Net (repayments of) proceeds from current revolving
credit loan........................................... (400,000) 3,128,660
Repayment on note...................................... (101,538) (101,538)
Proceeds from option exercise.......................... 4,404 --
Decrease in capital lease obligations.................. (210,123) (63,798)
Payment of dividends................................... (68,337) (56,517)
---------- ----------
Net cash (used in) provided by financing
activities...................................... (775,594) 2,906,807
---------- ----------
Net increase in cash.............................. 8,082 123,246
Cash, beginning of year..................................... 245,125 121,879
========== ==========
Cash, end of year........................................... $ 253,207 $ 245,125
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE> 13
LOON MOUNTAIN RECREATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF OPERATIONS
Loon Mountain Recreation Corporation (the "Company" or "LMRC") provides
facilities for skiing and other outdoor recreational activities in Lincoln, New
Hampshire. Food and hospitality services are also provided. Loon Realty Corp., a
wholly-owned subsidiary, owns land adjacent to land owned or leased by Loon
Mountain Recreation Corporation, which is currently held for future development.
Loon Realty Corp. started a real estate brokerage operation in 1989 under the
name of Loon Mountain Real Estate Company.
A major portion of the Company's recreational area is on land leased from
the United States Forest Service under terms of a forty year permit granted on
March 16, 1994. This permit is similar to permits issued to other ski areas and
recreational facilities and annual payments are based upon a percentage of
annual gross revenues. This permit allows for the operation and expansion of the
existing ski area as well as the development of South Mountain.
CONCENTRATION OF BUSINESS
Most of the Company's customers are residents of the New England States,
particularly the Boston area. If this geographical area experienced severe
economic decline, the Company's financial performance could be adversely
impacted. In addition, the Company generates a substantial portion of its
revenues from ski lift ticket sales and associated food and beverage sales. If
the Company experienced unfavorable weather conditions, the Company's financial
performance could be adversely impacted.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Loon Mountain
Recreation Corporation and Loon Realty Corp. All significant intercompany
balances and transactions have been eliminated in consolidation.
INVENTORY
Inventory, consisting of food and other operating supplies, is included at
the lower of cost (first-in, first-out method) or market.
LAND HELD FOR RESALE
Cost of land held for resale consists of the original cost of the land,
plus improvements, less the costs allocated to lots sold. Costs are allocated
equally to lots on the basis of estimated relative fair market value of the
lots. Sales of individual lots are recorded at the time the sale is consummated,
usually at closing. Deposits received are presented as liabilities until the
sale is consummated.
F-9
<PAGE> 14
LOON MOUNTAIN RECREATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Maintenance and repairs are
expensed as incurred. For financial statement purposes, the Company provides for
depreciation and amortization, on the straight-line method over the estimated
useful lives of the assets which range from 20 to 45 years for buildings,
leasehold improvements, lifts and trails and 3 to 15 years for machinery and
equipment. Accelerated cost recovery and accelerated depreciation methods are
used for tax purposes. When an asset is retired or disposed of, the related cost
and accumulated depreciation are removed from the accounts and any gain or loss
is recorded.
Construction in progress represents costs expended primarily to develop
South Mountain. As of the applicable balance sheet date, these assets have not
yet been placed in service.
INTEREST
Interest is expensed as incurred except when it is capitalized in
conjunction with major capital additions and development of properties for
resale. The amounts of interest capitalized are determined by applying current
interest rates to the funds required to finance the construction.
OTHER ASSETS
Included in other assets are debt origination costs that will be recognized
as expenses over the life of the related debt.
INCOME TAXES
The Company accounts for income taxes under Financial Accounting Standards
No. 109 "Accounting for Income Taxes," ("FAS 109"), which mandates the liability
method for computing deferred income taxes. The objective of the liability
method is to recognize the amount of current and deferred taxes payable or
refundable at the financial statement date resulting from all events that have
been recognized in the financial statements based upon the provisions of enacted
tax laws.
OTHER REVENUE
Other revenue consists primarily of special events revenues, employee
housing and television advertising income.
EARNINGS PER SHARE OF COMMON STOCK
The calculation of the earnings per share of common and common share
equivalents was based on the weighted average number of common shares
outstanding during each year (589,992 for 1997 and 599,220 for 1996), including
outstanding options, after provision for the dividend paid on the preferred
stock.
FAIR VALUE OF FINANCIAL INSTRUMENTS
In fiscal 1996, the Company adopted Statement of Financial Accounting
Standards No. 107 ("SFAS 107"), "Disclosures about Fair Value of Financial
Instruments", which requires the Corporation to disclose the fair value of all
financial instruments. The carrying amounts of cash, accounts receivable,
prepaid expense, accounts payable, accrued expenses, and the revolving line of
credit. It was not practicable to estimate the fair value of the 7.5% unsecured
notes and the 8.5% note payable (1996 only) without the Company incurring
excessive costs.
F-10
<PAGE> 15
LOON MOUNTAIN RECREATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
IMPAIRMENT OF LONG LIVED ASSETS
In fiscal 1997, the Company adopted Statement of Financial Accounting
Standards No. 121 ("SFAS 121), "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived to Be Disposed Of," which establishes accounting
standards for the impairment of long-lived assets including intangibles and
goodwill. The objective of SFAS 121 is to assess the Company's long-lived assets
for recoverability using estimated future cash flows expected to result from the
use of the assets and its eventual disposition.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform to the current
year presentation.
2. LONG-TERM DEBT
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revolving credit loan payable to bank through May 2005.
Interest at prime rate plus .75%, 9.25% at April 30, 1997,
is payable monthly. The loan's maximum availability is
$8,334,000 at April 30, 1997. On each subsequent fiscal
year-end the availability reduces by $833,000. The Company
has a one time option to suspend the annual availability
reduction. The note is secured by a first mortgage on all
inventory, equipment and real estate...................... $7,295,000 $7,695,000
7.5% unsecured notes due August 1, 1998 with interest
payable annually. Payment is subordinated to all mortgage
debt. Upon approval of Citizen's Bank, a maximum of 10% of
unsecured notes annually may be redeemed prior to August
1, 1998................................................... 1,152,000 1,152,000
8.5% note payable in annual installments of $101,538, plus
interest. Secured by common stock held in treasury.
Payment is subordinated to all mortgage debt.............. -- 101,538
---------- ----------
8,447,000 8,948,538
Less current portion........................................ -- (101,538)
---------- ----------
$8,447,000 $8,847,000
========== ==========
</TABLE>
Based on the current principal outstanding at April 30, 1997, scheduled
annual principal payments are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ------
<S> <C>
1998........................................................ $ --
1999........................................................ 1,779,000
2000........................................................ 833,000
2001........................................................ 833,000
2002........................................................ 833,000
Thereafter.................................................. 4,169,000
----------
$8,447,000
==========
</TABLE>
The Company has a line of credit of $3,200,000 with interest at prime plus
.25%, 8.75% at April 30, 1997. At April 30, 1997, the outstanding balance on
this line was zero. The line of credit, renewable annually, is a seasonal line
of credit and is secured by a second mortgage on all inventory, equipment and
real estate of the Company.
F-11
<PAGE> 16
LOON MOUNTAIN RECREATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. TREASURY STOCK
At April 30, 1997, the Company had 127 preferred shares and 80,830 common
shares of stock held in treasury with a cost of $13,253 and $542,361,
respectively. At April 30, 1996, the Company had 127 preferred shares and 81,385
common shares of stock held in treasury with a cost of $13,253 and $542,418,
respectively.
4. 401(k)
On January 20, 1995, the Company's Board of Directors approved the
conversion of its previous qualified profit sharing pension plans to a 401(k)
plan. Effective May 1, 1995, the Company rolled over the participant balances
from the Plans into a new 401(k) plan. In fiscal 1997, the Company matched 30%
of the first 6% of employees contributions, totalling $38,672.
5. STOCK OPTION PLAN
During fiscal year 1991, the Company adopted a compensatory stock option
plan for certain key employees which is administered by the Company's Board of
Directors. The options granted are exercisable five years from the date of
grant. The exercise price is determined by the Board of Directors but cannot be
less than 50% of the book value of the common and common share equivalents at
the time of the grant.
On January 20, 1995, the Board of Directors voted to wind up the stock
option plan effective April 30, 1995. Stock options outstanding as of April 30,
1995 are still eligible to be exercised as described in the plan document,
however, no new stock options will be granted under this stock option plan.
<TABLE>
<CAPTION>
OPTIONS EXERCISE PRICE
------- --------------
<S> <C> <C>
Options outstanding at April 30, 1994................. 14,360 $6.16 - $6.75
------
Granted............................................. 7,400 $7.19
Canceled............................................ (2,000) $6.16 - $6.75
------
Options outstanding at April 30, 1995................. 19,760 $6.16 - $7.19
------
Canceled............................................ (750) $6.30 - $7.19
------
Options outstanding at April 30, 1996................. 19,010 $6.16 - $7.19
Exercised........................................... (555) $6.30 - $6.75
Canceled............................................ (3,900) $6.16 - $7.19
------
Options outstanding at April 30, 1997................. 14,555 $6.16 - $7.19
======
</TABLE>
6. LEASES
The Company leases a major portion of the land used for ski trails from the
U.S. Forest Service under a forty year lease which extends to the year 2034.
Annual rental payments are determined using a percentage of gross revenues based
on prior years actual rate. This rate is adjusted annually in September of the
following fiscal year. Total rent expense under this lease was $221,394 in 1997
and $176,088 in 1996.
F-12
<PAGE> 17
LOON MOUNTAIN RECREATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. LEASES -- (CONTINUED)
The Company has various leased equipment under capital leases. The leased
equipment is included with property and equipment in the following categories:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Snow making equipment.................................... $ -- $344,578
Operating equipment...................................... 306,000 104,505
-------- --------
306,000 449,083
Less accumulated depreciation............................ 30,600 362,937
-------- --------
$275,400 $ 86,146
======== ========
</TABLE>
Future minimum annual rentals for property under capital leases are as
follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ------
<S> <C>
1998........................................................ $ 90,140
1999........................................................ 90,140
2000........................................................ 79,500
--------
Total minimum lease obligation.............................. 259,780
Less imputed interest....................................... (34,498)
--------
Present value of minimum lease obligation................. $225,282
========
</TABLE>
The Company is the lessee under an operating lease that has remaining
noncancelable lease payments as of April 30, 1998 of $38,600.
7. INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Current.................................................. $ 43,084 $ 81,821
Deferred................................................. 256,371 36,192
-------- --------
$299,455 $118,013
======== ========
</TABLE>
As of April 30, 1997, the Company's gross deferred tax assets and
liabilities were comprised of the following:
<TABLE>
<S> <C>
Gross deferred tax assets:
Alternative minimum tax credits........................... $ 243,861
Accrued liabilities and reserve........................... 142,885
Other..................................................... 26,953
----------
$ 413,699
==========
Gross deferred tax liabilities:
Depreciation.............................................. $1,342,327
Other..................................................... 74,825
----------
$1,417,152
==========
</TABLE>
At April 30, 1997, the Company has Alternative Minimum Tax (AMT) credit
carryforwards of $243,861 available for future utilization, which do not expire.
F-13
<PAGE> 18
LOON MOUNTAIN RECREATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH FINANCING ACTIVITIES
Capital lease obligations of $306,000 were incurred during the fiscal year
ended April 30, 1997, reflecting new equipment leases.
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash paid during the year for:
Interest............................................... $982,738 $907,326
Income taxes paid...................................... 117,000 63,788
Income taxes received.................................. 101,518 50,000
</TABLE>
9. INSURANCE
In November 1993, the Company obtained workers' compensation through a risk
transfer premium insurance coverage through the State of New Hampshire's
assigned risk pool. In fiscal 1995, the Company ceased its participation in the
assigned risk pool and obtained workers' compensation coverage through a
retrospective policy. This policy calculates the annual premium based on
estimated rates and classifications. Annually, the rates and classifications are
reviewed and adjusted to the actual amounts. Overpayments are refunded to the
Company while underpayments require additional monies to be paid by the Company.
The Company has a workers' compensation reserve of $124,000 and $251,000 at
April 30, 1997 and 1996, respectively. The Company carries general liability
insurance with specific ($25,000) and aggregate ($125,000) deductibles. At April
30, 1997 and 1996, the general liability reserve is $161,000 and $118,000,
respectively. The Company self-insures its employee health and dental benefits
payments up to certain limits. Employees participating in these programs bear a
portion of the cost. Purchased insurance is in effect to cover annual claims
exceeding approximately $30,000 individually or $126,786 in the aggregate. At
April 30, 1997 and 1996, the health and dental reserve is $27,000.
10. CONTINGENCY
On December 19, 1996, the United States Court of Appeals of the First
Circuit partially reversed the District Court's dismissal holding that a
Supplemental Environmental Impact Statement under the National Environmental
Policy Act (NEPA) was required for a planned development to upgrade and expand
skiing terrain and snow making facilities. The Court also required that the U.S.
Forest Service (USFS) obtain a permit under the Clean Water Act for certain
discharges from the Company's snowmaking system.
LMRC and the USFS filed a timely motion for rehearing. On February 13,
1997, the Court of Appeals modified its December 19, 1996 decision to state,
that LMRC, not the USFS, was required to obtain the Clean Water Act permits, and
denied the rehearing. An order from the District Court of New Hampshire on May
5, 1997 required LMRC to halt all construction activities contemplated in LMRC's
Master Development Plan of March 1, 1993 and pursuant to the March 16, 1994
Special Use Permit. The order also required the USFS to proceed in accordance
with the decision of the United States Court of Appeals of the First Circuit and
to prepare such documentation under NEPA as may be required to allow LMRC to
proceed with the related expansion and improvement plans. This process could
take up to two years to complete.
The Court Order went on to require LMRC to discontinue the transferring of
water from the East Branch of the Pemigewasset River to Loon Pond. LMRC is
developing a new withdrawal site in the East Branch of the Pemigewasset River
that will provide snowmaking capacity to the level experienced in the past,
which is currently anticipated to require additional capital expenditures of
approximately $2.3 million.
The ultimate outcome of the above litigation is not known at this point in
time, however, management intends to continue to vigorously defend itself to
ensure completion of the planned development. Approximately $650,000 of the
Company's April 30, 1997 construction in progress balance is directly related to
the
F-14
<PAGE> 19
LOON MOUNTAIN RECREATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. CONTINGENCY -- (CONTINUED)
aforementioned expansion and development plans, and other than these amounts,
management does not believe the ultimate outcome will have a material adverse
impact on its future results of operation or financial condition.
F-15
<PAGE> 20
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited pro forma financial information give effect to a
number of transactions of the Company that have occurred since October 1996.
In November 1996, the Company acquired the Waterville Valley and the
Mt. Cranmore ski resorts in New Hampshire (collectively, the "New Hampshire
Resorts") and in December 1996, the Company acquired Northstar-at-Tahoe,
Sierra-at-Tahoe and the Bear Mountain ski resorts in Southern California
(collectively, the "California Resorts"). In January 1997, the Company
acquired the Summit at Snoqualmie ski resort complex which consists of four
separate and distinct resorts (the "Summit") in the Cascade Mountains of
Washington and in March, 1997, the Grand Targhee ski resort ("Grand Targhee")
in the Grand Tetons in Wyoming.
The Company financed the purchase of the New Hampshire Resorts and the
California Resorts with the proceeds from: (i) $90.0 million of senior
subordinated notes (the "Bridge Notes"); (ii) $10.0 million of subordinated
option notes (the "Hancock Option Notes," and together with the Bridge Notes,
the "Bridge Financing Facilities") issued by Parent; (iii) the issuance of a
promissory note to American Skiing Company in the aggregate principal amount of
$2.75 million (the "ASC Seller Note") and (iv) the investment in the Company of
$40.0 million of equity by Parent, which was funded through the issuance by
Parent of debt and equity securities to John Hancock Mutual Life Insurance
Company ("John Hancock") and affiliates of George N. Gillett, Jr. and CIBC
Oppenheimer Corp. ("CIBC"). Pursuant to a Securities Purchase Agreement dated
as of March 13, 1997, the Company sold (the "1997 Offering") 12 1/2% senior
notes in an aggregate principal amount of $110.0 million to CIBC on March 18,
1997, and an additional $6.0 million aggregate principal amount of such notes
to CIBC on April 25, 1997 pursuant to the exercise of an option by CIBC. The
notes sold pursuant to the 1997 Offering were subsequently exchanged by the
Company in August 1997 for $116.0 million aggregate principal amount of the
Company's 12 1/2% Series B Senior Notes due 2007 (the "Series B Notes") in a
transaction registered under the Securities Act of 1933, as amended. In
addition, concurrently with the consummation of the 1997 Offering, the Senior
Credit Facility, which initially provided borrowing availability of up to $10.0
million, was amended to, among other things, provide a total revolving credit
commitment of $20.0 million. The Company used the proceeds from the 1997
Offering, together with available cash on hand and an additional equity
contribution of $6.5 million by Parent, (i) to repay the Bridge Financing
Facilities, and certain debt assumed or incurred in connection with the
acquisition of the Summit, (ii) to finance the purchase price for the
acquisition of Grand Targhee and repay certain assumed indebtedness in
connection therewith, (iii) to pay fees and expenses in connection with the
1997 Offering and the Senior Credit Facility and (iv) for general corporate
purposes. The acquisitions of the New Hampshire Resorts, the California
Resorts, the Summit, Grand Targhee and Loon Mountain are sometimes collectively
referred to herein as the "Acquisitions." The foregoing transactions, except
for the Loon Mountain Acquisition, are hereinafter referred to collectively as
the "Historical Transactions." The Loon Mountain Acquisition, the Equity
Financing, the Senior Credit Facility Amendment, the Consent Solicitation, the
Offering and the application of the net proceeds therefrom, are hereinafter
referred to collectively as the "Transactions."
The following unaudited pro forma condensed consolidated balance sheet of
the Company gives effect to the Transactions as if they had occurred on October
31, 1997. The following unaudited pro forma condensed consolidated statement
of operations gives effect to the Transactions and the Historical Transactions
as if they had occurred on November 1, 1996.
The pro forma financial information presented below should be read in
conjunction with the separate historical consolidated financial statements of
the Company included in its reports filed under the Securities Exchange Act
of 1934 and the historical consolidated financial statements of LMRC included
elsewhere in this current report on Form 8-K. The pro forma condensed
consolidated financial statements do not purport to be indicative of the
results that actually would have been obtained had the Historical Transactions
or the Transactions occurred as of the assumed dates and for the period
presented and are not intended to be a projection of future results or trends.
The pro forma adjustments, as described in the accompanying Notes to
Unaudited Pro Forma Financial Information, are based on available information
and certain assumptions that management believes are reasonable.
F-16
<PAGE> 21
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF OCTOBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE LOON
COMPANY MOUNTAIN PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash................................................. $ 462 $ -- $ 30,200 (a) $ 462
(28,850)(b)
(1,350)(c)
Other current assets................................. 5,983 481 (150)(b) 6,164
(150)(c)
-------- ------- -------- --------
Total current assets.......................... 6,445 481 (300) 6,626
Property and equipment, net.......................... 123,154 20,341 10,285 (d) 153,780
Real estate held for development and sale............ 11,335 705 195 (e) 12,235
Deferred charges and other assets.................... 13,631 291 1,000 (c) 14,640
(60)(g)
(222)(h)
Goodwill............................................. 31,851 -- 3,227 (f) 35,078
-------- ------- -------- --------
Total Assets.................................. $186,416 $21,818 $ 14,125 $222,359
======== ======= ======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Senior Credit Facility............................... $ 15,000 $ -- $ 2,200 (i) $ 17,200
Current portion of long-term debt.................... 947 2,935 (2,935)(i) 947
Accounts payable and accrued liabilities............. 17,132 1,967 -- 19,099
-------- ------- -------- --------
Total current liabilities..................... 33,079 4,902 (735) 37,246
Long-term debt....................................... 120,380 9,647 7,853 (i) 137,880
Other................................................ 425 55 (55)(g) 4,201
3,776 (h)
Preferred stock of subsidiary........................ 3,125 -- -- 3,125
Shareholder's equity................................. 29,407 7,214 10,500 (a) 39,907
(7,214)(j)
-------- ------- -------- --------
Total Liabilities and Shareholder's Equity.... $186,416 $21,818 $ 14,125 $222,359
======== ======= ======== ========
</TABLE>
F-17
<PAGE> 22
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) Reflects the Offering of $17.5 million of 12 1/2% Series C Senior
Notes due 2007 (the "Senior Notes") at par value, the additional equity
contribution by Parent, and assumed borrowings under the Senior Credit
Facility as follows (dollars in thousands):
<TABLE>
<S> <C>
Senior Notes ............................................... $ 17,500
Equity contribution by Parent............................... 10,500
Assumed borrowings under Senior Credit Facility............. 2,200
--------
Proceeds.......................................... $ 30,200
========
</TABLE>
(b) Reflects the acquisition of LMRC for an an aggregate net purchase
Price of approximately $29.0 million (including the assumption of
debt which was repaid in connection with the acquisition), less a
purchase deposit of $150,000 included in other current assets at
October 31, 1997.
(c) Reflects estimated total fees and expenses of $1.5 million to be
incurred in connection with the Offering ($1.0 million) and Loon
Mountain Acquisition ($500,000), less $150,000 of such costs included
in other current assets at October 31, 1997.
(d) Adjusts property and equipment related to the Loon Mountain Acquisition
to estimated fair value pursuant to purchase accounting. This is
estimated based on a preliminary purchase price allocation which is
subject to final allocation upon completion of valuation procedures.
(e) Adjusts real estate held for development and sale to estimated fair
value pursuant to purchase accounting. This is estimated based on
preliminary purchase price allocation which is subject to final
allocation upon completion of valuation procedures.
(f) Reflects goodwill arising from the acquisition of LMRC. This
is estimated based on a preliminary purchase price allocation which is
subject to final allocation upon completion of valuation efforts.
(g) Reflects the elimination of certain assets and liabilities in purchase
accounting.
(h) Reflects adjustment of the estimated deferred tax liability for
book/tax basis differences related to the stock purchase for the Loon
Mountain Acquisition.
(i) Reflects the following (dollars in thousands):
<TABLE>
<S> <C>
Senior Notes ............................................... $ 17,500
Assumed borrowings under Senior Credit Facility............. 2,200
Repayment of LMRC debt...................................... (12,582)
--------
Net............................................... $ 7,118
========
Reflected in pro forma balance sheet as:
Adjustment to Senior Credit Facility...................... $ 2,200
Adjustment to current portion of long-term debt........... (2,935)
Adjustment to long-term debt.............................. 7,853
--------
Net............................................... $ 7,118
========
</TABLE>
(j) Reflects elimination of historical stockholders' equity of LMRC.
F-18
<PAGE> 23
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CALIFORNIA
RESORTS
-----------
FIBREBOARD
RESORT NEW HAMPSHIRE THE GRAND
GROUP RESORTS SUMMIT TARGHEE
HISTORICAL ----------------------- HISTORICAL HISTORICAL
----------- WATERVILLE MT. ------------ -----------
FOR THE VALLEY CRANMORE FOR THE FOR THE
PERIOD FROM HISTORICAL HISTORICAL PERIOD FROM PERIOD FROM
NOVEMBER 1, ---------- ---------- NOVEMBER 1, NOVEMBER 1,
THE 1996 FOR THE PERIOD FROM 1996 1996
COMPANY THROUGH OCTOBER 28, 1996 THROUGH THROUGH
HISTORICAL DECEMBER 2, THROUGH JANUARY 15, MARCH 18, PRO FORMA
(A) 1996 NOVEMBER 27, 1996 1997 1997 ADJUSTMENTS
---------- ----------- ----------------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Resort Operations............... $ 68,136 $ 1,395 $ 352 $ 45 $3,465 $4,706 $ --
Real Estate and Other........... 3,671 304 -- -- -- -- --
-------- ------- ----- ----- ------ ------ -------
71,807 1,699 352 45 3,465 4,706 --
Operating Expenses:
Resort Operations............... 58,343 4,720 715 245 2,878 4,179 (75)(b)
(22)(c)
Cost of Sales -- Real Estate and
Other......................... 2,799 161 -- -- -- -- --
Depreciation and Amortization... 11,681 6 103 18 208 319 1,078 (d)
-------- ------- ----- ----- ------ ------ -------
Operating Income (Loss).......... (1,016) (3,188) (466) (218) 379 208 (981)
Interest Expense (net)........... 14,912 206 12 15 79 24 1,122 (e)
-------- ------- ----- ----- ------ ------ -------
Pre-tax Income (Loss)............ (15,928) (3,394) (478) (233) 300 184 (2,103)
Income Taxes (Benefit)........... (1,728) (1,358) -- -- -- 37 1,321 (f)
-------- ------- ----- ----- ------ ------ -------
Income (Loss) Before Minority
Interest........................ (14,200) (2,036) (478) (233) 300 147 (3,424)
Minority Interest................ 229 -- -- -- -- -- 52 (g)
-------- ------- ----- ----- ------ ------ -------
Income (Loss) Before
Extraordinary Loss.............. (14,429) (2,036) (478) (233) 300 147 (3,476)
Extraordinary Loss............... 2,664 -- -- -- -- -- (2,664)(h)
-------- ------- ----- ----- ------ ------ -------
Net Income (Loss)................ $(17,093) $(2,036) $(478) $(233) $ 300 $ 147 $ (812)
======== ======= ===== ===== ====== ====== =======
OTHER DATA:
EBITDA(m)........................ $ 12,902 $(3,049) $(363) $(200) $ 587 $ 527 $ 97
Non-cash Cost of Real Estate and
Other........................... $ 2,237 $ 133 $ -- $ -- $ -- $ -- $ --
<CAPTION>
LOON
MOUNTAIN
HISTORICAL
-----------
YEAR
ENDED
PRO OCTOBER 31, PRO FORMA PRO
FORMA 1997 ADJUSTMENTS FORMA
-------- ----------- ----------- --------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Resort Operations............... $ 78,099 $15,751 $ -- $ 93,850
Real Estate and Other........... 3,975 -- -- 3,975
-------- ------- ------- --------
82,074 15,751 -- 97,825
Operating Expenses:
Resort Operations............... 70,983 12,602 (586)(b) 82,999
Cost of Sales -- Real Estate and
Other......................... 2,960 -- -- 2,960
Depreciation and Amortization... 13,413 1,897 714 (i) 16,024
-------- ------- ------- --------
Operating Income (Loss).......... (5,282) 1,252 (128) (4,158)
Interest Expense (net)........... 16,370 893 1,571 (j) 18,834 (l)
-------- ------- ------- --------
Pre-tax Income (Loss)............ (21,652) 359 (1,699) (22,992)
Income Taxes (Benefit)........... (1,728) 147 (3,923)(k) (5,504)
-------- ------- ------- --------
Income (Loss) Before Minority
Interest........................ (19,924) 212 2,224 (17,488)
Minority Interest................ 281 -- -- 281
-------- ------- ------- --------
Income (Loss) Before
Extraordinary Loss.............. (20,205) 212 2,224 (17,769)
Extraordinary Loss............... -- -- -- --
-------- ------- ------- --------
Net Income (Loss)................ $(20,205) $ 212 $ 2,224 $(17,769)
======== ======= ======= ========
OTHER DATA:
EBITDA(m)........................ $ 10,501 $ 3,149 $ 586 $ 14,236 (m)
Non-cash Cost of Real Estate and
Other........................... $ 2,370 $ -- $ -- $ 2,370
</TABLE>
(see footnotes on following pages)
F-19
<PAGE> 24
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(a) The Company's historical consolidated statement of operations for the year
ended October 31, 1997 includes the results of operations for the following
acquisitions since the effective dates of such acquisitions:
<TABLE>
<S> <C>
California Resorts....................................... December 3, 1996
New Hampshire Resorts.................................... November 27, 1996
The Summit............................................... January 15, 1997
Grand Targhee............................................ March 18, 1997
</TABLE>
(b) The following adjustments have been made to reduce historical operating
expenses:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
THE ACQUISITIONS (EXCLUDING THE LOON MOUNTAIN ACQUISITION)
Replacement of executive management....................... $ 52
Lease modification........................................ 23
----
$ 75
====
THE LOON MOUNTAIN ACQUISITION
Replacement of executive management....................... $120
Removal of directors' fees................................ 70
Removal of divestiture-related expenses................... 396
----
$586
====
</TABLE>
Replacement of executive management represents elimination of non-recurring
executive management compensation and benefits paid to (i) former owners of
Ski Lifts, Inc. and Grand Targhee Incorporated and (ii) the former owners of
LMRC. The responsibilities of these individuals will be absorbed by
existing Company management.
Lease modification represents elimination of lease expenses for the Teewinot
Lodge, which was acquired by the Company in the Grand Targhee Acquisition.
Removal of directors' fees represents elimination of directors' fees paid to
directors of LMRC, which will not be incurred by the Company.
Removal of divestiture-related expenses represents elimination of
non-recurring legal and accounting fees that were incurred to facilitate the
sale of LMRC.
(c) Represents corporate management fee allocations from Fibreboard Corporation
($70,000) for the period from November 1, 1996 through December 2, 1996 and
American Skiing Company and S-K-I Limited for Waterville Valley ($10,000)
for the period from October 28, 1996 through November 27, 1996 net of (i)
the management fees that would have been paid to Booth Creek, Inc. pursuant
to the Management Agreement ($29,000) and (ii) the estimated amounts for
certain corporate expenses if the Company had operated on a stand-alone
basis ($29,000).
(d) Historical depreciation and amortization for periods prior to the respective
resort acquisition dates has been adjusted to reflect post-acquisition date
assumptions. Pro forma depreciation and amortization charges relate to the
estimated fair value assigned using purchase accounting. Land improvements
and buildings have been assigned a 20 year life, machinery and equipment 3
to 15 year lives, and goodwill a 15 year life.
(e) Pro forma interest expense includes interest on $116.0 million of Series B
Notes at 12.5%, the Senior Credit Facility at 9%, the ASC Seller Note at
12%, certain capital leases and other debt at varying rates and amortization
of $7.0 million of deferred financing fees (amortized generally over a 10
year period).
F-20
<PAGE> 25
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS -- (CONTINUED)
(f) Adjusts income tax provision to reflect the benefit of operating losses to
the extent of recorded deferred tax liabilities.
(g) Reflects cumulative preferred stock dividend of 9% on the Ski Lifts
Preferred Stock.
(h) Eliminates historical extraordinary loss on early retirement of debt.
(i) Historical depreciation and amortization for periods prior to the
acquisition date has been adjusted to reflect post-acquisition date
assumptions. Pro forma depreciation and amortization charges relate to the
estimated fair value assigned using purchase accounting. Land improvements
and buildings have been assigned a 20 year life, machinery and equipment 3
to 20 year lives, and goodwill a 15 year life. These charges are estimates
based on preliminary purchase price allocations which are subject to final
allocations pursuant to valuation efforts.
(j) Pro forma interest expense includes interest on $116.0 million of Series B
Notes at 12.5%, $17.5 million of Notes offered hereby at 12.5%, the Senior
Credit Facility at 9%, the ASC Seller Note at 12%, certain capital leases
and other debt at varying rates and amortization of $8.0 million of deferred
financing costs (amortized generally over a 10 year period).
(k) Adjusts income tax provision to reflect the benefit of operating losses to
the extent of recorded deferred tax liabilities.
(l) Pro forma cash interest expense would be approximately $17.9 million which
excludes $971,000 in amortization of deferred financing fees.
(m) The pro forma financial data includes information on "EBITDA". EBITDA
represents income from operations before depreciation, depletion and
amortization expense and the non-cash cost of real estate sales.
Although EBITDA is not a measure of performance under United States
generally accepted accounting principles, the term is presented because
management believes it provides useful information regarding a company's
ability to incur and service debt. EBITDA should not be considered in
isolation or as a substitute for net income, cash flows from operating
activities and other income or cash flow statement data prepared in
accordance with generally accepted accounting principles, or as a measure
of profitability or liquidity. In addition, "EBITDA" and "EBITDA
margin" as determined by the Company may not be comparable to related or
similar measures as reported by other companies and do not represent funds
available for discretionary use.
Pro forma EBITDA does not reflect certain additional adjustments which
management believes are relevant in evaluating the future operating
performance of the Company. The following additional adjustments,
which eliminate the impact of certain nonrecurring charges and reflect the
estimated impact of management's business and operating strategy are based
on estimates and assumptions made and believed to be reasonable by the
Company and are inherently uncertain and subject to change. The following
calculation should not be viewed as indicative of actual or future results.
The following table reflects the effects of these items:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1997
----------------
(DOLLARS IN THOUSANDS)
<S> <C>
Pro forma EBITDA........................................... $14,236
Additional adjustments:
Reduction in insurance premiums....................... 242
In-house operation of certain ski related services.... 435
One-time charges at Grand Targhee..................... 54
Reduction in LMRC expenses............................ 293
-------
Total additional adjustments..................... 1,024
-------
Adjusted pro forma EBITDA.................................. $15,260
=======
</TABLE>
Reduction of insurance premiums represents elimination of insurance
expenses as a result of a new insurance package entered into by the
Company, which has reduced insurance premiums as a result of the
consolidation of the Company's resorts.
F-21
<PAGE> 26
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS -- (CONTINUED)
In-house operation of certain ski-related services represents the increase
in revenues and elimination of expenses related to services performed by
outside vendors at the Summit that will be performed by the Company and
which are performed by the Company at its other resorts.
One-time charges at Grand Targhee represents elimination of the cost
associated with abandoning a land exchange project.
Reduction in LMRC expenses represents the estimated labor,
marketing and purchasing efficiencies expected to be realized subsequent to
the acquisition by the Company.
F-22
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOOTH CREEK SKI HOLDINGS, INC.
Date March 9, 1998 By /s/ Nanci N. Northway
-------------- ---------------------
Nanci N. Northway
Vice President and
Chief Financial Officer
<PAGE> 28
EXHIBIT INDEX
2.1 Agreement and Plan of Merger dated as of September 18, 1997 by and
among Booth Creek Ski Group, Inc., LMRC Acquisition Corp. and Loon
Mountain Recreation Corporation (exhibits and schedules omitted).
2.2 First Amendment to Merger Agreement, dated December 22, 1997, by and
among Booth Creek Ski Group, Inc. LMRC Acquisition Corp. and Loon
Mountain Recreation Corporation.
2.3 Amendment No. 4 to the Credit Agreement, as amended and restated as of
February 23, 1998, among Booth Creek Ski Holdings, Inc., the Borrowers
named therein and BankBoston, N.A.
2.4 Securities Purchase Agreement, dated as of February 23, 1998, by and
among Booth Creek Ski Holdings, Inc., the Subsidiary Guarantors named
therein and CIBC Oppenheimer Corp.
2.5 Amended and Restated Securities Purchase Agreement, dated as of
February 26, 1998, among Booth Creek Ski Group, Inc., Booth Creek Ski
Holdings, Inc., the Subsidiary Guarantors, as defined therein and each
of John Hancock Mutual Life Insurance Company and CIBC WG Argosy
Merchant Fund 2, L.L.C. (exhibits and schedules omitted).
4.1 Supplemental Indenture No. 2 to Indenture dated as of February 20,
1998, by and among Booth Creek Ski Holdings, Inc., the Guarantors named
therein and Marine Midland Bank, as trustee.
4.2 Supplemental Indenture No. 3 to Indenture dated as of February 26,
1998, by and among Booth Creek Ski Holdings, Inc., the Guarantors named
therein and Marine Midland Bank, as trustee.
4.3 Registration Rights Agreement, dated as of February 26, 1998, by and
among the Booth Creek Ski Holdings, Inc., the Subsidiary Guarantors
named therein and CIBC Oppenheimer Corp.
99.1 Press Release, dated February 26, 1998, announcing acquisition of Loon
Mountain Recreation Corporation.
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 18, 1997
BY AND AMONG
BOOTH CREEK SKI GROUP, INC.,
LMRC ACQUISITION CORP.
AND
LOON MOUNTAIN RECREATION CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS............................................................1
1.1 General.......................................................1
1.2 Definitions...................................................1
1.3 Interpretation................................................9
ARTICLE II
THE MERGER.............................................................9
2.1 The Merger....................................................9
2.2 Conversion of Shares Upon the Merger.........................10
2.3 Company Common Stock.........................................11
2.4 Appraisal Rights.............................................13
2.5 Options......................................................13
2.6 Articles of Incorporation....................................13
2.7 By-Laws......................................................14
2.8 Directors and Officers.......................................14
2.9 Effect of the Merger.........................................14
2.10 Company Closing Expenses.....................................14
2.11 Escheat......................................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................14
3.1 Corporate Status; Due Authorization; Authority
of the Company; Enforceability...............................15
3.2 Accounts Receivable..........................................15
3.3 Trade Names, Trademarks and Copyrights.......................16
3.4 No Patent Rights.............................................16
3.5 Ski and Other Passes.........................................16
3.6 Contracts....................................................16
3.7 Compliance with Laws.........................................17
3.8 Litigation...................................................17
3.9 Personnel Identification and Compensation....................17
3.10 Existing Employment Contracts................................17
3.11 Capitalization; Subsidiaries.................................18
3.12 Shareholder List; Shareholder Agreements.....................19
3.13 Forest Service Permits.......................................19
3.14 Environmental................................................19
3.15 Certain Transactions.........................................22
3.16 Employee Benefit Matters, Plans and Claims...................22
</TABLE>
i
<PAGE> 3
3.17 Tax Matters................................................24
3.18 Inventories................................................27
3.19 Title to Assets; Liens.....................................27
3.20 Real Property..............................................27
3.21 Improvements...............................................28
3.22 Zoning.....................................................28
3.23 No Commitments.............................................29
3.24 Continued Use of Real Property.............................29
3.25 Water Rights...............................................29
3.26 Condition of Assets........................................29
3.27 Consents...................................................29
3.28 Licenses and Permits.......................................30
3.29 No Alternative Transactions................................30
3.30 Occupational Safety and Health.............................30
3.31 Insurance..................................................30
3.32 Financial Statements.......................................30
3.33 Undisclosed Liabilities....................................30
3.34 Conduct of Business Since Reference Balance Sheet Date.....31
3.35 Broker's or Consultant's Fees..............................32
3.36 Banking Arrangements.......................................32
3.37 Powers of Attorney.........................................32
3.38 Disclosure.................................................32
3.39 Proxy Statement............................................32
3.40 Shareholders...............................................33
3.41 Expansion..................................................33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND ACQUISITION SUB.................................................33
4.1 Corporate Status...........................................33
4.2 Due Authorization..........................................33
4.3 Authority of Purchaser.....................................33
4.4 Enforceability.............................................34
4.5 Consents...................................................34
4.6 Broker's or Consultant's Fees..............................34
4.7 Litigation.................................................34
4.8 Business Activities of Acquisition Sub.....................34
ARTICLE V
PRE-CLOSING COVENANTS...............................................34
5.1 Required Consents..........................................34
5.2 Conduct of the Business....................................35
5.3 Right of Inspection; Access to Books and Personnel.........35
5.4 Notification of Material Adverse Events....................36
ii
<PAGE> 4
5.5 Disclosure Schedule and Supplemental Disclosures...........36
5.6 Title Insurance and Surveys................................36
5.7 Code Section 1445 Withholding..............................37
5.8 Exclusivity................................................38
5.9 Required Filings...........................................38
5.10 Shareholder Approval and Dissenting Shares.................38
5.11 Interim Financial Statements...............................39
5.12 Earnest Money Deposit......................................39
5.13 Company Preferred Stock....................................40
5.14 Exchange Agent Agreement...................................41
5.15 Marketing Agreement........................................41
ARTICLE VI
CONDITIONS PRECEDENT TO PURCHASER'S
AND ACQUISITION SUB'S OBLIGATIONS...................................41
6.1 Obligations to be Satisfied on or Prior to Closing Date....41
6.2 Procedure for Failure to Satisfy Conditions................44
ARTICLE VII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS..........44
7.1 Obligations to Be Satisfied on or Prior to Closing Date....44
7.2 Procedure for Failure to Satisfy Conditions................45
ARTICLE VIII
CLOSING.............................................................45
8.1 Time and Place.............................................45
8.2 Closing Transactions.......................................45
8.3 Deliveries by the Company to Purchaser
and Acquisition Sub........................................45
8.4 Deliveries by Purchaser and Acquisition
Sub to the Company.........................................47
ARTICLE IX
OTHER AGREEMENTS....................................................48
9.1 Further Assurance..........................................48
9.2 Confidentiality............................................48
9.3 Employment Matters.........................................49
9.4 Sales and Transfer Taxes...................................49
9.5 Purchaser Non-Solicitation.................................49
9.6 Section 338 of the Code....................................50
ARTICLE X
INDEMNIFICATION.....................................................50
10.1 Indemnification by Merger Consideration Recipients.........50
10.2 Indemnification by Purchaser...............................51
10.3 Procedure for Indemnification..............................51
iii
<PAGE> 5
10.4 Limitations on Indemnity...................................52
10.5 Escrow Agreement...........................................54
10.6 Payment....................................................54
10.7 Set-Off....................................................54
ARTICLE XI
TERMINATION.........................................................55
11.1 Rights to Terminate........................................55
11.2 Effects of Termination.....................................55
ARTICLE XII
THE REPRESENTATIVE..................................................56
12.1 Appointment................................................56
12.2 Authorization..............................................56
12.3 Irrevocable Appointment....................................57
12.4 Resignation and Removal....................................57
12.5 Purchaser's Reliance.......................................58
12.6 Exculpation and Indemnification............................58
ARTICLE XIII
MISCELLANEOUS PROVISIONS............................................58
13.1 Public Announcements.......................................58
13.2 Post-Closing Deliveries....................................58
13.3 Notices....................................................58
13.4 Assignment.................................................60
13.5 Benefit of the Agreement...................................60
13.6 Exhibits and Schedules.....................................60
13.7 Headings...................................................60
13.8 Entire Agreement...........................................60
13.9 Modifications and Waivers..................................61
13.10 Counterparts...............................................61
13.11 Severability...............................................61
13.12 GOVERNING LAW..............................................61
13.13 Expenses...................................................61
13.14 Waiver of Jury Trial.......................................61
ARTICLE XIV
GUARANTEE...........................................................62
iv
<PAGE> 6
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Exchange Agreement
Exhibit C Form of Option Cancellation Agreement
Exhibit D Articles of Merger
Exhibit E Company Closing Expenses
Exhibit F Form of Shareholder Agreement
Exhibit G Opinion of Company's, Subsidiary's and
Representative's Counsel
Exhibit H Form of Severance Agreement
Exhibit I Form of Withholding Certificates
Exhibit J Opinion of Purchaser and Acquisition Sub's Counsel
DISCLOSURE SCHEDULES
Schedule 1.1 Expansion of Company's Business
Schedule 3.3 Trade Names, Trademarks and Copyrights
Schedule 3.5 Ski and Other Passes
Schedule 3.6 Contracts, Indebtedness and Promissory Notes
Schedule 3.7 Compliance with Laws
Schedule 3.8 Litigation
Schedule 3.9 Personnel Identification and Compensation
Schedule 3.10 Existing Employment Contracts
Schedule 3.11 Copy of Stock Option Plan; List of Option Holders
with Details
Schedule 3.12 Shareholder List
Schedule 3.13 Forest Service Permits
Schedule 3.14.2 Compliance with Environmental Laws
Schedule 3.14.4 Release of Hazardous Substances
Schedule 3.14.5 Environmental and Related Permits
Schedule 3.14.6 Environmental Proceedings
Schedule 3.14.7 Tanks, Asbestos and PCB's
Schedule 3.15 Certain Transactions - Non-ownership
Schedule 3.16 Employee Benefit Matters, Plans and Claims
Schedule 3.17(j) Joint Ventures and Partnerships
Schedule 3.18 Inventories
Schedule 3.19 Title to Assets; Liens
Schedule 3.20 Real Property
Schedule 3.23 Commitments With Utility Companies, School
Districts, Water Districts or Improvement Districts
Schedule 3.25 Water Rights
Schedule 3.26 Equipment & Improvements
Schedule 3.27 Consents
Schedule 3.28 Licenses and Permits
v
<PAGE> 7
Schedule 3.30 Occupational Safety and Health Violations and
Investigations
Schedule 3.31 Insurance
Schedule 3.32 Financial Statements
Schedule 3.34 FY 1997-98 Operating and Capital Budget
Schedule 3.36 Banking Arrangements
Schedule 9.3 Parties to Severance Agreements, Length of Severance
Period, Base Salary & Addresses
vi
<PAGE> 8
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made
as of this 18th day of September, 1997, by and among BOOTH CREEK SKI GROUP,
INC., a Delaware corporation (together with its successors and permitted
assigns, "Purchaser"), LMRC ACQUISITION CORP., a New Hampshire corporation and
an indirect wholly-owned subsidiary of Purchaser ("Acquisition Sub"), and LOON
MOUNTAIN RECREATION CORPORATION, a New Hampshire corporation (the "Company").
RECITALS
WHEREAS, the Company has authorized capital stock of (i) 750,000 shares
of common stock, $.10 par value per share ("Company Common Stock"), of which
590,470 shares are outstanding as of the date hereof; and (ii) 2,250 shares of
7% non-cumulative preferred stock, $100 par value per share ("Company Preferred
Stock"), of which 1,334 shares are outstanding as of the date hereof;
WHEREAS, under the Company's Non-Qualified Stock Option Plan dated June
22, 1990 (the "Stock Option Plan"), options (including those options not yet
fully vested and/or exercisable in accordance with their terms) to purchase
14,155 shares of Company Common Stock (the "Option Shares") are outstanding as
of the date hereof and the Company is hereby agreeing that it will not issue any
additional options thereunder;
WHEREAS, the Company and the Subsidiary (as hereinafter defined) are
engaged in the ownership and operation of a ski resort by the name of "Loon
Mountain," together with a real estate and development company and other
facilities and properties, all located in the White Mountains in Lincoln, New
Hampshire (the "Business"); and
WHEREAS, Purchaser, Acquisition Sub and the Company desire to have
Acquisition Sub merge with and into the Company pursuant to a transaction in
which the separate existence of Acquisition Sub will cease, the Company shall
continue as the surviving corporation and become an indirect, wholly-owned
subsidiary of Purchaser, and (i) each share of Company Common Stock (except for
shares, if any, with respect to which the holder thereof shall have perfected
dissenter's rights) will be converted into a right to receive the Common Share
Merger Consideration, (ii) each share of Company Common Stock with respect to
which the holder thereof shall have perfected dissenter's rights shall be
converted into the right to receive the fair value for such share as determined
pursuant to New Hampshire Law and (iii) each outstanding Option will be
converted into a right to receive the Option Merger Consideration.
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual agreements and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Purchaser, Acquisition Sub, and the Company hereby agree as
follows:
<PAGE> 9
ARTICLE I
DEFINITIONS
1.1 General. Each term defined in the first paragraph of this Agreement
and in the Recitals shall have the meaning set forth above whenever used herein,
unless otherwise expressly provided or unless the context clearly requires
otherwise.
1.2 Definitions. As used herein, the following terms shall have the
meanings ascribed to them in this Section 1.2:
Accounts Receivable. All present and future rights to payment
for goods sold or services rendered whether or not earned by performance,
including, without limitation, all accounts or notes receivable owned or held by
the Company or the Subsidiary.
Acquisition Sub. As defined in the Recitals hereto.
Acquisition Sub Stock. All of the issued and outstanding
shares of capital stock of Acquisition Sub, consisting of 100 shares of common
stock, $.01 par value.
Adverse Consequences. All allegations, charges, complaints,
actions, suits, proceedings, hearings, investigations, claims, demands,
judgments, orders, decrees, stipulations, injunctions, damages, dues, penalties,
fines, costs, amounts paid in settlement, Liabilities, Taxes, interest, Liens,
losses, expenses and fees, including all accounting, consultant and reasonable
attorneys' fees and court costs, costs of expert witnesses and other expenses of
litigation.
Affiliate. As set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
Agreement. This Agreement and Plan of Merger, together with all
Exhibits and Disclosure Schedules referred to herein, as amended, modified or
supplemented from time to time in accordance with the terms hereof.
Aggregate Merger Consideration. Seventeen Million Nine Hundred
Ninety-Nine Thousand Nine Hundred and Seventy Dollars ($17,999,970) (subject to
the Price Adjustment, if any, required pursuant to Section 2.2(b)).
Aggregate Preferred Redemption Consideration. One Hundred Forty-Two
Thousand Seven Hundred Thirty-Eight Dollars ($142,738).
Allocable Portion. The ratable portion of the Holdback attributable
to any share of Company Common Stock (other than Dissenting Shares) or any
Option Share derived by
-1-
<PAGE> 10
multiplying the Holdback times the fraction equal to the number of such shares
of Company Common Stock (other than Dissenting Shares) or Option Shares being
considered over the aggregate number of outstanding shares of Company Common
Stock (other than Dissenting Shares) and the number of Option Shares that could
be issued upon exercise of all remaining Options on the Closing Date.
Authority. Any governmental, regulatory or administrative
body, agency or authority, any court or judicial authority, any arbitrator or
any public or governmental regulatory authority, whether foreign, federal, state
or local.
Business. As defined in the Recitals hereto.
CERCLA. Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601, et seq.
Closing. The closing of the Merger.
Closing Date. Five (5) days following the date on which
Purchaser and the Company agree all closing conditions have been satisfied (or
will be satisfied on the Closing Date) or waived or such other date as Purchaser
and the Company may mutually agree in writing, in either case, upon which the
Closing shall occur.
Code. Internal Revenue Code of 1986.
Common Share Merger Consideration. The quotient obtained by
dividing (a) the Aggregate Merger Consideration (as adjusted) by (b) the sum of
the number of issued and outstanding shares of Company Common Stock plus the
number of Option Shares that could be issued upon the vesting and exercise of
all remaining Options on the Closing Date.
Company. As defined in the Recitals hereto.
Company Closing Expenses. All attorneys' fees and other legal
costs and expenses, accountants' fees and other accounting costs and expenses
and investment banker fees and other investment banking costs and expenses
incurred by the Company in connection with its negotiation, preparation and
execution of this Agreement and its consummation of the Merger and the other
transactions contemplated hereby.
Company Common Stock. As defined in the Recitals hereto.
Company's Knowledge or Knowledge. The knowledge after due
inquiry and reasonable investigation of each of the senior executives of the
Company, including, without limitation, Samuel S. Adams, Alexander J. Kalinski,
David Anderson, Ruth Berkeley, Nancy Donahue, Rich Kelley, Ted Sutton and David
Talbot.
-2-
<PAGE> 11
Company Preferred Stock. As defined in the Recitals hereto.
Contracts. All contracts, leases, subleases, arrangements,
commitments, promissory notes, loan or credit agreements, instruments and other
agreements of the Company or the Subsidiary, including all customer agreements,
vendor agreements, purchase orders, installation and maintenance agreements,
computer software licenses, hardware lease or rental agreements, contract claims
and all other arrangements and understandings related to the Business,
including, without limitation, those items which are listed on Schedule 3.6.
Dissenting Shares. The shares of Company Common Stock held by
persons who perfect dissenter's rights under New Hampshire Law with respect to
such Company Common Stock.
DOJ. United States Department of Justice.
ENVIRON Environmental Site Assessment Report. The Phase I
Environmental Site Assessment Report dated July, 1997, prepared by ENVIRON
International Corporation with respect to the Company.
Equipment and Improvements. All ski lifts, pylons, towers,
ski-lift machinery and equipment, snow-cats, groomers, snow-making machinery and
equipment, lighting equipment, ski trail improvements, mountain restaurants,
signs, snow-making facilities and other facilities and structures, buildings,
installations, fixtures, improvements, betterments and additions located on or
within the Real Property, machinery, equipment, service trucks, shuttle busses,
golf carts, snowmobiles, bicycles, vehicles, tractors, spare tires and parts,
tools, appliances, furniture, office furniture, fixtures, office supplies and
office equipment, computers, computer terminals and printers, computer software,
telephone systems, telecopiers and photocopiers, and other tangible personal
property of every kind and description that are located upon or within the Real
Property, which are owned or leased by the Company or the Subsidiary, or are
utilized in connection with the Company's or the Subsidiary's operations upon or
within the Real Property, including, without limitation, the items listed on
Schedule 3.26.
ERISA. Employee Retirement Income Security Act of 1974.
Escrow Account. The escrow account to be established by the
Escrow Agent pursuant to the Escrow Agreement, into which the Holdback delivered
to the Escrow Agent shall be placed.
Escrow Agent. Initially, Citizens Bank New Hampshire, a New
Hampshire guaranty savings bank, and any successor or replacement thereof
appointed in accordance with the Escrow Agreement.
Escrow Agreement. The Escrow Agreement among the Escrow Agent,
the Purchaser and the Representative in substantially the form of Exhibit A
hereto as amended from time to time
-3-
<PAGE> 12
after the Closing Date, which Escrow Agreement shall govern the establishment
of, and the investment and disposition of, the funds held in the Escrow Account.
Exchange Account. The trust account to be established by the
Exchange Agent pursuant to the Exchange Agreement, into which the amounts to be
delivered to the Exchange Agent pursuant to Section 2.3 shall be placed.
Exchange Agent. Initially, Citizens Bank New Hampshire, a New
Hampshire guaranty savings bank, and any successor or replacement thereof
appointed in accordance with the Exchange Agreement.
Exchange Agreement. The Exchange Agreement among the Exchange
Agent, the Purchaser, the Company and the Representative in substantially the
form of Exhibit B hereto as amended from time to time after the Closing Date,
which Exchange Agreement shall govern the establishment of, and the investment
and disposition of, the funds held in the Exchange Account.
Existing Title Commitment. The mortgagee title commitment,
covering approximately 455 acres, issued to Citizens Bank of New Hampshire by
Lawyer's Title Insurance Company dated August 25, 1997.
Expansion. The Company's plan and proposal to expand its
facilities, including, without limitation, expansion into the south portion of
the mountain as described on Schedule 1.1.
Financial Statements. The audited balance sheets and income
statements and statements of cash flow of the Company and its subsidiaries, on a
consolidated basis, for the years ended April 30, 1996 and April 30, 1997,
together with the unaudited balance sheet and income statement and statement of
cash flow of the Company and its subsidiaries, on a consolidated basis, for the
three (3) month period ended July 27, 1997, copies of which are attached hereto
as Schedule 3.32.
Forest Service. The United States Forest Service.
FTC. United States Federal Trade Commission.
HSR Act or Hart-Scott-Rodino Act. The Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
Holdback. One Million Five Hundred Thousand Dollars
($1,500,000); provided, however, that to the extent that holders of more than
ten percent (10%) of the shares of Company Common Stock outstanding ("Excess
Dissenters' Shares") shall have perfected dissenter's rights under New Hampshire
Law, and the Purchaser nonetheless elects to waive Section 6.1(m) and proceed
with the Merger, then the Holdback shall be reduced dollar for dollar in an
amount equal to the Allocable Portion of the Holdback which would have been
attributable to such Excess
-4-
<PAGE> 13
Dissenters' Shares if the holders of such Excess Dissenters' Shares had not
caused such shares to become Dissenting Shares.
Initial Option Cash Payment. An amount equal to the Option
Merger Consideration less the Allocable Portion of the Holdback attributable to
such Option based on the number of Option Shares covered thereby.
Initial Per Common Share Cash Payment. An amount equal to the
Common Share Merger Consideration less the Allocable Portion of the Holdback
attributable to such share of Company Common Stock.
Intangibles. All trade names, trademarks, service marks,
copyrights, trade secrets, registrations and applications for any thereof, and
all technical know-how and other intellectual property rights or intangibles
used by the Company or the Subsidiary in the operation of the Business,
including, without limitation, those listed on Schedule 3.3 to this Agreement
and all goodwill associated therewith, licenses and sublicenses granted and
obtained with respect thereto and rights thereunder, remedies against
infringement thereof and rights to protection of interests therein under all
applicable Laws.
Inventories. All of the Company's and the Subsidiary's retail
inventory (including, without limitation, all inventories of food and beverages
and inventory customarily sold by the Company or the Subsidiary in new or used
condition to the public) and non-retail inventory (including, without
limitation, all inventories of ski rental equipment and employee and ski patrol
jackets, parkas, pants and other uniform items, other than those which are
customarily sold by the Company or the Subsidiary in new or used condition to
the public and which are included in the Company's and the Subsidiary's retail
inventory), consumable supplies, spare parts and repair materials and any and
all other inventories of the Company and the Subsidiary, an approximate summary
of which retail and non-retail inventories currently on hand is set forth on
Schedule 3.18 to this Agreement under the heading "Inventories", plus any
replacements for or additions to such inventories acquired on or before the
Closing Date, and minus any items of inventory sold or consumed by the Company
or the Subsidiary in the Ordinary Course of Business on or before the Closing
Date.
IRS. Internal Revenue Service.
Law. Any law, statute, regulation, rule, ordinance,
requirement, announcement or other binding action or requirement of an
Authority.
Leased Real Property. Those certain parcels of land more fully
described on Schedule 3.20.
Letter of Intent. The letter of intent dated June 30, 1997
between Booth Creek, Inc. and the Company relating to the transactions
contemplated by this Agreement, and as amended on
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August 15, 1997 and August 29, 1997, and as may be further modified or amended
from time to time.
Liabilities. Any obligation or liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated and whether due or to
become due), including, without limitation, any liability for Taxes.
Lien. Any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor or lessor
under any conditional sale, capitalized lease or other title retention
agreement).
Merger. As defined in the Recitals hereto.
Merger Consideration Recipient. At the Effective Time, each
holder of Company Common Stock and each holder of Options.
Options. The options issued pursuant to the Company's Stock
Option Plan, whether or not then exercisable.
Option Shares. As defined in the Recitals hereto.
Option Cancellation Agreement. A written agreement from the
holder of any Options, substantially in the form of Exhibit C, relating to the
termination of such employee's Options.
Option Merger Consideration. With respect to each Option
outstanding as of the Effective Time, an amount equal to (a) the product of (i)
the Common Share Merger Consideration and (ii) the aggregate number of Option
Shares which are subject to such Option less (b) the aggregate exercise price
payable with respect to such Option.
Order. Any decree, order, judgment, writ, award, injunction,
stipulation or consent of or by an Authority.
Ordinary Course of Business. The ordinary course of business
of the Company and/or the Subsidiary, as applicable, in accordance with past
custom and practice (including with respect to quantity and frequency).
Owned Real Property. Those certain parcels of land more fully
described on Schedule 3.20, together with all timber and water rights and other
privileges and appurtenances thereto and all plants, buildings, structures,
installations, fixtures, fittings, improvements, betterments and additions
situated thereon and together with all easements and rights-of-way used or
useful in connection therewith.
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Person. Any natural person, corporation, limited liability
company, partnership, firm, joint venture, joint-stock company, trust,
association, Authority, unincorporated entity or organization of any kind.
Preferred Share Redemption Consideration. One Hundred Seven
Dollars ($107) per share of Company Preferred Stock.
Purchaser. As defined in the Recitals hereto.
RCRA. Resource Conservation and Recovery Act, 42 U.S.C.
Section 9201, et seq.
Real Property. Collectively, the USFS Permitted Property, the
Owned Real Property and the Leased Real Property.
Real Property Leases. All leases to the Leased Real Property.
Records. All books of account, ledgers, forms, records,
documents, files, invoices, vendor or supplier lists, plans and other data which
are necessary to or desirable for the ownership, use, maintenance or operation
of the Business and which are owned or used by the Company or the Subsidiary,
including, without limitation, all blueprints and specifications, all Tax,
personnel, payroll, payroll tax and labor relations records, all environmental
control records, environmental impact reports, statements, studies and related
documents, handbooks, technical manuals and data, engineering specifications and
work papers, ski trail design specifications and improvement records, all
pricing and cost information, all sales records, all accounting and financial
records, all sales and use tax returns, reports, files and records, asset
history records and files, all data entry and accounting systems used to conduct
the day-to-day operations of the Business, all maintenance and repair records,
all correspondence, notices, citations and all other documents received from,
sent to or in the Company's or the Subsidiary's possession in connection with
any Authorities (including, without limitation, federal, state, county or
regional environmental protection, air or water quality control, occupational
health and safety, land use, planning or zoning, Forest Service, and any
alcohol, beverage or fire prevention Authorities), all plans, maps and surveys
of the Real Property, and all plans and designs of buildings, structures,
fixtures and equipment.
Reference Balance Sheet. The unaudited balance sheet of the
Company and the Subsidiary, on a consolidated basis, for the Business dated the
Reference Balance Sheet Date.
Reference Balance Sheet Date. July 27, 1997.
Shareholder Agreement. The Shareholder Agreement among the
Purchaser, Acquisition Sub and a shareholder of Company Common Stock, in
substantially the form of Exhibit F.
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South Mountain. The region covered by a one-year USFS Permit,
which is due to expire May 15, 1998, permit number 4031-01, and consisting of
approximately 581 acres as shown on the map contained in Schedule 1.1 of this
Agreement.
Stock Option Plan. As defined in the Recitals hereto.
Subsidiary. Loon Realty Corp., a New Hampshire corporation and
a wholly-owned subsidiary of the Company.
USFS Permits. The special use permits issued by the Forest
Service, each of which is described on Schedule 3.13, including the maps, master
development plans, operating plans, and other exhibits attached thereto or
incorporated therein.
USFS Permitted Property. The land described in the USFS
Permits and the plants, buildings, structures, installations, fixtures,
improvements, betterments and additions situated thereon.
In addition to the terms defined above, the following terms
are defined in the Sections as listed below:
DEFINED TERM SECTION
------------ -------
Alternative Transaction Section 5.8
Articles of Merger Section 2.1(b)
Company Warranty Claim Section 10.2(a)
Confidential Information Section 9.2(a)
Disclosure Schedules Section 5.5
Earnest Money Section 5.12
Effective Time Section 2.1(b)
Environmental Claims Section 3.14.6
Environmental Laws Section 3.14.1(a)
FY 1997-98 Budget Section 3.34
Hazardous Substances Section 3.14.1(b)
Indemnified Party Section 10.3(a)
Indemnifying Party Section 10.3(a)
Land Status Report Section 5.6(a)(iv)
Leasehold Policies Section 5.6(a)(ii)
New Hampshire Law Section 2.1(a)
Permits Section 3.28
Plan Section 3.16(a)
Price Adjustment Section 2.2(b)
Proxy Statement Section 3.39
Purchaser Indemnified Person Section 10.1
Purchaser Warranty Claims Section 10.1(a)
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Release Section 3.14.1(c)
Representative Section 12.1
Section 1445 Withholding Section 5.7
Shareholders' Meeting Section 5.10
Surveys Section 5.6(a)(iii)
Surviving Company Section 2.1(a)
Taxes Section 3.17(a)
Third-Party Notice Section 10.3(b)
Title Company Section 5.6(a)(i)
Title Policies Section 5.6(a)(i)
1.3 Interpretation. Unless otherwise expressly provided or
unless the context requires otherwise, (a) all references in this Agreement to
Articles, Sections, Disclosure Schedules and Exhibits shall mean and refer to
Articles, Sections, Disclosure Schedules and Exhibits of this Agreement; (b) all
references to statutes and related regulations shall include all amendments of
the same and any successor or replacement statutes and regulations; (c) words
using the singular or plural number also shall include the plural and singular
number, respectively; (d) references to "hereof", "herein", "hereby" and similar
terms shall refer to this entire Agreement (including the Disclosure Schedules
and Exhibits hereto); and (e) references to any Person shall be deemed to mean
and include the successors and permitted assigns of such Person (or, in the case
of an Authority, Persons succeeding to the relevant functions of such Person).
ARTICLE II
THE MERGER
2.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, and
in reliance upon the representations, warranties, covenants and agreements made
in this Agreement by Purchaser, Acquisition Sub and the Company, at the
Effective Time (as such term is defined in Section 2.1(b)), Acquisition Sub
shall be merged with and into the Company in accordance with the New Hampshire
Business Corporation Act (the "New Hampshire Law"), the separate existence of
Acquisition Sub shall cease and the Company shall continue as the surviving
corporation in the Merger (herein sometimes called the "Surviving Company")
under the name "Loon Mountain Recreation Corporation."
(b) At the Closing, the parties hereto shall cause the Merger
to be consummated by filing with the Secretary of State of New Hampshire the
appropriate articles of merger (the "Articles of Merger") duly executed by the
Company and Acquisition Sub in accordance with the requirements of New Hampshire
Law and with this Agreement and in substantially the form attached hereto as
Exhibit D. The date and time of filing with and acceptance of the Articles of
Merger with the Secretary of the State of New Hampshire is referred to herein as
the "Effective Time."
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2.2 Conversion of Shares Upon the Merger.
(a) At the Effective Time, the outstanding shares of Company
Common Stock and Acquisition Sub Stock will be converted or canceled and retired
or remain outstanding, in each case pursuant to the Merger and without any
action on the part of the holder thereof, as follows:
(i) All the shares of Acquisition Sub Stock shall be
converted into one-hundred (100) validly issued, fully paid and
nonassessable shares of Company Common Stock, par value $.10 per share,
of the Surviving Company. The certificate which formerly represented
the outstanding Acquisition Sub Stock shall, from and following the
Effective Time, represent, and for all purposes be evidence of
ownership of, the number of shares of the class of the Surviving
Company set forth in the preceding sentence.
(ii) Each share of Company Common Stock which,
immediately prior to the Effective Time, was held by the Company as a
treasury share shall be canceled and retired without any payment being
made therefor.
(iii) Each share of Company Common Stock issued and
outstanding as of the Effective Time, other than Dissenting Shares,
shall be converted into the right to receive in cash the Common Share
Merger Consideration, subject to the payment of the Holdback on the
Closing Date as required by Section 2.2(c), which amount shall be
payable in the manner set forth in Section 2.3.
(iv) Each share of Company Common Stock which is
outstanding as of the Effective Time with respect to which the holder
thereof shall have perfected dissenter's rights under New Hampshire Law
will be converted into, and become a right to receive the fair value
for such share as determined pursuant to New Hampshire Law, RSA 293-A:
13.01 et. seq.
(b) At the Closing Date, the Aggregate Merger Consideration
shall be adjusted ("Price Adjustment") as follows:
(i) In the event that the Company pays a dividend on
the Company Common Stock during the time period beginning on the date
hereof and ending on the Closing Date, the Aggregate Merger
Consideration shall be reduced on the Closing Date by the aggregate
amount of such dividend;
(ii) In the event that any of the Options are
effectively exercised or terminated during the time period beginning on
June 30, 1997 and ending on the Closing Date, the Aggregate Merger
Consideration shall be reduced by the aggregate amount of the exercise
price on such Options which are effectively exercised or terminated
during such time period unless such amounts have been paid to the
Company in cash; and
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<PAGE> 19
(iii) In the event that on the Closing Date there
exists declared and unpaid dividends on Company Common Stock which are
outstanding, the Aggregate Merger Consideration shall be reduced by the
amount of such dividends.
(c) Notwithstanding anything to the contrary contained herein,
at the Effective Time, each Merger Consideration Recipient shall have the right
to receive in the case of the holders of Company Common Stock (other than
Dissenting Shares) only the Initial Per Common Share Cash Payment for each share
of Company Common Stock which amount shall be payable in the manner set forth in
Section 2.3 or, in the case of each Option, the Initial Option Cash Payment
which amount shall be payable in the manner set forth in Section 2.5. The
remaining portion of the Common Share Merger Consideration (less the amount
equal to the Common Share Merger Consideration multiplied by the number of
Dissenting Shares) and the Option Merger Consideration payable to such Merger
Consideration Recipients, which in the aggregate for all Merger Consideration
Recipients constitutes the Holdback, shall be deposited at the Effective Time
into the Escrow Account. The Holdback shall be available to satisfy the Merger
Consideration Recipients' obligations to indemnify Purchaser and Surviving
Company in accordance with the terms of Article X and the Escrow Agreement.
(d) As of the Effective Time, the holders of the Company
Common Stock (other than Dissenting Shares) converted into the right to receive
the Common Share Merger Consideration shall have no rights with respect to the
Surviving Company by virtue of their ownership of such Company Common Stock
immediately prior to the Effective Time, except for the right to receive the
Common Share Merger Consideration and the Holdback pursuant to this Section 2.2,
Section 2.3, Article X and the Escrow Agreement, and each certificate which
formerly represented a Company Common Share (other than Dissenting Shares)
shall, from and following the Effective Time, represent only the right to
receive the Common Share Merger Consideration with respect to such Company
Common Share in accordance herewith.
(e) With respect to Dissenting Shares, the Surviving Company
shall be responsible for and liable to pay any additional amounts (over the
Common Share Merger Consideration) which are determined to be due by a final
determination of a court of competent jurisdiction under New Hampshire Law and
may keep any amounts (up to the Common Share Merger Consideration) should a
lesser amount ultimately be determined to be due under New Hampshire Law.
2.3 Company Common Stock.
At the Effective Time:
(a) Acquisition Sub shall make delivery in immediately
available funds to the Exchange Agent by wire transfer to the Exchange Account
of the amount equal to the Initial Per Common Share Cash Payment multiplied by
the number of outstanding shares of Company Common Stock (other than Dissenting
Shares);
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(b) The Exchange Agent shall deliver to each holder of shares
of Company Common Stock (other than Dissenting Shares) converted into the right
to receive the Common Share Merger Consideration pursuant to Section 2.2, who
has surrendered to the Exchange Agent the certificate or certificates
representing his, hers or its shares of Company Common Stock (other than
Dissenting Shares) together with any other customary instruments of transfer
that reasonably may be required by Acquisition Sub, a check (or, if required by
the next sentence, immediately available funds by wire transfer to the account
designated in writing by such holder) for an amount equal to the Initial Per
Common Share Cash Payment multiplied by the number of shares of Company Common
Stock represented by the certificate(s) so surrendered by such holder (less any
tax withholdings); provided, however, the Exchange Agent shall make delivery of
the initial payment amount required hereunder to each such holder by wire
transfer of immediately available funds only if the Exchange Agent is in receipt
of the certificate(s) held by such holder together with a written request
containing all of the necessary information to effectuate a wire transfer to
such holder of such certificate(s) no later than 2:00 p.m. Chicago time at least
three (3) business days prior to the Closing;
(c) Acquisition Sub shall make delivery in immediately
available funds to the Company by wire transfer of the amount equal to the
Common Share Merger Consideration multiplied by the number of outstanding
Dissenting Shares;
(d) The Surviving Company shall be obligated to pay each
holder of Dissenting Shares who has surrendered to the Surviving Company the
certificate or certificates representing his, hers or its Dissenting Shares
together with any other customary instruments of transfer that reasonably may be
required by the Company, the fair value for each Dissenting Share multiplied by
the number of shares of Company Common Stock being surrendered (less any tax
withholdings) as determined pursuant to New Hampshire Law RSA 293-A:13.01 et.
seq., and all such payments shall be made at such time as shall be required by
New Hampshire Law;
(e) Acquisition Sub shall make delivery in immediately
available funds to the Escrow Agent by wire transfer to the Escrow Account of
the remaining portion of the aggregate Common Share Merger Consideration for all
outstanding shares of Company Common Stock (other than Dissenting Shares), which
remaining portion constitutes part of the Holdback;
(f) There shall be no obligation (i) on the part of the
Exchange Agent to deliver any payment in respect of any of the shares of the
Company Common Stock until (and then only to the extent that) the holder thereof
surrenders the certificate(s) representing his, hers or its shares of Company
Common Stock for exchange as provided in this Section 2.3, or, in lieu thereof,
delivers to the Exchange Agent an appropriate affidavit of loss and an indemnity
agreement, or (ii) on the part of the Surviving Company to deliver any payment
in respect of the Dissenting Shares until (and then only to the extent that) the
holder thereof surrenders the certificate(s) representing his, hers or its
shares of Company Common Stock for exchange as provided in this Section 2.3, or,
in lieu thereof, delivers to the Surviving Company an appropriate affidavit of
loss and an indemnity agreement;
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<PAGE> 21
If any payment for the Company Common Stock is to be made in a
name other than that in which the certificate for the Company Common Stock
surrendered for exchange is registered, it shall be a condition to the payment
that the certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer, that all signatures shall be guaranteed by a member
firm of any national securities exchange in the United States or the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office in the United States, and that the person requesting
the payment shall either (i) pay to the Exchange Agent (or the Company with
respect to Dissenting Shares) any transfer or other taxes required by reason of
the payment to a person other than the registered holder of the certificate
surrendered or (ii) establish to the reasonable satisfaction of the Exchange
Agent (or the Company with respect to Dissenting Shares) that such taxes have
been paid or are not payable. From and after the Effective Time, there shall be
no transfers on the stock transfer books of the Company of any shares of Company
Common Stock outstanding immediately prior to the Effective Time and any such
shares of Company Common Stock presented to the Exchange Agent shall be canceled
in exchange for the aggregate amounts payable with respect thereto as provided
in Section 2.2.
2.4 Appraisal Rights. The holder of any Dissenting Share shall
have the rights and be subject to the limitations, provided by New Hampshire
Law.
2.5 Options. At the Effective Time, the Company shall cancel
and terminate each of the Options. In consideration of the foregoing,
Acquisition Sub shall make a cash payment to the holder of each Option, at the
time provided in the final sentence of this Section 2.5 (and subject, in the
case of each such holder, to the receipt from such holder of an Option
Cancellation Agreement), in an amount (less any applicable withholding taxes and
subject to any applicable reporting requirements) equal to the Initial Option
Cash Payment, and Acquisition Sub shall deposit the remaining portion of the
aggregate Option Merger Consideration for all Options (which remaining portion
constitutes part of the Holdback) into the Escrow Account. The Company shall use
commercially reasonable and good faith efforts to promptly after the date hereof
obtain an Option Cancellation Agreement to be effective as of the Effective Time
from each holder of Options relating to the termination of such holder's Options
at the Effective Time. A holder of an Option who delivers to the Company an
Option Cancellation Agreement (i) prior to the Effective Time shall be paid
pursuant to this Section 2.5 at the Effective Time, (ii) within thirty (30) days
after the Effective Time shall be paid pursuant to this Section 2.5 as soon as
reasonably practicable but in no event later than five (5) business days after
receipt of such Option Cancellation Agreement by the Surviving Company and (iii)
after thirty (30) days following the Effective Time shall be paid pursuant to
this Section 2.5 as soon as reasonably practicable but in no event later than
ten (10) business days after receipt of such Option Cancellation Agreement by
the Surviving Company.
2.6 Articles of Incorporation. The articles of incorporation
of Acquisition Sub shall be amended as set forth in the form of the Articles of
the Merger and, as so amended, shall continue in full force and effect from and
after the Effective Time as the articles of incorporation of the Surviving
Company, until otherwise amended as provided by law or by such articles of
incorporation.
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2.7 By-Laws. The By-laws of Acquisition Sub, as in effect at
the Effective Time, shall be the By-laws of the Surviving Company from and after
the Effective Time until otherwise amended as provided by law or by such
By-laws.
2.8 Directors and Officers. The directors and officers of
Acquisition Sub at the Effective Time shall be the directors and officers of the
Surviving Company and each shall hold office from and after the Effective Time
until their respective successors are duly elected or appointed and qualified,
and Purchaser and the Surviving Company shall take any corporate action
necessary to effectuate the provisions of this Section 2.8.
2.9 Effect of the Merger. Following the Merger, the Surviving
Company will continue its corporate existence under New Hampshire Law, and the
separate corporate existence of Acquisition Sub shall cease. The Merger shall
have the further effects set forth under New Hampshire Law.
2.10 Company Closing Expenses. In the event that actual
Company Closing Expenses exceed the estimated Company Closing Expenses as set
forth on Exhibit E hereto, Purchaser and the Representative shall immediately
jointly instruct the Escrow Agent to pay the amount of such excess from the
Escrow Account to the Surviving Company. In the event that actual Company
Closing Expenses as calculated by Company exceed the estimated Company Closing
Expenses as set forth on Exhibit E hereto, Company shall immediately give
written notice to Purchaser and to Acquisition Sub of the amount of the actual
Company Closing Expenses and that such amount exceeds the estimated Company
Closing Expenses as set forth on Exhibit E hereto.
2.11 Escheat. Notwithstanding anything in this Agreement to
the contrary, no party hereto shall be liable to a former holder of Company
Common Stock, Company Preferred Stock or Options for any cash delivered to a
public official pursuant to applicable escheat or abandoned property laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Purchaser and Acquisition Sub to enter
into and perform their obligations under this Agreement, and in consideration of
the covenants of Purchaser and Acquisition Sub contained herein, the Company
represents and warrants to Purchaser and Acquisition Sub (which representations
and warranties shall survive the Closing for the periods set forth in Section
10.4 regardless of what examinations, inspections, audits and other
investigations Purchaser and/or Acquisition Sub have heretofore made, or may
hereafter make, with respect to such representations and warranties) as follows:
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3.1 Corporate Status; Due Authorization; Authority of the
Company; Enforceability.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Hampshire and
in each other jurisdiction where the failure to so qualify could have a material
adverse effect on the business, operations or condition of the Company or the
Business. The Company has the corporate power and authority necessary to own,
lease, operate or otherwise hold its properties and assets and to carry on its
business as presently conducted. The Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Hampshire and in each other jurisdiction where the failure to so qualify could
have a material adverse effect on the business, operations or condition of the
Subsidiary or the Business. The Subsidiary has the corporate power and authority
necessary to own, lease, operate or otherwise hold its properties and assets and
to carry on its business as presently conducted.
(b) The execution and delivery by the Company of this
Agreement, and the performance by the Company of its obligations hereunder, have
been duly and validly authorized and approved by all necessary corporate action
on the part of the Company, subject only to approval of its shareholders as set
forth in Section 5.10.
(c) The Company has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
Neither the execution or delivery of this Agreement by the Company nor the
performance by the Company of its obligations under this Agreement will in any
material respect (assuming that the approval of the shareholders of the Company
is obtained as set forth in Section 5.10., and assuming the receipt of all
consents referred to in Section 3.27), conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any material
contract, lease, license, franchise, permit, indenture, mortgage, deed of trust,
note agreement or other agreement or instrument to which the Company or the
Subsidiary is a party or is bound, the articles of incorporation or by-laws of
the Company or the Subsidiary or any applicable Law or Order to which the
Company or the Subsidiary is a party or by the Company or the Subsidiary is
bound.
(d) This Agreement is binding upon, and enforceable against,
the Company in accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally and by
general principles of equity (whether in a proceeding at law or in equity).
3.2 Accounts Receivable. Except as reserved against on the
Reference Balance Sheet, the Accounts Receivable reflected on such balance
sheet: (a) were acquired by the Company or the Subsidiary (as the case may be)
in the Ordinary Course of Business and represent fully completed bona fide
transactions that require no further act on the part of the Company or the
Subsidiary to make such Accounts Receivable payable by the account debtors; (b)
to the Company's Knowledge are not subject to any material claim, counterclaim,
set-off or deduction; (c) represent
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<PAGE> 24
valid obligations owing to the Company or the Subsidiary by account debtors that
are not Affiliates of the Company or the Subsidiary, which are enforceable in
accordance with their respective terms; and (d) are owned by the Company or the
Subsidiary free and clear of all Liens.
3.3 Trade Names, Trademarks and Copyrights. Schedule 3.3 to
this Agreement contains a true and complete list of all trademarks, service
marks, trade names and copyrights and their registrations or applications, if
any, owned by the Company or the Subsidiary or in which the Company or the
Subsidiary has any rights or licenses, together with a brief description of
each. To the Company's Knowledge, there is no infringement or alleged
infringement by any Person of any such trademark, service mark, trade name or
copyright. Each of the Company and the Subsidiary has not infringed, nor is now
infringing on any trademark, service mark, trade name or copyright belonging to
any other Person. Each of the Company and the Subsidiary is not a party to any
license, agreement or arrangement, whether as licensor, licensee, franchisor,
franchisee or otherwise, with respect to any trademarks, service marks, trade
names or any copyrights or any applications therefor other than as listed on
Schedule 3.3. Each of the Company and the Subsidiary owns or holds adequate
licenses or other rights to use all trademarks, service marks, trade names and
copyrights necessary for the Business as now conducted.
3.4 No Patent Rights. Each of the Company and the Subsidiary
does not own, hold, or have any right, license or immunity with respect to any
patents, inventions, industrial models, processes, designs, formulas or
applications for patents. Each of the Company and the Subsidiary has not
infringed, nor is either of the Company or the Subsidiary now infringing, on any
patent or other right belonging to any Person. Each of the Company and the
Subsidiary is not a party to any license, agreement or arrangement, whether as
licensee, licensor or otherwise, with respect to any patent, application for
patent, invention, design, model, process, trade secret or formula.
3.5 Ski and Other Passes. Schedule 3.5 contains a true and
complete list of all outstanding lifetime and limited period ski and other
passes, tickets, vouchers, coupons or other passes for products, services or
activities of the Business, including the identity of the holder (if known),
type, number and value of such passes, tickets, vouchers or coupons.
3.6 Contracts. Schedule 3.6 to this Agreement contains a
complete list of all Contracts to which the Company or the Subsidiary is party
or by which the Company or the Subsidiary is currently bound which either (i)
were not entered into by the Company or the Subsidiary in the ordinary course of
business in accordance with past practices or (ii) severally have or will have
an economic effect on the Company or the Subsidiary or require a payment by any
party thereto of at least Ten Thousand Dollars ($10,000) in any calendar year
and which will not expire or cannot be terminated by the Company or the
Subsidiary upon written notice of thirty (30) days or less without penalty.
Copies of all such written Contracts disclosed on Schedule 3.6 to this Agreement
have been provided to Purchaser or its counsel. Each of the Company and the
Subsidiary is not a party to any Contract not entered into in the Ordinary
Course of Business. To the Company's Knowledge, all Contracts are valid and
binding upon the parties thereto except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors generally and
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<PAGE> 25
by general principles of equity (whether in a proceeding at law or in equity).
To the Company's Knowledge, there is no default or event that with notice or
lapse of time, or both, would constitute a default by any party to any of the
Contracts. Except as set forth on Schedule 3.6, neither the Company nor the
Subsidiary has received notice that any party to any of the Contracts intends to
cancel or terminate any of such agreements or to exercise or not exercise any
options under any of such agreements.
3.7 Compliance with Laws. Except as disclosed on Schedule 3.7,
each of the Company and the Subsidiary is in compliance in all material respects
with all, and is not in violation of any, applicable Laws or Orders (including,
without limitation, any applicable building, zoning, environmental protection,
water use, occupational health and safety, employment, disability rights or food
service facilities law, ordinance or regulation) affecting its properties or the
operation of its Business. No charge of any state or local alcohol or beverage
commission is pending against the Company or the Subsidiary as a holder of any
alcoholic beverage license and, to the Company's Knowledge, no investigation is
now in progress by any state or local alcohol or beverage commission concerning
any act or omission that could result in a charge, claim or proceeding being
filed against the Company or the Subsidiary.
3.8 Litigation. Schedule 3.8 sets forth a brief description of
all suits, actions, arbitrations, and legal, administrative and other
proceedings and governmental investigations pending or, to the Company's
Knowledge, threatened against or affecting the Company, the Subsidiary or the
Business. None of the matters set forth in Schedule 3.8 (except as specifically
referenced on such Schedule 3.8 as potentially having a material adverse effect
if adversely decided), if decided adversely to the Company or the Subsidiary,
could reasonably be expected to have a material adverse effect on the Business.
Each of the Company and the Subsidiary is not presently engaged in any legal
action to recover moneys due to it or damages sustained by it except as listed
in Schedule 3.8.
3.9 Personnel Identification and Compensation. Schedule 3.9
contains a true and complete list of the names, addresses and titles of all
current officers, directors, employees and independent contractors of the
Company and the Subsidiary and all seasonal employees, employed during the
1996-1997 ski season, together with a true and correct schedule stating the
rates of compensation payable (or paid, as the case may be) to each such person
including, without limitation, base pay and prior year's bonus.
3.10 Existing Employment Contracts. Schedule 3.10 contains a
list of all employment contracts and collective bargaining agreements, if any,
to which the Company or the Subsidiary is a party or by which the Company or the
Subsidiary is bound. All these contracts and arrangements are in full force and
effect, and neither the Company, the Subsidiary nor, to the Company's Knowledge,
any other Person is in default under any such contract or arrangement. There
have been no claims of default and, to the Company's Knowledge, there are no
facts or conditions which if continued, or on notice, will result in a default
under these contracts or arrangements. There is no pending or, to the Company's
Knowledge, threatened labor dispute, union organizing activities, strike or work
stoppage affecting the Business.
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<PAGE> 26
3.11 Capitalization; Subsidiaries. (a) The total number of
shares of capital stock and the par value thereof which the Company is
authorized to issue and the number of such shares which are issued and
outstanding are as follows:
<TABLE>
<CAPTION>
Issued and Par Value
Class Authorized Shares Outstanding Shares Per Share
----- ----------------- ------------------ ---------
<S> <C> <C> <C>
Company Common Stock 750,000 590,470 $.10
Company Preferred Stock 2,250 1,334 $100
</TABLE>
As of the date hereof, 80,630 shares of Company Common Stock
and 127 shares of Company Preferred Stock are held as treasury stock.
(a) Except for the Company's Stock Option Plan, pursuant to
which outstanding Options have been granted to officers and employees of the
Company for 14,155 shares of Company Common Stock, there are no outstanding
options, conversion rights, warrants or other rights in existence to acquire
from the Company any of its shares of capital stock. Schedule 3.11 attached
hereto contains a true and correct copy of the Company's Stock Option Plan
together with a list setting forth the name of each Option holder, the number of
Option Shares (and the exercise price for each such Option Share) held by such
holder and identifies the agreements pursuant to which such Options were
granted.
(b) All shares of Company Common Stock have been duly and
validly issued and are fully paid and nonassessable and are not subject to any
preemptive rights; and there are no voting trust agreements or other contracts,
agreements or arrangements restricting voting or dividend rights or
transferability with respect to the outstanding shares of capital stock of the
Company; other than the Shareholder Agreements which are entered into pursuant
to Section 5.10.
(c) Each of the Company and the Subsidiary has not violated in
any material respect any federal, state or local Law in connection with the
offer for sale or sale and issuance of its outstanding shares of capital stock
or any other securities.
(d) The total number of shares of capital stock, with no par
value, which the Subsidiary is authorized to issue is three hundred (300) shares
and the number of such shares which are issued and outstanding is eighty (80)
shares. The Company owns all of the issued and outstanding shares of capital
stock of Subsidiary. Neither the Company nor Subsidiary own any securities or
any other direct or indirect interest in any other Person (other than the
Company's interest in Subsidiary). Copies of the articles of incorporation and
by-laws of Subsidiary, as in effect the date hereof, including all amendments
thereto, have been provided to Purchaser by the Company. Each outstanding share
of capital stock of Subsidiary is duly and validly issued and is fully paid and
nonassessable and is not subject to any preemptive rights, and is owned of
record and beneficially
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<PAGE> 27
by the Company free and clear of all Liens. There are no outstanding options,
conversion rights, warrants or other rights in existence to acquire from
Subsidiary any of its shares of capital stock. There are no voting trust
agreements or other contracts, agreements or arrangements restricting voting or
dividend rights or transferability with respect to the outstanding shares of
capital stock of the Subsidiary.
3.12 Shareholder List; Shareholder Agreements.
(a) The persons listed as shareholders of the Company on
Schedule 3.12 are all of the record and beneficial owners of the capital stock
of the Company. The Company Common Stock and the Company Preferred Stock
constitute all of the issued and outstanding shares of capital stock of the
Company and such shares are owned in the amounts as set forth on Schedule 3.12.
(b) Each of the shareholders entering into the Shareholder
Agreements on the date hereof (i) is the record and beneficial owner of the
shares of Company Common Stock subject to such Shareholder Agreement, and (ii)
has the power and authority to enter into such Shareholder Agreement, and all
such Shareholder Agreements are the valid, binding obligation of the person or
entity executing the same, enforceable against such person in accordance with
its terms, which terms include, without limitation, conveying and granting to
Acquisition Sub the right to vote such shares at any shareholders' meeting of
the Company where a vote is taken on the approval of the Merger.
3.13 Forest Service Permits. Schedule 3.13 to this Agreement
contains a complete and accurate description of all of the Company's and the
Subsidiary's USFS Permits together with an accurate description of the real
property which the Company or the Subsidiary is entitled to use to conduct its
business pursuant to and for the terms set forth in such USFS Permits. Except as
set forth on Schedule 3.13 to this Agreement, the USFS Permits are valid and in
full force, and there does not exist any default or event that with notice or
lapse of time, or both, would constitute a default under the USFS Permits or any
Order relating to the USFS Permits. Except as set forth on Schedule 3.13 to this
Agreement, neither the Company nor the Subsidiary has received any notice nor to
the Company's Knowledge is there any actual, threatened, or contemplated
termination, default, revocation, suspension, or modification of the USFS
Permits or any Order relating thereto, and there are no administrative actions
or proceedings pending or threatened involving the USFS Permits. All fees and
charges required to be paid by the Company or the Subsidiary pursuant to the
USFS Permits have been properly computed and fully paid, no such fees or charges
have been deferred or are due and owing.
3.14 Environmental.
3.14.1 Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) The term "Environmental Law(s)" means each and every Law,
Order, Permit, or similar requirement of each and every Authority, pertaining to
(i) the protection of human health, safety, the environment, natural resources
and wildlife, including without limitation, as amended,
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<PAGE> 28
the National Environmental Policy Act, 42 U.S.C. Section 4321 et seq., the
Endangered Species Act, 16 U.S.C. Section 1531 et seq., and the National Forest
Management Act, 16 U.S.C. Section 1600 et seq., (ii) the protection or use of
surface water, groundwater, rivers and other bodies of water, (iii) the
management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release, abatement, removal,
remediation or handling of, or exposure to, any Hazardous Substance or (iv)
pollution, including without limitation, as amended, CERCLA, RCRA, the Clean Air
Act, 42 U.S.C. Section 7401 et seq., and the Federal Water Pollution Control
Act, 33 U.S.C. Section 1251, et seq.
(b) The term "Hazardous Substance(s)" means any substance
which is defined or regulated as a hazardous substance, hazardous material,
hazardous waste, pollutant or contaminant under any Environmental Laws and also
includes, without limitation, petroleum hydrocarbons, crude oil or any fraction
thereof.
(c) The term "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including without limitation the abandonment
or discarding of barrels, containers and other receptacles containing any
Hazardous Substance), except for a Release occurring pursuant to a Permit issued
by an Authority presently in full force and effect and not subject to challenge.
(d) For purposes of this Section 3.14, the Company and the
Subsidiary shall be deemed to include any Persons from which the Company or the
Subsidiary has assumed or is deemed to have assumed liabilities by operation of
Law.
3.14.2 Compliance with Environmental Laws. Except as set forth
on Schedule 3.14.2, the Real Property, and all uses and conditions of the Real
Property and the Business, have been and are in compliance in all material
respects with all Environmental Laws, and each of the Company and the Subsidiary
has not received any notice of violation or other communication or have
Knowledge of any facts or circumstances concerning any alleged violation or
liability arising under any Environmental Law with respect to the Real Property
or the Business or any use or condition thereof. Except as otherwise specified
on Schedule 3.14.2, none of the matters disclosed on Schedule 3.14.2 have or
will have material impact or effect on the Company, the Subsidiary or the
Business. Any real property formerly owned or leased by either the Company or
the Subsidiary or otherwise related to the Business were in compliance in all
material respects with all Environmental Laws during the Company's or the
Subsidiary's period of ownership or operation and each of the Company and the
Subsidiary has not received any notice of violation or other communication or
have Knowledge of any facts or circumstances concerning any alleged violation or
liability arising under any Environmental Law with respect to such formerly
owned or operated real property or any use or condition thereof.
3.14.3 Handling of Hazardous Substances. Each of the Company
and the Subsidiary and any other present or to the Company's Knowledge former
owner, tenant, occupant or user of the Real Property has not used, handled,
generated, produced, manufactured, treated, stored or transported any Hazardous
Substance on, under, about, to or from the Real Property or any real
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<PAGE> 29
property formerly owned or operated by the Company or the Subsidiary in material
violation of or in a manner that may form the basis of material liability under
any Environmental Law.
3.14.4 No Release of Hazardous Substances. Except as disclosed
on Schedule 3.14.4, there is no Release or threatened Release of any Hazardous
Substance existing on, beneath or from the surface, subsurface or ground water
of the Real Property or to the Company's Knowledge any real property formerly
owned, or operated for offsite disposal by the Company or the Subsidiary, nor,
to the Company's Knowledge, is there or has there been any Release or threatened
Release of Hazardous Substances directly adjacent to, from or in the vicinity of
the Real Property currently occurring or occurring at any time in the past.
Except as otherwise specified on Schedule 3.14.4, none of the exceptions
disclosed on Schedule 3.14.4 have or will have material impact or effect on the
Company, the Subsidiary or the Business.
3.14.5 Permits. Except for the (i) National Pollutant
Discharge Elimination System Permit for which the Company has applied and for
which the United States Environmental Protection Agency has accepted the
Company's application but has not to date issued a Permit, (ii) Authorization
for Installation and Operation of a Pipeline as set forth in a decision memo
dated August 26, 1997, which is currently in litigation and (iii) exemptions
disclosed on Schedule 3.14.5, all Permits required by or issued pursuant to any
Environmental Law for the current operations of the Business have been obtained
in a timely manner and are presently maintained in full force and effect. Except
as otherwise specified on Schedule 3.14.5, none of the exceptions disclosed on
Schedule 3.14.5 have or will have material impact or effect on the Company, the
Subsidiary or the Business. Schedule 3.14.5 contains a true and complete listing
of all such Permits. The Real Property and the operations of each of the Company
and the Subsidiary are in compliance with all terms and conditions of such
Permits in all material respects and each of the Company and the Subsidiary has
not received any notice or other written communication or has Knowledge of any
facts or circumstances concerning any alleged violation of any such Permits.
3.14.6 No Proceedings. Except as set forth on Schedule 3.14.6,
there exists no Order nor any written demand, allegation, suit, claim,
proceeding, citation, directive, summons, investigation, information request, or
notice of violation pending or, to the Company's Knowledge, threatened against
the Company pursuant to any Environmental Law relating to (a) the ownership,
occupation or use of the Real Property or any formerly owned, leased, or
occupied Real Property by the Company or the Subsidiary or, to the Company's
Knowledge, any other present or former owner, occupant or user of the Real
Property, (b) any alleged violation of or liability under any Environmental Law
by the Company or the Subsidiary, including but not limited to liability for
disposal of Hazardous Substances on or under property belonging to one or more
third parties, (c) the Release or threatened Release of any Hazardous Substance
on, under, in or from the surface, subsurface, or ground water associated with
the Real Property, or any formerly owned, leased, occupied or operated real
property including, without limitation, any migration of Hazardous Substances
from the Real Property or Leased Real Property, (d) any actual or alleged
damage, injury, threat or harm to health, safety, natural resources or the
environment caused by the Company or related to the Real Property (collectively
referred to herein as "Environmental Claims") nor, to the Company's Knowledge,
does there exist any valid basis for any such Environmental Claims.
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<PAGE> 30
Except as otherwise specified on Schedule 3.14.6, the matters described on
Schedule 3.14.6 will not have a material impact on the Company, the Subsidiary
or the Business.
3.14.7 No Tanks, Asbestos or PCB's. Except as set forth on
Schedule 3.14.7, there are no aboveground or underground storage tanks currently
or, to the Company's Knowledge, formerly located on the Real Property used or
formerly used for the purpose of storing any Hazardous Substance. There is no
PCB-containing equipment or PCB-containing material, in each case, as defined by
applicable Environmental Law, or any friable asbestos containing material on the
Real Property. The matters disclosed in Schedule 13.14.7 will not have a
material impact on the Company, the Subsidiary or the Business.
3.14.8 Lists and Liens. The Real Property and any real
property formerly owned, operated, leased, or used by the Company or Subsidiary:
(i) is not listed on any or nominated for listing on the National Priority List
promulgated by the United States Environmental Protection Agency pursuant to
CERCLA or any analogous state remedial priority list promulgated or published
pursuant to any comparable state law, (ii) is not subject to any restriction on
the ownership, occupancy or use of the Real Property, including, without
limitation, any Liens, and (iii) to the Company's Knowledge, there are no such
imminent restrictions or Liens that are reasonably likely to be imposed upon the
Real Property.
3.14.9 Documents. The Company has provided Purchaser access to
any and all documents, correspondence, pleadings, reports, assessments,
analytical results, Permits or other records concerning Environmental Laws or
Hazardous Substances.
3.15 Certain Transactions. All purchases and sales or other
transactions, if any, between the Company or the Subsidiary, on the one hand,
and any officer, director, shareholder or key employee or Affiliate thereof, on
the other hand, within the three (3) years immediately preceding the date hereof
have been made on the basis of prevailing market rates and terms such that from
the prospective of the Company, all such transactions have been made on terms no
less favorable than those which would have been available from unrelated third
parties. Except as set forth on Schedule 3.15, neither any officer, nor any
director or employee of the Company nor of the Subsidiary, nor any spouse, child
or other relative of any of such persons, owns, or has any interest, directly or
indirectly, in any of the real or personal property owned by or leased to the
Company or the Subsidiary or any copyrights, patents, trademarks, trade names or
trade secrets owned or licensed by the Company or the Subsidiary.
3.16 Employee Benefit Matters, Plans and Claims.
(a) Schedule 3.16 contains a true, complete and correct list
of each pension, retirement, profit sharing, savings, stock option, restricted
stock, severance, termination, bonus, fringe benefit, insurance, supplemental
benefit, medical, education reimbursement or other employee benefit plan,
program, agreement or arrangement, including each "employee benefit plan" as
defined in Section 3(3) of ERISA, sponsored, maintained or contributed to or
required to be contributed to
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<PAGE> 31
by the Company or the Subsidiary within the last six years for the benefit of
current or former employees of the Business (each a "Plan").
(b) True, complete and correct copies of the following items
relating to each Plan, where applicable, have been delivered to Purchaser:
(i) the plan document and related trust agreement and
insurance contracts, including any amendments (including descriptions
of vacation and severance policies);
(ii) the most recent determination letter received
from the IRS with respect to each such Plan that is intended to be
qualified under Section 401 of the Code;
(iii) the most recent summary plan description,
summary of material modifications and all material communications to
participants; and
(iv) the most recent annual report (5500 series) and
accompanying schedules.
(c) Each of the Plans has been operated and administered in
accordance with the applicable provisions of ERISA and the Code, including
COBRA, and all other applicable Laws, and there are no actions, suits or claims
pending or to the Company's Knowledge threatened against any Plan or any
administrator or fiduciary thereof, nor to the Company's Knowledge do any facts
exist which could give rise to any such action, suit or claim.
(d) Each of the Plans that is intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified.
(e) Each of the Company and the Subsidiary does not have any
liability with respect to a plan termination under Title IV of ERISA, a funding
deficiency under Section 412 of the Code or Section 302 of ERISA or a withdrawal
from a "multiemployer plan" as defined in (f) below or under Section 4063 of
ERISA.
(f) None of the Plans is a plan subject to Title IV of ERISA
or a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA. No
Plan which is a "welfare plan" within the meaning of Section 3(1) of ERISA
provides benefits with respect to employees beyond termination of employment
other than coverage required by law.
(g) Each of the Company and the Subsidiary is not, and has
never been, a member of a "controlled group of corporations" within the meaning
of Section 414(b) of the Code, a member of a group under "common control" within
the meaning of Section 414(c) of the Code, or a member of an "affiliated service
group" within the meaning of Section 414(m) of the Code, which includes any
member other than the Company or the Subsidiary.
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<PAGE> 32
(h) To the Company's Knowledge, Schedule 3.16 contains a true,
complete and correct list of all Liabilities of or attributable to the Company
or its Subsidiary arising from workers' compensation claims, both medical and
disability, or other government-mandated programs which are based on injuries
that occurred prior to the Closing Date regardless of when such claims are filed
including the identity of the claimant, type and value of such Liabilities.
(i) To the Company's Knowledge, Schedule 3.16 contains a true,
complete and correct list of all claims for medical, dental, life insurance,
health, accident, disability or other benefits brought by or in respect of
employees under any of the Company's or Subsidiary's welfare benefit plans where
the claims were incurred prior to the Closing regardless of when such claims are
filed including the identity of the claimant, type and value of such claims.
(j) To the Company's Knowledge, Schedule 3.16 contains a true,
complete and correct list of all Liabilities in connection with claims for
benefits brought by or in respect of all employees and former employees of the
Company or the Subsidiary not retained by the Surviving Company as of the
Closing Date under any of the Company's or Subsidiary's welfare benefit plans
with respect to medical, dental, life insurance, health, accident or disability
or other benefits, including without limitation continuation coverage pursuant
to Section 4980B of the Code and Part 6 of Title I of ERISA including the
identity of the claimant, type and value of such Liabilities.
3.17 Tax Matters.
(a) The term "Taxes" means all net income, capital gains,
gross income, gross receipts, sales, use, transfer, ad valorem, franchise,
profits, license, capital, withholding, payroll, employment, excise, goods and
services, severance, stamp, occupation, premium, property, assessments or other
governmental charges of any kind whatsoever, together with any interest, fines
and any penalties, additions to tax or additional amounts incurred or accrued
under applicable federal, state, local or foreign tax law or assessed, charged
or imposed by any Authority, domestic or foreign, provided that any interest,
penalties, additions to tax or additional amounts that relate to Taxes for any
taxable period (including any portion of any taxable period ending on or before
the Closing Date) shall be deemed to be Taxes for such period, regardless of
when such items are incurred, accrued, assessed or charged. For the purposes of
this Section 3.17, the Company and the Subsidiary shall be deemed to include any
predecessor to the Company and the Subsidiary, respectively, and any Person from
which the Company or the Subsidiary incurs a liability for Taxes as a result of
transferee liability.
(b) Each of the Company and the Subsidiary has duly and timely
filed, taking into account any extensions that have been properly granted (and
prior to the Closing Date will duly and timely file), true, correct and complete
Tax returns, reports or estimates, all prepared in accordance with applicable
Laws, for all years and periods (and portions thereof), for all jurisdictions
(whether federal, state, local or foreign) in which any such returns, reports or
estimates were due, and for all such returns, reports and estimates which are
required to be filed by any applicable Law on or prior to the Closing Date.
Except where the Company is disputing the payment of any Taxes in good faith and
has established adequate reserves in accordance with generally accepted
accounting principles,
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<PAGE> 33
consistently applied, all Taxes shown as due and payable on such returns,
reports and estimates have been paid (or will be paid prior to the Closing), and
there is no current liability for any Taxes due and payable in connection with
any such returns. Any charges, accruals and reserves for Taxes provided for on
the Financial Statements are adequate. There are no existing liens for Taxes
upon any of the assets of the Company or Subsidiary other than for inchoate Tax
Liens incurred in the ordinary course of business in accordance with past
practices for any Taxes not then due and owing. The Company has provided to
Purchaser copies of all federal, state and foreign tax returns filed by each of
the Company and the Subsidiary for the past four (4) years. All applicable sales
Taxes, to the extent due, were paid by the Company or the Subsidiary when its
assets were acquired by the Company or the Subsidiary.
(c) Each of the Company and the Subsidiary has (i) withheld
all required amounts from its employees, agents, contractors and nonresidents
and remitted such amounts to the proper Authorities; (ii) paid all employer
contributions and premiums; and (iii) filed all federal, state, local and
foreign returns and reports with respect to employee income Tax withholding, and
social security and unemployment Taxes and premiums, all in compliance with the
withholding provisions of the Code, or any prior provision of the Code and other
applicable Laws.
(d) None of the Company's or the Subsidiary's assets is tax
exempt use property under Code Section 168(h). None of the Company's or the
Subsidiary's assets is property that the Company or the Subsidiary is required
to treat as being owned by any other Person pursuant to the safe harbor lease
provision of former Code Section 168(f)(8).
(e) No portion of the cost of any of the Company's or the
Subsidiary's assets was financed directly or indirectly from the proceeds of any
tax exempt state or local government obligation described in Code Section
103(a).
(f) Neither the Company nor the Subsidiary has (and has not
previously had any) permanent establishment in any foreign country and neither
the Company nor the Subsidiary engages (and has not previously engaged) in a
trade or business within the meaning of the Code relating to the creation of a
permanent establishment in any foreign country.
(g) Neither the Company nor the Subsidiary is a foreign person
within the meaning of Code Section 1445.
(h) Neither the Code nor any other provision of Law requires
Purchaser to withhold any portion of the Aggregate Merger Consideration.
(i) Neither the Company nor the Subsidiary has ever been a
member of any consolidated, combined or unitary group with any other Person for
federal, state, local or foreign Tax purposes.
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<PAGE> 34
(j) Except as set forth on Schedule 3.17(j), neither the
Company nor the Subsidiary is a party to any joint venture, partnership or other
arrangement that could be treated as a partnership for federal income Tax
purposes.
(k) The federal income Tax returns of each of the Company and
the Subsidiary have been examined by the IRS for all periods ending on or before
April 30, 1990, and have been closed by the applicable statute of limitations,
for all tax returns filed more than three (3) years prior to the date hereof;
the state Tax returns of each of the Company and the Subsidiary have never been
examined by the relevant agencies and therefore such returns have been closed by
the applicable statute of limitations for all tax returns filed more than three
(3) years prior to the date hereof; no deficiencies or reassessments for any
Taxes have been proposed, asserted or assessed against the Company or the
Subsidiary by any federal, state, local or foreign taxing authority.
(l) Neither the Company nor the Subsidiary has executed or
filed with any taxing authority (whether federal, state, local or foreign) any
agreement or other document extending or have the effect of extending the period
for assessment, reassessment or collection of any Taxes, and no power of
attorney granted by the Company or the Subsidiary with respect to any Taxes is
currently in force.
(m) No federal, state, local or foreign Tax audits or other
administrative proceedings, discussions or court proceedings are presently
pending with regard to any Taxes or Tax returns of the Company or the Subsidiary
and no additional issues are being asserted against the Company or the
Subsidiary in connection with any existing audits of the Company or the
Subsidiary.
(n) Neither the Company nor the Subsidiary has entered into
any agreement relating to Taxes which affects any taxable year ending after the
Closing Date.
(o) Neither the Company nor the Subsidiary has agreed to or is
required to make any adjustment by reason of a change in accounting methods that
affects any taxable year ending after the Closing Date. Neither the IRS nor any
other agency has proposed any such adjustment or change in accounting methods
that affects any taxable year ending after the Closing Date. Neither the Company
nor the Subsidiary has any application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to its
business or operations and that affects any taxable year ending after the
Closing Date.
(p) Neither the Company nor the Subsidiary is or has ever been
a party to any Tax sharing agreement or similar arrangement with any other
Person for the sharing of Tax liabilities or benefits.
(q) Neither the Company nor the Subsidiary has consented to
the application of Code section 341(f).
(r) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Company or the Subsidiary that,
individually or collectively, could give
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<PAGE> 35
rise to the payment by the Company or the Subsidiary of any amount that would
not be deductible by reason of Code section 280G.
3.18 Inventories. The Inventories (which are accurately and
completely described in all material respects as of July 27, 1997 on Schedule
3.18 on the basis of a full physical inventory taken by the Company as of such
date) consist of items of a quality and quantity useable or saleable in the
Ordinary Course of Business, except for obsolete or slow moving items and items
below standard quality, all of which have been written down on the books of the
Company or the Subsidiary to net realizable market value or have been provided
for by adequate reserves. All items included in the Inventories are the property
of the Company or the Subsidiary, except for sales made in the Ordinary Course
of Business; for each of these sales either the purchaser has made full payment
or the purchaser's liability to make payment is reflected in the books of the
Company or the Subsidiary. Except as set forth on Schedule 3.18, no items
included in the Inventories have been pledged as collateral, or are held by the
Company or the Subsidiary on consignment from third parties. The Company's or
the Subsidiary's inventories shown on the balance sheets included in the
Financial Statements are based on quantities determined by physical count or
measurement, taken within the preceding twelve (12) months, and are valued at
the lower of cost (determined on a first-in, first-out basis) or market value
and on a basis consistent with prior years. The quantities of items included in
the Company's and the Subsidiary's respective ski rental inventory, including,
without limitation, skis, ski boots, bindings, ski poles and snow boards, (i)
are not, and on the Closing Date shall not be, significantly lower than the
quantities of such items (compared on an item-by-item basis) on hand at the end
of the 1996-1997 ski season due to usage of such items in the ordinary course of
business, and (ii) based on historical data, should be sufficient to meet the
normal and expected demand of the 1997-1998 ski season.
3.19 Title to Assets; Liens. Except as set forth on Schedule
3.19 hereof, each of the Company and Subsidiary has (i) based on the Existing
Title Commitment, good and marketable title to Real Property as provided in the
Existing Title Commitment, and in any event subject to no other Liens except as
disclosed in the Existing Title Commitment; (ii) a valid and binding leasehold
interest in all of the Leased Real Property; (iii) based on the Land Status
Report, the exclusive contractual right to use the USFS Permitted Property in
strict accordance with its USFS Permits except as may be modified by the Court's
Order in the case of Dubois et al. v. United States Forest Service (said action
being more fully identified on Schedule 3.8 hereto); and (iv) good and
marketable title to all of its other assets, real, personal or otherwise, free
and clear of all Liens.
3.20 Real Property.
(a) Schedule 3.20 to this Agreement contains complete and
accurate legal descriptions of each parcel of Real Property owned, leased or
occupied under permit. To the Company's Knowledge, all of the Real Property
Leases are valid and in full force, and there does not exist any default or
event that with notice or lapse of time, or both, would constitute a default
under any of the Real Property Leases.
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(b) Except as set forth on Schedule 3.20: (i) all the
buildings, fixtures and leasehold improvements used by the Company and the
Subsidiary in the Business are located on the Real Property; (ii) each parcel of
Real Property abuts on at least one side a public street or road in a manner so
as to permit reasonable, customary and adequate vehicular and pedestrian
ingress, egress and access to such parcel, or has adequate easements across
intervening property to permit reasonable, customary and adequate vehicular and
pedestrian ingress, egress and access to such parcel from a public street or
road; and (iii) there are no restrictions on entrance to or exit from the Real
Property to adjacent public streets and no conditions which will result in the
termination of the present access from the Real Property to existing highways or
roads.
(c) Subject to any exceptions set forth in the Existing Title
Commitment, each of the Company and the Subsidiary has good and marketable fee
simple title to its Owned Real Property, and good and marketable leasehold
interests to the property leased by the Company or the Subsidiary, in each case,
free and clear of all Liens. Except for the Real Property Leases and subject to
any exceptions set forth in the Existing Title Commitment, to the Company's
Knowledge, there is no unrecorded or undisclosed legal or equitable interest in
any Real Property owned or claimed by any Person. Subject to the Real Property
Leases, each of the Company and the Subsidiary has enjoyed the continuous and
uninterrupted quiet possession, use and operation of its Real Property without
any material complaint or objection by any Person. There exists no unfulfilled
obligation on the part of the Company or the Subsidiary to dedicate or grant an
easement or easements over any portion or portions of any of the Real Property
to any Authority.
(d) All real estate Taxes and assessments which may be due and
payable with respect to the Real Property have been paid.
(e) Neither the Company nor the Subsidiary has received any
notice of any special Tax assessment affecting any property owned or leased in
connection with the Business, and, to Company's Knowledge, no such assessments
are pending or threatened.
3.21 Improvements. The improvements located on the Real
Property are in compliance in all material respects with all applicable Laws and
Orders, and, to the Company's Knowledge, are in reasonable and serviceable
condition and repair, normal wear and tear excepted. Neither the Real Property
nor the use, occupancy, or transfer to Purchaser thereof violates in any
material respect any applicable Laws, Orders or covenants, conditions and
restrictions, whether federal, state, local or private.
3.22 Zoning. Subject to any limitations set forth in the
Existing Title Commitment, the zoning of each parcel of Real Property permits
the presently existing improvements and the continuation of the business
presently being conducted on such parcel. In all material respects, there is no
pending or, to the Company's Knowledge, contemplated rezoning of any Real
Property. All the Real Property is in compliance in all material respects with
applicable state law and local subdivision ordinances, and no final subdivision
or parcel map is required in connection with the Merger.
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3.23 No Commitments. Except as set forth on Schedule 3.23,
there are no outstanding, defaulted or unsatisfied contracts, commitments,
agreements (including, without limitation, developer agreements) or
understandings which have been made to, with or for the benefit of any utility
companies, school districts, water districts, improvement districts or other
Authorities which could reasonably be expected to impose any obligation,
liability or condition on the Company or the Subsidiary, to grant any easements
or to make any payments, contributions or dedications of money or land or to
construct, install or maintain or to contribute to the construction,
installation or maintenance of any improvements of a public or private nature,
whether on or off the Real Property.
3.24 Continued Use of Real Property. There are no presently
pending or, to the Company's Knowledge, threatened, proceedings to (a) condemn,
take or demolish the Real Property or any part thereof, (b) declare the Real
Property or any part of it a nuisance or (c) exercise the power of eminent
domain or a similar power with respect to all or any part of the Real Property.
3.25 Water Rights. Except as set forth in Schedule 3.25, each
of the Company and the Subsidiary has all necessary Permits, property rights and
other necessary approvals to use in all material respects the aggregate amount
of water it has historically used (and at its historic rate of use) in the
operation of the Business, including, but not limited to, the use of water for
snowmaking, and its water use has otherwise been and will be in compliance with
all applicable Laws and Orders (except as described in Schedule 1.1). To the
Company's Knowledge, except as described in Schedule 1.1, no event has occurred
or failed to occur which presently, or upon the giving of notice or lapse of
time, or both, could reasonably be expected to materially adversely affect or
decrease the supply of water to the Company's or the Subsidiary's premises so as
to adversely affect the Company's or the Subsidiary's ability to manufacture
snow at such premises after the Closing Date in amounts approximating the
maximum amounts previously manufactured by the Company and the Subsidiary, or
which the Company and the Subsidiary had the right to manufacture. Schedule 3.25
sets forth a description of all the Company's and the Subsidiary's water rights
at each of its locations, including, without limitation, South Mountain.
3.26 Condition of Assets. Schedule 3.26 lists in all material
respects all of the Company's and the Subsidiary's Equipment and Improvements.
All of the Equipment and Improvements which are necessary for operation of the
Business as currently conducted are in good operating condition and repair
subject to normal wear and tear.
3.27 Consents. Except as contemplated by this Agreement with
respect to the filing of the Articles of Merger with the Secretary of State of
New Hampshire, the USFS Permits, the appropriate filings pursuant to the HSR
Act, if applicable, or as otherwise disclosed on Schedule 3.27, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Authority or any other Person is required to be obtained or made by
the Company in connection with the execution and delivery of this Agreement or
the performance by the Company of its obligations hereunder.
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3.28 Licenses and Permits. Schedule 3.28 lists and describes
all material qualifications, registrations, filings, privileges, franchises,
immunities, licenses, permits, authorizations and approvals of Authorities which
are used or required in order for the Company and the Subsidiary to own and
operate the Business, including, without limitation, all certificates of
occupancy and certificates, licenses and permits relating to zoning, building,
housing, safety, Environmental Laws, fire and health (collectively, the
"Permits"); and each Permit is in good standing, valid and subsisting, and in
full force and effect in accordance with its terms.
3.29 No Alternative Transactions. Neither the Company nor the
Subsidiary is a party to or otherwise bound by any agreement with respect to an
Alternative Transaction.
3.30 Occupational Safety and Health. Except as set forth on
Schedule 3.30, neither the Company nor the Subsidiary has received any notice,
citation, claim, assessment or proposed assessment as to or alleging any current
violation of any federal, state or local occupational safety and health laws nor
to the Company's Knowledge has the Company or the Subsidiary been subject to any
investigation by any federal, state or local occupational safety and health
agency within the three (3) years preceding the date hereof, and to the
Company's Knowledge no such violation exists. Neither the Company nor the
Subsidiary is a party to any pending dispute with respect to compliance with any
federal, state or local occupational safety and health law.
3.31 Insurance.
(a) Schedule 3.31 sets forth a list and brief description of
all insurance policies maintained by the Company and the Subsidiary.
(b) Each of the Company and the Subsidiary is not in default
with respect to any provision contained in any such insurance policy, nor has it
failed to give any notice or present any claim thereunder in a due and timely
fashion. Neither the Company nor the Subsidiary has received notice from any
insurance carrier that material alterations to the Real Property, the facilities
located thereon or the Business are required by such carrier.
3.32 Financial Statements. The Financial Statements attached
hereto as Schedule 3.32 were prepared by the Company from the books and records
of the Business and in accordance with generally accepted accounting principles
consistently applied and present fairly the financial position and results of
operations of the Company and the Subsidiary at the dates and for the periods
indicated therein.
3.33 Undisclosed Liabilities. On the Reference Balance Sheet
Date, the Company had no liability with respect to the Business of any nature
(whether accrued, absolute, contingent or otherwise) of the type which should be
reflected in balance sheets (including the notes thereto) prepared in accordance
with generally accepted accounting principles which was not fully disclosed,
reflected or reserved against in the Reference Balance Sheet; and, except for
liabilities which have been incurred since the Reference Balance Sheet Date in
the Ordinary Course of Business, since the
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Reference Balance Sheet Date neither the Company nor the Subsidiary has incurred
any liability of any nature (whether accrued, absolute, contingent or
otherwise).
3.34 Conduct of Business Since Reference Balance Sheet Date.
Since the Reference Balance Sheet Date:
(a) the Business has been conducted only in the Ordinary
Course of Business;
(b) except for equipment, inventory and supplies purchased,
sold or otherwise disposed of in the Ordinary Course of the Business, neither
the Company nor the Subsidiary has purchased, sold, leased, mortgaged, pledged
or otherwise acquired or disposed of any properties or assets except for
continuing to implement and fund the Company's current operating and capital
budget for the 1997-1998 fiscal year ("FY 1997-98 Budget") as such budget is
described on Schedule 3.34;
(c) neither the Company nor the Subsidiary has sustained or
incurred any loss or damage with respect to the Business (whether or not insured
against) on account of fire, flood, accident or other calamity which has in any
material respect interfered with or affected, or may in any material respect
interfere with or affect, the operation of the Business;
(d) neither the Company nor the Subsidiary has increased the
rate of compensation of any officer or other employee of the Business, except in
the Ordinary Course of Business, or in any event offered or issued any
additional Options or has hired any officer or other employee;
(e) to the Company's Knowledge there has been no material
adverse change in or with respect to the condition (financial or otherwise),
operations, business, prospects, rights, properties, assets or liabilities of
the Business or the Company's or the Subsidiary's relations with Authorities or
its employees, creditors, advertisers, suppliers, distributors, customers or
others having business relationships with the Company or the Subsidiary;
(f) neither the Company nor the Subsidiary has canceled any of
its debts or claims owed to it;
(g) neither the Company nor the Subsidiary has changed any
accounting methods or practices (including, without limitation, any change in
depreciation or amortization policies or rates);
(h) neither the Company nor the Subsidiary has made any
dividend or distribution to its shareholders or other holders of capital stock,
except that (i) the Company has paid on August 1, 1997 a one-time cash dividend
to the holders of the Company Common Stock in the aggregate amount of Fifty-Nine
Thousand and Forty-Seven Dollars ($59,047) and (ii) the Company shall after the
date hereof redeem all of its Company Preferred Stock immediately prior to the
Shareholders' Meeting (as hereinafter defined); or
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(i) neither the Company nor the Subsidiary has agreed to take
any of the actions described in paragraphs (b), (d), (f), (g) or (h) above.
3.35 Broker's or Consultant's Fees. Neither the Company nor
the Subsidiary has dealt with any broker, finder or consultant in connection
with any of the transactions contemplated by this Agreement, and, to the
Company's Knowledge, no Person is entitled to any commission or finder's fee in
connection with the transactions contemplated by this Agreement except for Fifty
Thousand Dollars ($50,000) plus reasonable expenses payable to Tucker Anthony
Incorporated in accordance with that certain engagement letter dated as of May
30, 1997 between the Company and Tucker Anthony Incorporated.
3.36 Banking Arrangements. Except as set forth in Schedule
3.36, neither the Company nor the Subsidiary has banking, borrowing or
depository relationship, or accounts or deposits of funds, and all persons
authorized as signatories on each such account are listed in Schedule 3.36.
3.37 Powers of Attorney. No Person holds any power of attorney
from the Company or the Subsidiary.
3.38 Disclosure. None of the representations and warranties
made by the Company in this Agreement or in any letter, certificate or
memorandum furnished or to be furnished by the Company, or on its behalf,
contains or will contain any untrue statement of a material fact, or omits any
material fact the omission of which would make the statements made therein
misleading. Except for facts or circumstances affecting the ski resort industry
generally, there is no fact known to any of the Company's or the Subsidiary's
officers which materially adversely affects, or is reasonably likely to
materially adversely affect, the condition (financial or otherwise), assets,
liabilities, business, operations or prospects of the Business, the value or
utility of the Company's or the Subsidiary's assets or the ability of the
Company or the Subsidiary to consummate the transactions contemplated hereby
that has not been set forth herein or heretofore communicated to Purchaser in
writing pursuant hereto.
3.39 Proxy Statement. The proxy statement to be sent to the
shareholders of the Company in connection with the shareholders meeting referred
to in Section 5.10 (such proxy statement, as amended or supplemented, is herein
referred to as the "Proxy Statement"), shall not, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
shareholders or at the time of such shareholders meeting, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or shall omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they are made, not misleading. The Proxy Statement shall comply in all material
respects with New Hampshire Law and shall include, without limitation, a notice
which complies with RSA 293-A:13:20 of New Hampshire Law.
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3.40 Shareholders. At no point in time has the Company Common
Stock been owned by 500 or more shareholders of record.
3.41 Expansion. Schedule 1.1 hereto sets forth a summary
description of the Company's efforts to expand its ski facilities onto the South
Mountain and the current status of and any legal impediments to such Expansion,
including, without limitation, a list of all development activities to date, any
USFS Permits, the status of any legal actions or rights to use additional water
for snow making purposes on the South Mountain as well as the status of any
repermitting efforts and any agreements by the USFS to reimburse the Company for
additional costs; provided, however, that the Company makes no representation or
warranty relating to its Permits or agreements with respect to the Expansion or
the likelihood of completing such Expansion.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND ACQUISITION SUB
As an inducement to the Company to enter into and perform its
obligations under this Agreement, and in consideration of the covenants of the
Company contained herein, Purchaser and Acquisition Sub hereby, jointly and
severally, represent and warrant to the Company (which representations and
warranties shall survive the Closing for the periods set forth in Section 10.4
regardless of what examinations, inspections, audits and other investigations
the Company has heretofore made, or may hereafter make, with respect to such
representations and warranties) as follows:
4.1 Corporate Status. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Acquisition Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Hampshire.
4.2 Due Authorization. The execution and delivery by each of
Purchaser and Acquisition Sub of this Agreement, and the performance by each of
Purchaser and Acquisition Sub of its obligations hereunder, have been duly and
validly authorized and approved by all necessary corporate action on the part of
each of Purchaser and Acquisition Sub.
4.3 Authority of Purchaser. Except as expressly set forth
herein (which approvals will be received on or before the Effective Time), each
of Purchaser and Acquisition Sub has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
Neither the execution or delivery of this Agreement by Purchaser or Acquisition
Sub nor the performance by Purchaser or Acquisition Sub of its obligations under
this Agreement will in any material respect and subject to the receipt of the
consents and approvals referred to in Section 4.5 conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, any
material contract, lease, license, franchise, permit, indenture, mortgage, deed
of trust, note agreement or other agreement or instrument to which Purchaser or
Acquisition Sub is a party or is
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bound, its certificate or articles of incorporation, by-laws or any applicable
Law or Order to which Purchaser or Acquisition Sub is a party or by which
Purchaser or Acquisition Sub is bound.
4.4 Enforceability. This Agreement is binding upon, and
enforceable against, each of Purchaser and Acquisition Sub in accordance with
its terms, subject to bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally and by principles of equity (whether in a
proceeding at law or in equity).
4.5 Consents. Except as contemplated by this Agreement with
respect to the filing of the Articles of Merger with the Secretary of State of
New Hampshire, the USFS Permits, the appropriate filings pursuant to the HSR
Act, if applicable, or as otherwise contemplated by this Agreement, no consent,
approval, Order or authorization of, or registration, declaration or filing
with, any Authority or any other Person is required to be obtained or made by
Purchaser or Acquisition Sub in connection with its execution and delivery of
this Agreement or the performance by either of them of its obligations
hereunder.
4.6 Broker's or Consultant's Fees. Each of Purchaser and
Acquisition Sub represents and warrants that it has dealt with no broker, finder
or consultant in connection with any of the transactions contemplated by this
Agreement, and, to its knowledge, no Person is entitled to any commission or
finder's fee in connection with the transactions contemplated by this Agreement.
4.7 Litigation. As of the date hereof, there are no actions,
suits, proceedings or investigations pending, or to the knowledge of the
Purchaser or Acquisition Sub threatened, against Purchaser or Acquisition Sub
which question the validity, legality or propriety of the transactions
contemplated by this Agreement or could have a material adverse effect on
Purchaser's or Acquisition Sub's ability to perform its obligations hereunder.
4.8 Business Activities of Acquisition Sub. Acquisition Sub
was formed for purposes of the transactions contemplated by this Agreement and
it has not conducted any business activities other than those related to the
transactions contemplated by this Agreement as of the date hereof.
ARTICLE V
PRE-CLOSING COVENANTS
Each of the Company, Purchaser and Acquisition Sub covenant
and agree that from the date hereof through and including the Closing Date:
5.1 Required Consents. The Company will use all commercially
reasonable efforts to obtain the consents listed on Schedule 3.27. Purchaser and
Acquisition Sub will use all commercially reasonable efforts to obtain the
consents expressly listed in Section 4.5 hereof.
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5.2 Conduct of the Business. Except as otherwise contemplated
by this Agreement or consented to by Purchaser in writing:
(a) The Company will (i) operate and maintain the Business in
the Ordinary Course of Business; (ii) cause Subsidiary to operate and maintain
its business in the ordinary course; (iii) keep and cause Subsidiary to keep all
Equipment and Improvements necessary for the operation of the Business as
currently conducted in good operating condition and repair, reasonable wear and
tear excepted, and replace any of it that may be worn out, lost, stolen or
destroyed; (iv) maintain and cause Subsidiary to maintain normal quantities of
retail and non-retail Inventories; (v) not and cause Subsidiary not to execute
any employment contracts with any Person; and (vi) proceed forward as
expeditiously as reasonably practicable to complete the capital improvements as
proposed by the FY 1997-98 Budget.
(b) The Company shall not, and shall not allow the Subsidiary,
if applicable, to (i) permit or allow any of the Company's or the Subsidiary's
assets to be subjected to any Lien; (ii) purchase, sell, lease, transfer or
otherwise dispose of any of the Company's or the Subsidiary's assets, except for
Inventory sold, leased, transferred or otherwise disposed of in the Ordinary
Course of Business and purchases made in accordance with the Company's FY
1997-98 Budget; (iii) terminate, modify or amend materially any of the Contracts
listed on Schedule 3.6 or any other Contract to the extent that such change
would require it to be disclosed on the Disclosure Schedules; (iv) enter into
any material contract, lease, registration, license or permit without the prior
written consent of Purchaser; (v) change the Business' accounting methods,
principles or practices (including without limitation, any change in
depreciation or amortization methods, policies or rates or income recognition
methods); (vi) increase or otherwise change the rate or nature of the
compensation (including wages, salaries, bonuses and benefits under any Plan)
which is paid or payable to any officer, employee or other representative of the
Business or of the Subsidiary's business, except in the Ordinary Course of
Business or in any event offer or issue any additional Options; (vii) make, or
commit to make, any payment, contribution or award under or into any bonus,
pension, profit-sharing, deferred compensation or similar plan, program or
trust; (viii) make any other material change in the Business or in the
Subsidiary's business or the operation thereof; (ix) make any dividend
distributions to its stockholders other than for the redemption by the Company
by payment of the Aggregate Preferred Redemption Consideration of all of its
Company Preferred Stock immediately prior to the Shareholders' Meeting (as
hereinafter defined); or (x) hire any officer or executive; and
(c) The Company shall, and shall cause the Subsidiary to, use
all commercially reasonable efforts to preserve and protect the Business'
goodwill, prospects, rights, properties, assets and business, to keep available
to it and Purchaser the services of the Business' employees, and to preserve and
protect the Business' relationships with Authorities and its employees,
officers, advertisers, suppliers, customers, creditors and others having
business relationships with it.
5.3 Right of Inspection; Access to Books and Personnel. The
Company shall, and shall cause the Subsidiary, the Company's and the
Subsidiary's officers, directors, employees, auditors and agents to, afford to
Purchaser and Purchaser's officers, employees, auditors, agents and
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lenders the right at any time prior to the Closing during normal business hours,
access to and the right to investigate each of the Company's and the
Subsidiary's directors, officers, employees, auditors, agents, facilities, books
and records as Purchaser reasonably shall deem necessary or desirable and shall
furnish such financial and operating data and other information as Purchaser may
reasonably require and to permit Purchaser to conduct environmental testing;
provided, however, that if this Agreement is terminated in accordance with
Article XI hereof, Purchaser shall thereafter be required to repair or remediate
any damage or contamination to the Company's land, buildings or other property
that Purchaser's environmental engineering firm may have directly caused in
connection with such environmental testing, and Purchaser shall indemnify and
hold the Company harmless from and against any costs, expenses, liabilities,
causes of action or losses that the Company may suffer or incur as the direct
result of any damage or contamination to the Company's land, buildings or other
property caused solely by Purchaser's environmental engineering firm performing
such environmental testing. No such access, examination or review shall in any
way affect, diminish or terminate any of the representations, warranties or
covenants of the Company set forth herein.
5.4 Notification of Material Adverse Events. The Company shall
promptly notify Purchaser in writing of any event following the date hereof of
which the Company or the Subsidiary is or becomes aware that will or may
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), rights, properties, assets or prospects of the Company
or of the Subsidiary or the performance by the Company of its obligations under
this Agreement.
5.5 Disclosure Schedule and Supplemental Disclosures. The
Company has delivered disclosure schedules (the "Disclosure Schedules") dated
the date hereof which contain the information required by this Agreement. The
Company shall have the continuing obligation to promptly propose in writing
supplements and amendments to the Disclosure Schedules as necessary or
appropriate with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in the Disclosure Schedules; provided, however, that for
the purpose of the rights and obligations of the parties hereunder, any such
proposed supplemental or amended disclosure shall not, except as Purchaser may
otherwise agree in writing, be deemed to have been accepted or to have cured any
breach of any representation or warranty made in this Agreement.
5.6 Title Insurance and Surveys.
(a) The Company shall endeavor in good faith on behalf of
Purchaser to obtain and deliver to Purchaser at least thirty (30) days prior to
the Closing Date the following:
(i) with respect to each parcel of Owned Real
Property, an owner's preliminary report on title covering a date
subsequent to the date hereof, issued by Chicago Title Insurance
Company or another title insurance company reasonably acceptable to
Purchaser (the "Title Company"), which preliminary report shall contain
a commitment of the Title Company to issue an owner's title insurance
policy on ALTA 1992 Owner's Form B (the "Title Policies") insuring the
fee simple title of the Company or of the Subsidiary, as
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the case may be, in such real estate, subject only to exceptions which
are reasonably satisfactory to Purchaser, and shall include extended
coverage, a zoning 3.1 with parking endorsement, a non-imputation
endorsement, an owner's comprehensive endorsement and such other
endorsements or coverages deemed necessary or advisable in the
reasonable judgment of Purchaser;
(ii) with respect to each parcel of Leased Real
Property, a preliminary report on title covering a date subsequent to
the date hereof, issued by the Title Company, which preliminary report
shall contain a commitment of the Title Company to issue a leasehold
title insurance policy on ALTA Leasehold Owner's Policy (10-17-92)
insuring the Company's or the Subsidiary's (as the case may be)
leasehold interests under the leases covering such parcels in amounts
reasonably satisfactory to Purchaser, and shall include extended
coverage, a zoning 3.1 with parking endorsement, a non-imputation
endorsement, an owner's comprehensive endorsement and such other
endorsements or coverages deemed necessary or advisable in the
reasonable judgment of Purchaser (the "Leasehold Policies");
(iii) surveys certified by a registered land surveyor
as of a date subsequent to the date hereof (the "Surveys"), of the real
estate covered by the preliminary report on title deliverable under
paragraphs (i) and (ii) above, prepared in accordance with ALTA/ACSM
standards, and showing with respect to such real estate: (A) the legal
description; (B) all buildings, structures and improvements thereon and
all "setback" lines, restrictions of record and other restrictions that
have been established by an applicable zoning or building code or
ordinance and all easements or rights of way; (C) any encroachments
upon such parcel or upon adjoining parcels by buildings, structures,
improvements or easements; and (D) access to such parcel; and
(iv) with respect to the USFS Permitted Property, a
land status report in the form of a letter from the Laconia, New
Hampshire office of the Forest Service, together with copies of pages
from the land status atlas maintained at such office, with respect to
all existing interests in and burdens on the USFS Permitted Property
including, without limitation, all mineral claims and patents, leases,
inholdings, permits, rights of way and easements (the "Land Status
Report").
(v) The costs and expenses of the Title Policies,
Leasehold Policies and the Land Status Report referred to in this
Section 5.6 shall be paid by the Company and the costs and expenses of
the Survey shall be paid by the Purchaser, in each case whether or not
the transactions contemplated under this Agreement are consummated.
5.7 Code Section 1445 Withholding. The Company shall take all
actions as may be necessary to comply with Sections 897 and 1445 of the Code and
any rules, regulations and orders which may be promulgated thereunder. In the
event that the Company fails to provide to Purchaser, at or prior to the
Closing, either (a) a certificate from the Company in the form of Exhibit I(A)
attached hereto, or (b) evidence satisfactory to Purchaser's counsel that the
transaction contemplated by this Agreement is exempt from any Taxes which may
apply by reason of Section
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897 of the Code, Purchaser shall (or shall require the Exchange Agent to)
withhold ten percent (10%) of any payment to any holder of Company Common Stock
or Options who fails to provide the Purchaser or the Exchange Agent with a fully
executed original certificate in the form of Exhibit I(B) attached hereto signed
by such holder (the "Section 1445 Withholding"), and Purchaser shall hold and
dispose of the Section 1445 Withholding in accordance with the requirements of
Section 1445 of the Code. The amount of the Section 1445 Withholding shall be
credited against the Aggregate Merger Consideration otherwise due and payable
hereunder by Acquisition Sub at the Closing and neither the Company nor any
holder of any Company Common Stock or Options shall have recourse against
Purchaser therefor. It shall be a condition to the Closing that the Title
Company shall omit from the Title Policies and the Leasehold Policies any and
all exceptions based upon any Tax Liabilities arising under Section 897 of the
Code.
5.8 Exclusivity. Unless this Agreement has been terminated in
accordance with Article XI, (a) the Company shall not, and shall not permit the
Subsidiary or any other of the Company's Affiliates, directors, officers, agents
or advisors to, initiate, pursue or encourage (by way of furnishing information
or otherwise) any inquiries or proposals, or enter into any discussions,
negotiations or agreements (whether preliminary or definitive) with any Person,
contemplating or providing for any merger, acquisition, purchase or sale of all
or substantially all of the assets or stock or any business combination or
change in control of the Business, other than the transaction contemplated by
this Agreement (an "Alternative Transaction"), (b) the Company shall deal
exclusively with Purchaser and Acquisition Sub with respect to the Merger and
the transactions contemplated by this Agreement and (c) the Company shall
immediately notify Purchaser and share the terms of any offer it receives from
any other party which could qualify as an offer, proposal or other notice
concerning or in respect of an Alternative Transaction.
5.9 Required Filings.
(a) If required, the Company and Purchaser shall cause to be
filed with the DOJ and the FTC the premerger notification form required pursuant
to the HSR Act with respect to the transactions contemplated hereby, together
with a request for early termination of the waiting period specified under the
HSR Act. The parties agree with respect to such filing that they shall (i) after
any request by the DOJ or FTC, promptly file any information or documents
requested by the DOJ or the FTC and (ii) notify each other of any communications
with the DOJ or the FTC which relate to the transactions contemplated hereby.
Purchaser shall pay the HSR Act filing fee.
(b) The Company, Purchaser and Acquisition Sub agree to (i)
promptly file, or cause to be promptly filed, with all appropriate Authorities
all notices, registrations, declarations, applications and other documents as
may be necessary to consummate the transactions contemplated hereby and (ii)
thereafter diligently pursue all consents, approvals and authorizations from
such Authorities as may be necessary to consummate the transactions contemplated
hereby.
5.10 Shareholder Approval and Dissenting Shares. The Company
will promptly take all steps necessary to circulate the Proxy Statement to all
of its shareholders within twenty (20) days after the date hereof (which Proxy
Statement shall include the recommendation by all of the
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members of its Board of Directors (except for the recommendation by Samuel S.
Adams and Donald Lavoie who have abstained from such recommendation because of a
conflict of interest, but who each have executed and delivered a Shareholder
Agreement with respect to the Company Common Stock owned by them on the date
hereof) that the shareholders approve the Merger) and then to call a special
meeting of its shareholders and submit this Agreement for approval at such
meeting of shareholders ("Shareholders' Meeting"), which the Company shall hold
within forty-five (45) days after the date hereof or at such later date as to
which Purchaser shall consent in writing. The Company will use its reasonable
and good faith efforts to obtain the necessary approvals of this Agreement and
the transactions contemplated hereby by the shareholders of the Company.
Simultaneous herewith holders of Company Common Stock who own beneficially and
of record at least 51% of the outstanding shares of Company Common Stock on a
fully diluted basis have executed and delivered to Purchaser a Shareholder
Agreement in substantially the form of Exhibit F attached hereto. Additionally,
the Company shall have kept the Purchaser apprised of the number of holders of
shares of Company Common Stock who have exercised appraisal or dissenter's
rights and the Company shall not enter into any negotiations, agreements or
settlements with or make any payments to holders of Dissenting Shares without
the prior written consent of the Purchaser.
5.11 Interim Financial Statements. The Company shall deliver
to Purchaser within twenty (20) days following the end of each fiscal month
hereafter, an unaudited balance sheet and statement of income for the Company
and its subsidiaries (prepared in accordance with generally accepted accounting
principles, consistently applied with the preparation of the Financial
Statements) as of the end of and for each such fiscal month, beginning with the
month ending in August 1997.
5.12 Earnest Money Deposit. On the date hereof the Purchaser
shall deposit One Hundred Fifty Thousand Dollars ($150,000) (the "Earnest
Money") with the Company by payment in the form of a check or by wire transfer
of immediately available funds to the Company, and the Company agrees to retain
and use such Earnest Money pursuant to this Section 5.12. If the Merger
contemplated hereby is not consummated and this Agreement is terminated in
accordance with the terms and conditions hereof solely by reason of (i) a
material breach by the Purchaser or Acquisition Sub hereunder, (ii) the failure
of the Purchaser or Acquisition Sub to satisfy the condition precedent to the
Purchaser's obligation to close hereunder as set forth in either the first
sentence of Section 6.1(h) or the third sentence of Section 6.1(n), then in such
instances the Company shall be entitled to retain the Earnest Money, together
with any interest or income earned thereon, as and for full liquidated damages
with respect to the transactions contemplated hereby and not as a penalty. If
the Merger contemplated hereby is not consummated for any reason other than as
described above, then the Company shall promptly after the termination of this
Agreement refund the Earnest Money to the Purchaser, in cash, together with
interest thereon for the number of days it had such Earnest Money calculated at
a per annum rate equal to the prime rate as announced by the Wall Street
Journal. If the Merger contemplated hereby is consummated, then the Earnest
Money (plus any interest or income earned thereon as calculated above less the
Aggregate Preferred Redemption Consideration) shall be forwarded by the Company
on behalf of the Purchaser to the Exchange Agent on the Closing Date as part of
the Aggregate Merger Consideration.
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5.13 Company Preferred Stock.
(a) Immediately following the date hereof, the Company will
(i) promptly circulate notices of redemption of the Company Preferred Stock to
all of its shareholders of Company Preferred Stock at a per share redemption
price equal to the Preferred Share Redemption Consideration, (ii) pursuant to
RSA 293-A:7.21(d) of New Hampshire Law deposit the Aggregate Preferred
Redemption Consideration with an escrow agent to be held under an irrevocable
obligation to pay the shareholders of Company Preferred Stock the Preferred
Share Redemption Consideration in accordance with New Hampshire Law and (iii)
provide the Purchaser with written evidence of the deposit of the Aggregate
Preferred Redemption Consideration with such escrow agent in accordance with New
Hampshire Law.
(b) After thirty (30) days following the circulation of the
notices of redemption of Company Preferred Stock (and in any no event later than
immediately prior to the Shareholders' Meeting), the Company shall redeem each
share of Company Preferred Stock by making a cash payment to the holder of each
share of Company Preferred Stock (and subject, in the case of each such holder,
to the receipt from such holder of the original stock certificate or certificate
representing such shares of Company Preferred Stock together with any customary
instruments of transfer that may reasonably be required by the Company), in an
amount equal to the Preferred Share Redemption Consideration multiplied by the
number of shares of Company Preferred Stock being surrendered by each such
holder. The Company shall use commercially reasonable and good faith efforts to
advise each holder of Company Preferred Stock relating to the redemption of his,
hers or its Company Preferred Stock as of the Shareholders' Meeting and obtain
the transfer documentation as required by this Section 5.13. A holder of Company
Preferred Stock who delivers to the Company his, her or its stock certificate
and proper transfer documentation (i) prior to the Shareholders' Meeting shall
be paid pursuant to this Section 5.13 on the date immediately preceding the date
of the Shareholders' Meeting, (ii) within thirty (30) days after the date of the
Shareholders' Meeting shall be paid pursuant to this Section 5.13 as soon as
reasonably practicable after receipt of such stock certificate and proper
transfer documentation by the Company and (iii) after thirty (30) days following
the date of the Shareholders' Meeting shall be paid pursuant to this Section
5.13 as soon as reasonably practicable but in no event later than ten (10)
business days after receipt of such stock certificate and proper transfer
documentation by the Company.
(c) Each share of Company Preferred Stock which, immediately
prior to the redemption notice in clause (a) above, was held by the Company as a
treasury share shall be canceled and retired without any payment being made
therefor;
(d) There shall be no obligation on the part of the Company to
deliver any payment in respect of any the Company Preferred Stock until (and
then only to the extent that) the holder thereof surrenders its certificate(s)
representing his, hers or its shares of Company Preferred Stock for exchange as
provided in this Section 5.13, or, in lieu thereof, delivers to the Company an
appropriate affidavit of loss and an indemnity agreement.
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If any payment for the Company Preferred Stock is to be made
in a name other than that in which the certificate for the Company Preferred
Stock surrendered for exchange is registered, it shall be a condition to the
payment that the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer, that all signatures shall be guaranteed
by a member firm of any national securities exchange in the United States or the
National Association of Securities Dealers, Inc., or by a commercial bank or
trust company having an office in the United States, and that the person
requesting the payment shall either (i) pay to the Company any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the certificate surrendered or (ii) establish to the reasonable
satisfaction of the Company that such taxes have been paid or are not payable.
From and after the date of the redemption notice in clause (a) above, there
shall be no transfers on the stock transfer books of the Company of any shares
of Company Preferred Stock outstanding immediately prior to such redemption
notice and any such shares of Company Preferred Stock presented to the Company
shall be canceled in exchange for the aggregate amounts payable with respect
thereto as provided in this Section 5.13.
5.14 Exchange Agent Agreement. The Company, the Purchaser and
the Acquisition Sub agree to promptly execute (and in the case of the Company to
cause the execution by the Representative) the Exchange Agreement after the
approval of the Merger by the Company's shareholders at the Shareholders'
Meeting.
5.15 Marketing Agreement. The Company hereby agrees to
negotiate in good faith and to enter into a commercially reasonable Marketing
Agreement for the 1997-98 ski season with certain affiliates of Purchaser (being
Waterville Valley Ski Resort, Inc. and Mount Cranmore Ski Resort, Inc.) as
promptly as possible after the date hereof.
ARTICLE VI
CONDITIONS PRECEDENT TO PURCHASER'S
AND ACQUISITION SUB'S OBLIGATIONS
6.1 Obligations to be Satisfied on or Prior to Closing Date.
The obligations of Purchaser and Acquisition Sub to effect the Merger and the
transactions contemplated by this Agreement is subject to the satisfaction (or
waiver by Purchaser or Acquisition Sub), on or prior to the Closing Date, of the
following conditions:
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties made by the Company in this Agreement shall be
true, correct and complete in all material respects on the Closing Date as
though made on such date.
(b) Compliance with Agreement. The Company and the Subsidiary
shall have performed or complied in all material respects with the covenants,
agreements and obligations required by this Agreement to be performed or
complied with by the Company or the Subsidiary on or prior to the Closing Date.
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(c) Investigation. Each of Purchaser, Purchaser's agents,
Acquisition Sub and Acquisition Sub's agents and their respective lenders shall
have been afforded access to the Company's and the Subsidiary's books and
records, officers, employees, agents, facilities and personnel, as provided in
Section 5.3, and Purchaser, Purchaser's agents, Acquisition Sub and Acquisition
Sub's agents and their respective lenders shall have completed their respective
due diligence reviews of the assets, properties, liabilities, business and books
and records (including, but not limited to, financial and Tax books and records)
of the Company and the Subsidiary, and the results thereof shall be satisfactory
to Purchaser and Acquisition Sub in their sole discretion. The Purchaser shall
have received a Phase I environmental report with respect to the Real Property
which is satisfactory in form and substance to Purchaser in its sole and
absolute discretion.
(d) Consents. All consents, approvals, orders, authorizations,
registrations, declarations and filings described on Schedule 3.27 shall have
been obtained or made in form reasonably satisfactory to Purchaser and
Acquisition Sub. This Agreement shall have been adopted and approved by the
requisite vote of the holders of the Company Common Stock required under New
Hampshire Law and the Company's articles of incorporation, as amended. Any
required consent of the Forest Service or reissuance of each USFS Permit to the
Company upon consummation of the Merger and the transactions contemplated by
this Agreement shall have been obtained on or prior to the Closing Date. All
necessary authorizations, agreements and consents of any Persons or Authorities
to the consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, shall have been obtained by
the Company and delivered to Purchaser and shall be in full force and effect as
of the Closing Date, and no such authorizations, agreements and consents shall
impose any burdensome or, in Purchaser's reasonable determination,
unsatisfactory conditions or requirements on Purchaser or Acquisition Sub or
Purchaser shall have entered into new contracts or agreements which permit the
continued use or supply of the property, products, technology or services
provided for by the Company's and the Subsidiary's existing contracts or
agreements on terms no less favorable to Purchaser than the prior contract or
agreement of the Company or the Subsidiary as to such property, products,
technology or services.
(e) No Adverse Proceedings. No Law shall have been enacted or
promulgated, and no investigation, action, suit or proceeding shall have been
threatened or instituted against the Company or the Subsidiary, which, in any
case, in the reasonable judgment of Purchaser, challenges, or might result in a
challenge to, the consummation of the transactions contemplated hereby, or which
claims, or might give rise to a claim for, damages against the Purchaser or
Acquisition Sub as a result of the consummation of such transactions.
(f) No Material Adverse Change. There shall have occurred no
material adverse change in or with respect to the condition (financial or
otherwise), business, prospects, rights, properties or assets of the Business,
the Company or the Subsidiary since the date hereof.
(g) Schedules. All amendments or supplements to the Disclosure
Schedules made by the Company pursuant to Section 5.5 shall be reasonably
acceptable to Purchaser and Acquisition Sub.
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(h) Financing; Purchaser Consent. Purchaser shall have
received funds pursuant to any and all necessary debt and equity financing for
the consummation of the transactions contemplated herein and the operation of
the Business after the Closing Date and the consent of its current lenders to
such new financing together with appropriate pay-off letters and lien releases
form the Company's current lenders to terminate and discharge any Liens such
lenders have on the Company's or the Subsidiary's assets, in each case on such
terms and subject to such conditions as are satisfactory to the Purchaser in its
sole discretion. This Agreement and the transactions contemplated hereby shall
have been approved by Purchaser's shareholders.
(i) Closing Documents. The Company shall have delivered all
reports, agreements, certificates, instruments, opinions and other documents
required to be delivered by the Company on the Closing Date pursuant to Section
8.3, and the form and substance of all such reports, agreements, certificates,
instruments, opinions and other documents shall be reasonably satisfactory to
Purchaser and Acquisition Sub; provided, however, that the Company acknowledges
that neither Purchaser nor Acquisition Sub has been given an opportunity to
review or approve the fee schedules attached as Exhibit V to the Exchange
Agreement or Exhibit IV to the Escrow Agreement and that such exhibits are
subject to the review and approval of Purchaser and Acquisition Sub, which
approval may be withheld in their reasonable discretion.
(j) Title Insurance and Surveys. As of the date hereof,
Purchaser has not yet received the Title Policies, Leasehold Policies, the Land
Status Report, the Surveys or any draft versions thereof, and as such at the
Closing, Purchaser shall have received the Title Policies, Leasehold Policies,
Land Status Report and Surveys, each dated the Closing Date, and in form and
substance satisfactory to Purchaser in its sole and absolute discretion
including, without limitation, being satisfied as to the extent and nature of
any easements or encumbrances whether or not disclosed on the Existing Title
Commitment and the amount of real property owned, leased or subject to permits
in favor of the Company or the Subsidiary.
(k) UCC, Tax Lien and Judgment Search Results. Each of
Purchaser and Acquisition Sub shall have received a report, in form and
substance satisfactory to Purchaser, as to the results of an examination
relating to the Company and the Subsidiary of financing statements filed under
the Uniform Commercial Code, and tax lien and judgment records, in each office
in each such jurisdiction as Purchaser shall reasonably request, and such report
shall indicate no material security interests, Tax Liens, judgments or other
Liens not previously disclosed in writing to Purchaser.
(l) Hart-Scott-Rodino Act. All filings required pursuant to
the Hart-Scott-Rodino Act will have been made, and any approvals required
thereunder will have been obtained, or the waiting period required thereby will
have expired or have been terminated, as the case may be.
(m) Dissenters. Holders of the Company Common Stock shall have
approved the Merger at a duly convened meeting of the shareholders of the
Company and holders of not more than five percent (5%) of the shares of Company
Common Stock outstanding shall have exercised appraisal or dissenter's rights
under New Hampshire Law.
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(n) Forest Service Permits; Water Rights and Expansion. All
notices required under the USFS Permits will have been made, and any approvals
required thereunder or by any Law or Order relating thereto will have been
obtained. All necessary Permits and approvals will have been obtained to allow
the Company to use the maximum aggregate amount of water it has historically
used in the operation of the Business, including, but not limited to, the use of
water for snowmaking. Purchaser is satisfied in its sole discretion that the
Expansion will be authorized by the Forest Service and any other necessary
Authorities without material future cost, delay, or restrictions.
6.2 Procedure for Failure to Satisfy Conditions. In the event
that, in Purchaser's or Acquisition Sub's reasonable judgment, any of the
conditions precedent set forth in Section 6.1 have not been satisfied, Purchaser
or Acquisition Sub shall notify the Company in writing indicating its election
to (a) waive such condition precedent or (b) terminate this Agreement pursuant
to Section 11.1.
ARTICLE VII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
7.1 Obligations to Be Satisfied on or Prior to Closing Date.
The obligations of the Company to effect the Merger and the transactions
contemplated by this Agreement are subject to the satisfaction (or waiver by the
Company), on or prior to the Closing Date, of the following conditions:
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties made by each of Purchaser and Acquisition Sub in
this Agreement shall be true, correct and complete in all material respects on
the Closing Date as though made on such date.
(b) Compliance with Agreement. Purchaser and Acquisition Sub
shall have performed or complied in all material respects with the covenants,
agreements and obligations required by this Agreement to be performed or
complied with by it on or prior to the Closing Date.
(c) No Adverse Proceedings. No Law shall have been enacted or
promulgated, and no investigation, action, suit or proceeding shall have been
threatened or instituted against Purchaser or Acquisition Sub, which, in any
case, in the reasonable judgment of the Company, challenges, or might result in
a challenge to, the consummation of the transactions contemplated hereby, or
which claims, or might give rise to a claim for, damages against the Company as
a result of the consummation of such transactions.
(d) Closing Documents. Purchaser and Acquisition Sub shall
have delivered all reports, agreements, certificates, instruments, opinions and
other documents required to be delivered by it on the Closing Date pursuant to
Section 8.4, and the form and substance of all such certificates, instruments,
opinions and other documents shall be reasonably satisfactory to the Company.
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(e) Hart-Scott-Rodino Act. All filings required pursuant to
the Hart-Scott-Rodino Act will have been made, and any approvals required
thereunder will have been obtained, or the waiting period required thereby will
have expired or have been terminated, as the case may be.
(f) Shareholder Consent. This Agreement shall have been
adopted and approved by the requisite vote of the holders of the Company Common
Stock required under New Hampshire Law and the Company's articles of
incorporation, as amended.
7.2 Procedure for Failure to Satisfy Conditions. In the event
that, in the Company's reasonable judgment, any of the conditions set forth in
Section 7.1 have not been satisfied, the Company shall notify Purchaser and
Acquisition Sub in writing indicating the Company's election to: (a) waive such
conditions precedent; or (b) terminate this Agreement pursuant to Section 11.1.
ARTICLE VIII
CLOSING
8.1 Time and Place. The Closing shall be a "New York style"
closing and shall take place at 10:00 a.m. (Chicago time) on the Closing Date at
the offices of Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois 60601
or at such other time and place as the Company, Purchaser and Acquisition Sub
may mutually agree.
8.2 Closing Transactions. All documents and other instruments
required to be delivered at the Closing shall be regarded as having been
delivered simultaneously, and no document or other instrument shall be regarded
as having been delivered until all have been delivered.
8.3 Deliveries by the Company to Purchaser and Acquisition
Sub. At the Closing, the Company shall deliver or cause to be delivered to
Purchaser and Acquisition Sub:
(a) a file stamped copy of the Articles of Merger from the New
Hampshire Secretary of State evidencing the effectiveness of the Merger;
(b) articles of incorporation of the Company and the
Subsidiary certified by the Secretary of State of New Hampshire and the by-laws
of the Company and the Subsidiary certified by the Secretary or Assistant
Secretary of the Company and the Subsidiary, respectively;
(c) certificates of good standing for the Company and the
Subsidiary from the State of New Hampshire and any state where the Company's or
the Subsidiary's failure to be qualified to transact business as a foreign
corporation would have a material adverse effect on the Company or the
Subsidiary or its business or financial condition;
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(d) the legal opinion of Peabody & Brown, counsel for the
Company, the Subsidiary and the Representative concerning the opinions
substantially in the form attached hereto as Exhibit G;
(e) a certificate of each of the Company and Subsidiary,
executed by the Secretary or an Assistant Secretary of Company and Subsidiary,
respectively, dated as of the Closing Date, certifying to (i) the certificate of
incorporation and by-laws of Company or Subsidiary, as applicable; (ii)
resolutions of the Board of Directors of Company or Subsidiary, as applicable,
and of the Company's shareholders of Company Common Stock approving the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby; and (iii) incumbency and signatures of the
officers of Company or Subsidiary, as applicable, executing this Agreement and
any other certificate or document delivered in connection herewith (together
with copies of the same);
(f) a certificate executed by the President or Vice President
of the Company, dated as of the Closing Date, certifying that all
representations and warranties of the Company herein contained are true, correct
and complete in all material respects as of the Closing Date as if made thereon
and that each of the Company and the Subsidiary has performed or complied in all
material respects with all of the covenants and obligations required by this
Agreement to be performed or complied with by the Company or the Subsidiary on
or prior to the Closing Date;
(g) an executed original of each consent required to be
obtained pursuant to Section 6.1(d);
(h) the USFS Permits and all other Permits issued or reissued
in the name of the Company and in the form and substance satisfactory to
Purchaser in its sole discretion;
(i) an affidavit of the President or a Vice President of each
of the Company and the Subsidiary stating, under penalty of perjury, the
Company's and the Subsidiary's, respectively, United States taxpayer
identification number together with a withholding certificate, in the form of
Exhibit I executed by the Company and the Subsidiary;
(j) the Severance Agreement in substantially in the form of
Exhibit H attached hereto executed by each of the individuals listed on Schedule
9.3 (the "Severance Agreement");
(k) the Escrow Agreement executed by the Purchaser, the Escrow
Agent and the Representative;
(l) a GAP undertaking and all other documents deemed
reasonably necessary by the Title Company for purposes of delivering the Title
Policies and the Leasehold Policies;
(m) the Exchange Agreement executed by the Company, Purchaser,
the Representative and the Exchange Agent;
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(n) evidence that a redemption notice was forwarded to the
shareholders of the Company Preferred Stock at least 30 days prior to the date
of the Shareholders' Meeting and that thereafter the Company Preferred Stock was
redeemed and paid for prior to the date of the Shareholders' Meeting;
(o) evidence that the Company shall have received all the
Option Cancellation Agreements referred to in Section 2.5; and
(p) such other instruments and documents as are: (i) required
by any other provisions of this Agreement to be delivered on the Closing Date by
the Company or the Subsidiary to Purchaser or Acquisition Sub; or (ii)
reasonably necessary, in the opinion of Purchaser or Acquisition Sub, to effect
the performance of this Agreement and the other documents and agreements
contemplated hereby by the Company.
8.4 Deliveries by Purchaser and Acquisition Sub to the
Company. At the Closing, Purchaser shall deliver or cause to be delivered to the
Company:
(a) the legal opinion of Winston & Strawn, special counsel for
Purchaser and Acquisition Sub, and of any local New Hampshire counsel to such
parties concerning the opinions in substantially in the form attached hereto as
Exhibit J;
(b) a certificate of each of the Purchaser and Acquisition
Sub, executed by the Secretary or an Assistant Secretary of Purchaser and
Acquisition Sub, respectively, dated as of the Closing Date, certifying to (i)
the certificate of incorporation and by-laws of Purchaser or Acquisition Sub, as
applicable; (ii) resolutions of the Board of Directors and shareholders of
Purchaser or Acquisition Sub, as applicable, approving the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby; and (iii) incumbency and signatures of the officers of
Purchaser or Acquisition Sub, as applicable, executing this Agreement and any
other certificate or document delivered in connection herewith (together with
copies of the same);
(c) a certificate of each of the Purchaser and Acquisition
Sub, executed by the President or Vice President of Purchaser and Acquisition
Sub, respectively, dated as of the Closing Date, certifying that all
representations and warranties of Purchaser or Acquisition Sub, as applicable,
herein contained are true, correct and complete in all material respects as of
the Closing Date as if made thereon and that Purchaser or Acquisition Sub, as
applicable, has performed or complied in all material respects with all of the
covenants and obligations required by this Agreement to be performed or complied
with by Purchaser or Acquisition Sub, as applicable, on or prior to the Closing
Date;
(d) certificate of incorporation of Purchaser certified by the
Secretary of State of the State of Delaware;
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(e) certificate of incorporation of Acquisition Sub certified
by the Secretary of State of the State of New Hampshire;
(f) the Escrow Agreement, the Exchange Agreement and each
Severance Agreement executed by Purchaser; and
(g) such other instruments and documents as are: (i) required
by any other provisions of this Agreement to be delivered on the Closing Date by
Purchaser or Acquisition Sub to the Company; or (ii) reasonably necessary, in
the opinion of the Company, to effect the performance of this Agreement by
Purchaser and Acquisition Sub.
ARTICLE IX
OTHER AGREEMENTS
9.1 Further Assurance. At any time and from time to time from
and after the Closing, the Company, Purchaser and Acquisition Sub will, at the
request and expense of the other parties hereto, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such instruments
and other documents and perform or cause to be performed such acts and provide
such information, as may reasonably be required to evidence or effectuate the
Merger or the transactions contemplated by this Agreement or for the performance
by the Company, Purchaser or Acquisition Sub of any of their other respective
obligations under this Agreement.
9.2 Confidentiality.
(a) The parties hereto agree with respect to the terms and
conditions of this Agreement, including, without limitation, the Aggregate
Merger Consideration, and all information that is furnished or disclosed by the
other party (collectively, "Confidential Information"), that (i) such
Confidential Information is confidential and/or proprietary to the
furnishing/disclosing party and entitled to and shall receive treatment as such
by the receiving party; (ii) the receiving party will hold in confidence and not
disclose nor use (except in respect of the transactions contemplated by this
Agreement) any such Confidential Information, treating such Confidential
Information with the same degree of care and confidentiality as it accords its
own confidential and proprietary information; provided, however, that the
receiving party shall not have any restrictive obligation with respect to any
Confidential Information which (A) is contained in a printed publication
available to the general public, (B) is or becomes publicly known through no
wrongful act or omission of the receiving party, (C) is known by the receiving
party without any proprietary restrictions by the furnishing/disclosing party at
the time of receipt of such Confidential Information or (D) is required by Law
to be disclosed; and (iii) all such Confidential Information furnished to either
party by the other, unless otherwise specified in writing, shall remain the
property of the furnishing/disclosing party, and in the event this Agreement is
terminated, shall be returned to it, together with any and all copies made
thereof, upon request for such return by it (except for documents submitted to
an Authority with the consent of the furnishing/disclosing party or upon
subpoena and which cannot be retrieved with reasonable effort).
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(b) Each party hereto acknowledges that the remedy at law for
any breach by any party of its obligations under Section 9.2(a) is inadequate
and that the other parties shall be entitled to equitable remedies, including an
injunction, in the event of breach of any other party.
9.3 Employment Matters.
(a) On the Closing Date, Acquisition Sub shall retain the
employees of the Company engaged full-time or part-time in the conduct of the
Business; provided, however, that such employees will all continue to be at-will
employees subject to termination as determined by Surviving Company in its sole
discretion after the Closing Date. Subject to the prior sentence, the Surviving
Company will initially continue the employment of all of the Company's employees
as of the Closing at the same base salary or hourly rate cash compensation
levels as provided by the Company immediately prior to the Closing and upon such
other terms and provisions, including employee benefits, as the Company
currently provides its employees having years of service equivalent to the
Company's employees. The Surviving Company will give full credit for the years
of service with the Company for employee benefits eligibility and vesting
purposes for which such employees are eligible at the Closing to all employees
of the Company who have worked for the Company during the year prior to the
Closing and become employees of the Surviving Company again by the beginning of
the 1997 ski season. Notwithstanding the foregoing, the Surviving Company and
Acquisition Sub reserve the right to amend, modify or terminate any employee
benefit plan sponsored by them at any time in their sole discretion.
(b) The Company shall offer severance agreements to those
employees listed on Schedule 9.3 for the length of time after the Closing Date
and at the per annum base salary as set forth on Schedule 9.3 and otherwise on
substantially the terms and conditions set forth in Exhibit H attached hereto.
In addition Schedule 9.3 also lists the respective residence address of each
covered employee.
9.4 Sales and Transfer Taxes. The Escrow Agent will disburse
funds from the Escrow Account to Surviving Company to pay for the cost of any
transfer, stamp, sales, purchase, use, value added, excise or similar tax
imposed on the Surviving Company, the Company or the Subsidiary under the laws
of the United States, or any state or political subdivision thereof, which
arises out of the Merger or any deemed transfer of any shares of capital stock
of the Company or the Subsidiary in connection with the Merger, and the
Purchaser and the Representative shall immediately jointly instruct the Escrow
Agent to pay to the Surviving Company the amount of any such taxes upon notice
to Representative by Surviving Company or Purchaser of such taxes.
9.5 Purchaser Non-Solicitation. Purchaser agrees for itself,
its successors and other persons claiming directly through Purchaser that for
the period beginning on June 30, 1997 until the earlier of the Closing or June
30, 1999, Purchaser shall not solicit, approach or otherwise encourage any then
current employees of the Company to leave the Company's employ in order to
become an employee of Purchaser.
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9.6 Section 338 of the Code. The Surviving Company will be
responsible for any Tax liability and receive any Tax benefit due to any Code
Section 338 election or deemed election, if any, made in connection with the
Merger.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Merger Consideration Recipients. The
Company (on behalf of the Merger Consideration Recipients) and the Merger
Consideration Recipients jointly and severally agree to indemnify, defend, hold
harmless and waive any claim for contribution against Purchaser, the Surviving
Company and all of their officers, directors, shareholders, Affiliates,
employees and agents (the "Purchaser Indemnified Persons") from and against any
Adverse Consequence arising out of or resulting from:
(a) the untruth, inaccuracy or incompleteness as of the date
hereof or on the Closing Date of any representation or warranty of the Company
contained in this Agreement or the Disclosure Schedules (or in any document,
writing, certificate, data or financial statements delivered by the Company
under this Agreement) (each a "Purchaser Warranty Claim");
(b) the failure by the Company to perform any of its covenants
or obligations hereunder;
(c) any brokers' commissions, finders' fees or other like
payments incurred or alleged to have been incurred by the Company or the
Subsidiary in connection with the Merger or the consummation of the transactions
contemplated by this Agreement other than as disclosed in Section 3.35;
(d) all Taxes attributable to the Company or the Subsidiary
for taxable periods ending on or before the Closing Date, and for their
allocable share of Taxes for any period that begins prior to the Closing Date
and ends after the Closing Date; provided, however, that this clause (d) shall
(i) exclude any Taxes related to or incurred for periods after April 30, 1996
except to the extent that such Taxes exceed the sum of the amount which was (A)
accrued for Taxes on the Financial Statements as of July 31, 1997 and (B)
amounts which may be accrued in accordance with generally accepted accounting
principles, consistently applied, on any balance sheet prepared as of the
Closing Date for Taxes incurred after July 31, 1997 in the ordinary course of
business and (ii) exclude any additional Taxes assessed by the IRS for any tax
year in which the Purchaser, of its own accord and without being so required by
the IRS, reopens or challenges the Taxes assessed or paid in such taxable period
in which a return has previously been filed in an effort to obtain a refund for
such period and as a result thereof the IRS after further review assesses
additional Tax Liabilities for such prior taxable period. For purposes of
determining any Person's allocable share of Taxes for any period which was not
closed as of the Closing Date, the Company's or the Subsidiary's allocable share
of Taxes shall be determined by reference to income, capital gains, gross
receipts, sales, net profits, windfall profits or similar items or resulting
from the sale of assets allocated based on the
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date the items occurred and all other Taxes shall be allocated pro rata based on
the number of days in the taxable period for which each party is liable; and
(e) fifty percent (50%) of the total costs, expenses and other
liabilities incurred in upgrading or replacing the five single-walled
underground storage tanks (being UST's No. 1, 2, 3, 4 and 7 registered under
owner number 0-111275 with the State of New Hampshire) up to a maximum of
$50,000 to bring such UST's into compliance with federal regulation by December,
1998 including, without limitation, the costs and expenses of clean-up and
remediation of any contaminated soil (except any contamination directly caused
by the negligence of the party retained by the Surviving Company to replace such
tanks) which must by law be removed or cleaned up in connection with such UST
upgrades and replacement.
10.2 Indemnification by Purchaser. Purchaser and Acquisition
Sub agree to indemnify, defend and hold harmless Merger Consideration Recipients
after the Closing from and against any Adverse Consequence arising out of or
resulting from:
(a) the untruth, inaccuracy or incompleteness as of the date
hereof or on the Closing Date of any representation or warranty of Purchaser or
Acquisition Sub contained in this Agreement (or in any document, writing or
certificate delivered by Purchaser or Acquisition Sub under this Agreement)
(each a "Company Warranty Claim");
(b) the failure by Purchaser or Acquisition Sub to perform any
of its covenants or obligations hereunder, or the failure of the Surviving
Company to perform its obligations or covenants under Section 9.6; and
(c) any brokers' commissions, finders' fees or other like
payments incurred or alleged to have been incurred by Purchaser or Acquisition
Sub in connection with the Merger or the consummation of the transactions
contemplated by this Agreement.
10.3 Procedure for Indemnification.
(a) If any Person shall claim indemnification (the
"Indemnified Party") hereunder for any claim other than a third party claim, the
Indemnified Party shall promptly give written notice to the other party from
whom indemnification is sought (the "Indemnifying Party") of the nature and
amount of the claim.
(b) If an Indemnified Party shall claim indemnification
hereunder arising from any claim or demand of a third party, the Indemnified
Party shall promptly give written notice (a "Third-Party Notice") to the
Indemnifying Party of the basis for such claim or demand, setting forth the
nature of the claim or demand in detail. The Indemnifying Party shall have the
right to compromise or, if appropriate, defend at its own cost and through
counsel of its own choosing, any claim or demand set forth in a Third-Party
Notice giving rise to such claim for indemnification. In the event the
Indemnifying Party undertakes to compromise or defend any such claim or demand,
it shall promptly (and in any event, no later than fifteen (15) days after
receipt of the Third-Party
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Notice) notify the Indemnified Party in writing of its intention to do so and
shall give the Indemnifying Party such security in that regard as the
Indemnified Party reasonably may request.
The Indemnified Party shall fully cooperate with the Indemnifying Party and its
counsel in the defense or compromise of such claim or demand. After the
assumption of the defense by the Indemnifying Party, the Indemnified Party shall
not be liable for any legal or other expenses subsequently incurred by the
Indemnifying Party, in connection with such defense, but the Indemnified Party
may participate in such defense at its own expense. No settlement of a third
party claim or demand defended by the Indemnifying Party shall be made without
the written consent of the Indemnified Party, such consent not to be
unreasonably withheld. The Indemnifying Party shall not, except with written
consent of the Indemnified Party, consent to the entry of a judgment or
settlement which does not include as an unconditional term thereof, the giving
by the claimant or plaintiff to the Indemnified Party of an unconditional
release from all liability in respect of such third party claim or demand. If a
firm written offer is made to settle any such third party claim, demand, action
or proceeding which (I) does not require the Indemnified Party to admit any
liability, complicity or responsibility for any actions, injuries, negligence or
other similar matters or restrain, restrict or limit in any way the Indemnified
Party's ability to operate its business or take actions in the future, (II)
contains reasonable confidentiality obligations with respect to the terms of
such settlement, (III) in the instance the Purchaser or the Acquisition Sub is
the Indemnified Party, the settlement requires payments in excess of the
remaining available amount of the Holdback, and (IV) the Indemnifying Party
proposes to accept and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party shall upon ten (10) business days prior
written notice to the Indemnified Party have the right to pay the Indemnified
Party in immediately available funds the lesser of the total amount constituting
the proposed settlement or the remaining amounts it is obligated to pay under
this Article X, and thereafter, to be excused from, and the Indemnified Party
shall be solely responsible for, all further defense of such third party claim,
demand, action or proceeding.
(c) Upon resolution or any claim under this Article X in favor
of Purchaser or Acquisition Sub, whether by agreement or the rendering of a
final judgment in any litigation, the Purchaser and the Representative shall
jointly instruct the Escrow Agent to pay over and deliver to an Indemnified
Party an amount equal to the amount of any claim so resolved.
10.4 Limitations on Indemnity. (a) The indemnities contained
in this Article X with respect to Purchaser Warranty Claims and Company Warranty
Claims shall expire fifteen (15) months following the Closing Date, except with
respect to claims (a) under Section 3.14 as to which the indemnification
obligation shall survive until thirty (30) months following the Closing Date,
(b) under Section 3.17 as to which the indemnification obligation shall survive
for the applicable statute of limitations period, and (c) under Sections 3.1,
3.11, 3.39 and 3.40 or with respect to fraud as to which there shall be no
expiration date; provided, however, that if at the stated expiration of any
indemnification obligation there shall then be pending any indemnification claim
by a Person, such Person shall continue to have the right to such
indemnification with respect to such claim notwithstanding such expiration. The
indemnification provided herein shall not limit any liability of the Company,
the Subsidiary, Merger Consideration Recipients, Purchaser or Acquisition Sub
which may arise by statute or common law. Except as expressly set forth herein,
Purchaser's and
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Acquisition Sub's rights under this Article X shall not be limited by or to any
amounts held pursuant to the Escrow Agreement.
(b) The Merger Consideration Recipients' maximum aggregate
liability to the Purchaser Indemnified Persons for indemnification of Purchaser
Warranty Claims pursuant to Section 10.1(a) and as to any obligations set forth
in Section 10.1(e) shall not exceed an amount equal to the Holdback.
(c) Purchaser's maximum aggregate liability to the Merger
Consideration Recipients for indemnification of Company Warranty Claims pursuant
to Section 10.2(a) shall not exceed an amount equal to the Holdback.
(d) No Purchaser Indemnified Person shall be entitled to
indemnification pursuant to Section 10.1 for any Purchaser Warranty Claims
unless and until the aggregate Adverse Consequences suffered by all Purchaser
Indemnified Persons collectively exceeds $500,000 whereupon the Purchaser
Indemnified Persons shall be entitled to indemnification hereunder from the
Merger Consideration Recipients for all Adverse Consequences suffered by
Purchaser Indemnified Persons in excess of such threshold amount.
(e) The Merger Consideration Recipients shall not be entitled
to indemnification pursuant to Section 10.2 for any Company Warranty Claims
unless and until the aggregate Adverse Consequences suffered by the Merger
Consideration Recipients in the aggregate exceeds $500,000 whereupon the Merger
Consideration Recipients shall be entitled to indemnification hereunder from
Purchaser for all Adverse Consequences suffered by the Company in excess of such
threshold amount.
(f) The Company hereby acknowledges and agrees on behalf of
itself, the Merger Consideration Recipients and the Representative that
notwithstanding the fact that certain covenants, representations, warranties and
agreements are given by the Company in favor of Purchaser and/or Acquisition
Sub, that the Merger Consideration Recipients shall assume all liability and
obligation for any inaccuracy, violation or breach thereof (including, without
limitation, by way of payments against the Holdback) and shall not have any
right to seek contribution, indemnity or payment of any kind from the Surviving
Company and/or the Subsidiary with respect thereto.
Except for losses or damages due to fraud or indemnification
claims other than Purchaser Warranty Claims, any loss incurred by the Purchaser
or Acquisition Sub for which it is to be indemnified hereunder shall be
satisfied solely from the Holdback, and with respect to any amounts claimed
directly against the Merger Consideration Recipients, as opposed to against the
Holdback, no Merger Consideration Recipient shall be liable to the Purchaser for
more than his pro rata share of any such claim. Such pro rata share of each
Merger Consideration Recipient shall be determined by multiplying the amount
claimed times the fraction equal to the number of shares of Company Common Stock
(other than Dissenting Shares) and Option Shares which were owned by such Merger
Consideration Recipient at the Effective Time over the aggregate number of
outstanding shares of Company Common Stock (other than Dissenting Shares) and
the number of
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Option Shares that could have been issued upon execution of all remaining
options as of the Effective Time.
10.5 Escrow Agreement. In addition to any right or remedy
available to Purchaser hereunder or otherwise, Purchaser shall be entitled to be
paid for any indemnification claims against Merger Consideration Recipients by
demanding payment of funds in accordance with the Escrow Agreement and against
the Holdback in accordance with the terms and conditions in the Escrow
Agreement. The Holdback placed by Acquisition Sub in the Escrow Account shall be
held in escrow in the Escrow Account and shall be available to pay for
indemnification claims asserted by the Purchaser Indemnified Persons pursuant to
this Article X. On the first business day of the first month which is at least
(i) fifteen (15) months following the Closing Date, and on the first business
day of each month occurring three (3), six (6), nine (9) and twelve (12) months
thereafter, the Purchaser and the Representative each agree to direct the Escrow
Agent to pay into the Exchange Account on behalf of the Merger Consideration
Recipients $200,000 (or such lesser amount then remaining in the Escrow Account)
and (subject to any tax withholdings) to have the Allocable Portion of such
amounts paid out to the former holders of Company Common Stock (other than
Dissenting Shares) and Option Shares, and (ii) thirty (30) months following the
Closing Date, the Purchaser and the Representative each agree to direct the
Escrow Agent to pay $500,000 (or such lesser amount then remaining in the Escrow
Account) into the Exchange Account on behalf of the Merger Consideration
Recipients and (subject to any tax withholdings) to have the Allocable Portion
of such amounts paid out to the former holders of Company Common Stock (other
than Dissenting Shares) and Option Shares; provided, however, that the amount of
each such payment will be less the sum of (a) the aggregate of all claims for
indemnification which have been paid out to date and not already deducted from a
payment or are then pending against such Merger Consideration Recipients, plus
(b) if any tax audit is in process or has been noticed, an additional amount as
estimated by Purchaser as shall be necessary to cover any potential claims
related to Taxes which may be reasonable assessed or incurred. On the first
business day of each calendar month subsequent to the third (3rd) anniversary of
the Closing Date, the Purchaser and the Representative each agree to direct the
Escrow Agent to pay into the Exchange Account on behalf of the Merger
Consideration Recipients any amounts withheld from the final payment in
accordance with clauses (a) or (b) in the preceding sentence and which are no
longer required to be held by the terms of such clause (a) or (b) above and
(subject to any tax withholdings) to have the Allocable Portion of such amounts
paid out to the former holders of Company Common Stock (other than Dissenting
Shares) and Option Shares, until all amounts held in the Escrow Account have
been paid into the Exchange Account.
10.6 Payment. Except for third-party claims being defended in
good faith by the Indemnifying Party in accordance with Section 10.3, the
Indemnifying Party shall satisfy its obligations hereunder within fifteen (15)
days after receipt of notice of a claim. Any amount not paid to the Indemnified
Party by such date shall bear interest at a rate equal to nine percent (9%) per
annum from the date due until the date paid.
10.7 Set-Off. If any Merger Consideration Recipient fails to
make any payment with respect to any indemnification claim in accordance with
this Article X, Purchaser may set-off
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the amount of such claim against any amounts payable by Purchaser or the Company
to any Merger Consideration Recipient under this Agreement or any other
agreement, promissory note or instrument delivered in connection with the
transactions contemplated hereby.
ARTICLE XI
TERMINATION
11.1 Rights to Terminate. This Agreement may be terminated at
any time prior to the Closing only as follows:
(a) by mutual written consent of the Company and
Purchaser;
(b) by the Company, if Purchaser or Acquisition Sub is in
material breach of any representation, warranty, covenant or condition under
this Agreement (and the Company is not then in material breach of any
representation, warranty, covenant or condition hereunder) and such breach
continues for ten (10) business days after written notice of the same to the
breaching party or if the alleged breach is reasonably capable of being cured
and the breaching party is working in good faith to cure such breach but it
cannot be cured in ten (10) business days, said ten (10) business day period to
cure such breach shall be extended by an additional twenty (20) days;
(c) by Purchaser, if the Company is in material breach of any
representation, warranty, covenant or condition under this Agreement (and
Purchaser and Acquisition Sub are not then in material breach of any
representation, warranty, covenant or condition hereunder) and such breach
continues for ten (10) business days after written notice of the same to the
breaching party or if the alleged breach is reasonably capable of being cured
and the breaching party is working in good faith to cure such breach but it
cannot be cured in ten (10) business days, said ten (10) business day period to
cure such breach shall be extended by an additional twenty (20) days;
(d) by the Company or by Purchaser if, at or before the
Closing, any condition set forth herein for the benefit (i) of the Company or
(ii) Purchaser or Acquisition Sub, respectively, shall not have been timely met
and cannot be met on or before the Closing Date and has not been waived; or
(e) by Purchaser or the Company if the Closing shall not have
occurred on or before November 30, 1997; provided, however, that neither such
party shall be entitled to terminate this Agreement pursuant to this Section
11.1(e) if such party's willful breach of this Agreement has prevented the
consummation of the transactions contemplated hereby.
Each party's right of termination hereunder is in addition to
any of the rights it may have hereunder or otherwise.
11.2 Effects of Termination. Notwithstanding any other
provision of this Agreement to the contrary, no termination of this Agreement
shall release (i) the Company from its
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obligation to pay the costs and expenses described in Section 5.6, 5.9 or
6.1(j), (ii) any party hereto from any Liabilities arising hereunder for any
pre-termination breaches in any material respect hereof or intentional
misrepresentations made herein, (iii) any party hereto from its obligations
under Section 9.2 or (iv) any party hereto (if such party is in default in any
material respect of any of its obligations or duties under the Agreement and the
other parties hereto are not in default of their obligations and duties under
the Agreement), in addition to all other remedies available to such
non-defaulting party at law and in equity, of its obligation to pay and fully
reimburse the non-defaulting party for all reasonable expenses paid or incurred
by such non-defaulting party in connection with the transactions contemplated
hereby, including, without limitation, reasonable attorneys' and accountants'
fees, which fees with respect to the Company shall also include the actual out
of pocket fees paid to its investment bankers (but in any event not in excess of
$75,000) solely related to providing a fairness opinion for the transaction
contemplated hereby; provided, however, that if the Company is entitled to
retain the Earnest Money in connection with any termination of this Agreement,
then such Earnest Money shall be retained by the Company as and for full
liquidated damages hereunder, and not as a penalty, and the Company shall not be
permitted to claim any additional amounts.
ARTICLE XII
THE REPRESENTATIVE
12.1 Appointment. Upon approval of the Merger, the Merger
Consideration Recipients shall be deemed for themselves and their respective
successors, assigns, heirs, executors and legal representatives to have
constituted and appointed, effective from and after the Effective Time, Stephen
U. Samaha, an individual residing in New Hampshire, as the agent and
representative (the "Representative") of the Merger Consideration Recipients and
their respective successors, assigns, heirs, executors and legal representatives
to act as Representative for all purposes under this Agreement. In the event of
the death, resignation or incapacity of the Representative, J. Timothy Reilly,
an individual residing in New Hampshire, shall automatically be deemed to be
appointed as successor Representative (subject to receipt by the Company of a
written acceptance from such successor Representative within twenty (20) days
after notice of such automatic appointment), and in the event of the successor
Representative's death, resignation, incapacity or failure to timely accept the
appointment in writing, the Merger Consideration Recipients shall promptly
designate another individual to act as their representative under this Agreement
so that at all times there will be a Representative with the authority provided
in this Article XII. Such successor Representative shall be designated by the
Merger Consideration Recipients by an instrument in writing executed by Merger
Consideration Recipients with an aggregate contingent interest or right to
receive (subject to set off in accordance with this Agreement) not less than 51%
of the Holdback then remaining and such appointment shall become effective as to
the successor Representative when such instrument shall have been delivered to
any such proposed successor Representative (and accepted in writing) and a copy
thereof received by Purchaser and the Company.
12.2 Authorization. The Merger Consideration Recipients hereby
authorize the Representative, on their behalf and in their name, to:
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(a) Receive all notices or documents given or to be given to
the Company or the Merger Consideration Recipients by the Purchaser or
Acquisition Sub pursuant hereto or in connection herewith and to receive and
accept service of legal process in connection with any suit or proceeding
arising under this Agreement;
(b) Engage counsel, and such accountants and other advisors on
behalf of the Merger Consideration Recipients and incur such other reasonable
expenses on behalf of the Merger Consideration Recipients in connection with
this Agreement and the transactions contemplated hereby as the Representative
may deem appropriate; and
(c) Take such action on behalf of the Merger Consideration
Recipients as the Representative may deem appropriate in respect of:
(i) waiving any inaccuracies in the representations
or warranties of Purchaser or Acquisition Sub contained in this
Agreement or in any document delivered by Purchaser or Acquisition Sub
pursuant hereto;
(ii) taking such other action as the Representative
is authorized to take under this Agreement;
(iii) receiving all documents or certificates and
making all determinations on behalf of the Merger Consideration
Recipients required under this Agreement;
(iv) all such other matters as the Representative may
deem necessary or appropriate in connection with the administration of
this Agreement and the transactions contemplated hereby; and
(v) taking all such action as may be necessary after
the Closing Date to carry out any of the transactions contemplated by
this Agreement and permit any disbursements or payments out of the
Escrow Account.
12.3 Irrevocable Appointment. The appointment of the
Representative hereunder is irrevocable (subject to Section 12.4) and any action
taken by the Representative pursuant to the authority granted in this Article
XII shall be effective and absolutely binding on the Merger Consideration
Recipients notwithstanding any contrary action of, or direction from, the
Company, except for actions taken by the Representative which are in bad faith
or grossly negligent.
12.4 Resignation and Removal. The Representative may resign at
any time by giving notice to the Company and to the Merger Consideration
Recipients, and such resignation shall be effective upon the appointment and
qualification of a successor. The Representative may be discharged, and replaced
by another person to act as his or her successor, by an instrument in writing
signed by Merger Consideration Recipients with an aggregate contingent interest
or right to receive (subject to set off in accordance with this Agreement) not
less than sixty-six percent (66%) of the Holdback then remaining.
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12.5 Purchaser's Reliance. Purchaser, Acquisition Sub and
Surviving Company shall not be obliged to inquire into the authority of the
Representative, and such parties shall be fully protected in dealing with the
Representative in good faith.
12.6 Exculpation and Indemnification. (a) In performing any of
such Representative's duties under this Agreement, the Representative shall not
incur any Liability to any Person, except for Liability caused by the
Representative's willful misconduct, unlawful acts or gross negligence.
Accordingly, the Representative shall not incur any such Liability for (i) any
action that is taken or omitted in good faith regarding any questions relating
to the duties and responsibilities of the Representative under this Agreement,
or (ii) any action taken or omitted to be taken in reliance upon any instrument
that the Representative shall in good faith believe to be genuine, to have been
signed or delivered by a proper person or persons and to conform with the
provisions of this Agreement.
(b) The Merger Consideration Recipients shall indemnify,
defend and hold harmless the Representative against, from and in respect of any
Adverse Consequence arising out of or resulting from the performance of such
Representative's duties hereunder or in connection with this Agreement (except
for Liabilities arising from the gross negligence, unlawful acts or willful
misconduct of the Representative).
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Public Announcements. Prior to the Closing Date, any
announcements or similar publicity with respect to this Agreement or the
transactions contemplated herein shall be at such time and in such manner as the
Company and Purchaser shall mutually agree; provided, that nothing herein shall
prevent either party upon notice to the other party from making such public
announcements as such party's counsel may consider advisable in order to satisfy
that party's legal obligations in such regard.
13.2 Post-Closing Deliveries. After the Closing, any monies,
checks, instruments, invoices, bills, receipts, notices, mail and other
communications received by one party but directed toward or due to another shall
be promptly delivered to the other party.
13.3 Notices. All notices or other communications required or
permitted by this Agreement shall be in writing and shall be deemed to have been
duly received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a business day and during
normal business hours of the recipient, and otherwise on the next business day
following transmission, (b) if given by certified or registered mail, return
receipt requested, postage prepaid, three business days after being deposited in
the U.S. mails and (c) if given by courier or other means, when received or
personally delivered, and, in any such case, addressed as follows:
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(i) if to Purchaser, Acquisition Sub or Surviving Company:
c/o Booth Creek, Inc.
1000 South Frontage Road
Vail, Colorado 81657
Attention: George N. Gillett, Jr.
Facsimile: (970) 479-0291
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Bruce A. Toth, Esq.
Facsimile: (312) 558-5700
(ii) if to the Company before the Closing:
Loon Mountain Recreation Corporation
RR #1, Box 41
Kancamagus Highway
Lincoln, New Hampshire 03251-9711
Attention: Samuel S. Adams
Facsimile: (603) 745-8214
with a copy to:
Peabody & Brown
889 Elm Street
Manchester, New Hampshire 03101
Attention: James C. Hood, Esq.
Facsimile: (603) 628-4040
(iii) if to the Representative or the Merger
Consideration Recipients, after the Closing:
c/o Stephen U. Samaha, Esq.
Samaha & Vaughan
125 Main Street
Littleton, NH 03561
Facsimile: (603) 444-2552
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with a copy to:
Peabody & Brown
889 Elm Street
Manchester, New Hampshire 03101
Attention: James C. Hood, Esq.
Facsimile: (603) 628-4040
or to such other addresses as may be specified by any such Person to the other
Person pursuant to notice given by such Person in accordance with the provisions
of this Section 13.3.
13.4 Assignment. No party may assign or transfer any or all of
its rights or obligations under this Agreement without the prior written
approval of all the other parties; provided, however, that Purchaser may assign
or transfer all (but not less than all) of its rights and obligations under this
Agreement (a) to any Person that is wholly-owned, directly or indirectly, by
Purchaser or (b) after the Closing, to any Person to whom Purchaser sells the
Business and substantially all of the Company's assets so long as such Person
agrees in a writing reasonably satisfactory in form and substance to the
Representative, prior to or contemporaneously with the acquisition, to be bound
by all of the terms and conditions hereof in respect to the Merger Consideration
Recipients; and, provided further, that Purchaser may collaterally assign its
rights hereunder to any Person or Persons providing financing to Purchaser in
connection with the transactions contemplated hereby.
13.5 Benefit of the Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement shall not be construed so as to
confer any right or benefit upon any Person or create any third party
beneficiary, other than the parties hereto and their respective successors and
permitted assigns.
13.6 Exhibits and Schedules. The Exhibits and Disclosure
Schedules hereto shall be construed with and as an integral part of this
Agreement to the same effect as if the contents thereof had been set forth
verbatim herein.
13.7 Headings. The headings used in this Agreement are for
convenience of reference only and shall not be deemed to limit, characterize or
in any way affect the interpretation of any provision of this Agreement.
13.8 Entire Agreement. This Agreement contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and no other representations, promises, agreements or understandings
regarding the subject matter hereof (including, without limitation, the Letter
of Intent which shall be deemed to be superseded and replaced hereby) shall be
of any force or effect unless in writing, executed by the party to be bound
thereby and dated on
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<PAGE> 69
or after the date hereof; provided, however, that the Confidentiality and
Non-Disclosure Agreement dated May 6, 1997 between the Company and Booth Creek,
Inc. shall survive the execution and delivery hereof and shall only terminate on
the Closing Date.
13.9 Modifications and Waivers. No change, modification or
waiver of any provision of this Agreement shall be valid or binding unless it is
in writing, dated subsequent to the date hereof and signed by Purchaser,
Acquisition Sub and the Company. No waiver of any breach, term or condition of
this Agreement by any party shall constitute a subsequent waiver of the same or
any other breach, term or condition.
13.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.11 Severability. In case any one or more of the provisions
contained herein for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
13.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF DELAWARE.
13.13 Expenses. Except as otherwise expressly provided herein,
each party hereto shall pay all of its own costs and expenses incurred or to be
incurred in negotiating and preparing this Agreement (including, without
limitation, any legal fees, accounting fees, brokers fees, or other fees or
expenses) and in closing and carrying out the transactions contemplated by this
Agreement in each case, whether or not the Merger and the other transactions
contemplated hereby are consummated but subject to Section 11.2.
13.14 WAIVER OF JURY TRIAL. PURCHASER, THE COMPANY AND
ACQUISITION SUB EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED IN CONNECTION HEREWITH OR
HEREAFTER AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
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<PAGE> 70
ARTICLE XIV
GUARANTEE
14.1 Guarantee. Purchaser hereby guarantees for the benefit of
the Company the performance by Acquisition Sub and the Surviving Company of all
of their obligations under Article II of this Agreement. The discharge,
termination or extinguishment of any undertakings and indemnifications of
Acquisition Sub for any reason including, without limitation, Acquisition Sub's
dissolution, liquidation or bankruptcy, shall not release Purchaser from its
obligations under this Section 14.1.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
PURCHASER: BOOTH CREEK SKI GROUP, INC.
By: /s/ Jeffrey Joyce
----------------------------------
Title: Executive Vice President
-------------------------------
ACQUISITION SUB: LMRC ACQUISITION CORP.
By: /s/ Jeffrey Joyce
-----------------------------------
Title: Executive Vice President
-------------------------------
COMPANY: LOON MOUNTAIN RECREATION CORPORATION
By: /s/ Samuel Adams
-----------------------------------
Title: President
--------------------------------
Acknowledged and Agreed to by the undersigned, as
Representative, who hereby agrees, subject to the approval of the holders of
Company Common Stock as set forth in Section 12.1 hereof, to act as
Representative in accordance with this Agreement.
/s/ Stephen U. Samaha
--------------------------------
Stephen U. Samaha, an individual
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<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT TO MERGER AGREEMENT
This First Amendment to Merger Agreement (this "Amendment") is entered
into as of this 22nd day of December, 1997 by and among BOOTH CREEK SKI GROUP,
INC., a Delaware corporation (together with its successors and permitted
assigns, "Purchaser"), LMRC ACQUISITION CORP., a New Hampshire corporation and
an indirect wholly-owned subsidiary of Purchaser ("Acquisition Sub"), and LOON
MOUNTAIN RECREATION CORPORATION, a New Hampshire corporation (the "Company").
RECITALS
WHEREAS, Purchaser, Acquisition Sub and the Company are parties to that
certain Agreement and Plan of Merger, entered into as of September 18, 1997
(the "Merger Agreement"), and are now desirous of amending the Merger Agreement
as set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained in this
Amendment, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties, the parties
hereto hereby agree as follows:
ARTICLE I
AMENDMENTS TO THE MERGER AGREEMENT
1.1 Section 1.2 of the Merger Agreement is amended by deleting the
definitions "Aggregate Merger Consideration," "Closing Date" and "Merger" where
they appear in such section and by replacing such definitions with the
following:
"Aggregate Merger Consideration. Seventeen
Million Nine Hundred Ninety-Nine Thousand Nine Hundred and
Seventy Dollars ($17,999,970) (subject to the Price Adjustment, if any,
required pursuant to Section 2.2(b)) plus an additional amount equal to
interest that would have accrued on such amount at a per annum interest
rate of six percent (6%) for the number of days beginning on and
including December 1, 1997 to and excluding the Closing Date."
"Closing Date. (a) Ten (10) business days
following the later of (i) the approval of the holders of the
Company Common Stock of this Agreement (as amended by the First
Amendment to Merger Agreement) pursuant to a duly convened
shareholders' meeting of the Company which satisfies the requirements
of Section 6.1(m) and (ii) the date that the Federal District Court in
the RESTORE Pipeline Litigation affirmatively denies any Pipeline Case
Injunction or (b) such other date as Purchaser and the Company may
mutually agree in writing, in either case, upon which the
<PAGE> 2
Closing shall occur; provided, however, that the parties hereto
agree to grant one fifteen (15) business day extension of the initial
Closing Date which would apply pursuant to clause (a) above if
requested by another party hereto so long as the parties are working in
good faith to finalize the remaining closing conditions and deliveries
hereunder and conclude in good faith that there is a reasonable
likelihood that all such remaining conditions and deliveries can be
satisfied during such extension period and may mutually agree to grant
such additional extensions as they deem necessary."
"Merger. The merger of Acquisition Sub with and into
the Company as referred to in the Recitals to this Agreement as
consummated in accordance with New Hampshire Law pursuant to this
Agreement including, without limitation, as amended by the First
Amendment to Merger Agreement."
1.2 Section 1.2 of the Merger Agreement is amended by adding the
following new definitions in proper alphabetical sequence:
"CWA Penalty. The total fine, penalty and
liability, and associated costs and expenses (including
attorney and expert witness fees) imposed upon the Company and the
Subsidiary by the court in the RESTORE Penalty Litigation in connection
with any and all violations of the Federal Clean Water Act, 33 U.S.C. '
1251 et seq., any related Order, and any similar state, local or
federal law, by the Company or the Subsidiary through action or
omission occurring either before or during the 1996-1997 ski season,
including but not limited to any fine, penalty or liability, and any
associated cost or expense for pumping, draining, releasing or
otherwise discharging water and any associated pollutants into Loon
Pond."
"First Amendment Date. December 22, 1997."
"First Amendment to Merger Agreement. That certain
First Amendment to Merger Agreement dated as of the First
Amendment Date by and among Purchaser, Acquisition Sub and the
Company.
"Pipeline Case Injunction. If the Company or
the Subsidiary shall receive an Order from the United States
District Court for the District of New Hampshire in the RESTORE
Pipeline Litigation, affirming the plaintiff's request for a
declaratory judgment declaring that the defendant(s) violated federal
law in reviewing and approving the installation and use of a new
sixteen inch pipeline crossing Forest Service land and/or the
appurtenant water withdrawal and snowmaking apparatus and/or granting
an injunction which has the effect of substantially limiting the
Company's use
2
<PAGE> 3
of such new sixteen inch pipeline and/or the appurtenant water
withdrawal and snowmaking apparatus."
"RESTORE Penalty Litigation. The lawsuit styled
Dubois and RESTORE v. The United States Department of Agriculture, et
al., Docket No. C-95-50-B filed in the United States District Court
for the District of New Hampshire."
"RESTORE Pipeline Litigation. The lawsuit styled
RESTORE, et al. v. The United States Department of Agriculture, et al.,
Docket No. C-97-435-B filed in the United States District Court for
the District of New Hampshire."
1.3 Section 3.39 of the Merger Agreement is amended in its
entirety as follows:
"3.39 Proxy Statement. Each proxy statement
to be sent to the shareholders of the Company in connection
with the shareholders meetings referred to in Sections 5.10(a) and
5.10(b) (each such proxy statement, as amended or supplemented, is
herein referred to as "Proxy Statement"), shall not, at the date each
Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to shareholders or at the time of such shareholders
meetings, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with
respect to any material fact, or shall omit to state any material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which
they are made, not misleading. Each Proxy Statement shall comply in all
material respects with New Hampshire Law and shall include, without
limitation, a notice which complies with RSA 293-A:13:20 of New
Hampshire Law."
1.4 Article IV of the Merger Agreement is amended by adding the
following new Section 4.9:
"4.9 Funding. Purchaser has through its
subsidiaries since November 1996 consummated acquisitions of
(1) Waterville Valley Ski Resort, Inc. and Mount Cranmore Ski Resort,
Inc. (d/b/a the Waterville Valley and Mount Cranmore ski resorts in New
Hampshire) for approximately $17.5 million, (2) Sierra-at-Tahoe, Inc.
and Trimont Land Company (d/b/a the Sierra-at-Tahoe and
Northstar-at-Tahoe ski resorts in Northern California) and Bear
Mountain, Inc. (d/b/a the Bear Mountain ski resort in Southern
California) for approximately $121.5 million, (3) Ski Lifts, Inc.
(d/b/a the Snoqualmie Pass ski resort in Northwest Washington) for
approximately $14.0 million, and (4) Grand Targhee Incorporated (d/b/a
the Grand Targhee ski resort in Wyoming) for approximately $7.9
million, and
3
<PAGE> 4
such acquisitions have been financed through proceeds obtained
from, among other things, the issuance of debt and equity securities
and from bank borrowings. Based on this experience and current market
conditions, Purchaser continues in good faith to have a high level of
confidence that it has obtained the financing to fund the obligations
of Acquisition Sub under Article II of this Agreement."
1.5 The Merger Agreement is amended by renaming Section 5.10 of
the Merger Agreement as Section 5.10(a) and by adding the following new
Section 5.10(b):
"(b) The Company will promptly take all steps necessary
to circulate a Proxy Statement with respect to the First Amendment to
Merger Agreement to all of its shareholders within twenty (20) days
after the First Amendment Date (which Proxy Statement shall
include the recommendation by all of the members of its Board of
Directors (except for the recommendation by Samuel S. Adams and Donald
Lavoie who have abstained from such recommendation because of a
conflict of interest, but who each have executed and delivered a
Shareholder Agreement and Reaffirmation of Shareholder Agreement with
respect to the Company Common Stock owned by them on the date hereof)
that the shareholders approve the Merger) and then to call a second
special meeting of its shareholders concerning the Merger and submit
this Agreement as amended by the First Amendment to Merger Agreement
for approval at such meeting of shareholders, which the Company shall
hold within thirty-five (35) days after the First Amendment Date or at
such later date as to which Purchaser shall consent in writing. The
Company will use its reasonable and good faith efforts to obtain the
necessary approvals of this Agreement (as amended by the First
Amendment to Merger Agreement) and the transactions contemplated hereby
by the shareholders of the Company. The Company shall have kept the
Purchaser apprised of the number of holders of shares of Company Common
Stock who have exercised appraisal or dissenter's rights and the
Company shall not enter into any negotiations, agreements or
settlements with or make any payments to holders of Dissenting Shares
without the prior written consent of Purchaser."
1.6 Section 5.12 of the Merger Agreement is amended in its entirety as
follows:
"5.12 Earnest Money Deposit. On the date hereof
Purchaser shall deposit One Hundred Fifty Thousand Dollars ($150,000)
(the "Initial Earnest Money") with the Company by payment in
the form of a check or by wire transfer of immediately available funds
to the Company, and the Company agrees to retain and use such Initial
Earnest Money pursuant to this Section 5.12. On December 17, 1997,
Purchaser deposited an additional Six Hundred Thousand Dollars
($600,000) (the "Additional Earnest Money", and
4
<PAGE> 5
collectively with the Initial Earnest Money, the "Earnest
Money") with Citizens Bank New Hampshire, as escrow agent, by wire
transfer of immediately available funds to such escrow agent for
deposit in a joint escrow account pursuant to that certain Signing
Escrow Agreement among Purchaser, the Company and such bank dated
December 16, 1997 (as amended from time to time, the "Signing Escrow
Agreement"). Purchaser and the Company hereby agree to deliver a fully
signed copy of the notice called for by Section 2(g) of such Signing
Escrow Agreement to the escrow agent thereunder in the form of Exhibit
A to the First Amendment to Merger Agreement acknowledging the
execution and effectiveness of the First Amendment to Merger Agreement.
If the Merger contemplated hereby is not consummated and this Agreement
is terminated as contemplated by the terms and conditions set forth in
Section 2(c) of the Signing Escrow Agreement, then in such instance the
Company shall be entitled to retain the Initial Earnest Money and the
Additional Earnest Money, together with any interest or income earned
thereon, as and for full liquidated damages with respect to the
transactions contemplated hereby and not as a penalty and the Company
shall have no further rights or claims hereunder. If the Merger
contemplated hereby is not consummated and this Agreement is terminated
as contemplated by the terms and conditions of Section 2(b) of the
Signing Escrow Agreement, then in such instance the Purchaser shall be
entitled to be refunded a portion of the Additional Earnest Money equal
to Two Hundred and Fifty Thousand Dollars ($250,000) and the Initial
Earnest Money together with the remainder of any Additional Earnest
Money (and any earnings thereon) will be retained by the Company as and
for full liquidated damages with respect to the transactions
contemplated hereby and not as a penalty, and the Company shall have no
further rights or claims hereunder. If the Merger contemplated hereby
is not consummated and this Agreement is terminated as contemplated by
Section 2(a) of the Signing Escrow Agreement, then in such instance the
Company shall promptly after the termination of this Agreement refund
the Initial Earnest Money to the Purchaser, in cash, together with
interest thereon for the number of days it had such Initial Earnest
Money calculated at a per annum rate equal to the prime rate as
announced by the Wall Street Journal at such time and Purchaser shall
be entitled to be refunded the Additional Earnest Money (and any
earnings thereon). If the Merger contemplated hereby is consummated,
then the Initial Earnest Money (plus any interest or income earned
thereon as calculated above less the Aggregate Preferred Redemption
Consideration) shall be forwarded by the Company on behalf of Purchaser
to the Exchange Agent on the Closing Date as part of the Aggregate
Merger Consideration, and the bank acting as escrow agent under the
Signing Escrow Agreement shall be instructed by the Company and
Purchaser to release all funds in the escrow account under the Signing
Escrow Agreement pursuant to the instructions of Purchaser. The parties
hereto agree to promptly take all
5
<PAGE> 6
actions and deliver all certificates as may be required by this
Agreement or the Signing Escrow Agreement to effectuate a release and
transfer of the funds held in escrow thereunder in accordance with the
terms and conditions hereof and thereof."
1.7 Article V of the Merger Agreement shall be amended by
adding the following Section 5.16:
"5.16 Additional Company Undertakings. The Company
shall take the following actions:
(a) the Company will endeavor, but not be required, to
settle the lawsuit styled William Todd Wissell v. Loon Mountain
Recreation Corporation, Docket No. 96-C-202 (Superior Court of Grafton
County, New Hampshire), before the Closing on terms it, in its sole
discretion, deems in the best interests of the Company, which shall in
any event include, if settled, an appropriate confidentiality agreement
and general release of all further claims of the plaintiff;
(b) the Company shall obtain within five (5) days after
the First Amendment Date a Reaffirmation of Shareholder Agreement by
each shareholder of the Company that originally executed a Shareholder
Agreement, in substantially the form of Exhibit B to the First
Amendment to Merger Agreement;
(c) the Company will work with Purchaser to attempt in
good faith to obtain for the Company a written and unconditional option
to acquire a permanent right and easement over land owned by persons
other than Slopeside Realty Trust at a commercially reasonable cost to
provide access from Main Street in Lincoln, New Hampshire to the South
Mountain Bridge; provided, however, that the failure to obtain such an
option, despite the good faith efforts of the Purchaser and the Company
shall not constitute a breach of this clause (c); and
(d) the Company shall obtain within five (5)
days after the First Amendment Date an indemnity bond in the
face amount of at least Four Million Five Hundred Thousand Dollars
($4,500,000) from AIG, which indemnity bond will in any event will be
subject to a commercially reasonable deductible which shall be no more
than One Million Two Hundred Thousand Dollars ($1,200,000) and will
have a premium of no more than Ninety Thousand Dollars ($90,000), to
indemnify the Company for any CWA Penalty up to the face amount of such
bond."
6
<PAGE> 7
1.8 The second sentence of Section 6.1(d) of the Merger Agreement is
amended by adding the parenthetical "(including, without limitation, as amended
by the First Amendment to Merger Agreement)" immediately after the word
"Agreement" appearing in such sentence.
1.9 Section 6.1 of the Merger Agreement is amended by addition a new
Section 6.1(o) as follows:
"(m) Pipeline Case Injunction. No Pipeline Case
Injunction shall have been issued or entered against the Company or the
Subsidiary."
1.10 Section 10.1 of the Merger Agreement is amended by deleting the
"and" at the end of paragraph (d) of such section, changing the period at the
end of paragraph (e) to "; and" and adding the following new paragraph (f) in
proper alphabetical sequence:
"(f) any CWA Penalty imposed after the First
Amendment Date in an amount equal to the excess of the aggregate amount
of any CWA Penalty over the lesser of (I) One Hundred Thousand Dollars
($100,000) and (II) any remaining unused threshold amount under Section
10.4(d) hereof, up to a maximum payment against any CWA Penalty equal
to the lesser of (i) any remaining unused portion of the Holdback at
such time and (ii) the amount at which the deductible under the
indemnity bond purchased by the Company pursuant to Section 5.16(d) has
been satisfied and the indemnity bond issuer begins paying to the
Company amounts in respect of the CWA Penalty."
1.11 Section 10.4(b) of the Merger Agreement is amended by inserting
the phrase "and Section 10.1(f)" immediately after the words "Section 10.1(e)"
appearing in such Section.
1.12 Section 10.4(d) of the Merger Agreement is amended by inserting
the following phrase at the end of Section 10.4(d) of the Merger Agreement:
", provided that the $500,000 threshold amount to the extent
not already used or being used shall be reduced (i) by each dollar of
any CWA Penalty up to a maximum of $100,000 and (ii) by each dollar of
the settlement amount plus the costs of settlement or of any final
judgment, in either instance including but not limited to attorneys'
fees, for the lawsuit referred to in Section 5.16(a), whether such
lawsuit is settled or decided before or after Closing, to the extent
that such aggregate amount of such settlement or judgment exceeds
$25,000."
1.13 Section 11.1(e) of the Merger Agreement is amended in its
entirety as follows:
"(e) this Agreement will automatically terminate if the
Closing shall not have occurred on or before the close of business on
February 27,
7
<PAGE> 8
1998; provided, however, that this Agreement will not
automatically terminate on such date or thereafter pursuant to this
Section 11.1(e) if any party's willful breach of this Agreement has
prevented the consummation of the transactions contemplated hereby
unless agreed to in writing by the non-breaching party(ies); provided,
further, that the parties hereto agree to grant one fifteen (15)
business day extension of the automatic termination date set forth
above if requested by another party hereto so long as the parties are
working in good faith to finalize the remaining closing conditions and
deliveries hereunder and conclude in good faith that there is a
reasonable likelihood that all such remaining conditions and deliveries
can be satisfied during such extension period and may mutually agree to
grant such additional extensions as they deem necessary."
1.14 Paragraph 1 of Exhibit E to the Merger Agreement is amended in
its entirety as follows:
<TABLE>
<S> <C>
"1. Attorneys' Fees
a. Peabody & Brown $ 265,000
expenses $ 15,000
b. Atty. Alex Kalinski $ 35,000
expenses $ 5,000"
</TABLE>
1.15 Schedule 3.8 of the Disclosure Schedules is hereby deemed to be
amended to add the information set forth on Exhibit C to the First Amendment to
Merger Agreement.
ARTICLE II
MISCELLANEOUS
2.1 Except to the extent otherwise specified herein, capitalized terms
used in this Amendment shall have the same meanings ascribed to them in the
Merger Agreement.
2.2 Each party hereto represents and warrants that (i) it is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, (ii) the execution and delivery of
this Amendment and performance of its obligations hereunder have been duly
authorized by proper corporate proceedings (other than shareholder approval),
and subject to receipt of shareholder approval this Amendment constitutes a
legal, valid and binding obligation of such party enforceable in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws and general
principles of equity and (iii) neither the execution nor delivery of this
Amendment by such party nor any action contemplated hereunder (x) violates in
any material respect any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding upon
8
<PAGE> 9
such party, (y) violates or conflicts with in any material respect the
provisions of any instrument or agreement to which such party is a party or is
subject or bound or (z) violates any provision of the charter or certificate of
incorporation or by-laws of such party.
2.3 Except as specifically and expressly amended in Article I above,
each of the terms and conditions of the Merger Agreement, the Exchange
Agreement, the Shareholder Agreements and the Signing Escrow Agreement shall
remain in full force and effect and is hereby ratified and confirmed, and the
parties hereto further acknowledge and agree that the execution of this
Amendment is not a waiver or acknowledgment of, or consent to any breach of any:
(i) covenant, (ii) warranty or (iii) representation contained in the Merger
Agreement or (iv) material adverse change relating to the Business that may have
occurred since the Reference Balance Sheet Date, and any breach or violation of
the Merger Agreement shall be deemed to be continuing thereunder.
2.4 This Amendment may be executed in any number of counterparts, each
of which when so executed shall be deemed an original, but all such counterparts
shall constitute one and the same instrument. The titles and section headings in
this Amendment are provided for convenience and ease of reading only, and are of
no substantive effect in interpreting this Amendment.
2.5 THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF
DELAWARE. EACH OF THE PURCHASER, ACQUISITION SUB, THE COMPANY AND THE
REPRESENTATIVE WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THE MERGER AGREEMENT, THIS AMENDMENT OR UNDER
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED IN CONNECTION
HEREWITH OR HEREAFTER AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
2.6 This Amendment and the Signing Escrow Agreement contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof (and supersedes and replaces any prior letters, memoranda and/or writings
given with respect to any such proposed amendment) and no other representations,
warranties or understandings with respect to the subject matter hereof shall be
of any force or effect.
2.7 On the date hereof, the Company is delivering to Purchaser
resolutions unanimously approved by all of the members of its Board of Directors
approving the execution, delivery and performance of this Amendment, the Merger
Agreement and the transactions contemplated hereby and thereby.
9
<PAGE> 10
2.8 On the date hereof, the Company is delivering to Purchaser an
additional letter agreement from Citizens Bank New Hampshire agreeing to
continue its understanding that it will act as Escrow Agent and Exchange Agent
in accordance with its letter dated September 18, 1997.
[signature page follows]
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
BOOTH CREEK SKI GROUP, INC.
PURCHASER:
By: /s/ George Gillett, Jr.
------------------------------------
George N. Gillett, Jr., Chief
Executive Officer
ACQUISITION SUB: LMRC ACQUISITION CORP.
By: /s/ George Gillett, Jr.
------------------------------------
George N. Gillett, Jr., Chairman
COMPANY: LOON MOUNTAIN RECREATION
CORPORATION
By: /s/ Samuel Adams
------------------------------------
Samuel S. Adams, President
Acknowledged and Agreed to by the
undersigned, as Representative.
/s/ Stephen U. Samaha
- ------------------------------------
Stephen U. Samaha, as Representative
11
<PAGE> 12
EXHIBIT A
NOTICE TO ESCROW AGENT
CITIZENS BANK NEW HAMPSHIRE
875 Elm Street
Manchester, NH 03101
Attn: Robert Provencher, Trust and Business Development Officer
Fax: (603) 634-7788
Re: Notice - Section 2(g) of Signing Escrow Agreement
Gentlemen:
In accordance with the terms of Section 2(g) of that certain Signing
Escrow Agreement (the "Signing Escrow Agreement") dated as of December 16, 1997
by and among you and the undersigned, relating to the establishment of an escrow
account and the appointment of you as escrow agent, the undersigned do hereby
give you notice that the First Amendment to Merger Agreement among the
undersigned and LMRC Acquisition Corp. has been executed and is effective as of
the date hereof and that Section 2(g) of the Signing Escrow Agreement is no
longer in force and effect as of the date hereof.
Dated: December ____, 1997
BOOTH CREEK SKI GROUP, INC.
By:_____________________________
Name: George N. Gillett, Jr.
Title: Chief Executive Officer
LOON MOUNTAIN RECREATION
CORPORATION
By:_____________________________
Name: Samuel S. Adams
Title: President
12
<PAGE> 13
EXHIBIT B
FORM OF
REAFFIRMATION OF SHAREHOLDER AGREEMENT
December ___, 1997
Booth Creek Ski Group, Inc. LMRC ACQUISITION CORP.
c/o Booth Creek, Inc. c/o Booth Creek, Inc.
1000 South Frontage Road 1000 South Frontage Road
Suite 100 Suite 100
Vail, Colorado 81657 Vail, Colorado 81657
Attn: George N. Gillett, Jr. Attn: George N. Gillett, Jr.
Gentlemen:
Please refer to (1) the Merger Agreement dated as of September 18, 1997
(as amended, supplemented, restated or otherwise modified from time to time, the
"Merger Agreement") by and among Booth Creek Ski Group, Inc. (together with its
successors and permitted assigns, "Purchaser"), LMRC Acquisition Corp.
("Acquisition Sub") and Loon Mountain Recreation Corporation (the "Company") and
(2) the Shareholder Agreement (the "Shareholder Agreement") dated as of
September 18, 1997 by and among the undersigned party listed as Seller
("Seller"), a shareholder of the Company, with a principal residence at the
address located below, Purchaser and Acquisition Sub. Pursuant to the First
Amendment to the Merger Agreement (the "Amendment") dated as of December 22,
1997, among Purchaser, Acquisition Sub and the Company, certain provisions in
the Merger Agreement were amended. Seller has received and reviewed a copy of
the Amendment.
The undersigned Seller hereby (i) acknowledges and reaffirms that all of
such Seller's obligations and undertakings under the Shareholder Agreement shall
continue after execution of the Amendment and that all references to the "Merger
Agreement" in the Shareholder Agreement shall mean the Merger Agreement as
amended by the Amendment, and (ii) acknowledges and agrees that subsequent to,
and taking into account such Amendment, the Shareholder Agreement is and shall
remain in full force and effect in accordance with the terms thereof.
IN WITNESS WHEREOF, Seller has caused this Reaffirmation of Shareholder
Agreement to be duly executed as of the day and year first above written with
the intention that Purchaser and Acquisition Sub may rely on it in pursuing a
closing and expending additional amounts of their funds in connection with the
Merger Agreement and the Amendment.
Address: _________________________ SELLER:
_________________________
_________________________ _____________________________________
Print Name: ________________________
13
<PAGE> 14
EXHIBIT C
AMENDMENT TO SCHEDULE 3.8 OF THE DISCLOSURE SCHEDULE
1. The brief description of the pending action styled Roland
C. Dubois v. U.S. Dept. of Agriculture, U.S. Forest Service and Loon Mountain
Recreation Corporation set forth on the letter from Company Counsel Alexander
Kalinski to Samuel Adams dated August 29, 1997 attached to Section 1 of Schedule
3.8 of the Disclosure Schedules is hereby amended by adding the following
additional paragraph thereto:
"By Motion for CWA Civil Penalties dated October 29,
1997, Plaintiff Roland C. Dubois has requested the Court to
assess a civil penalty against the Company in the sum of
$5,550,125 for 347 alleged violations of the Clean Water Act
and to award him his costs and attorneys fees. The Company has
filed a response and is waiting for a hearing date to be
scheduled."
2. Schedule 3.8 of the Disclosure Schedules is hereby further
amended by inserting the following brief description of an additional action
commenced against the Company on October 20, 1997 immediately following Section
4 thereof; provided, however, that neither the Purchaser nor Acquisition Sub
shall be deemed to have accepted any developments in such action subsequent to
the First Amendment Date that will or may reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), rights,
properties, assets or prospects of the Company or of the Subsidiary or the
performance by the Company of its obligations under the Agreement, including,
without limitation, as amended by the First Amendment to Merger Agreement, which
developments shall be subject to Section 5.5 of the Agreement:
"5. On October 20, 1997, two shareholders of the Company,
James F. Miles and Andrew S. Kaplan ("Plaintiffs"), filed a
Petition and a Motion for Preliminary Injunctive Relief
("Motion") against the Company and its directors in the
Grafton County (New Hampshire) Superior Court alleging various
breaches by the directors of their fiduciary duties to the
shareholders of the Company in the negotiation, approval, and
recommendation of the Merger Agreement to such shareholders
and the solicitation of proxies for the shareholder meeting to
adopt the Merger Agreement. In their Petition and Motion,
Plaintiffs seek, inter alia, a temporary restraining order and
preliminary and permanent injunctions enjoining the Company
from: (i) further distributing proxy materials to and
soliciting proxies from shareholders; (ii) using any proxies
received; (iii) conducting a shareholders' meeting to approve
the Merger Agreement; or (iv) taking any corporate action
favoring or advantaging any particular bidder over other
interested suitors. Plaintiffs also seek orders: (a)
compelling the Company to make
<PAGE> 15
information concerning the Company available to, and to
meet with all potential bidders; (b) compelling the Company
to produce certain documents to Mr. Kaplan; and (c) declaring
that the New Hampshire Security Takeover Disclosure Act, RSA
421-A, applies to the proposed merger transaction.
A hearing was held on the Plaintiffs' Motion on
October 24, 1997. By Order dated October 28, 1997, the Court
concluded that the Plaintiffs had failed to demonstrate the
required likelihood of success on the merits or that there was
a danger of immediate irreparable injury. The Court further
found that Plaintiffs have an adequate remedy at law and that
the issuance of the requested injunction would potentially
cause great harm and loss to the Company and its shareholders,
whereas the harm to the Plaintiffs, should the injunction be
denied, would be minimal in comparison. Accordingly, the Court
denied the Plaintiffs' Motion."
<PAGE> 1
EXHIBIT 2.3
AMENDMENT NO. 4
TO CREDIT AGREEMENT
AS AMENDED AND RESTATED
As of February 23, 1998
BOOTH CREEK SKI HOLDINGS, INC., a Delaware corporation (together with
its successors and assigns, "BCS Holdings"), BOOTH CREEK SKI ACQUISITION CORP.,
a Delaware corporation (together with its successors and assigns, "BCS
Acquisition"), TRIMONT LAND COMPANY, a California corporation (together with
its successors and assigns, "Northstar-at-Tahoe"), SIERRA-AT-TAHOE, INC., a
Delaware corporation (together with its successors and assigns,
"Sierra-at-Tahoe"), BEAR MOUNTAIN, INC., a Delaware corporation (together with
its successors and assigns, "Bear Mountain"), WATERVILLE VALLEY SKI RESORT,
INC., a Delaware corporation (together with its successors and assigns,
"Waterville"), MOUNT CRANMORE SKI RESORT, INC., a Delaware corporation
(together with its successors and assigns, "Cranmore"), SKI LIFTS, INC., a
Washington corporation (together with its successors and assigns, "Ski Lifts"),
GRAND TARGHEE INCORPORATED, a Delaware corporation (together with its
successors and assigns, "Grand Targhee", and together with BCS Holdings, BCS
Acquisition, Northstar-at-Tahoe, Sierra-at-Tahoe, Bear Mountain, Waterville,
Cranmore and Ski Lifts, the "Existing Borrowers", and each an "Existing
Borrower"), LMRC HOLDING CORP., a Delaware corporation (together with its
successors and assigns, "LMRC Holding"), LOON MOUNTAIN RECREATION CORPORATION,
a New Hampshire corporation (together with its successors and assigns, "Loon"),
LOON REALTY CORP., a New Hampshire corporation (together with its successors
and assigns, "Loon Realty", and together with LMRC Holding and Loon, the "Loon
Borrowers", and the Loon Borrowers together with the Existing Borrowers, the
"Borrowers"), BANKBOSTON, N.A. (f/k/a The First National Bank of Boston), a
national banking association (together with its successors and assigns,
"BankBoston"), and BankBoston, as agent (the "Agent") for itself and any other
Lenders from time to time party to the Credit Agreement hereby agree as
follows:
1. Reference to Credit Agreement: Joinder; Definitions. Reference is
made to the Credit Agreement dated as of December 3, 1996, as amended and
restated as of March 18, 1997, as further amended and in effect on the date
hereof (the "Credit Agreement"), among the Borrowers, BankBoston and the Agent.
1.1. Definitions. The Credit Agreement as amended by this Amendment is
referred to herein as the "Amended Credit Agreement". Terms defined in the
Amended Credit Agreement and not otherwise defined herein are used herein with
the meanings so defined.
1.2. Joinder. On the Loon Joinder Date, each of the Loon Borrowers hereby
agrees to join in, jointly and severally be bound by and perform all of the
obligations of a Borrower
<PAGE> 2
under the Amended Credit Agreement, including without limitation for the
purposes of; (a) paying all Credit Obligations; (b) complying with the
covenants set forth in Section 7 of the Amended Credit Agreement; and (c)
making the representations and warranties contained in Section 8 of the Amended
Credit Agreement. The Existing Borrowers, the Agent and the Lenders hereby
agree that on such date the Loon Borrowers shall be joined as Borrowers under
the Amended Credit Agreement.
2. Amendments to the Credit Agreement. Subject to all the terms and
conditions hereof, effective as of the date the conditions set forth in Section
4 are satisfied (the "Loon Joinder Date"), the Credit Agreement is hereby
amended as set forth herein.
2.1. Amendment to Preamble. The Preamble of the Credit Agreement is hereby
amended by deleting therefrom, in the parenthetical following the words "GRAND
TARGHEE INCORPORATED", the definitions of the terms "Borrowers" and "Borrower".
2.2. Amendment to Section 1.2. Section 1.2 of the Credit Agreement is
hereby amended by deleting the definition of "Resorts Cash Flow" in its
entirety.
2.3. New Definitions. New definitions are hereby added to Section 1.2,
each to read in its entirety as follows:
""By-laws" means all written by-laws, rules, regulations and
all similar other documents relating to the management, governance or
internal regulations of any Person other than an individual, all as
from time to time in effect."
""Charter" means the articles of organization, certificate of
incorporation, articles of incorporation, statute, constitution, joint
venture agreement, partnership agreement, declaration of trust,
limited liability company agreement or other charter document of any
Person other than an individual, each as from time to time in effect."
""Interest Rate Protection Agreement" means any interest rate
swap, interest rate cap, interest rate hedge or other contractual
arrangement that converts variable interest rates into fixed interest
rates, fixed interest rates into variable interest rate, or other
similar arrangements."
""Joint Marketing Agreement" means the Marketing Agreement
dated as of December 1, 1997, among Loon, Loon Realty, BCS Holdings
and certain of the subsidiaries of BCS Holdings, as amended, restated,
supplemented or otherwise defined and in effect from time to time."
""LMRC Holding" means LMRC Holding Corp., a Delaware
corporation, together with its successors and assigns."
-2-
<PAGE> 3
""LMRC Holding Security Agreement" means the Security
Agreement dated as of the Loon Joinder Date between LMRC Holding and
the Agent, as amended, restated, supplemented and in effect from time
to time."
""Loon" means Loon Mountain Recreation Corporation, a New
Hampshire corporation, together with its successors and assigns."
""Loon Acquisition Agreement" means the Agreement and Plan of
Merger dated as of September 18, 1997, among BCS Group, LMRC
Acquisition Corp., a New Hampshire corporation, and Loon, as amended,
restated, supplemented, assigned or otherwise modified and in effect
from time to time."
""Loon Borrowers"" means, collectively, LMRC Holding, Loon
and Loon Realty.
""Loon Joinder Date" means the "Loon Joinder Date" as defined
in Amendment No. 4 to the Credit Agreement, dated as of February 23,
1998."
""Loon Mortgage" means the Mortgage, Security Agreement and
Assignment of Leases and Rents, dated as of the Loon Joinder Date,
executed by Loon in favor of the Agent, as amended, restated,
supplemented or otherwise modified and in effect from time to time."
""Loon Realty" means Loon Realty Corp., a New Hampshire
corporation, together with its successors and assigns."
""Loon Realty Security Agreement" means the Security
Agreement, dated as of the Loon Joinder Date, between Loon Realty and
the Agent, as amended, restated, supplemented or otherwise modified
and in effect from time to time."
""Loon Security Agreement" means the Security Agreement,
dated as of the Loon Joinder Date, between Loon and the Agent, as
amended, restated, supplemented or otherwise modified and in effect
from time to time."
""7.5% Subordinated Notes" means, collectively, the
Subordinated Notes made by Loon, each as listed on Exhibit 7.6.14
hereto."
2.4. Amendments to Definitions. Section 1.2 of the Credit Agreement is
hereby amended by amending and restating the following definitions, to
read in their entirety as follows:
""Acquisition Appraisals" means, collectively, the Original
Appraisals, the New Appraisals and the appraisal on the assets and
business of Loon performed by
-3-
<PAGE> 4
Resort North Valuation, Inc. and dated January 30, 1998, and the
updated appraisals to be obtained pursuant to Section 7.17."
""Agent" has the meaning provided in the preamble hereto."
""Applicable Margin" means
(i) during any fiscal quarter of the
Borrowers for which Trailing Four Fiscal Quarter
Cash Flow for the four fiscal quarters then most
recently ended is less than or equal to $20,000,000,
and during any Default Rate Period, 0.50% for any
Alternate Base Rate Loan and 3.00% for any LIBOR
Loan;
(ii) during any fiscal quarter of the
Borrowers for which Trailing Four Fiscal Quarter
Cash Flow for the four fiscal quarters then most
recently ended is greater than $20,000,000 and less
than or equal to $25,000,000, 0.25% for any
Alternate Base Rate Loan and 2.25% for any LIBOR
Loan; and
(iii) during any fiscal quarter of the
Borrowers for which Trailing Four Fiscal Quarter
Cash Flow for the four fiscal quarters then most
recently ended is greater than $25,000,000, 0.00%
for any Alternate Base Rate Loan and 2.00% for any
LIBOR Loan."
""Borrowers" means, collectively, the Original Borrowers, the
New Borrowers and the Loon Borrowers."
""Cash Flow" means, with respect to any Person, for any
period, on a Consolidated basis for such Person, the total of (a) Net
Income of such Person, plus (b) all amounts deducted in computing such
Net Income in respect of:
(i) depreciation and amortization; provided,
however, that when computing Cash Flow for any four fiscal
quarter period the maximum amount to be added to Net Income
pursuant to this clause (i) in respect of amortization of any
capitalized real estate development costs shall not exceed
$5,000,000;
(ii) Interest Expense of such Person; and
(iii) taxes based upon or measured by income of
such Person."
""Credit Security" means all assets now or from time to time
hereafter subjected to a security interest or charge (or intended or
required so to be pursuant to the Security Agreements, the Mortgages
or any other Credit Document) to secure the payment or performance of
any of the Credit Obligations, including the assets
-4-
<PAGE> 5
described in the Security Agreements, the Mortgages (excluding any
environmental indemnity agreements) and any three party agreements
with the USFS."
""Environmental Audits" means, collectively, the Original
Environmental Audits, the New Environmental Audits and the Phase I
Environmental Report dated as of July 1997 on Loon."
""Final Offering Memorandum" means the Offering Memorandum
dated February 23, 1998, of BCS Holdings, in respect of the Series C
Senior Unsecured Notes."
""Fixed Charges" means, for any four consecutive fiscal
quarters, the sum of:
(i) Interest Expense; plus
(ii) the aggregate amount of all mandatory scheduled
payments, prepayments and sinking fund payments, in each case
with respect to principal paid by the Borrowers in respect of
Financing Debt; plus
(iii) the aggregate amount of all mandatory payments
actually paid in cash in respect of leases of equipment,
excluding all payments (whether in the nature of interest or
principal) in respect of Capitalized Leases;
provided, however, that for any such period ending on or before March
18, 1998, Fixed Charges shall mean the sum of (x) actual Fixed
Charges, computed as provided in clauses (i) through (iii) hereof,
accrued or paid by the Original Borrowers plus (y) actual Fixed
Charges, computed as provided in clauses (i) through (iii) hereof,
accrued or paid by the New Borrowers since the Restatement Date
through the end of such period, annualized plus (z) actual Fixed
Charges, computed as provided in classes (i) through (iii) hereof,
accrued or paid by the Loon Borrowers since the Loon Joinder Date
through the end of such period, annualized; and, provided, further,
that for any such period ending after March 18, 1998 and on or before
the first anniversary of the Loon Joinder Date, Fixed Charges shall
mean the sum of (r) actual Fixed Charges, computed as provided in
clauses (i) through (iii) hereof, accrued or paid by the Old Borrowers
and the New Borrowers through the end of such period plus (s) actual
Fixed Charges, computed as provided in clauses (i) through (iii)
hereof, accrued or paid by the Loon Borrowers since the Loon Joinder
Date through the end of such period, annualized."
""Hancock Bridge Note" means the Note dated as of February
26, 1998, in the principal amount of $1,107,692.31, made by BCS Group
payable to Hancock.
""Interest Expense" means, for any period, the aggregate
amount of interest, including payments in the nature of interest under
Capitalized Leases, paid or accrued
-5-
<PAGE> 6
by the Borrowers (whether such interest is reflected as an item
of expense or capitalized) on Indebtedness; provided, however, that
for any such period ending on or before March 18, 1998, Interest
Expense shall mean the sum of (x) actual Interest Expense accrued or
paid by the Original Borrowers plus (y) actual Interest Expense
accrued or paid by the New Borrowers since the Restatement Date
through the end of such period, annualized plus (z) actual Interest
Expense accrued or paid by the Loon Borrowers since the Loon Joinder
Date through the end of such period, annualized; and provided, further
that for any such period ending after March 18, 1998 and on or before
the first anniversary of the Loon Joinder Date, Interest Expense shall
mean the sum of (r) actual Interest Expense accrued or paid by the
Original Borrowers and the New Borrowers plus (s) actual Interest
Expense accrued or paid by the Loon Borrowers since the Loon Joinder
Date through the end of such period, annualized."
""Material Adverse Change" means any materially adverse
change in the business, assets, financial condition, income or
prospects of any of the Borrowers or their Subsidiaries (on an
individual basis) or the Borrowers and their Subsidiaries (on a
Consolidated pro forma basis), since October 31, 1997."
""Mortgages" means, collectively, the Northstar-at-Tahoe
Mortgage, the Sierra-at-Tahoe Mortgage, the Bear Mountain Mortgage,
the Waterville Mortgage, the Cranmore Mortgage, the Ski Lifts
Mortgage, the Loon Mortgage and related assignments to the Agent of
leases of real property owned by any of the Borrowers."
""Net Income" means, with respect to any Person, for any
period, the net income (or loss) of the Borrowers determined in
accordance with GAAP; provided, however, that Net Income shall not
include:
(a) all amounts included in computing such net
income (or loss) in respect of the write-up (i) after the
Effective Date of any asset acquired in connection with the
acquisition of Waterville, Cranmore and the California
Resorts, (ii) after the Restatement Date of any asset
acquired in connection with the acquisition of the Washington
Resorts and the Wyoming Resort and (iii) after the Loon
Joinder Date of any asset acquired in connection with the
acquisition by merger of Loon; and
(b) extraordinary and nonrecurring gains."
""Net Worth" means, with respect to any Person, at any date,
the excess of the total assets of such Person over the total
Indebtedness of such Person, on a Consolidated basis. Total assets
shall be determined in accordance with GAAP, excluding, however:
-6-
<PAGE> 7
(i) all loans to any Subsidiary, employee, officer
or other Affiliate of such Person, and all amounts payable to
such Persons from any of such Affiliates,
(ii) minority interests in other Persons,
(iii) cash and securities segregated in a sinking or
other similar fund established for the purpose of redemption
or other retirement of capital stock or Financing Debt, and
(iv) current reserves on the date of calculation for
depreciation, depletion, obsolescence and amortization of
properties and all other reserves which, in accordance with
GAAP, should be established in connection with the business
conducted by such Person."
""New Hampshire Resorts" means, collectively, Waterville,
Cranmore, Loon, Loon Realty and LMRC Holding."
""Payment Date" means the first Banking Day of each calendar
quarter."
""Person" means any present or future natural person or any
corporation, association, partnership, limited liability company,
joint venture, company, trust, business trust, organization, business,
individual or government or any governmental agency or political
subdivision thereof."
""Security Agreements" means, collectively, the
Northstar-at-Tahoe Security Agreement, the Sierra-at-Tahoe Security
Agreement, the Bear Mountain Security Agreement, the Waterville
Security Agreement, the Cranmore Security Agreement, the Ski Lifts
Security Agreement, the Grand Targhee Security Agreement, the LMRC
Holding Security Agreement, the Loon Security Agreement, the Loon
Realty Security Agreement, the BCS Acquisition Security Agreement and
the BCS Holdings Security Agreement."
""Securities Purchase Agreements" means, collectively, the
Securities Purchase Agreement dated November 27, 1996 between John
Hancock and BCS Group and the Securities Purchase Agreement dated
November 27, 1996 between the CIBC Securities Subsidiary and BCS
Group, each as amended, and restated as of the Loon Joinder Date, and
as further amended and in effect from time to time."
""Stated Maximum" means $25,000,000."
""Trailing Four Fiscal Quarter Cash Flow" means, for any four
consecutive fiscal quarters ending nearest the dates set forth in the
table below the amount set forth with respect to such four fiscal
quarters:
-7-
<PAGE> 8
<TABLE>
<CAPTION>
Fiscal Quarter Ending Nearest Amount
----------------------------- ------
<S> <C>
April 30, 1998 The sum of Cash Flow of the Borrowers for the
Period from the quarter beginning nearest January
31, 1998 to the end of the quarter ending nearest
April 30, 1998 plus $8,316,000
July 31, 1998 The sum of Cash Flow of the Borrowers for the
Period from the quarter beginning nearest January
31, 1998 to the end of the quarter ending nearest
July 31, 1998 plus $12,578,000
October 31, 1998 The sum of Cash Flow of the Borrowers for the
Period from the quarter beginning nearest January
31, 1998 to the end of the quarter ending nearest
October 31, 1998 plus $14,552,000
January 31, 1999 and thereafter Cash Flow of the Borrowers for the period of four
fiscal quarters most recently completed"
</TABLE>
2.5. Amendment to Section 2.1.2. Section 2.1.2 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"2.1.2. Annual Clean-Up. For a period in each year from
February 15 through April 15 of such year (such period being the
"Designated Cleanup Period" for such year), the Revolving Loan shall
not exceed $6,000,000; provided, however, that on March 13, 1998 and
March 12, 1999, the Revolving Loan shall not exceed $0; and provided,
further that during the period from March 15, 1998 through April 15,
1998, the Revolving Loan may exceed $6,000,000 but shall not exceed
$7,500,000."
2.6. Amendment to Section 7.5.1. Section 7.5.1 of the Credit
Agreement is hereby amended to read in its entirety as follows:
"7.5.1. Financing Debt to Cash Flow. At all times, the ratio
of the unpaid principal amount of Consolidated Financing Debt of the
Borrowers to Trailing Four Fiscal Quarter Cash Flow for such time
shall not exceed 7.0 to 1.0."
2.7. Amendment to Section 7.5.2. Section 7.5.2 of the Credit Agreement is
hereby amended to read in its entirety as follows:
-8-
<PAGE> 9
"7.5.2. Cash Flow to Fixed Charges. On the last day of each
fiscal quarter of the Borrowers, the sum of (a) Trailing Four Fiscal
Quarter Cash Flow measured on such date minus (b) Cash Flow
Adjustment for the four fiscal quarters then ending, shall equal or
exceed 110% of Consolidated Fixed Charges of the Borrowers for such
period."
2.8. Amendment to Section 7.5.3. Section 7.5.3 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"7.5.3. Minimum Net Worth. At all times, Consolidated Net
Worth of the Borrowers shall be in excess of the sum of the
proceeds of any equity offering by the Borrowers plus $40,000,000."
2.9. Deletion of Section 7.5.4. Section 7.5.4 of the Credit Agreement is
hereby deleted in its entirety.
2.10. Amendment to Section 7.6.13. Section 7.6.13 of the Credit Agreement
is hereby amended to read in its entirety as follows:
"7.6.13. Indebtedness in respect of the Senior Unsecured
Notes, not to exceed the sum of $133,500,000 in aggregate principal
amount."
2.11. New Sections 7.6.19 and 7.6.20. Two new Sections are hereby added to
the Credit Agreement, immediately following Section 7.6.18, to read in their
entirety as follows:
"7.6.19. Indebtedness in respect of the 7.5% Subordinated
Notes; provided, however, that such Indebtedness shall not exceed
$1,152,000 in aggregate principal amount; and provided, further, that
the Borrowers shall maintain a segregated account of cash or Cash
Equivalents, in an amount (and with matched maturities) sufficient to
pay the principal, interest and any prepayment fees as they accrue and
upon redemption; and provided, further, that the Borrowers shall not
undertake or enter into any amendment, refinancing or other
modification of the 7.5% Subordinated Notes.
"7.6.20. Indebtedness in respect of Interest Rate Protection
Agreements between BCS Holdings and the Agent."
-9-
<PAGE> 10
2.12. Amendment to Section 7.7. Section 7.7 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"7.7. Guarantees; Letters of Credit. None of the Borrowers or
their Subsidiaries will become or remain liable with respect to any
Guarantee, including reimbursement obligations under letters of credit
and other financing guarantees by third parties, except as
contemplated by (i) the Credit Documents, (ii) the Senior Indenture,
to the extent such Guarantees are of Indebtedness permitted by Section
7.6.13, (iii) the ASC Subordinated Note and (iv) a guarantee by BCS
Holdings of workers' compensation liabilities of Ski Lifts.
2.13. New Sections 7.9.12, 7.9.13, 7.9.14 and 7.9.15. Four new Sections
are hereby added to the Credit Agreement, immediately following Section 7.9.11,
to read in their entirety as follows:
"7.9.12. Investments, not to exceed $1,000,000 in aggregate,
(i) pursuant to terms of the Asset Purchase Agreement dated as of
August 21, 1997 by and between Charles Wiper III, as shareholder, BCS
Holdings and First Tracks, Inc., an Oregon corporation, and (ii)
consisting of the "July Deposit" as defined therein.
"7.9.13. Investments consisting of a Promissory Note made by
Star Resorts, an Arizona limited liability company ("Star Resorts"),
not to exceed $700,000 in principal amount and the related Agreement
to Purchase and Sell Real Property between Star Resorts and
Northstar-at-Tahoe, dated as of October 27, 1997.
"7.9.14. Investments that comprise part of Interest Rate
Protection Agreements between BCS Holdings and the Agent.
"7.9.15. Investments consisting of the holdback under the
Loon Acquisition Agreement."
2.14. Amendment to Section 7.10.2. Section 7.10.2 of the Credit Agreement
is hereby amended to read in its entirety as follows:
"7.10.2. So long as before and after giving effect thereto no
Default exists, the Borrowers may make Distributions to BCS Group to
provide funds to service notes issued under the Securities Purchase
Agreements."
2.15. Amendment to Section 7.10.3. Section 7.10.3 of the Credit Agreement
is hereby amended to read in its entirety as follows:
"7.10.3. So long as before and after giving effect thereto
no Default exists, payments of principal and interest due under the
ASC Subordinated Note and the 7.5% Subordinated Notes."
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<PAGE> 11
2.16. Amendment to Section 7.11. Section 7.11 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"7.11. Capital Expenditures. The Borrowers will not make
aggregate Capital Expenditures exceeding $10,000,000 during any fiscal
year; provided, however, that Capital Expenditures with respect to
real estate activities of the Borrowers shall not in the aggregate
exceed $3,000,000 during any fiscal year."
2.17. Deletion of Section 7.16. Section 7.16 of the Credit Agreement is
hereby deleted in its entirety.
2.18. Amendment to Section 7.22. Section 7.22 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"7.22. Use of Equipment. The Borrowers shall provide the
Agent with 30 days' prior written notice before (i) any of the
California Resorts, Ski Lifts or Grand Targhee removes, relocates or
maintains any tangible personal property outside the states of
California, Washington and Wyoming, and (ii) any of the New Hampshire
Resorts removes, relocates or maintains any tangible personal property
outside the state of New Hampshire."
2.19. Amendment to Section 8.1.1. Section 8.1.1 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"8.1.1. The Borrowers. Each of BCS Holdings, BCS Acquisition,
Sierra-at-Tahoe, Bear Mountain, Waterville, Cranmore, Grand Targhee
and LMRC Holding is a duly organized and validly existing corporation,
in good standing, under the laws of the State of Delaware,
Northstar-at-Tahoe is a duly organized and validly existing
corporation, in good standing, under the laws of the State of
California, Ski Lifts is a duly organized and validly existing
corporation, in good standing, under the laws of the State of
Washington, and each of Loon and Loon Realty is a duly organized and
validly existing corporation, in good standing, under the laws of the
State of New Hampshire, each with all power and authority, corporate
or otherwise, necessary to (i) enter into and perform each of this
Agreement and other Credit Documents to which it is party, (ii) grant
the Lenders the security interests in the Credit Security owned by it
to secure the Credit Obligations as applicable and (iii) own its
properties and carry on the business now conducted or proposed to be
conducted by it. Each of the Borrowers have taken all corporate or
other action required to execute, deliver and perform each of this
Agreement and other Credit Documents to which it is party. Certified
copies of the Charter and By-laws of each of the Borrowers have been
previously delivered to the Agent and are correct and complete.
Exhibit 8.1, as from time to time hereafter supplemented in accordance
with Section 7.4 or otherwise by written notice to the Lenders, sets
forth (a) the jurisdiction of incorporation or
-11-
<PAGE> 12
organization of each of the Borrowers, (b) the address of each
of the Borrowers' chief executive office and chief place of business
and (c) the name under which each of the Borrowers conducts its
business and the jurisdictions in which the name is used."
2.20. Amendment to Section 8.2.1. Section 8.2.1 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"8.2.1. Financial Statements and Other Information. The
Borrowers have previously furnished to the Lenders copies of the
Consolidated and Consolidating balance sheet of Loon and Loon Realty
as at April 30, 1997 and October 26, 1997, the Consolidated and
Consolidating statements of income and Consolidated and Consolidating
statement of changes in shareholders' equity and cash flows of Loon
and Loon Realty for the period then ending, the Consolidated and
Consolidating balance sheet of the New Borrowers and Old Borrowers as
at October 31, 1997 and January 31, 1998, and the Consolidated and
Consolidating statements of income and cash flows of the Old Borrowers
and the New Borrowers for the period then ending.
The Consolidated and Consolidating financial statements
(including the notes thereto, subject, in the case of any unaudited
financial statements, to the absence of footnote disclosure and normal
year-end and audit adjustments) referred to above were prepared in
accordance with GAAP and fairly present the financial position of the
Persons covered thereby at the respective dates thereof and the
results of their operations for the periods covered thereby. Neither
the Borrowers nor any of their Subsidiaries has any known material
contingent liability which is not reflected in the most recent balance
sheet referred to above or the notes thereto, or in the Final Offering
Memorandum."
2.21. Amendment to Section 8.2.1. Section 8.2.1 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"8.7. Litigation. Except as described on Exhibit 8.7, no
litigation, at law or in equity, or in any proceeding before any
court, board or other governmental or administrative agency or any
arbitrator is pending or, to the knowledge of the Borrowers or their
Subsidiaries, threatened which may involve any material risk of any
final judgment, order or liability which, after giving effect to any
applicable insurance, has resulted, or poses a material risk of
resulting, in any Material Adverse Change or which seeks to enjoin the
consummation, or which questions the validity, or any of the
transactions contemplated by this Agreement or any other Credit
Document. Except as described on Exhibit 8.7, no judgment, decree or
order of any court, board or other governmental or administrative
agency or any arbitrator has been issued or binds the Borrowers or any
Subsidiary which has resulted, or poses a material risk of resulting,
in any Material Adverse Change."
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<PAGE> 13
2.22. Amendment to Section 11.1. Section 11.1 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"11.1. Interests in Credits. The percentage interest of
each Lender in the Revolving Loan and Letters of Credit shall be
computed based on the maximum principal amount for each Lender as
follows:
<TABLE>
<CAPTION>
Lender Maximum Principal Amount Percentage Interest
------ ------------------------ -------------------
<S> <C> <C>
BankBoston, N.A. $25,000,000 100%
Total $25,000,000 100%
</TABLE>
The foregoing percentage interests, as otherwise adjusted as the
Lenders may from time to time agree among themselves, are referred to
as the "Percentage Interests" with respect to all or any portion of
the Revolving Loan and Letters of Credit. References in any Credit
Document to the Lenders' respective Percentage Interests are to such
interests as from time to time in effect."
2.23. Amendments to Exhibits; New Exhibits. Exhibits 8.1, 8.4, 8.11.1 are
each amended to read in their entirety as attached to this Amendment. A new
Exhibit 8.7 is added to the Credit Agreement, to read in its entirety as
attached to this Amendment.
3. Representations and Warranties. In order to induce the Lenders to enter
into this Amendment, and to continue to extend credit to the Borrowers under
the Amended Credit Agreement, each of the Borrowers represents and warrants to
the Lenders that:
3.1. Organization and Qualification. Each of the Borrowers is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power necessary
to execute and deliver this Amendment and to perform its obligations thereunder
and under the Amended Credit Agreement.
3.2. Corporate Authority. The execution, delivery and performance of this
Amendment and the Amended Credit Agreement, and the borrowings and transactions
contemplated hereby and thereby, are within the corporate power and authority
of each of the Borrowers and have been authorized by proper corporate
proceedings, and do not and will not (a) require any consent or approval of the
stockholders of any of the Borrowers, (b) contravene any provision of the
Charter or By-laws of any of the Borrowers or any law, rule or regulation
applicable to any of the Borrowers, (c) contravene any provision of, or
constitute an event of default or event which, but for the requirement that
time elapse or notice be given, or both, would constitute an event of default
under, any other agreement, instrument or undertaking binding on any of the
Borrowers, or (d) result in or require the imposition of any Lien on any of the
properties of any of the Borrowers.
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<PAGE> 14
3.3. No Default. No Default under the Credit Agreement now exists, and
after giving effect to this Amendment no Default under the Amended Credit
Agreement shall exist.
4. Conditions to Amendment. The effectiveness of Section 2 of this Amendment,
the amendment of the terms of the Credit Agreement contemplated thereby, and
the obligation of the Lender to extend credit up to a maximum amount of
$25,000,000, shall be subject to the conditions set forth in this Section 4.
4.1. Note. The Loon Borrowers shall have executed a Revolving Note,
substantially in the form of Exhibit 4.1 hereto, and delivered it to the Agent.
4.2. Collateral Documentation. Collateral Documentation.
4.2.1. Loon Borrowers. Loon shall have executed the Loon Security
Agreement and the Loon Mortgage, Loon Realty shall have executed the
Loon Realty Security Agreement and the Loon Mortgage and LMRC Holding
shall have executed the LMRC Holding Security Agreement.
4.2.2. Existing Borrower Mortgages. The Existing Borrowers shall
have executed amendments to, or memoranda relating to, the
Mortgages to which any of them are party, to evidence the increase in
the indebtedness secured by such Mortgages to $25,000,000, each in form
and substance satisfactory to the Agent and its counsel.
4.2.3. Forest Service Agreements. Loon shall have entered into
agreements with the USFS and the Agent (and amendments to any such
agreements in effect) all in form and substance satisfactory to the
Agent.
4.2.4. Perfection of Security. Each Obligor shall have duly
authorized, executed, acknowledged, delivered, filed, registered
and recorded such security agreements, notices, financing statements
and other instruments as the Agent may have requested in order to
perfect the security interests and encumbrances purported or required
pursuant to the Credit Documents to be created in the Credit Security.
4.3. Acquisition of Loon Report. BCS Group shall have contributed
LMRC Holding to BCS Holdings, and the transaction contemplated by the
Loon Acquisition Agreement shall have been consummated, to the effect that Loon
shall be a wholly-owned subsidiary of LMRC Holding, each of which shall be in
form and substance satisfactory to the Agent and its counsel.
4.4. Additional Unsecured Debt Financing. BCS Holdings shall have
consummated a sale of debt securities issued under the Senior Indenture, in
principal amount of $17,500,000,
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<PAGE> 15
on terms and conditional satisfactory to the Agent; provided, however,
that the terms of the Final Offering Memorandum shall be deemed acceptable to
the Agent.
4.4.1. Amendment to Indenture. BCS Holdings shall have
consummated an amendment to the Senior Indenture, on terms and
conditions satisfactory to the Agent.
4.5. Additional Equity Capitalization.
4.5.1. BCS Group shall have entered into the Securities
Purchase Agreements and the Hancock Bridge Note, on terms and
conditions satisfactory to the Agent.
4.5.2. The Agent shall have received a certificate, in
substantially the form of Exhibit 4.5 hereto, signed by a Financial
Officer of BCS Holdings, LMRC Holding, Loon and Loon Realty, to the
following effect:
(i) Certifying that the value, determined in accordance
with GAAP, of the stockholders' equity contributed
to BCS Holdings on the Loon Joinder Date is not less
than $10,500,000; and
(ii) Certifying the solvency of the Borrowers, as of the
Loon Joinder Date.
4.6. Payment of Fees. The Borrowers shall have paid (i) a closing
fee of $50,000 to the Agent, (ii) the fees and expenses of the Agent's counsel,
Ropes & Gray, for which statements have been rendered on or before the Loon
Joinder Date, and (iii) the fees and expenses of local counsel to the Agent.
4.7. Reports and Other Documents. The Agent shall have received the
following, each in form and substance satisfactory to the Agent:
(i) the Phase I Environmental Report dated as of
July 1997 on Loon;
(ii) the audited Consolidated balance sheet of Loon
as at April 30, 1997, and Consolidated statements of income
and changes in shareholders' equity and cash flows of Loon
for the fiscal year of Loon then ended, accompanied by a
management letter prepared by independent certified public
accountants of recognized standing reasonably satisfactory to
the Agent;
(iii) The Consolidated and Consolidating balance
sheet of the Existing Borrowers as of January 31, 1998 and
the Consolidated and Consolidating statements of income and
cash flows for the fiscal quarter then ending; and
(iv) the Consolidated and Consolidating balance
sheet of the Borrowers, giving pro forma effect to the
transactions occurring as of the Loon Joinder Date, and
Consolidated and Consolidating statements of income
-15-
<PAGE> 16
and changes in shareholders' equity of the Borrowers for the
twelve-month period ending October 31, 1997, and projections
of the same as at October 31 for each year from 1998 through
2002 and for the fiscal years then ended on each such date.
4.8. Legal Opinions. The Lenders shall have received from Winston &
Strawn, special counsel for the Borrowers, its opinion with respect to the
transactions contemplated by this Amendment and the Loon Acquisition Agreement,
which opinion shall be in form and substance satisfactory to the Agent and its
counsel.
4.9. Representations and Warranties. The representations and warranties
of each of the Borrowers contained in this Amendment, the Amended Credit
Agreement, the Security Agreements and the Mortgages shall be true and correct
in all material respects on and as of the Loon Joinder Date with the same
force and effect as though originally made on and as of such date; no Default
shall exist on the Loon Joinder Date prior to or immediately after giving
effect to the requested extension of credit; no Material Adverse Change shall
have occurred; and the Borrowers shall have furnished to the Agent on the Loon
Joinder Date a certificate to these effects, in substantially the form of
Exhibit 4.9 hereto, signed by an Executive Officer or a Financial Officer.
4.10. Proper Proceedings. This Amendment, the Amended Credit Agreement,
each other Credit Document and the transactions contemplated hereby and thereby
shall have been authorized by all necessary proceedings of each Obligor and any
of their respective Affiliates party thereto. All necessary consents, approvals
and authorizations of any governmental or administrative agency or any other
Person of any of the transactions contemplated hereby or by any other Credit
Document shall have been obtained and shall be in full force and effect.
4.11. Legality, etc. The making of the requested extension of credit on
the Loon Joinder Date shall not (i) subject any Lender to any penalty or
special tax, (ii) be prohibited by any law or governmental order or regulation
applicable to any Lender or any Obligor or (iii) violate any voluntary credit
restraint program of the executive branch of the government of the United
States of America, the Board of Governors of the Federal Reserve System or any
other governmental or administrative agency so long as any Lender reasonably
believes that compliance therewith is in the best interests of such Lender.
4.12. General. All legal and corporate proceedings in connection with
the transactions contemplated by this Amendment, the Amended Credit Agreement
and each other Credit Document shall be satisfactory in form and substance to
the Agent, and the Lenders shall have received copies of all documents,
including records of corporate proceedings, appraisals and opinions of counsel,
which any Lender may have reasonably requested in connection therewith, such
documents where appropriate to be certified by proper corporate or governmental
authorities.
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<PAGE> 17
5. Miscellaneous. Except to the extent specifically amended hereby, the
provisions of the Credit Agreement shall remain unmodified, and subject to the
conditions contained in this Amendment, the Amended Credit Agreement is hereby
confirmed as being in full force and effect. The Borrowers hereby affirm that,
after giving effect to this Amendment, the security interests contemplated by
the Credit Agreement and all other Credit Documents attach in favor of the
Agent so as to secure due and punctual performance of all Credit Obligations
contemplated by the Amended Credit Agreement. This Amendment is a Credit
Document.
This Amendment may be executed in any number of counterparts which
together shall constitute one instrument, shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without regard
to the conflict of laws rules of any jurisdictions, and shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns
pursuant to Section 12 of the Amended Credit Agreement.
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<PAGE> 18
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
BOOTH CREEK SKI HOLDINGS, INC.
BOOTH CREEK SKI ACQUISITION CORP.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
By: /s/ Jeffrey Joyce
-------------------------------------
Title: Executive Vice President, Finance
LMRC HOLDING CORP.
LOON MOUNTAIN RECREATION CORPORATION
LOON REALTY CORP.
By: /s/ Jeffrey Joyce
-------------------------------------
Title: Executive Vice President, Finance
BANKBOSTON, N.A.,
as Agent
By: /s/ Carlton F. Williams
-------------------------------------
Title: Director
BANKBOSTON, N.A.,
as Lender
By: /s/ Carlton F. Williams
-------------------------------------
Title: Director
100 Federal Street
Boston, Massachusetts 02110
Attention: Carlton F. Williams
Telecopy: (617) 434-8108
<PAGE> 19
FORM OF REVOLVING NOTE
N-__ February ____, 1998
FOR VALUE RECEIVED, LMRC Holding Corp., a Delaware corporation
(together with its successors and assigns, "LMRC Holding"), Loon Mountain
Recreation Corporation, a New Hampshire corporation (together with its
successors and assigns, "Loon"), and Loon Realty Corp., a New Hampshire
corporation (together with its successors and assigns, "Loon Realty", and
together with LMRC Holding and Loon, the "Borrowers", and each a "Borrower"),
hereby jointly and severally promise to pay [INSERT LENDER] (the "Lender") or
order, on March 31, 1999, the aggregate unpaid principal amount of the loans
made by the Lender to the Borrowers pursuant to the Credit Agreement referred
to below. The Borrowers promise to pay daily interest from the date hereof,
computed as provided in such Credit Agreement, on the aggregate principal
amount of such loans from time to time unpaid at the per annum rate applicable
to such unpaid principal amount as provided in such Credit Agreement, plus any
accrued and unpaid interest owing to the Lender on the date hereof, such
interest being payable at the times specified in such Credit Agreement, except
that all accrued interest shall be paid at the stated or accelerated maturity
hereof or upon the prepayment in full hereof.
Payments hereunder shall be made to BankBoston, N.A., as agent for the
payee hereof (the "Agent"), at 100 Federal Street, Boston, Massachusetts 02110.
All loans made by the Lender pursuant to the Credit Agreement referred
to below and all repayments of the principal thereof shall be recorded by the
Lender and, prior to any transfer hereof, appropriate notations to evidence the
foregoing information with respect to each such loan then outstanding shall be
endorsed by the Lender on the schedule attached hereto or on a continuation of
such schedule attached to and made a part hereof; provided, however, that the
failure of the Lender to make any such recordation or endorsement shall not
affect the obligations of the Borrowers under this Revolving Note, such Credit
Agreement or under any other Credit Document.
This Revolving Note evidences borrowings under, and is entitled to the
benefits and security of, and is subject to the provisions of, the Credit
Agreement dated as of December 3, 1996, as amended and restated as of March 18,
1997, as from time to time in effect (the "Credit Agreement"), among the
Borrowers, certain Affiliates thereof, the Agent, the Lender and certain other
lenders. The principal of this Revolving Note is prepayable in the amounts and
under the circumstances set forth in the Credit Agreement, and may be prepaid
in whole or from time to time in part, all as set forth in the Credit
Agreement. Terms defined in the Credit Agreement and not otherwise defined
herein are used herein with the meanings so defined.
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<PAGE> 20
In case an Event of Default shall occur, the entire principal of this
Revolving Note may become or be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (OTHER THAN THE CONFLICT OF LAWS
RULES).
The parties hereto, including the Borrowers and all guarantors and
endorsers, hereby waive presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance
and enforcement of this Revolving Note, except as specifically otherwise
provided in the Credit Agreement, and assent to extensions of time of payment,
or forbearance or other indulgence without notice.
LMRC HOLDING, INC.
By ___________________________
Title:
LOON MOUNTAIN RECREATION CORPORATION
By ___________________________
Title:
LOON REALTY CORP.
By ___________________________
Title:
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<PAGE> 21
LOAN AND PAYMENTS OF PRINCIPAL
------------------------------------------------------------
<TABLE>
<CAPTION>
Amount Amount of Unpaid
of Principal Principal Notation
Date Loan Repaid Balance Made By
------------------------------------------------------------
<S> <C> <C> <C> <C>
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
</TABLE>
-iii-
<PAGE> 22
FORM OF OMNIBUS OFFICER'S CERTIFICATE
(For Loon Joinder Date)
Pursuant to Amendment No. 4 dated as of February __, 1998 (the "Loon
Joinder"), to the Credit Agreement dated as of December 3, 1996, as amended and
restated as of March 18, 1997 and as now in effect (the "Credit Agreement"),
among the undersigned Booth Creek Ski Holdings, Inc., Booth Creek Ski
Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe, Inc., Bear Mountain,
Inc, Waterville Valley Ski Resort, Inc., Mount Cranmore Ski Resort, Inc., Ski
Lifts, Inc., Grand Targhee Incorporated, LMRC Holding Corp., Loon Mountain
Recreation Corporation, Loon Realty Corp. (collectively the "Borrowers"),
BankBoston, N.A., a national banking association ("BKB"), the other Lenders,
and BKB, as Agent for itself and the other Lenders, the Borrowers represent and
warrant that the representations and warranties contained in the Loon Joinder,
the Amended Credit Agreement, and the representations and warranties of each of
the Borrowers under the Security Agreements and the Mortgages are true and
correct in all material respects on and as of the date hereof with the same
force and effect as though originally made on and as of the date hereof; after
giving effect to the requested extension of credit under the Credit Agreement,
no Default exists; and no Material Adverse Change has occurred.
Terms defined in the Amended Credit Agreement and not otherwise
defined herein are used herein with the meanings so defined.
This certificate has been executed by a duly authorized Executive
Officer or Financial Officer of each of the Borrowers this ___ day of February,
1998.
BOOTH CREEK SKI HOLDINGS, INC.
BOOTH CREEK SKI ACQUISITION CORP.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
SKI LIFTS, INC.
MOUNT CRANMORE SKI RESORT, INC.
WATERVILLE VALLEY SKI RESORT, INC.
GRAND TARGHEE INCORPORATED
LMRC HOLDING CORP.
LOON MOUNTAIN RECREATION CORPORATION
LOON REALTY CORP.
By:
------------------------------------
Title:
-i-
<PAGE> 1
EXHIBIT 2.4
================================================================================
SECURITIES PURCHASE AGREEMENT
by and among
BOOTH CREEK SKI HOLDINGS, INC.,
THE GUARANTORS NAMED HEREIN
and
THE INITIAL PURCHASER NAMED HEREIN
______________________
Dated as of February 23, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions 1
Section 1.2. Accounting Terms; Financial Statements 8
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE
OF NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Notes 8
Section 2.2. Purchase, Sale and Delivery of Notes 9
Section 2.3. Registration Rights of Holders of Notes 10
Section 2.4. Offering by the Initial Purchaser 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of the Company
and the Guarantors 10
Section 3.2. Resale of Notes 27
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the
Initial Purchaser 28
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company and the Guarantors 30
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes 33
-i-
<PAGE> 3
Page
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity 34
Section 7.2. Contribution 37
Section 7.3. Registration Rights Agreement 38
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions 38
Section 8.2. Termination 39
Section 8.3. No Waiver; Modifications in Writing 40
Section 8.4. Information Supplied by the Initial Purchaser 40
Section 8.5. Communications 41
Section 8.6. Execution in Counterparts 41
Section 8.7. Successors 41
Section 8.8. Governing Law 42
Section 8.9. Severability of Provisions 42
Section 8.10. Headings 42
SIGNATURE PAGE 43
-ii-
<PAGE> 4
SECURITIES PURCHASE AGREEMENT, dated as of February 23, 1998 (the
"Agreement"), among BOOTH CREEK SKI HOLDINGS, INC., a Delaware corporation (the
"Company"), the Guarantors (as defined herein) and CIBC OPPENHEIMER CORP. (the
"Initial Purchaser").
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Accredited Investor" has the meaning provided therefor in Section 3.2 of
this Agreement.
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Person in question. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise; provided, however, that beneficial ownership of at least 10% of
the voting securities of a Person shall be deemed to be control.
"Agreement" means this Agreement, as the same may be amended, supplemented
or modified in accordance with the terms hereof.
"Basic Documents" means, collectively, the Indenture, the Notes, the
Guarantee, the Registration Rights Agreement and this Agreement.
<PAGE> 5
-2-
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the City of New York are
authorized or obligated by law to close.
"Capital Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's equity, including membership interests or units
in a limited liability company, and includes, without limitation, all series
and classes of such equity.
"Closing" has the meaning provided therefor in Section 2.2 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Act.
"Default" means any event, act or condition which, with notice or lapse of
time or both, would constitute an Event of Default.
"Effective Time" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Environmental Claim" means any written allegation, notice of violation,
claim, demand, abatement order or other order by any Tribunal or any Person for
any response or corrective action, any damage, including, without limitation,
personal injury (including sickness, disease or death), property damage,
contribution, indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, in each case arising
under any Environmental Law, including without limitation, relating to,
resulting from or in connection with Hazardous Materials and relating to the
Company, any Subsidiaries of the Company or any Facilities.
"Environmental Laws" means the common law and all statutes, ordinances,
orders, rules, regulations or decrees relating to (i) fines, injunctions,
penalties, damages, contribution, cost recovery compensation, losses or
injuries resulting from the Release or threatened Release of Hazardous
Materials,
<PAGE> 6
-3-
(ii) the generation, use, storage, treatment, transportation or disposal of
Hazardous Materials, or (iii) pollution or protection of human health, safety
or the environment, including without limitation, ambient air, indoor air,
soil, surface water, ground water, land, or subsurface strata, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section
2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.) and the Emergency Planning and Community Right-to-Know
Act (42 U.S.C. Section 11001 et seq.), each as amended or supplemented, and
any analogous present statutes and regulations promulgated pursuant thereto,
each as in effect as of the date of determination, provided, however, that as
used in Section 3.1(y), the term "Environmental Laws" means, Environmental Laws
in effect on the Closing Date.
"Environmental Lien" means a Lien in favor of a Tribunal or other Person
(i) for any liability under an Environmental Law or (ii) for damages arising
from or costs incurred by such Tribunal or other Person in response to a
Release or threatened Release of any Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means any event defined as an Event of Default in the
Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"Exchange Notes" has the meaning provided therefor in the Registration
Rights Agreement.
"Facilities" means any and all real property (including without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by any of the Company
or Subsidiaries of the Company or any of their respective predecessors in
interest.
<PAGE> 7
-4-
"Final Memorandum" has the meaning provided therefor in Section 2.1 of
this Agreement.
"Guarantee" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Guarantors" means Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount Cranmore Ski Resort,
Inc., Booth Creek Ski Acquisition Corp., Ski Lifts, Inc., Grand Targhee
Incorporated, B-V Corporation, Targhee Company and Targhee Ski Corp. and, at
the Effective Time, also means LMRC Holding Corp., Loon Mountain Recreation
Corporation and Loon Realty Corp. References herein to the Guarantors or a
Guarantor shall not, however, include the Loon Entities prior to the Effective
Time.
"Hazardous Materials" means any pollutant, contaminant, toxic, hazardous
or extremely hazardous substance, constituent or waste, or any other
constituent, waste, material, compound or substance including, without
limitation, petroleum including crude oil or any fraction thereof, or any
petroleum product, subject to regulation under any Environmental Law.
"Indemnified Party" has the meaning provided therefor in Section 7.1(c) of
this Agreement.
"Indemnifying Party" has the meaning provided therefor in Section 7.1(c)
of this Agreement.
"Indenture" means the indenture dated as of March 18, 1997, as amended by
Supplemental Indenture No. 1 dated as of April 25, 1997, Supplemental Indenture
No. 2 dated as of February 20, 1998 and Supplemental Indenture No. 3 to be
dated as of the date of Closing, among the Company, the Guarantors and the
Trustee, under which the Notes will be issued.
"Initial Purchaser" has the meaning set forth in the introductory
paragraph to this Agreement.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligations (as defined in
the Indenture)), conditional sales,
<PAGE> 8
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or other title retention agreement having substantially the same economic
effect as any of the foregoing.
"LMRC" has the meaning provided therefor in Section 2.1 of this Agreement.
"Loon Entities" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Loon Mountain" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Loon Mountain Acquisition" has the meaning provided therefor in the Final
Memorandum.
"Loon Realty" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Material Adverse Effect" means, with respect to the Company, its
Subsidiaries and the Loon Entities, a material adverse effect on the business,
condition (financial or otherwise), results of operations or prospects of the
Company, its Subsidiaries and the Loon Entities, taken as a whole; provided
that, with respect to the Company and the Guarantors, "Material Adverse Effect"
shall also mean a material adverse effect on the ability of the Company and the
Guarantors to perform their respective obligations under this Agreement or the
other Basic Documents.
"Memorandum" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Notes" means the 12 1/2% Series C Senior Notes due 2007 of the Company.
"Offering" has the meaning assigned thereto in the Memorandum.
"Offering Materials" has the meaning provided therefor in Section 7.1 of
this Agreement.
"Permits" means certificates, permits, licenses, franchises, consents,
approvals, authorizations and clearances that are material to the condition
(financial or otherwise), business or operations of the Company, the
Subsidiaries of the Company and the Loon Entities, taken as a whole.
<PAGE> 9
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"Person" means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint-stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"PORTAL" means the Private Offering, Resales, and Trading through
Automated Linkages Market.
"Preliminary Memorandum" has the meaning provided therefor in Section 2.1
of this Agreement.
"Private Exchange Notes" shall have the meaning provided therefor in the
Registration Rights Agreement.
"Proceeding" has the meaning provided therefor in Section 7.1(c) of this
Agreement.
"QIB" has the meaning provided therefor in Section 3.2 of this Agreement.
"Real Property Assets" means interests in land, buildings, improvements
and fixtures attached thereto or used in the operation thereof, in each case
owned or leased (as lessee) by the Company, Subsidiaries of the Company or the
Loon Entities and, as used in Section 3.1(y), including land, buildings,
improvements and fixtures operated by the Company, Subsidiaries of the Company
or the Loon Entities.
"Registration Rights Agreement" means the registration rights agreement
among the Company, the Guarantors and the Initial Purchaser relating to the
Notes.
"Release" means any spill, emission, leaking, pumping, pouring, injection,
escaping, deposit, disposal, discharge, dumping, leaching or migration of
Hazardous Materials (including, without limitation, the abandonment or disposal
of any barrels, containers or other closed receptacles containing any Hazardous
Materials.
"Senior Credit Facility" has the meaning provided therefor in the
Indenture.
"State" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having jurisdiction to
enforce such State's securities laws.
<PAGE> 10
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"Subsidiaries" means, with respect to any Person, any corporation,
partnership, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired, (i) in the case of a
corporation, of which more than 50% of the total voting power of the capital
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, limited liability company, joint venture, association or other
business entity, with respect to which such first-named Person or any of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise or if in accordance with
generally accepted accounting principles such entity is consolidated with the
first-named Person for financial statement purposes. When used in any
representation, warranty or covenant contained herein, the terms "Subsidiaries"
or "Subsidiary" shall mean Subsidiaries or a Subsidiary of a Person at the time
such representation, warranty or covenant is made or deemed made.
"Taxes" has the meaning provided therefor in Section 3.1(v) of this
Agreement.
"Time of Purchase" has the meaning provided therefor in Section 2.2 of
this Agreement.
"Transaction Documents" means the material documents entered into by the
Company or any of its Subsidiaries in connection with the Transactions.
"Transactions" has the meaning provided therefor in the Final Memorandum.
"Tribunal" means any government, any arbitration panel, any court or any
governmental department, commission, board, bureau, agency authority or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted and/or existing.
"Trustee" means Marine Midland Bank, as trustee under the Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Commission thereunder.
<PAGE> 11
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Section 1.2. Accounting Terms; Financial Statements. All accounting
terms used herein not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with sound accounting practice.
The term "sound accounting practice" shall mean such accounting practice as,
in the opinion of the independent accountants regularly retained by the
Company, conforms at the time to generally accepted accounting principles in
the United States applied on a consistent basis except for changes which such
accountants believe are reasonable. All determinations to which accounting
principles apply shall be made in accordance with sound accounting practice.
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE
OF NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Notes. The Company has authorized the issuance of
$17,500,000 aggregate principal amount of the Notes which are to be issued
pursuant to the Indenture. Each Note will be substantially in the form of the
Note set forth as Exhibit A to the Indenture. The Notes will be
unconditionally guaranteed, on a senior basis, as to payment of principal,
premium, if any, and interest, jointly and severally, by the Guarantors (the
"Guarantee"). Each Guarantee will be substantially in the form of the
Guarantee set forth as Exhibit G to the Indenture.
The Notes will be offered and sold to the Initial Purchaser without being
registered under the Act, in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company and the Guarantors
have prepared a preliminary offering memorandum dated February 16, 1998 (the
"Preliminary Memorandum") and prepared a final offering memorandum dated
February 23, 1998 (the "Final Memorandum" and, together with the Preliminary
Memorandum, the "Memorandum") setting forth or including a description of the
terms of the Notes and the Guarantees, the terms of the Offering, a description
of the Company and the Guarantors and LMRC Holding Corp. ("LMRC"), Loon
Mountain Recreation Corporation ("Loon Mountain") and Loon Realty Corp. ("Loon
Realty" and, together with LMRC and Loon Mountain, the "Loon Entities") and any
material developments relating to the
<PAGE> 12
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Company, the Guarantors and the Loon Entities occurring after the date of the
most recent financial statements included therein.
At the time the Loon Mountain Acquisition is consummated (the "Effective
Time"), which shall occur simultaneously with the consummation of the sale of
the Notes, each of the Loon Entities shall become a direct or indirect wholly
owned subsidiary of the Company and at the Effective Time will execute and
deliver this Agreement and the Guarantee and become subject to all of the
provisions of this Agreement and the Guarantee as a Guarantor. References
herein to the Guarantors or a Guarantor shall not, however, include the Loon
Entities prior to the Effective Time.
Section 2.2. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees that
it will sell to the Initial Purchaser, and the Initial Purchaser agrees that it
will purchase from the Company at the Time of Purchase, $17,500,000 aggregate
principal amount of the Notes at a price equal to 97% of the principal amount
thereof.
The purchase, sale and delivery of the Notes will take place at a closing
(the "Closing") at the offices of Winston & Strawn, 200 Park Avenue, New York,
New York, at 10:00 A.M., New York time, on February 26, 1998, or such later
date and time, if any, as the Initial Purchaser and the Company shall agree.
The time at which such Closing is concluded is herein called the "Time of
Purchase."
One or more certificates in definitive form for the Notes that the Initial
Purchaser has agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchaser
requests upon notice to the Company at least 36 hours prior to the Closing,
shall be delivered by or on behalf of the Company to the Initial Purchaser,
against payment by or on behalf of the Initial Purchaser of the purchase price
therefor by wire transfer of immediately available funds wired in accordance
with the written instructions of the Company. The Company will make such
certificate or certificates for the Notes available for checking and packaging
by the Initial Purchaser at the offices of the Initial Purchaser, or such other
place as the Initial Purchaser may designate, at least 24 hours prior to the
Closing.
<PAGE> 13
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Section 2.3. Registration Rights of Holders of Notes. The Initial
Purchaser and its direct and indirect transferees of the Notes will have such
rights with respect to the registration thereof under the Act and
qualification of the Indenture under the Trust Indenture Act as are set forth
in the Registration Rights Agreement.
Section 2.4. Offering by the Initial Purchaser. The Initial Purchaser
proposes to make an offering of the Notes at the price and upon the terms set
forth in the Final Memorandum, as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchaser is advisable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of the Company and the
Guarantors. The Company and the Guarantors, jointly and severally, represent
and warrant to and agree with the Initial Purchaser as follows:
(a) The Final Memorandum, as of its date and at the Time of
Purchase, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this Section 3.1(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the Initial
Purchaser furnished to the Company in writing by the Initial Purchaser
expressly for use in the Final Memorandum or any amendment or supplement
thereto as set forth in Section 8.4 hereof.
(b) The audited financial statements of each of the Company; the
Resort Group of Fibreboard Corporation; Waterville Valley Ski Area Ltd.
(a subsidiary of American Skiing Company); Waterville Valley Ski Area
Ltd. (a subsidiary of S.K.I. Limited); Ski Lifts, Inc.; Grand Targhee
Incorporated (collectively, the "Audited Entities"); and Loon Mountain,
together with related notes, set forth in the Final Memorandum fairly
present the financial condition, results of operations and cash flows of
the Audited Entities and, to the best knowledge of the Company, after due
inquiry, of Loon Mountain, as of the dates indicated
<PAGE> 14
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and for the periods to which they relate and have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout, except as otherwise stated therein; to the best
knowledge of the Company, after due inquiry, the interim unaudited
financial statements of Loon Mountain included in the Final Memorandum
present fairly the financial condition, results of operations and cash
flows of Loon Mountain at the dates and for the periods to which they
relate subject to year-end audit adjustments and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis with the audited financial statements of Loon Mountain
included therein (except that the interim financial statements have more
limited footnote disclosure); the summary and selected financial data in
the Final Memorandum present fairly the financial information shown
therein and have been prepared and compiled on a basis consistent with
audited financial statements included therein, except as otherwise stated
therein; and the pro forma financial information and the related notes
thereto included in the Final Memorandum have been prepared using
reasonable assumptions and (except with respect to the unaudited adjusted
pro forma financial data and note (m) to the unaudited pro forma
condensed consolidated statement of operations, which each includes
supplemental adjustments not provided for under the Act, but which are
appropriate to give effect to the transactions or circumstances referred
to therein) have been prepared in accordance with the applicable
requirements of the Act and include all adjustments necessary to present
fairly the pro forma financial information included in the Final
Memorandum at the respective dates and for the respective periods
indicated. Ernst & Young LLP, Arthur Andersen LLP, Coopers & Lybrand
LLP, Feldhake & Associates, P.C. and Price Waterhouse LLP (collectively,
the "Independent Accountants"), which have reported upon the audited
financial statements included in the Memorandum, are independent public
accounting firms as required by the Act and the rules and regulations
thereunder. Neither the Company nor any of the Guarantors has been
notified by any of the Independent Accountants who provided comfort
letters in connection with the Company's March 1997 offering of 12 1/2%
Senior Notes due 2007 that there were any untrue statements in such
comfort letters or in the financial statements which are the subject of
such comfort letters.
(c) The Company and each Subsidiary, and to the best knowledge of
the Company, after due inquiry, each of the
<PAGE> 15
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Loon Entities, is a corporation duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of
organization. The Company and each Subsidiary, and to the best knowledge
of the Company, after due inquiry, each of the Loon Entities, has all
requisite corporate power and authority to own its properties and conduct
its business as now conducted and as described in the Final Memorandum.
Each of the Company and its Subsidiaries, and to the best knowledge of
the Company, after due inquiry, each of the Loon Entities, is duly
qualified and in good standing as a foreign corporation and is authorized
to do business, in each jurisdiction in which the ownership or leasing of
any property or the character of its operations makes such qualification
necessary and in which the failure so to qualify would reasonably be
expected to have a Material Adverse Effect.
(d) As of the Time of Purchase (after giving pro forma effect to
the Transactions), the Company will have the authorized, issued and
outstanding capitalization as set forth in the Final Memorandum. All of
the issued and outstanding shares of Capital Stock of the Company and its
Subsidiaries and, to the best knowledge of the Company, after due
inquiry, each of the Loon Entities are validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights. Except for the Real Estate LLC (as defined in the
Memorandum), the Company has no subsidiaries other than the Guarantors.
Except as set forth in the Final Memorandum and other than with respect
to the Real Estate LLC and matters which are immaterial, (i) all of the
outstanding shares of Capital Stock of the Company and each of its
Subsidiaries and, to the best knowledge of the Company, after due
inquiry, each of the Loon Entities will be free and clear of all liens,
encumbrances, equities and claims or restrictions on transferability
(other than those imposed by the Act and the securities or "Blue Sky"
laws of certain jurisdictions), (ii) there are no outstanding
subscriptions, options, warrants, rights, convertible securities or other
binding agreements or commitments of any character obligating the Company
or its Subsidiaries or, to the best knowledge of the Company, after due
inquiry, any of the Loon Entities to issue any securities and (iii) there
is no agreement, understanding or arrangement among the Company or its
Subsidiaries or, to the best knowledge of the Company, after due inquiry,
any of the Loon Entities and their respective securityholders or any
other Person relating to the ownership or disposition of any Capital
<PAGE> 16
-13-
Stock in the Company or its Subsidiaries or, to the best knowledge of
the Company, after due inquiry, any of the Loon Entities, the election of
directors of the Company or any of its Subsidiaries or, to the best
knowledge of the Company, after due inquiry, any of the Loon Entities or
the governance of the affairs of the Company or any of its Subsidiaries
or, to the best knowledge of the Company, after due inquiry, any of the
Loon Entities, and such agreements, arrangements or understandings will
not be breached or violated as a result of the execution and delivery of,
or the consummation of the transactions contemplated by, this Agreement
and the Basic Documents.
(e) This Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors and (assuming the due
authorization, execution and delivery by the Initial Purchaser) is a
valid and legally binding agreement of the Company and each of the
Guarantors, enforceable against each of them in accordance with its terms
except (i) that the enforcement hereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity and the discretion of the
court before which any proceeding therefor may be brought and (ii) as any
rights to indemnity or contribution hereunder may be limited by federal
and state securities laws and public policy considerations.
(f) The Indenture has been duly authorized, executed and delivered
by the Company and each of the Guarantors (assuming the due
authorization, execution and delivery by the Trustee), and constitutes a
valid and legally binding agreement of the Company and each of the
Guarantors, enforceable against each of them in accordance with its terms
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(g) The Registration Rights Agreement has been duly authorized by
the Company and the Guarantors and, when executed and delivered by the
Company and each of the Guarantors (assuming the due authorization,
execution and delivery by the Initial Purchaser), will constitute a
<PAGE> 17
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valid and legally binding agreement of the Company and each of the
Guarantors, enforceable against each of them in accordance with its terms
except (i) that the enforcement thereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity and the discretion of the
court before which any proceeding therefor may be brought and (ii) as any
rights to indemnity or contribution thereunder may be limited by federal
and state securities laws and public policy considerations.
(h) The Notes, the Exchange Notes and the Private Exchange Notes
have each been duly authorized by the Company and, when executed by the
Company and authenticated by the Trustee in accordance with the
provisions of the Indenture and, in the case of the Notes, delivered to
and paid for by the Initial Purchaser in accordance with the terms of
this Agreement, will be entitled to the benefits of the Indenture and
will constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(i) The Guarantees endorsed on the Notes and the guarantees to be
endorsed on the Exchange Notes and the Private Exchange Notes have each
been duly authorized by the Guarantors and, when the Notes are executed
by the Company and the Guarantees are endorsed by the Guarantors and the
Notes are authenticated by the Trustee in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial Purchaser
in accordance with the terms of this Agreement, the Guarantees will be
entitled to the benefits of the Indenture and will constitute valid and
legally binding obligations of the Guarantors enforceable in accordance
with their terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of equity and
the discretion of
<PAGE> 18
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the court before which any proceeding therefor may be brought.
(j) Immediately after the consummation of the transactions
contemplated by this Agreement (including the use of proceeds from the
sale of Notes at the Time of Purchase), the fair value and present fair
saleable value of the assets of the Company (on a consolidated basis)
will exceed the sum of its stated liabilities and identified contingent
liabilities; the Company (on a consolidated basis) will not be, after
giving effect to the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
(including the use of proceeds from the sale of Notes at the Time of
Purchase), (i) left with unreasonably small capital with which to carry
on its business as it is proposed to be conducted, (ii) unable to pay its
debts (contingent or otherwise) as they mature or (iii) otherwise
insolvent.
(k) Each of the Company and the Guarantors (to the extent a party
thereto) has all requisite corporate power and authority to (i) execute,
deliver and perform its obligations under this Agreement and each of the
other Basic Documents, (ii) execute, deliver and perform its obligations
under all other agreements and instruments executed and delivered by the
Company and the Guarantors pursuant to or in connection with this
Agreement and each of the other Basic Documents, (iii) issue the Notes
and the Guarantee, as the case may be, in the manner and for the purpose
contemplated by this Agreement and (iv) consummate each of the
transactions contemplated hereby and thereby.
(l) Subsequent to the date as of which financial information is
given in the Final Memorandum and except as disclosed in the Final
Memorandum there has not been (i) any event or condition that has had or
that could reasonably be expected to have a Material Adverse Effect, (ii)
any transaction entered into by the Company or the Guarantors, or to the
best knowledge of the Company, after due inquiry, any of the Loon
Entities, other than in the ordinary course of business, that is material
to the Company, the Guarantors and the Loon Entities, taken as a whole,
or (iii) any dividend or distribution of any kind declared, paid or made
by the Guarantors or the Company on its common equity other than to the
Company or another Guarantor.
(m) Except as set forth in the Final Memorandum, there is no
action, suit, investigation or proceeding,
<PAGE> 19
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governmental or otherwise, pending or, to the best knowledge of the
Company, threatened to which the Company or the Guarantors or to the best
knowledge of the Company, after due inquiry, any of the Loon Entities, is
or would be a party or of which the properties or assets of the Company
or the Guarantors are or may be subject that (i) seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the issuance
and sale of the Notes by the Company or the making of the Guarantee by
the Guarantors or any of the other transactions contemplated hereby, (ii)
questions the legality or validity of any such transactions or seeks to
recover damages or obtain other relief in connection with any such
transactions or (iii) would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(n) The execution, delivery and performance by the Company and the
Guarantors (to the extent a party thereto) of this Agreement and the
other Basic Documents, and the issuance and sale by the Company of the
Notes, the making of the Guarantees by the Guarantors, and the execution,
delivery and performance by the Company and the Guarantors (to the extent
a party thereto) of all other agreements and instruments to be executed
and delivered by the Company and the Guarantors pursuant hereto or
thereto or in connection herewith or therewith, and compliance by the
Company and the Guarantors (to the extent a party thereto) with the terms
and provisions hereof and thereof, do not and will not (i) (assuming
compliance with all applicable state securities or "Blue Sky" laws and
assuming the accuracy of the representations and warranties of the
Initial Purchaser in Section 3.2 hereof) violate any provision of any
law, rule or regulation (including, without limitation, Regulation G, T,
U or X of the Board of Governors of the Federal Reserve System), order,
writ, judgment, decree, determination or award presently in effect or in
effect at the Time of Purchase having applicability to the Company or the
Guarantors or, to the best knowledge of the Company, after due inquiry,
the Loon Entities, or (ii) conflict with or result in a breach of or
constitute a default under the organizational documents of the Company or
the Guarantors or, to the best knowledge of the Company, after due
inquiry, the Loon Entities, or, as of the Time of Purchase, any indenture
or loan or credit agreement, or any other material agreement or
instrument, to which the Company or the Guarantors or, to the best
knowledge of the Company, after due inquiry, the Loon Entities, is a
party or by which the Company or the Guaran-
<PAGE> 20
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tors or, to the best knowledge of the Company, after due inquiry, the
Loon Entities, or any of their respective properties or assets may be
bound or affected, or (iii) except as contemplated by this Agreement and
the other Basic Documents or the Memorandum, result in, or require the
creation or imposition of, any Lien upon or with respect to any of the
properties now owned or hereafter acquired by the Company or the
Guarantors or, to the best knowledge of the Company, after due inquiry,
the Loon Entities, except, in the case of clauses (i), (ii) and (iii),
where such violation, conflict, default or creation or imposition of any
Lien would not (individually or in the aggregate) reasonably be expected
to have a Material Adverse Effect.
(o) Each agreement or instrument (other than the Basic Documents)
executed and delivered by the Company or the Guarantors (to the extent a
party thereto) in connection with the Basic Documents has been duly and
validly authorized, executed and delivered by the Company and the
Guarantors (to the extent a party thereto) and constitutes or will
constitute a valid and legally binding obligation of the Company and the
Guarantors (to the extent a party thereto), enforceable against them in
accordance with its terms, except (i) that the enforcement thereof may be
subject to bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and to general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought and (ii) as any rights to indemnity and contribution hereunder
and thereunder may be limited by applicable law.
(p) None of the Company or the Guarantors or, to the best knowledge
of the Company, after due inquiry, the Loon Entities is currently or,
after giving effect to the consummation of the transactions contemplated
by this Agreement and the Basic Documents, will be (i) in violation of
its respective organizational documents, (ii) in default (nor will an
event occur which with notice or passage of time or both would constitute
such a default) under or in violation of any indenture or loan or credit
agreement or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets may be bound or
affected (except as set forth in the Final Memorandum), (iii) in
violation of any order of any court, arbitrator or governmental body or
(iv) in violation of or
<PAGE> 21
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will have violated any statute, rule or regulation of any governmental
authority, which default or violation (individually or in the aggregate)
would reasonably be expected to (x) affect the legality, validity or
enforceability of this Agreement or any of the other Basic Documents or
(y) have a Material Adverse Effect.
(q) Except as set forth in the Final Memorandum, no authorization,
consent, approval, license, qualification or formal exemption from, nor
any filing, declaration or registration with, any court, governmental
agency or regulatory authority or any securities exchange is required in
connection with the execution, delivery or performance by the Company or
the Guarantors of this Agreement, or any of the other Basic Documents or
any of the transactions contemplated thereby, except (i) as may be
required under state securities or "blue sky" laws or the laws of any
foreign jurisdiction in connection with the offer and sale of the Notes
or (ii) as would not (individually or in the aggregate) reasonably be
expected to have a Material Adverse Effect. All such authorizations,
consents, approvals, licenses, qualifications, exemptions, filings,
declarations and registrations set forth in the Final Memorandum (other
than as disclosed therein) which are required to have been obtained by
the date hereof have been obtained or made, as the case may be, and are
in full force and effect and not the subject of any pending or, to the
knowledge of the Company, threatened attack by appeal or direct
proceeding or otherwise.
(r) None of the Company or any of the Guarantors or, to the best
knowledge of the Company, after due inquiry, any of the Loon Entities is,
or immediately after the Time of Purchase will be, an "investment
company" or a "promoter" or "principal underwriter" for an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(s) The execution and delivery of this Agreement and the other
Basic Documents and the sale of the Notes to the Initial Purchaser will
not involve any non-exempt prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code on the part of the
Company or any of its Subsidiaries or, to the best knowledge of the
Company, after due inquiry, any of the Loon Entities. No Reportable
Event (as defined in Section 4043 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made
or deemed
<PAGE> 22
-19-
made with respect to any Employee Benefit Plan (as defined below), and
the Company and each of its Subsidiaries and, to the best knowledge of
the Company, after due inquiry, each of the Loon Entities, and Commonly
Controlled Entities (as defined below) have complied in all material
respects with the applicable provisions of ERISA and the Code in
connection with the Employee Benefit Plans (as defined below). The
present value of all accrued benefits under each Employee Benefit Plan
subject to Title IV of ERISA (based on the current liability, interest
rate and other assumptions used in preparation of the plan's Form 5500
Annual Report) did not, as of the last annual valuation date prior to the
date on which this representation is made or deemed made, exceed the
value of the assets of such plan allocable to such accrued benefits.
Neither the Company, any of its Subsidiaries or, to the best knowledge of
the Company, after due inquiry, any of the Loon Entities nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA), and
neither the Company, any of its Subsidiaries or, to the best knowledge of
the Company, after due inquiry, any of the Loon Entities, nor any
Commonly Controlled Entity would become subject to any liability under
ERISA if the Company, any of its Subsidiaries, any of the Loon Entities
or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding
the date on which such representation is made or deemed made. No such
Multiemployer Plan is in reorganization or insolvent. There are no
material liabilities of the Company, any of its Subsidiaries or, to the
best knowledge of the Company, after due inquiry, any of the Loon
Entities, or any Commonly Controlled Entity for post-retirement benefits
to be provided to their current and former employees under Plans which
are welfare benefit plans (as described in Section 3(1) of ERISA). With
respect to each Employee Benefit Plan, no event has occurred and there
exists no condition or set of circumstances in connection with which the
Company or any of its Subsidiaries or, to the best knowledge of the
Company, after due inquiry, any of the Loon Entities may, directly or
indirectly (though a Commonly Controlled Entity or otherwise), be subject
to material liability under the Code, ERISA or any other applicable law,
except for liability for benefit claims and funding obligations payable
in the ordinary course. "Commonly Controlled Entity" shall mean any
person or entity that, together with the Company, any Subsidiary of the
Company or any of the Loon Entities, is
<PAGE> 23
-20-
treated as a single employer under Section 414(b), (c), (m) or (o) of
the Code. "Employee Benefit Plan" shall mean an employee benefit plan,
as defined in Section 3(3) of ERISA, which is maintained or contributed
to by the Company, any of its Subsidiaries, any of the Loon Entities or
any Commonly Controlled Entity or to which the Company, any of its
Subsidiaries, any of the Loon Entities or any Commonly Controlled Entity
may have liability for which the Company and its Subsidiaries or the Loon
Entities are not fully indemnified.
(t) The Company, each of its Subsidiaries and, to the best
knowledge of the Company, after due inquiry, each of the Loon Entities
has good and valid title to, or valid and enforceable leasehold interests
in, all properties and assets identified in the Final Memorandum as owned
or leased, respectively, by it free and clear of all Liens, except (i) to
the extent the failure to have such title or the existence of such Liens,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect, (ii) such Liens as are described in the
Final Memorandum or (iii) Liens created in the ordinary course of
business which are Permitted Liens (as defined in the Indenture). All of
the leases material to the business of the Company, each of its
Subsidiaries and, to the best knowledge of the Company, after due
inquiry, each of the Loon Entities and under which the Company, each of
its Subsidiaries and, to the best knowledge of the Company, after due
inquiry, each of the Loon Entities holds properties described in the
Final Memorandum, are valid and binding as leased by them, with such
exceptions as, individually and in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(u) No form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) was used by the
Company or the Guarantors or their agents in connection with the offer
and sale of the Notes. None of the Company or the Guarantors or any
Person authorized to act for any of them has, either directly or
indirectly, sold or offered for sale any of the Notes or any other
similar security (other than the 12 1/2% Series A Senior Notes due 2007
and the 12 1/2% Series B Senior Notes due 2007 previously issued pursuant
to the Indenture) of the Company to, or solicited any offers to buy any
thereof from, or has otherwise approached or negotiated in respect
thereof with, any Person or Persons other than with or through the
Initial Purchaser; and the Com-
<PAGE> 24
-21-
pany and the Guarantors agree that neither they nor any Person acting
on their behalf will sell or offer for sale any Notes to, or solicit any
offers to buy any Notes from, or otherwise approach or negotiate in
respect thereof with, any Person or Persons so as thereby to bring the
issuance or sale of any of the Notes within the provisions of Section 5
of the Act.
(v) All tax returns required to be filed by each of the Company and
its Subsidiaries and, to the best knowledge of the Company, after due
inquiry, each of the Loon Entities in any jurisdiction (including foreign
jurisdictions) have been duly filed and all taxes, assessments, fees and
other charges including, without limitation, withholding taxes,
penalties, and interest ("Taxes") due or claimed to be due have been
paid, other than those Taxes being contested in good faith and those
Taxes for which adequate reserves or accruals have been established in
accordance with generally accepted accounting principles, except where
the failure to file such returns or to pay such Taxes would not
reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect. The Company knows of no actual or proposed additional
tax assessments for any fiscal period prior to the date hereof against
the Company or any of its Subsidiaries or, to the best knowledge of the
Company, after due inquiry, any of the Loon Entities that, individually
or in the aggregate, is reasonably likely to have a Material Adverse
Effect.
(w) The Company and each of its Subsidiaries and, to the best
knowledge of the Company, after due inquiry, each of the Loon Entities
owns or possesses adequate licenses or other rights to use all trade
names, unregistered trademarks and service marks, brand names, patents,
registered and unregistered copyrights, registered trademarks and service
marks, and all applications for any of the foregoing, and all permits,
grants and licenses or other rights with respect thereto, the absence of
which (individually or in the aggregate) would have or could reasonably
be expected to have a Material Adverse Effect. Except as set forth in
the Final Memorandum, neither the Company, any of its Subsidiaries nor,
to the best knowledge of the Company, after due inquiry, any of the Loon
Entities has been charged with any material infringement of any
intangible property of the character described above or been notified or
advised of any material claim of any other Person relating to any of the
intangible prop-
<PAGE> 25
-22-
erty which infringements or claims (individually or in the aggregate)
would have a Material Adverse Effect.
(x) Except as set forth in the Final Memorandum, each of the
Company and its Subsidiaries and, to the best knowledge of the Company,
after due inquiry, each of the Loon Entities is in compliance with all,
and has no liability under any, laws, rules and regulations (including,
without limitation, all applicable Environmental Laws, rules and
regulations) applicable to the Company, any of its Subsidiaries or any of
the Loon Entities, and the Company, each of its Subsidiaries and, to the
best knowledge of the Company, after due inquiry, each of the Loon
Entities owns or possesses and is operating in compliance in all material
respects with the terms, provisions, conditions, restrictions and
limitations contained in all licenses, franchises, approvals,
certificates and permits (including, without limitation, environmental
permits) from all Federal, state, territorial, foreign and local
governmental and regulatory authorities which are necessary to own or
lease their respective properties and assets and to the conduct of their
respective businesses (other than where the failure to be in compliance
with or liability under such laws, rules, regulations, licenses,
franchises, approvals, certificates or permits would not reasonably be
expected to have a Material Adverse Effect). Except as described in the
Final Memorandum, there are no citations or notices of forfeiture or
other proceedings pending or, to the best knowledge of the Company,
threatened against the Company or any of its Subsidiaries or, to the best
knowledge of the Company, after due inquiry, any of the Loon Entities or
any basis therefor which would lead to the revocation, termination,
suspension or non-renewal of any such license, franchise, approval,
certificate or permit except where all such revocations, terminations,
suspensions or non-renewals, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Other than as
disclosed in the Final Memorandum, (i) there are no license renewal or
rate or tariff proceedings existing, pending or, to the best knowledge of
the Company, threatened against the Company or the Guarantors or, to the
best knowledge of the Company, after due inquiry, the Loon Entities that
would have a Material Adverse Effect, and (ii) there are no restrictions
or limitations contained in any applicable license, franchise, approval,
certificate or permit of the Company, any of its Subsidiaries or, to the
best knowledge of the Company, after due inquiry, any of the Loon
Entities, or,
<PAGE> 26
-23-
to the best knowledge of the Company, threatened or proposed in any
pending or contemplated hearing, proceeding or procedure, that would have
a Material Adverse Effect.
(y) Except as set forth in the Final Memorandum,
(1) none of the Company or any Subsidiaries of the Company or,
to the best knowledge of the Company, after due inquiry, any of the
Loon Entities has received (a) any written notice or claim to the
effect that it is or may be liable to any Person under any
Environmental Law, except as would not reasonably be expected to
have a Material Adverse Effect or (b) any written notice of
potential liability or request for information under the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended or any comparable state laws regarding any
matter except as would not reasonably be expected to have a
Material Adverse Effect, and none of the Company or any
Subsidiaries of the Company or, to the best knowledge of the
Company, after due inquiry, any of the Loon Entities, is presently
involved in any investigation, response or corrective action
relating to or in connection with any Hazardous Materials at any
location except for such of the foregoing which would not
reasonably be expected to have a Material Adverse Effect;
(2) none of the Company or any Subsidiaries of the Company or
any of their Real Property Assets or, to the best knowledge of the
Company, after due inquiry, any of the Loon Entities or any of
their Real Property Assets or, to the Company's knowledge, any
Facilities, are subject to any outstanding written order with any
governmental authority or written agreement with any Person
relating to (a) any actual or potential violation of or liability
under Environmental Laws or (b) any Environmental Claims except, in
each case, for such of the foregoing which would not reasonably be
expected to have a Material Adverse Effect;
(3) there are currently no Releases and, to the best knowledge
of the Company and the Guarantors, there have been no Releases of
Hazardous Materials at, on, under or from any of the Real Property
Assets of the Company, any of its Subsidiaries or, to the best
knowledge of the Company, after due inquiry, any
<PAGE> 27
-24-
of the Loon Entities in a manner that could reasonably be
expected to give rise to an Environmental Claim except for Releases
which would not reasonably be expected to have a Material Adverse
Effect, and none of the Company, any Subsidiaries of the Company
or, to the best knowledge of the Company, after due inquiry, any of
the Loon Entities has reported a Release of any Hazardous Materials
that could reasonably be expected to give rise to an Environmental
Claim except for Releases which would not reasonably be expected to
have a Material Adverse Effect;
(4) no underground storage tanks or surface impoundments are
on or at any Real Property Assets of the Company, any of its
Subsidiaries or, to the best knowledge of the Company, after due
inquiry, any of the Loon Entities which require response,
corrective or other action under any applicable Environmental Law,
in each case, which would reasonably be expected to have a Material
Adverse Effect;
(5) no Environmental Lien in favor of any Person has been
filed with respect to any Real Property Assets or other assets of
the Company, any Subsidiaries of the Company or, to the best
knowledge of the Company, after due inquiry, any of the Loon
Entities, except for any such Lien which would not reasonably be
expected to have a Material Adverse Effect; and
(6) there have been no past or present events, conditions or
activities which could reasonably be expected to prevent the
Company, any of its Subsidiaries or, to the best knowledge of the
Company, after due inquiry, any of the Loon Entities from complying
with, or to give rise to any liability of any of them under, any
applicable Environmental Law which would reasonably be expected to
have a Material Adverse Effect.
(z) The Notes, the Guarantees, the Indenture, and the Registration
Rights Agreement, when executed and delivered, will conform in all
material respects to the descriptions thereof in the Final Memorandum.
(aa) Assuming the accuracy of the Initial Purchaser's
representation and warranties set forth in Section 3.2 hereof, and the
due performance by the Initial Purchaser of the covenants and agreements
set forth in
<PAGE> 28
-25-
Section 3.2 hereof, the offer and sale of the Notes to the Initial
Purchaser in the manner contemplated by this Agreement and the Final
Memorandum does not require registration under the Act and the Indenture
does not require qualification under the Trust Indenture Act of 1939, as
amended.
(bb) Except as set forth in the Final Memorandum, there is no
strike, labor dispute, slowdown or work stoppage with the employees of
the Company, any of its Subsidiaries or, to the best knowledge of the
Company, after due inquiry, any of the Loon Entities which is pending or,
to the best knowledge of the Company or any of its Subsidiaries,
threatened, which would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(cc) Each of the Company, its Subsidiaries and, to the best
knowledge of the Company, after due inquiry, the Loon Entities carries
insurance (including self insurance) in such amounts and covering such
risks as in its reasonable determination is adequate for the conduct of
its business and the value of its properties.
(dd) No securities of the Company or any of its Subsidiaries are of
the same class (within the meaning of Rule 144A under the Act) as the
Notes and listed on a national securities exchange registered under
Section 6 of the Exchange Act, or quoted in a U.S. automated interdealer
quotation system.
(ee) None of the Company, its Subsidiaries or, to the best
knowledge of the Company, after due inquiry, any of the Loon Entities has
taken, nor will any of them take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Notes.
(ff) None of the Company, the Guarantors, any of their respective
Affiliates or any person acting on its or their behalf (other than the
Initial Purchaser) has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Act ("Regulation S")) with
respect to the Notes and the Company, the Guarantors and their respective
Affiliates and any person acting on its or their behalf (other than the
Initial Purchaser) have acted in accordance with the offering
restrictions requirements of Regulation S.
<PAGE> 29
-26-
(gg) The Company and each of the Guarantors (to the extent a party)
have duly authorized each of the transactions contemplated hereby and by
the Final Memorandum.
(hh) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company
believes to be reliable and accurate or represents the Company's good
faith estimates that are made on the basis of data derived from such
sources.
(ii) Except as stated in the Final Memorandum, none of the Company
or any of the Guarantors knows of any claims against the Company, any of
the Guarantors or the Loon Entities for services, either in the nature of
a finder's fee or financial advisory fee, with respect to the offering of
the Notes and the transactions contemplated by the Final Memorandum.
(jj) Each of the Company and the Guarantors (to the extent a party
thereto) has the requisite corporate power and authority to execute,
deliver and perform its obligations under the Transaction Documents. The
Transaction Documents have been duly and validly authorized by each of
the Company and the Guarantors to the extent a party thereto and, when
executed and delivered by the Company or any Guarantor will constitute a
valid and legally binding agreement of the Company or such Guarantor,
enforceable against the Company or such Guarantor to the extent a party
thereto in accordance with their terms except (i) that the enforcement
thereof may be subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally, and to general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought and (ii) as any rights to indemnity or
contribution thereunder may be limited by federal and state securities
laws and public policy considerations. Each of the Transaction Documents
conforms in all material respects to the description thereof, if any, in
the Final Memorandum (or, if the Final Memorandum is not in existence,
the most recent Preliminary Memorandum).
(kk) (i) The Company has delivered to the Initial Purchaser a true
and correct copy of each of the Transaction Documents that have been
executed and delivered prior to the date of this Agreement, together with
all schedules
<PAGE> 30
-27-
and exhibits thereto, and as of the date hereof there have been no
amendments, alterations, modifications or waivers of any of the
provisions of any of such Transaction Documents; (ii) each other
Transaction Document shall be substantially as described in the Final
Memorandum; and (iii) there exists as of the date hereof (after giving
effect to the transactions contemplated by each of the Transaction
Documents) no event or condition that would constitute a default or an
event of default (in each case as defined in each of the Transaction
Documents) under any of the Transaction Documents that would result in a
Material Adverse Effect or materially adversely affect the ability of the
Company to consummate the Transactions.
Section 3.2. Resale of Notes. The Initial Purchaser represents and
warrants that it is a "qualified institutional buyer" as defined in Rule 144A
of the Act ("QIB"). The Initial Purchaser agrees with the Company and each of
the Guarantors that (a) it has not and will not solicit offers for, or offer or
sell, the Notes by any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) or in any manner involving
a public offering within the meaning of Section 4(2) of the Act; and (b) it has
and will solicit offers for the Notes only from, and will offer the Notes only
to (A) in the case of offers inside the United States, Persons whom the Initial
Purchaser reasonably believes to be QIBs or, if any such Person is buying for
one or more institutional accounts for which such Person is acting as fiduciary
or agent, only when such Person has represented to the Initial Purchaser that
each such account is a QIB, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A and (B) in the case of offers outside the United
States, to Persons other than U.S. Persons (as such term is defined in
Regulation S under the Act) ("foreign purchasers," which term shall include
dealers or other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an estate or
trust)); provided, however, that, in the case of this clause (B), in purchasing
such Notes such Persons are deemed to have represented and agreed as provided
under the caption "Notice to Investors" contained in the Final Memorandum.
<PAGE> 31
-28-
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the Initial
Purchaser. The obligation of the Initial Purchaser to purchase the Notes to be
purchased by it hereunder is subject, at the Time of Purchase, to the
satisfaction or waiver of the following conditions:
(a) At the Time of Purchase, the Initial Purchaser shall have
received the opinion, dated as of the Time of Purchase and addressed to
the Initial Purchaser, of Winston & Strawn, counsel for the Company and
the Guarantors in form and substance satisfactory to counsel for the
Initial Purchaser. At the time of Purchase, the Initial Purchaser shall
have received the opinion, dated as of the Time of Purchase and addressed
to the Initial Purchaser, of local counsel for Trimont Land Company and
for Loon Mountain and Loon Realty, in form and substance satisfactory to
counsel for the Initial Purchaser. In addition, the Initial Purchaser
shall have received a letter or letters permitting it to rely on any
opinions rendered by counsel to the Company and/or the Guarantors in
connection with the Transactions.
(b) The Initial Purchaser shall have received an opinion, addressed
to the Initial Purchaser in form and substance satisfactory to the
Initial Purchaser and dated the Time of Purchase, of Cahill Gordon &
Reindel, counsel to the Initial Purchaser.
(c) The Initial Purchaser shall have received from each of Ernst &
Young LLP and Price Waterhouse LLP a comfort letter or letters dated the
date hereof and the Closing in form and substance reasonably satisfactory
to counsel to the Initial Purchaser.
(d) The representations and warranties made by the Company and the
Guarantors herein shall be true and correct in all material respects
(except for changes expressly provided for in this Agreement) on and as
of the Time of Purchase with the same effect as though such
representations and warranties had been made on and as of the Time of
Purchase, and the Company and the Guarantors shall have complied in all
material respects with all agreements as set forth in or contemplated
hereunder and in the Basic
<PAGE> 32
-29-
Documents required to be performed by the Company and the Guarantors at
or prior to the Time of Purchase.
(e) Subsequent to the date of the Final Memorandum, (i) there shall
not have been any change, or any development involving a prospective
change, which has had or would reasonably be expected to have a Material
Adverse Effect and (ii) the Company and its Subsidiaries shall have
conducted their respective businesses only in the ordinary course except
to the extent contemplated by the Transactions.
(f) At the Time of Purchase and after giving effect to the
consummation of the transactions contemplated by this Agreement and the
Basic Documents, there shall exist no Default or Event of Default.
(g) The purchase of and payment for the Notes by the Initial
Purchaser hereunder shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation (including,
without limitation, Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System).
(h) At the Time of Purchase, the Initial Purchaser shall have
received a certificate, dated the Time of Purchase, from the Company and
the Guarantors stating that the conditions specified in Sections 4.1(d),
(e), (f) and (g) have been satisfied or duly waived at the Time of
Purchase.
(i) Each of the Basic Documents shall be satisfactory in form and
substance to the Initial Purchaser and shall have been executed and
delivered by all the respective parties thereto and shall be in full
force and effect.
(j) All proceedings taken in connection with the issuance of the
Notes and the transactions contemplated by this Agreement, the other
Basic Documents and all documents and papers relating thereto shall be
reasonably satisfactory to the Initial Purchaser and counsel to the
Initial Purchaser. The Initial Purchaser and counsel to the Initial
Purchaser shall have received copies of such papers and documents as they
may reasonably request in connection therewith, all in form and substance
reasonably satisfactory to them.
<PAGE> 33
-30-
(k) Neither the sale of the Notes hereunder nor any of the other
Transactions shall have been enjoined (temporarily or permanently) at the
Time of Purchase.
(l) Subsequent to the execution and delivery of this Agreement,
there shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of
Rule 436(g) under the Act, that (A) it is downgrading its rating assigned
to any debt securities of the Company or any Subsidiary, or (B) it is
reviewing its rating assigned to any debt securities of the Company or
any Subsidiary with a view to possible downgrading, or with negative
implications, or direction not determined.
(m) Each agreement or instrument executed in connection with the
Transactions shall be reasonably satisfactory in form and substance to
the Initial Purchaser and shall have been executed and delivered by all
the respective parties thereto and shall be in full force and effect.
The Transactions shall each have been consummated on or prior to the
Closing Date.
On or before the Closing, the Initial Purchaser and counsel to the Initial
Purchaser shall have received such further documents, opinions, certificates
and schedules or other instruments relating to the business, corporate, legal
and financial affairs of the Company and its Subsidiaries as they may
reasonably request.
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company and the Guarantors. The
Company and the Guarantors, jointly and severally, covenant and agree with
the Initial Purchaser that:
(a) None of the Company or any of the Guarantors will amend or
supplement the Final Memorandum or any amendment or supplement thereto of
which the Initial Purchaser shall not previously have been advised and
furnished a copy for a reasonable period of time prior to the proposed
amendment or supplement and as to which the Initial Purchaser shall not
have given its consent, which consent shall not be unreasonably withheld.
The Company
<PAGE> 34
-31-
and the Guarantors will promptly, upon the reasonable request of the
Initial Purchaser or counsel to the Initial Purchaser, make any
amendments or supplements to the Preliminary Memorandum or the Final
Memorandum that may be necessary or advisable in connection with the
resale of the Notes by the Initial Purchaser.
(b) The Company and the Guarantors will cooperate with the Initial
Purchaser in arranging for the qualification of the Notes for offering
and sale under the securities or "Blue Sky" laws of such jurisdictions as
the Initial Purchaser may designate and will continue such qualifications
in effect for as long as may be reasonably necessary to complete the
resale of the Notes; provided, however, that in connection therewith, the
Company and the Guarantors shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by
the Initial Purchaser of the Notes, the Exchange Notes or the Private
Exchange Notes, any event occurs or information becomes known as a result
of which the Final Memorandum as then amended or supplemented would
include any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement the
Final Memorandum to comply with applicable law, the Company and the
Guarantors will promptly notify the Initial Purchaser thereof (who
thereafter will not use such Final Memorandum until appropriately amended
or supplemented) and will prepare, at the expense of the Company and the
Guarantors, an amendment or supplement to the Final Memorandum that
corrects such statement or omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel to the Initial Purchaser as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchaser may reasonably request.
<PAGE> 35
-32-
(e) The Company will apply the net proceeds from the sale of the
Notes substantially as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For and during the period commencing on the date hereof and
ending on the date no Notes are outstanding, the Company will furnish
to the Initial Purchaser copies of all reports and other communications
(financial or otherwise) furnished by the Company to the Trustee or the
holders of the Notes and, promptly after available, copies of any reports
or financial statements furnished to or filed by the Company with the
Commission or any national securities exchange on which any class of
securities of the Company may be listed.
(g) Prior to the Time of Purchase, the Company will furnish to the
Initial Purchaser, as soon as they have been prepared, a copy of any
unaudited interim financial statements of the Company for any period
subsequent to the period covered by the most recent financial statements
appearing in the Final Memorandum.
(h) None of the Company or any of its Affiliates will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any "security" (as defined in the Act) which could be integrated with the
sale of the Notes in a manner which would require the registration under
the Act of the Notes.
(i) The Company will not, and will not permit any of its
Subsidiaries to, solicit any offer to buy or offer to sell the Notes by
means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Act.
(j) For so long as any of the Notes remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Act and not salable in full under Rule 144 under the Act (or any
successor provision), the Company will make available, upon request, to
any seller of such Notes the information specified in Rule 144A(d)(4)
under the Act, unless the Company is then subject to Section 13 or 15(d)
of the Exchange Act.
(k) The Company and the Guarantors will use their best efforts to
(i) permit the Notes to be included for
<PAGE> 36
-33-
quotation on PORTAL and (ii) permit the Notes to be eligible for
clearance and settlement through The Depository Trust Company.
(l) The Company and the Guarantors (to the extent a party thereto)
will use their best efforts to do and perform all things required to be
done and performed by them under this Agreement and the other Basic
Documents prior to or after the Closing and to satisfy all conditions
precedent on their part to the obligations of the Initial Purchaser to
purchase and accept delivery of the Notes.
(m) In connection with Notes offered and sold in an offshore
transaction (as defined in Regulation S) the Company will not register
any transfer of such Notes not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Notes in the form of
definitive securities.
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes. The Company and the
Guarantors, jointly and severally, agree to pay all costs and expenses incident
to the performance of their obligations under this Agreement, whether or not
the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 8.2 hereof, including, but not limited to, all
costs and expenses incident to (i) the negotiation, preparation, printing, word
processing, reproduction, execution and delivery of this Agreement, each of the
Basic Documents, any amendment or supplement to or modification of any of the
foregoing and any and all other documents furnished pursuant hereto or thereto
or in connection herewith or therewith, (ii) any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto, any other marketing related materials, (iii) all arrangements relating
to the delivery to the Initial Purchaser of copies of the foregoing documents,
(iv) the fees and disbursements of the counsel, the accountants and any other
experts or advisors retained by the Company and the Guarantors, (v) preparation
(including printing), issuance and delivery to the Initial Purchaser of the
Notes, (vi) the qualification of the Notes under state securities and "Blue
Sky" laws, including filing fees,
<PAGE> 37
-34-
word processing and reproduction costs of any "Blue Sky" memoranda and
reasonable fees and disbursements of counsel to the Initial Purchaser relating
thereto, (vii) expenses in connection with any meetings with prospective
investors in the Notes, (viii) fees and expenses of the trustee, including fees
and expenses of counsel to the Trustee, (ix) all expenses and listing fees
incurred in connection with the application for quotation of the Notes on
PORTAL, (x) any fees charged by investment rating agencies for the rating of
the Notes, and (xi) except as limited by Article VII, all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses), if
any, in connection with the enforcement of this Agreement, the Notes or any
other agreement furnished pursuant hereto or thereto or in connection herewith
or therewith. In addition, the Company and the Guarantors shall pay any and
all stamp, transfer and other similar taxes payable or determined to be payable
in connection with the execution and delivery of this Agreement, any Basic
Document or the issuance of the Notes, and shall save and hold the Initial
Purchaser harmless from and against any and all liabilities with respect to or
resulting from any delay in paying, or omission to pay, such taxes.
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity.
(a) Indemnification by the Company and the Guarantors. The Company and
the Guarantors, jointly and severally, agree and covenant to hold harmless and
indemnify the Initial Purchaser and any Affiliates thereof (including any
director, officer, employee, agent or controlling Person of any of the
foregoing) from and against any losses, claims, damages, liabilities and
expenses (including expenses of investigation) to which such Initial Purchaser
and its Affiliates may become subject arising out of or based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Memorandum and any amendments or supplements thereto, the Basic Documents or
any application or other document filed by or on behalf of the Company or any
Guarantor with the Commission or any State Commission (collectively, the
"Offering Materials") or arising out of or based upon the omission or alleged
omission to state in any of the Offering Materials a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Com-
<PAGE> 38
-35-
pany and the Guarantors shall not be liable under this paragraph (a) to
the extent that such losses, claims, damages or liabilities arose out of or are
based upon an untrue statement or omission made in any of the documents
referred to in this paragraph (a) in reliance upon and in conformity with the
information relating to the Initial Purchaser furnished in writing by such
Initial Purchaser for inclusion therein; provided, further, that the Company
and the Guarantors shall not be liable under this paragraph (a) to the extent
that such losses, claims, damages or liabilities arose out of or are based upon
an untrue statement or omission made in any Memorandum that is corrected in the
Final Memorandum (or any amendment or supplement thereto) if the person
asserting such loss, claim, damage or liability purchased Notes from the
Initial Purchaser in reliance on such Memorandum but was not given the Final
Memorandum (or any amendment or supplement thereto) on or prior to the
confirmation of the sale of such Notes. The Company and the Guarantors, on a
joint and several basis, further agree to reimburse the Initial Purchaser for
any reasonable legal and other expenses as they are incurred by it in
connection with investigating, preparing to defend or defending any lawsuits,
claims or other proceedings or investigations arising in any manner out of or
in connection with such Person being the Initial Purchaser; provided that if
the Company or the Guarantors reimburses the Initial Purchaser hereunder for
any expenses incurred in connection with a lawsuit, claim or other proceeding
for which indemnification is sought, the Initial Purchaser hereby agrees to
refund such reimbursement of expenses to the extent that the losses, claims,
damages or liabilities are not entitled to indemnification hereunder. The
Company and the Guarantors further agree that the indemnification, contribution
and reimbursement commitments set forth in this Article VII shall apply whether
or not the Initial Purchaser is a formal party to any such lawsuits, claims or
other proceedings. The indemnity, contribution and expense reimbursement
obligations of the Company and the Guarantors under this Article VII shall be
in addition to any liability the Company and the Guarantors may otherwise have.
(b) Indemnification by the Initial Purchaser. The Initial Purchaser
agrees and covenants to hold harmless and indemnify the Company and the
Guarantors and any Affiliates thereof (including any director, officer,
employee, agent or controlling Person of any of the foregoing) from and against
any losses, claims, damages, liabilities and expenses insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement of any material fact contained in the Offering Materials, or
upon the omission
<PAGE> 39
-36-
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or omission was made
in reliance upon and in conformity with the information relating to the Initial
Purchaser furnished in writing by the Initial Purchaser for inclusion therein.
The indemnity, contribution and expense reimbursement obligations of the
Initial Purchaser under this Article VII shall be in addition to any liability
the Initial Purchaser may otherwise have.
(c) Procedure. If any Person shall be entitled to indemnity hereunder
(each an "Indemnified Party"), such Indemnified Party shall give prompt written
notice to the party or parties from which such indemnity is sought (each an
"Indemnifying Party") of the commencement of any action, suit, investigation or
proceeding, governmental or otherwise (a "Proceeding"), with respect to which
such Indemnified Party seeks indemnification or contribution pursuant hereto;
provided, however, that the failure so to notify the Indemnifying Parties shall
not relieve the Indemnifying Parties from any obligation or liability except to
the extent that the Indemnifying Parties have been prejudiced materially by
such failure. The Indemnifying Parties shall have the right, exercisable by
giving written notice to an Indemnified Party promptly after the receipt of
written notice from such Indemnified Party of such Proceeding, to assume, at
the Indemnifying Parties' expense, the defense of any such Proceeding, with
counsel reasonably satisfactory to such Indemnified Party; provided, however,
that an Indemnified Party or parties (if more than one such Indemnified Party
is named in any Proceeding) shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
parties unless: (1) the Indemnifying Parties agree to pay such fees and
expenses; or (2) the Indemnifying Parties fail promptly to assume the defense
of such Proceeding or fail to employ counsel reasonably satisfactory to such
Indemnified Party or parties; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party or
parties and the Indemnifying Party or an Affiliate of the Indemnifying Party
and such Indemnified Parties, and the Indemnified Parties shall have been
advised in writing by counsel that there may be one or more legal defenses
available to such Indemnified Party or parties that are different from or
additional to those available to the Indemnifying Parties, in which case, if
such Indemnified Party or parties notifies the Indemnifying Parties in writing
that it elects to
<PAGE> 40
-37-
employ separate counsel at the expense of the Indemnifying Parties, the
Indemnifying Parties shall not have the right to assume the defense thereof on
behalf of such Indemnified Party or parties and such counsel shall be at the
expense of the Indemnifying Parties, it being understood, however, that, unless
there exists a conflict among Indemnified Parties, the Indemnifying Parties
shall not, in connection with any one such Proceeding or separate but
substantially similar or related Proceedings in the same jurisdiction, arising
out of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for such Indemnified Party or parties,
or for fees and expenses that are not reasonable. No Indemnified Party or
parties will settle any Proceeding without the consent of the Indemnifying
Party or Parties (but such consent shall not be unreasonably withheld). No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened Proceeding in respect
of which any Indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability or claims that are the subject of such Proceeding.
Section 7.2. Contribution. If for any reason the indemnification
provided for in Section 7.1 of this Agreement is unavailable to an Indemnified
Party, or insufficient to hold it harmless, in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other from
the Offering of the Notes, but also the relative fault of the Indemnifying and
Indemnified Parties in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Indemnifying and Indemnified Parties shall be deemed to be in the same
proportion as the total proceeds from the offering of the Notes (before
deducting expenses) received by the Company bear to the total discounts and
commissions received by the Initial Purchaser. The relative fault of the
Indemnifying and Indemnified Parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a ma-
<PAGE> 41
-38-
terial fact or the omission or alleged omission to state a material
fact relates to information supplied by the Indemnifying or Indemnified
Parties and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other
fees or expenses incurred by such party in connection with investigating or
defending any such claim.
The Company and the Guarantors and the Initial Purchaser agree that it
would not be just and equitable if contribution pursuant to the
immediately preceding paragraph were determined pro rata or per capita or by
any other method of allocation which does not take into account the equitable
considerations referred to in such paragraph. Notwithstanding any other
provision of this Section 7.2, the Initial Purchaser shall not be obligated to
make contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by the Initial Purchaser under this
Agreement, less the aggregate amount of any damages that the Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
Section 7.3. Registration Rights Agreement. Notwithstanding anything to
the contrary in this Article 7, the indemnification and contribution provisions
of the Registration Rights Agreement shall govern any claim with respect
thereto.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions. The representations, warranties and
covenants of the Company, the Guarantors, their respective officers and the
Initial Purchaser made herein, the indemnity and contribution agreements
contained herein and each of the provisions of Articles VI, VII and VIII shall
remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of the Company, the Guarantors, the Initial
Purchaser or any Indemnified Party,
<PAGE> 42
-39-
(b) acceptance of any of the Notes and payment therefor, (c) any
termination of this Agreement, or (d) disposition of the Notes by the Initial
Purchaser whether by redemption, exchange, sale or otherwise.
Section 8.2. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchaser by notice to the Company given prior
to the Time of Purchase in the event that the Company or the Guarantors shall
have failed, refused or been unable to perform all obligations and satisfy all
conditions on their part to be performed or satisfied here under at or prior
thereto or, if at or prior to the Closing:
(1) the Company or the Guarantors or any of the Loon Entities
shall have sustained any loss or interference with respect to their
businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any
strike, labor dispute, slow down or work stoppage or any legal or
governmental proceeding, which loss or interference, in the sole
judgment of the Initial Purchaser, has had or has a Material
Adverse Effect, or there shall have been, in the sole judgment of
the Initial Purchaser, any event or development that, individually
or in the aggregate, has or would reasonably be expected to have a
Material Adverse Effect (including without limitation a Change of
Control (as defined in the Indenture) of the Company or the
Guarantors), except in each case as described in the Final
Memorandum (exclusive of any amendment or supplement thereto);
(2) trading in securities of the Company generally on the New
York Stock Exchange, American Stock Exchange or the Nasdaq National
Market shall have been suspended or minimum or maximum prices shall
have been established on any such exchange or market;
(3) a banking moratorium shall have been declared by New York
or United States authorities;
(4) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power (other
than Iraq), or (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States or any
other national or international calamity or emergency, or (C) any
material change in the financial
<PAGE> 43
-40-
markets of the United States which, in the case of (A), (B) or
(C) above and in the sole judgment of the Initial Purchaser, makes
it impracticable or inadvisable to proceed with the offering or the
delivery of the Notes as contemplated by the Final Memorandum; or
(5) any securities of the Company shall have been downgraded
or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 8.2 shall be
without liability of any party to any other party except as provided in Section
8.1 hereof.
Section 8.3. No Waiver; Modifications in Writing. No failure or delay on
the part of the Company, the Guarantors or the Initial Purchaser in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies provided for herein are cumulative and
are not exclusive of any remedies that may be available to the Company or the
Guarantors or the Initial Purchaser at law or in equity or otherwise. No
waiver of or consent to any departure by the Company or the Guarantors from any
provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit thereof, provided that notice of any such waiver
shall be given to each party hereto as set forth below. Except as otherwise
provided herein, no amendment, modification or termination of any provision of
this Agreement shall be effective unless signed in writing by or on behalf of
each of the Company, the Guarantors and the Initial Purchaser. Any amendment,
supplement or modification of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure by the
Company or the Guarantors from the terms of any provision of this Agreement,
shall be effective only in the specific instance and for the specific purpose
for which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on the Company or the Guarantors in any case
shall entitle the Company or the Guarantors to any other or further notice or
demand in similar or other circumstances.
Section 8.4. Information Supplied by the Initial Purchaser. The
statements set forth in the first paragraph on page (i), the fourth and the
fifth sentences of the third para-
<PAGE> 44
-41-
graph and in the seventh, eighth and ninth paragraphs under the heading "Plan
of Distribution" in the Final Memorandum (to the extent such statements relate
to the Initial Purchaser) constitute the only information furnished by the
Initial Purchaser to the Company for the purposes of Sections 3.1(a) and 7.1(a)
and (b) hereof.
Section 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if
to the Initial Purchaser, shall be given by registered or certified mail,
return receipt requested, telex, telegram, telecopy, courier service or
personal delivery, addressed to CIBC Oppenheimer Corp., 425 Lexington Avenue,
3rd floor, New York, New York 10017, with a copy to Cahill Gordon & Reindel, 80
Pine Street, New York, New York, 10005, Attention: Roger Meltzer, Esq. and (b)
if to the Company or the Guarantors, shall be given by similar means to Booth
Creek Ski Holdings, Inc., Highway 267 and Northstar Drive, Truckee, California,
Attention: Chief Financial Officer, with copies to Winston & Strawn, 200 Park
Avenue, New York, New York 10166, Attention: Bruce Toth, Esq. In each case
notices, demands and other communications shall be deemed given when received.
Section 8.6. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 8.7. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchaser, the Company, the Guarantors and
their respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
Person any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such Persons and for the benefit of no other Person
except that (i) the indemnities of the Company and the Guarantors contained in
Section 7.1(a) of this Agreement shall also be for the benefit of the
directors, officers, employees and agents of the Initial Purchaser and any
Person or Persons who control the Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Initial Purchaser contained in Section 7.1(b) of this
Agreement shall also be for the benefit of
<PAGE> 45
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the directors of the Company and the Guarantors, their officers and any
Person or Persons who control the Company or the Guarantors within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Notes from the Initial Purchaser will be deemed a successor because of such
purchase.
Section 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 8.9. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Headings. The Article and Section headings and Table of
Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
BOOTH CREEK SKI HOLDINGS, INC.
By: /s/ Jeffrey Joyce
------------------------------------
Name: Jeffrey J. Joyce
Title: Executive Vice President,
Finance
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
BOOTH CREEK SKI ACQUISITION CORP.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
B-V CORPORATION
TARGHEE COMPANY
TARGHEE SKI CORP.
By: /s/ Jeffrey Joyce
------------------------------------
Name: Jeffrey J. Joyce
Title: Executive Vice President,
Finance
At the Effective Time:
LMRC HOLDING CORP.
LOON MOUNTAIN RECREATION CORPORATION
LOON REALTY CORP.
By: /s/ Jeffrey Joyce
------------------------------------
Name: Jeffrey J. Joyce
Title: Executive Vice President,
Finance
<PAGE> 47
CIBC OPPENHEIMER CORP.
By: /s/Edward Levy
------------------------------
Name: Edward Levy
Title: Managing Director
<PAGE> 1
Exhibit 2.5
================================================================================
BOOTH CREEK SKI GROUP, INC.
$38,332,544.38 Notes due November 27, 2008
3,431 Shares of Class B Common Stock
Warrants for 3,477 Shares of Class B Common Stock (subject to adjustment)
--------------
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
--------------
February 26, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Authorization of Securities; etc......................................................................1
2. Sale and Purchase of Securities.......................................................................3
3. Closing...............................................................................................4
4. Conditions to Closing.................................................................................5
4.1 Representations and Warranties Correct...............................................5
4.2 Performance; No Default..............................................................5
4.3 Related Transactions................................................................5
4.4 Compliance Certificate...............................................................7
4.5 Opinion of Counsel for the Company...................................................7
4.6 Sale of Securities to Other Purchaser................................................7
4.7 Certain Additional Documents to be Delivered at or
Prior to the Loon Mountain Closing...................................................7
4.8 Legal Investment; Certificate........................................................7
4.9 Sale and Purchase Not Forbidden by Law...............................................7
4.10 Payment of Transactions Costs........................................................7
4.11 Proceedings and Documents............................................................7
5. Representations and Warranties........................................................................8
5.1. Organization, Standing, etc. of the Company..................................................8
5.2. Names; Jurisdictions of Incorporation; Subsidiaries, etc.....................................8
5.3. Qualification................................................................................8
5.4. Business, etc................................................................................8
5.5. Shares; Stockholders.........................................................................8
5.6. Financial Statements........................................................................10
5.7. Changes; Solvency, etc......................................................................11
5.8. Tax Returns and Payments....................................................................11
5.9. Funded Debt, Current Debt, Liens, Investments, Transactions
with Affiliates, Leases and Derivative Transactions.........................................12
5.10. Title to Properties; Liens; Leases..........................................................12
5.11. Litigation, etc.............................................................................13
5.12. Valid and Binding Obligations; Compliance with Other Instruments, Borrowing
Restrictions, etc...........................................................................13
5.13. ERISA.......................................................................................14
5.14. Consents, etc...............................................................................15
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
5.15. Proprietary Rights; Licenses................................................................16
5.16. Offer of Securities; Investment Bankers.....................................................16
5.17. Government Regulation.......................................................................17
5.18. Labor Relations.............................................................................17
5.19. Disclosure..................................................................................17
6. Use of Proceeds......................................................................................17
7. Financial Statements and Information.................................................................18
8. Inspection...........................................................................................22
9. Prepayment of Notes..................................................................................22
9.1. Optional Prepayment With Premium of Notes...................................................22
9.2. Optional Prepayment of the Notes upon Sale of the Company or Public
Offerings...................................................................................22
9.3. Allocation of Partial Prepayments of Notes..................................................25
9.4. Notice of Optional Prepayments of Notes.....................................................25
9.5. Maturity; Accrued Interest; Surrender, etc. of Notes........................................25
9.6. Purchase of Notes...........................................................................26
9.7. Payment on Non-Business Days................................................................26
10. [Intentionally Omitted.].............................................................................26
11. Registration, etc....................................................................................26
11.1. Registration on Request.....................................................................26
11.2. Incidental Registration.....................................................................28
11.3. Permitted Registration; Registration on Form S-3............................................29
11.4. Registration Procedures.....................................................................30
11.5. Indemnification.............................................................................30
11.6. Restrictions on Other Agreements............................................................31
12. Retention of Certain Documents.......................................................................32
13. Board Visitation Rights..............................................................................32
14. Covenants of the Company.............................................................................32
14.1. Books of Record and Account; Reserves.......................................................33
14.2. Payment of Taxes; Existence; Maintenance of Properties;
Compliance with Laws; Lines of Business; Proprietary Rights.................................33
14.3. Insurance; Key Man Insurance................................................................34
14.4. Limitation on Discount or Sale of Receivables...............................................34
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
14.5. Limitation on Funded Debt and Current Debt..................................................34
14.6. Limitation on Restricted Payments; Required Distributions to
Company by Subsidiaries.....................................................................36
14.7. Financial Covenants.........................................................................37
14.8. Limitation on Investments...................................................................38
14.9. Limitation on Liens.........................................................................38
14.10. Limitation on Transactions with Affiliates..................................................41
14.11. Limitation on Issuance of Preferred Shares By Subsidiaries..................................42
14.12. Limitation on Disposal of Ownership of a Subsidiary; No
Subsidiaries Other Than Wholly-Owned Subsidiaries...........................................42
14.13. Limitation on Consolidation or Merger, etc..................................................43
14.14. Limitation on Tax Consolidation.............................................................44
14.15. Limitation on Disposition of Property.......................................................44
14.16. Modification of Certain Documents, Agreements and
Instruments; Terms of Permitted Debt Documents..............................................45
14.17. Further Assurances..........................................................................46
14.18. Limitation on Leasebacks....................................................................46
14.19. Interest Payment Reserve Account............................................................46
14.20. Pledge of Shares of Booth Creek Ski Holdings................................................47
14.21. Deposit of Dividends in Interest Payment Reserve Account;
Application of Dividends to the Payment of Interest on the Notes............................47
15. Definitions..........................................................................................48
15.1. Definitions of Terms........................................................................48
15.2. Other Definitions...........................................................................70
15.3. Accounting Terms and Principles; Laws.......................................................70
16. Remedies.............................................................................................71
16.1. Events of Default Defined; Acceleration of Maturity.........................................71
16.2. Suits for Enforcement, etc..................................................................76
16.3. No Election of Remedies.....................................................................76
16.4. Remedies Not Waived.........................................................................77
16.5. Application of Payments.....................................................................77
17. Registration, Transfer and Exchange of Securities; Certain
Restrictions on Transfer in Stockholders Agreement...................................................77
18. Replacement of Securities............................................................................78
19. Amendment and Waiver.................................................................................78
20. Method of Payment of Securities......................................................................79
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
21. Expenses; Indemnity..................................................................................79
22. Taxes................................................................................................80
23. Communications.......................................................................................80
24. Survival of Agreements, Representations and Warranties, etc..........................................81
25. Successors and Assigns; Rights of Other Holders......................................................81
26. Purchase for Investment; ERISA.......................................................................81
27. Governing Law; Jurisdiction; Waiver of Jury Trial....................................................83
28. Rule 144A............................................................................................84
29. Miscellaneous........................................................................................84
30. Confidentiality......................................................................................84
</TABLE>
(iv)
<PAGE> 6
Schedule I Schedule of Purchasers
Exhibit 1(b)(i)(A) Form of Note
Exhibit 1(b)(i)(B) Form of Pledge Agreement
Exhibit 1(b)(ii)(A) Form of Certificate for Class A Common Stock
Exhibit 1(b)(ii)(B) Form of Certificate for Class B Common Stock
Exhibit 1(b)(iii) Form of Warrant
Exhibit 3 Wire Instructions
Exhibit 4.3(e) Form of Stockholders Agreement
Exhibit 4.5 Opinion of Winston & Strawn (Loon Mountain
Closing)
Exhibit 4.7 Certain Additional Documents to be Delivered at
or Prior to the Loon Mountain Closing
Exhibit 5.2 Names; Jurisdictions of Incorporation;
Subsidiaries, etc.
Exhibit 5.4 Disclosure Documents
Exhibit 5.5(a) Shares; Stockholders
Exhibit 5.5(b) Other Securities; Commitments; Preemptive and
Registration Rights
Exhibit 5.6(a) Financial Statements
Exhibit 5.6(b) Projections
Exhibit 5.6(c) Pro Forma Unaudited Balance Sheet
Exhibit 5.9 Funded Debt, Current Debt, Liens, Investments,
Transactions with Affiliates and Leases
Exhibit 5.11 Pending Litigation, etc.
Exhibit 5.14 Consents
Exhibit 5.15 Proprietary Rights
Exhibit 6(a) Use of Proceeds (Loon Mountain Closing)
Exhibit 7(c)(iv) Information as to New Subsidiaries
(v)
<PAGE> 7
BOOTH CREEK SKI GROUP, INC.
1000 South Frontage Road
Vail, Colorado 81657
February 26, 1998
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Ladies and Gentlemen:
Reference is made to those certain Securities Purchase Agreements dated
November 27, 1996, as amended as of March 18, 1997 (as so amended, the "Existing
Securities Purchase Agreements"), by and between the Company and each of you and
the Other Purchaser (as hereinafter defined). Pursuant to the Existing
Securities Purchase Agreements, you and the Other Purchaser purchased from the
Company certain Securities described below in connection with the ASC
Acquisition and the Fibreboard Acquisition. The purpose of this Agreement is to
amend, restate and supersede the Existing Securities Purchase Agreements to
permit the transactions described below and to provide for the issue and sale of
the additional Securities described below.
BOOTH CREEK SKI GROUP, INC., a Delaware corporation (the "Company"),
agrees with you as follows. Certain capitalized terms used herein are defined in
section 15.
1. Authorization of Securities; etc.
(a) Pursuant to the Existing Securities Purchase Agreements,
the Company issued and sold to you and the Other Purchaser in the
aggregate (i) $40,000,000 aggregate principal amount of its Notes due
November 27, 2008 ($10,000,000 aggregate principal amount of which were
designated "Additional John Hancock Note" in the Existing Securities
Purchase Agreements and are no longer outstanding) (the "Existing
Notes"), (ii) 3,070 shares of its Class B Common Stock (the "Original
Purchased Common Shares"), and (iii) its warrants evidencing rights to
purchase 2,900 shares (of which 500 shares are evidenced by the
warrants designated the "Additional John Hancock Warrants" in the
Existing Securities Purchase Agreements) of Class B Common Stock (the
"Existing Warrants").
(b) The Company has authorized the issue and sale of:
<PAGE> 8
(i) its Notes due November 27, 2008 (herein, together
with any notes issued in exchange therefor or replacement
thereof, called the "Additional Notes") in the aggregate
principal amount of $8,332,544.38. The Existing Notes and the
Additional Notes are herein called the "Notes." The Notes are
to be substantially in the form of Exhibit 1(b)(i)(A) attached
hereto. As further provided in section 14.20, the Notes are to
be secured by and entitled to the benefits of a first priority
pledge of all now or hereafter outstanding Shares of Booth
Creek Ski Holdings (and all rights to acquire any such Shares)
pursuant to an amended and restated pledge agreement
substantially in the form of Exhibit 1(b)(i)(B) attached
hereto (the "Pledge Agreement");
(ii) 361 shares of its Class B Common Stock (herein,
such 361 shares, together with any Shares issued in exchange
therefor or replacement thereof, called the "Additional
Purchased Common Shares"). The Original Purchased Common
Shares, the Additional Purchased Common Shares and the shares
of Class B Common Stock issuable to John Hancock upon the
conversion of the John Hancock Convertible Notes (as
hereinafter defined) are herein called the "Purchased Common
Shares." The certificates for the Class A Common Stock and
Class B Common Stock are to be substantially in the forms of
Exhibit 1(b)(ii)(A) and 1(b)(ii)(B) attached hereto; and
(iii) its warrants evidencing rights to purchase 577
shares of Class B Common Stock (subject to adjustment)
(herein, together with any warrants issued in exchange
therefor or replacement thereof, collectively called the
"Additional Warrants"). The Existing Warrants and the
Additional Warrants are herein called the "Warrants." The
Warrants are to be substantially in the form of Exhibit
1(b)(iii) attached hereto. The Additional Notes, the
Additional Purchased Common Shares and the Additional Warrants
are herein called the "Additional Securities."
(c) As further provided in each of the Notes, the Company may,
at its option (but subject to the provisions in section 14.21), in lieu
of paying cash, pay all (but not less than all) of the interest on the
Notes which is due on any regularly scheduled interest payment date by
adding to the principal amount of each such Note an amount equal to the
interest not then paid in cash. The Notes shall bear interest at 12%
per annum, if paid in cash, or 14% per annum, if paid in kind, as
further provided in each of the Notes. Interest is payable on the Notes
semi-annually in arrears on the 27th day of May and November of each
year, commencing with respect to each Note on the first such date
succeeding the date of such Note and at maturity. In no event shall the
amount paid or agreed to be paid by the Company as interest and premium
on any Note exceed the highest lawful rate permissible under any law
applicable thereto.
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<PAGE> 9
(d) The Company and John Hancock hereby agree that
$1,107,692.31 aggregate principal amount of the Additional Notes
(together with any Notes issued in exchange therefor or replacement
thereof, the "Convertible John Hancock Notes") shall be convertible
into 378 shares of the Class B Common Stock at any time by the holders
of the Convertible John Hancock Notes upon written notice thereof
delivered to the Company. Upon such conversion, the outstanding
principal amount of the Convertible John Hancock Notes together with
all accrued interest thereon shall be deemed paid in full and upon the
delivery of such shares of Class B Common Stock the Convertible John
Hancock Notes shall be delivered to the Company and cancelled. The
Convertible John Hancock Notes shall be assignable by the holders
thereof only in accordance with the terms of the Stockholders Agreement
(as hereinafter defined). Notwithstanding any provisions hereof to the
contrary, upon the occurrence and during the continuance of any Event
of Default, the Company and CIBC shall each have the right to require
the holders of the Convertible John Hancock Notes to convert the
Convertible John Hancock Notes into such shares of Class B Common Stock
and promptly to take all necessary action to effect such conversion.
(e) The Additional Securities are to be issued under this
Agreement and a separate Amended and Restated Securities Purchase
Agreement (the "Other Securities Purchase Agreement") identical
herewith (except as to the name and address of the other purchaser)
being entered into concurrently by the Company with the other purchaser
(the "Other Purchaser") named in Schedule I attached hereto. The issue
of Additional Securities to you and the issue of Additional Securities
to the Other Purchaser are separate transactions, and you shall not be
liable or responsible for the acts or defaults of the Other Purchaser.
(f) This Agreement amends, restates and supersedes the
Existing Securities Purchase Agreements in order to provide for the
issue and sale of the Additional Securities and for the other matters
set forth herein.
2. Sale and Purchase of Securities.
(a) The Company will issue and sell to you and, subject to the
terms and conditions hereof and in reliance upon the representations
and warranties of the Company contained herein and in the other
Operative Documents, at the Loon Mountain Closing specified in section
3, you will purchase the Additional Securities that are specified
below.
(b) At the Loon Mountain Closing:
(i) the Company will issue and sell to John Hancock
$4,800,000 aggregate principal amount of the Additional Notes
and Additional Warrants for 295 shares of its Class B Common
Stock for an aggregate purchase price of $3,692,307.69; and
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<PAGE> 10
(ii) the Company will issue and sell to CIBC Fund (A)
$3,532,544.38 aggregate principal amount of the Additional
Notes and Additional Warrants for 282 shares of its Class B
Common Stock for an aggregate purchase price of $3,532,544.38
and (B) 361 shares of its Class B Common Stock for an
aggregate purchase price of $1,059,763.31.
The aggregate purchase price of (x) the Additional Notes and the
Additional Warrants issued and sold at the Loon Mountain Closing to
John Hancock and CIBC Fund shall be $8,332,544.38 which shall be
allocated (1) $1,107,692.31 to the Convertible John Hancock Notes, (2)
$6,683,609.47 to the Additional Notes (other than the Convertible John
Hancock Notes) and (3) $361,242.60) to the Additional Warrants and (y)
the Additional Purchased Common Shares issued and sold at the Loon
Mountain Closing to CIBC Fund shall be $1,059,763.31.
(c) The Company, you and the Other Purchaser agree that the
values ascribed to the Securities (which values shall be used by the
Company, you and the Other Purchaser, as well as any subsequent holder
of any of the Securities, for all purposes, including the preparation
of tax returns) shall be determined in accordance with the foregoing
(with respect to the Additional Securities) or in accordance with the
provisions of the Existing Securities Purchase Agreements (with respect
to the Securities other than the Additional Securities).
3. Closing. The sale and purchase of the Additional Securities hereunder
and under the Other Securities Purchase Agreement (the "Loon Mountain
Closing"), shall occur at the time of the closing of the Loon Mountain
Acquisition and shall take place at the office of Messrs. Choate, Hall &
Stewart, Exchange Place, 53 State Street, Boston, Massachusetts 02109. The Loon
Mountain Closing shall occur on February 26, 1998 or such other date (not later
than February 26, 1998) to which you and the Other Purchaser may agree (the
"Loon Mountain Closing Date"). The Loon Mountain Closing shall occur not later
than 11:00 A.M. Boston time (your reinvestment deadline) on the Loon Mountain
Closing Date. At the Loon Mountain Closing, the Company will deliver to you and
the Other Purchaser the Additional Securities to be purchased by you and the
Other Purchaser at the Loon Mountain Closing (as specified on Schedule I
attached hereto) against payment of the purchase price thereof to (or for the
benefit of) the Company in immediately available funds in accordance with the
wire instructions set forth on Exhibit 3 attached hereto. Delivery of the
Additional Securities to be purchased by you at the Loon Mountain Closing shall
be made in the form of one or more Additional Notes, certificates for
Additional Purchased Common Shares and Additional Warrants, in such
denominations and registered in such names as are specified on Schedule I
attached hereto, and in each case dated and, in the case of each Additional
Note, bearing interest from, the Loon Mountain Closing Date. If at the Loon
Mountain Closing the Company shall fail to tender the Additional Securities to
be delivered to you thereat as provided herein, or if at the Loon Mountain
Closing any of the conditions applicable to the Loon Mountain Closing specified
in section 4 shall not have been fulfilled to your satisfaction, you shall, at
your election, be relieved of all further obligations under this
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<PAGE> 11
Agreement, without thereby waiving any other rights you may have by reason of
such failure or such non-fulfillment.
4. Conditions to Closing.
Your obligation to purchase and pay for the Additional Securities to be
purchased by you hereunder at the Loon Mountain Closing is subject to the
fulfillment to your satisfaction, at the Loon Mountain Closing, of the following
conditions:
4.1 Representations and Warranties Correct. The representations and
warranties made by the Company herein and in the other Operative Documents shall
have been correct when made and shall be correct at and as of the time of the
Loon Mountain Closing (both before and after giving effect to the transactions
consummated at the Loon Mountain Closing).
4.2 Performance; No Default. The Company shall have performed all
agreements and complied with all conditions contained herein and in the other
Operative Documents required to be performed or complied with by it prior to or
at the Loon Mountain Closing, and at the time of the Loon Mountain Closing, no
Default or Event of Default shall exist and no condition shall exist which has
resulted in, or could reasonably be expected to result in, a Material Adverse
Change.
4.3 Related Transactions.
(a) The Loon Mountain Acquisition shall have been consummated
in accordance with the terms of the Loon Mountain Acquisition
Documents. No material term or condition of the Loon Mountain
Acquisition Documents for the benefit of the Company or any of its
Subsidiaries shall have been amended, modified, supplemented or waived.
The Aggregate Merger Consideration (as such term is defined in the Loon
Mountain Acquisition Agreement) (which shall not exceed $17,999,970,
subject only to the adjustments (including interest) set forth in
Articles I and II of the Loon Mountain Acquisition Agreement) and all
other terms of the Loon Mountain Acquisition Documents, shall be
satisfactory to you in all material respects.
(b) The debt and equity capitalization of the Company and each
of its Subsidiaries shall be in all respects satisfactory to you.
Without limiting the generality of the foregoing, (A) after giving
effect to the Loon Mountain Closing, neither the Company nor any of its
Subsidiaries shall have any Funded Debt or Current Debt other than that
evidenced by the Notes and that which is specified on Exhibit 5.9
attached hereto and (B) the Gillett Family Partnership shall have
purchased 536 shares of Class A Common Stock for not less than
$1,107,692.31 paid in cash.
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<PAGE> 12
(c) The BKB Revolving Credit Agreement shall have been
executed and delivered and shall be in full force and effect. The
credit facility created thereby shall consist of a secured revolving
credit facility of $25,000,000 in aggregate principal amount maturing
not earlier than March 18, 1999. The terms of the BKB Revolving Credit
Documents, including, without limitation, all Restricted Payment
Provisions, shall be satisfactory to you in all material respects.
(d) The Senior 144A Indenture shall have been executed and
delivered and shall be in full force and effect. The credit facility
created by the Senior 144A Indenture shall consist of term notes of not
more than $133,500,000 in aggregate principal amount (including
$17,500,000 in aggregate principal amount dated the Loon Mountain
Closing Date) maturing not earlier than March 15, 2007. The terms of
the Senior 144A Documents, as applicable, including, without
limitation, all Restricted Payment Provisions, shall be satisfactory to
you in all material respects.
(e) You, the Other Purchaser, the Company and the Gillett
Family Partnership shall have entered into an amended and restated
stockholders agreement substantially in the form of Exhibit 4.3(e)
attached hereto (as amended, modified and supplemented from time to
time, the "Stockholders Agreement").
(f) The Organizational Documents of the Company and each of
its Subsidiaries shall be satisfactory to you in all material respects.
(g) You shall be satisfied in all material respects as to the
compliance by the Acquired Loon Mountain Businesses with all applicable
Environmental Laws and shall have received such reports evidencing the
same as you may reasonably request.
(h) The terms of the Gillett Management Agreement shall be
satisfactory to you in all material respects. Without limiting the
generality of the foregoing, the Gillett Management Agreement shall
explicitly provide that the obligation of the Company to make payments
thereunder is subject to the provisions of this Agreement, including,
without limitation, section 14.6.
(i) No closing fee or similar amount shall be paid or
shall be payable to George N. Gillett, Jr. or any of his Affiliates in
connection with the Loon Mountain Acquisition.
(j) George N. Gillett, Jr. shall have entered into an amended
and restated letter agreement with you and the Other Purchaser (the
"Gillett Side Letter") pursuant to which he agrees that, so long as any
of the Securities are outstanding, he will not, and will not permit any
of his Affiliates to, directly or indirectly, purchase any ski resort
or related business (or any interest in any Person owning or operating
any ski resort or related business) except through a purchase by the
Company or any Wholly-Owned Subsidiary of the Company.
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<PAGE> 13
4.4 Compliance Certificate. At the Loon Mountain Closing, you shall
have received an Officers' Certificate, dated the Loon Mountain Closing Date,
certifying that the conditions specified in sections 4.1 and 4.2 have been
fulfilled.
4.5 Opinion of Counsel for the Company. At the Loon Mountain Closing,
you shall have received an opinion, dated the Loon Mountain Closing Date, from
Messrs. Winston & Strawn, counsel for the Company, and an opinion of Messrs.
Sheehan Phinney Bass + Green, Professional Association, counsel for Booth Creek
Ski Holdings, substantially in the forms of Exhibit 4.5 attached hereto.
4.6 Sale of Securities to Other Purchaser. At the Loon Mountain
Closing, the Company shall issue and sell to the Other Purchaser the Additional
Securities to be purchased at the Loon Mountain Closing by the Other Purchaser
pursuant to the Other Securities Purchase Agreement and shall receive payment in
full of the purchase price thereof.
4.7 Certain Additional Documents to be Delivered at or Prior to the
Loon Mountain Closing. You shall have received the items specified on Exhibit
4.7 attached hereto, each of which shall be satisfactory to you in all material
respects.
4.8 Legal Investment; Certificate. Your purchase of the Additional
Securities to be issued pursuant hereto at the Loon Mountain Closing shall be
permitted under the laws and regulations of any jurisdiction to which you are
subject (without resort to any provision of any such law permitting limited
investments by you without restriction as to the character of the particular
investment), and you shall, if requested by you, have received an Officers'
Certificate, dated the Loon Mountain Closing Date, certifying as to such matters
as you may request to enable you to determine whether your purchase is so
permitted.
4.9 Sale and Purchase Not Forbidden by Law. The offer, issue, sale and
delivery by the Company of the Additional Securities to be issued pursuant
hereto at the Loon Mountain Closing and your purchase of such Additional
Securities at the Loon Mountain Closing shall not be prohibited by and shall not
subject you to any tax, penalty, liability or other onerous condition under or
pursuant to any law, statute, rule or regulation.
4.10 Payment of Transactions Costs. Without limiting the generality of
the provisions of section 21, the Company shall have paid in immediately
available funds all fees, expenses and disbursements incurred by you at or prior
to the time of the Loon Mountain Closing in connection with the transactions
contemplated by the Operative Documents, including, without limitation, the
reasonable fees, expenses and disbursements of your special counsel.
4.11 Proceedings and Documents. All proceedings in connection with the
transactions contemplated by the Operative Documents and all agreements,
documents and instruments incident to such transactions shall be satisfactory in
substance and form to you and your special counsel, and you and your special
counsel shall have received all such
-7-
<PAGE> 14
counterpart originals or copies of such agreements, documents and instruments as
you or they may reasonably request.
5. Representations and Warranties. The Company represents and warrants that as
of the date hereof and as of the Loon Mountain Closing Date (both before and
after giving effect to the transactions consummated at the Loon Mountain
Closing):
5.1. Organization, Standing, etc. of the Company. The Company and each
of its Subsidiaries is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite power
and authority to own, lease and operate its properties, to carry on its business
as now conducted, and now proposed to be conducted as described in the
Disclosure Documents referred to in section 5.4, to execute, deliver and perform
each of the Operative Documents to which it is (or is to be) a party and to
consummate the transactions contemplated by the Operative Documents. No approval
of the stockholders or members of the Company or any of its Subsidiaries or any
class thereof is required in connection therewith which has not previously been
obtained.
5.2. Names; Jurisdictions of Incorporation; Subsidiaries, etc. Exhibit
5.2 attached hereto correctly specifies as to the Company and each of its
Subsidiaries (a) its legal name, (b) the jurisdiction of its incorporation or
organization, (c) each jurisdiction (other than its jurisdiction of
incorporation or organization) in which it is qualified to do business and (d)
each jurisdiction in which any of its material properties are (or are to be)
located. The Company does not have any Subsidiary that is not named on Exhibit
5.2 attached hereto.
5.3. Qualification. The Company and each of its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the character of the properties owned or leased or the
nature of the activities conducted makes such qualification or licensing
necessary, except for those jurisdictions in which the failure to be so
qualified or licensed or to be in good standing has not resulted in, and could
not reasonably be expected to result in, a Material Adverse Change.
5.4. Business, etc. The Company and its Subsidiaries are engaged in the
business of owning and operating ski resorts and related activities (the
"Business"), as further described in the documents listed on Exhibit 5.4
attached hereto (the "Disclosure Documents"), true, correct and complete copies
of which have been furnished to you.
5.5. Shares; Stockholders.
(a) Exhibit 5.5(a) attached hereto correctly and fully
specifies as to the Company and each of its Subsidiaries (after giving
effect to the transactions consummated at the Loon Mountain Closing)
(i) its authorized and outstanding Shares and (ii) the name of each
record and beneficial owner of such Shares (and, with respect to each
holder of Shares of the Company, clearly indicates if such Person is a
member of the Gillett Family), together with the number (and class, if
-8-
<PAGE> 15
any) of such Shares held by each such Person. All of the outstanding
Shares of the Company and each of its Subsidiaries are, and all
Underlying Securities issued upon exercise of the Warrants in
accordance with the terms thereof will be, duly authorized, validly
issued, fully paid and non-assessable and, except as provided in the
Stockholders Agreement, not subject to any preemptive right, right of
first refusal or similar right on the part of any other Person, and all
of such Shares have been (or will have been) offered, issued and sold
in accordance with all applicable laws. Except as set forth on Exhibit
5.5(a) attached hereto, the owners of the Shares indicated on Exhibit
5.5(a) attached hereto own the Shares indicated on such exhibit free of
any Lien, proxy, voting agreement, voting trust, stockholders agreement
or similar agreement or restriction (other than as provided in the
Stockholders Agreement). Except as provided by the Stockholders
Agreement and except as set forth on Exhibit 5.5(a) attached hereto,
neither the Organizational Documents nor any other agreement, document
or instrument binding on or applicable to the Company or any of its
Subsidiaries or any of its stockholders contains any provision
requiring a higher voting requirement with respect to action taken
(and/or to be taken) by its board of directors or stockholders than
that which would apply in the absence of such provision. Except for the
Stockholders Agreement, the Gillett Family Partnership has the right
(by virtue of its ownership of the Shares of the Company as shown on
Exhibit 5.5(a) attached hereto) to elect or designate for election all
of the members of the board of directors of the Company (and thereby to
direct or cause the direction of the management and policies of the
Company and each of its Subsidiaries), and, except for the Stockholders
Agreement and except as set forth on Exhibit 5.5(a) attached hereto,
the Gillett Family Partnership is not subject to any agreement or any
legal or contractual restriction that affects its right to vote such
Shares or to exercise any other incident of ownership of such Shares.
The only partners and beneficial owners of Shares of the Gillett Family
Partnership are (and at all times shall be) George N. Gillett, Jr. and
other members of his Family.
(b) Except as provided in section 11, except for the Warrants
and the Management Options and except as set forth on Exhibit 5.5(b)
attached hereto (after giving effect to the consummation of the
transactions consummated at the Loon Mountain Closing), (i) there are
no outstanding rights, options, warrants or agreements for the purchase
from, or sale or issuance by, the Company or any of its Subsidiaries of
any of its Shares or any securities convertible into or exercisable or
exchangeable for such Shares; (ii) there are no agreements on the part
of the Company or any of its Subsidiaries to issue, sell or distribute
any of its Shares, other securities or assets; (iii) neither the
Company nor any of its Subsidiaries has any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its Shares
or any interest therein or to pay any dividend or make any distribution
in respect thereof; and (iv) no Person is entitled to any rights with
respect to the registration of any Shares of the Company or any of its
Subsidiaries under the Securities Act (or the securities laws of any
other jurisdiction).
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<PAGE> 16
(c) The aggregate number of shares of Class B Common Stock
issuable upon exercise in full of the Warrants (including the
Additional Warrants) is 3,477, which, if such shares were issued
immediately following the Loon Mountain Closing, would constitute
29.33% of the Common Stock calculated on a fully-diluted basis assuming
(x) the conversion, exercise and exchange of all outstanding securities
convertible into and exercisable or exchangeable for shares of Common
Stock of the Company, including, without limitation, the Warrants then
outstanding and (y) the issuance of 400 shares of Class A Common Stock
upon the exercise of the Management Options. The Company has reserved
3,477 shares of Class B Common Stock solely for issuance upon exercise
of the Warrants and 3,477 shares of Class A Common Stock solely for
issuance upon conversion of the shares of Class B Common Stock issued
upon exercise of the Warrants. Each share of each class of Common Stock
is and shall at all times be convertible into one share of duly
authorized, validly issued, fully paid and non-assessable Common Stock
of the other class.
(d) The aggregate number of the Purchased Common Shares
(including the Additional Purchased Common Shares and the shares of
Class B Common Stock issuable to John Hancock upon the conversion of
the Convertible John Hancock Notes assuming the conversion of the
Convertible John Hancock Notes into 378 shares of Class B Common Stock)
will constitute (i) 47.76% of the outstanding Common Stock and (ii)
32.13% of the Common Stock calculated on a fully-diluted basis (as
aforesaid in section 5.5(c)). The Company has reserved 3,809 shares of
Class A Common Stock solely for issuance upon conversion of the
Purchased Common Shares.
5.6. Financial Statements. You have been furnished with:
(a) the financial statements referred to on Exhibit 5.6(a)
attached hereto, which financial statements (subject, in the case of
any unaudited financial statements, to the absence of footnote
disclosure and normal year-end and audit adjustments) have been
prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby and present fairly in all
material respects the financial position and the results of operations
and cash flows of the Person(s) purported to be covered thereby as at
the respective dates and for the respective periods indicated in
conformity with GAAP (subject, in the case of any unaudited financial
statements, to the absence of footnote disclosure and normal year-end
and audit adjustments);
(b) the projections referred to on Exhibit 5.6(b) attached
hereto, which projections were prepared in good faith, are based upon
assumptions that the Company believes are reasonable and take into
account all material information regarding the matters set forth
therein. Such projections represent a reasonable estimate by the
Company of the future financial performance of the Company and its
Subsidiaries. The Company does not presently anticipate any material
deviation
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<PAGE> 17
from such projections and the Company reasonably believes that the
results of operations reflected therein are attainable, provided that
the Company does not represent that the projected results of operations
will be achieved; and
(c) the pro forma unaudited consolidated balance sheet of the
Company referred to on Exhibit 5.6(c) attached hereto, which balance
sheet fairly presents the consolidated financial position of the
Company as at October 31, 1997, adjusted on a pro forma basis to give
effect to the consummation of the Loon Mountain Acquisition, and each
of the other transactions contemplated by the Operative Documents, and
reflects all known material liabilities of the Company and its
Subsidiaries, contingent or other, as at the Loon Mountain Closing
Date, required by GAAP to be reflected therein.
5.7. Changes; Solvency, etc. Since October 26, 1997: (a) there has been
no change in the assets, liabilities or financial condition of the Acquired Loon
Mountain Businesses from that set forth in the balance sheets as at such dates
referred to on Exhibit 5.6(a) attached hereto, other than changes in the
ordinary course of business which have not been, either in any case or in the
aggregate, materially adverse; and (b) no condition or event has occurred which
has resulted in, or could reasonably be expected to result in, a Material
Adverse Change. The Company and its Subsidiaries are Solvent.
5.8. Tax Returns and Payments. The Company and its Subsidiaries have
filed all tax returns required by law to be filed and have paid all taxes,
assessments and other governmental charges levied upon their respective
properties, assets, income, receipts, franchises or sales, other than those not
yet delinquent and those, not substantial in aggregate amount, being or about to
be contested as provided in section 14.2(a). The income tax liability of the
Company and its Subsidiaries (other than the Bear Mountain Subsidiary, the
Northstar Subsidiary and the Sierra Subsidiary) is not currently being audited.
The Company and its Subsidiaries (other than the Bear Mountain Subsidiary, the
Northstar Subsidiary and the Sierra Subsidiary) have not executed any waiver or
waivers that would have the effect of extending the applicable statute of
limitations in respect of income tax liabilities. The charges, accruals and
reserves in the financial statements of the Company and its Subsidiaries in
respect of taxes for all fiscal periods are adequate in the opinion of the
Company, and the Company knows of no unpaid assessments for additional taxes for
any fiscal period or of any basis therefor. The Company and its Subsidiaries are
indemnified under the Loon Mountain Acquisition Agreement by the Merger
Consideration Recipients (as such term is defined in the Loon Mountain
Acquisition Agreement) for certain liabilities in respect of taxes (and all
related penalties and other amounts) of the Loon Mountain Subsidiary.
5.9. Funded Debt, Current Debt, Liens, Investments, Transactions with
Affiliates, Leases and Derivative Transactions. Exhibit 5.9 attached hereto
correctly describes as to the Company and each of its Subsidiaries (after giving
effect to the transactions consummated at the Loon Mountain Closing):
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<PAGE> 18
(a) all of its Funded Debt and/or Current Debt to be
outstanding immediately following the Loon Mountain Closing (other than
that evidenced by the Notes);
(b) all Liens to which any of its properties and assets will
be subject immediately following the Loon Mountain Closing (other than
those arising under the Pledge Agreement and those of the character
described in section 14.9(c));
(c) all of its Investments (and all agreements and commitments
to make Investments) to be owned or held (or in effect) immediately
following the Loon Mountain Closing (other than Investments of the
character described in clauses (a), (b), (c), (e), (f), (g), (i), (j)
and (k) of the definition of Restricted Investments);
(d) all transactions with Affiliates of the Company and its
Subsidiaries which were consummated during the 12-month period ended on
the date hereof or which it is now obligated or now intends to
consummate at any time in the future (including, without limitation,
all transactions involving consulting or management services provided
(or to be provided) to the Company or any of its Subsidiaries by any of
their respective Affiliates, other than the Gillett Management
Agreement); and
(e) each lease, other than Capital Leases, under which it is
lessee or sublessee and is or shall be obligated to pay $50,000 or more
during any period of twelve consecutive months after the date hereof,
and, with respect to each such lease, the name of the lessor, the
lessee or sublessee, a general description of the property leased, the
annual Rental Obligations payable thereunder and the term thereof.
The Company is not a party to any Derivative Transaction.
5.10. Title to Properties; Liens; Leases. After giving effect to the
Loon Mountain Acquisition, the Company and its Subsidiaries will have good and
marketable title to all of their respective properties and assets, free of all
Liens (other than the Liens permitted under section 14.9), including, without
limitation, the properties and assets reflected in the balance sheets, dated
October 26, 1997 (in the case of the Loon Mountain Acquired Businesses),
referred to on Exhibit 5.6(a) attached hereto, except for the properties and
assets disposed of since such dates in the ordinary course of business. The
Company and its Subsidiaries enjoy peaceful and undisturbed possession under all
material leases under which they operate, and all of such leases are valid,
subsisting and in full force and effect. None of such leases contains any
unusual or burdensome provision, which, in either case, has resulted in, or
could reasonably be expected to result in, a Material Adverse Change.
5.11. Litigation, etc. There is no action, proceeding or investigation
pending or, to the best knowledge of the Company, threatened (or any basis
therefor known to the Company), including, without limitation, those referred to
on Exhibit 5.11 attached hereto, which questions the validity of any of the
Operative Documents or any action taken or to be
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<PAGE> 19
taken pursuant thereto or which has resulted in, or could reasonably be expected
to result in, a Material Adverse Change. There is no outstanding judgment,
decree or order, including, without limitation, those referred to on Exhibit
5.11 attached hereto, which has resulted in, or could reasonably be expected to
result in, a Material Adverse Change. Exhibit 5.11 attached hereto sets forth a
complete list of all material pending and, to the best knowledge of the Company,
threatened actions, proceedings and investigations and all outstanding
judgments, decrees and orders against or affecting the Company and/or any of its
Subsidiaries or the Acquired Businesses.
5.12. Valid and Binding Obligations; Compliance with Other
Instruments, Borrowing Restrictions, etc.
(a) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and legally binding
obligation of the Company enforceable against the Company in accordance
with its terms (subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other similar laws affecting the enforcement of
creditors' rights generally and general equitable principles which may
limit the right to obtain the remedy of specific performance of
executory covenants and other equitable remedies). Each of the other
Operative Documents to which the Company is a party has been duly
authorized by the Company and, when executed and delivered, will
constitute the valid and legally binding obligation of the Company,
enforceable against it in accordance with its terms (subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other
similar laws affecting the enforcement of creditors' rights generally
and general equitable principles which may limit the right to obtain
the remedy of specific performance of executory covenants and other
equitable remedies).
(b) Neither the Company nor any of its Subsidiaries is in
violation of or in default under any term of its Organizational
Documents, or of any agreement, document, instrument, judgment, decree,
order, law, statute, rule or regulation applicable to it or any of its
properties and assets, in any way which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change. Without
limiting the generality of the foregoing, the Company and each of its
Subsidiaries is in compliance with (and neither it nor any of its
predecessors in interest has received any notice to the contrary) and
there is no reasonable possibility of any liability of or any judgment,
decree or order binding upon or applicable to the Company and/or any of
its Subsidiaries or any of their respective properties and assets under
or on account of any Environmental Laws, except where the same has not
resulted in, and could not reasonably be expected to result in, a
Material Adverse Change.
(c) The execution, delivery and performance of and the
consummation of the transactions contemplated by the Operative
Documents will not violate or constitute a default under, or permit any
Person to accelerate or to require the prepayment of any Indebtedness
of or the repurchase or redemption of any securities issued by the
Company or any of its Subsidiaries or to terminate any lease or
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<PAGE> 20
agreement of the Company or any of its Subsidiaries pursuant to, or
result in the creation of any Lien (other than the Liens created by the
Permitted Debt Documents and by the Security Documents) upon any of the
properties or assets of the Company or any of its Subsidiaries pursuant
to, any term of its Organizational Documents or of any agreement,
document, instrument, judgment, decree, order, law, statute, rule or
regulation applicable to any of them or any of their respective
properties and assets.
(d) Neither the Company nor any of its Subsidiaries is a party
to or bound by or subject to any agreement, document, instrument,
judgment, decree, order, law, statute, rule or regulation (other than
the Operative Documents, the Permitted Debt Documents and laws,
statutes, rules or regulations affecting creditors or businesses
generally) (i) which restricts its right or ability to incur
Indebtedness, to issue securities or to consummate the transactions
contemplated hereby; (ii) under the terms of or pursuant to which its
obligation to pay all amounts due from it and/or to perform all
obligations imposed on it and/or to comply with the terms applicable to
it under any of the Operative Documents is in any way restricted; (iii)
which contains Restricted Payment Provisions or which restricts its
right or ability to make any distributions to its stockholders or in
respect of any of its Shares, to mortgage or dispose of its properties,
to consummate any merger, consolidation or acquisition, to make
Investments or Capital Expenditures, to enter into and perform leases,
to pay executive compensation and/or to conduct its business as now
conducted and now proposed to be conducted, or (iv) which has resulted
in, or could reasonably be expected to result in, a Material Adverse
Change.
5.13. ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except
for such instances of noncompliance which have not resulted in, and
could not reasonably be expected to result in, a Material Adverse
Change. Neither the Company nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans (as
defined in section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in
the incurrence of any such liability by the Company or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either
case pursuant to Title I or IV of ERISA or to such penalty or excise
tax provisions or to section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not individually or in the aggregate
result in a Material Adverse Change.
(b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans), determined as
of the end of such Plan's most recently ended plan year on the basis of
the actuarial assumptions specified for funding purposes in such Plan's
most recent actuarial valuation report, did not exceed
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<PAGE> 21
the aggregate current value of the assets of such Plan allocable to
such benefit liabilities. The term "benefit liabilities" has the
meaning specified in section 4001 of ERISA and the terms "current
value" and "present value" have the meaning specified in section 3 of
ERISA.
(c) The Company and the ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate could result
in a Material Adverse Change. The Company and the ERISA Affiliates have
made all required contributions to Multiemployer Plans. Neither the
Company nor any ERISA Affiliate has incurred, nor would reasonably
expect to incur, any Withdrawal Liability upon a complete or partial
withdrawal from any Multiemployer Plan that individually or in the
aggregate could result in a Material Adverse Change. To the best of the
Company's knowledge, no Multiemployer Plan is, or is reasonably
expected to be, insolvent, in reorganization or terminated within the
meaning of Title IV of ERISA.
(d) Neither the Company nor any of its Subsidiaries has any
expected post retirement benefit obligation (determined in accordance
with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code).
(e) The consummation of the transactions contemplated by the
Operative Documents will not involve any transaction that is subject to
the prohibitions of section 406(a) of ERISA or in connection with which
a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first sentence of this
section 5.13(e) is made in reliance upon and subject to the accuracy of
your representation in section 26(b) as to the sources of the funds
used to pay the purchase price of the Securities to be purchased by
you.
5.14. Consents, etc. No consent, approval or authorization of, or
declaration or filing with, or other action by, any Person (including, without
limitation, any creditor of or lender to the Company or any of its Subsidiaries
and any governmental authority) is required as a condition precedent to the
valid execution, delivery and performance of and the consummation of the
transactions contemplated by the Operative Documents, including, without
limitation, the Loon Mountain Acquisition, other than (a) those specified on
Exhibit 5.14 attached hereto, all of which, if related to the Loon Mountain
Acquisition or the other transactions to be consummated in connection therewith,
shall have been obtained and shall be unconditional, in full force and effect
and not subject to appeal or review on the Loon Mountain Closing Date, and (b)
immaterial consents which will be obtained by the Company and its Subsidiaries
on a best efforts basis as soon as possible following the Loon Mountain Closing
if determined to be in the best interests of the Company and its Subsidiaries by
the board of directors of the Company. Without limiting the generality of the
foregoing all filings under the Clayton Act and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 required in connection with the Loon Mountain
Acquisition shall
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<PAGE> 22
have been made and any applicable "waiting period" under such Acts shall have
expired or been terminated on or before the Loon Mountain Closing Date.
5.15. Proprietary Rights; Licenses. The Company and its Subsidiaries
have all Proprietary Rights and Licenses as are adequate for the conduct of
their respective businesses (including, without limitation, in connection with
the Acquired Businesses) as now conducted and now proposed to be conducted,
without any known conflict with the rights of others. Each such Proprietary
Right and License is in full force and effect, all material obligations with
respect thereto have been fulfilled and performed by the Company or the
applicable Subsidiary and there is no known infringement thereon by any other
Person that has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect. No default in the performance or observance by the
Company and/or any of its Subsidiaries (or any of their respective predecessors
in interest) of its obligations thereunder has occurred which permits, or after
notice of lapse of time or both would permit, the revocation or termination of
any material Proprietary Right or License or which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change. Exhibit 5.15
attached hereto contains a complete and accurate list of all material
Proprietary Rights and material Licenses owned or held by the Company and its
Subsidiaries.
5.16. Offer of Securities; Investment Bankers. Neither the Company nor
any of its Subsidiaries nor any Person acting on their behalf (a) has directly
or indirectly offered the Securities or any part thereof or any similar
securities for issue or sale to, or solicited any offer to buy any of the same
from, anyone other than you and the Other Purchaser, (b) has taken or will take
any action which would bring the issuance and sale of the Securities within the
provisions of Section 5 of the Securities Act or the registration or
qualification provisions of any applicable blue sky or other securities laws,
(c) has dealt with any broker, finder, commission agent or other similar Person
in connection with the sale of the Securities, or (d) is under any obligation to
pay any broker's fee, finder's fee or commission in connection with such sale.
The only material transaction fees and expenses payable in connection with the
transactions contemplated by the Loon Mountain Acquisition) (other than those
payable to professionals) are those specified on Exhibits 6(a) attached hereto,
all of which fees and expenses are the obligation solely of the Company. There
are no closing fees or similar amounts payable to George N. Gillett, Jr. or any
of his Affiliates in connection with the Loon Mountain Acquisition.
5.17. Government Regulation. Neither the Company nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act or the Investment Company Act of 1940, each
as amended.
5.18. Labor Relations. No dispute involving employees of Loon Mountain
(if involved in the Acquired Loon Mountain Businesses) or of the Company or any
of its Subsidiaries or the relationship of Loon Mountain, the Company or any of
its Subsidiaries with any such employees has resulted in, or could reasonably be
expected to result in, any Material Adverse Change.
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<PAGE> 23
5.19. Disclosure. Neither this Agreement nor any of the other Operative
Documents nor any other document, certificate or written statement furnished to
you by or on behalf of the Company or any of its Subsidiaries in connection with
the transactions contemplated by the Operative Documents (including, without
limitation, the Disclosure Documents), contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading in the light of the
circumstances under which such statements were made, it being understood that,
except as set forth in section 5.6, no representation or warranty is made with
respect to any projections or other prospective financial information. There is
no fact known to the Company (other than information concerning general economic
conditions known to the public generally) which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change which has not
been set forth in this Agreement, the other Operative Documents and the other
documents, certificates and written statements referred to above in this section
5.19.
6. Use of Proceeds.
(a) The proceeds of the sale of the Additional Securities
(together with the proceeds under the Permitted Debt Documents and
payments made by the Gillett Family Partnership in respect of its
interest in the Company) received by the Company and its Subsidiaries
at the Loon Mountain Closing will be used on the Loon Mountain Closing
Date to make the payments to the Persons and for the purposes specified
on Exhibit 6(a) attached hereto.
(b) The Company does not own, and will not, and will not
permit any of its Subsidiaries to, directly or indirectly, use any part
of the proceeds of the sale of the Securities for the purpose of
purchasing or carrying any "margin stock" within the meaning of
Regulation G (12 CFR Part 207) of the Board of Governors of the Federal
Reserve System (herein called a "margin security") or for the purpose
of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose which
might constitute the transactions contemplated by the Operative
Documents a "purpose credit" within the meaning of said Regulation G or
cause this Agreement or any of the other Operative Documents to violate
Regulation G or any other regulation of the Board of Governors of the
Federal Reserve System, or the Exchange Act or any other applicable
law, statute, regulation, rule, order or restriction.
7. Financial Statements and Information. The Company will furnish to you in
duplicate, so long as you shall be obligated to purchase Securities hereunder or
shall hold any of the Securities, and to each other institutional holder from
time to time of the Securities:
(a) as soon as available and in any event (i) within 40 days
after the end of each monthly accounting period and (ii) 45 days after
the end of each quarterly accounting period, in each fiscal year of the
Company, the consolidated balance
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<PAGE> 24
sheets of the Company and its Subsidiaries as at the end of such period
and the related consolidated and consolidating statements of
operations, stockholders' equity and cash flows for such period and for
the portion of such fiscal year ended on the last day of such period,
in each case setting forth in comparative form the corresponding
figures for the same period and portion of the next preceding fiscal
year (commencing with the financial statements for periods ending after
October 31, 1997) and the corresponding figures from the budgets for
such period and for the fiscal year which includes such period;
(b) as soon as available and in any event within 100 days
after the end of each fiscal year of the Company, the consolidated and
consolidating balance sheets of the Company and its Subsidiaries as at
the end of such year and the related consolidated and consolidating
statements of operations, stockholders' equity and cash flows for such
year, in each case setting forth in comparative form the corresponding
figures for the next preceding fiscal year (commencing with the
financial statements for the fiscal year ended October 31, 1998) and
the corresponding figures from the budget for such fiscal year, all in
reasonable detail and accompanied by the standard unqualified report on
such consolidated financial statements of the Company and its
Subsidiaries of Ernst & Young L.L.P. (or other accountants of
recognized national standing selected by the Company and satisfactory
to the Required Holders of each class of Securities), which report
shall (i) state that the audit of such accountants in connection with
such consolidated financial statements has been conducted in accordance
with generally accepted auditing standards and that such accountants
believe that such audit provides a reasonable basis for their opinion,
(ii) contain the other statements required from time to time by the
American Institute of Certified Public Accountants for an auditor's
standard unqualified opinion (and shall not contain any additional
explanatory paragraph concerning uncertainties or other matters), (iii)
include the opinion of such accountants that such consolidated
financial statements present fairly in all material respects the
consolidated financial position of the Company and its Subsidiaries as
at the end of such fiscal year and the consolidated results of
operations and cash flows for such fiscal year, in conformity with GAAP
and (iv) be accompanied by a separate certificate from such accountants
which shall state (A) that such accountants are familiar with the terms
of the Operative Documents and provide negative assurance relative to
compliance with the applicable covenants of the Operative Documents as
they relate to accounting matters and (B) whether or not their
examination has disclosed the existence, during or at the end of the
fiscal year covered by such financial statements and/or the date of
such certificate, of (x) any "reportable condition" (as defined in
Statement on Auditing Standards No. 60 issued by the Auditing Standards
Board of the American Institute of Certified Public Accountants) in the
internal control structure of the Company or any of its Subsidiaries,
(y) any Change of Control or (z) any Default or Event of Default and,
if their examination has disclosed such a condition or event,
specifying in reasonable detail the nature and period of existence
thereof;
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<PAGE> 25
(c) together with each delivery of financial statements
pursuant to sections 7(a) and 7(b), an Officers' Certificate which
shall:
(i) certify that such financial statements have been
prepared in accordance with GAAP (subject, in the case of any
unaudited financial statements, to normal year-end and audit
adjustments and the omission of footnotes) applied on a
consistent basis throughout the periods covered thereby and
present fairly in all material respects the consolidated
financial position and the consolidated results of operations
and cash flows of the Company and its Subsidiaries as at the
end of and for the periods covered thereby in conformity with
GAAP (subject, in the case of any unaudited financial
statements, to normal year-end and audit adjustments and the
omission of footnotes);
(ii) state that, after due inquiry, the signers do
not have knowledge of the existence, during the fiscal period
covered by such financial statements or as at the date of such
Officers' Certificate, of (A) any "reportable condition" in
the internal control structure of the Company or any of its
Subsidiaries, (B) any Change of Control or (C) any Default or
Event of Default, or, if such is not the case, specifying in
reasonable detail the nature and period of existence thereof
and what action the Company or the applicable Subsidiary has
taken, is taking and proposes to take with respect thereto;
(iii) in the case of each such Officers' Certificate
accompanying the quarterly financial statements delivered
pursuant to section 7(a) and the annual financial statements
delivered pursuant to section 7(b):
(A) show in reasonable detail all
computations required to demonstrate compliance,
during and at the end of the fiscal period covered by
such financial statements, with the provisions of
sections 14.5, 14.6, 14.7, 14.9 and 14.15; and
(B) include in reasonable detail
management's discussion and analysis of the results
of operations and the financial condition of the
Company and its Subsidiaries as at the end of and for
the fiscal period covered by such financial
statements, including a discussion of any significant
variation from the budgets for such period delivered
pursuant to section 7(h); and
(iv) if there shall exist any Subsidiary of the
Company as of the date of such Officers' Certificate which did
not exist as of the date of the last Officers' Certificate
delivered pursuant to this section 7(c), specify with respect
to each such Subsidiary the information called for by Exhibit
7(c)(iv), contain a brief description of the nature of each
such Subsidiary's business;
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<PAGE> 26
(d) as promptly as practicable (but in any event not later
than five days) after receipt thereof, copies of all material reports
or written comments (including, without limitation, audit reports,
so-called management letters and any other reports or communications
with respect to the internal control structure of the Company or any of
its Subsidiaries) submitted by independent accountants or other
management consultants;
(e) at such time as any securities of the Company or any
Subsidiary of the Company are publicly held, as promptly as practicable
(but in any event not later than five days) after the same are
available, copies of (i) all material press releases issued by the
Company or any Subsidiary of the Company, and all notices, proxy
statements, financial statements, reports and documents as the Company
shall send or make available generally to its stockholders or as any
Subsidiary of the Company shall send or make available generally to its
stockholders other than the Company and (ii) all periodic and special
reports, documents and registration statements (other than on Form S-8)
which the Company or any Subsidiary of the Company furnishes or files,
or any officer or director or stockholder of the Company or any of its
Subsidiaries furnishes or files with respect to the Company or any of
its Subsidiaries, with the Commission (or any analogous foreign
governmental authority) or any securities exchange;
(f) as promptly as practicable (but in any event not later
than five days) after any executive officer of the Company or any of
its Subsidiaries becomes aware of the occurrence of any of the
following conditions or events, an Officers' Certificate specifying in
reasonable detail the nature and period of existence thereof, what
action the Company or any of its Subsidiaries has taken, is taking and
proposes to take with respect thereto: (i) with respect to any Plan,
any reportable event, as defined in section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date hereof; (ii) the
taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Company or any ERISA Affiliate of a notice
from a Multiemployer Plan that such action has been taken by the PBGC
with respect to such Multiemployer Plan; or (iii) any event,
transaction or condition that could result in the incurrence of any
liability by the Company or any ERISA Affiliate pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or excise
tax provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, has resulted in, or
could reasonably be expected to result in, a Material Adverse Change;
(g) as promptly as practicable (but in any event not later
than three days) after any officer or management employee of the
Company or any of its Subsidiaries
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<PAGE> 27
obtains knowledge of the occurrence of any Default or Event of Default,
or of any condition or event which has resulted in, or could reasonably
be expected to result in, a Material Adverse Change, an Officers'
Certificate specifying in reasonable detail the nature and period of
existence thereof, what action the Company or any of its Subsidiaries
has taken, is taking and proposes to take with respect thereto and the
date, if any, on which it is estimated the same will be remedied;
(h) (i) as promptly as practicable (but in any event not later
than the first day of each fiscal year of the Company (commencing with
the fiscal year which begins on November 1, 1997)), (A) an annual
budget prepared on a monthly basis for the Company and its Subsidiaries
for such fiscal year (displaying anticipated balance sheets and
statements of operations, stockholders' equity and cash flows) and (B)
projections (prepared in substantially the same manner and containing
substantially the same information as the projections referred to on
Exhibit 5.6(b) attached hereto) for each of the five succeeding fiscal
years and (ii) promptly upon preparation thereof, any other significant
budgets and/or projections which the Company or any of its Subsidiaries
prepares and any revisions of such annual or other budgets and/or
projections;
(i) such other material information and notices relating to
the Acquired Businesses, the Company and/or any of its Subsidiaries as
shall be furnished to or received from (i) any bank, financial
institution or other Person to which the Company or any of its
Subsidiaries is indebted for borrowed money, including, without
limitation, any notice of default or event of default, and/or (ii) any
party to the ASC Acquisition Documents, the Fibreboard Acquisition
Documents or the Loon Mountain Acquisition Documents, including,
without limitation, any notice relating to any adjustment in the
purchase price paid for any of the Acquired Businesses or any claim for
indemnification, such information and notices to be furnished to the
holders of the Securities at the same time as it is furnished to, or
immediately after it is received from, any such bank, financial
institution or other Person or party; and
(j) such other information as from time to time may reasonably
be requested by you or by any Significant Holder.
8. Inspection. The Company will permit any Person designated by you or by any
Significant Holder on reasonable notice and at your expense or at the expense of
such Significant Holder (unless a Default or Event of Default shall have
occurred and be continuing, in which case, at the Company's expense), to visit
and inspect any of the properties of the Company and its Subsidiaries, to
examine its and their books and records (and to make copies thereof and take
extracts therefrom) and to discuss its and their affairs, finances and accounts
with and to be advised as to the same by, its and their officers, consultants,
counsel and accountants, all at such reasonable times and intervals as you or
such Significant Holder may desire.
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<PAGE> 28
9. Prepayment of Notes.
9.1. Optional Prepayment With Premium of Notes. At any time and from
time to time, the Company may, at its option, upon notice as set forth in
section 9.5, prepay all or any part (in an integral multiple of $1,000,000 and a
minimum of $5,000,000 or such lesser principal amount thereof as shall then be
outstanding) of the Notes upon the concurrent payment of an amount equal to the
Make Whole Amount.
9.2. Optional Prepayment of the Notes upon Sale of the Company or
Public Offerings.
(a) Prepayments at the Option of the Company. Concurrently
with the closing of a Sale of the Company or a Qualified Public
Offering, the Company may, at its option, upon notice as set forth in
section 9.4, prepay all (but not less than all) of the Notes upon the
concurrent payment to the holder or holders of the Notes of an amount
equal to the Special Prepayment Premium; provided that any prepayment
of the Notes pursuant to this section 9.2(a): (i) must be made with
available net proceeds of the Sale of the Company or the Qualified
Public Offering and (ii) must be made on the Sale/Offering Closing
Date. Each notice pursuant to section 9.4 of a prepayment under this
section 9.2(a) shall be accompanied by an Officers' Certificate
certifying and demonstrating that this section 9.2(a) is being complied
with in connection with such prepayment.
(b) Prepayments at the Option of the Holders of the Notes. If
any Sale of the Company or any offering and sale by the Company to the
public of its Common Stock (whether or not the same shall constitute a
Qualified Public Offering) is to occur, then not less than 30 days nor
more than 60 days prior to the occurrence of such Sale of the Company
or public offering, the Company will notify each holder of any Notes
thereof and shall specify the date upon which it is scheduled to occur.
If any holder of any Notes furnishes a written request for prepayment
to the Company not more than 30 days after receipt by such holder of
such notice from the Company, the Company will prepay the principal
amount of the Notes of such holder specified in such written request
(i) without premium, if such prepayment is to be made on account of any
offering and sale by the Company to the public of its Common Stock, and
(ii) together with a premium equal to the Make Whole Amount, if such
prepayment is to be made on account of a Sale of the Company. Each
prepayment pursuant to this section 9.2(b) shall occur on the date upon
which the Sale of the Company or the public offering is consummated,
and no prepayment requested pursuant to this section 9.2(b) by any
holder shall be due unless the Sale of the Company or the public
offering shall occur.
(c) For purposes of this section 9.2:
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(i) "IRR Equity Securities" shall mean (A) the
Warrants (other than the Additional John Hancock Warrants) and
(B) the Underlying Securities (other than any Underlying
Securities issued or issuable upon exercise of the Additional
John Hancock Warrants).
(ii) "IRR Notes" shall mean the Notes.
(iii) "IRR Securities" shall mean the IRR Notes and
the IRR Equity Securities.
(iv) "Qualified Public Offering" shall mean an
underwritten offering and sale by the Company to the public of
its Common Stock pursuant to an effective registration
statement filed by the Company with the Commission under the
Securities Act, provided that the aggregate net proceeds to
the Company from such offering and sale is at least
$35,000,000.
(v) "Required IRR Amount" shall mean, as applied to
any holder of IRR Securities, at any date, the amount which,
when added to the sum of all payments in cash actually
received by such holder in respect of such IRR Securities
prior to such date, would result in such holder earning an
internal "cash on cash" per annum rate of return on its IRR
Securities of 20% (determined in accordance with generally
accepted financial practice and calculated from the Closing
Date on which such IRR Securities were issued to the later of
(x) the Sale/Offering Closing Date and (y) the third
anniversary of the Closing Date on which such IRR Securities
were issued). In calculating the Required IRR Amount, it shall
be assumed that:
(A) the IRR Notes held by such holder are
prepaid in full without premium (notwithstanding the
provisions of this section 9 to the contrary) on the
Sale/Offering Closing Date;
(B) such holder receives on the
Sale/Offering Closing Date a payment in cash in
respect of its IRR Equity Securities equal to the
product of (1) the aggregate number of IRR Equity
Securities then held by and issuable to such holder
times (2) the per share value of each such IRR Equity
Security determined by reference to the imputed per
share price in the case of a Sale of the Company or
the net per share amount received by the Company in
the case of a Qualified Public Offering; and
(C) all cash payments on the IRR Securities
actually received by such holder on or before the
later of the Sale/Offering Closing Date and the third
anniversary of the Closing Date on which such IRR
Securities were issued are reinvested on the date of
receipt
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thereof and earn interest at a per annum rate equal
to the Treasury Yield plus 100 basis points as of the
date of such reinvestment from such date of receipt
through the later of the Sale/Offering Closing Date
and the third anniversary of the Closing Date on
which such IRR Securities were issued.
(vi) "Sale of the Company" shall mean the sale of all
or substantially all of the assets of the Company and its
Subsidiaries to a third party or parties (other than any
Affiliate of the Company).
(vii) "Sale/Offering Closing Date" shall mean the
date of the closing of the Sale of the Company or of the
Qualified Public Offering, as applicable.
(viii) "Special Prepayment Premium" shall mean the
lesser of: (A) the Required IRR Amount and (B) the Make Whole
Amount.
(ix) "Treasury Yield" at any time with respect to any
cash payments actually received on the IRR Securities by the
holder thereof on or before the later of the Sale/Offering
Closing Date and the third anniversary of the Closing Date on
which such IRR Securities were issued, shall mean and shall be
determined by reference to the applicable display on the
Bloomberg Financial Markets Service as of 10:00 A.M., Boston
time, on the date each such payment is received (or, if such
display is no longer available, any publicly available source
of similar market data which is generally recognized as
reliable and is selected by the Required Holders of the
Notes), and shall be the yield on actively traded United
States Treasury securities adjusted to a maturity date on the
later of the Sale/Offering Closing Date and the third
anniversary of the Closing Date on which such IRR Securities
were issued (the "Remaining Life"). If the Remaining Life is
not equal to the maturity of a United States Treasury security
for which a yield is given, the Treasury Yield shall be
obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of the
two closest United States Treasury securities for which such
yields are given, except that if the Remaining Life is less
than one year, the average yield on actively traded United
States Treasury securities adjusted to a constant maturity of
one year shall be used. The Treasury Yield shall be computed
to the fifth decimal place (one-thousandth of a percentage
point) and then rounded to the fourth decimal point
(one-hundredth of a percentage point).
9.3. Allocation of Partial Prepayments of Notes. In the case of each
partial prepayment of the Notes under section 9.1, the principal amount to be
prepaid shall be allocated among the Notes at the time outstanding (excluding
any Notes at the time owned by the Company or any Affiliate of the Company), in
proportion, as nearly as practicable, to
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the respective unpaid principal amounts thereof, with adjustments, to the extent
practicable, to compensate for any prior prepayments not made exactly in such
proportion.
9.4. Notice of Optional Prepayments of Notes. In the case of each
prepayment under sections 9.1 or 9.2, the Company shall give written notice
thereof to each holder of any Notes not less than 30 nor more than 60 days prior
to the date fixed for such prepayment. Each such notice shall set forth: (a) the
date fixed for prepayment; (b) the aggregate principal amount of Notes to be
prepaid on such date; and (c) the aggregate principal amount of Notes held by
such holder to be prepaid on such date, the amount of accrued interest and, in
the case of any prepayment under section 9.1 or 9.2, an estimation of the
Special Prepayment Premium and Make Whole Amount, if any, to be paid to such
holder on such date (together with the calculation of such estimated Special
Prepayment Premium or Make Whole Amount, as the case may be, which calculation
shall be satisfactory to each holder of the Notes to be prepaid).
9.5. Maturity; Accrued Interest; Surrender, etc. of Notes. In the case
of each prepayment of all or any part of any Note, the principal amount to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the premium, if any, due thereon. Any Note prepaid in full shall be
surrendered to the Company at the Company's principal place of business promptly
following prepayment and cancelled and shall not be reissued, and no Note shall
be issued in lieu of any prepaid principal amount of any Note.
9.6. Purchase of Notes. The Company will not, and will not permit any
Affiliate of the Company to, directly or indirectly, purchase or otherwise
acquire, or offer to purchase or otherwise acquire, any outstanding Notes except
(a) by way of payment or prepayment in accordance with the provisions of the
Notes and this Agreement or (b) pursuant to an identical offer made by the
Company pro rata and on the same terms to each holder of the Notes at the time
outstanding. Any such offer shall provide each holder of Notes with sufficient
information to enable it to make an informed decision with respect to such offer
and shall remain open for at least 30 days. If the holders of more than 50% of
the principal amount of the Notes then outstanding accept such offer, the
Company shall promptly notify the remaining holders of the Notes of such fact
and the expiration date for the acceptance by such remaining holders of such
offer shall be extended by the number of days necessary to give each such
remaining holder at least 10 days from its receipt of such notice to accept such
offer.
9.7. Payment on Non-Business Days. If any amount hereunder or under the
Notes shall become due on a day which is not a Business Day, such payment shall
be due on the next succeeding Business Day.
10. [Intentionally Omitted.]
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11. Registration, etc.
11.1. Registration on Request.
(a) In case the Company shall receive from one or more holders
of any Registrable Shares a written request or requests that the
Company effect any registration, qualification and/or compliance of any
Registrable Shares held by (or issuable to) such holder or holders, and
specifying the intended method of offering, sale and distribution, the
Company will:
(i) promptly give written notice of the proposed
registration, qualification and/or compliance to each holder
of any Registrable Shares; and
(ii) as soon as practicable, effect such
registration, qualification and/or compliance (including,
without limitation, the execution of an undertaking for
post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and
appropriate compliance with exemptive regulations issued under
the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or
facilitate the sale and distribution of such amount of
Registrable Shares as is specified in a written request or
requests, made within 30 days after receipt of such written
notice from the Company, by any holder or holders of any
Registrable Shares.
(b) The obligations of the Company under this section 11.1 are
subject to the following qualifications:
(i) except as provided in section 11.1(b)(iv), the
Company shall only be obligated to effect four registrations
pursuant to this section 11.1, of which (A) two shall be
effected only if the Company shall have been requested to do
so by the holder or holders of 67% or more of the Purchased
Common Shares at the time outstanding and (B) two shall be
effected only if the Company shall have been requested to do
so by the holder or holders of 67% or more of the Underlying
Securities at the time outstanding and/or issuable;
(ii) except as provided in section 11.1(b)(v), the
Company shall not include in any registration, qualification
or compliance requested pursuant to this section 11.1 any
other securities (including, without limitation, those to be
issued and sold by the Company), without the prior written
consent of the holder or holders of 67% or more of the
Registrable Shares to be included in such registration,
qualification or compliance;
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(iii) the Company shall pay all Registration Expenses
related to any registration, qualification and compliance
requested pursuant to this section 11.1;
(iv) if, in connection with any registration of
Registrable Shares pursuant to this section 11.1, the holders
of Registrable Shares requesting registration are unable for
any reason to include in such registration all of the
Registrable Shares for which registration has been requested
(including as a result of any limitations imposed as provided
in section 11.1(b)(v)), then such holder or holders of the
Registrable Shares shall be entitled to an additional
registration of Registrable Shares pursuant to this section
11.1; and
(v) if, in connection with any underwritten offering
pursuant to this section 11.1, the managing underwriter(s)
shall suggest a limitation on the number or kind of securities
which may be included in any such registration because, in its
reasonable judgment, such limitation is necessary to effect an
orderly public distribution or to prevent an adverse effect
upon such offering, then there shall be included in such
registration:
(A) first, the Registrable Shares then
requested to be registered by the holders thereof
(and, if not all of such Registrable Shares can be
included therein on account of such limitation, then
the Registrable Shares to be included in such
registration shall be allocated among the holders
thereof at the time requesting registration in
proportion to the aggregate number of Registrable
Shares then owned by or issuable to each such
holder); and
(B) second, if all of the Registrable Shares
then requested to be registered have been so
included, any other securities (including, without
limitation, those to be issued and sold by the
Company) which are to be included in such
registration (including, without limitation, any
securities to be sold by the Gillett Family
Partnership, George N. Gillett, Jr. or any other
member of his Family).
11.2. Incidental Registration.
(a) If the Company at any time or from time to time shall
determine to effect the registration, qualification and/or compliance
of any of its Shares (whether in connection with an offering by the
Company or others) (otherwise than pursuant to a registration on a form
inappropriate for an underwritten public offering or relating solely to
securities to be issued in a merger, acquisition of the stock or assets
of another entity or in a similar transaction), then, in each such case
(including the Company's initial public offering), the Company will:
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(i) promptly give written notice of the proposed
registration, qualification and/or compliance (which shall
include a list of the jurisdictions in which the Company
intends to register or qualify such securities under the
applicable blue sky or other state securities laws) to each
holder of any Registrable Shares; and
(ii) include among the Shares which it then registers
or qualifies all Registrable Shares specified by any holder
thereof in a written request or requests, made within 30 days
after receipt of such written notice from the Company.
(b) The obligations of the Company under this section 11.2 are
subject to the following qualifications:
(i) the Company shall pay all Registration Expenses
related to any registration, qualification or compliance
requested pursuant to this section 11.2; and
(ii) if, in connection with any underwritten offering
pursuant to this section 11.2, the managing underwriter(s)
shall suggest a limitation on the number or kind of securities
which may be included in any such registration because, in its
reasonable judgment, such limitation is necessary to effect an
orderly public distribution or to prevent an adverse effect
upon such offering, then there shall be included in such
registration:
(A) first, the securities to be issued
and sold by the Company;
(B) second, if all of the securities to be
issued and sold by the Company have been so included,
the Registrable Shares then requested to be
registered by the holders thereof and any shares of
Common Stock then requested to be registered by the
Gillett Family Partnership (the "Gillett Shares")
(and, if not all of such Registrable Shares and
Gillett Shares can be included therein on account of
such limitation, then the Registrable Shares and
Gillett Shares to be included in such registration
shall allocated among the holders thereof at the time
requesting registration in proportion to the
aggregate number of Registrable Shares and Gillett
Shares then owned by or issuable to each such
holder); and
(C) third, if all of the securities to be
issued and sold by the Company and all of the
Registrable Shares and Gillett Shares then requested
to be registered have been so included, any
securities to be offered for the account of any
Person other than the Company and the holders of the
Registrable Shares and Gillett Shares.
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11.3. Permitted Registration; Registration on Form S-3.
(a) If and to the extent that any holder or holders of any
Registrable Shares shall have, at the time of delivery of the written
request referred to in section 11.2, no present intention of selling or
distributing such securities, the Company shall be obligated to effect
the registration, qualification and compliance of such securities of
such holder or holders only (i) if and to the extent, in each case,
that such registration, qualification and compliance are at the time
permitted by the applicable statutes or rules and regulations
thereunder or the practices of the governmental authority concerned and
(ii) the Company is eligible to file such registration statement on
Form S-3 (or any successor form) under the Securities Act.
(b) In addition to the rights of the holders of Registrable
Shares under sections 11.1 and 11.2, upon the written request by any
holder of any Registrable Shares, the Company shall use its best
efforts to effect the registration, qualification and compliance of all
of the Registrable Shares of the holder making such request, provided
that the Company shall be obligated to effect a registration,
qualification and compliance requested pursuant to this section 11.3(b)
only after November 27, 1999 and only if the Company is then eligible
to file the related registration statement on Form S-3 (or any
successor form) under the Securities Act. The Company shall pay all
Registration Expenses related to each registration, qualification and
compliance requested pursuant to this section 11.3(b).
11.4. Registration Procedures. In the case of each registration,
qualification and/or compliance contemplated by this section 11, the Company
will keep the holder or holders of Registrable Shares advised in writing as to
the initiation of proceedings for such registration, qualification and
compliance and as to the completion thereof, and will advise each such holder,
upon request, of the progress of such proceedings. In addition, the Company will
follow procedures customarily observed by issuers in registered public
offerings, and accord to the holder or holders of Registrable Shares all rights
(including, without limitation, the right to perform appropriate "due
diligence") customarily accorded to selling stockholders in secondary
distributions and to managing underwriters if the transaction in question is or
were an underwritten public offering. At the expense of the Company or of the
party or parties bearing the expenses of such registration, qualification and
compliance, the Company will (a) keep such registration, qualification and
compliance current and effective by such action as may be necessary or
appropriate, including, without limitation, the filing of post-effective
amendments and supplements to any registration statement or prospectus, for such
period as is necessary to permit the exercise of the Warrants and the sale and
distribution of the Registrable Shares pursuant thereto, provided that, except
in the case of a registration permitted by section 11.3, such period shall not
exceed 90 days, (b) take all necessary action under any applicable blue sky or
other state securities law to permit such sale and/or distribution, all as
requested by the holder or holders of Registrable Shares included therein,
provided that the Company shall not be required to so register or qualify the
Registrable Shares in any jurisdiction if, solely as a result thereof, the
Company must qualify generally to do business therein or consent to general
service of process therein,
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(c) comply with applicable requirements of all regulatory entities, including,
without limitation, the National Association of Securities Dealers, Inc., (d)
furnish each holder of Registrable Shares included therein such number of
registration statements, prospectuses, supplements, amendments, offering
circulars and other documents incidental thereto as such holder from time to
time may reasonably request, (e) list all Registrable Shares on each securities
exchange on which securities of the same class are then listed and (f) furnish
(or cause to be furnished) to each holder of Registrable Shares, all
undertakings, agreements, certificates, opinions, financial statements and
"comfort letters" of the sort customarily provided to selling stockholders in
secondary distributions and to the managing underwriters, if the transaction in
question is or were an underwritten public offering. Each holder of Registrable
Shares will furnish to the Company upon request by the Company such information
regarding such holder and any distribution of Registrable Shares proposed by
such holder as may be required to consummate any registration, qualification
and/or compliance contemplated by this section 11.
11.5. Indemnification. Without limiting the generality of section 21,
the Company will indemnify, defend and hold harmless each holder of Registrable
Shares included in any registration, qualification and/or compliance
contemplated by this section 11 and each underwriter of such securities, and
each Person, if any, who controls each such holder and underwriter within the
meaning of the Securities Act, and their respective directors, officers,
employees, agents, advisors and Affiliates (each, an "Indemnified Person"), to
the fullest extent enforceable under applicable law against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, supplement, amendment,
offering circular or other document related to any registration, qualification
or compliance or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or any violation (or alleged violation) of the Securities Act or
other securities laws in connection with any such registration, qualification or
compliance, and will reimburse each such Indemnified Person for any legal or any
other expenses reasonably incurred in connection with investigating and/or
defending (and/or preparing for any investigation or defense of) any such claim,
loss, damage, liability, action or violation; provided that the Company will not
be liable in any such case to any such Indemnified Person if, but only to the
extent that, any such claim, loss, damage, liability, action, violation or
expense is finally determined to arise out of or result from any untrue
statement in or omission from written information furnished to the Company by an
instrument duly executed by such Indemnified Person and stated to be
specifically for use therein. Each holder of Registrable Shares will, if
securities held by such holder are included in a registration effected pursuant
to this section 11, indemnify, defend and hold harmless the Company, each of its
directors and officers who signs the related registration statement, and each
Person, if any, who controls the Company within the meaning of the Securities
Act, against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, supplement, amendment, offering circular or other document or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make
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the statements therein not misleading, and will reimburse the Company and such
directors, officers or Persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending (and/or preparing for any
investigation or defense of) any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) was made in (or
omitted from) such registration statement, prospectus, supplement, amendment,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
such holder and stated to be specifically for use therein; provided that the
liability of any such holder under this section 11.5 shall be limited to the net
sales proceeds actually received by such holder as a result of the sale by it of
securities in such registration.
11.6. Restrictions on Other Agreements. The Company will not grant any
right relating to the registration of its securities if the exercise thereof
interferes with or is inconsistent with or will delay (or could reasonably be
expected to interfere with or be inconsistent with or delay) the exercise and
enjoyment of any of the rights granted under this section 11. The Company will
not permit any of its Subsidiaries to effect, or to grant any right relating to,
the registration of its securities (except upon the exercise of foreclosure
remedies under the Permitted Debt Documents and Permitted Refinancing
Documents).
12. Retention of Certain Documents. The Company will keep at its principal
executive office a true copy of each of the Operative Documents and each other
agreement pursuant to which the Company or any of its Subsidiaries has borrowed
money or issued securities (or has the right or obligation to do the same) as at
the time in effect, including all exhibits thereto and all amendments,
supplements, waivers and consents in respect thereof, and upon request will
furnish copies thereof to, and will cause the same to be available for
inspection at such office during normal business hours by, any institutional
holder of any of the Securities.
13. Board Visitation Rights. The Required Holders of the Notes shall have the
right, as a group, to appoint one representative who shall: (a) receive notice
of all meetings (both regular and special and including any executive or
"private" session) of the board of directors (or other governing body) of the
Company and its Subsidiaries and each committee of any such board (such notice
to be delivered or mailed as specified in section 23 at the same time as notice
is given to the members of any such board and/or committee); (b) be entitled to
attend (or, at the option of such representative, monitor by telephone) all such
meetings; (c) receive all notices, information and reports which are furnished
to the members of any such board and/or committee at the same time and in the
same manner as the same is furnished to such members; (d) be entitled to
participate in all discussions conducted at such meetings and (e) receive as
soon as available copies of the minutes of all such meetings. If any action is
proposed to be taken by any such board and/or committee by written consent in
lieu of a meeting, the Company will give written notice thereof to such
representative, which notice shall describe in reasonable detail the nature and
substance of such proposed action and shall be delivered at the same time as
notice is given to the members of such board and/or committee but in no event
later than seven days prior to the
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date upon which such action is proposed to be taken. The Company will furnish
such representative with a copy of each such written consent not later than five
days after it has been signed by its last signatory. Such representative shall
not constitute a member of any such board and/or committee and shall not be
entitled to vote on any matters presented at meetings of any such board and/or
committee or to consent to any matter as to which the consent of any such board
and/or committee shall have been requested. The board of directors of the
Company shall meet not less frequently than once during each fiscal quarter. The
Company will pay the reasonable out-of-pocket expenses of such representative
incurred in connection with attending such meetings and/or exercising any rights
hereunder, but the Company will not be obligated to otherwise compensate such
representative in connection with this section 13.
14. Covenants of the Company. From and after the date of this Agreement, and
thereafter so long as any of the Securities shall remain outstanding, the
Company will duly perform and observe, for the benefit of the holders of the
Securities, each and all of the covenants and agreements hereinafter set forth,
provided that, if all of the Notes shall have been paid in full, the Company
will not be obligated to perform and observe the covenants and agreements set
forth in sections 14.2 (other than 14.2(b) and (e)), 14.4, 14.5, 14.7, 14.9,
14.18, 14.19 or 14.21:
14.1. Books of Record and Account; Reserves. The Company will, and will
cause each of its Subsidiaries to (a) at all times keep proper books of record
and account in which full, true and correct entries shall be made of its
transactions in accordance with GAAP and (b) set aside on its books from its
earnings for each fiscal year all such proper reserves as shall be required in
accordance with GAAP in connection with its business.
14.2. Payment of Taxes; Existence; Maintenance of Properties;
Compliance with Laws; Lines of Business; Proprietary Rights. The Company will,
and will cause each of its Subsidiaries to:
(a) pay and discharge promptly as they become due and payable
all material taxes, assessments and other governmental charges or
levies imposed upon it or its income or upon any of its property, as
well as all claims of any kind (including claims for labor, materials
and supplies) which, if unpaid, might by law become a Lien upon its
property; provided that no such Person shall be required to pay any
such tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good
faith by appropriate proceedings promptly initiated and diligently
conducted and if it shall have set aside on its books such reserves, if
any, with respect thereto as are required by GAAP; provided, further,
that the Company will, and will cause each of its Subsidiaries to, pay
any such tax, assessment, charge, levy or claim prior to the
commencement of any proceeding to foreclose any Lien securing the same
(unless foreclosure is effectively stayed);
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(b) do or cause to be done all things necessary to preserve
and keep in full force and effect its existence (except that nothing in
this section 14.2(b) shall prohibit the consummation of any merger,
consolidation or other business combination permitted under sections
14.12, 14.13 or 14.15);
(c) maintain and keep its material properties in good repair,
working order and condition, so that the business carried on in
connection therewith may in the reasonable judgment of the Company be
properly and advantageously conducted at all times;
(d) comply in all respects with all applicable laws, statutes,
rules, regulations and orders of, and all applicable restrictions
imposed by, all governmental authorities in respect of the conduct of
its business and the ownership of its property (including, without
limitation, all Environmental Laws), except where the failure to so
comply has not resulted in, and could not reasonably be expected to
result in, a Material Adverse Change; provided that no such Person
shall be required by reason of this section 14.2(d) to comply therewith
at any time while it shall be contesting its obligation to do so in
good faith by appropriate proceedings promptly initiated and diligently
conducted, and if it shall have set aside on its books such reserves,
if any, with respect thereto as are required by GAAP. Without limiting
the generality of the foregoing, the Company will, and will cause its
Subsidiaries to, (i) comply in all material respects with and maintain
a system to assure and monitor continued compliance in all material
respects with, and to prevent the possibility of any material liability
under, all Environmental Laws and (ii) comply in all material respects
with the requirements and recommendations set forth in the
Environmental Action Plan furnished to John Hancock under letter dated
November 7, 1996;
(e) engage only in the Business substantially in the manner
described in the Disclosure Documents and keep all of its assets in the
United States of America or Canada; and
(f) own or have a valid license for or the legal right to all
material Proprietary Rights and Licenses used by it in the conduct of
its business.
14.3. Insurance; Key Man Insurance.
(a) The Company will, and will cause each of its Subsidiaries
to, maintain with financially sound and reputable insurers, insurance
with respect to its properties and businesses against liability, loss
or damage of each kind customarily insured against by Persons of
established reputation engaged in the same or a similar business and
similarly situated, in such amounts and by such methods as is prudent
and customary for such Persons.
(b) The Company shall have obtained and at all times (so long
as any Notes are outstanding) shall maintain the Gillett Key Man
Insurance. So long as any
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Notes are outstanding, such insurance shall be collaterally assigned to
the holders of the Notes pursuant to one or more collateral assignments
duly recorded with or acknowledged by the issuers of such key man
insurance, such that the holders of the Notes shall have a fully
perfected first and prior Lien thereon.
14.4. Limitation on Discount or Sale of Receivables. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
discount or sell any of their accounts receivable, except that the Company or
any Subsidiary of the Company may settle doubtful accounts in the ordinary
course of business.
14.5. Limitation on Funded Debt and Current Debt. The Company will not,
and will not permit any of its Subsidiaries to, be liable or create, assume,
incur, guarantee, or in any manner become liable, contingently or otherwise, in
respect of any Funded Debt or Current Debt other than:
(a) Funded Debt evidenced by the Notes;
(b) Funded Debt and/or Current Debt owing by (i) the Company
to any Wholly-Owned Subsidiary, or (ii) any Wholly-Owned Subsidiary to
the Company or any other Wholly-Owned Subsidiary, provided that, both
at the time of and immediately after giving effect to the incurrence
thereof and the retirement of any Indebtedness which is concurrently
being retired, no Default or Event of Default shall have occurred and
be continuing;
(c) in the case of any Subsidiary of the Company, Funded Debt
and/or Current Debt arising under the Permitted Debt Documents or any
Permitted Refinancing Documents or not otherwise permitted under this
section 14.5, provided that:
(i) in the case of Funded Debt and Current Debt
incurred under the Permitted Debt Documents or not otherwise
permitted under this section 14.5, the aggregate outstanding
principal amount of all such Funded Debt and Current Debt and
all other outstanding Funded Debt and Current Debt of the
Company and its Subsidiaries (including the Notes but
excluding Funded Debt and Current Debt of the kind permitted
under section 14.5(d)) shall not exceed $175,000,000 (plus any
increase in the Company's Funded Debt and Current Debt
resulting from the "pik" provisions in the Notes) at any time
on or after the Loon Mountain Closing Date; and
(ii) in the case of any Funded Debt and Current Debt
incurred under any Permitted Refinancing Documents, (A) the
maximum aggregate principal amount of the Funded Debt and/or
Current Debt under the Permitted Refinancing Documents shall
not exceed at any time the maximum aggregate principal amount
permitted to be incurred under the terms of the Funded Debt
and/or Current Debt being extended, refinanced, refunded or
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renewed, and (B) both at the time of and immediately after
giving effect thereto, and the retirement of any Indebtedness
which is concurrently being retired, no Default or Event of
Default shall have occurred and be continuing;
(d) Funded Debt and/or Current Debt of the kind described in,
and which is secured by Liens permitted under, section 14.9(d), 14.9(g)
and/or 14.9(h), provided that:
(i) both at the time of and immediately after giving
effect to the incurrence thereof and the retirement of any
Indebtedness which is concurrently being retired, no Default
or Event of Default shall have occurred and be continuing;
(ii) the aggregate principal amount of any Funded
Debt and Current Debt incurred pursuant to this section
14.5(d) shall not exceed at any time the Fair Market Value of
the property securing such Funded Debt and Current Debt; and
(iii) the aggregate outstanding principal amount of
all Funded Debt and Current Debt incurred pursuant to this
section 14.5(d) shall not exceed $5,000,000 at any time.
For purposes of this section 14.5, any Person becoming a Subsidiary of the
Company after the date hereof shall be deemed, at the time it becomes a
Subsidiary, to have incurred all of its then outstanding Funded Debt and Current
Debt, and any Person extending, refinancing, refunding or renewing any Funded
Debt or Current Debt shall be deemed to have incurred such Funded Debt or
Current Debt, as the case may be, at the time of such extension, refinancing,
refunding or renewal.
14.6. Limitation on Restricted Payments; Required Distributions to
Company by Subsidiaries.
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, at any time, declare or make,
or incur any liability to declare or make, any Restricted Payment,
except that:
(i) Booth Creek Ski Holdings may pay management fees
required to be paid pursuant to the Gillett Management
Agreement (as in effect on the Loon Mountain Closing Date),
if:
(A) both at the time of making such payment
and after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing;
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(B) the aggregate amount of such management
fees paid during any fiscal year of the Company shall
not exceed the lesser of (1) $750,000 and (2) the sum
of (x) $350,000 plus (y) 2.50% of Consolidated EBITDA
in excess of $25,000,000 for the then most recently
completed fiscal year of the Company;
provided, that if management fees required to be paid pursuant
to the Gillett Management Agreement are not permitted to be
paid under the terms of section 14.6(a)(i)(A) (such fees being
hereinafter referred to as "Blocked Management Fees"), such
Blocked Management Fees shall accrue without interest and may
be paid at such time as no Default or Event of Default shall
exist;
(ii) the Company may purchase Management Options or
shares of Class A Common Stock issued upon exercise of
Management Options if (A) both at the time of making such
purchase and after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing; (B) each
such purchase is made on account of the death or termination
of employment of the individual to whom such securities were
initially issued and (C) the aggregate amount paid or to be
paid in cash or otherwise for all such purchases does not
exceed $1,000,000; and
(iii) the Company may purchase Purchased Common
Shares, Warrants and/or Underlying Securities offered to it
pursuant to section 10 of the Stockholders Agreement if, both
at the time of and after giving effect to such purchase, no
Default or Event of Default shall have occurred and be
continuing.
(b) The Company will not, and will not permit any of its
Subsidiaries to, enter into or be bound by any Restricted Payment
Provisions (or any provisions having the same effect) other than the
Restricted Payment Provisions contained in the Permitted Debt Documents
or the Permitted Refinancing Documents.
(c) The Company shall cause each of its Subsidiaries to pay
cash dividends to the Company (or, if such Subsidiary is not directly
owned by the Company, the "parent" Subsidiary of such Subsidiary) in
the maximum amount that each of its Subsidiaries may pay, subject to
the provisions of applicable law and of the Permitted Debt Documents
and any Permitted Refinancing Documents, and the Company shall deposit
such amount in the Interest Payment Reserve Account, provided that no
Subsidiary shall be obligated to pay such dividends on any date if, as
of such date, the Company shall have on deposit in the Interest Payment
Reserve Account an aggregate amount equal to the sum of (i) all accrued
and unpaid interest on the Notes (determined without regard to the
provisions in the Notes permitting the Company to capitalize accrued
interest) and (ii) the aggregate amount of interest that will accrue on
the Notes during the period of twelve months commencing on such
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date (determined without regard to the provisions in the Notes
permitting the Company to capitalize accrued interest).
14.7. Financial Covenants.
(a) Leverage Ratio. The Company will not permit, on any date
during any period specified below, the ratio of Consolidated Total Debt
outstanding on such date to Consolidated Cash Flow for the period of
four consecutive fiscal quarters of the Company ending on, or most
recently ended prior to, such date, to exceed the applicable ratio
specified below:
Period Ratio
From and after the Loon Mountain Closing Date 8.80 to 1.00
(b) Fixed Charge Coverage Ratio. The Company will not permit,
on any date during any period specified below, the ratio of
Consolidated Cash Flow for the period of four consecutive fiscal
quarters of the Company ending on, or most recently ended prior to,
such date to Consolidated Fixed Charges for such period, to be less
than the applicable ratio specified below:
Period Ratio
From and after the Loon Mountain Closing Date 0.96 to 1.00
(c) Interest Charge Coverage Ratio. The Company will not
permit, on any date during any period specified below, the ratio of
Consolidated Cash Flow for the period of four consecutive fiscal
quarters of the Company ending on, or most recently ended prior to,
such date to Consolidated Interest Charges for such period, to be less
than the applicable ratio specified below:
Period Ratio
From and after the Loon Mountain Closing Date 1.00 to 1.00
(d) The Company shall not, and shall not permit any of its
Subsidiaries to, engage in any Derivative Transactions other than an
"interest rate swap" upon customary and prudent terms with respect to
all or any portion of the Funded Debt and Current Debt under the BKB
Revolving Credit Agreement which bears interest at a floating rate.
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14.8. Limitation on Investments.
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, own, declare, make or
authorize any Restricted Investment except for the purchase of the
preferred stock of Ski Lifts, Inc. by DRE, L.L.C. from the former
shareholders of Ski Lifts, Inc.
(b) Each Person which becomes a Subsidiary of the Company
after the Closing Date will be deemed to have made, on the date such
Person becomes a Subsidiary of the Company, all Investments of such
Person in existence on such date. Investments in any Person that ceases
to be a Subsidiary of the Company (but in which the Company or another
Subsidiary continues to maintain an Investment) will be deemed to have
been made on the date on which such Person ceases to be a Subsidiary of
the Company.
14.9. Limitation on Liens. The Company will not, and will not permit
any of its Subsidiaries to, create or suffer to exist any Lien in respect of any
property of any character (whether owned on the date hereof or hereafter
acquired), including any income or profits therefrom (unless it makes, or causes
to be made, effective provision whereby the Notes will be equally and ratably
secured with any and all obligations thereby secured, such security to be
pursuant to an agreement reasonably satisfactory to the Required Holders of the
Notes and, in any such case, the Notes shall have the benefit, to the fullest
extent that, and with such priority as, the holders of the Notes may be entitled
under applicable law, of an equitable Lien on such property) other than:
(a) Liens for taxes, assessments or other governmental charges
which are not yet due and payable or the payment of which is not at the
time required by section 14.2(a);
(b) any attachment or judgment Lien, provided that the same
does not constitute an Event of Default under section 16.1(i);
(c) Liens, charges and encumbrances (other than those (x)
created by any Environmental Law or by section 4068 of ERISA and (y) of
the kind referred to in any other clause of this section 14.9) which
(i) are incurred in the ordinary course of business and which are
incidental to the conduct of the business of the Company and its
Subsidiaries and the ownership of its and their property, (ii) are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit, (iii) do not in the aggregate materially detract
from the value of the property of the Company or its Subsidiaries or
materially impair the use thereof in the operation of its or their
business and (iv) do not (and could not reasonably be expected to)
materially adversely affect the rights of the holders of the Notes or
the validity, enforceability or priority of the Liens arising under the
Security Documents, including the following Liens (but subject in any
event to the foregoing terms of this clause (c)):
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(A) pledges or deposits to secure
obligations under workers' compensation laws or
similar legislation, including Liens or judgments
thereunder which are not currently dischargeable;
(B) pledges or deposits to secure
performance in connection with bids, tenders or
contracts (other than contracts for the payment of
money) made in the ordinary course of business (to
the extent otherwise permitted by the terms of this
Agreement);
(C) deposits to secure public or
statutory obligations of the Company or any of its
Subsidiaries;
(D) materialmen's, mechanics', carriers',
workers', repairmen's or other like Liens arising in
the ordinary course of business (to the extent such
Liens are not required to be discharged under section
14.2(a)), or deposits to obtain the release of such
Liens;
(E) deposits to secure or in lieu of surety,
appeal or customs bonds to which the Company or any
of its Subsidiaries is a party;
(F) Liens created by or resulting from any
litigation or legal proceeding which is currently
being contested in good faith by appropriate
proceedings or other appropriate actions promptly
initiated and diligently conducted (to the extent
such Liens are not required to be discharged under
section 14.2(a));
(G) landlords' Liens (imposed by law) under
leases to which the Company or any of its
Subsidiaries is a party (to the extent otherwise
permitted by the terms of this Agreement); and
(H) zoning restrictions, easements, rights
of way, encumbrances, licenses and restrictions on
the use of real property for minor defects or
irregularities in title thereto which (individually
and in the aggregate) do not materially impair the
use of such property in the operation of the business
of the Company or any of its Subsidiaries or the
value of such property for the purpose of such
business;
(d) Liens existing on the Loon Mountain Closing Date, if the
same are specified on Exhibit 5.9 attached hereto;
(e) any Lien securing Funded Debt and Current Debt permitted
under section 14.5(c);
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(f) any Lien renewing, extending, refinancing or refunding any
Lien permitted by clause (d), (e) or (g) of this section 14.9,
including all Liens arising under any Permitted Refinancing Documents,
provided that (i) the principal amount of the Funded Debt and Current
Debt secured by such Lien immediately prior to such extension, renewal
or refunding is not increased or the maturity thereof reduced, (ii)
such Lien is not extended to any other property, and (iii) immediately
after such renewal, extension, refinancing or refunding, no Default or
Event of Default would exist;
(g) any Lien created to secure all or any part of the purchase
price, or to secure Funded Debt and/or Current Debt incurred or assumed
to pay all or any part of the purchase price or cost of construction,
of tangible or intangible property (or any improvement thereon)
acquired or constructed by the Company or a Subsidiary after the date
of the Closing, provided that
(i) any such Lien shall extend solely to the item or
items of such property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument
originally creating such Lien, other property (or improvement
thereon) which is an improvement to or is acquired for
specific use in connection with such acquired or constructed
property (or improvement thereon) or which is real property
being improved by such ac quired or constructed property (or
improvement thereon),
(ii) the principal amount of the Funded Debt and
Current Debt secured by any such Lien shall be permitted under
section 14.5(d); and
(iii) any such Lien shall be created
contemporaneously with, or within 120 days after, the
acquisition or construction of such property;
(h) any Lien existing on property of a Person immediately
prior to its being consolidated with or merged into the Company or a
Subsidiary or its becoming a Subsidiary, or any Lien existing on any
property acquired by the Company or any Subsidiary at the time such
property is so acquired (whether or not the Funded Debt and/or Current
Debt secured thereby shall have been assumed), provided that (i) no
such Lien shall have been created or assumed in contemplation of such
consolidation or merger or such Person's becoming a Subsidiary or such
acquisition of property, (ii) each such Lien shall extend solely to the
item or items of property so acquired and, if required by the terms of
the instrument originally creating such Lien, other property which is
an improvement to or is acquired for specific use in connection with
such acquired property and (iii) the principal amount of the Funded
Debt and Current Debt shall be permitted under section 14.5(d);
(i) other Liens not otherwise permitted by clauses (a) through
(h) of this section 14.9, provided that all Funded Debt and Current
Debt secured thereby is permitted under section 14.5(c); and
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(j) any Lien arising under any of the Security Documents to
secure the Notes.
Notwithstanding the foregoing provisions of this section 14.9 or any
other provisions of the Operative Documents, the Company will not permit (x) any
of the Shares of Booth Creek Ski Holdings to be subject to any Lien, other than
those arising under the Pledge Agreement and (y) any of the Shares of any of its
Subsidiaries to be pledged to secure the Senior 144A Notes.
14.10. Limitation on Transactions with Affiliates. The Company will
not, and will not permit any of its Subsidiaries to, engage in any transaction
(including, without limitation, the making of any Investment, the purchase, sale
or exchange of any properties and assets or the rendering of any services) with
an Affiliate of the Company or of any of its Subsidiaries (other than (x) any
transaction exclusively between or among the Company and/or one or more
Wholly-Owned Subsidiaries and (y) the payment of reasonable compensation to
officers and directors of the Company (excluding George N. Gillett, Jr. and any
member of his Family) and (z) any transaction exclusively between or among the
Company, any Wholly-Owned Subsidiaries and/or Ski Lifts, Inc.), unless (a) the
terms thereof are not less favorable to the Company or any such Subsidiary in
any material respect than would be obtainable at the time in comparable
transactions with a Person not such an Affiliate and (b) each of the
Unaffiliated Directors (as defined in the Stockholders Agreement) shall have
approved such transaction; provided that nothing in this section 14.10 shall
prohibit the Company from making any payment required to be paid pursuant to the
Gillett Management Agreement, if such payment is permitted to be paid under
section 14.6.
14.11. Limitation on Issuance of Preferred Shares By Subsidiaries. The
Company will not permit any Subsidiary to have any outstanding Preferred Shares
other than the preferred stock of Ski Lifts, Inc.
14.12. Limitation on Disposal of Ownership of a Subsidiary; No
Subsidiaries Other Than Wholly-Owned Subsidiaries. The Company will not, and
will not permit any of its Subsidiaries to, sell or otherwise dispose of any
shares of Subsidiary Stock, nor will the Company permit any such Subsidiary to
issue, sell or otherwise dispose of any shares of its own Subsidiary Stock,
provided that the foregoing restrictions do not apply to:
(a) the issue of directors' qualifying shares by any such
Subsidiary;
(b) any Transfer of Subsidiary Stock constituting a Transfer
described in clause (a) of the definition of "Asset Disposition";
(c) the Transfer of all of the Subsidiary Stock of a
Subsidiary of the Company owned by the Company and its other
Subsidiaries if:
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(i) such Transfer satisfies the requirements of
section 14.15 here of,
(ii) in connection with such Transfer, the entire
Investment (whether represented by stock, Indebtedness, claims
or otherwise) of the Company and its other Subsidiaries in
such Subsidiary is sold, transferred or otherwise disposed of
to a Person other than (A) the Company, (B) another Subsidiary
not being simultaneously disposed of, or (C) an Affiliate, and
(iii) the Subsidiary being disposed of has no
continuing Investment in any other Subsidiary of the Company
not being simultaneously disposed of or in the Company; and
(d) the acquisition of the preferred stock of Ski Lifts,
Inc. by DRE, L.L.C. from the former shareholders of Ski Lifts, Inc.
The Company shall not have any direct or indirect Subsidiary which is
not a Wholly- Owned Subsidiary other than Ski Lifts, Inc. which has issued
preferred stock which is owned by former shareholders of Ski Lifts, Inc.
14.13. Limitation on Consolidation or Merger, etc. The Company will
not, and will not permit any of its Subsidiaries to, consolidate with or merge
into any other Person or Transfer all or substantially all of its property in a
single transaction or series of transactions to any Person (except that a
Subsidiary may (x) consolidate with or merge into, or Transfer all or
substantially all of its property in a single transaction or series of
transactions to the Company (if the Company is the surviving corporation of such
transaction) or a Wholly- Owned Subsidiary (if the surviving corporation to such
transaction is a Wholly-Owned Subsidiary) or (y) Transfer all of its property in
compliance with section 14.15), provided that the foregoing restriction does not
apply to the consolidation or merger of the Company with or into, or the
Transfer of all or substantially all of its property in a single transaction or
series of transactions to, any other Person so long as:
(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires as a result of such Transfer
all or substantially all of the property of the Company, as the case
may be (the "Successor Corporation"), shall be a Solvent corporation
organized and existing under the laws of the United States of America,
any state thereof or the District of Columbia;
(b) if the Company is not the Successor Corporation, the
Successor Corporation shall have executed and delivered to each holder
of Securities its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and each of
the other Operative Documents (pursuant to such agreements and
instruments as shall be reasonably satisfactory to the Required Holders
of each class of Securities at the time outstanding), and the Company
shall have caused to be delivered to each holder of Securities an
opinion of
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independent counsel reasonably satisfactory to the Required Holders of
each class of Securities at the time outstanding, to the effect that
all agreements or instruments effecting such assumption are legal,
valid and binding obligations of such Successor Corporation enforceable
against it in accordance with their respective terms (subject to
customary and reasonable qualifications and assumptions) and covering
such other matters as the Required Holders of each class of Securities
at the time outstanding may reasonably request; and
(c) immediately after giving effect to such transaction (i) no
Default or Event of Default would exist and (ii) the Company or the
Successor Corporation, as applicable, would be permitted by the
provisions of section 14.5(c) to incur at least $1.00 of additional
Funded Debt owing to a Person other than a Subsidiary of the Company or
the Successor Corporation, as applicable.
No Transfer by the Company shall have the effect of releasing the Company (or
any successor corporation that shall theretofore have become such in the manner
prescribed in this section 14.13) or any of its Subsidiaries from its liability
under this Agreement or any of the other Operative Documents.
14.14. Limitation on Tax Consolidation. The Company will not, and will
not permit any of its Subsidiaries to, become a party to a consolidated or
combined income tax return with any Person other than the Company and its
Subsidiaries.
14.15. Limitation on Disposition of Property. Except as permitted under
section 14.13, the Company will not, and will not permit any of its Subsidiaries
to, make any Asset Disposition unless:
(a) in the good faith opinion of the board of directors of the
Company, the Asset Disposition (i) is in exchange for consideration
having a Fair Market Value at least equal to that of the property
exchanged, (ii) is in the best interest of the Company or such
Subsidiary and (iii) is not disadvantageous in any material respect to
the interests of any holder of any of the Securities; and
(b) immediately after giving effect to the Asset Disposition:
(i) no Default or Event of Default would exist;
(ii) the Disposition Value of all property that was
the subject of any Asset Disposition occurring in the then
current fiscal year of the Company would not exceed 10% of
Consolidated Total Assets as of the end of the then most
recently ended fiscal year of the Company;
(iii) the Disposition Value of all property that was
the subject of any Asset Disposition occurring on or after the
ASC Closing Date would not
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exceed 30% of Consolidated Total Assets as of the end of the
then most recently ended fiscal year of the Company;
(iv) all property that was the subject of any Asset
Disposition occurring in the then current fiscal year of the
Company did not account for more than 10% of Consolidated Cash
Flow for the then most recently ended fiscal year of the
Company; and
(v) all property that was the subject of any Asset
Disposition occurring on or after the ASC Closing Date did not
account for more than 30% of cumulative Consolidated Cash Flow
for the period commencing on the ASC Closing Date and ending
on the end of the then most recently ended fiscal quarter of
the Company.
If the Net Proceeds Amount for any Transfer is applied to a Property
Reinvestment Application within 180 days after such Transfer, then such
Transfer, only for the purpose of determining compliance with subsection (b) of
this section 14.15 as of a date on or after the Net Proceeds Amount is so
applied, shall be deemed not to be an Asset Disposition.
In addition to the foregoing, the Company and its Subsidiaries may sell
real property constituting "development parcels", provided that (x) the
aggregate Fair Market Value of all such property sold in any period of 365
consecutive days does not exceed $5,000,000 and (y) at the time of such sale and
after giving effect thereto, no Default or Event of Default shall exist.
14.16. Modification of Certain Documents, Agreements and Instruments;
Terms of Permitted Debt Documents.
(a) The Company will not, and will not permit any of its
Subsidiaries to:
(i) file any resolution of its board of
directors (or other governing body) with the Secretary of
State of the jurisdiction of its organization;
(ii) have a fiscal year which ends on any date other
than October 31 in each year;
(iii) amend, modify, supplement or waive any term,
condition or provision of its Organizational Documents or any
of the other agreements, documents or instruments referred to
in section 4.3 or in section 4.1(c) or 4.2 (c) of the Existing
Securities Purchase Agreements (other than the Permitted Debt
Documents, as to which sections 14.16(a)(iv) and 14.16(b)
apply) or enter into any agreement, document or instrument or
transaction, if the effect thereof is, or could reasonably be
expected to be, adverse to the interests of any holder of any
of the Securities or to impose restrictions upon the right and
obligation of the Company to make payments on the Securities
or to
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impose any Restricted Payment Provisions, in each case that
are more restrictive in any material respect than those set
forth in its Organizational Documents or such other
agreements, documents and instruments as in effect on any
Closing Date; or
(iv) amend, modify, supplement or waive any term of
the Permitted Debt Documents or any Permitted Refinancing
Document or enter into any Permitted Refinancing Document, if,
after giving effect thereto, (i) any of the terms thereof
relating to the amount of or timing of any payment (or
prepayment) of the principal of, premium, if any, or interest
on any Funded Debt or Current Debt thereunder differs in any
material respect from the terms thereof prior to giving effect
thereto, (ii) the rate of interest payable on any of the
Funded Debt or Current Debt thereunder increases, (iii) the
aggregate amount of Funded Debt or Current Debt thereunder
increases (or could increase) to an amount greater than the
amount of Funded Debt or Current Debt permitted under this
Agreement or (iv) the Restricted Payment Provisions contained
therein are more restrictive on the Company or any of its
Subsidiaries.
(b) The Restricted Payment Provisions and other material terms
and provisions of the Senior 144A Documents shall be acceptable in all
respects to the Required Holders of each class of the Securities. In
any event, the Senior 144A Documents shall not include (i) any
"cross-default" provisions on the basis of which the holders of the
Senior 144A Notes could accelerate such notes upon any Default or Event
of Default prior to an acceleration of the Notes, (ii) any restriction
on amendments, modifications, supplements or waivers to any term of the
Operative Documents or (iii) any obligation for the Company to
guarantee the Senior 144A Notes. No amendment shall be made to the
terms of the Senior 144A Documents without the consent of the Required
Holders of each class of the Securities.
14.17. Further Assurances. From time to time hereafter, the Company
will execute and deliver, or will cause to be executed and delivered, such
additional agreements, documents and instruments and will take all such other
actions as any holder or holders of the Securities may reasonably request for
the purpose of implementing or effectuating the provisions of the Operative
Documents.
14.18. Limitation on Leasebacks. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, sell or otherwise
dispose of any of its property if, as part of the same transaction or series of
related transactions, any such Person shall then or thereafter rent or lease as
lessee, or similarly acquire the right to possession or use of, such property
(or a major portion thereof), or other property which it intends to use for
substantially the same purpose or purposes, under any lease, agreement or other
arrangement which obligates any such Person to pay rent as lessee or make any
other payments for such possession or use.
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14.19. Interest Payment Reserve Account. The Company shall establish
and at all times shall maintain a separate account (the "Interest Payment
Reserve Account") into which Booth Creek Ski Holdings shall deposit the
dividends required to be deposited therein by section 14.6(c). Funds in the
Interest Payment Reserve Account shall be segregated from other funds of the
Company and its Subsidiaries and held in interest bearing accounts or invested
in the United States Government Securities maturing not later than the date such
funds are to be used for the purposes set for in section 14.21.
14.20. Pledge of Shares of Booth Creek Ski Holdings. Upon the execution
and delivery of this Agreement, the Company shall execute and deliver the Pledge
Agreement, and all agreements, documents and instruments required to be executed
and delivered in connection therewith (including, without limitation, the
delivery of certificates evidencing the outstanding Shares of Booth Creek Ski
Holdings, with stock powers duly executed in blank) shall have been so executed
and delivered by the Company in proper form to the holders of the Notes or, at
the election of the Required Holders of the Notes, to a collateral trustee for
the holders of the Notes reasonably acceptable to the Company and the Required
Holders of the Notes. In the event that a collateral trustee is appointed, then
the Company hereby agrees it shall pay all reasonable expenses of the collateral
trustee. The Company and each holder of the Notes shall enter into such
agreements with the collateral trustee as the collateral trustee may reasonably
request in connection therewith, including, without limitation, customary
agreements concerning indemnification of the collateral trustee in connection
with performing under the Pledge Agreement and, to the extent necessary, the
terms of the Pledge Agreement shall be appropriately modified to provide for the
collateral trustee. The Pledge Agreement shall create in favor of the holders of
the Notes a valid and enforceable first priority Lien on all of the outstanding
Shares of Booth Creek Ski Holdings (and all rights to acquire such Shares) and
immediately following the closing of the issue and sale of the Senior 144A
Notes, such Lien shall be perfected. The Shares pledged pursuant to the Pledge
Agreement shall not be subject to any other Liens. The Required Holders of the
Notes shall be satisfied in all material respects as to all matters incident to
the pledge and the Company shall deliver to the holders of the Notes such
certifications and opinions of counsel (in form and substance reasonably
satisfactory to the Required Holders of the Notes) as may be reasonably
requested by the Required Holders of the Notes.
14.21. Deposit of Dividends in Interest Payment Reserve Account;
Application of Dividends to the Payment of Interest on the Notes. The Company
will cause Booth Creek Ski Holdings to pay to the Company the maximum amount of
dividends which Booth Creek Ski Holdings is permitted to pay under its credit
and other agreements, such payments to be made not more than (5) Business Days
after Booth Creek Ski Holdings is permitted to make such payments. All such
dividends shall be deposited in the Interest Payment Reserve Account immediately
after they are received by the Company. Notwithstanding any provisions to the
contrary contained in any of the Operative Documents, including, without
limitation, the "pik" provisions of the Notes pursuant to which the Company may
pay interest on the Notes by adding to the principal amount of the Notes, all
cash deposited in the Interest Payment Reserve Account shall be retained in the
Interest Payment Reserve Account for the purpose of paying interest on the Notes
and, promptly upon receipt, shall be
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applied to the payment of interest on the Notes in the following order of
priority: first, to the payment of capitalized interest and second, if all
capitalized interest has been paid in full in cash, to the payment of accrued
interest at the time the same becomes due and payable.
15. Definitions.
15.1. Definitions of Terms. The terms defined in this section 15.1,
whenever used in this Agreement, shall, unless the context otherwise requires,
have the following respective meanings:
"Acquired ASC Businesses" shall mean the assets, properties and
businesses acquired (or to be acquired) in the ASC Acquisition.
"Acquired Businesses" shall mean the Acquired ASC Businesses, the
Acquired Fibreboard Businesses and the Acquired Loon Mountain Businesses.
"Acquired Fibreboard Businesses" shall mean the assets, properties and
businesses acquired (or to be acquired) in the Fibreboard Acquisition.
"Acquired Loon Mountain Businesses" shall mean the assets, properties
and businesses acquired (or to be acquired) in the Loon Mountain Acquisition.
"Additional John Hancock Notes" and "Additional John Hancock Warrants"
shall have the respective meanings specified in section 1.
"Additional Notes" shall have the meaning specified in section 1.
"Additional Purchased Common Shares" shall have the meaning specified
in section 1.
"Additional Securities" shall have the meaning specified in section 1.
"Additional Warrants" shall have the meaning specified in section 1.
"Affiliate" of any Person shall mean any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
first-mentioned Person, or any individual, in the case of a Person who is an
individual, who has a relationship by blood, marriage or adoption to such
first-mentioned Person not more remote than first cousin, and, without limiting
the generality of the foregoing, shall include (a) any Person beneficially
owning or holding, directly or indirectly, 5% or more of any class of Voting
Stock or other Shares of such first-mentioned Person, (b) any Person of which
such first-mentioned Person owns or holds, directly or indirectly, 5% or more of
any class of Voting Stock or other Shares and (c) any director or officer of
such first-mentioned Person; provided that, for purposes hereof, in no event
shall you or any other institutional holder of Securities be deemed to be an
Affiliate of the Company or any of its Subsidiaries. For the purposes of
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this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock or by contract or otherwise.
"ASC" shall mean American Skiing Company, a Maine corporation.
"ASC Acquisition" shall mean the acquisition by the Mount Cranmore
Subsidiary and the Waterville Valley Subsidiary of the Acquired ASC Businesses
pursuant to the ASC Acquisition Documents.
"ASC Acquisition Agreement" shall mean the Purchase and Sale Agreement,
dated as of August 30, 1996, by and among Waterville Valley Ski Area, Ltd.,
Cranmore, Inc., ASC and Booth Creek Ski Acquisition.
"ASC Acquisition Documents" shall mean the ASC Acquisition Agreement,
the ASC Seller Note and the other agreements, documents and instruments related
thereto.
"ASC Closing" and "ASC Closing Date" shall have the respective meanings
specified in section 3 of the Existing Securities Purchase Agreements.
"ASC Seller Note" shall mean the subordinated secured promissory note
in the original aggregate principal amount of not more than $2,750,000 issued by
Booth Creek Ski Acquisition, the Mount Cranmore Subsidiary and the Waterville
Valley Subsidiary to ASC, referred to in Section 4.03(b) of the ASC Acquisition
Agreement.
"Asset Disposition" shall mean any Transfer except:
(a) any Transfer from a Subsidiary to the Company or a
Wholly-Owned Subsidiary, provided that, both before and immediately
after the consummation of any such Transfer and after giving effect
thereto, no Default or Event of Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or
(ii) equipment, fixtures, supplies or materials no longer required in
the operation of the business of the Company or any of its Subsidiaries
or that is obsolete.
"Bear Mountain Subsidiary" shall mean Bear Mountain, Inc., a Delaware
corporation and a Wholly-Owned Subsidiary of the Company.
"BKB" shall mean BankBoston, N.A., a national banking association.
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"BKB Revolving Credit Agreement" shall mean the agreement between BKB
and Booth Creek Ski Holdings providing for the BKB Revolving Credit Loan.
"BKB Revolving Credit Documents" shall mean the BKB Revolving Credit
Agreement and the other agreements, documents and instruments related thereto.
"BKB Revolving Credit Loan" shall mean the $25,000,000 revolving credit
facility to be established by BKB for Booth Creek Ski Holdings on or before the
Loon Mountain Closing Date.
"Booth Creek Ski Acquisition" shall mean Booth Creek Ski Acquisition
Corp., a Delaware corporation and a Wholly-Owned Subsidiary of the Company.
"Booth Creek Ski Holdings" shall mean Booth Creek Ski Holdings, Inc., a
Delaware corporation and a Wholly-Owned Subsidiary of the Company.
"Business" shall have the meaning specified in section 5.4.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day which shall be in Boston, Massachusetts or New York, New York a legal
holiday or a day on which banking institutions therein are authorized by law to
close.
"Capital Lease" shall mean any lease or similar arrangement which is of
such a nature that payment obligations of the lessee or obligor thereunder are
required to be capitalized and shown as liabilities upon a balance sheet of such
lessee or obligor prepared in accordance with GAAP.
"Capital Expenditures" of any Person shall mean any payment made,
directly or indirectly, by such Person for the purpose of acquiring or
constructing fixed assets, real property or equipment which, in accordance with
GAAP, would be added as a debit to the fixed asset account of such Person,
including, without limitation, any payment made under any Capital Lease or any
conditional sale or other title retention agreement.
"Cash Flow" of any Person shall mean, for any period, the Net Income of
such Person for such period after restoring thereto amounts deducted for (a)
Fixed Charges, (b) taxes in respect of income and profits and (c) depreciation
and amortization, determined in accordance with GAAP.
"Change of Control" shall mean and shall be deemed to have occurred if
at any time for whatever reason:
(a) the Gillett Family ceases to own and control beneficially
and of record at least 90% of the outstanding Shares of each class of
Voting Stock of the Company (other than as a result of the conversion
of any of the Purchased Common Shares and/or Underlying Securities into
shares of Class A Common Stock); or
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(b) George N. Gillett, Jr. ceases to serve as chairman of the
Company for any reason other than by reason of his death or permanent
disability.
"CIBC Fund" shall mean CIBC WG Argosy Merchant Fund 2, L.L.C., a
Delaware limited liability company.
"CIBC Notes" shall mean the Notes issued to CIBC Fund at the ASC
Closing, the Fibreboard Closing and/or the Loon Mountain Closing and any Note or
Notes issued in exchange therefor or replacement thereof (including any Notes
issued to any successor, assign or transferee of CIBC Fund).
"Class A Common Stock" shall mean the Class A Common Stock, $.001 par
value, of the Company as constituted on the ASC Closing Date and any Shares into
which such Common Stock shall have been changed or any Shares resulting from any
reclassification of the Common Stock.
"Class B Common Stock" shall mean the Class B Common Stock, $.001 par
value, of the Company as constituted on the ASC Closing Date and any Shares into
which such Common Stock shall have been changed or any Shares resulting from any
reclassification of the Common Stock.
"Closing" shall mean the ASC Closing, the Fibreboard Closing and/or the
Loon Mountain Closing, as applicable.
"Closing Date" shall mean the ASC Closing Date, the Fibreboard Closing
Date or the Loon Mountain Closing Date, as applicable.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency from time to time administering the Securities Act and/or
the Exchange Act.
"Common Stock" shall mean the Class A Common Stock and Class B Common
Stock.
"Company" shall mean Booth Creek Ski Group, Inc., a Delaware
corporation, and any successor thereto.
"Consolidated Cash Flow", "Consolidated EBITDA" and "Consolidated Net
Income" shall mean the Cash Flow, EBITDA and Net Income, as the case may be, of
the Company and its Subsidiaries (whether or not ordinarily consolidated in
consolidated financial statements of the Company and Subsidiaries), all
consolidated in accordance with GAAP, and after giving appropriate effect to
outside minority interests, if any, in Subsidiaries,
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provided that in determining Consolidated Cash Flow, Consolidated EBITDA and
Consolidated Net Income there shall be excluded:
(a) the Net Income of any Person (other than a Subsidiary of
the Company) in which the Company or any Subsidiary of the Company has
an ownership interest, except to the extent that any such Net Income
has been actually received by the Company or such Subsidiary in the
form of cash dividends or similar cash distributions;
(b) any undistributed Net Income of a Subsidiary of the
Company which for any reason is unavailable for distribution to the
Company or any other Subsidiary of the Company;
(c) the Net Income of any Person accrued prior to the date it
becomes a Subsidiary of the Company or is merged into or consolidated
with the Company or a Subsidiary of the Company;
(d) in the case of a successor to the Company by
consolidation, merger or transfer of assets, the Net Income of such
successor accrued prior to such consolidation, merger or transfer;
(e) any deferred or other credit representing the excess of
the equity in any Subsidiary of the Company at the date of acquisition
thereof over the cost of the investment in such Subsidiary;
(f) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of
income accrued during the same period;
(g) any aggregate net gain and any aggregate net loss arising
from the sale, conversion, exchange or other disposition of capital
assets, including, without limitation, (i) all non-current assets and,
without duplication, (ii) the following, whether or not current: (A)
fixed assets, whether tangible or intangible, (B) all inventory sold in
conjunction with the disposition of fixed assets and (C) all Shares or
other securities;
(h) any gains resulting from any write-up of any assets (but
not any loss resulting from any write-down);
(i) any net gain from the collection of any proceeds of
life insurance policies;
(j) any gain arising from the acquisition of any Shares or
other securities or the extinguishment, under GAAP, of any
Indebtedness, of the Company or any Subsidiary of the Company;
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(k) any net income or gain (but not any net loss) from (i) any
change in accounting principles in accordance with GAAP, (ii) any prior
period adjustments resulting from any change in accounting principles
in accordance with GAAP and (iii) any discontinued operations or the
disposition thereof; and
(l) any portion of net income that cannot be freely converted
into United States Dollars;
provided, further, that in determining Consolidated Cash Flow, Consolidated
EBITDA and Consolidated Net Income, the Net Income of any Person for any period
shall be (x) increased by the amount deducted therefrom in respect of "non cash
costs of real estate sales" incurred during such period and (y) decreased by the
amount of "cash real estate development costs" to the extent capitalized during
such period.
"Consolidated Current Assets", "Consolidated Current Liabilities",
"Consolidated Fixed Charges", "Consolidated Interest Charges", "Consolidated
Total Assets" and "Consolidated Total Debt" shall mean the Current Assets,
Current Liabilities, Fixed Charges, Interest Charges, Total Assets and Total
Debt, as the case may be, of the Company and its Subsidiaries (whether or not
ordinarily consolidated in consolidated financial statements of the Company and
Subsidiaries), all consolidated in accordance with GAAP, and after giving
appropriate effect to outside minority interests, if any, in Subsidiaries.
"Convertible John Hancock Notes" shall have the meaning specified in
section 1.
"Current Assets" of any Person shall mean, at any date, all assets of
such Person which would, in accordance with Closing Date GAAP, be classified as
current assets at such date.
"Current Debt" of any Person shall mean, at any date, without
duplication of amounts, (a) all Indebtedness for borrowed money or in respect of
Capital Leases or the deferred purchase price of property (including, without
limitation, all Indebtedness of the kind referred to in clauses (b), (c), (d)
and (e) of the definition of Indebtedness), whether or not interest bearing and
whether secured or unsecured, of such Person at such date which would, in
accordance with GAAP, be classified as short-term Indebtedness at such date, but
specifically excluding the current maturities of such Person's Funded Debt, (b)
all Guarantees by such Person at such date of Current Debt of others, and (c)
the aggregate amount which is due on or before the expiration of one year from
such date in respect of any Redeemable Shares of such Person (other than the
Purchased Common Shares, the Warrants and the Underlying Securities).
"Current Liabilities" of any Person shall mean, at any date, all
Indebtedness of such Person which would, in accordance with Closing Date GAAP,
be classified as current liabilities at such date.
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"Default" shall mean any condition or event which constitutes or, after
notice or lapse of time or both, would constitute an Event of Default.
"Derivative Transactions" shall mean (a) any rate, basis, commodity,
currency, debt or equity swap, (b) any cap, collar or floor agreement, (c) any
rate, basis, commodity, currency, debt or equity exchange or forward agreement,
(d) any rate, basis, commodity, currency, debt or equity option, (e) any other
similar agreement, (f) any option to enter into any of the foregoing, (g) any
master agreement or other agreement providing for any of the foregoing and (h)
any combination of any of the foregoing.
"Disposition Value" shall mean, at any time, with respect to any
property:
(a) in the case of property that does not constitute
Subsidiary Stock, the greater of (i) the book value thereof and (ii)
the Fair Market Value thereof, in each case valued at the time of such
disposition in good faith by the Company, and
(b) in the case of property that constitutes Subsidiary Stock,
an amount equal to the greater of:
(i) that percentage of the book value of the assets
of the Subsidiary that issued such stock as is equal to the
percentage that the book value of such Subsidiary Stock
represents of the book value of all of the outstanding capital
stock of such Subsidiary; and
(ii) that percentage of the Fair Market Value of the
assets of the Subsidiary that issued such stock as is equal to
the percentage that the Fair Market Value of such Subsidiary
Stock represents of the Fair Market Value of all of the
outstanding capital stock of such Subsidiary;
assuming, in making such calculations, that all securities convertible
into such capital stock are so converted and giving full effect to all
transactions that would occur or be required in connection with such
conversion, in each case determined at the time of the disposition
thereof, in good faith by the Company.
"EBITDA" of any Person shall mean, for any period, the Net Income of
such Person for such period after restoring thereto amounts deducted for (a)
Interest Charges, (b) taxes in respect of income and profits and (c)
depreciation and amortization, determined in accordance with GAAP.
"Environmental Laws" shall mean any law, statute, rule, regulation or
other governmental standard or requirement relating or pertaining to (a) the
generation, manufacture, management, handling, use, sale, transportation,
treatment, storage, disposal, delivery, discharge, release or emission of any
waste, pollutant or toxic, hazardous or other substance (including, without
limitation, petroleum or petroleum-derived materials), or (b)
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any other act, omission or condition affecting or involving the environment or
air or water pollution or soil or groundwater contamination.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations and rulings thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) that, together with the Company, would be treated as a single
employer under section 4001(b) of ERISA, or that is a member of a group of which
the Company is a member and that is a controlled group within the meaning of
section 4971(e)(2)(B) of the Code.
"Event of Default" shall have the meaning specified in section 16.1.
"Existing Notes" shall have the meaning specified in section 1.
"Existing Warrants" shall have the meaning specified in section 1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
"Fair Market Value" shall mean, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"Family", as applied to any individual, shall mean (a) the children of
such individual (by birth or adoption), (b) the parents, spouse and siblings of
such individual, (c) the children of such siblings, (d) any trust solely for the
benefit of any one or more of such aforementioned individuals (so long as such
individuals have the exclusive right to control such trust) and (e) the estate
of such individual.
"Fibreboard" shall mean Fibreboard Corporation, a Delaware corporation.
"Fibreboard Acquisition" shall mean the acquisition by the Northstar
Subsidiary, the Sierra Subsidiary and the Bear Mountain Subsidiary of the
Acquired Fibreboard Businesses pursuant to the Fibreboard Acquisition Documents.
"Fibreboard Acquisition Agreement" shall mean the Stock Purchase and
Indemnification Agreement among Booth Creek Ski Holdings, Fibreboard, Trimont
Land Company, Sierra-at-Tahoe, Inc. and Bear Mountain, Inc., dated as of
November 26, 1996.
"Fibreboard Acquisition Documents" shall mean the Fibreboard
Acquisition Agreement and the other agreements, documents and instruments
related thereto.
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"Fibreboard Closing" and "Fibreboard Closing Date" shall have the
respective meanings specified in section 3 of the Existing Securities Purchase
Agreements.
"Fixed Charges" of any Person shall mean, for any period, the sum
(without duplication of amounts) of all Interest Charges and all Rental
Obligations of such Person for such period, determined in accordance with GAAP.
"Funded Debt" of any Person shall mean, at any date, without
duplication of amounts, (a) all Indebtedness for borrowed money or in respect of
Capital Leases or the deferred purchase price of property (including, without
limitation, all Indebtedness of the kind referred to in clauses (b), (c), (d)
and (e) of the definition of Indebtedness), whether or not interest-bearing, of
such Person which would, in accordance with GAAP, be classified as long-term
Indebtedness at such date, but in any event including all such Indebtedness,
whether secured or unsecured, of such Person which matures (or which, pursuant
to the terms of a revolving credit agreement or otherwise, is directly or
indirectly renewable or extendible at the option of such Person for a period
ending) more than one year after the date of the creation thereof,
notwithstanding the fact that payments in respect thereof (whether installment,
serial maturity or sinking fund payments or otherwise) are required to be made
by such Person not more than one year after the date as of which the amount of
Funded Debt is being determined, other than any amount thereof which is at the
time included in Current Debt of such Person, (b) all Guarantees by such Person
at such date of Funded Debt of others and (c) the aggregate amount which is due
more than one year from such date in respect of any Redeemable Shares of such
Person (other than the Purchased Common Shares, the Warrants and Underlying
Securities).
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States from time to time, consistently applied.
"Gillett Family" shall mean the individuals or trust(s) indicated as
being a member of the Gillett Family on Exhibit 5.5(a) attached hereto and, as
to any such individual, each other member of such individual's Family.
"Gillett Family Partnership" shall mean Booth Creek Partners Ltd. II,
L.L.L.P., a Colorado limited liability partnership.
"Gillett Key Man Insurance Policy" shall mean one or more insurance
policies issued by one or more insurers reasonably acceptable to the Required
Holders of the Notes on the life of George N. Gillett, Jr. having a death
benefit at all times of not less than $5,000,000 and which is collaterally
assigned to the holders of the Notes.
"Gillett Management Agreement" shall mean the Management Agreement
dated November 27, 1996 by and between Booth Creek Ski Holdings and the Gillett
Management Company, as amended from time to time with the written consent of
each of the Unaffiliated Directors (as defined in the Stockholders Agreement),
provided no such amendment shall increase the amount of management fees required
to be paid thereunder..
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"Gillett Management Company" shall mean Booth Creek, Inc.
"Gillett Shares" shall have the meaning specified in section 11.2.
"Gillett Side Letter" shall have the meaning specified in section 4.3.
"Guarantee" of any Person shall mean, at any date, any obligation of
such Person at such date guaranteeing, directly or indirectly, any Indebtedness,
liability or other obligation of any other Person in any manner, but in any
event including all endorsements (other than for collection or deposit in the
ordinary course of business), all discounts with recourse and all obligations
incurred through an agreement, contingent or otherwise, (a) to purchase the
obligations of any other Person or any security therefor or to advance or supply
funds for the payment or purchase of such obligations, or (b) to purchase, sell
or lease (as lessee or lessor) property, products, materials or supplies or to
purchase or sell transportation or services, primarily for the purpose of
enabling the obligor to make payment of such obligations or to assure the owner
of such obligations against loss, regardless of the delivery or non-delivery of
the property, products, materials or supplies or the furnishing or nonfurnishing
of the transportation or services, or (c) to provide funds for the payment of,
or obligating such Person to make, any loan, advance, capital contribution or
other investment in the obligor for the purpose of assuring a minimum equity,
asset base, working capital or other balance sheet condition for any date or to
provide funds for the payment of any obligation, dividend or stock liquidation
payment, or otherwise to supply funds to or in any manner invest in the obligor.
The amount of any Guarantee shall be equal to the amount of all Indebtedness,
liabilities and other obligations directly or indirectly guaranteed thereby.
"Indebtedness" of any Person shall mean, at any date, all indebtedness,
liabilities and other obligations of such Person at such date (other than items
of shareholders' equity) which would, in accordance with GAAP, be classified as
liabilities of such Person, but in any event including (without duplication):
(a) all Guarantees of such Person;
(b) all indebtedness, liabilities and other obligations
secured by any Lien in respect of property owned by such Person,
whether or not such Person has assumed or become liable for the payment
of such obligations;
(c) all indebtedness, liabilities and other obligations of
such Person arising under any conditional sale or other title retention
agreement, whether or not the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property;
(d) the amount of the obligation required to be recorded by
the lessee in respect of any Capital Lease under which such Person is
lessee; and
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(e) all indebtedness, liabilities and other obligations
arising in connection with letters of credit, bankers acceptances or
other credit enhancement facilities.
"Indemnified Costs" and "Indemnitee" shall have the respective meanings
specified in section 21.
"Indemnified Person" shall have the meaning specified in section 11.5.
"Interest Charges" of any Person shall mean, for any period, the
aggregate amount of all interest paid, payable or guaranteed during such period
by such Person in respect of Funded Debt and Current Debt, including, without
limitation, Rental Obligations on Capital Leases, determined in accordance with
GAAP.
"Interest Payment Reserve Account" shall have the meaning specified in
section 14.19.
"Investment" of any Person shall mean any investment made by such
Person in any other Person by stock purchase, capital contribution, loan,
advance, acquisition of Indebtedness, Guarantee or otherwise.
"John Hancock" shall mean John Hancock Mutual Life Insurance Company, a
Massachusetts mutual life insurance company.
"John Hancock Notes" shall mean the Notes issued to John Hancock at the
ASC Closing, the Fibreboard Closing and/or the Loon Mountain Closing and any
Note or Notes issued in exchange therefor or replacement thereof (including any
Notes issued to any successor, assign or transferee of John Hancock).
"John Hancock Warrants" shall mean the Warrants issued to John Hancock
at the ASC Closing, the Fibreboard Closing and/or the Loon Mountain Closing and
any Warrants issued in exchange therefor or replacement thereof (including any
Warrants issued to any successor, assign or transferee of John Hancock).
"John Hancock Underlying Securities" shall mean the Underlying
Securities issued or issuable upon exercise of the John Hancock Warrants
(including any Underlying Securities issued to any successor, assign or
transferee of John Hancock).
"Licenses" shall mean certificates of public convenience and necessity,
franchises, licenses and other permits and authorizations from governmental
authorities.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, lien (statutory or otherwise), preference, priority,
security interest, chattel mortgage or other charge or encumbrance of any kind,
or any other type of preferential arrangement, including, without limitation,
the lien or retained security title of a conditional
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vendor and any easement, right of way or other encumbrance on title to real
property and any lease having substantially the same effect as any of the
foregoing.
"Loon Mountain" shall mean Loon Mountain Recreation Corporation, a New
Hampshire corporation.
"Loon Mountain Acquisition" shall mean the acquisition by the Loon
Mountain Subsidiary of the Acquired Loon Mountain Businesses pursuant to the
Loon Mountain Acquisition Documents.
"Loon Mountain Acquisition Agreement" shall mean the Agreement and
Plan of Merger, dated as of September 18, 1997, as amended as of December 22,
1997, by and among the Company, LMRC Acquisition Corp. and Loon Mountain.
"Loon Mountain Acquisition Documents" shall mean the Loon Mountain
Acquisition Agreement and the other agreements, documents and instruments
related thereto.
"Loon Mountain Closing" and "Loon Mountain Closing Date" shall have the
respective meanings specified in section 3.
"Loon Mountain Subsidiary" shall mean Loon Mountain Recreation
Corporation, a New Hampshire corporation and the surviving entity of the merger
between Loon Mountain and LMRC Acquisition Corp., a New Hampshire corporation
and a Wholly-Owned Subsidiary of the Company immediately prior to such merger.
"Make Whole Amount" shall mean, at any date, with respect to any
prepayment or payment (whether on account of acceleration or otherwise) of any
Notes, if the Treasury Rate plus 100 basis points at such date is lower than 12%
per annum, the excess of (x) the present value of the principal and interest
payments on and in respect of the Notes being prepaid or paid, as the case may
be, that would otherwise become due and payable (without giving effect to such
prepayment or payment) (including the final payment on the maturity date of the
Notes), discounted at a rate which is equal to the Treasury Rate plus 100 basis
points over (y) the principal amount of the Notes being prepaid or paid, as the
case may be, at par. If the Treasury Rate plus 100 basis points at the date of
such prepayment or payment is equal to or higher than 12% per annum, the Make
Whole Amount is zero.
"Management Options" shall mean options for shares of Class A Common
Stock granted or to be granted to employees of the Company or any of its
Subsidiaries (excluding George N. Gillett, Jr. or any member of his Family),
provided that the aggregate number of shares of Class A Common Stock issued and
issuable pursuant to such Options does not exceed 400 shares (adjusted
appropriately for stock splits and combinations, stock dividends and the like).
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"Material Adverse Change" shall mean a material adverse change in or
effect upon any of (a) the condition (financial or otherwise), business,
performance, operations, properties or profits of any of the Acquired
Businesses, the Company or any of its Subsidiaries or the Company and its
Subsidiaries taken as one enterprise, (b) the legality, validity or
enforceability of this Agreement, the Securities or any of the other Operative
Documents, including, without limitation, the validity, enforceability,
perfection and priority of any Liens created by the Security Documents, (c) the
rights and remedies of any holder of Securities with respect to the Securities
or (d) the ability of the Company or any of its Subsidiaries to perform its
obligations under any of the Operative Documents and/or to comply with any of
the terms thereof applicable to it.
"Mount Cranmore Subsidiary" shall mean Mount Cranmore Ski Resort,
Inc., a Delaware corporation and a Wholly-Owned Subsidiary of the Company.
"Multiemployer Plan" shall mean any Plan that is a "multiemployer plan"
as defined in section 4001(a)(3) of ERISA.
"Net Income" of any Person shall mean, for any period, the net income
(or net loss) of such Person for such period, determined in accordance with
GAAP.
"Net Proceeds Amount" shall mean, with respect to any Transfer of any
property by any Person, an amount equal to the remainder of:
(a) the aggregate amount of the consideration (valued at the
Fair Market Value of such consideration at the time of the consummation
of such Transfer) received by such Person in respect of such Transfer,
minus
(b) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by (or reserved for) such Person in
connection with such Transfer.
"Notes" shall have the meaning specified in section 1.
"Northstar Subsidiary" shall mean Trimont Land Company, a California
corporation and a Wholly-Owned Subsidiary of the Company.
"Officers' Certificate" shall mean a certificate signed on behalf of
the Company by its President or one of its Vice Presidents and its Treasurer or
one of its Assistant Treasurers.
"Operative Documents" shall mean this Agreement, the Other Securities
Purchase Agreement, the Securities, the Security Documents, the Stockholders
Agreement, the Gillett Side Letter and each of the other agreements, documents
and instruments executed in connection herewith and therewith, each as it may
from time to time be amended, modified or supplemented.
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"Organizational Documents" of any Person shall mean such Person's
charter and by-laws, partnership agreement, operating agreement, trust
agreement, as applicable, and/or any other similar agreement, document or
instrument and, in the case of the Company, shall include its Certificate of
Incorporation.
"Original Purchased Common Shares" shall have the meaning specified in
section 1.
"Other Purchaser" and "Other Securities Purchase Agreement" shall have
the respective meanings specified in section 1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"Permitted Debt Documents" shall mean (a) the BKB Revolving Credit
Agreement, (b) the Senior 144A Indenture and (c) the ASC Seller Note, each as in
effect on the ASC Closing Date the Fibreboard Closing Date, Loon Mountain
Closing Date, as applicable, and as amended, modified and supplemented in
compliance with the terms hereof.
"Permitted Refinancing Documents" shall mean the agreements, documents
and instruments executed in connection with any extension, refinancing,
refunding or renewal of any Funded Debt and/or Current Debt under any Permitted
Debt Documents, provided that the terms and conditions of such agreements,
documents and instruments, including, without limitation, all Restricted Payment
Provisions, are no more restrictive upon the Company and/or any of its
Subsidiaries and no more adverse to the interests of the holder of any of the
Securities than those of the Permitted Debt Documents being extended,
refinanced, refunded or renewed.
"Person" shall mean an individual, a corporation, an association, a
joint-stock company, a business trust or other similar organization, a
partnership, a limited liability company, a joint venture, a trust, an
unincorporated organization or a government or any agency, instrumentality or
political subdivision thereof.
"Plan" shall mean an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate (while an ERISA Affiliate) or with respect to which the Company or any
ERISA Affiliate may have any material liability.
"Pledge Agreement" shall have the meaning specified in section 1.
"Preferred Shares", as applied to any Person, shall mean Shares of such
Person which shall be entitled to preference or priority over any other Shares
of such Person in respect of either the payment of dividends or the distribution
of assets upon liquidation.
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"Property Reinvestment Application" shall mean, with respect to any
Transfer of property, the satisfaction of each of the following conditions:
(a) an amount equal to at least 90% of the Net Proceeds Amount
with respect to such Transfer shall have been applied to the
acquisition by the Company, or any of its Subsidiaries making such
Transfer, of property that upon such acquisition is unencumbered by any
Lien (other than Liens permitted under section 14.9) and that:
(i) constitutes property that (x) is property
classifiable under GAAP as non-current, to the extent that
such proceeds are derived from the transfer of property that
was properly classifiable as non-current, and otherwise
properly classifiable as either current or non-current, (y) is
to be used in the ordinary course of business of the Company
and its Subsidiaries and (z) has a Fair Market Value equal to
or greater than 90% of the Fair Market Value of the property
that was the subject of such Transfer, or
(ii) constitutes Shares of a Person that shall be, on
or prior to the time of such acquisition, a Wholly-Owned
Subsidiary of the Company, and shall invest the proceeds of
such acquisition in property of the nature described in the
immediately preceding clause (i); and
(b) the Company shall have delivered an Officers' Certificate
to each holder of a Note referring to section 14.15 and identifying the
property that was the subject of such Transfer, the Disposition Value
of such property, the portion of Consolidated Cash Flow for the
applicable measurement periods under section 14.15 that was generated
by such property and the nature, terms, amount and application of the
proceeds from the Transfer.
"Proprietary Rights" shall mean any patents, registered and common law
trademarks, service marks, trade names, brand names, copyrights, licenses and
other similar rights (including, without limitation, know-how, trade secrets and
other confidential information) and applications for each of the foregoing, if
any.
"Purchased Common Shares" shall have the meaning specified in
section 1.
"Qualified Public Offering" shall have the meaning specified in
section 9.2.
"Qualifying Transaction" shall have the meaning specified in section
9.3.
"Redeemable" shall mean, with respect to any Shares of any Person, each
Share of such Person that is (a) redeemable, payable or required to be purchased
or otherwise retired or extinguished, or convertible into Funded Debt or Current
Debt of such Person, (i) at a fixed or determinable date, whether by operation
of any sinking fund or otherwise, (ii) at the
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option of any Person other than such Person or (iii) upon the occurrence of a
condition not solely within the control of such Person or (b) convertible into
other Redeemable Shares.
"Registrable Shares" shall mean the Underlying Securities and the
Purchased Common Shares, except that, as to any particular Registrable Shares,
such securities, once issued, will cease to be Registrable Shares when (a) a
registration statement covering such securities has been declared effective and
such securities have been disposed of pursuant to an effective registration
statement or (b) such securities are sold to the public in accordance with Rule
144 (or any similar provision then in force) under the Securities Act. A Person
shall be deemed to be a "holder of Registrable Shares" for purposes of section
11 if such Person is the holder of any Warrants, any Underlying Securities
and/or any Purchased Common Shares.
"Registration Expenses" shall mean all fees, expenses and disbursements
related to any registration, qualification or compliance pursuant to section 11,
including, without limitation, all registration, filing, rating and listing
fees, blue sky fees and expenses, printing expenses, fees and disbursements of
counsel (including, without limitation, the fees, expenses and disbursements of
counsel for the holder or holders of the Registrable Shares), and expenses of
any special audits incident to or required by any registration, qualification or
compliance, except that Registration Expenses shall not include any
underwriters' discounts or commissions attributable to any Registrable Shares
registered and sold pursuant to any such registration.
"Rental Obligations" of any Person shall mean, for any period, all
rents and other amounts (including as such, all payments which such Person is
obligated to make to the lessor on termination of any lease and/or on surrender
of the leased property other than payments for which such Person is contingently
liable on account of early termination or breach of such lease) paid, payable or
guaranteed during such period by such Person, as lessee or sublessee under any
lease, including any amount required to be paid by such Person (whether or not
designated as rents or additional rents) on account of maintenance, repairs,
insurance, taxes, utilities and similar charges, determined in accordance with
GAAP. Whenever it is necessary to determine the amount of Rental Obligations for
any period, to the extent that such Rental Obligations are not definitely
determinable by the terms of the lease, the Rental Obligations not so definitely
determinable shall be estimated in good faith and in such reasonable manner as
the board of directors of the Company may determine (as evidenced by a certified
resolution of such board of directors promptly delivered to the holder or
holders of the Notes).
"Required Holders" as applied to describe the requisite holder or
holders of any class of the Securities, shall mean, at any date, the holder or
holders of more than 50% in interest of such class of Securities at the time
outstanding (excluding all Securities at the time owned by the Company or any
Affiliate of the Company).
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"Required IRR Amount" shall have the meaning specified in section 9.2.
"Responsible Officer" of any Person shall mean any Senior Officer of
such Person and any other officer or senior management employee of such Person
with responsibility for the administration of the relevant portion of the
Operative Documents and/or the related activities of such Person.
"Restricted Investments" shall mean all Investments except the
following:
(a) property to be used in the ordinary course of
business of the Company and its Subsidiaries;
(b) current assets arising from the sale of goods and services
in the ordinary course of business of the Company and its Subsidiaries;
(c) Investments in one or more Wholly-Owned Subsidiaries or
any Person that concurrently with such Investment becomes a
Wholly-Owned Subsidiary, provided that (i) both at the time of and
immediately after giving effect to any such Investment, no Default or
Event of Default shall have occurred and be continuing and (ii) all
such Investments are made only in Solvent entities (A) which are
organized under the laws of and conduct substantially all of their
respective businesses and have substantially all their property in, the
United States of America (or a state thereof or the District of
Columbia) or Canada and (B) who are engaged in the Business;
(d) Investments existing on the ASC Closing Date, the
Fibreboard Closing Date and/or the Loon Mountain Closing Date, if the
same are specified on Exhibit 5.9 attached hereto;
(e) Investments in United States Governmental Securities,
provided that such obligations mature within 365 days from the date of
acquisition thereof;
(f) Investments in certificates of deposit issued by an
Acceptable Bank, provided that such obligations mature within 365 days
from the date of acquisition thereof;
(g) Investments in commercial paper, provided that such
obligations (i) have been given the highest rating by a credit rating
agency of recognized national standing and (ii) mature not more than
270 days from the date of creation thereof;
(h) Investments by any Subsidiary of the Company in the
Company;
(i) shares of so-called "money market funds" registered under
the Investment Company Act of 1940, as amended, organized and operating
the United States of America, having total net assets of $500,000,000
or more and investing
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primarily in securities of the character described in the preceding
clauses (e), (f) and (g) of this definition;
(j) contingent liabilities represented by endorsements of
negotiable instruments for collection or deposit in the ordinary course
of business and advances, deposits, down payments and prepayments on
account of firm purchase orders made in the ordinary course of
business; and
(k) loans made to employees of the Company and/or its
Subsidiaries, provided that the aggregate outstanding principal amount
of all such loans shall not exceed $50,000 at any time.
As used in this definition of "Restricted Investments":
"Acceptable Bank" shall mean any bank or trust company (a)
which is organized under the laws of the United States of America or
any state thereof, (b) which has capital, surplus and undivided profits
aggregating at least $500,000,000, and (c) whose long-term unsecured
debt obligations (or the long-term unsecured debt obligations of the
bank holding company owning all of the capital stock of such bank or
trust company) shall have been given the highest or second highest
rating by S&P, Moody's or any other credit rating agency of recognized
national standing.
"Moody's" shall mean Moody's Investors Service, Inc.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc.
"United States Governmental Security" shall mean any direct
obligation of, or obligation guaranteed by, the United States of
America, or any agency controlled or supervised by or acting as an
instrumentality of the United States of America pursuant to authority
granted by the Congress of the United States of America, so long as
such obligation or guarantee shall have the benefit of the full faith
and credit of the United States of America which shall have been
pledged pursuant to authority granted by the Congress of the United
States of America.
"Restricted Payment" as applied to any Person shall mean:
(a) any dividend or other distribution or payment, direct or
indirect, on account of any Shares of such Person now or hereafter
outstanding (including, without limitation, Preferred Shares) or any
securities convertible into or exercisable or exchangeable for such
Shares or any rights, options or warrants to acquire any such Shares,
except (i) any such dividend or distribution or payment payable to the
Company and/or any Wholly-Owned Subsidiary and (ii) a pro rata
distribution payable to all of the holders of Common Stock solely in
shares of Common Stock
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and as a result of which there is no change in the relative ownership
interest of any stockholder in the Company or any of such
stockholder's rights; and
(b) any redemption, retirement, purchase or other acquisition,
direct or indirect, of any Shares of such Person now or hereafter
outstanding (including, without limitation, Preferred Shares) or any
securities convertible into or exercisable or exchangeable for such
Shares or any rights, options or warrants to acquire any such Shares;
and
(c) any payments to the Gillett Management Company, George N.
Gillett, Jr., any other member of the Gillett Family and/or any of
their respective Affiliates, whether pursuant to the Gillett Management
Agreement or otherwise (other than the reimbursement of reasonable
out-of-pocket expenses incurred to unaffiliated third parties).
"Restricted Payment Provisions" shall mean provisions which restrict
the right or ability of any Subsidiary of the Company to pay dividends to, or
make advances to or Investments in, the Company (or, if such Subsidiary is not
directly owned by the Company, the "parent" Subsidiary of such Subsidiary).
"Sale of the Company" shall have the meaning specified in section 9.2.
"Sale/Offering Closing Date" shall have the meaning specified in
section 9.2.
"Securities" shall mean the Notes, the Purchased Common Shares and the
Warrants and, unless the context clearly requires otherwise, the Underlying
Securities, each of which is a "Security".
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Security Documents" shall mean the Pledge Agreement and the Gillett
Key Man Insurance Policy (and the collateral assignments thereof), together with
any and all other agreements, documents and instruments heretofore or hereafter
securing the Notes and/or any of the other obligations arising under the
Operative Documents, as amended, modified or supplemented from time to time.
"Senior Officer" of any Person shall mean the president, chief
executive officer, chief financial officer, principal accounting officer,
treasurer or comptroller of such Person.
"Senior 144A Documents" shall mean the Senior 144A Indenture and the
other agreements, documents and instruments related thereto.
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"Senior 144A Indenture" shall mean the Indenture to be entered into
between the trustee for the holders of the Senior 144A Notes, Booth Creek Ski
Holdings and certain Subsidiaries of Booth Creek Ski Holdings as guarantors.
"Senior 144A Notes" shall mean the Senior 144A Notes, in an aggregate
principal amount of not more than $133,500,000 issued or to be issued pursuant
to Rule 144A of the Commission under the Securities Act by Booth Creek Ski
Holdings upon terms and conditions satisfactory to the Required Holders of each
class of Securities at the time outstanding.
"Shares" of any Person shall include any and all shares of capital
stock, partnership interests, limited liability company interests, membership
interests, or other shares, interests, participations or other equivalents
(however designated and of any class) in the capital of, or other ownership
interests in, such Person, and, as applied to the Company, includes shares of
Common Stock.
"Significant Holder" shall mean, at any date, any institutional holder
of 5% or more in interest of any class of the Securities outstanding on such
date.
"Sierra Subsidiary" shall mean Sierra-at-Tahoe, Inc., a Delaware
corporation and a Wholly-Owned Subsidiary of the Company.
"Solvent" as applied to any Person at any date shall mean that on and
as of such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities on and as of any date shall be computed as the
amount that, in the light of all the facts and circumstances existing on and as
of such date, represents the amount that can reasonably be expected to become an
actual or matured liability. For purposes of this definition, "Person" shall
mean, where so required by the context in which the term "Solvent" appears, such
Person and its Subsidiaries taken as a whole.
"Source" shall have the meaning specified in section 26.
"Special Prepayment Premium" shall have the meaning specified in
section 9.2.
"Stockholders Agreement" shall have the meaning specified in section
4.3.
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"Subsidiary" of any Person at any date shall mean (a) any other Person
a majority (by number of votes) of the Voting Stock of which is owned by such
first-mentioned Person and/or by one or more other Subsidiaries of such
first-mentioned Person and (b) any other Person with respect to which such
first-mentioned Person and/or any one or more other Subsidiaries of such
first-mentioned Person (i) is entitled to more than 50% of such Person's profits
or losses or more than 50% of such Person's assets on liquidation or (ii) holds
an equity interest in such Person of more than 50%. As used herein, unless the
context clearly required otherwise, the term "Subsidiary" refers to a Subsidiary
of the Company.
"Subsidiary Stock" shall mean, with respect to any Person, the Shares
(including, without limitation, Preferred Shares) of any Subsidiary of such
Person and any securities convertible into or exercisable or exchangeable for
such Shares or any rights, options or warrants to acquire any such Shares.
"Successor Corporation" shall have the meaning specified in section
14.13.
"Total Assets" of any Person shall mean, at any date, the total assets
of such Person which would be shown as assets on a balance sheet as of such date
prepared in accordance with GAAP after eliminating all amounts properly
attributable to minority interests, if any, in the stock or surplus of any
Subsidiary of such Person.
"Total Debt" of any Person shall mean, at any date, all Funded Debt and
Current Debt of such Person at such date, determined in accordance with GAAP.
"Transfer" shall mean, with respect to any Person, any transaction in
which such Person sells, conveys, transfers or leases (as lessor) any of its
property, including, without limitation, Subsidiary Stock.
"Treasury Rate" at any time with respect to any Notes being prepaid or
paid (whether on account of acceleration or otherwise), as the case may be,
shall mean and shall be determined by reference to the applicable display on the
Bloomberg Financial Markets Service as of 10:00 A.M., Boston time, on the second
Business Day prior to the date fixed for such prepayment or payment (or, if such
display is no longer available, any publicly available source of similar market
data as selected by the Required Holders of the Notes and reasonably acceptable
to the Company), and shall be the yield on actively traded United States
Treasury securities adjusted to a maturity equal to the then remaining Weighted
Average Life to Maturity of the Notes then being prepaid or paid (whether on
account of acceleration or otherwise) (the "Remaining Life"). If the Remaining
Life is not equal to the maturity of a United States Treasury security for which
a yield is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of the two closest United States Treasury securities for which such yields are
given, except that if the Remaining Life is less than one year, the average
yield on actively traded United States Treasury securities adjusted to a
constant maturity of one year shall be used. The Treasury Rate shall be computed
to the fifth decimal
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place (one-thousandth of a percentage point) and then rounded to the fourth
decimal place (one-hundredth of a percentage point).
"Treasury Yield" shall have the meaning specified in section 9.2.
"Underlying Securities" shall mean any Shares (or Other Securities (as
defined in the Warrants)) issued (or issuable, as applicable) upon exercise of
any Warrants, each of which is an "Underlying Security".
"Voting Stock", when used with reference to any Person, shall mean
Shares (however designated) of such Person having ordinary voting power for the
election of a majority of the members of the board of directors (or other
governing body) of such Person, other than Shares having such power only by
reason of the happening of a contingency.
"Warrants" shall have the meaning specified in section 1.
"Waterville Valley Subsidiary" shall mean Waterville Valley Ski
Resort, Inc., a Delaware corporation and a Wholly-Owned Subsidiary of the
Company.
"Weighted Average Life to Maturity" of any Indebtedness or obligation
shall mean, at any date, the number of years obtained by dividing the then
Remaining Dollar-years of such Indebtedness or obligation by the then
outstanding principal amount of such Indebtedness or obligation. For purposes of
this definition, the "Remaining Dollar-years" of any Indebtedness or obligation
shall mean, at any date, the total of the products obtained by multiplying (a)
the amount of each then remaining installment, sinking fund, serial maturity or
other required payment, including payment at final maturity, in respect thereof,
by (b) the number of years (calculated to the nearest one-twelfth) which will
elapse between such date and the date of making of such payment.
"Wholly-Owned Subsidiary" shall mean any Subsidiary all of the
outstanding Shares of which, other than directors' qualifying Shares, shall at
the time be owned by the Company and/or by one or more other Wholly-Owned
Subsidiaries and the accounts of which are consolidated with those of the
Company in accordance with GAAP.
"Withdrawal Liability" shall have the meaning given such term under
Part 1 of Subtitle E of Title IV of ERISA.
15.2. Other Definitions. The terms defined in this section 15.2,
whenever used in this Agreement, shall, unless the context otherwise requires,
have the respective meanings hereinafter specified.
"this Agreement" (and similar references to any of the other Operative
Documents) shall mean, and the words "herein" (and "therein"), "hereof" (and
"thereof"), "hereunder" (and "thereunder") and words of similar import shall
refer to, such instruments as they may from time to time be amended, modified or
supplemented.
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"beneficial ownership" of any Shares or other securities shall be
determined in the manner set forth in Rule 13d-3 of the Commission under the
Exchange Act.
a "class" of Securities shall refer to the Notes, the Purchased Common
Shares, the Warrants and/or the Underlying Securities, as the case may be, each
of which is a separate class.
"corporation" shall include an association, joint stock company,
business trust or other similar organization.
"premium" when used in conjunction with references to principal of and
interest on the Notes, shall mean any amount due upon any payment or prepayment
of any of the Notes, other than principal and interest, and shall include the
Make Whole Amount and the Special Prepayment Premium.
"qualification" or "compliance" as used in section 11 refer to the
qualification or compliance of any Shares of the Company, including, without
limitation, the Registrable Shares, included in any registration contemplated by
section 11 under all applicable blue sky or other state securities laws.
"register", "registered" and "registration" as used in section 11 refer
to a registration effected by filing a registration statement in compliance with
the Securities Act to permit the sale and disposition of any Shares of the
Company, including, without limitation, the Registrable Shares, and any
amendment filed or required to be filed to permit any such disposition.
15.3. Accounting Terms and Principles; Laws.
(a) All accounting terms used herein which are not expressly
defined in this Agreement shall have the respective meanings given to
them in accordance with GAAP, all computations made pursuant to this
Agreement shall be made in accordance with GAAP and all financial
statements shall be prepared in accordance with GAAP.
(b) All references herein to laws, statutes, rules and
regulations shall, unless the context clearly requires otherwise, be
deemed to refer to any law, statute, rule, regulation and any other
governmental restriction, standard and/or requirement promulgated,
issued and/or enforced by any domestic or foreign federal, state or
local government, governmental agency, authority, court,
instrumentality or regulatory body, including, without limitation,
those of the United States of America or any state thereof or the
District of Columbia.
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16. Remedies.
16.1. Events of Default Defined; Acceleration of Maturity. If any one
or more of the following events ("Events of Default") shall occur (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:
(a) if default shall be made in the due and punctual payment
of all or any part of the principal of, or premium (if any) on, any
Note when and as the same shall become due and payable, whether at the
stated maturity thereof, by notice of or demand for prepayment, or
otherwise; or
(b) if default shall be made in the due and punctual payment
of any interest on any Note when and as such interest shall become due
and payable and such default shall have continued for a period of five
Business Days; or
(c) if default shall be made in the performance or observance
of any covenant, agreement or condition contained in:
(i) sections 7(g), 8, 9.7, 11, 13, 14.2(b), 14.2(e),
14.5 (other than 14.5(d)), 14.6, 14.8, 14.9, 14.10, 14.11,
14.12, 14.13, 14.14, 14.15, 14.16, 14.18, 14.19, 14.20; or
14.21; or
(ii) section 14.5(d), 14.7 or 14.8 if, in the case of
this clause (ii), such default shall have continued for a
period of 20 Business Days after the earlier to occur of (A) a
Responsible Officer of the Company or any Subsidiary obtaining
knowledge of such default or (B) the Company's receipt of
written notice of such default; or
(d) if default shall be made in the performance or observance
of any other of the covenants, agreements or conditions contained in
this Agreement or any of the other Operative Documents and such default
shall have continued for a period of 30 Business Days after the earlier
to occur of (i) a Responsible Officer of the Company or any Subsidiary
obtaining knowledge of such default or (ii) the Company's receipt of
written notice of such default; or
(e) if the Company or any Subsidiary of the Company shall make
a general assignment for the benefit of creditors, or shall not pay its
debts as they become due, or shall admit in writing its inability to
pay its debts as they become due, or shall file a voluntary petition in
bankruptcy, or shall be adjudicated bankrupt or insolvent, or shall
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any present or future statute, law or regulation,
or shall file any answer admitting or not contesting the material
allegations of a petition filed against it in
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any such proceeding, or shall seek or consent to or acquiesce in the
appointment of any trustee, custodian, receiver, liquidator or fiscal
agent for it or for all or any substantial part of its properties, or
shall (or its directors or stockholders shall) take any action looking
to its dissolution or liquidation; or
(f) if, within 60 days after the commencement of an action
against the Company or any Subsidiary of the Company seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law
or regulation, such action shall not have been dismissed or all orders
or proceedings thereunder affecting the operations or the business of
the Company or any of its Subsidiaries stayed, or if, within 60 days
after the appointment without the consent or acquiescence of the
Company or any Subsidiary, of any trustee, custodian, receiver,
liquidator or fiscal agent for the Company or any Subsidiary of the
Company or for all or any substantial part of their respective
properties, such appointment shall not have been vacated; or
(g) if, under the provisions of any law for the relief or aid
of debtors, any court or governmental agency of competent jurisdiction
shall assume custody or control of the Company or of any Subsidiary of
the Company or of all or any substantial part of their respective
properties and such custody or control shall not be terminated or
stayed within 60 days from the date of assumption of such custody or
control; or
(h) if the Company or any Subsidiary of the Company shall fail
to (i) make any payment due on any Indebtedness (other than the Notes)
or other obligation (including any in respect of any lease or any
Shares upon the exercise by any Person of any put or call option or
other similar right of redemption or repurchase with regard to such
Shares in accordance with the terms of such option or right) or (ii)
perform, observe or discharge any covenant, condition or obligation in
any agreement, document or instrument evidencing, securing or relating
to such Indebtedness or other obligation, if the effect of any such
failure of the character described in this clause (h) is to cause, or
any other Person shall cause, any payment in respect thereof to become
due and payable; provided that the amount of the payment which shall
have become so due and payable, together with the aggregate amount of
all other Indebtedness and other obligations as to which the Company or
any Subsidiary is in default, exceeds $1,000,000; or
(i) if a final judgment for the payment of money which,
together with all other outstanding final judgments for the payment of
money against the Company and/or any of its Subsidiaries (other than
any judgment or judgments with respect to which one or more financially
sound and reputable insurers (having the highest or second highest
rating available from A.M. Best Company) shall have unconditionally
assumed in writing all liability in connection therewith), exceeds an
aggregate of $1,000,000 shall be rendered by a court of record against
the Company or any Subsidiary, and the Company or such Subsidiary shall
not discharge the same
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or provide for its discharge in accordance with its terms, or procure a
stay of execution thereof within 90 days from the date of entry thereof
and within such period of 90 days, or such longer period during which
execution of such judgment shall have been stayed, move to vacate such
judgment or appeal therefrom and cause the execution thereof to be
stayed pending determination of such motion or during such appeal; or
(j) if any representation or warranty made by or on behalf of
the Company or any Subsidiary of the Company in this Agreement or in
any of the other Operative Documents or in any agreement, document or
instrument delivered under or pursuant to any provision hereof or
thereof shall prove to have been materially false or incorrect on the
date as of which made; or
(k) if, at any time, this Agreement or any of the other
Operative Documents shall for any reason (other than the scheduled
termination thereof in accordance with its terms) expire, fail to be in
full force and effect or be disaffirmed, repudiated, cancelled,
terminated or declared to be unenforceable, null and void; or
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings
under section 4042 of ERISA to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
all Plans, determined in accordance with Title IV of ERISA, shall
exceed $250,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
any Subsidiary of the Company establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in
a manner that would increase the liability of the Company or any
Subsidiary of the Company thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or
together with any other such event or events, has resulted in, or could
reasonably be expected to result in a Material Adverse Change; or
(m) if (i) any holder of any Lien on any properties and assets
of the Company or any Subsidiary shall take possession of or shall
foreclose upon or take other enforcement action with respect to the
properties and assets subject to such Lien, provided that such
properties and assets (A) have a Fair Market Value immediately after
such action of more than 10% of Consolidated Total Assets as of
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the end of the then most recently completed fiscal year of the Company
or (B) accounted for more than 10% of Consolidated Cash Flow for the
then most recently completed fiscal year of the Company and (ii) such
foreclosure or other enforcement action shall continue for 30 days or
more; or
(n) any Change of Control shall occur; or
(o) Booth Creek Ski Holdings shall fail to pay to the Company
the maximum amount of dividends which Booth Creek Ski Holdings is
permitted to pay within five (5) Business Days of the date on which
Booth Creek Ski Holdings is permitted to make such payments;
then, in the case of any Event of Default which is continuing (other than one of
the character described in subdivisions (e), (f), (g) or (m) of this section
16.1) and at the option of the holder or holders of 25% or more in aggregate
principal amount of the Notes at the time outstanding (excluding any Notes at
the time owned by the Company or any Affiliate of the Company), exercised by
written notice to the Company, the principal of all Notes shall forthwith become
due and payable, together with interest accrued thereon, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and the Company shall forthwith upon any such acceleration pay to the
holder or holders of all the Notes then outstanding (i) the entire principal of
and interest accrued on the Notes, and (ii) in addition, to the extent permitted
by applicable law, an amount equal to the Make Whole Amount as liquidated
damages and not as a penalty; provided that, in the case of an Event of Default
of the character described in subdivisions (a) or (b) of this section 16.1 which
is continuing and irrespective of whether all of the Notes have been declared
due and payable by the holder or holders of 25% or more in aggregate principal
amount of the Notes at the time outstanding, any holder of Notes who or which
has not consented to any waiver with respect to such Event of Default may, at
the option of such holder, by written notice to the Company declare all Notes
then held by such holder to be, and such Notes shall thereupon become, forthwith
due and payable, together with interest accrued thereon, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and the Company shall forthwith upon any such acceleration pay to such
holder (i) the entire principal of and interest accrued on such Notes, and (ii)
in addition, to the extent permitted by applicable law, an amount equal to the
Make Whole Amount as liquidated damages and not as a penalty; provided that, in
the case of any Event of Default which is continuing (and has continued for not
less than five Business Days) (other than one of the character described in
subdivisions (e), (f), (g) or (m) of this section 16.1) and irrespective of
whether all of the Notes have been declared due and payable by the holder or
holders of 25% or more in aggregate principal amount of the Notes at the time
outstanding, the holder or holders of 16% or more in aggregate principal amount
of the Notes at the time outstanding who or which has not consented to any
waiver with respect to such Event of Default may, at the option of such holder
or holders, by written notice to the Company, declare all Notes then held by
such holder or holders to be, and such Notes shall thereupon become, forthwith
due and payable, together with interest accrued thereon, without presentment,
demand, protest or other notice of any kind, all of which are
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hereby expressly waived, and the Company shall forthwith upon any such
acceleration pay to such holder or holders (i) the entire principal of and
interest accrued on such Notes, and (ii) in addition, to the extent permitted by
applicable law, an amount equal to the Make Whole Amount as liquidated damages
and not as a penalty; provided, further, that, in the case of an Event of
Default of the character described in subdivisions (e), (f), (g) or (m) of this
section 16.1, the principal of all Notes shall forthwith become due and payable,
together with interest accrued thereon (including any interest accruing after
the commencement of any action or proceeding under the federal bankruptcy laws,
as now or hereafter constituted, or any other applicable domestic or foreign
federal or state bankruptcy, insolvency or other similar law, and any other
interest that would have accrued but for the commencement of such proceeding,
whether or not any such interest is allowed as an enforceable claim in such
proceeding), without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, and the Company shall forthwith upon
any such acceleration pay to the holder or holders of all the Notes then
outstanding (i) the entire principal of and interest accrued on the Notes, and
(ii) in addition, to the extent permitted by applicable law, an amount equal to
the Make Whole Amount as liquidated damages and not as a penalty.
Notwithstanding the foregoing provisions, at any time after the
occurrence of any Event of Default and of notice thereof, if any, by any holder
or holders of Notes and before any judgment, decree or order for payment of the
money due has been obtained by or on behalf of any holder or holders of the
Notes, the Required Holders of the Notes by written notice to the Company, may
rescind and annul such Event of Default and/or notice of such Event of Default
and the consequences thereof with respect to all of the Notes (excluding any
Notes which were accelerated pursuant to the first or second proviso in the
preceding paragraph by any holder or holders on account of an Event of Default
of the character described in subdivision (a) or (b) of this section 16.1) if:
(1) the Company has paid a sum sufficient to pay
(A) all overdue installments of interest on all
Notes at the rate specified in the Notes;
(B) the principal of (and premium, if any, on) any
Notes which have become due otherwise than by such Event of
Default or notice thereof and interest thereon at the rate for
overdue amounts specified in such Notes; and
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate for overdue
amounts specified in such Notes; and
(2) all Defaults and Events of Default, other than the
non-payment of the principal of Notes which have become due solely by
such acceleration, have been cured or waived as provided in section 19.
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No such rescission shall affect any subsequent default or impair any right
consequent thereon.
16.2. Suits for Enforcement, etc. In case any one or more of the Events
of Default specified in section 16.1 shall have occurred and be continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under section 16.1, the holder of any Note may proceed to
protect and enforce its rights either by suit in equity or by action at law, or
both. The Company stipulates that the remedies at law of the holder or holders
of the Securities in the event of any default or threatened default by the
Company in the performance of or compliance with any covenant or agreement in
this Agreement or any of the other Operative Documents are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance thereof, whether
by an injunction against a violation thereof or otherwise. Without limiting the
generality of the foregoing (and without derogating from any provision contained
in this Agreement or any of the other Operative Documents), upon the occurrence
and during the continuance of an Event of Default, the Required Holders of each
class of Securities shall have the right to apply for and have a receiver
appointed for the Company and its Subsidiaries, or any one or more of them, by a
court of competent jurisdiction in any action taken by any such holders to
enforce their respective rights and remedies hereunder and under the other
Operative Documents in order to manage, protect and preserve the assets of the
Company and its Subsidiaries and continue the operation of the business of the
Company and its Subsidiaries, or to sell or dispose of the assets of the Company
and its Subsidiaries, and to collect all revenues and profits thereof and apply
the same to the payment of all expenses and other charges of such receivership,
including the compensation of the receiver, and the Company hereby consents to
such appointment without regard to the existence of any misfeasance or
malfeasance or the presence of any defenses that would otherwise be available to
such application.
16.3. No Election of Remedies. No remedy conferred in this Agreement or
in any of the other Operative Documents upon the holder of any Security is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or thereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
16.4. Remedies Not Waived. No course of dealing between the Company and
any of its Subsidiaries, on the one hand, and any holder of any Security, on the
other hand, and no delay by any such holder in exercising any rights hereunder
or under any of the other Operative Documents shall operate as a waiver of any
rights of any such holder.
16.5. Application of Payments. In case any one or more of the Events of
Default specified in section 16.1 shall have occurred, all amounts to be applied
to the prepayment or payment of any Notes, shall be applied, after the payment
of all related costs and expenses incurred by the holders of the Notes
(including, without limitation, compensation to any and all trustees,
liquidators, receivers or similar officials and reasonable fees, expenses and
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disbursements of counsel) in such order of priority as is determined by the
Required Holders of the Notes.
17. Registration, Transfer and Exchange of Securities; Certain Restrictions on
Transfer in Stockholders Agreement.
(a) Securities issued hereunder shall be issued in registered
form. The Company shall keep at its principal executive office (which
is now located at the address set forth at the beginning of this
Agreement) or at such other address (including that of any transfer
agent) as the Company shall notify the holders of the Securities in
writing, registers in which it shall provide for the registration and
transfer of the Securities. The name and address of each holder of the
Securities shall be registered in such registers. The Company shall
give to any institutional holder of any Security promptly (but in any
event within 10 Business Days) following request therefor, a complete
and correct copy of the names and addresses of all registered holders
of the Securities and the amount and kind of Securities held by each.
Subject to the provisions of section 17(b), whenever any Security or
Securities shall be surrendered for transfer or exchange, the Company
at its expense will execute and deliver in exchange therefor a new
Security or Securities (in such denominations and registered in such
name or names as may be requested in writing by the holder of the
surrendered Security or Securities), in the same aggregate unpaid
principal amount (in the case of the Notes) or exercisable for the same
aggregate number of Shares (in the case of any Warrants) or in the same
aggregate number of Shares (in the case of any Underlying Security), as
applicable, as that of the Security or Securities so surrendered,
provided that any transfer tax relating to such transaction shall be
paid by the holder requesting the exchange or the transferee of the
applicable Securities. The Company may treat the Person in whose name
any Security is registered as the owner of such Security for all
purposes.
(b) Reference is hereby made to the Stockholders Agreement for
certain provisions restricting the transfer of the Purchased Common
Shares, Warrants and Underlying Securities.
18. Replacement of Securities. Upon receipt by the Company of reasonably
satisfactory evidence of the loss, theft, destruction or mutilation of any
Security and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnity, and (in the case of mutilation) upon surrender of such
Security, the Company at its expense will execute and deliver in lieu of such
Security a new Security of like tenor and, in the case of any new Note, dated so
as not to result in any loss of interest. Your unsecured agreement to indemnify
and/or affidavit and that of any other institutional holder shall constitute
satisfactory indemnity and/or satisfactory evidence of loss, theft or
destruction for the purpose of this section 18.
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19. Amendment and Waiver.
(a) Any term of this Agreement and the Other Securities
Purchase Agreement and, unless explicitly provided otherwise therein,
of any of the other Operative Documents may, with the consent of the
Company, be amended, or compliance therewith may be waived, in writing
only, by the Required Holders of each class of Securities entitled to
the benefits of such term, provided that (i) without the consent of the
holders of all of the Notes at the time outstanding, no such amendment
or waiver shall (A) change the amount of the principal of or any rate
of interest on or the amount of any premium payable with respect to any
of the Notes or change the payment terms of any of the Notes, or,
subordinate the obligation of the Company to pay any amount due on the
Notes to any other obligation, or (B) change the percentage of holders
of Notes required to approve any such amendment, effectuate any such
waiver or accelerate payment of the Notes; (ii) without the consent of
the holders of all of the Warrants and Underlying Securities at the
time outstanding, no such amendment or waiver shall (A) modify any of
the provisions of section 11, or (B) change the percentage of holders
of the Warrants and Underlying Securities required to approve any such
amendment or effect any such waiver; and (iii) no such amendment or
waiver shall extend to or affect any obligation not expressly amended
or waived or impair any right consequent thereon. Executed or true and
correct copies of any amendment, waiver or consent effected pursuant to
this section 19 shall be delivered by the Company to each holder of
Securities forthwith (but in any event not later than five days)
following the effective date thereof.
(b) The Company will not, directly or indirectly, request or
negotiate for, or offer or pay any remuneration or grant any security
as an inducement for, any proposed amendment or waiver of any of the
provisions of this Agreement or any of the other Operative Documents
unless each holder of the Securities (irrespective of the kind and
amount of Securities then owned by it) shall be informed thereof by the
Company and, if such holder is entitled to the benefit of any such
provision proposed to be amended or waived, shall be afforded the
opportunity of considering the same, shall be supplied by the Company
with sufficient information to enable it to make an informed decision
with respect thereto and shall be offered and paid such remuneration
and granted such security on the same terms.
(c) In determining whether the requisite holders of Securities
have given any authorization, consent or waiver under this section 19,
any Securities owned by the Company or any of its Affiliates shall be
disregarded and deemed not to be outstanding.
20. Method of Payment of Securities. Irrespective of any provision hereof or of
the other Operative Documents to the contrary, so long as you or any other
institutional holder shall hold any Security, the Company will make all payments
on such Security to you or such other institutional holder by the method and at
the address for such purpose specified in
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Schedule I attached hereto or by such other method or at such other address as
you or such institutional holder may designate in writing (given as provided in
section 23), without requiring any presentation or surrender of such Security,
except that if any Security shall be paid, prepaid and/or repurchased in full,
such Security shall be surrendered to the Company promptly following such
payment, prepayment or repurchase and cancelled.
21. Expenses; Indemnity. Whether or not the transactions contemplated by any of
the Operative Documents shall be consummated, the Company will pay or cause to
be paid (or reimbursed, as the case may be) and will defend, indemnify and hold
you (and each other holder of any of the Securities) and each of your (and such
other holder's) directors, officers, employees, agents, advisors and Affiliates
(each, an "Indemnitee") harmless (on an after tax basis) in respect of all
costs, losses, expenses (including, without limitation, the reasonable fees,
costs, expenses and disbursements of counsel) and damages (collectively,
"Indemnified Costs") incurred by or asserted against any Indemnitee in
connection with the negotiation, execution, delivery, performance and/or
enforcement of this Agreement or any of the other Operative Documents
(including, without limitation, so-called work-outs and/or restructurings and
all amendments, waivers and consents hereunder and thereunder, whether or not
effected) and/or the consummation of the transactions contemplated hereby and
thereby or which may otherwise be related in any way to this Agreement or any
other Operative Documents or such transactions or such Indemnitee's relationship
to the Company or any of its Affiliates or any of their respective properties
and assets, including, without limitation, any and all Indemnified Costs related
in any way to the requirements of any Environmental Laws (as the same may be
amended, modified or supplemented from time to time) or to any environmental
investigation, assessment, site monitoring, containment, clean up, remediation,
removal, restoration, reporting and sampling, whether or not consented to, or
requested or approved by, any Indemnitee, and whether or not such Indemnified
Cost is attributable to an event or condition originating from any properties or
assets of the Company or any of its Subsidiaries or any other properties
previously or hereafter owned, leased, occupied or operated by the Company or
any of its Subsidiaries. Notwithstanding the foregoing, the Company shall not
have any obligation to an Indemnitee under this section 21 with respect to any
Indemnified Cost if and to the extent it is finally determined by a court of
competent jurisdiction to have arisen as a result of the gross negligence,
willful misconduct or bad faith of such Indemnitee.
22. Taxes. The Company will pay all taxes and fees (including interest and
penalties), including, without limitation, all issuance and documentary stamp
and similar taxes, which may be payable in respect of the execution and delivery
of this Agreement and each of the other Operative Documents.
23. Communications. All communications provided for herein and, unless
explicitly provided otherwise therein, in any of the other Operative Documents
shall be in writing and sent (a) by telecopy if the sender on the same day sends
a confirming copy of such communication by a recognized overnight delivery
service (charges prepaid), (b) by a recognized overnight delivery service
(charges prepaid), or (c) by messenger. Any such
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communication must be sent (i) if to the Company (or any Subsidiary of the
Company), to the Company (or such Subsidiary) at:
Booth Creek Ski Group, Inc.
1000 South Frontage Road
Vail, Colorado 81657
Attention: George N. Gillett, Jr.
Telecopy No.: (303) 479-0291
with a copy (which shall not constitute notice) to:
Winston & Strawn
35 W. Wacker Drive
Chicago, Illinois 60601
Attention: Oscar A. David, Esq.
Telecopy No.: (312) 558-5700
or at such other address (or telecopy number) as may be furnished in writing by
the Company to each holder of any Security and (ii) if to you, at your address
for such purpose set forth in Schedule I attached hereto, with a copy (which
shall not constitute notice) to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Frank B. Porter, Jr., Esq.
Telecopy No.: (617) 248-4000
and if to any other holder of any Security, at the address of such holder as it
appears on the applicable register maintained pursuant to section 17, or at such
other address as may be furnished in writing by you or by any other holder to
the Company. Communications under this section 23 shall be deemed given only
when actually received.
24. Survival of Agreements, Representations and Warranties, etc. All agreements,
representations and warranties contained herein and in the other Operative
Documents shall be deemed to have been relied upon by you and shall survive the
execution and delivery of this Agreement and each of the other Operative
Documents, the issue, sale and delivery of the Securities and payment therefor
and any disposition of the Securities by you, whether or not any investigation
at any time is made by you or on your behalf. All indemnification provisions,
including, without limitation, those contained in sections 11.5, 21 and 22,
shall survive the date upon which none of the Securities shall be outstanding
and the termination of this Agreement and each of the other Operative Documents.
25. Successors and Assigns; Rights of Other Holders. This Agreement and, unless
explicitly provided otherwise therein, each of the other Operative Documents
shall bind and
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inure to the benefit of and be enforceable by the Company and you, successors to
the Company and your successors and assigns, and, in addition, shall inure to
the benefit of and be enforceable by each holder from time to time of any
Securities who, upon acceptance thereof, shall, without further action, be
entitled to enforce the applicable provisions and enjoy the applicable benefits
hereof and thereof in accordance with their respective terms. The Company may
not assign any of its rights or obligations hereunder or under any of the other
Operative Documents without the written consent of the Required Holders of each
class of Securities then outstanding.
26. Purchase for Investment; ERISA.
(a) You represent and warrant (i) that you have been furnished
with all information that you have requested for the purpose of
evaluating your proposed acquisition of the Securities to be issued to
you pursuant hereto, (ii) that you are an "Accredited Investor" as
defined in Rule 501 promulgated under the Securities Act and are able
to bear the risk of losing your entire investment in the Securities,
(iii) that you will acquire such Securities for your own account for
investment and not with a view to distribution in any manner that would
violate applicable securities laws, but without prejudice to your
rights to dispose of such Securities or a portion thereof to a
transferee or transferees, in accordance with such laws if at some
future time you deem it advisable to do so, (iv) that you have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of your investment in the
Securities and are making such investment in reliance upon such
knowledge and experience, (v) that you understand that there is no
established trading market for the Securities and, in the absence of
such an established trading market, it may not be possible for you to
readily liquidate the Securities in the event you wish to do so and
(vi) that you understand that the Securities to be purchased by you
have not been registered under any applicable securities laws and
cannot be transferred in the absence of registration thereunder or an
exemption therefrom. The acquisition of such Securities by you at the
Closing shall constitute your confirmation of the foregoing
representations and warranties. You understand that such Securities are
being sold to you in a transaction which is exempt from the
registration requirements of the Securities Act, and that, in making
the representations and warranties contained in section 5.16, the
Company is relying, to the extent applicable, upon your representations
and warranties contained herein.
(b) You represent that at least one of the following
statements is an accurate representation as to each source of funds (a
"Source") to be used by you to pay the purchase price of the Securities
to be purchased by you hereunder:
(i) the Source is an "insurance company general
account" as defined in Section V(e) of Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and, except as
you have disclosed to the Company in writing pursuant to this
section (i), the amount of reserves and liabilities for the
general account contract(s) held by or on behalf of any
employee benefit
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plan or group of plans maintained by the same employer or
employee organization do not exceed 10% of the total reserves
and liabilities of the general account (exclusive of separate
account liabilities) plus surplus as set forth in the NAIC
Annual Statement filed with the state of domicile of the
insurer; or
(ii) the Source is a separate account of an insurance
company maintained by you in which an employee benefit plan
(or its related trust) has an interest, which separate account
is maintained solely in connection with your fixed contractual
obligations under which the amounts payable, or credited, to
such plan and to any participant or beneficiary of such plan
(including any annuitant) are not affected in any manner by
the investment performance of the separate account; or
(iii) the Source is either (A) an insurance company
pooled separate account, within the meaning of PTE 90-1
(issued January 29, 1990), or (B) a bank collective investment
fund, within the meaning of the PTE 91-38 (issued July 12,
1991) and, except as you have disclosed to the Company in
writing pursuant to this section (iii), no employee benefit
plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective
investment fund; or
(iv) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption)
managed by a "qualified professional asset manager" or "QPAM"
(within the meaning of Part V of the QPAM Exemption), no
employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of
the total client assets managed by such QPAM, the conditions
of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of
the QPAM Exemption) owns a 5% or more interest in either
Company and (A) the identity of such QPAM and (B) the names of
all employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing
pursuant to this section (iv); or
(v) the Source is a governmental plan; or
(vi) the Source is one or more employee benefit
plans, or a separate account or trust fund comprised of one or
more employee benefit
-81-
<PAGE> 88
plans, each of which has been identified to the Company in
writing pursuant to this section (vi); or
(vii) the Source does not include assets of any
employee benefit plan, other than a plan exempt from the
coverage of ERISA.
As used in this section 26(b), the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall
have the respective meanings assigned to such terms in Section 3 of
ERISA, and the term "QPAM Exemption" means PTE 84-14 (issued March 13,
1984).
27. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and,
unless explicitly provided otherwise therein, each of the other Operative
Documents, including the validity hereof and thereof and the rights and
obligations of the parties hereunder and thereunder, and all amendments and
supplements hereof and thereof and all waivers and consents hereunder and
thereunder, shall be construed in accordance with and governed by the domestic
substantive laws of The Commonwealth of Massachusetts without giving effect to
any choice of law or conflicts of law provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction. The
Company, to the extent that it may lawfully do so, hereby consents to service of
process, and to be sued, in The Commonwealth of Massachusetts and consents to
the jurisdiction of the courts of The Commonwealth of Massachusetts and the
United States District Court for the District of Massachusetts, as well as to
the jurisdiction of all courts to which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of any of
its obligations hereunder or thereunder or with respect to the transactions
contemplated hereby or thereby, and expressly waives any and all objections it
may have as to venue in any such courts. The Company further agrees that a
summons and complaint commencing an action or proceeding in any of such courts
shall be properly served and shall confer personal jurisdiction if served
personally or by certified mail to it at its address set forth in section 23 or
as otherwise provided under the laws of The Commonwealth of Massachusetts.
Notwithstanding the foregoing, the Company agrees that nothing contained in this
section 27 shall preclude the institution of any such suit, action or other
proceeding in any jurisdiction other than The Commonwealth of Massachusetts. THE
COMPANY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR
OTHER PROCEEDING INSTITUTED BY OR AGAINST THE COMPANY IN RESPECT OF ITS
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
28. Rule 144A. The Company will take, or will cause to be taken, such action as
any holder of Securities may reasonably request from time to time to facilitate
any sale or disposition by any such holder of any Securities without
registration under the Securities Act and/or any applicable securities laws
within the limitation of the exemptions provided by any rule or regulation
thereunder, including, without limitation, Rule 144A under the Securities Act.
-82-
<PAGE> 89
29. Miscellaneous. The headings in this Agreement and in each of the other
Operative Documents are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof or thereof. This Agreement (together with
the other Operative Documents) embodies the entire agreement and understanding
between you and the Company and supersedes all prior agreements and
understandings relating to the subject matter hereof. Each covenant contained
herein and in each of the other Operative Documents shall be construed (absent
an express provision to the contrary) as being independent of each other
covenant contained herein and therein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. If any provision in this Agreement or in any
of the other Operative Documents refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable, whether such action is taken directly or indirectly by such
Person, whether or not expressly specified in such provision. In case any
provision in this Agreement or any of the other Operative Documents shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
This Agreement and, unless explicitly provided otherwise therein, each of the
other Operative Documents, may be executed in any number of counterparts and by
the parties hereto or thereto, as the case may be, on separate counterparts but
all such counterparts shall together constitute but one and the same instrument.
30. Confidentiality. Each holder of any Securities agrees by its acceptance
thereof to use its best efforts to keep confidential and not to disclose to any
other Person any non-public information concerning the Company and its
Subsidiaries which is furnished to such holder pursuant to this Agreement or any
of the other Operative Documents and which is designated in writing as
confidential (collectively "Confidential Information"); provided that no holder
shall be liable to the Company or any of its Subsidiaries or to any other Person
for any breach of this section 30 unless such breach is finally determined by a
court of competent jurisdiction to have arisen as a result of the gross
negligence, willful misconduct or bad faith of such holder. The term
"Confidential Information" shall not include, however, any information which (a)
was publicly known or otherwise known to any holder (other than through
disclosure by a Person in violation of a confidentiality agreement of which the
holder is aware) at the time of disclosure by the Company or any of its
Subsidiaries to any holder; (b) subsequently becomes publicly known through no
act or omission of any holder or (c) becomes known to any holder otherwise than
through disclosure by the Company or any of its Subsidiaries or by a Person in
violation of a confidentiality agreement of which the holder is aware.
Notwithstanding the foregoing, each holder of any Securities may disclose
Confidential Information: (i) with the consent of the Company or any of its
Subsidiaries (which shall not be unreasonably withheld or delayed); (ii) when
required by law or regulation; (iii) in any report, statement or testimony
submitted by such holder to any regulatory body having or claiming to have
jurisdiction over such holder; (iv) to the National Association of Insurance
Commissioners or any similar organization or to any rating agency; (v) to the
officers, directors, employees, agents, representatives and professional
consultants of such holder and of such holder's Affiliates; (vi) in connection
with the preservation, exercise and/or enforcement of any of such holder's
rights or remedies
-83-
<PAGE> 90
under this Agreement and the other Operative Documents; (vii) in connection with
any transfer of any of the Securities held by such holder (whether or not
consummated), provided that the recipient of such information agrees to keep
such information confidential on terms in all material respect the same as those
set forth in this section 30; (viii) in a response to any summons, subpoena or
other legal process or in connection with any judicial or administrative
proceeding or inquiry; or (ix) to correct any false or misleading information
which may become public concerning the relationship of such holder to the
Company or any of its Subsidiaries and/or the transactions contemplated hereby.
[The remainder of this page is intentionally left blank.]
-84-
<PAGE> 91
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
BOOTH CREEK SKI GROUP, INC.
By: /s/ Jeffrey Joyce
-------------------------
Executive Vice
President, Finance (Title)
The foregoing Agreement is hereby
agreed to as of the date thereof.
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Sandeep Alva
---------------------------------
Senior Investment Officer (Title)
<PAGE> 92
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal between you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
BOOTH CREEK SKI GROUP, INC.
By: /s/ Jeffrey Joyce
------------------------------
Executive Vice
President, Finance (Title)
The foregoing Agreement is hereby
agreed to as of the date thereof.
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
By: /s/ Jay Levine
-------------------------------------
(Title)
<PAGE> 1
EXHIBIT 4.1
================================================================================
Supplemental Indenture
No. 2
to
Indenture dated as of March 18, 1997
Re:
Up to $200,000,000 12 1/2% Senior Notes due 2007
================================================================================
<PAGE> 2
This SUPPLEMENTAL INDENTURE NO. 2 to INDENTURE (the "Supplemental
Indenture") is entered into among Booth Creek Ski Holdings, Inc., a Delaware
corporation (the "Company"), Trimont Land Company, a California corporation,
Sierra-at-Tahoe, Inc., a Delaware corporation, Bear Mountain, Inc., a Delaware
corporation, Waterville Valley Ski Resort, Inc., a Delaware corporation, Mount
Cranmore Ski Resort, Inc., a Delaware corporation, Booth Creek Ski Acquisition
Corp., a Delaware corporation, Ski Lifts, Inc., a Washington corporation, Grand
Targhee Incorporated, a Delaware corporation, B-V Corporation, a Wyoming
corporation, Targhee Company, a Delaware corporation, and Targhee Ski Corp., a
Delaware corporation (collectively, the "Guarantors"), and Marine Midland Bank,
a New York banking corporation and trust company (the "Trustee").
RECITALS
WHEREAS, the Company, the Guarantors and the Trustee have entered into
that certain Indenture dated as of March 18, 1997, as supplemented by Amendment
No. 1 dated as of April 25, 1997 (the "Original Indenture") providing for the
issuance and delivery by the Company of its 12 1/2% Senior Notes due 2007;
WHEREAS, the Company is entering into certain financing and related
transactions (the "Transactions") which will benefit the Company and its
Subsidiaries; and
WHEREAS, Article 8 of the Indenture provides a manner by which the
Indenture may be amended, and by which compliance with the provisions of the
Indenture may be waived, with the consent of the Holders of a majority in
aggregate principal amount of the then outstanding Notes by written act of said
Holders delivered to the Company and the Trustee; and
WHEREAS, the Holders of a majority in aggregate principal amount of
the outstanding Notes have delivered said consents to the Trustee and the
Company; and
WHEREAS, pursuant to and in accordance with Section 8.02 of the
Indenture, and with the consent of the Holders of a majority in aggregate
principal amount of the outstanding Securities, the Company, the Guarantors and
the Trustee have agreed to enter into this Supplemental Indenture;
NOW THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consid-
<PAGE> 3
-2-
eration, the receipt and adequacy of which is hereby acknowledged, the parties
hereto agree as follows for the benefit of each other party and for the equal
and ratable benefit of the Holders of the Company's 12 1/2% Senior Notes due
2007:
Section 1. AMENDMENTS AND WAIVER.
1.1. Subject to Section 2.2 hereof, the definition of "Change
of Control" contained in Section 1.01 of the Indenture is hereby amended to read
in its entirety as follows:
A "Change of Control" of the Company means the occurrence of
one or more of the following events: (i) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all of the assets of the Company to any Person
or group of related Persons for purposes of Section 13(d) of the
Exchange Act (a "Group"), together with any Affiliates thereof;
(ii) the approval by the holders of Capital Stock of the Company of any
plan or proposal for the liquidation or dissolution of the Company;
(iii) prior to a Qualified IPO, John Hancock Mutual Life Insurance
Company and/or its Affiliates (other than its portfolio companies,
including without limitation, the Parent and its Subsidiaries) shall
cease to beneficially own (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, Voting Stock representing, or
Class B Common Stock and/or warrants exercisable for shares of Class B
Common Stock representing upon conversion, at least 40% of the total
voting power of all Voting Stock of the Company or Parent on a fully
diluted basis; (iv) any Person or Group (other than the Permitted
Holders) shall become the beneficial owner, directly or indirectly, of
Voting Stock representing, or Common Stock or Warrants exercisable for
Common Stock representing upon conversion, more than 35% of the total
voting power of all Voting Stock of the Company or Parent on a fully
diluted basis; (v) prior to a Qualified IPO, Booth Creek Partners Ltd.
II, L.L.L.P. or any Affiliate thereof that is a Permitted Holder shall
cease to have the right to appoint a majority of the Board of Directors
of Parent; (vi) the replacement of a majority of the Board of Directors
of Parent over a two-year period from the directors who constituted the
Board of Directors of Parent at the beginning of such period, and such
re-
<PAGE> 4
-3-
placement shall not have been approved or recommended by a vote
of at least two-thirds of the Board of Directors of Parent then still
in office who either were members of such Board of Directors at the
beginning of such period or whose election as a member of such Board
of Directors was previously so approved; (vii) there shall be
consummated any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to
which the Common Stock of the Company would be converted into cash,
securities or other property, other than a merger or consolidation of
the Company in which holders of the Common Stock of the Company
outstanding immediately prior to the consolidation or merger hold,
directly or indirectly, at least a majority of the Common Stock of the
surviving corporation immediately after such consolidation or merger;
(viii) George N. Gillett, Jr. ceases, other than by death or
disability, to have an executive management position with the Company;
or (ix) any creditor of Parent shall foreclose on any Capital Stock of
the Company.
1.2. Subject to Section 2.2 hereof, the definition of
"Permitted Indebtedness" contained in Section 1.01 of the Indenture is hereby
amended to read in its entirety as follows:
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted
Subsidiary arising under or in connection with the Senior
Credit Facility in a principal amount at any time not to exceed
$25,000,000, less each permanent reduction of commitments to extend
credit thereunder as provided for under this Indenture;
(ii) Indebtedness under Notes issued by the Company
pursuant to this Indenture in an aggregate principal amount of
up to $133,500,000 and Indebtedness evidenced by the Guarantees;
(iii) Indebtedness not covered by any other clause of
this definition which is outstanding on the date of this
Indenture;
(iv) Indebtedness of the Company to any Restricted
Subsidiary and Indebtedness of any Re-
<PAGE> 5
-4-
stricted Subsidiary to the Company or another Restricted
Subsidiary;
(v) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred to acquire property in the ordinary course
of business, which Purchase Money Indebtedness and Capitalized Lease
Obligations do not in the aggregate exceed $2,500,000 at any time
outstanding;
(vi) Obligations of the Company or any Restricted
Subsidiary under (A) Interest Rate Agreements designed to
protect against fluctuations in interest rates in respect of
Indebtedness of the Company and its Restricted Subsidiaries
permitted to be incurred under this Indenture, which obligations do
not exceed the aggregate principal amount of such Indebtedness, and
(B) Currency Agreements designated to protect the Company and its
Subsidiaries against fluctuations in foreign currency exchange rates
in respect of foreign exchange exposures incurred by the Company and
its Restricted Subsidiaries;
(vii) Indebtedness incurred by the Company or any of its
Restricted Subsidiaries constituting reimbursement obligations
with respect to letters of credit issued in the ordinary course of
business, including, without limitation, letters of credit in
respect of workers' compensation claims or self-insurance, or other
Indebtedness with respect to reimbursement type obligations
regarding workers' compensation claims; provided, however, that upon
the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days
following such drawing or incurrence;
(viii) Indebtedness arising from agreements of the
Company or a Restricted Subsidiary providing for
indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with
the acquisition or disposition of any business, assets or a
Subsidiary;
(ix) obligations in respect of performance and surety
bonds and completion guarantees pro-
<PAGE> 6
-5-
vided by the Company or any Restricted Subsidiary in the
ordinary course of business;
(x) any guarantee by the Company of Indebtedness or
other obligations of any of its Restricted Subsidiaries, and
any guarantee by any Restricted Subsidiary of Indebtedness of the
Company or any other Restricted Subsidiary, so long as the
incurrence of such Indebtedness is permitted under the terms of the
Indenture;
(xi) additional Indebtedness of the Company and its
Restricted Subsidiaries not to exceed $2,500,000 in principal
amount outstanding at any time;
(xii) Refinancing Indebtedness; and
(xiii) Indebtedness assumed and subsequently repaid on
the Issue Date in connection with the acquisition of Grand Targhee
Incorporated.
1.3. Subject to Section 2.2 hereof, the definition of
"Restricted Subsidiary" contained in Section 1.01 of the Indenture is hereby
amended to read in its entirety as follows:
"Restricted Subsidiary" means a Subsidiary of the
Company other than an Unrestricted Subsidiary and includes all of
the Subsidiaries of the Company existing as of the Issue Date,
except the Real Estate LLC. The Board of Directors of the Company
may designate any Unrestricted Subsidiary or any Person that is to
become a Subsidiary as a Restricted Subsidiary if immediately
after giving effect to such action (and treating any Acquired
Indebtedness as having been incurred at the time of such action),
(i) the Company could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.06 of this Indenture or (ii) the ratio of the Company's
EBITDA to the Company's Consolidated Interest Expense (determined
on a pro forma basis for the last four fiscal quarters of the
Company for which financial statements are available at the date
of determination in accordance with Section 4.06 of this
Indenture) does not decrease and the Company does not incur any
Indebt-
<PAGE> 7
-6-
edness (other than Indebtedness under the Notes permitted
under clause (ii) of the definition of "Permitted Indebtedness"
and up to $1.5 million of additional Permitted Indebtedness) in
connection with such action.
1.4. Subject to Section 2.2 hereof, the first paragraph of
Section 2.01 of the Indenture is hereby amended to read in its entirety as
follows:
The Trustee shall authenticate (i) Notes for original issue
on the Issue Date in the aggregate principal amount of
$110,000,000, (ii) in the event of an exercise by the Initial
Purchaser pursuant to Section 2.2(b) of the Purchase Agreement of its
option to purchase up to an additional $6,000,000 aggregate principal
amount of Notes (the "Option Notes"), Option Notes for original issue
in the aggregate principal amount not to exceed $6,000,000, which
Option Notes may not be issued after April 25, 1997 and (iii) Notes
(other than Option Notes) for original issue subsequent to the Issue
Date in an aggregate principal amount not to exceed $90,000,000 (minus
the aggregate principal amount of any Option Notes authenticated
pursuant to the terms hereof) in one or more series ("Subsequent
Series Notes"), in each case upon a written order of the Company in
the form of an Officers' Certificate of the Company; provided,
however, that no Subsequent Series Notes may be authenticated and
delivered in an aggregate principal amount of less than $15,000,000;
and provided, further, that the Company must, in issuing any
Subsequent Series Notes, comply with Section 4.06. Each such written
order shall specify the amount of Notes to be authenticated, the date
on which the Notes are to be authenticated and the title of the Notes
of the series (which shall distinguish the Notes of the series from
Notes of any other series). All Notes issued on the Issue Date, Option
Notes and Subsequent Series Notes shall be identical in all respects
other than issue dates and the date from which interest accrues and
except as provided in this Section 2.01 and except that any Subsequent
Series Notes may contain any notations, legends or endorsements
permitted under Section 2.02. The aggregate principal amount of Notes
outstanding at any time may not exceed $200,000,000, except as
provided in Section 2.08.
<PAGE> 8
-7-
1.5. Subject to Section 2.2 hereof, paragraph 5 of Exhibit A,
the Form of Notes, is hereby amended to read in its entirety as follows:
5. Optional Redemption. The Company, at its option, may
redeem the Notes, in whole or in part, at any time on or after
March 15, 2002 upon not less than 30 nor more than 60 days' notice, at
the redemption prices (expressed as percentages of principal amount),
set forth below, together, in each case, with accrued and unpaid
interest to the Redemption Date, if redeemed during the twelve month
period beginning on March 15 of each year listed below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2002....................... 106.250%
2003....................... 104.167%
2004....................... 102.083%
2005 and thereafter........ 100.000%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the
aggregate up to 30% of the original principal amount of Notes at any
time and from time to time on or prior to March 15, 2000 at a
redemption price equal to 112.5% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon to the Redemption
Date with the Net Proceeds of one or more Public Equity Offerings;
provided, that at least $93.5 million of the principal amount of Notes
originally issued remains outstanding immediately after the occurrence
of any such redemption and that any such redemption occurs within 90
days following the closing of any such Public Equity Offering.
1.6. Subject to Section 2.2 hereof, compliance by the Company
with Sections 5.01 and 5.02 of the Indenture are hereby waived to the extent any
default would occur under such Sections as a result of the transactions
contemplated by the Loon Mountain Acquisition (as defined in the Offering
Memorandum relating to the Company's 12 1/2% Series C Senior Notes due 2007).
<PAGE> 9
-8-
Section 2. MISCELLANEOUS.
2.1. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE.
2.2. Operative Time. Upon the execution and delivery of this
Supplemental Indenture by the Company, the Guarantors and the Trustee, the
Indenture shall be supplemented in accordance herewith, and this Supplemental
Indenture shall form a part of the Indenture for all purposes, and every Holder
of Notes heretofore or hereafter authenticated and delivered under the Indenture
shall be bound thereby; provided, however, that Section 1 hereof shall become
operative upon the satisfaction (or waiver by the Company) of the Conditions (as
defined in the Consent Solicitation Statement, dated February 16, 1998, that was
provided to Holders of Notes in connection with the Company's solicitation of
consents by such Holders to the waiver and amendments set forth herein). Upon
the receipt by the Trustee of (i) an Officers' Certificate certifying that such
conditions have been satisfied, or waived by the Company, and (ii) an Opinion of
Counsel to the effect set forth in Section 8.06 of the Indenture, the amendments
set forth herein shall become operative.
2.3. Confirmation of the Original Indenture. Except as
amended hereby, the Original Indenture shall remain in full force and effect and
is hereby ratified and confirmed in all respects.
2.4. Multiple Counterparts. The parties may sign multiple
counterparts of this Supplemental Indenture. Each signed counterpart shall be
deemed an original, but all of them together represent one and the same
agreement.
2.5. Separability. Each provision of this Supplemental
Indenture shall be considered separable and if for any reason any provision
which is not essential to the effectuation of the basic purpose of this
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
<PAGE> 10
-9-
2.6. Headings. The captions of the various section headings
of this Supplemental Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
2.7. The Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Company and the Guarantors.
2.8. Definitions. All terms defined in the Indenture shall
have the same meaning in this Supplemental Indenture unless otherwise defined
herein.
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto caused this
Supplemental Indenture to be duly executed as of this 20th day of
February, 1998.
BOOTH CREEK SKI HOLDINGS, INC.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
BOOTH CREEK SKI ACQUISITION CORP.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
B-V CORPORATION
TARGHEE COMPANY
TARGHEE SKI CORP.
By: /s/ Jeffrey Joyce
-------------------------------------
Name: Jeffrey J. Joyce
Title: Executive
Vice President, Finance
MARINE MIDLAND BANK, as Trustee
By: /s/ Robert A. Conrad
--------------------------------------
Name: Robert A. Conrad
Title: Vice President
<PAGE> 1
EXHIBIT 4.2
================================================================================
Supplemental Indenture
No. 3
to
Indenture dated as of March 18, 1997
Re:
Up to $200,000,000 12 1/2% Senior Notes due 2007
================================================================================
<PAGE> 2
This SUPPLEMENTAL INDENTURE NO. 3 to INDENTURE (the
"Supplemental Indenture") is entered into among Booth Creek Ski Holdings, Inc.,
a Delaware corporation (the "Company"), LMRC Holding Corp., a Delaware
corporation ("LMRC"), Loon Mountain Recreation Corporation, a New Hampshire
corporation ("Loon Mountain") and Loon Realty Corp., a New Hampshire corporation
("Loon Realty"), and Marine Midland Bank, a New York banking corporation and
trust company (the "Trustee").
RECITALS
WHEREAS, the Company, the Guarantors and the Trustee have
entered into that certain Indenture dated as of March 18, 1997, as amended by
Supplemental Indenture No. 1 dated as of April 25, 1997 and Supplemental
Indenture No. 2 dated as of February 20, 1998 (the "Original Indenture")
providing for the issuance and delivery by the Company of its 12 1/2% Senior
Notes due 2007;
WHEREAS, the Company has entered into certain financing and
related transactions (the "Transactions") which will benefit the Company and its
Subsidiaries; and
WHEREAS, it is a requirement of the Transactions that the
Restricted Subsidiaries of the Company guarantee the obligations of the Company
under the Indenture; and
WHEREAS, LMRC, Loon Mountain and Loon Realty have become
Restricted Subsidiaries of the Company as of the date hereof; and
WHEREAS, the Boards of Directors of the Company, LMRC, Loon
Mountain and Loon Realty have determined that it is in the best interests of the
Company to make LMRC, Loon Mountain and Loon Realty guarantors of the
obligations of the Company under the Indenture; and
WHEREAS, Article 10 of the Indenture provides for the terms
and conditions of the guarantee of the obligations of the Company under the
Indenture by the Restricted Subsidiaries of the Company.
NOW THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows
for the benefit of
<PAGE> 3
-2-
each other party and for the equal and ratable benefit of the Holders of the
Company's 12% Senior Notes due 2007:
Section 1. GUARANTEE.
For value received, each of LMRC, Loon Mountain and Loon
Realty hereby agrees to become a party to the Indenture as a Guarantor under and
pursuant to Article 10 of the Indenture and to jointly and severally
unconditionally guarantee to each Holder and the Trustee (a) the due and
punctual payment of the principal of, and premium, if any, and interest on each
Note, when and as the same shall become due and payable, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest (including
Additional Interest) on the overdue principal of, and premium, if any, and
interest, and the due and punctual performance of all other obligations of the
Company to the Holders or the Trustee, all in accordance with the terms set
forth in such Note and Article 10 of the Indenture, and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
Obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Each of LMRC, Loon Mountain and Loon
Realty further agrees that its obligations under Article 10 of the Indenture
shall be absolute and unconditional, irrespective of, and shall be unaffected
by, any invalidity, irregularity or unenforceability of any such Note or the
Indenture, any failure to enforce the provisions of any such Note or the
Indenture, any waiver, modification or indulgence granted to the Company with
respect thereto by the Holder of such Note or the Trustee, or any other
circumstances which may otherwise constitute a legal or equitable discharge of a
surety or such Guarantor.
Section 2. MISCELLANEOUS.
2.1. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE.
2.2. Confirmation of the Original Indenture. Except as amended
hereby, the Original Indenture shall remain in full
<PAGE> 4
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force and effect and is hereby ratified and confirmed in all respects.
2.3. Multiple Counterparts. The parties may sign multiple
counterparts of this Supplemental Indenture. Each signed counterpart shall be
deemed an original, but all of them together represent one and the same
agreement.
2.4. Separability. Each provision of this Supplemental
Indenture shall be considered separable and if for any reason any provision
which is not essential to the effectuation of the basic purpose of this
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
2.5. Headings. The captions of the various section headings
of this Supplemental Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
2.6. The Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Company and the Guarantors.
2.7. Definitions. All terms defined in the Indenture shall
have the same meaning in this Supplemental Indenture unless otherwise defined
herein.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto caused this
Supplemental Indenture to be duly executed as of this 26th day of February,
1998.
BOOTH CREEK SKI HOLDINGS, INC.
LMRC HOLDING CORP.
LOON MOUNTAIN RECREATION CORPORATION
LOON REALTY CORP.
By: /s/ Jeffrey Joyce
--------------------------------
Name: Jeffrey J. Joyce
Title: Executive
Vice President, Finance
MARINE MIDLAND BANK, as Trustee
By: /s/ Robert A. Conrad
--------------------------------
Name: Robert A. Conrad
Title: Vice President
<PAGE> 1
EXHIBIT 4.3
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of February 26, 1998
by and among
BOOTH CREEK SKI HOLDINGS, INC.,
THE GUARANTORS
named herein
and
CIBC OPPENHEIMER CORP.
as Initial Purchaser
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Definitions..........................................................1
2. Exchange Offer.......................................................5
3. Shelf Registration...................................................9
4. Additional Interest.................................................10
5. Registration Procedures.............................................12
6. Registration Expenses...............................................23
7. Indemnification.....................................................25
8. Rules 144 and 144A..................................................29
9. Underwritten Registrations..........................................29
10. Miscellaneous.......................................................29
a. Remedies.......................................................29
b. Enforcement....................................................30
c. No Inconsistent Agreements.....................................30
d. Adjustments Affecting Registrable Notes........................30
e. Amendments and Waivers.........................................30
f. Notices........................................................31
g. Successors and Assigns.........................................31
h. Counterparts...................................................31
i. Headings.......................................................32
j. Governing Law..................................................32
k. Severability...................................................32
l. Entire Agreement...............................................32
m. Joint and Several Obligations..................................32
n. Notes Held by the Company or their Affiliates..................32
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of February
26, 1998, by and among BOOTH CREEK SKI HOLDINGS, INC., a Delaware corporation
(the "Company"), the Guarantors named herein and CIBC OPPENHEIMER CORP.
("CIBC"), as initial purchaser (the "Initial Purchaser").
This Agreement is entered into in connection with the Securities
Purchase Agreement, dated as of February 23, 1998 among the Company, the
Guarantors and the Initial Purchaser (the "Purchase Agreement") relating to the
sale by the Company to the Initial Purchaser of $17,500,000 aggregate principal
amount of the Company's 12 1/2% Series C Senior Notes due 2007 (the "Notes"),
and the guarantee of the Notes by the Guarantors (the "Guarantees"). In order
to induce the Initial Purchaser to enter into the Purchase Agreement, the
Company and the Guarantors have agreed to provide the registration rights set
forth in this Agreement to the Initial Purchaser and its direct and indirect
transferees and assigns. The execution and delivery of this Agreement is a
condition to the Initial Purchaser's obligation to purchase the Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a).
Advice: See Section 5.
Applicable Period: See Section 2(b).
Closing: See the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 120th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(c).
<PAGE> 4
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Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 30th day after the Issue Date.
Guarantees: See the introductory paragraph of this Agreement.
Guarantors: Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount Cranmore Ski Resort,
Inc., Booth Creek Ski Acquisition Corp., Ski Lifts, Inc., Grand Targhee
Incorporated, B-V Corporation, Targhee Company, Targhee Ski Corp., LMRC Holding
Corp., Loon Mountain Recreation Corporation and Loon Realty Corp. and any
Person who becomes a Guarantor by the terms of the Indenture (as defined
herein).
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of March 18, 1997, as amended by
Supplemental Indenture No. 1 dated as of April 25, 1997, Supplemental Indenture
No. 2 dated as of February 20, 1998 and Supplemental Indenture No. 3 dated as
of February 26, 1998, among the Company, the Guarantors and Marine Midland
Bank, as trustee, pursuant to which the Notes are being issued, as amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchaser: See the introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
<PAGE> 5
-3-
Issue Date: The date on which the original Notes are sold to the
Initial Purchaser pursuant to the Purchase Agreement.
Lien: See the Indenture.
NASD: See Section 5(t).
Notes: See the introductory paragraphs to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes upon original issuance of the Notes and
at all times subsequent thereto and, if issued, the Private Exchange Notes,
until in the case of any such Notes or any such Private Exchange Notes, as the
case may be, (i) a Registration Statement covering such Notes or such Private
Exchange Notes has been declared effective by the SEC and
<PAGE> 6
-4-
such Notes or such Private Exchange Notes, as the case may be, have been
disposed of in accordance with such effective Registration Statement, (ii) such
Notes or such Private Exchange Notes, as the case may be, are sold in
compliance with Rule 144, (iii) in the case of any Note, such Note has been
exchanged for an Exchange Note or Exchange Notes pursuant to an Exchange Offer
or (iv) such Notes or such Private Exchange Notes, as the case may be, cease to
be outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of the Company or
the Guarantors, including, but not limited to, the Exchange Registration
Statement, which covers any of the Registrable Notes pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
<PAGE> 7
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Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter(s) for reoffering to
the public.
2. Exchange Offer
(a) Each of the Company and the Guarantors jointly and severally agrees
to use its best efforts to file with the SEC as soon as practicable after the
Closing, but in no event later than the Filing Date, an offer to exchange (the
"Exchange Offer") any and all of the Registrable Notes (other than the Private
Exchange Notes, if any) for a like aggregate principal amount of debt
securities of the Company, guaranteed by the Guarantors, which are identical to
the Notes (the "Exchange Notes") (and which are entitled to the benefits of the
Indenture or a trust indenture which is substantially identical to the
Indenture (other than such changes to the Indenture or any such identical trust
indenture as are necessary to comply with any requirements of the SEC to effect
or maintain the qualification thereof under the TIA) and which, in either case,
has been qualified under the TIA), except that the Exchange Notes (other than
the Private Exchange Notes, if any) shall have been registered pursuant to an
effective registration statement under the Securities Act and will not contain
terms with respect to transfer restrictions. The Exchange Offer will be
registered under the Securities Act on the appropriate form (the "Exchange
Registration Statement") and will comply with all applicable tender offer rules
and regulations under the Exchange Act. Each of the Company and the Guarantors
jointly and severally agrees to use its best efforts to (x) cause the Exchange
Registration Statement to become effective under the Securities Act on or
before the Effectiveness Date; (y) keep the Exchange Offer open for at least 20
days (or longer if required by applicable law) after the date that notice of
the Exchange Offer is mailed to Holders; and (z) consummate the Exchange Offer
on or prior to the 180th day following the Issue Date. Each
<PAGE> 8
-6-
Holder who participates in the Exchange Offer will be required to represent
that any Exchange Notes received by it will be acquired in the ordinary course
of its business, that at the time of the consummation of the Exchange Offer
such Holder will have no arrangement or understanding with any Person to
participate in the distribution of the Exchange Notes in violation of the
provisions of the Securities Act, that such Holder is not an affiliate of any
of the Company or the Guarantors within the meaning of Rule 405 promulgated
under the Securities Act or if it is such an affiliate, that it will comply
with the registration and prospectus delivery requirements of the Securities
Act, to the extent applicable and that is not acting on behalf of any Person
who could not truthfully make the foregoing representations. Upon consummation
of the Exchange Offer in accordance with this Section 2, the provisions of this
Agreement shall continue to apply, mutatis mutandis, solely with respect to
Registrable Notes that are Private Exchange Notes and Exchange Notes held by
Participating Broker-Dealers, and the Company and the Guarantors shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes and Exchange Notes held by Participating Broker-Dealers) pursuant to
Section 3 of this Agreement.
(b) The Company and the Guarantors shall include within the Prospectus
contained in the Exchange Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchaser, which shall
contain a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of Exchange Notes received by such
broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"), whether
such positions or policies have been publicly disseminated by the staff of the
SEC or such positions or policies, in the reasonable judgment of the Initial
Purchaser, represent the prevailing views of the staff of the SEC. Such "Plan
of Distribution" section shall also allow the use of the Prospectus by all
Persons subject to the prospectus delivery requirements of the Securities Act,
including all Participating Broker-Dealers, and include a statement describing
the means by which Participating Broker-Dealers may resell the Exchange Notes.
Each of the Company and the Guarantors shall use its best efforts to
keep the Exchange Registration Statement effective and to amend and supplement
the Prospectus contained therein, in order to permit such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery re-
<PAGE> 9
-7-
quirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes, provided
that such period shall not exceed 180 days (or such longer period if extended
pursuant to the last paragraph of Section 5) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial Purchaser
holds any Notes acquired by it and having, or which are reasonably likely to be
determined to have, the status as an unsold allotment in the initial
distribution, the Company and the Guarantors upon the request of the Initial
Purchaser shall, simultaneously with the delivery of the Exchange Notes in the
Exchange Offer, issue and deliver to the Initial Purchaser, in exchange (the
"Private Exchange") for the Notes held by the Initial Purchaser, a like
principal amount of debt securities of the Company guaranteed by the
Guarantors, that are identical in all material respects to the Exchange Notes
(the "Private Exchange Notes") (and which are issued pursuant to the same
indenture as the Exchange Notes) except for the placement of a restrictive
legend on the Private Exchange Notes. If possible, the Private Exchange Notes
shall bear the same CUSIP number as the Exchange Notes. Interest on the
Exchange Notes and Private Exchange Notes will accrue from the last interest
payment date on which interest was paid on the Notes surrendered in exchange
therefor or, if no interest has been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Company and the Guarantors
shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York; and
(iii) permit Holders to withdraw tendered Notes at any time prior to the
close of business, New York time, on the last business day on which the
Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company and the Guarantors shall:
<PAGE> 10
-8-
(i) accept for exchange all Notes tendered and not validly withdrawn
pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(iii) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount to the Notes of such Holder so accepted for
exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture substantially identical to the
Indenture, which in either event will provide that (1) the Exchange Notes will
not be subject to the transfer restrictions set forth in the Indenture and (2)
the Private Exchange Notes will be subject to the transfer restrictions set
forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes will vote and consent
together on all matters as one class and that neither the Exchange Notes, the
Private Exchange Notes nor the Notes will have the right to vote or consent as
a separate class on any matter.
(c) If (1) prior to the consummation of the Exchange Offer, the Company
and the Guarantors or Holders of at least a majority in aggregate principal
amount of the Registrable Notes reasonably determine in good faith that (i) the
Exchange Notes would not, upon receipt, be tradeable by such Holders which are
not affiliates (within the meaning of the Securities Act) of the Company or the
Guarantors without restriction under the Securities Act and without
restrictions under applicable state securities laws, (ii) the interests of the
Holders under this Agreement would be adversely affected by the consummation of
the Exchange Offer or (iii) after conferring with counsel, the SEC is unlikely
to permit the commencement of the Exchange Offer prior to the Effectiveness
Date, (2) subsequent to the consummation of the Private Exchange, any holder of
the Private Exchange Notes so requests or (3) the Exchange Offer is commenced
and not consummated within 180 days of the date of this Agreement, then the
Company and the Guarantors shall promptly deliver to the Holders and the
Trustee written notice thereof (the "Shelf Notice") and shall file an Initial
Shelf Registration pursuant to Section 3. Following the delivery of a Shelf
Notice to the Holders of Registrable Notes (in the circumstances contemplated
by clauses (1) and (3) of the preceding
<PAGE> 11
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sentence), the Company and the Guarantors shall not have any further obligation
to conduct the Exchange Offer or the Private Exchange under this Section 2.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Initial Shelf Registration. The Company and the Guarantors shall
prepare and file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Notes (the "Initial Shelf Registration"). If the Company and the Guarantors
shall have not yet filed an Exchange Registration Statement, each of the
Company and the Guarantors shall use its best efforts to file with the SEC the
Initial Shelf Registration on or prior to the Filing Date. In any other
instance, each of the Company and the Guarantors shall use its best efforts to
file with the SEC the Initial Shelf Registration within 30 days of the delivery
of the Shelf Notice. The Initial Shelf Registration shall be on Form S-1 or
another appropriate form permitting registration of such Registrable Notes for
resale by such Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Company and the
Guarantors shall not permit any securities other than the Registrable Notes to
be included in the Initial Shelf Registration or any Subsequent Shelf
Registration. Each of the Company and the Guarantors shall use its best
efforts to cause the Initial Shelf Registration to be declared effective under
the Securities Act, if an Exchange Registration Statement has not yet been
declared effective, on or prior to the Effectiveness Date, or, in any other
instance, as soon as practicable thereafter and in no event later than 45 days
after filing of the Initial Shelf Registration, and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date
which is 24 months from the date on which such Initial Shelf Registration is
declared effective (subject to extension pursuant to the last paragraph of
Section 5 hereof), or such shorter period ending when (i) all Registrable Notes
covered by the Initial Shelf Registration have been sold in the manner set
forth and as contemplated in the Initial Shelf Registration or (ii) a
Subsequent Shelf Registration covering all of the Registrable Notes has been
declared effective under the Securities Act (the "Effectiveness Period").
<PAGE> 12
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(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period, each of the Company and the
Guarantors shall use its best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within 45
days of such cessation of effectiveness amend the Shelf Registration in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Notes (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, each of the
Company and the Guarantors shall use its best efforts to cause the Subsequent
Shelf Registration to be declared effective as soon as practicable after such
filing and to keep such Registration Statement continuously effective for a
period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registration was previously continuously effective. As used
herein the term "Shelf Registration" means the Initial Shelf Registration and
any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company and the Guarantors shall
promptly supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if requested by the
Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter(s) of such
Registrable Notes.
4. Additional Interest
(a) The Company and the Initial Purchaser agree that the Holders of
Registrable Notes will suffer damages if the Company fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay additional interest on the Notes ("Additional
Interest") under the circumstances and to the extent set forth below:
(i) if neither the Exchange Registration Statement nor the Initial
Shelf Registration has been filed on or prior to the Filing Date;
<PAGE> 13
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(ii) if neither the Exchange Registration Statement nor the Initial
Shelf Registration has been declared effective on or prior to the
Effectiveness Date;
(iii) if an Initial Shelf Registration required by Section 2(c)(2)
has not been filed on or prior to the date required by Section 3(a);
(iv) if an Initial Shelf Registration required by Section 2(c)(2)
has not been declared effective on or prior to the date required by
Section 3(a); and/or
(v) if (A) the Company has not exchanged the Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to 60 days after the Exchange Registration Statement was
declared effective or (B) the Exchange Registration Statement ceases to
be effective at any time prior to the time that the Exchange Offer is
consummated or (C) if applicable, the Shelf Registration has been
declared effective and such Shelf Registration ceases to be effective at
any time during the Effectiveness Period;
(each such event referred to in clauses (i) through (v) above is a
"Registration Default"), the sole remedy available to Holders of the Notes will
be the immediate accrual of Additional Interest as follows: the per annum
interest rate on the Notes will increase by .50% during the first 90-day period
following the occurrence of a Registration Default and until it is waived or
cured; and the per annum interest rate will increase by an additional .25% for
each subsequent 90-day period during which the Registration Default remains
uncured, up to a maximum additional interest rate of 2.0% per annum, provided,
however, that only Holders of Private Exchange Notes shall be entitled to
receive Additional Interest as a result of a Registration Default pursuant to
clause (iii) or (iv), provided, further, that (1) upon the filing of the
Exchange Registration Statement or the Initial Shelf Registration (in the case
of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or a Shelf Registration (in the case of (ii) above), (3) upon the
filing of the Shelf Registration (in the case of (iii) above), (4) upon the
effectiveness of the Shelf Registration (in the case of (iv) above), or (5)
upon the exchange of Exchange Notes for all Notes tendered (in the case of
(v)(A) above), or upon the effectiveness of the Exchange Registration Statement
which had ceased to remain effective (in the case of (v)(B) above), or upon the
effectiveness of the Shelf Registration which had ceased to remain effective
(in the case of
<PAGE> 14
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(v)(C) above), Additional Interest on the Notes as a result of such clause (i),
(ii), (iii), (iv) or (v) (or the relevant subclause thereof), as the case may
be, shall cease to accrue and the interest rate on the Notes will revert to the
interest rate originally borne by the Notes.
(b) Notwithstanding the foregoing, no Additional Interest will be
payable with respect to a Registration Default described in clause (v)(C)
above, if pending a material corporate transaction, the Company issues a notice
that the registration statement, or the prospectus contained therein, is
unusable, or such notice is required under applicable securities laws to be
issued by the Company, and the aggregate number of days in any consecutive
twelve month period for which all such notices have been issued or required to
be issued has not exceeded 30 days in the aggregate.
(c) The Company and the Guarantors shall notify the Trustee within one
business day after each and every date on which an event occurs in respect of
which Additional Interest is required to be paid (an "Event Date"). Any
amounts of Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of
this Section 4 will be payable in cash semi-annually on each March 15 and
September 15 (to the Holders of record on the March 1 and September 1
immediately preceding such dates), commencing with the first such date
occurring after any such Additional Interest commences to accrue and until such
Registration Default is cured, by depositing with the Trustee, in trust for the
benefit of such Holders, immediately available funds in sums sufficient to pay
such Additional Interest. The amount of Additional Interest will be determined
by multiplying the applicable Additional Interest rate by the principal amount
of the Registrable Notes, multiplied by a fraction, the numerator of which is
the number of days such Additional Interest rate was applicable during such
period (determined on the basis of a 360-day year comprised of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed),
and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Section 2 or 3 hereof, the Company and the Guarantors shall effect such
registrations to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company and the Guarantors shall:
<PAGE> 15
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(a) Prepare and file with the SEC, prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and use their respective best efforts to cause each such
Registration Statement to become effective and remain effective as
provided herein, provided that, if (1) such filing is pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company and the Guarantors shall, if requested, furnish to
and afford the Holders of the Registrable Notes covered by such
Registration Statement and each such Participating Broker-Dealer, as the
case may be, their counsel and the managing underwriter(s), if any, a
reasonable opportunity to review copies of all such documents (including
copies of any documents to be incorporated by reference therein and all
exhibits thereto) proposed to be filed (at least 5 business days prior to
such filing). The Company and the Guarantors shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity
to review prior to the filing of such document, if the Holders of a
majority in aggregate principal amount of the Registrable Notes covered
by such Registration Statement, or such Participating Broker-Dealer, as
the case may be, their counsel, or the managing underwriter(s), if any,
shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement,
as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the
Applicable Period, as the case may be; cause the related Prospectus to be
supplemented by any prospectus supplement required by applicable law, and
as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act and the Exchange Act applicable to them
with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities
being sold by a Participating Broker-Dealer covered by any such
<PAGE> 16
-14-
Prospectus; the Company and the Guarantors shall be deemed not to have
used their best efforts to keep a Registration Statement effective during
the Applicable Period if any of them voluntarily takes any action that
would result in selling Holders of the Registrable Notes covered thereby
or Participating Broker-Dealers seeking to sell Exchange Notes not being
able to sell such Registrable Notes or such Exchange Notes during that
period unless such action is required by applicable law or unless the
Company and the Guarantors comply with this Agreement, including without
limitation, the provisions of clause 5(c)(v) below.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, notify the selling Holders of Registrable
Notes, or each such Participating Broker-Dealer, as the case may be,
their counsel and the managing underwriter(s), if any, promptly (but in
any event within two business days), and confirm such notice in writing,
(i) when a Prospectus or any prospectus supplement or post-effective
amendment thereto has been filed, and, with respect to a Registration
Statement or any post-effective amendment thereto, when the same has
become effective under the Securities Act (including in such notice a
written statement that any Holder may, upon request, obtain, without
charge, one conformed copy of such Registration Statement or
post-effective amendment thereto including financial statements and
schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop
order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of any preliminary Prospectus or
the initiation of any proceedings for that purpose, (iii) if at any time
when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Notes or resales of Exchange
Notes by Participating Broker-Dealers the representations and warranties
of the Company contained in any agreement (including any underwriting
agreement) contemplated by Section 5(n) below cease to be true and
correct, (iv) of the receipt by any of the Company or the Guarantors of
any notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any
<PAGE> 17
-15-
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of
any changes in, or amendments or supplements to, such Registration
Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
and (vi) of the Company's or any Guarantor's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, use their best efforts to prevent the
issuance of any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of a
Prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Notes or the Exchange Notes to
be sold by any Participating Broker-Dealer, for sale in any jurisdiction,
and, if any such order is issued, to use their best efforts to obtain the
withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter(s), if any, or the Holders of a
majority in aggregate principal amount of the Registrable Notes being
sold in connection with an underwritten offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriter(s), if any, or such Holders
reasonably request to be included therein and (ii) make all required
filings of such Pro-
<PAGE> 18
-16-
spectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to
be incorporated in such Prospectus supplement or post-effective
amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, furnish to each selling Holder of
Registrable Notes who so requests and to each such Participating
Broker-Dealer who so requests and to counsel and the managing
underwriter(s), if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, deliver to each selling Holder of
Registrable Notes, or each such Participating Broker-Dealer, as the case
may be, their counsel, and the managing underwriter or underwriters, if
any, without charge, as many copies of the Prospectus or Prospectuses
(including each form of preliminary Prospectus) and each amendment or
supplement thereto and any documents incorporated by reference therein as
such Persons may reasonably request; and, subject to the last paragraph
of this Section 5, each of the Company and the Guarantors hereby consents
to the use of such Prospectus and each amendment or supplement thereto by
each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the managing
underwriter or underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Registrable Notes covered
by, or the sale by Participating Broker-Dealers of the Exchange Notes
pursuant to, such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Ex-
<PAGE> 19
-17-
change Registration Statement by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, to use their
best efforts to register or qualify, and to cooperate with the selling
Holders of Registrable Notes or each such Participating Broker-Dealer, as
the case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification of (or exemption from such registration or qualification),
such Registrable Notes for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters, if any, reasonably request in writing, provided that where
Exchange Notes held by Participating Broker-Dealers or Registrable Notes
are offered other than through an underwritten offering, the Company and
the Guarantors agree to cause their counsel to perform Blue Sky
investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and
all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by
Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement; provided that none of the Company or
the Guarantors shall be required to (A) qualify generally to do business
in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Notes to be sold,
which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company; and enable
such Registrable Notes to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holders may
reasonably request.
<PAGE> 20
-18-
(j) Use their best efforts to cause the Registrable Notes covered by
the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the managing underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Notes, except as may be required solely as a consequence of the nature of
such selling Holder's business, in which case each of the Company and the
Guarantors will cooperate in all reasonable respects with the filing of
such Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 5(c)(v) or 5(c)(vi), as promptly as reasonably
practicable prepare and (subject to Section 5(a)) file with the SEC, at
the joint and several expense of each of the Company and the Guarantors,
a supplement or post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of
the Registrable Notes being sold thereunder or to the purchasers of the
Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(l) Use their best efforts to cause the Registrable Notes covered by
a Registration Statement or the Exchange Notes, as the case may be, to be
rated with the appropriate rating agencies, if so requested by the
Holders of a majority in aggregate principal amount of Registrable Notes
covered by such Registration Statement or the Exchange Notes, as the case
may be, or the managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Regis-
<PAGE> 21
-19-
trable Notes or Exchange Notes, as the case may be, in a form eligible
for deposit with The Depository Trust Company and (ii) provide a CUSIP
number for the Registrable Notes or Exchange Notes, as the case may be.
(n) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the
Notes and take all such other actions as are reasonably requested by the
managing underwriter(s), if any, in order to expedite or facilitate the
registration or the disposition of such Registrable Notes, and in such
connection, (i) make such representations and warranties to the managing
underwriter or underwriters on behalf of any underwriters, with respect
to the business of the Company and its subsidiaries and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made
by issuers to underwriters in underwritten offerings of debt securities
similar to the Notes, and confirm the same if and when requested; (ii)
obtain opinions of counsel to the Company and the Guarantors and updates
thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the managing underwriter or
underwriters covering the matters customarily covered in opinions
requested in underwritten offerings of debt securities similar to the
Notes and such other matters as may be reasonably requested by the
managing underwriter(s); (iii) obtain "cold comfort" letters and updates
thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters from the independent certified public
accountants of the Company and the Guarantors (and, if necessary, any
other independent certified public accountants of any subsidiary of any
of the Company or of any business acquired by any of the Company or the
Guarantors for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to the
managing underwriter or underwriters on behalf of any underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the Notes and such
other matters as may be reasonably requested by the managing underwriter
or underwriters; and (iv) if an underwriting agreement is entered into,
the same shall contain indemnification provisions and procedures no less
favorable
<PAGE> 22
-20-
than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal
amount of Registrable Notes covered by such Registration Statement and
the managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to the
extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, make available for inspection by any
selling Holder of such Registrable Notes being sold, or each such
Participating Broker-Dealer, as the case may be, the managing underwriter
or underwriters participating in any such disposition of Registrable
Notes, if any, and any attorney, accountant or other agent retained by
any such selling Holder or each such Participating Broker-Dealer, as the
case may be (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and
the Guarantors and their respective subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise
any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Company and the Guarantors and their
respective subsidiaries to supply all information in each case reasonably
requested by any such Inspector in connection with such Registration
Statement. Records which the Company and the Guarantors determine, in
good faith, to be confidential and any Records which they notify the
Inspectors are confidential shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records is necessary to avoid or
correct a material misstatement or material omission in such Registration
Statement, (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction or (iii)
the information in such Records has been made generally available to the
public. Each selling Holder of such Registrable Notes and each such
Participating Broker-Dealer or underwriter will be required to agree that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be
<PAGE> 23
-21-
used by it as the basis for any market transactions in the securities of
the Company or for any purpose other than in connection with such
Registration Statement unless and until such is made generally available
to the public. Each selling Holder of such Registrable Notes and each
such Participating Broker-Dealer will be required to further agree that
it will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give prompt notice to the Company and
allow the Company to undertake appropriate action to prevent disclosure
of the Records deemed confidential at their expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange
Registration Statement or the first Registration Statement relating to
the Registrable Notes; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the Registrable
Notes, to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all
other forms and documents required to be filed with the SEC to enable
such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Notes
are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company and the Guarantors, in a form
customary for underwritten
<PAGE> 24
-22-
offerings of debt securities similar to the Notes, addressed to the
Trustee for the benefit of all Holders of Registrable Notes participating
in the Exchange Offer or the Private Exchange, as the case may be, and
which includes an opinion that (i) each of the Company and the Guarantors
has duly authorized, executed and delivered the Exchange Notes and
Private Exchange Notes and the related indenture and (ii) each of the
Exchange Notes or the Private Exchange Notes, as the case may be, and
related indenture constitute a legal, valid and binding obligation of
each of the Company and the Guarantors, enforceable against each of the
Company and the Guarantors in accordance with its respective terms (with
customary exceptions).
(s) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Company and the
Guarantors (or to such other Person as directed by the Company and the
Guarantors) in exchange for the Exchange Notes or the Private Exchange
Notes, as the case may be, the Company and the Guarantors shall mark, or
cause to be marked, on such Registrable Notes that such Registrable Notes
are being canceled in exchange for the Exchange Notes or the Private
Exchange Notes, as the case may be; and, in no event shall such
Registrable Notes be marked as paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and the managing underwriter(s), if any,
participating in the disposition of such Registrable Notes and their
respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc. (the "NASD").
(u) Use their respective best efforts to take all other reasonable
steps necessary to effect the registration of the Registrable Notes
covered by a Registration Statement contemplated hereby.
The Company and the Guarantors may require each seller of Registrable
Notes or Participating Broker-Dealer as to which any registration is being
effected to furnish to the Company and the Guarantors such information
regarding such seller or Participating Broker-Dealer and the distribution of
such Registrable Notes or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, as the Company
<PAGE> 25
-23-
and the Guarantors may, from time to time, reasonably request. The Company may
exclude from such registration the Registrable Notes of any seller or
Participating Broker-Dealer who unreasonably fails to furnish such information
within a reasonable time after receiving such request. Each seller as to which
any Shelf Registration is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will
forthwith discontinue disposition of such Registrable Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such
Holder or Participating Broker-Dealer, as the case may be, until such Holder's
or Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k), or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements
thereto. In the event the Company shall give any such notice, each of the
Effectiveness Period and the Applicable Period shall be extended by the number
of days during such periods from and including the date of the giving of such
notice to and including the date when each seller of Registrable Notes covered
by such Registration Statement or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
or (y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company and the Guarantors shall be borne by the
Company and the Guarantors, jointly and severally, whether or not the Exchange
Offer or a Shelf Registration is filed or becomes effective, including, without
limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
<PAGE> 26
-24-
limitation, reasonable fees and disbursements of counsel in connection with
Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions in the United States (x) where
the Holders of Registrable Notes are located, in the case of the Exchange
Notes, or (y) as provided in Section 5(h), in the case of Registrable Notes or
Exchange Notes to be sold by a Participating Broker-Dealer during the
Applicable Period)), (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Notes or Exchange Notes in a
form eligible for deposit with The Depository Trust Company and of printing
Prospectuses if the printing of Prospectuses is reasonably requested by the
managing underwriter or underwriters, if any, or, in respect of Registrable
Notes or Exchange Notes to be sold by any Participating Broker-Dealer during
the Applicable Period, by the Holders of a majority in aggregate principal
amount of the Registrable Notes included in any Registration Statement or of
such Exchange Notes, as the case may be), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company and
fees and disbursements of special counsel for the sellers of Registrable Notes
(subject to the provisions of Section 6(b)), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, (vii) Securities Act liability insurance, if the Company desire
such insurance, (viii) fees and expenses of the Trustee, (ix) fees and expenses
of all other Persons retained by the Company, (x) internal expenses of the
Company and the Guarantors (including, without limitation, all salaries and
expenses of officers and employees of the Company and the Guarantors performing
legal or accounting duties), (xi) the expense of any annual audit, (xii) the
fees and expenses incurred in connection with any listing of the securities to
be registered on any securities exchange and (xiii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the Company
and the Guarantors, jointly and severally, shall reimburse the Holders of the
Registrable Notes being registered in such registration for the reasonable fees
and disbursements (which fees and disbursements shall not in any event exceed
$25,000) of not more than one counsel (in addition to
<PAGE> 27
-25-
appropriate local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Registrable Notes to be included in such Registration
Statement and other reasonable out-of-pocket expenses of the Holders of
Registrable Notes incurred in connection with the registration of the
Registrable Notes. The Company and the Guarantors shall not have any
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities.
7. Indemnification
(a) Each of the Company and the Guarantors, jointly and severally,
agrees to indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, the officers and directors of each such Person, and each Person, if
any, who controls any such Person within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act (each, a "Participant"),
from and against any and all losses, claims, damages and liabilities
(including, without limitation, the reasonable legal fees and other expenses
actually incurred in connection with any suit, action or proceeding or any
claim asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary Prospectus,
or caused by, 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, in light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Company in writing by such
Participant expressly for use therein; provided that the foregoing indemnity
with respect to any preliminary Prospectus shall not inure to the benefit of
any Participant (or to the benefit of an officer or director of such
Participant or any Person controlling such Participant) from whom the Person
asserting any such losses, claims, damages or liabilities purchased
Registrable Notes or Exchange Notes if such untrue statement or omission or
alleged untrue statement or omission made in such preliminary Prospectus is
eliminated or remedied in the related Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) and a
copy of the related Prospectus (as so amended or supplemented) shall have been
fur-
<PAGE> 28
-26-
nished to such Participant at or prior to the sale of such Registrable or
Exchange Notes, as the case may be, to such Person.
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Company and the Guarantors, their
respective directors and officers and each Person who controls any of the
Company or the Guarantors within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company and the Guarantors to each Participant and shall
have the rights and duties given to the Company and the Guarantors in paragraph
(c) of this Section 7 (except that if the Company and the Guarantors shall have
assumed the defense thereof, such Participant shall not be required to do so,
but may employ separate counsel therein and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
holder), but only with reference to information relating to such Participant
furnished to the Company and the Guarantors in writing by such Participant
expressly for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary Prospectus. The liability of any
Participant under this paragraph (b) shall in no event exceed the proceeds
received by such Participant from sales of Registrable Notes or Exchange Notes
giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either
paragraph (a) or (b) of this Section 7, such Person (the "Indemnified Person")
shall promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain one counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses incurred by such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the
<PAGE> 29
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Indemnified Person and such Indemnified Person shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to any such Indemnifying
Person. It is understood that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one separate law firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Participants and such control Persons of Participants shall be designated
in writing by Participants who sold a majority in interest of Registrable Notes
and Exchange Notes sold by all such Participants and any such separate firm for
the Company and the Guarantors, their directors, their officers and such
control Persons of the Company and the Guarantors shall be designated in
writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its prior written consent, but if
settled with such consent or if there be a final judgment for the plaintiff for
which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, the Indemnifying Person agrees to indemnify any Indemnified Person
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
Indemnified Person shall have requested an Indemnifying Person to reimburse the
Indemnified Person for reasonable fees and expenses incurred by counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and
(ii) such Indemnifying Person shall not have reimbursed the Indemnified Person
in accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Party is contesting, in good faith, the request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Person, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability on claims that are the subject matter of such proceeding.
<PAGE> 30
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(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company and the Guarantors on the one hand and the Participants on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Guarantors on the
one hand and the Participants on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Guarantors or by the
Participants and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses actually incurred by such Indemnified Person
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section
7 will be in addition to any liability
<PAGE> 31
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which the Indemnifying Persons may otherwise have to the Indemnified Persons
referred to above.
8. Rules 144 and 144A
Each of the Company and the Guarantors covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder in a timely
manner and, if at any time the Company is not required to file such reports, it
will, upon the request of any Holder of Registrable Notes, make publicly
available other information of a like nature so long as necessary to permit
sales pursuant to Rule 144 or Rule 144A. Each of the Company and the
Guarantors further covenants that so long as any Registrable Notes remain
outstanding to make available to any Holder of Registrable Notes in connection
with any sale thereof, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
(a) such Rule 144A, or (b) any similar rule or regulation hereafter adopted by
the SEC.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company and the Guarantors.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Company or any Guarantor
of any of its obligations under this Agreement, other than the occurrence of an
event which requires payment of Additional Interest, each Holder of Registrable
<PAGE> 32
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Notes, in addition to being entitled to exercise all rights provided herein, in
the Indenture or, in the case of the Initial Purchaser, in the Purchase
Agreement or granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Each of the Company
and the Guarantors jointly and severally agree that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees, jointly and
severally, that, in the event of any action for specific performance in respect
of such breach, it shall waive the defense that a remedy at law would be
adequate.
(b) Enforcement. The Trustee shall be authorized to enforce the
provisions of this Agreement for the ratable benefit of the Holders.
(c) No Inconsistent Agreements. None of the Company or the Guarantors
has, as of the date hereof, and the Company and the Guarantors shall not, after
the date of this Agreement, enter into any agreement with respect to any of
their securities that is inconsistent with the rights granted to the Holders of
Registrable Notes in this Agreement or otherwise conflicts with the provisions
hereof. None of the Company or the Guarantors has entered or will enter into
any agreement with respect to any of its securities which will grant to any
Person piggy-back rights with respect to a Registration Statement required to
be filed under this Agreement.
(d) Adjustments Affecting Registrable Notes. Neither the Company nor
the Guarantors shall, directly or indirectly, take any action with respect to
the Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company and the Guarantors have obtained the
written consent of Holders of at least a majority of the then outstanding
aggregate principal amount of Registrable Notes. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Notes whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit
<PAGE> 33
-31-
or compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being sold by such Holders pursuant to such Registration Statement,
provided that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(f) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address given by the Trustee to the
Company; and
(ii) if to the Company, Booth Creek Ski Holdings, Inc., Highway 267
and Northstar Drive, Truckee, California, Attention: Chief Financial
Officer, with a copy to Winston & Strawn, 35 West Wacker Drive, Chicago,
Illinois 60601, Attention: Bruce A. Toth, Esq.
All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) five business
days after being deposited in the mail, postage prepaid, if mailed; (iii) one
business day after being timely delivered to a next-day air courier; and (iv)
when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Registrable Notes.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE> 34
-32-
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall 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.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final expression
of their agreement, and is intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(m) Joint and Several Obligations. Unless otherwise stated herein,
each of the obligations of the Company and the Guarantors under this Agreement
shall be joint and several obligations of each of them.
(n) Notes Held by the Company or their Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes
is required hereunder, Registrable Notes held by the Company or their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
<PAGE> 35
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BOOTH CREEK SKI HOLDINGS, INC.
TRIMONT LAND COMPANY
SIERRA-AT-TAHOE, INC.
BEAR MOUNTAIN, INC.
WATERVILLE VALLEY SKI RESORT, INC.
MOUNT CRANMORE SKI RESORT, INC.
BOOTH CREEK SKI ACQUISITION CORP.
SKI LIFTS, INC.
GRAND TARGHEE INCORPORATED
B-V CORPORATION
TARGHEE COMPANY
TARGHEE SKI CORP.
LMRC HOLDING CORP.
LOON MOUNTAIN RECREATION CORPORATION
LOON REALTY CORP.
By: /s/ Jeffrey Joyce
---------------------------------------
Name: Jeffrey J. Joyce
Title: Executive Vice President, Finance
<PAGE> 36
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The foregoing Agreement is hereby conformed and accepted as of the date first
above written.
CIBC OPPENHEIMER CORP.
By: /s/ Edward Levy
---------------------------------------
Name: Edward Levy
Title: Managing Director
<PAGE> 1
EXHIBIT 99.1
BOOTH CREEK SKI HOLDINGS, INC. COMPLETES MERGER WITH
NEW HAMPSHIRE'S LOON MOUNTAIN
LINCOLN, NEW HAMPSHIRE (FEBRUARY 26, 1998) -- Booth Creek Ski
Holdings, Inc. (BCSH), one of the largest U.S. operators of ski and
summer mountain resorts owned by George N. Gillett, Jr. and family,
today announced it had completed its merger with the Loon Mountain
Recreation Corporation, the owner of Loon Mountain. The announcement
was made by Tim Beck, president of Eastern Operations for Booth Creek.
"Loon is one of New England's jewels and an excellent fit for Booth
Creek's group of resorts," said George Gillett, owner and chairman of
Booth Creek. "Not only is the resort easily accessible, Loon is a
superior year round venue, providing a wide range of activities for all
ages. In addition to first class skiing and riding, Loon is a wonderful
family destination offering Children's Theater, The Loon Wildlife
Theater, tubing, cross-country skiing, snowshoeing and ice skating. We
are pleased Loon is now officially a member of the Booth Creek family."
Located in the heart of the White Mountain National Forest, Loon
Mountain was rated the number one resort in the East for accessibility
by Snow Country magazine in the September 1997 issue. In the October
1997 issue, Ski magazine awarded Loon medals for snow quality,
grooming, terrain, family programs, lifts and accessibility.
Loon has vertical drop of 2,100 ft., 41 trails and eight lifts
including a four passenger-high speed enclosed gondola and a high-speed
detachable quad chairlift. This season, Loon spent $2.3 million to
upgrade its snowmaking system, which covers close to 100% of its trails
with the cleanest, most environmentally safe snowmaking technology in
the world.
Loon is also a popular summer destination, offering hiking, mountain
biking, horseback riding, summer theater and scenic lift rides.
With the acquisition of Loon, Booth Creek Ski Holdings, Inc. owns and
operates eight ski resort complexes encompassing eleven separate
resorts, making the company the fourth largest ski resort operator in
North America based on skier day totals. The Company=s resorts include
Northstar-at-Tahoe, Sierra-at-Tahoe and Bear Mountain in California;
Waterville Valley and Mt. Cranmore in New Hampshire; Grand Targhee in
Wyoming; and the four ski areas that comprise the Summit at Snoqualmie
in Northwest Washington.
