SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D**
Under the Securities Exchange Act of 1934
(Amendment No. )*
American Skiing Company
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
029654308
(Cusip Number)
Matthew Nimetz, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
(212) 373-3022
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 7, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
`for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The total number of shares of Stock reported herein is 28,572,000, which would
constitute approximately 48.5% of the 58,858,773 shares of Stock that would be
outstanding if all of the shares of Series B Preferred (as defined below) were
converted. All ownership percentages set forth herein are based on there being
30,286,773 shares of Stock outstanding.
<PAGE>
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
1. Name of Reporting Person:
Oak Hill Capital Partners, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): / /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
25,118,598(1)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
- --------
(1) Represents the shares of Stock that will be beneficially owned upon
conversion of the Issuer's 8.5% Series B Convertible Participating
Preferred Stock, par value $.01 per share (the "Series B
Preferred"). On conversion, 24,737,638 shares of Stock will be owned
directly by Oak Hill Capital Partners, L.P., through its general
partner, OHCP GenPar, L.P., through OHCP GenPar, L.P.'s general
partner, OHCP MGP, LLC. On conversion, Oak Hill Capital Partners,
L.P. will also beneficially own 380,960 shares of Stock owned
directly by OHCP Ski, L.P., as its general partner.
<PAGE>
13. Percent of Class Represented by Amount in Row (11): 45.3%(2)
14. Type of Reporting Person: PN
- --------
(2) Assumes that there are 55,405,371 shares of Stock outstanding.
<PAGE>
1. Name of Reporting Person:
Oak Hill Capital Management Partners, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
634,298(3)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 2.0%(4)
- --------
(3) Represents the shares of Stock that will be beneficially owned upon
conversion of the Series B Preferred. On conversion, 634,298 shares
of Stock will be owned directly by Oak Hill Capital Management
Partners, L.P., through its general partner, OHCP GenPar, L.P.,
through OHCP GenPar, L.P.'s general partner, OHCP MGP, LLC.
(4) Assumes that there are 30,921,071 shares of Stock outstanding.
<PAGE>
14. Type of Reporting Person: PN
<PAGE>
1. Name of Reporting Person:
OHCP GenPar, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
25,752,896(5)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
- --------
(5) Represents the shares of Stock that will be beneficially owned upon
conversion of the Issuer's Series B Preferred. On conversion, OHCP
GenPar, L.P. will beneficially own the following shares of Stock:
(i) 24,737,638 shares of Stock of Oak Hill Capital Partners, L.P. in
its capacity as general partner; (ii) 634,298 shares of Stock of Oak
Hill Capital Management Partners, L.P. in its capacity as general
partner and (iii) 380,960 shares of Stock of OHCP Ski, L.P., in its
capacity as general partner of Oak Hill Capital Partners, L.P.,
which is the general partner of OHCP Ski, L.P. OHCP GenPar, L.P.'s
power is exercised through its general partner, OHCP MGP, LLC.
<PAGE>
13. Percent of Class Represented by Amount in Row (11): 46%(6)
14. Type of Reporting Person: PN
- --------
(6) Assumes that there are 56,039,669 shares of Stock outstanding.
<PAGE>
1. Name of Reporting Person:
OHCP MGP, LLC
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
25,752,896(7)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 46%(8)
14. Type of Reporting Person: CO
- --------
(7) See footnote (1) to page relating to OHCP GenPar, L.P. (8) Assumes
that there are 56,039,669 shares of Stock outstanding.
<PAGE>
1. Name of Reporting Person:
Oak Hill Securities Fund, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,409,552(9)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 4.4%(10)
- --------
(9) Represents the shares of Stock that will be beneficially owned upon
conversion of the Issuer's Series B Preferred. On conversion,
1,409,552 shares of Stock will be owned directly by Oak Hill
Securities Fund, L.P., through its general partner, Oak Hill
Securities GenPar, L.P., through Oak Hill Securities GenPar, L.P.'s
general partner, Oak Hill Securities MGP, Inc.
(10) Assumes that there are 31,696,325 shares of Stock outstanding.
<PAGE>
14. Type of Reporting Person: PN
<PAGE>
1. Name of Reporting Person:
Oak Hill Securities GenPar, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,409,552(11)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 4.4%(12)
- --------
(11) Represents the shares of Stock that will be beneficially owned upon
conversion of the Issuer's Series B Preferred. Power is exercised in
its capacity as general partner to Oak Hill Securities Fund, L.P.
and through its general partner, Oak Hill Securities MGP, Inc. See
also footnote (1) to page relating to Oak Hill Securities Fund, L.P.
(12) Assumes that there are 31,696,325 shares of Stock outstanding.
<PAGE>
14. Type of Reporting Person: PN
<PAGE>
1. Name of Reporting Person:
Oak Hill Securities MGP, Inc.
2. Check the Appropriate Box if a Member of a Group:
(c) / /
(d) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,409,552 (13)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 4.4%(14)
14. Type of Reporting Person: CO
- --------
(13) See footnote (1) to page relating to OHCP GenPar, L.P.
(14) Assumes that there are 31,696,325 shares of Stock outstanding.
<PAGE>
1. Name of Reporting Person:
Oak Hill Securities Fund II, L.P.
2. Check the Appropriate Box if a Member of a Group:
(e) / /
(f) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,409,552(15)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 4.4%(16)
- --------
(15) Represents the shares of Stock that will be beneficially owned upon
conversion of the Issuer's Series B Preferred. On conversion,
1,409,552 shares of Stock will be owned directly by Oak Hill
Securities Fund II, L.P., through its general partner, Oak Hill
Securities GenPar II, L.P., through Oak Hill Securities GenPar II,
L.P.'s general partner, Oak Hill Securities MGP II, Inc.
(16) Assumes that there are 31,696,325 shares of Stock outstanding.
<PAGE>
14. Type of Reporting Person: PN
<PAGE>
1. Name of Reporting Person:
Oak Hill Securities GenPar II, L.P.
2. Check the Appropriate Box if a Member of a Group:
(g) / /
(h) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,409,552(17)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 4.4%(18)
14. Type of Reporting Person: PN
- --------
(17) Power is exercised in its capacity as general partner to Oak Hill
Securities Fund II, L.P. and through its general partner, Oak Hill
Securities MGP II, Inc. See also footnote (1) to page relating to
Oak Hill Securities Fund II, L.P.
(18) Assumes that there are 31,696,325 shares of Stock outstanding.
<PAGE>
1. Name of Reporting Person:
Oak Hill Securities MGP II, Inc.
2. Check the Appropriate Box if a Member of a Group:
(i) / /
(j) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,409,552 (19)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 4.4%(20)
14. Type of Reporting Person: CO
- --------
(19) See footnote (1) to page relating to OHCP Securities GenPar II, L.P.
(20) Assumes that there are 31,696,325 shares of Stock outstanding.
<PAGE>
1. Name of Reporting Person:
OHCP Ski, L.P.
2. Check the Appropriate Box if a Member of a Group:
(k) / /
(l) / X /
3. SEC Use Only
4. Source of Funds: OO
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Delaware
7. Sole Voting Power: 0
Number of
Shares
Beneficially 8. Shared Voting Power: 0
Owned By
Each
Reporting 9. Sole Dispositive Power: 0
Person
With
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
380,960(21)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 1.2%(22)
14. Type of Reporting Person: CO
- --------
(21) Power is exercised through its general partner, Oak Hill Capital
Partners, L.P. (22) Assumes that there are 30,667,773 shares of Stock
outstanding.
<PAGE>
Item 1. Security and Issuer.
This statement relates to shares of Common Stock, par value $.01 per
share (the "Stock"), of American Skiing Company (the "Issuer"). The principal
executive offices of the Issuer are located at Sunday River Road; Bethel, Maine;
04217.
Item 2. Identity and Background.
(a) This statement is being filed pursuant to Rule 13d of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, by
the following: Oak Hill Capital Partners, L.P., a Delaware limited partnership
("OHCP"), Oak Hill Capital Management Partners, L.P., a Delaware limited
partnership ("OHCMP"), OHCP GenPar, L.P., a Delaware limited partnership ("OHCP
GenPar"), OHCP MGP, LLC, a Delaware limited liability company ("OHCP MGP"), Oak
Hill Securities Fund, L.P., a Delaware limited partnership ("OHSF"), Oak Hill
Securities GenPar, L.P., a Delaware limited partnership ("OHS GenPar"), Oak Hill
Securities MGP, Inc., a Delaware corporation ("OHS MGP"), Oak Hill Securities
Fund II, L.P., a Delaware limited partnership ("OHSF II"), Oak Hill Securities
GenPar II, L.P., a Delaware limited partnership ("OHS GenPar II"), Oak Hill
Securities MGP II, Inc., a Delaware corporation ("OHS MGP II") and OHCP Ski
L.P., a Delaware limited partnership ("OHCP Ski"). OHCP, OHCMP, OHCP GenPar,
OHCP MGP, OHSF, OHS GenPar, OHS MGP, OHSF II, OHS GenPar II, OHS MGP II and OHCP
Ski are sometimes hereinafter collectively referred to as the "Reporting
Persons." The Reporting Persons are making this single, joint filing because
they may be deemed to constitute a "group" within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, although neither the fact of
this filing nor anything contained herein shall be deemed to be an admission by
the Reporting Persons that a group exists.
(b) - (c)
OHCP is a Delaware limited partnership, the principal business of which
is making investments in public and private securities. The principal business
address of OHCP is 201 Main Street, Suite 2300, Fort Worth, Texas 76102. OHCP
serves as the general partner of OHCP Ski.
OHCMP is a Delaware limited partnership, the principal business of
which is making investments in public and private securities. The principal
business address of OHCMP is 201 Main Street, Suite 2300, Fort Worth, Texas
76102. OHCMP is a limited partner of OHCP Ski.
OHCP GenPar is a Delaware limited partnership, the principal business
of which is acting as general partner of OHCP and OHCMP. The principal business
address of OHCP GenPar, which also serves as its principal office, is 201 Main
Street, Suite 3100, Fort Worth, Texas 76102.
<PAGE>
OHCP MGP is a Delaware limited liability company, the principal
business of which is acting as general partner of OHCP GenPar. The principal
business address of OHCP MGP, which also serves as its principal office, is 201
Main Street, Suite 3100, Fort Worth, Texas 76102. The name, residence or
business address, and present principal occupation or employment of each
director, executive officer and controlling person of OHCP MGP are as follows:
RESIDENCE OR PRINCIPAL OCCUPATION
NAME BUSINESS ADDRESS OR EMPLOYMENT
- ---- ---------------- -------------
J. Taylor Crandall 201 Main St., Ste. 3100 Manager and Vice President
Fort Worth, Texas 76102
Daniel L. Doctoroff 65 E. 55th Street Manager and Vice President
New York, NY 10022
Steven Gruber 65 E. 55th Street Manager and Vice President
New York, NY 10022
Mark A. Wolfson 201 Main St., Ste. 3100 Manager and Vice President
Fort Worth, Texas 76102
W. Robert Cotham 201 Main St., Ste. 2600 Manager and Vice President
Fort Worth, Texas 76102
John H. Fant 201 Main St., Ste. 3100 Manager, Vice President and
Fort Worth, Texas 76102 Secretary
Kevin G. Levy 201 Main St., Ste. 3100 Manager, Vice President and
Fort Worth, Texas 76102 Secretary
John R. Monsky 65 East 55th Street Vice President, Treasurer
New York, New York 10022 and Secretary
OHSF is a Delaware limited partnership, the principal business of which
is making investments in public and private securities. The principal business
address of OHSF, which also serves as its principal office, is 201 Main Street,
Suite 3100, Fort Worth, Texas 76102. OHSF is a limited partner of OHCP Ski.
OHS GenPar is a Delaware limited partnership, the principal business of
which is acting as general partner to OHSF. The principal business address of
OHS GenPar, which also serves as its principal office, is 201 Main Street, Suite
3100, Fort Worth, Texas 76102.
OHS MGP is a Delaware corporation, the principal business of which is
acting as general partner to OHS GenPar. The principal business address of OHS
MGP, which also serves as its principal office, is 65 East 55th Street, 32nd
Floor, New York, New York 10022. The name, residence or business address, and
present principal occupation or employment of each director, executive officer
and controlling person of OHS MGP are as follows:
<PAGE>
RESIDENCE OR PRINCIPAL OCCUPATION
NAME BUSINESS ADDRESS OR EMPLOYMENT
- ---- ---------------- -------------
Glenn R. August 65 E. 55th Street President and Director
New York, NY 10022
Charles Irwin 201 Main St., Ste. 3100 Vice President and Director
Fort Worth, Texas 76102
Thomas Delatour 201 Main St., Ste. 3100 Vice President and Director
Fort Worth, Texas 76102
William H. Bohnsack 65 E. 55th Street Vice President and Treasurer
New York, NY 10022
John R. Monsky 65 E. 55th Street Vice President and Secretary
New York, NY 10022
Scott D. Krase 65 E. 55th Street Vice President and Assistant
New York, NY 10022 Secretary
Roan Caruthers 201 Main St., Ste. 3100 Assistant Vice President
Fort Worth, Texas 76102
Mark Warner 201 Main St., Ste. 3100 Assistant Vice President
Fort Worth, Texas 76102
OHSF II is a Delaware limited partnership, the principal business of
which is making investments in public and private securities. The principal
business address of OHSF, which also serves as its principal office, is 201 Main
Street, Suite 3100, Fort Worth, Texas 76102.
OHS GenPar II is a Delaware limited partnership, the principal business
of which is acting as general partner to OHSF II. The principal business address
of OHS GenPar II, which also serves as its principal office, is 201 Main Street,
Suite 3100, Fort Worth, Texas 76102.
OHS MGP II is a Delaware corporation, the principal business of which
is acting as general partner to OHS GenPar II. The principal business address of
OHS MGP II, which also serves as its principal office, is 65 East 55th Street,
32nd Floor, New York, New York 10022. The name, residence or business address,
and present principal occupation or employment of each director, executive
officer and controlling person of OHS MGP II are as follows:
RESIDENCE OR PRINCIPAL OCCUPATION
NAME BUSINESS ADDRESS OR EMPLOYMENT
- ---- ---------------- -------------
Glenn R. August 65 E. 55th Street President and Director
New York, NY 10022
Richard Sarnoff 1540 Broadway, 22nd Floor Director
New York, NY 10036
<PAGE>
RESIDENCE OR PRINCIPAL OCCUPATION
NAME BUSINESS ADDRESS OR EMPLOYMENT
- ---- ---------------- -------------
William H. Bohnsack 65 E. 55th Street Vice President and Treasurer
New York, NY 10022
Scott D. Krase 65 E. 55th Street Vice President and Secretary
New York, NY 10022
OHCP Ski is a Delaware limited partnership, the principal business of
which is investing in public and private equity securities. The principal
business address of OHCP Ski, which also serves as its principal office, is 201
Main Street, Suite 3100, Fort Worth, Texas 76102.
(d) None of the entities or persons identified in this Item 2 has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) None of the entities or persons identified in this Item 2 has,
during the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
(f) All of the natural persons identified in this Item 2 are citizens
of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
This statement is being filed as a result of the purchase of 150,000
shares of Series B Preferred of the Issuer, which is convertible into 28,572,000
shares of Stock, by OHCP, OHCMP, OHSF and OHCP Ski, as further described in Item
5(a), pursuant to the Preferred Stock Subscription Agreement, by and among OHCP,
OHCMP, OHSF, OHCP Ski and the Issuer, dated July 9, 1999, and as amended by
Amendment No. 1, dated as of August 6, 1999 (the "Preferred Stock Subscription
Agreement"). The source and amount of the funds used by the Reporting Persons to
purchase shares of the Stock are as follows:
REPORTING PERSON SOURCE OF FUNDS AMOUNT OF FUNDS
- ---------------- --------------- ---------------
OHCP Contributions from $129,870,000
Partners
OHCMP Contributions from $3,330,000
Partners
OHCP GenPar Not Applicable Not Applicable
OHCP MGP Not Applicable Not Applicable
<PAGE>
REPORTING PERSON SOURCE OF FUNDS AMOUNT OF FUNDS
- ---------------- --------------- ---------------
OHSF Contributions from $14,800,000(23)
Partners
OHS GenPar Not Applicable Not Applicable
OHS MGP Not Applicable Not Applicable
OHSF II Contributions from $7,400,000(24)
Partners
OHS GenPar II Not Applicable Not Applicable
OHS MGP II Not Applicable Not Applicable
OHCP Ski Contributions from $2,000,000
Partners
Item 4. Purpose of Transaction.
The Reporting Persons acquired and continue to hold the shares of the
Stock reported herein for investment purposes. The Reporting Persons intend to
review continuously their equity position in the Issuer. Depending upon future
evaluations of the business prospects of the Issuer and upon other developments,
including, but not limited to, general economic and business conditions and
money market and stock market conditions, each of Reporting Persons may
determine (i) to convert or to not convert the Series B Preferred into Stock
and/or (ii) to increase or decrease its equity interest in the Issuer by
acquiring additional shares of the Stock (or other securities convertible or
exercisable into shares of the Stock) or by disposing of all or a portion of its
holdings, subject to any applicable legal and contractual restrictions on its
ability to do so.
Pursuant to the Stockholders' Agreement, dated August 9, 1999, by and
among OHCP, OHCMP, OHSF, OHCP Ski, the Issuer and Leslie B. Otten (the
"Stockholders Agreement"), OHCP, OHCMP, OHSF and OHCP Ski have the right to
elect four members of the Issuer's Board of Directors ("the Board"), one member
to each of the committees of the Board and one member of the Board of Directors
of each material subsidiary of the Issuer, provided in each case that OHCP,
OHCMP, OHSF and OHCP Ski, together, maintain certain ownership levels of the
Stock. In addition, pursuant to the Stockholders' Agreement, certain actions of
the Issuer require the affirmative vote of at least one of the directors elected
by OHCP, OHCMP, OHSF and OHCP Ski as a group.
- --------
(23) Pursuant to the Forward Purchase Agreement, dated as of August 9,
1999, between OHSF and OHSF II, OHSF sold to OHSF II 7,400 shares of
Series B Preferred, which are convertible into 1,409,552 shares of
Stock, for a purchase price of $7,400,000.
(24) See footnote (1) on this page.
<PAGE>
Except as set forth in this Item 4, the Reporting Persons have no
present plans or proposals that relate to or that would result in any of the
actions specified in clauses (a) through (j) of Item 4 of Schedule 13D of the
Act.
Item 5. Interest in Securities of the Issuer.
(a) As of the date hereof, (i) OHCP beneficially owns 25,118,598 shares
of the Stock or 45.3% of the issued and outstanding shares of the Stock; (ii)
OHCMP beneficially owns 634,298 shares of the Stock or 2% of the issued and
outstanding shares of the Stock; (iii) OHCP GenPar beneficially owns 25,752,896
shares of Stock or 46% of the issued and outstanding shares of the Stock; (iv)
OHCP MGP beneficially owns 25,752,896 shares of Stock or 46% of the issued and
outstanding shares of the Stock; (v) OHSF beneficially owns 1,409,552 shares of
the Stock or 4.4% of the issued and outstanding shares of the Stock; (vi) OHS
GenPar beneficially owns 1,409,552 shares of Stock or 4.4% of the issued and
outstanding shares of the Stock; (vii) OHS MGP beneficially owns 1,409,552
shares of Stock or 4.4% of the issued and outstanding shares of the Stock;
(viii) OHSF II beneficially owns 1,409,552 shares of the Stock or 4.4% of the
issued and outstanding shares of the Stock; (ix) OHS GenPar II beneficially owns
1,409,552 shares of Stock or 4.4% of the issued and outstanding shares of the
Stock; (x) OHS MGP II beneficially owns 1,409,552 shares of Stock or 4.4% of the
issued and outstanding shares of the Stock and (xi) OHCP Ski beneficially owns
380,960 shares of the Stock or 1.2% of the issued and outstanding shares of the
Stock.
(b) Not Applicable.
(c) To the best knowledge of each of the Reporting Persons, none of the
Reporting Persons has effected any transactions in the Stock during the past 60
days.
(d) No person other than the persons listed is known to have the right
to receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, any securities owned by any member of the group.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
None.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 -- Preferred Stock Subscription Agreement (including
Amendment No. 1)
Exhibit 2 -- Voting Agreement
Exhibit 3 -- Stockholders' Agreement
Exhibit 4 -- Certificate of Designation
<PAGE>
Exhibit 5 -- Forward Purchase Agreement
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
DATED: October 14, 1999
OAK HILL CAPITAL PARTNERS,
L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
- ------------------------
Name: Steven B. Gruber
Title: Vice President
OAK HILL CAPITAL
MANAGEMENT PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
- ------------------------
Name: Steven B. Gruber
Title: Vice President
OHCP GENPAR, L.P.
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
- ------------------------
Name: Steven B. Gruber
Title: Vice President
OHCP MGP, LLC
By: /s/ Steven B. Gruber
- ------------------------
Name: Steven B. Gruber
Title: Vice President
<PAGE>
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
its general partner
By: Oak Hill Securities MGP, Inc.,
its general partner
By: /s/ Scott D. Krase
- ----------------------
Name: Scott D. Krase
Title: Vice President
OAK HILL SECURITIES GENPAR,
L.P.
By: Oak Hill Securities MGP, Inc.,
its general partner
By: /s/ Scott D. Krase
- ----------------------
Name: Scott D. Krase
Title: Vice President
OAK HILL SECURITIES MGP, INC.
By: /s/ Scott D. Krase
- ----------------------
Name: Scott D. Krase
Title: Vice President
OAK HILL SECURITIES FUND II,
L.P.
By: Oak Hill Securities GenPar II,
L.P., its general partner
By: Oak Hill Securities MGP II, Inc.,
its general partner
By: /s/ Scott D. Krase
- ----------------------
Name: Scott D. Krase
Title: Vice President
OAK HILL SECURITIES GENPAR II,
L.P.
By: Oak Hill Securities MGP II, Inc.,
its general partner
By: /s/ Scott D. Krase
- ----------------------
Name: Scott D. Krase
Title: Vice President
<PAGE>
OAK HILL SECURITIES MGP II,
INC.
By: /s/ Scott D. Krase
- ----------------------
Name: Scott D. Krase
Title: Vice President
OHCP SKI, L.P.
By: Oak Hill Capital Partners, L.P.,
its general partner
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
- ------------------------
Name: Steven B. Gruber
Title: Vice President
================================================================================
-------------------------------------------------
PREFERRED STOCK SUBSCRIPTION AGREEMENT
-------------------------------------------------
AMONG
AMERICAN SKIING COMPANY
AND
OAK HILL CAPITAL PARTNERS, L.P.
AND
THE OTHER ENTITIES NAMED IN ANNEX A HERETO
Dated July 9, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms.................................................1
1.02. Other Definitions.....................................................8
1.03. Terms Generally.......................................................9
ARTICLE II
SUBSCRIPTION AND SALE
2.01. Subscription and Sale of the Shares...................................9
2.02. Purchase Price.......................................................10
2.03. Closing..............................................................10
2.04. Closing Deliveries by the Company....................................10
2.05. Closing Deliveries by the Purchasers.................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01. Organization, Authority and Qualification of the Company and the
Company Subsidiaries; Company Subsidiaries...........................11
3.02. Capital Stock of the Company; Ownership of the Shares................13
3.03. No Conflict..........................................................14
3.04. Governmental Consents and Approvals..................................14
3.05. SEC Filings; Financial Statements....................................14
3.06. No Undisclosed Liabilities...........................................15
3.07. Absence of Certain Changes or Events.................................15
3.08. Litigation...........................................................16
3.09. Compliance with Laws.................................................16
3.10. Environmental Matters................................................17
3.11. Material Contracts...................................................18
3.12. Intellectual Property................................................18
3.13. Year 2000 Compliance.................................................19
3.14. Title to Properties; Absence of Encumbrances.........................19
3.15. Employee Benefit Matters; Labor Matters..............................22
3.16. Insurance............................................................24
3.17. Brokers..............................................................24
3.18. Securities Law Compliance............................................24
-i-
<PAGE>
Section Page
3.19. Potential Conflict of Interest.......................................25
3.20. Taxes................................................................25
3.21. Condominium Associations; Time Share Arrangements....................26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
4.01. Organization and Authority of Each Purchaser.........................28
4.02. No Conflict..........................................................28
4.03. Governmental Consents and Approvals..................................28
4.04. Investment Purpose...................................................29
4.05. Status of Shares; Limitations on Transfer and Other Restrictions.....29
4.06. Sophistication and Financial Condition of Each Purchaser.............29
4.07. Fees and Expenses....................................................29
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Conduct of Business by the Company Pending the Closing...............30
5.02. Access to Information; Confidentiality...............................31
5.03. Investigation........................................................32
5.04. Public Announcements.................................................32
5.05. Delaware Reincorporation.............................................33
5.06. Company Stockholders' Meeting........................................33
5.07. NYSE Listing.........................................................33
5.08. No Solicitation of Transactions......................................33
5.09. Use of Proceeds......................................................34
5.10. Voting Agreement.....................................................34
5.11. Further Action; Consents; Filings....................................34
5.12. Tax Reporting........................................................35
5.13. Section 382 of the Code..............................................35
ARTICLE VI
CONDITIONS TO THE CLOSING
6.01. Conditions to the Obligations of Each Party..........................36
6.02. Conditions to Obligations of the Company.............................37
6.03. Conditions to Obligations of the Purchasers..........................37
-ii-
<PAGE>
Section Page
ARTICLE VII
INDEMNIFICATION
7.01. Survival of Representations and Warranties...........................38
7.02. Indemnification......................................................39
7.03. Limits on Indemnification............................................40
7.04. Form of Payment of Purchaser Losses..................................41
ARTICLE VIII
TERMINATION
8.01. Termination..........................................................41
8.02. Effect of Termination................................................42
ARTICLE IX
GENERAL PROVISIONS
9.01. Waiver...............................................................42
9.02. Expenses.............................................................42
9.03. Notices..............................................................43
9.04. Headings.............................................................44
9.05. Severability.........................................................44
9.06. Entire Agreement.....................................................45
9.07. Assignment...........................................................45
9.08. No Third Party Beneficiaries.........................................45
9.09. Amendment............................................................45
9.10. Governing Law; Forum; Arbitration....................................45
9.11. Counterparts.........................................................47
9.12. Specific Performance.................................................47
-iii-
<PAGE>
ANNEX/EXHIBITS
Annex A Purchasers
Exhibit A Certificate of Designation
Exhibit B Form of Stockholders' Agreement
Exhibit C Form of Opinion of Pierce Atwood, Outside Counsel to the Company
Exhibit D Form of Opinion of Shearman & Sterling, Special Counsel to the
Company
Exhibit E Form of Opinion of Counsel to the Purchasers
Exhibit F Form of Voting Agreement
DISCLOSURE SCHEDULE
-iv-
<PAGE>
PREFERRED STOCK SUBSCRIPTION AGREEMENT dated July 9, 1999 among
AMERICAN SKIING COMPANY, a Maine corporation (the "Company"), OAK HILL CAPITAL
PARTNERS, L.P., a Delaware limited partnership ("Oak Hill"), and the other
entities identified in Annex A attached hereto (together with Oak Hill, the
"Purchasers").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to the Purchasers, and
the Purchasers wish to purchase from the Company, an aggregate of 150,000 shares
of the Company's 8.5% Series B Convertible Participating Preferred Stock, par
value $.01 per share (the "Series B Preferred"), having the rights and
preferences set forth in the Certificate of Designation (defined herein), upon
the terms and subject to the conditions set forth herein. All shares of Series B
Preferred purchased pursuant to this Agreement are collectively referred to as
the "Shares";
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Purchasers and the Company
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Agreement" or "this Agreement" means this Preferred Stock
Subscription Agreement dated July 9, 1999 among the Company and the Purchasers
(including the Annex and the Exhibits hereto and the Disclosure Schedule) and
all amendments hereto made in accordance with the provisions of Section 9.09.
"Amended and Restated Credit Agreements" means, collectively, (i)
the Amended and Restated Credit Agreement dated as of November 12, 1997, as
amended on July 20, 1998, September 30, 1998 and March 3, 1999, and as it may be
further amended from time to time, among ASC East, Inc., certain Company
Subsidiaries, as borrowers, the Company, ASC West, Inc., and certain Company
Subsidiaries, as guarantors, the lenders and BankBoston, N.A., as agent for the
lenders; and (ii) the Amended and Restated Credit Agreement dated as of
<PAGE>
2
November 12, 1997, as amended on July 20, 1998, September 30, 1998 and March 3,
1999, and as it may be further amended from time to time, among ASC Utah, ASC
West, Inc. and certain Company Subsidiaries, as borrowers, the Company, as
guarantor, the lenders and BankBoston, N.A., as agent for the lenders.
"Articles of Incorporation" means the articles of incorporation of
the Company, as amended to the date of this Agreement.
"Board" means the board of directors of the Company.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in The
City of New York.
"By-laws" means the by-laws of the Company as amended as of the date
hereof and as may be amended from time to time.
"CERCLA" means the U.S. Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date hereof.
"Certificate of Designation" means the documents to be filed with
the Secretary of State of Maine, substantially in the form of Exhibit A attached
hereto, setting forth the rights and preferences of the Series B Preferred.
"Class A Common Stock" means the Class A common stock of the
Company, par value $.01 per share.
"Code" means the Internal Revenue Code of 1986, as amended through
the date hereof.
"Common Stock" means the common stock of the Company (excluding the
Class A Common Stock), par value $.01 per share.
"Company Subsidiary" or "Company Subsidiaries" means any Subsidiary
or all of the Subsidiaries of the Company, respectively, as such Subsidiaries
are identified in Section 3.01(b) of the Disclosure Schedule.
"Company Systems" shall mean all computer, hardware, software,
systems and equipment (including embedded microcontrollers in noncomputer
equipment) used, sold or licensed by the Company or any Company Subsidiary and
material to or necessary for the Company or any Company Subsidiary to carry on
its business as currently conducted.
"Competing Transaction" means the occurrence of a transaction
resulting in any of the following: (i) any Person, other than a trustee or other
fiduciary holding securities of the Company under a Company Benefit Plan or any
Company Subsidiary or any stockholder (and
<PAGE>
3
such stockholder's Affiliates) as of the date hereof and direct transferees
thereof, becoming, after the date hereof, the "beneficial owner" (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the
Company representing, or convertible into, 20% or more of the outstanding Voting
Securities; (ii) the merger or consolidation of the Company with any other
corporation; or (iii) the sale or transfer (in one transaction or a series of
related transactions) of all or any substantial part of the assets of the
Company and the Company Subsidiaries, taken as a whole, (including, without
limitation, a sale of stock of a Company Subsidiary (whether by sale or direct
issuance), representing a substantial part of the assets of the Company and the
Company Subsidiaries, taken as a whole) other than to a Company Subsidiary.
"control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Conversion Stock" means new shares of Common Stock issued or
issuable upon conversion of Shares.
"Development Activities" means real estate development activities
currently contemplated to be completed by the Company, as set forth in the
Project Plans for the following locations owned or controlled by the Company or
a Company Subsidiary: (i) Killington Resort Village; (ii) The Canyons Resort
Village; (iii) Steamboat Resort Village; (iv) Jordan Bowl Resort Village; and
(v) Park Avenue Redevelopment District at Heavenly.
"Director" means a member of the Board.
"Disclosure Schedule" means the Disclosure Schedule delivered in
connection with this Agreement dated as of the date hereof and incorporated
herein by reference.
"Encumbrance" means any security interest, pledge, mortgage, lien,
charge or encumbrance, but excluding Permitted Encumbrances.
"Environmental Laws" means any federal, state or local statute, law,
ordinance, regulation, rule, code or order and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials, as in effect as of the date of this Agreement.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any applicable
Environmental Law.
<PAGE>
4
"Governmental Authority" means any United States federal, state,
local, supranational or any foreign government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Hazardous Materials" means (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indenture" means the Indenture dated as of June 28, 1996, as
amended and as it may be further amended from time to time, relating to ASC
East, Inc.'s Series A and B 12% Senior Subordinated Notes due 2006, among ASC
East, Inc., as issuer, several of the Company Subsidiaries, as guarantors, and
the United States Trust Company of New York, as trustee.
"ING" means ING US Capital LLC.
"knowledge" means, with respect to any matter in question, that any
person identified in Section 1.01 of the Disclosure Schedule has knowledge of
such matter.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Liabilities" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law, Action or Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.
"Material Adverse Effect" means any circumstance, change in, or
effect on the Company, any Company Subsidiary or their businesses or any resort
location that, individually or in the aggregate with any other circumstances,
changes in, or effects on, the Company, any Company Subsidiary or their
businesses or any resort location is, or is reasonably expected to be,
materially adverse to the business of the Company and the Company Subsidiaries,
taken as a whole, or the financial condition, results of operations, prospects,
assets or properties of the Company and the Company Subsidiaries, taken as a
whole, except for any changes or effects principally resulting from or
principally arising in connection with (i) any occurrence or condition affecting
the leisure industry generally or (ii) any changes in general economic
conditions, it being understood that (x) the fact that the business or financial
condition, results of operations, prospects, assets or properties of each resort
location are consolidated with the other
<PAGE>
5
resort locations and business of the Company and the Company Subsidiaries for
purposes of defining whether there has been a "Material Adverse Effect" shall in
no way imply that a material adverse change in the business, financial
condition, results of operations, prospects, assets or properties of any single
resort location or Resort Village could not result in a Material Adverse Effect
and (y) solely for purposes of determining whether the condition set forth in
Section 6.03(a) shall have been satisfied, Material Adverse Effect shall also
include any circumstance, change in, or effect on the Development Activities
that is, or is reasonably expected to be, materially adverse to the Development
Activities in their entirety at any Resort Village.
"Mr. Otten" means Mr. Leslie B. Otten.
"NYSE" means the New York Stock Exchange.
"Permitted Encumbrances" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced or is reasonably expected to commence: (a) liens for taxes,
assessments and governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (b) Encumbrances imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other similar liens
arising in the ordinary course of business; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations or other obligations of a like nature incurred
in the ordinary course of business; (d) minor survey exceptions, reciprocal
easement agreements and other customary encumbrances on title to real property
that (i) were not incurred in connection with any indebtedness, (ii) do not
render title to the property encumbered thereby unmarketable and (iii) do not,
individually or in the aggregate, materially adversely affect the value or use
of such property for its current and anticipated purposes; (e) Encumbrances
permitted under any of the following agreements of the Company and/or any
Company Subsidiary (any Encumbrance which is permitted under any of the
following as to the Company or any Company Subsidiary shall be permitted as to
all Company Subsidiaries and the Company for purposes hereof): (i) the Amended
and Restated Credit Agreements, (ii) the Indenture, (iii) the Resort Properties
Credit Agreement, (iv) the Amended Loan and Security Agreement dated as of
September 30, 1998 and as it may be further Amended from time to time with
Textron Financial Corporation and (v) the Loan and Security Agreement dated as
of December 29, 1998 and as it may be amended further from time to time with Key
Bank, N.A.; (f) purchase money security interests in supplier equipment; (g)
precautionary liens filed by lessors with respect to leased equipment; (h) any
single or series of related Encumbrances which are not in excess of $50,000 and
do not materially impair the value or use of the property subject thereto or the
operation of the Company's business as currently conducted; and (i) Encumbrances
listed on the UCC searches disclosed in Section 1.01(a) of the Disclosure
Schedule.
<PAGE>
6
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.
"Purchase Price Bank Account" means a bank account in the United
States to be designated by the Company in a written notice to Oak Hill, on
behalf of each Purchaser, at least five Business Days before the Closing.
"Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and
the like into or upon any land or water or air or otherwise entering into the
environment.
"Resort Properties Credit Agreement" means the Amended and Restated
Credit Agreement dated as of January 8, 1999, as amended and as it may be
further amended from time to time, among American Skiing Company Resort
Properties, Inc., the lenders party thereto and BankBoston, N.A., as agent.
"Resort Villages" means the locations referred to in clauses (i)
through (v) of the definition of Development Activities.
"SEC" means the United States Securities and Exchange Commission.
"Senior Preferred Stock" means the Company's 10.5% Repriced
Convertible Exchangeable Preferred Stock, par value $.01 per share.
"Stockholders' Agreement" means the Stockholders' Agreement to be
dated the Closing Date among the Company, the Purchasers, Mr. Otten and ING,
substantially in the form of Exhibit B hereto.
"Subsidiaries" of any Person means any corporation, partnership,
joint venture, limited liability company, trust, estate or other Person of which
(or in which), directly or indirectly, more than 50% of (a) the issued and
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall or might
have voting power upon the occurrence of any contingency), (b) the interest in
the capital or profits of such partnership, joint venture or limited liability
company or other Person or (c) the beneficial interest in such trust or estate
is at the time owned by such first Person, or by such first Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Superior Proposal" means an offer made by a third party to
consummate a Competing Transaction that the Board determines, in its reasonable
judgment (after consultation with a nationally recognized independent financial
advisor), to be more favorable to the Company's stockholders from a financial
point of view than the terms of transactions contemplated by this Agreement and
the Stockholders' Agreement, taking into account all
<PAGE>
7
relevant factors of the Competing Transaction and the transactions contemplated
by this Agreement, including, without limitation, all legal, financial,
regulatory and other material aspects of the Competing Transaction (including
qualifications, or lack thereof, relating to the completion of a satisfactory
due diligence review), the Person making the proposal, the strategic benefits to
be derived from the transactions contemplated by the Agreement, the long-term
prospects of the Company and the Company Subsidiaries and the extent to which
financing is committed or reasonably available.
"Tax" or "Taxes" means any federal, state, county, local, foreign
and other taxes (including, without limitation, income, profits, premium,
estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem,
severance, capital levy, production, transfer, withholding, employment,
unemployment compensation, payroll and property taxes, import duties and other
governmental charges and assessments), whether or not measured in whole or in
part by net income, and including deficiencies, interest, additions to tax or
interest, and penalties with respect thereto, and including expenses associated
with contesting any proposed adjustments related to any of the foregoing.
"Tax Claim" means any claim arising out of or otherwise in respect
of any inaccuracy in or any breach of any representation, warranty, covenant or
agreement of the Company contained in this Agreement relating to Taxes.
"Vendors" means any and all vendors who are unaffiliated with the
Company who supply raw materials, components, spare parts, supplies, goods,
merchandise or services to the Company or any Company Subsidiary.
"Voting Agreement" means the voting agreement to be dated as of the
Closing Date among the Company, certain stockholders of the Company and Oak Hill
and substantially in the form of Exhibit F attached hereto.
"Voting Securities" means the total voting power represented by the
Company's then outstanding securities on a fully diluted basis that vote
generally in the election of Directors.
"Year 2000 Compliant" means that the Company Systems provide
uninterrupted millennium functionality in that (i) the Company Systems will
record, store, process and present calendar dates falling on or after January 1,
2000, in the same manner and with the same functionality as the Company Systems
record, store, process and present calendar dates falling on or before December
31, 1999; (ii) the Company Systems operate accurately to the extent necessary in
connection with the conduct of the business of the Company as currently
conducted with other software and hardware that use standard date format (four
digits) for representation of the year; and (iii) the occurrence of the calendar
year 2000 will not adversely affect the Company Systems.
<PAGE>
8
SECTION 1.02. Other Definitions. The meanings of the following terms
can be found in the Sections of this Agreement indicated below:
Term Section
AAA.................................Section 9.10(c)(ii)
Aggregate Purchase Price............Section 2.02
Arbitration Panel...................Section 9.10(c)(ii)
Basket Amount.......................Section 7.03(a)
Claim...............................Section 9.10(c)
Claimant............................Section 9.10(c)(iii)
Closing.............................Section 2.03
Closing Date........................Section 2.03
Company.............................Preamble
Company Balance Sheet...............Section 3.05(b)
Company Benefit Plans...............Section 3.15(a)
Company Loss........................Section 7.02(b)
Company Permits.....................Section 3.09(b)
Company SEC Reports.................Section 3.05(a)
Confidentiality Agreement...........Section 5.02(b)
Decision............................Section 9.10(c)(iv)
Delaware Reincorporation............Section 5.05
Development Fees....................Section 3.14(j)
Dispute Notice......................Section 9.10(c)(i)
ERISA...............................Section 3.15(a)
ERISA Affiliate.....................Section 3.15(d)
Exchange Act........................Section 3.04
Forward Looking Information.........Section 5.03(b)
GAAP................................Section 3.05(b)
Improvements........................Section 3.14(f)
Indemnified Party...................Section 7.02(c)
Indemnifying Party..................Section 7.02(c)
Intellectual Property...............Section 3.12(a)
Intervals...........................Section 3.21(a)
IRS.................................Section 3.15(c)
Leased Real Property................Section 3.14(a)
Loss................................Section 7.02(b)
Material Contracts..................Section 3.11(a)
Oak Hill............................Preamble
Oak Hill Designees..................Section 2.04(c)
Oak Hill Fee........................Section 4.07
Owned Real Property.................Section 3.14(a)
Project Plans.......................Section 3.14(h)
Prospective Purchasers..............Section 3.21(b)
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9
Purchase Price......................Section 2.02
Purchasers..........................Preamble
Purchaser Loss......................Section 7.02(a)
Real Property.......................Section 3.14(d)
Reporting Agreement.................Section 5.12
Representatives.....................Section 5.02(a)
Resorts.............................Section 3.21(e)
Respondent..........................Section 9.10(c)(iii)
Section 382 Control Change..........Section 5.13
Securities Act......................Section 3.05(a)
Series B Preferred..................Recitals
Shares..............................Recitals
Space Leases........................Section 3.14(e)
Space Tenant........................Section 3.14(e)
Tax Returns.........................Section 3.20(a)
Terminating Company Breach..........Section 8.01(d)
Terminating Purchaser Breach........Section 8.01(e)
Third Party Claims..................Section 7.02(c)
Units...............................Section 3.21(a)
U.S. Forest Service Properties......Section 3.14(c)
SECTION 1.03. Terms Generally. References in this Agreement to
articles, sections, paragraphs, clauses, schedules, annexes and exhibits are to
articles, sections, paragraphs, clauses, schedules, annexes and exhibits in or
to this Agreement unless otherwise indicated. Whenever the context may require,
any pronoun includes the corresponding masculine, feminine and neuter forms. Any
term defined by reference to any agreement, instrument or document has the
meaning assigned to it whether or not such agreement, instrument or document is
in effect. The words "include", "includes" and "including" are deemed to be
followed by the phrase "without limitation". Unless the context otherwise
requires, any agreement, instrument or other document defined or referred to
herein refers to such agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified from time to time. Unless the
context otherwise requires, references herein to any Person include its
successors and assigns. The words "shall" and "will" have the same meaning and
effect.
ARTICLE II
SUBSCRIPTION AND SALE
SECTION 2.01. Subscription and Sale of the Shares. Upon the terms
and subject to the conditions set forth in this Agreement, the Company shall
sell to each Purchaser, and each Purchaser shall purchase from the Company, the
number of shares of Series B Preferred set forth opposite its name on Annex A
for a price of $1,000 per share. Oak Hill shall be responsible and
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10
liable for the performance of all obligations of each Purchaser under this
Agreement, including, without limitation, full payment of the Aggregate Purchase
Price (as defined below).
SECTION 2.02. Purchase Price. The purchase price to be paid by each
Purchaser to the Company for the Shares to be purchased by it shall be the
amount set forth opposite its name on Annex A and shall be payable at the
Closing (as defined below) by wire transfer in immediately available funds (such
payable amount with respect to each Purchaser being referred to as the "Purchase
Price"). The aggregate purchase price for all of the Shares sold hereby for
which Oak Hill is responsible in accordance with Section 2.01 is $150,000,000
(the "Aggregate Purchase Price").
SECTION 2.03. Closing. The subscription and purchase of the Shares
contemplated by this Agreement shall take place at a closing (the "Closing") to
be held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York,
New York at 10:00 a.m. on the later to occur of (i) July 31, 1999, or (ii) the
third business day following the satisfaction of the conditions specified in
paragraphs (b), (c) and (d) of Section 6.01 and paragraph (f) of Section 6.03 or
at such other time, place and/or date as shall be agreed upon by the Company and
Oak Hill. The date upon which the Closing occurs is referred to herein as the
"Closing Date".
SECTION 2.04. Closing Deliveries by the Company. At the Closing, the
Company shall deliver or cause to be delivered to each Purchaser:
(a) a newly issued stock certificate, issued to each Purchaser and
evidencing the number of Shares being purchased by it, as set forth
opposite its name on Annex A, at the Closing;
(b) a receipt for the Purchase Price paid by such Purchaser;
(c) a true and complete copy, certified by the Secretary or an
Assistant Secretary of the Company, of the resolutions duly and validly
adopted by the Board evidencing (i) its authorization of the execution and
delivery of this Agreement, the Stockholders' Agreement and the Voting
Agreement and the consummation of the transactions contemplated hereby and
thereby, including the filing of the Certificate of Designation with the
Secretary of State of Maine and the issuance of the Shares, (ii) the
election of Directors in order to ensure that there are eleven Directors,
(iii) the appointment of four individuals designated by Oak Hill in
writing 10 Business Days prior to the Closing Date (the "Oak Hill
Designees") to serve as Directors, (iv) the formation of an executive
committee comprising two Directors designated by Oak Hill and two
Directors designated by Mr. Otten, (v) the appointment of at least one of
the Oak Hill Designees to serve as (A) a member of each committee of the
Board and (B) a director of each of ASC East, Inc., ASC West, Inc., ASC
Utah and American Skiing Company Resort Properties, Inc. and a member of
all of the committees thereof and (vi) the amendment of the By-laws to
conform to the Stockholders' Agreement;
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11
(d) from each of Pierce Atwood and Shearman & Sterling, a legal
opinion, addressed to the Purchasers and dated the Closing Date,
substantially in the form of Exhibits C and D, respectively;
(e) a copy of (i) the Articles of Incorporation, certified by the
Secretary of State of Maine, as of a date not earlier than five Business
Days prior to the Closing Date and accompanied by a certificate of the
Secretary or Assistant Secretary or other authorized officer of the
Company, dated as of the Closing Date, stating that no amendments, other
than the filing of the Certificate of Designation, have been made to such
Articles of Incorporation since such date, and (ii) the By-laws, certified
by the Secretary or Assistant Secretary of the Company; and
(f) a good standing certificate for the Company from the Secretary
of State of Maine dated as of a date not earlier than five Business Days
prior to the Closing Date.
SECTION 2.05. Closing Deliveries by the Purchasers. At the Closing,
each of the Purchasers shall deliver to the Company the items specified below:
(a) the respective Purchase Price to the Purchase Price Bank
Account;
(b) a receipt acknowledging delivery by the Company of the stock
certificates specified in Section 2.04(a);
(c) a legal opinion addressed to the Company and dated the Closing
Date from counsel for the Purchasers, substantially in the form of Exhibit
E hereto; and
(d) a good standing certificate for such Purchaser from the
Secretary of State of the state of its organization as of a date not
earlier than five Business Days prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to the Purchasers to enter into this Agreement, the
Company hereby represents and warrants to the Purchasers as follows:
SECTION 3.01. Organization, Authority and Qualification of the
Company and the Company Subsidiaries; Company Subsidiaries. (a) The Company and
each Company Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, and the Company has all necessary corporate power and authority to
enter into each of this Agreement, the Stockholders' Agreement and the Voting
Agreement, to carry out its obligations hereunder and thereunder and to
<PAGE>
12
consummate the transactions contemplated hereby and thereby. The Company and
each Company Subsidiary is duly qualified to do business and is in good standing
in each jurisdiction in which (x) it owns or leases properties material to its
operations or (y) the operation of its business makes such qualification
necessary, except, with respect to clause (y) above, to the extent that the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. The execution and delivery of each of this Agreement,
the Stockholders' Agreement and the Voting Agreement by the Company, the
performance by the Company of its obligations hereunder and thereunder and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly authorized by all requisite action on the part of the Company
other than with respect to the approval by the Company's stockholders of (i) the
issuance of Conversion Stock pursuant to the terms of the Series B Preferred as
required by the rules of the NYSE and (ii) the Delaware Reincorporation (defined
below). This Agreement has been, and, as of the Closing Date, the Stockholders'
Agreement and the Voting Agreement will be, duly executed and delivered by the
Company, and (assuming due authorization, execution and delivery by the
Purchasers, Mr. Otten, ING and any other stockholder of the Company, as the case
may be) this Agreement constitutes, and, as of the Closing Date, each of the
Stockholders' Agreement and the Voting Agreement will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms. Neither the Company nor any Company Subsidiary is in
violation of any of the provisions of their respective articles of
incorporation, by-laws or equivalent organizational documents in any material
respect.
(b) Section 3.01(b) of the Disclosure Schedule sets forth a complete
and accurate list of each Company Subsidiary, together with its jurisdiction of
incorporation or organization. Except as disclosed in Section 3.01(b) of the
Disclosure Schedule, each such Company Subsidiary is directly and wholly owned
by the Company.
(c) Section 3.01(c) of the Disclosure Schedule lists each Company
Subsidiary that is a "Restricted Subsidiary" (as such term is defined in the
Indenture).
(d) Section 3.01(d) of the Disclosure Schedule lists each Company
Subsidiary that is an "Unrestricted Subsidiary" (as such term is defined in the
Indenture).
(e) Section 3.01(e) of the Disclosure Schedule lists each Company
Subsidiary that is a "Real Estate Subsidiary" (as such term is defined in the
Indenture).
(f) Section 3.01(f) of the Disclosure Schedule lists the material
"Indebtedness" (as such term is defined in the Indenture) of each Company
Subsidiary listed on Section 3.01(b) of the Disclosure Schedule that qualifies
as "Non-Recourse Real Estate Debt" (as such term is defined in Section 1.01 of
the Indenture).
(g) Section 3.01(g) of the Disclosure Schedule lists each Company
Subsidiary that is a "Restricted Subsidiary" (as such term is defined in the
Amended and Restated Credit Agreements).
<PAGE>
13
(h) Section 3.01(h) of the Disclosure Schedule lists each Company
Subsidiary that is an "Unrestricted Subsidiary" (as such term is defined in the
Amended and Restated Credit Agreements).
(i) Section 3.01(i) of the Disclosure Schedule lists all material
"Indebtedness" (as such term is defined in the Indenture) which is non-recourse
to any "Restricted Subsidiary" (as such term is defined in the Indenture).
SECTION 3.02. Capital Stock of the Company; Ownership of the Shares.
(a) As of the date hereof, the authorized capital stock of the Company consists
of (x) 100 million shares of Common Stock, of which (i) 15,526,243 shares are
outstanding, (ii) 53,333,334 million shares are reserved for issuance upon
conversion of the Shares, (iii) 3,595,718 shares are reserved for issuance upon
conversion of the Senior Preferred Stock, (iv) 14,760,530 shares are reserved
for issuance upon conversion of the Class A Common Stock and (v) 3,886,836
shares are reserved for issuance upon the exercise of stock options in the
amounts and at the exercise prices disclosed in Section 3.02(a)(v) of the
Disclosure Schedule, (y) 15 million shares of Class A Common Stock, of which
14,760,530 shares are outstanding, and (z) 500,000 shares of preferred stock,
par value $.01 per share, of which (i) 150,000 shares have been designated
Series B Preferred and will be sold to the Purchasers pursuant to this Agreement
and (ii) 40,000 shares have been designated Senior Preferred Stock, of which
36,626 shares are issued and outstanding. All of the outstanding shares of the
Company's capital stock are validly issued, fully paid and nonassessable. None
of the issued and outstanding shares of capital stock of the Company was issued
in violation of any preemptive rights. Except as described above or as disclosed
in Section 3.02(a) of the Disclosure Schedule, there are no options, warrants,
subscriptions, calls, convertible securities or other rights, agreements,
arrangements or commitments relating to the capital stock of the Company or
obligating the Company to issue or sell any shares of capital stock of, or any
other equity interest in, the Company. Except as disclosed in Section 3.02(a) of
the Disclosure Schedule, there are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of capital stock
of the Company or make any investment (in the form of a loan, capital
contribution or otherwise) in any other Person other than a Company Subsidiary.
Upon consummation of the Closing as contemplated hereby, including receipt by
the Company of the Aggregate Purchase Price, the Shares owned by the Purchasers
will be validly issued, fully paid and nonassessable. The Conversion Stock, if
and when issued, will be validly issued, fully paid and nonassessable.
(b) All of the outstanding shares of capital stock of each Company
Subsidiary that is a corporation are validly issued, fully paid and
nonassessable. Except as disclosed in Section 3.02(b) of the Disclosure
Schedule, all of the outstanding shares of capital stock of, or other ownership
interest in, each Company Subsidiary are owned, directly or indirectly, by the
Company free and clear of any Encumbrances. Except as disclosed in Section
3.02(b) of the Disclosure Schedule, no Company Subsidiary has outstanding
options, warrants, subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating the Company Subsidiary to issue, transfer
or sell any securities of any Company Subsidiary.
<PAGE>
14
SECTION 3.03. No Conflict. Assuming the making and obtaining of all
filings, notifications, consents, approvals, authorizations and other actions
referred to in Section 3.04, except as may arise from facts or circumstances
relating solely to the Purchasers, the execution, delivery and performance of
this Agreement, the Stockholders' Agreement and the Voting Agreement by the
Company do not and will not (a) violate, conflict with or result in the breach
of any provision of the articles of incorporation or by-laws (or similar
organizational documents) of the Company or any Company Subsidiary, (b) conflict
with or violate any Law or Governmental Order applicable to the Company, any
Company Subsidiary or any of their respective assets, properties or businesses,
or (c) except as disclosed in Section 3.03(c) of the Disclosure Schedule,
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the assets or properties of the
Company or any Company Subsidiary pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument, obligation or arrangement to which the Company or any Company
Subsidiary is a party or by which any of its assets or properties is bound or
affected, except, with respect to clauses (b) and (c), as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 3.04. Governmental Consents and Approvals. Except as
disclosed in Section 3.04 of the Disclosure Schedule, the execution, delivery
and performance of this Agreement, the Stockholders' Agreement and the Voting
Agreement by the Company do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to any
Governmental Authority, except (i) for the applicable requirements, if any, of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), state
securities or "blue sky" laws, the NYSE and the HSR Act and (ii) for such other
consents, approvals, authorizations, orders, actions, filings or notifications
which if not obtained or made would not be reasonably expected to result in a
Material Adverse Effect or to materially delay the consummation of the
transactions contemplated by this Agreement.
SECTION 3.05. SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since its initial public offering on November 6, 1997 (collectively, the
"Company SEC Reports"). Except as disclosed in any amendment to any Company SEC
Report filed with the SEC, as of the respective dates on which they were filed,
(i) the Company SEC Reports complied in all material respects with the
requirements of the Securities Act of 1933, as amended (together with the rules
and regulations promulgated thereunder, the "Securities Act"), and the Exchange
Act, as the case may be, and (ii) none of the Company SEC Reports contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(b) Except as disclosed in any amendment to any Company SEC Report
filed with the SEC, each of the consolidated financial statements (including, in
each case, any notes
<PAGE>
15
thereto) contained in the Company SEC Reports was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated ("GAAP") (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
and Regulation S-X of the SEC), and each presented fairly, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company and the consolidated Company Subsidiaries as at the
respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring year-end adjustments that would not, individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect). The
balance sheet of the Company contained in the Company SEC Report as of April 25,
1999 is hereinafter referred to as the "Company Balance Sheet".
(c) The Company has heretofore furnished to Oak Hill a complete and
correct copy of any amendment or modification, that has not yet been filed with
the SEC, to agreements, documents or other instruments that previously had been
filed by the Company with the SEC (except as may be required with respect to the
transactions contemplated hereby), pursuant to the Securities Act or the
Exchange Act.
SECTION 3.06. No Undisclosed Liabilities. Except as disclosed in
Section 3.06 of the Disclosure Schedule or as disclosed in the Annual Report of
the Company on Form 10-K for its fiscal year ended July 26, 1998 and all
Quarterly Reports on Form 10-Q subsequent to such Annual Report, there are no
Liabilities of the Company or any Company Subsidiary which would be required to
be reflected on a balance sheet, or the notes thereto, prepared in accordance
with GAAP, other than Liabilities (i) reflected or reserved against on the
Company Balance Sheet or (ii) incurred since the date of the Company Balance
Sheet in the ordinary course of the business, consistent with the past
practices, of the Company and the Company Subsidiaries and which are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect.
SECTION 3.07. Absence of Certain Changes or Events. Except as
disclosed in Section 3.07 of the Disclosure Schedule, since the date of the
Company Balance Sheet, except as contemplated by, or disclosed pursuant to, this
Agreement (including the Disclosure Schedule) or disclosed in any Company SEC
Report filed after the date of the Company Balance Sheet and prior to the date
hereof, the Company has conducted its business only in the ordinary course and
in a manner consistent with past practices and there has not been any (i)
Material Adverse Effect, (ii) material change by the Company in its accounting
methods, principles or policies, except as may be required by GAAP, (iii)
material revaluation by the Company of any asset (including, without limitation,
any writing down of the value of inventory or writing-off of notes or accounts
receivable), other than in the ordinary course of business consistent with past
practices, (iv) declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of its securities, (v) increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit-sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock
<PAGE>
16
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers or key
employees of the Company or any Company Subsidiary, except in the ordinary
course of business consistent with past practices, (vi) amendment of any term of
any outstanding security of the Company or any Company Subsidiary that would
materially increase the obligations of the Company or such Company Subsidiary
under such security, (vii) damage, destruction or other casualty loss with
respect to any asset or property owned, leased or otherwise used by the Company
or any Company Subsidiary, except for such damage, destruction or loss that,
individually or in the aggregate, has not resulted, or would not reasonably be
expected to result, in a Material Adverse Effect, (viii) incurrence, assumption
or guarantee by the Company or any Company Subsidiary of any indebtedness for
borrowed money other than in the ordinary course of business and consistent with
past practices, except as incurred under facilities existing as of the date of
the Company Balance Sheet, (ix) making of any loan, advance or capital
contribution to or investment in any Person by the Company or any Company
Subsidiary other than (A) loans, advances or capital contributions to or
investments in any wholly owned Company Subsidiary, (B) loans or advances to the
Company by any Company Subsidiary or (C) loans or advances to employees of the
Company or any Company Subsidiary made in the ordinary course of business
consistent with past practices or (x) (A) transactions, commitments, contracts
or agreements entered into by the Company or any Company Subsidiary relating to
any material acquisition or disposition of any assets or business or (B)
modification, amendment, assignment, termination or relinquishment by the
Company or any Company Subsidiary of any contract, license or other right that
would be reasonably likely to have a Material Adverse Effect, other than, in
either case, transactions, commitments, contracts or agreements in the ordinary
course of business consistent with past practices and those contemplated by this
Agreement.
SECTION 3.08. Litigation. Except as disclosed in Section 3.08 of the
Disclosure Schedule or as disclosed in the Company SEC Reports filed prior to
the date of this Agreement, there are no Actions by or against the Company or
any Company Subsidiary (and relating to the business of the Company or any
Company Subsidiary), or affecting any of the assets of the Company, pending
before any Governmental Authority or, to the knowledge of the Company,
threatened to be brought by or before any Governmental Authority which has, has
had or is reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. Except as disclosed in Section 3.08 of the Disclosure
Schedule, none of the Company, the Company Subsidiaries or any of the assets of
the Company or the Company Subsidiaries is subject to any Governmental Order
(or, to the knowledge of the Company, are there any such Governmental Orders
threatened to be imposed by any Governmental Authority) which has, has had or is
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 3.09. Compliance with Laws. (a) Except as disclosed in
Section 3.09(a) of the Disclosure Schedule, neither the Company nor any Company
Subsidiary is in default or violation of any Governmental Order, except for such
defaults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect.
<PAGE>
17
(b) Except as disclosed in Section 3.09(b) of the Disclosure
Schedule, (i) the Company and each Company Subsidiary are in possession of all
franchises, grants, authorizations, licenses, permits, memoranda of
understanding, development agreements, easements, variances, exceptions,
consents, certificates, approvals and orders of or with any Governmental
Authority (the "Company Permits") necessary or required for the Company or any
Company Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted, except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, (ii) no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened, and no Company Permit which has been
issued in connection with any Development Activity has been suspended or
canceled (or to the knowledge of the Company is threatened to be suspended,
canceled or materially modified in a manner adverse to the Company) or has
expired and, with respect to any such Company Permit which will expire prior to
September 1, 1999, the Company is not aware of any circumstance which would
reasonably be expected to cause such Company Permit not to be renewed or
extended upon expiration, except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and (iii) neither
the Company nor any Company Subsidiary is in default under any Company Permit,
except for a default which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 3.10. Environmental Matters. Except as disclosed in Section
3.10 of the Disclosure Schedule or as disclosed in any Company SEC Report or as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect:
(a) the Company and the Company Subsidiaries (i) are in compliance
with all applicable Environmental Laws, (ii) hold all necessary
Environmental Permits and (iii) are in compliance with their respective
Environmental Permits;
(b) neither the Company nor any Company Subsidiary has received any
written request for information, or been notified in writing that it is a
potentially responsible party, under CERCLA, or any similar Law of any
state, locality or any other jurisdiction;
(c) neither the Company nor any Company Subsidiary has entered into
or agreed to any consent decree or order or is subject to any judgment,
decree or judicial order relating to compliance with Environmental Laws,
Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials (as
defined below) and, to the knowledge of Company, no investigation,
litigation or other proceeding is pending or threatened with respect
thereto, and no condition exists on any property currently or formerly
owned or operated by the Company that is reasonably likely to lead to such
investigation, litigation or proceeding;
(d) none of the real property currently or formerly owned or leased
by the Company or any Company Subsidiary is listed or, to the knowledge of
the Company, proposed for listing on the "National Priorities List" under
CERCLA, as updated through
<PAGE>
18
the date of this Agreement, or any similar list of sites in the United
States or any other jurisdiction requiring investigation or cleanup; and
(e) Oak Hill has been provided access to all material reports in the
Company's possession or control assessing the environmental condition of
the Company's current and former properties.
SECTION 3.11. Material Contracts. (a) Section 3.11(a) of the
Disclosure Schedule sets forth a complete list of all contracts, agreements,
licenses, notes, bonds, mortgages, guarantees, security agreements and
commitments, including all amendments and modifications thereto, to which the
Company or any Company Subsidiary is a party that are material to (i) the
Company and the Company Subsidiaries, taken as a whole, or (ii) the conduct of
Development Activities, taken as a whole (together, "Material Contracts").
(b) Except as disclosed in Section 3.11(b) of the Disclosure
Schedule, each Material Contract: (i) is valid and binding on the Company and is
in full force and effect and (ii) upon consummation of the transactions
contemplated by this Agreement, the Stockholders' Agreement, and the Voting
Agreement, except to the extent that any consents disclosed in Section 3.04 of
the Disclosure Schedule are not obtained, shall continue in full force and
effect without penalty or other adverse consequence.
(c) Except as disclosed in Section 3.11(c) of the Disclosure
Schedule, (i) neither the Company nor any Company Subsidiary is in material
breach of, or default under, any Material Contract, and (ii) to the knowledge of
the Company, no other party to any Material Contract is in material breach
thereof or default thereunder.
SECTION 3.12. Intellectual Property. (a) Section 3.12(a) of the
Disclosure Schedule sets forth a true and complete list (including, to the
extent applicable, registration, application or file numbers) of each material
trademark, trade name, patent, service mark, brand mark, brand name, industrial
design, and copyright owned by the Company or the Company Subsidiaries as well
as a true and complete list of all registrations thereof and pending
applications therefor, including any additions thereto or extensions,
continuations, renewals or divisions thereof (setting forth the registration,
issue or serial number and a description of the same) (collectively, the
"Intellectual Property"). All of the Intellectual Property is owned by the
Company or the Company Subsidiaries free and clear of any and all Encumbrances,
and the Company or one of the Company Subsidiaries has good, marketable and
exclusive title to, and the valid right to use all of the Intellectual Property.
Except as disclosed in Section 3.12(a) of the Disclosure Schedule, to the
knowledge of the Company, neither the Company nor any of the Company
Subsidiaries has received any complaint, assertion, threat or allegation or
otherwise has notice of any claim, lawsuit, demand, proceeding or investigation
involving any such matters or otherwise knows that any of the Intellectual
Property is invalid or conflicts with the rights of any third party.
<PAGE>
19
(b) To the knowledge of the Company, each of the Company and each of
the Company Subsidiaries owns or has a right to use all Intellectual Property in
the operation of its business as presently conducted.
(c) Except as disclosed in Section 3.12(c) of the Disclosure
Schedule, to the knowledge of the Company, each of the Company and each Company
Subsidiary owns free and clear of all Encumbrances or has a valid license to use
all computer software that is material to the operation of its business as
presently conducted and the Company is not aware of any impediment (other than
the payment of customary licensing fees) to obtaining the Intellectual Property
which is or is reasonably expected to be necessary to carry out the Development
Activities presently anticipated to be completed within the next five years,
except as would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.13. Year 2000 Compliance. The Company (i) has undertaken
an assessment of all Company Systems that could be adversely affected by a
failure to be Year 2000 Compliant, (ii) has developed a plan and timeline for
rendering such Company Systems Year 2000 Compliant and (iii) except as otherwise
disclosed in any Company SEC Report filed prior to the date of this Agreement,
expects to comply with the plan and timeline for rendering the Company Systems
Year 2000 Compliant, except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company and the
Company Subsidiaries have made available for review to the Purchaser copies of
all material documents related to such assessment and plan implementation
efforts, including communications to and from customers and material Vendors and
suppliers and all plans, time lines and cost estimates for rendering the Company
Systems Year 2000 Compliant. Based on such review and assessment, except as may
be set forth in any Company SEC Report filed prior to the date of this
Agreement, all Company Systems presently are Year 2000 Compliant or are expected
to be Year 2000 Compliant, except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.14. Title to Properties; Absence of Encumbrances. (a)
Section 3.14(a) of the Disclosure Schedule lists the material real property
interests owned by the Company and the Company Subsidiaries ("Owned Real
Property"). Section 3.14(a)(i) of the Company Disclosure Schedule lists all
leases relating to real property to which the Company or any Company Subsidiary
is a party as a lessee and each amendment thereto that provide for annual
payments in excess of $50,000 ("Leased Real Property"). All such leases are in
full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed in Section 3.14(b) of the Disclosure
Schedule, each of the Company and the Company Subsidiaries has good and
marketable fee title (subject to any Permitted Encumbrances) to, or, in the case
of leased properties and assets, has good and valid leasehold interests in, all
of its tangible properties and assets, real, personal and mixed, used or
<PAGE>
20
held for use in, or which are necessary to conduct, the respective business of
the Company and each Company Subsidiary as currently conducted, including the
Development Activities, free and clear of any Encumbrances, except where such
failure would not, individually or in the aggregate, have a Material Adverse
Effect.
(c) Section 3.14(c) of the Disclosure Schedule lists all properties
used by the Company pursuant to U.S. Forest Service Permits (collectively, "U.S.
Forest Service Properties").
(d) Except as disclosed in Section 3.14(b) or Section 3.14(k) of the
Disclosure Schedule, all of the land, buildings, structures and other
improvements used by the Company and the Company Subsidiaries in the conduct of
their businesses, including the Development Activities, are included in the
Owned Real Property, the U.S. Forest Service Properties and the Leased Real
Property or property leased by the Company or the Company Subsidiaries under
leases with annual payments of less than $50,000 (collectively, the "Real
Property"), except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(e) Section 3.14(e) of the Disclosure Schedule sets forth all
material leases, subleases, licenses, time-share and other agreements
(collectively, the "Space Leases") granting to any Person or entity other than
the Company or any Company Subsidiary any right to the possession, use,
occupancy or enjoyment of the Real Property or any portion thereof other than in
an Interval (as defined below). Each Space Lease is valid, binding and in full
force and effect, all rent and other sums and charges payable by the tenant or
occupant thereunder (the "Space Tenant") are current, no notice of default or
termination under any Space Lease is outstanding, no termination event or
condition or uncured default on the part of the Company or any Company
Subsidiary or, to the knowledge of the Company, the Space Tenant, exists under
any Space Lease, and no event has occurred and no condition exists that, with
the giving of notice or the lapse of time, or both, would constitute such a
default or termination event or condition, except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(f) To the knowledge of the Company, all components of all
buildings, structures, fixtures and other improvements in, on or within the Real
Property (the "Improvements") are in good operating condition and repair,
subject to continued repair and replacement in accordance with past practice,
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(g) The Company and each Company Subsidiary has not received notice
of and, to the knowledge of the Company, there is no pending, threatened or
contemplated condemnation proceeding affecting the Real Property or any part
thereof, nor any sale or other disposition of the Real Property or any part
thereof in lieu of condemnation. Since January 1, 1995, no portion of the Real
Property has suffered any material damage by fire or other casualty
<PAGE>
21
that has not heretofore been completely repaired and restored, except as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(h) Plans. Section 3.14(h) of the Disclosure Schedule lists all
current material master plans, government and public-private plans (such as
municipal utility districts or levy improvement districts) concerning the
Development Activities ("Project Plans"). The Company (or the applicable Company
Subsidiary) is in compliance with all Project Plans, except for such
non-compliance as is disclosed in Section 3.14(h) of the Disclosure Schedule or
as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company and the Company Subsidiaries are in
possession of all Company Permits necessary for the completion of the
Development Activities which are currently under construction, except as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(i) Zoning and Land Use. Except as disclosed in Section 3.14(i) of
the Disclosure Schedule, the land for each Development Activity at each Resort
(as defined below) has been zoned for its intended use in accordance with its
Project Plan and all requirements for that zoning have been met, except as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as disclosed in Section 3.14(i) of the Disclosure
Schedule, the land for each Development Activity has been subdivided for its
intended use in accordance with its Project Plan and each subdivided plot
constitutes its own separate tax lot, except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Except
as disclosed in Section 3.14(i) of the Disclosure Schedule, all archeological,
soil, geotechnical, traffic, environmental and similar studies have been
completed and to the knowledge of the Company reveal no facts or conditions
which, individually or in the aggregate, are reasonably expected to have a
Material Adverse Effect on the Development Activities.
(j) Development Fees. Except as disclosed in Section 3.14(j) of the
Disclosure Schedule, no Governmental Authority or board has requested (and
continues to request) or required (or, to the knowledge of the Company, is
expected to require in order to obtain future approvals) that additional public
or quasi-public facilities be constructed or monies or property be contributed
as a condition to the Development Activities or in connection with any Resort
("Development Fees"). Section 3.14(j) of the Disclosure Schedule contains an
estimate of all material fees, charges or other costs that have been imposed by
Governmental Authorities with respect to the Development Activities or in
connection with any Resort which have not yet been paid. Except as set forth in
Section 3.14(j) of the Disclosure Schedule, there are no performance bonds,
letters of credit or completion guarantees for the benefit of any governmental
agency which are currently outstanding or which, to the knowledge of the
Company, will be required to be funded within the next five years in relation to
the Development Activities, except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
<PAGE>
22
(k) Development Activity Processes. To the knowledge of the Company,
Section 3.14(k) of the Disclosure Schedule lists all regulatory processes
necessary to (i) complete the Development Activities as contemplated under the
Project Plans and (ii) bring the Development Activities to full entitlement
status, in each case, except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(l) Easements. To the knowledge of the Company, Section 3.14(k) of
the Disclosure Schedule lists all easements, rights-of-way and licenses which
must be granted to or obtained from third parties in order to complete those
Development Activities scheduled for completion within five years from the date
of this Agreement, except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 3.15. Employee Benefit Matters; Labor Matters. (a) Section
3.15(a) of the Disclosure Schedule lists (i) all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all bonus, stock option, stock purchase, restricted
stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans to which the Company
or any Company Subsidiary is a party, with respect to which the Company or any
Company Subsidiary has any material obligation or which are maintained,
contributed to or sponsored by the Company or any Company Subsidiary, (ii) each
employee benefit plan for which the Company or any Company Subsidiary could
incur liability under Section 4069 of ERISA in the event such plan has been or
was to be terminated, (iii) any plan in respect of which the Company or any
Company Subsidiary could incur liability under Section 4212(c) of ERISA and (iv)
any employment contracts or arrangements between the Company or any Company
Subsidiary and any employee of the Company or any Company Subsidiary
(collectively, "Company Benefit Plans").
(b) Each Company Benefit Plan has been operated in material
compliance with its terms and the requirements of all applicable Laws,
including, without limitation, ERISA and the Code. Each of the Company and the
Company Subsidiaries has performed all obligations required to be performed by
it under, and is not in any respect in default under or in violation of, any
Company Benefit Plan, except where such failure to perform obligations, default
or violation would not have a Material Adverse Effect. No action, claim or
proceeding is pending or, to the knowledge of the Company, threatened with
respect to any Company Benefit Plan (other than claims for benefits in the
ordinary course).
(c) Except as disclosed in Section 3.15(c) of the Disclosure
Schedule, each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service (the "IRS") and each trust established in
connection with any Company Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt and, to the Company's
knowledge, nothing has occurred since the date of such letter that has or is
reasonably likely to adversely affect such qualification or exemption.
<PAGE>
23
(d) Neither the Company, any Company Subsidiary nor any entity that
would be considered a single employer with the Company pursuant to Section
414(b), (c), (m) or (o) of the Code (an "ERISA Affiliate") has, within the last
six years, sponsored or made contributions to or had any obligations, whether
absolute or contingent, direct or indirect, under any Company Benefit Plan
subject to Title IV, and the Company has not incurred, nor could it reasonably
be expected to incur, any Liability under, arising out of or by operation of
Title IV of ERISA, including, without limitation, any Liability in connection
with (i) the termination or reorganization of any employee benefit plan subject
to Title IV of ERISA or (ii) the withdrawal from any (A) "Multiemployer Plan"
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) or (B) single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for
which the Company or any Company Subsidiary could incur liability under Section
4063 or 4064 of ERISA.
(e) Except as disclosed in Section 3.15(e) of the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not (i) accelerate the time of payment or vesting, or increase the amount
of compensation due to any employee or former employee, (ii) reasonably be
expected to result in any "excess parachute payment" under Section 280G of the
Code; (iii) result in any liability to any present or former employee,
including, but not limited to, liability as a result of the Worker Adjustment
Retraining and Notification Act or (iv) entitle any employee or former employee
to severance pay, unemployment compensation or similar payment.
(f) Except as disclosed in Section 3.15(f) of the Disclosure
Schedule, neither the Company nor any Company Subsidiary has any obligation to
provide, or has any direct or indirect liability, whether contingent or
otherwise, with respect to the post-termination provision of health or death
benefits to any employee or former employee, except as may be required pursuant
to Section 4980B of the Code and the costs of which are fully paid by such
former employees.
(g) Neither the Company nor any Company Subsidiary is a party to any
collective bargaining or other labor union contract applicable to persons
employed by the Company or any Company Subsidiary and no collective bargaining
agreement is being negotiated by the Company or any Company Subsidiary. Except
as disclosed in Section 3.15(g) of the Disclosure Schedule, there is no labor
dispute, strike or work stoppage against the Company or any Company Subsidiary
pending or threatened in writing which may interfere with the respective
business activities of the Company or any Company Subsidiary, except where such
dispute, strike or work stoppage would not reasonably be expected to materially
affect the respective business of the Company and each Company Subsidiary as
currently conducted. Except as disclosed in Section 3.15(g) of the Disclosure
Schedule, to the knowledge of the Company, none of the Company, any Company
Subsidiary, or any of their respective representatives or employees has violated
any Law regarding the terms and conditions of employment of employees, former
employees or prospective employees or other labor-related matters or committed
any unfair labor practices in connection with the operation of the respective
businesses of the Company or any Company Subsidiary, and there is no charge or
complaint
<PAGE>
24
against the Company or any Company Subsidiary by the National Labor Relations
Board or any comparable state agency pending or threatened in writing, except
where such unfair labor practice, charge or complaint would not reasonably be
expected to materially affect the respective business of the Company and each
Company Subsidiary as currently conducted.
SECTION 3.16. Insurance. Section 3.16 of the Disclosure Schedule
sets forth all material policies or binders of fire, liability, workmen's
compensation, vehicular or life insurance held by the Company or the Company
Subsidiaries or other types of policies customary for ski resorts or development
and construction sites. Such policies and binders are in full force and effect.
Neither the Company nor any Company Subsidiary is in default with respect to any
provision contained in any such policy or binder and neither has failed to give
any notice or present any claim under such policy or binder in due and timely
fashion, except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except for claims disclosed in
Section 3.16 of the Disclosure Schedule, there are no outstanding unpaid claims
under any such policy or binder and, to the knowledge of the Company, none of
the material unpaid claims disclosed in Section 3.16 of the Disclosure Schedule
have been denied. Neither the Company nor any Company Subsidiary has received a
notice of cancellation or non-renewal of any such policy or binder. The Company
has not received notice of any inaccuracy in any application for such policies
or binders, any failure to pay premiums when due or any similar state of facts
which might form the basis for termination of any such insurance, except as
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.17. Brokers. Except for the fees of Oak Hill Capital
Management, Inc., Donaldson, Lufkin and Jenrette Securities Corporation, Main
Street Advisors and ING Barings, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
SECTION 3.18. Securities Law Compliance. Assuming the
representations and warranties of the Purchasers set forth in Article IV hereof
are true and correct in all respects, the subscription and sale of the Shares
pursuant to this Agreement will be exempt from the registration requirements of
the Securities Act. Neither the Company nor any Person acting on its behalf has,
in connection with the sale of the Shares, engaged in (i) any form of general
solicitation or general advertising (as those terms are used within the meaning
of Rule 502(c) under the Securities Act), (ii) any action involving a public
offering within the meaning of Section 4(2) of the Securities Act, or (iii) any
action that would require the registration under the Securities Act of the
offering and sale of the Shares pursuant to this Agreement or that would violate
applicable state securities or "blue sky" laws. The Company has not made and
will not prior to the Closing make, directly or indirectly, any offer or sale of
the Shares or of securities of the same or similar class as the Shares if, as a
result, the offer and sale contemplated hereby would fail to be entitled to
exemption from the registration requirements of the Securities Act. As used
herein, the terms "offer" and "sale" have the meanings specified in Section 2(3)
of the Securities Act.
<PAGE>
25
SECTION 3.19. Potential Conflict of Interest. Except as disclosed in
Section 3.19 of the Disclosure Schedule or in the Company SEC Reports, to the
knowledge of the Company, no officer, director or Affiliate of the Company or
any Company Subsidiary, and no relative or spouse of any such officer, director
or Affiliate: (a) owns, directly or indirectly, any interest in (excepting less
than 1% stock holdings for investment purposes in securities of publicly held
and traded companies), or is an officer, director, employee or consultant of,
any Person that is, or is engaged in business as, a competitor, lessor, lessee,
supplier, distributor, sales agent or customer of, or lender to or borrower
from, the Company or any of the Company Subsidiaries; (b) owns, directly or
indirectly, in whole or in part, any material tangible or intangible property
that the Company or any of the Company Subsidiaries uses in the ordinary conduct
of its business; or (c) has any cause of action or other claim whatsoever
against, or owes any amount to, the Company or any of the Company Subsidiaries,
except for claims in the ordinary course of business such as for accrued
vacation pay, accrued benefits under Company Benefit Plans, and similar matters
and agreements arising in the ordinary course of business.
SECTION 3.20. Taxes. To the knowledge of the Company, the Company
has filed or caused to be filed, or has properly filed extensions for, all tax
returns, reports, forms and other such documents ("Tax Returns") that are
required to be filed and has paid or caused to be paid all Taxes as shown on
said returns and on all material assessments received by it to the extent that
such Taxes have become due, except any Tax the validity or amount of which is
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves, in accordance with GAAP, have been set aside. To the
knowledge of the Company, such Tax Returns are true and correct in all material
respects. The Company has paid or caused to be paid, or has established reserves
in accordance with GAAP for all Tax liabilities applicable to the Company for
all fiscal years that have not been examined and reported on by the taxing
authorities (or closed by applicable statutes). Except as disclosed in Section
3.20(a) of the Disclosure Schedule, to the knowledge of the Company, no
additional Tax assessment against the Company or any Company Subsidiary has been
heretofore proposed by any Governmental Authority for which provision deemed
adequate by the Company in its reasonable judgment has not been made on its
balance sheet. Except as disclosed in Section 3.20(a) of the Disclosure
Schedule, no waivers of the statute of limitation or extension of time within
which to assess any Tax have been granted by the Company or any Company
Subsidiary. Section 3.20(a) of the Disclosure Schedule sets forth the tax year
through which United States federal income tax returns of the Company have been
examined and closed.
(b) Except as disclosed in Section 3.20(b) of the Disclosure
Schedule, with respect to all Tax Returns of the Company and the Company
Subsidiaries, (i) no audit is in progress and no extension of time is in force
with respect to any date on which any Tax Return was or is to be filed and no
waiver or agreement is in force for the extension of time for the assessment or
payment of any Tax and (ii) there is no unassessed deficiency proposed or
threatened against the Company or any of the Company Subsidiaries.
(c) Except as disclosed in Section 3.20(c) of the Disclosure
Schedule, the Company knows of no change in the rates or basis of assessment of
any Tax (other than federal
<PAGE>
26
income tax) of the Company and the Company Subsidiaries that would reasonably be
expected to result in a Material Adverse Effect.
(d) Except as disclosed in Section 3.20(d) of the Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries has agreed to
or is required to make any adjustments under section 481 of the Code by reason
of a change or accounting method or otherwise.
(e) None of the respective assets of the Company or any of the
consolidated tax Company Subsidiaries is required to be treated as being owned
by any Person, other than the Company or any of the Company Subsidiaries,
pursuant to the "safe harbor" leasing provisions of Section 168(f)(8) of the
Code.
SECTION 3.21. Condominium Associations; Time Share Arrangements. (a)
Except as disclosed on Section 3.21(a) of the Disclosure Schedule, the Company
and the Company Subsidiaries have complied in all material respects with (i) the
Interstate Land Sales Act and the applicable state land sales disclosure acts;
(ii) all applicable state condominium and time share statutes, rules, and
regulations, including those governing the administration and operation of
owners' associations and those requiring the registration of the timeshare
interests or quartershare interests in the Resorts ("Intervals") or the units in
the Resorts ("Units") in the states in which the Resorts are located, marketed
or sold; (iii) Section 5 of the Federal Trade Commission Act; (iv) with respect
to the Development Activities, the Americans with Disabilities Act and the
applicable state laws regarding same; (v) state and federal fair housing acts
(except for accessibility requirements); (vi) all applicable real estate sales,
licensing, disclosure, reporting, and escrow laws; and (vii) all amendments to
the rules and regulations promulgated under the foregoing, in each case, except
as would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) The Company and the Company Subsidiaries market and sell
Intervals and Units in a manner such that prospective purchasers (the
"Prospective Purchasers") (i) are not required to participate in any rental
management program operated by the Company or any Company Subsidiary; (ii) are
induced to purchase Intervals or Units for vacation use and not as an
investment; (iii) have received no inducement or promise regarding the ability
of the Prospective Purchasers or anyone else to rent the Intervals or Units;
(iv) are informed upon their inquiry that there are readily available rental
management sources other than the Company or any Company Subsidiary, in each
case, except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(c) Except as disclosed in Section 3.21(c) of the Disclosure
Schedule, to the knowledge of the Company, there exist no facts giving rise to
any right of consumer recision with regard to any contract to sell or closed
sale of any Interval or Unit, whether because of non-compliance with one or more
state or federal statutes creating recision rights in consumers under specified
circumstances, or because of specific facts constituting misrepresentation or
fraud with
<PAGE>
27
respect to any Prospective Purchaser, in each case, except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(d) Except as disclosed in Section 3.21(d) of the Disclosure
Schedule, there exist no Encumbrance or Permitted Encumbrance against any Unit
or Interval or all or any portion of any Resort (including recreational
activities located within such Resort), except for Encumbrances or Permitted
Encumbrances (i) that have been fully subordinated to the rights of Prospective
Purchasers, (ii) will be discharged prior to delivery of title to Prospective
Purchasers or (iii) that have been fully disclosed to Prospective Purchasers in
any jurisdiction that permits or requires only disclosure of same, in each case,
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(e) For purposes of this section, the term "Resorts" shall mean (i)
the Grand Summit Hotels at the following locations: (1) Steamboat, Colorado; (2)
The Canyons, Utah; (3) Killington, Vermont; (4) Mount Snow, Vermont; (5)
Attitash/Bear Peak, New Hampshire; (6) Jordan Bowl, Maine; and (7) Heavenly,
California; and (ii) Sundial Lodge at The Canyons.
(f) All Units and recreational facilities within the Resorts that
were promised to be available for use by Prospective Purchasers were in all
material respects complete and available for legal occupancy prior to the time
that closing of any contracts were completed for any Intervals or Units.
(g) To the knowledge of the Company, all owners' associations and
management companies at the Resorts are in compliance in all material respects
with all applicable federal, state and local statutes, ordinances, rules, and
regulations requiring the full and timely payment in all material respects of
all common expenses and real estate taxes attributable to the Resorts.
(h) (i) All utilities, including sewer, water, gas, electricity,
steam and telephone, necessary for the operation of the Resorts are currently
available and in place in sufficient capacity at the Resorts to allow the
immediate and full operation in all material respects of the Resorts with the
exception of the Resorts currently under construction or where construction has
not yet commenced; (ii) to the knowledge of the Company, there are no pending or
threatened moratoria, injunctions or court orders in effect which would
reasonably be likely to interfere with the provision of utilities to the
Resorts; and (iii) all easements necessary for the furnishing of the utilities
have been obtained and duly recorded with the exception of the Resorts currently
under construction, in each case, except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(i) Each homeowners' association for each Resort which is operating
has been validly formed as a non-profit corporation and is in good standing in
the state in which it is incorporated.
<PAGE>
28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
As an inducement to the Company to enter into this Agreement, each
of the Purchasers hereby represents and warrants severally, and not jointly, to
the Company as follows:
SECTION 4.01. Organization and Authority of Each Purchaser. Each
Purchaser is a limited partnership duly organized, validly existing and in good
standing under the laws of its state of organization. Each Purchaser has all
necessary power and authority to enter into this Agreement and the Stockholders'
Agreement, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of each of this Agreement and the Stockholders' Agreement by such
Purchaser, the performance by such Purchaser of its obligations hereunder and
thereunder and the consummation by such Purchaser of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of such Purchaser. This Agreement has been, and, as of the
Closing Date, the Stockholders' Agreement will be, duly executed and delivered
by each Purchaser, and (assuming due authorization, execution and delivery by
the Company, Mr. Otten and ING, as the case may be) this Agreement constitutes,
and, as of the Closing Date, the Stockholders' Agreement will constitute, a
legal, valid and binding obligation of such Purchaser enforceable against such
Purchaser in accordance with its terms.
SECTION 4.02. No Conflict. Assuming the making and obtaining of all
filings, notifications, consents, approvals, authorizations and other actions
referred to in Section 4.03, except as may result from any facts or
circumstances relating solely to the Company, the execution, delivery and
performance of this Agreement and the Stockholders' Agreement by each Purchaser
does not and will not (a) violate, conflict with or result in the breach of any
provision of its certificate of limited partnership or by-laws or similar
organizational document of such Purchaser, (b) conflict with or violate any Law
or Governmental Order applicable to such Purchaser or (c) conflict with, or
result in any breach of, constitute a default (or event which with the giving of
notice or lapse or time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation, or cancellation of, or result in the
creation of any Encumbrance on any of the assets or properties of such Purchaser
pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease,
sublease, license, permit, franchise or other instrument or arrangement to which
such Purchaser is a party or by which any of such assets or properties are bound
or affected which, with respect to clauses (b) and (c) above, would have a
material adverse effect on the ability of such Purchaser to consummate the
transactions contemplated by this Agreement and the Stockholders' Agreement.
SECTION 4.03. Governmental Consents and Approvals. The execution,
delivery and performance of this Agreement and the Stockholders' Agreement by
each Purchaser does not and will not require any consent, approval,
authorization or other order of, action by, filing with, or notification to, any
Governmental Authority, except (i) for the applicable requirements, if any,
<PAGE>
29
of the Exchange Act, state securities or "blue sky" laws and the HSR Act and
(ii) for such other consents, approvals, authorizations, orders, actions,
filings or notifications, which if not obtained or made would not be reasonably
likely to be material to such Purchaser or materially delay the consummation of
the transactions contemplated by this Agreement.
SECTION 4.04. Investment Purpose. Each Purchaser is acquiring the
Shares for its own account solely for the purpose of investment and not with a
view to, or for offer or sale in connection with, any distribution thereof.
SECTION 4.05. Status of Shares; Limitations on Transfer and Other
Restrictions. Each Purchaser understands that the Shares have not been and will
not be registered under the Securities Act or under any state securities laws
(other than in accordance with the Stockholders' Agreement) and are being
offered and sold in reliance upon federal and state exemptions for transactions
not involving any public offering and that the Shares have not been approved or
disapproved by the SEC or by any other federal or state agency. Each Purchaser
further understands that such exemption depends in part upon, and such Shares
are being sold in reliance on, the representations and warranties set forth in
this Article IV. Each Purchaser understands that (i) none of the Shares may be
sold, transferred or assigned unless registered by the Company pursuant to the
Securities Act and any applicable state securities laws, or unless an exemption
therefrom is available, and, accordingly, it may not be possible for each
Purchaser to liquidate its investment in the Shares, and it agrees not to sell,
assign or otherwise transfer or dispose of any Shares unless such Shares have
been so registered or an exemption from registration is available, and (ii) the
Shares will be subject to certain restrictions on transfer and voting, as set
forth in the Stockholders' Agreement.
SECTION 4.06. Sophistication and Financial Condition of Each
Purchaser. Each Purchaser is an "Accredited Investor" as defined in Regulation D
under the Securities Act and each Purchaser considers itself to be an
experienced and sophisticated investor and to have such knowledge and experience
in financial and business matters as are necessary to evaluate the merits and
risks of an investment in the Shares. Each Purchaser has not been organized for
the sole purpose of acquiring Shares. Each Purchaser has been provided access to
such information and documents as it has requested and has been afforded an
opportunity to ask questions of and receive answers from representatives of the
Company concerning the terms and conditions of this Agreement and the purchase
of the Shares contemplated hereby.
SECTION 4.07. Fees and Expenses. Upon consummation of the
transactions contemplated by this Agreement, except for the fee payable by the
Company to Oak Hill Capital Management, Inc., which fee shall be equal to 3% of
the Aggregate Purchase Price (the "Oak Hill Fee"), and certain reasonable
out-of-pocket expenses, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchasers.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business by the Company Pending the
Closing. The Company agrees that it shall not, directly or indirectly, between
the date of this Agreement and the Closing Date, except as disclosed in Section
5.01 of the Disclosure Schedule or as specifically contemplated by any other
provision of this Agreement, unless Oak Hill shall otherwise consent in writing,
which consent shall not be unreasonably withheld or delayed:
(a) amend, alter or repeal (by merger, consolidation or otherwise)
any provision of the Articles of Incorporation or the By-laws, so as to
affect adversely the relative rights, preferences, qualifications,
limitations or restrictions of the Purchasers as the holders of the Series
B Preferred on the Closing Date;
(b) create any new class of shares having a preference with respect
to dividends and/or liquidation over or on parity with the Series B
Preferred;
(c) reclassify any of its capital stock into shares having a
preference over or on parity with the Series B Preferred;
(d) sell all or substantially all of its assets in one or a series
of related transactions, or effect any merger, consolidation or
combination of the Company with another entity;
(e) authorize any dividend or distribution with respect to the Class
A Common Stock or the Common Stock;
(f) effect any redemption or repurchase of any capital stock of the
Company (other than upon the exercise by the Company of its repurchase
rights as to Common Stock issued to employees (other than Mr. Otten and
his Affiliates) or others providing services at original cost upon the
termination of their employment or other service relationship with the
Company and the Company Subsidiaries); provided that this prohibition will
not apply to any mandatory redemption of the Senior Preferred Stock;
(g) increase the authorized number of shares of Series B Preferred;
(h) increase the authorized number of shares of or issue any
additional Senior Preferred Stock other than the issuance of Senior
Preferred Stock as a dividend to holders thereof in accordance with the
terms thereof;
(i) effect a voluntary liquidation, dissolution or winding up of the
Company;
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(j) effect any tender or exchange offer involving the Company's
equity securities or any security convertible into, exchangeable for, or
that otherwise gives the holder the right to obtain, equity securities of
the Company;
(k) except as disclosed in Section 5.01(k) of the Disclosure
Schedule, make or commit capital expenditures or expenditures relating to
Development Activities;
(l) make any material changes in pricing strategy;
(m) make any material acquisitions;
(n) hire or terminate senior executives (other than termination for
cause), make material changes in Company management, enter into any
material employment agreement or issue any employee or director stock
options; or
(o) make any material amendments or other changes to any of its
Material Contracts.
In addition, except as disclosed in Section 5.01 of the Disclosure
Schedule or as contemplated by this Agreement, neither the Company nor any
Company Subsidiary shall, between the date of this Agreement and the Closing
Date, directly or indirectly, do, or propose to do, any of the following without
the prior written consent of Oak Hill, which consent shall not be unreasonably
withheld or delayed:
(x) take any of the actions that would be reasonably likely to
result in the circumstances described in clauses (i) through (x) of
Section 3.07 hereof;
(y) take any action to cause the Company's representations and
warranties set forth in Article III to be untrue in any respect; or
(z) agree in writing or otherwise to take any of the actions
described in Sections 5.01(x) and (y) above.
SECTION 5.02. Access to Information; Confidentiality. (a) Except as
required pursuant to any confidentiality agreement or similar agreement or
arrangement to which Oak Hill or the Company or any of their partners or
Subsidiaries, as the case may be, is a party or pursuant to applicable Law, from
the date of this Agreement to the Closing Date, Oak Hill and the Company shall,
and shall cause their respective partners or Subsidiaries, as the case may be,
to: (i) provide to the other (and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives
(collectively, "Representatives")) access at reasonable times upon prior notice
to the officers, employees, agents, properties, offices and other facilities of
the other and its partners or Subsidiaries, as the case may be, and to the books
and records thereof and (ii) furnish promptly such information concerning the
business, properties, contracts,
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32
assets, liabilities, personnel and other aspects of the other party and its
partners or Subsidiaries, as the case may be, as the other party or its
Representatives may reasonably request.
(b) The parties shall comply with, and shall cause their respective
Representatives to comply with, all of their obligations under the
confidentiality agreement dated April 7, 1999 (the "Confidentiality Agreement")
between the Company and Oak Hill. All information obtained by the parties
pursuant to paragraph (a) above shall be subject to the Confidentiality
Agreement.
SECTION 5.03. Investigation. (a) Each Purchaser acknowledges and
agrees that it (i) has made its own inquiry and investigation into, and based
thereon has formed an independent judgment concerning, the business of the
Company and the Company Subsidiaries, (ii) has been furnished with or given such
adequate access to such information about the respective business of the Company
and the Company Subsidiaries as it has requested, (iii) has had independent
legal and financial advice relating to the respective business of the Company
and the Company Subsidiaries and the terms of this Agreement and the documents
to be executed pursuant hereto and (iv) will not assert any claim against the
Company, any Company Subsidiary or any of their Affiliates or Representatives,
or hold the Company or any such persons liable, for any inaccuracies,
misstatements or omissions with respect to information (other than the
representations and warranties of the Company contained in this Agreement
(including the Disclosure Schedule attached hereto and made a part hereof))
furnished by the Company or such persons concerning the Company, any Company
Subsidiary or the respective business of the Company and the Company
Subsidiaries. Any implied warranty or similar rights applicable to any of the
transactions contemplated hereby under the Law of any jurisdiction is hereby
expressly and irrevocably waived by each party hereto to the fullest extent
permitted by such Law, and each party hereto agrees that it shall not seek to
enforce any such implied warranties or similar rights against the other party.
(b) In connection with each Purchaser's investigation of the
respective business of the Company and the Company Subsidiaries, such Purchaser
has received certain estimates, projections and other forecasts for the
respective business of the Company and the Company Subsidiaries, and certain
plan and budget information (collectively, the "Forward Looking Information").
Each Purchaser acknowledges that there are uncertainties inherent in attempting
to make such estimates, projections, forecasts, plans and budgets, that such
Purchaser is familiar with such uncertainties, that such Purchaser is taking
full responsibility for making its own evaluation of the adequacy and accuracy
of all estimates, projections, forecasts, plans and budgets so furnished to it.
Accordingly, the Company makes no representation or warranty with respect to any
estimates, projections, forecasts, plans or budgets referred to in this Section
5.03.
SECTION 5.04. Public Announcements. The initial press release
relating to this Agreement shall be a joint press release the text of which has
been agreed to by each of Oak Hill and the Company. Thereafter, unless otherwise
required by applicable Law or the requirements of the NYSE, each of Oak Hill, on
behalf of the Purchasers as the sole authority to make any public disclosure
with respect to this Agreement, and the Company shall use best efforts to
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33
consult with the other before issuing any press release with respect to this
Agreement or any of the transactions contemplated hereby.
SECTION 5.05. Delaware Reincorporation. The Company shall use its
best efforts and take all actions necessary or advisable and permitted by
applicable Law promptly to cause (i) the Company to be merged with and into a
newly formed Subsidiary (such new Subsidiary's capital stock, after giving
effect to such merger, being identical to the authorized, issued and outstanding
capital stock of the Company) which is incorporated in the State of Delaware,
with such new Delaware Subsidiary surviving the merger and (ii) the Board to be
changed from a staggered board structure to a board structure where all
Directors are elected annually (the actions described in clauses (i) and (ii)
being collectively referred to as the "Delaware Reincorporation").
SECTION 5.06. Company Stockholders' Meeting. The Company shall use
its best efforts and take all actions necessary or advisable and permitted by
applicable Law to prior to December 31, 1999 (i) call and hold a stockholders'
meeting as promptly as practicable for the purpose of voting upon (A) the
approval of the issuance of the Conversion Stock pursuant to the terms of the
Series B Preferred and (B) the Delaware Reincorporation, in each case, as may be
required by the rules of the NYSE and applicable Law, (ii) secure the requisite
vote or consent of stockholders for such approval and (iii) reserve for issuance
such number of shares of Common Stock issuable upon conversion of the Conversion
Stock as may reasonably be required.
SECTION 5.07. NYSE Listing. The Company shall promptly prepare and
submit to the NYSE a listing application covering the Conversion Stock, and
shall use its best efforts to reserve for issuance such Conversion Stock,
subject to stockholder approval and to official notice to the NYSE of issuance.
SECTION 5.08. No Solicitation of Transactions. (a) The Company will
not, directly or indirectly, and will instruct the Company Subsidiaries and
Representatives not to, directly or indirectly, solicit, initiate or encourage
(including by means of furnishing nonpublic information), or take any other
action to facilitate, any inquiries or the making of any proposal or offer that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction, or enter into or maintain or continue discussions or negotiate with
any Person in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or authorize or
permit any of the Company Subsidiaries or any Representative retained by it to
take any such action. Notwithstanding anything to the contrary in this Section
5.08, the Company may furnish information to, and enter into discussions with, a
Person who has made a Superior Proposal if (i) the Board has reasonably
concluded, after consultation with its outside legal counsel, that, in light of
such Superior Proposal, the furnishing of such information or entering into
discussions is required to comply with its fiduciary obligations to the Company
and its stockholders under applicable Law, (ii) the Company has advised Oak Hill
of the furnishing of such information or such discussions and (iii) the Company
has obtained from such Person an executed confidentiality agreement on terms no
less favorable to the Company than those contained in the Confidentiality
Agreement.
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34
(b) Nothing contained in this Agreement shall prohibit the Company
or the Board from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act.
(c) The Company shall (i) promptly notify Oak Hill orally and in
writing of the receipt by the Company (or any of its Representatives) of any
Superior Proposal or any inquiries that could reasonably be expected to lead to
a Superior Proposal and the identity of the Person making such Superior Proposal
or such inquiry and (ii) notify Oak Hill orally and in writing promptly after
receipt of any request for non-public information relating to it or any of the
Company Subsidiaries or for access to its or any of the Company Subsidiaries'
properties, books or records by any Person that, to the knowledge of the
Company, may be considering making, or has made, a Superior Proposal.
SECTION 5.09. Use of Proceeds. The Company shall use the proceeds of
the Aggregate Purchase Price substantially as follows:
(a) approximately $80,000,000 for the reduction of certain senior
indebtedness of the Company and certain of the Company Subsidiaries;
(b) approximately $30,000,000 for an equity contribution to American
Skiing Company Resort Properties, Inc.;
(c) approximately $30,000,000 initially to be applied to repay
certain indebtedness under certain of the Amended and Restated Credit
Agreements, which amount may subsequently be drawn upon and used (i) for
the purchase of certain assets to be used in the business of the Company
and certain of the Company Subsidiaries and (ii) for other capital
expenditures, in each case, as approved by the Board and as disclosed in
Section 5.09 of the Disclosure Schedule; and
(d) the remainder of the proceeds for (i) fees and expenses of the
Company relating to the transactions contemplated by this Agreement and
(ii) general working capital purposes.
SECTION 5.10. Voting Agreement. The Company shall deliver the
executed Voting Agreement on behalf of all parties thereto (other than Oak Hill)
at the Closing.
SECTION 5.11. Further Action; Consents; Filings. (a) Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use its
reasonable best efforts to (i) take, or cause to be taken, all appropriate
action and do, or cause to be done, all things necessary, proper or advisable
under applicable Law to consummate the transactions contemplated by this
Agreement and, when executed, the Stockholders' Agreement and the Voting
Agreement, (ii) obtain from Governmental Authorities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by the Purchasers or the Company or any of their partners or Subsidiaries,
as the case may be, in connection with the
<PAGE>
35
authorization, execution and delivery of this Agreement, the Stockholders'
Agreement and the Voting Agreement and the consummation of the transactions
contemplated hereby and thereby and (iii) make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement,
the Stockholders' Agreement and the Voting Agreement and the transactions
contemplated hereby and thereby that are required under (A) the Exchange Act and
the Securities Act and the rules and regulations thereunder and any other
applicable federal or state securities or "blue sky" laws, (B) the HSR Act and
(C) any other applicable Law. The parties hereto shall cooperate with each other
in connection with the making of all such filings, including by providing copies
of all such documents to the nonfiling party and its advisors prior to filing
and, if requested, by accepting all reasonable additions, deletions or changes
suggested in connection therewith.
(b) The Purchasers and the Company shall file as soon as practicable
after the date of this Agreement notifications under the HSR Act and shall
respond as promptly as practicable to all inquiries or requests received from
the Federal Trade Commission or the Antitrust Division of the Department of
Justice for additional information or documentation and shall respond as
promptly as practicable to all inquiries and requests received from any State
Attorney General or other Governmental Authority in connection with antitrust
matters. The parties shall cooperate with each other in connection with the
making of all such filings or responses, including providing copies of all such
documents to the other party and its advisors prior to filing or responding.
SECTION 5.12. Tax Reporting. The parties hereto agree and
acknowledge that unless otherwise required in the opinion of outside counsel to
the relevant party, as a result of a change in applicable law (including,
without limitation, a clarification of law pursuant to legislative,
administrative or judicial guidance), to comply with its obligations under the
Code, (i) no party hereto will take the position that any amount will be
includible in income with respect to the Shares issued pursuant to this
Agreement under Section 305 of the Code and that the parties shall file all Tax
Returns accordingly (the "Reporting Agreement") and (ii) no party shall
affirmatively take any position inconsistent with the Reporting Agreement upon
examination of any Tax Return, in any refund claim, in any litigation or
otherwise.
SECTION 5.13. Section 382 of the Code. The parties hereto agree and
acknowledge that, if the Company and Oak Hill reasonably believe the Closing is
likely to result in a "change of control" (as such term is defined in Section
382 of the Code) (a "Section 382 Control Change"), Oak Hill and the Company
agree to negotiate in good faith to restructure the transaction terms, in a
manner satisfactory to both parties, (i) so as to avoid a Section 382 Control
Change, or (ii) in the event a Section 382 Control Change cannot be avoided to
assure that the timing and amount of deductions of net operating losses that the
Company may claim for federal income tax purposes is not materially adversely
affected by reason of such Section 382 Control Change.
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36
ARTICLE VI
CONDITIONS TO THE CLOSING
SECTION 6.01. Conditions to the Obligations of Each Party. The
obligations of the Company and the Purchasers to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or written waiver
(where permissible), with Oak Hill's written waiver constituting an effective
waiver on behalf of all Purchasers, of the following conditions:
(a) No Order. No Governmental Authority or court of competent
jurisdiction shall have enacted, threatened, issued, promulgated, enforced
or entered any Governmental Order that is then in effect, pending or
threatened and has, or would have, the effect of prohibiting consummation
of the transactions contemplated by this Agreement;
(b) Antitrust Waiting Periods. Any waiting period (and any extension
thereof) applicable to the consummation of the transactions contemplated
by this Agreement under the HSR Act shall have expired or been terminated;
(c) NYSE Listing. The Conversion Stock shall have been reserved for
issuance on the NYSE, subject to stockholder approval and to official
notice of issuance;
(d) Consents. Each of Oak Hill and the Company shall have received,
each in form reasonably satisfactory to it, (i) from holders of ASC East,
Inc.'s 12% Series A and B Senior Subordinated Notes issued under the
Indenture, a consent to the effect that none of the transactions
contemplated by this Agreement shall constitute a "Change of Control" (as
such term is defined in the Indenture), (ii) from the lenders under the
Amended and Restated Senior Credit Agreements, a consent to all the
transactions contemplated by this Agreement, (iii) from the holders of the
Senior Preferred Stock, a consent with respect to the transactions
contemplated by this Agreement and the Stockholders' Agreement; (iv) from
ING, a consent to the effect that none of the transactions contemplated by
this Agreement will constitute a "change of control" under the Credit
Agreement dated as of November 10, 1997 between Mr. Otten and ING; and (v)
from the lenders under the Resort Properties Credit Agreement, a consent
to the effect that none of the transactions contemplated by this Agreement
shall constitute a "Change of Control" (as such term is defined in the
Resort Properties Credit Agreement);
(e) By-laws. The By-laws shall have been amended to conform to the
Stockholders' Agreement, including the addition of a provision that
references and acknowledges the effectiveness of Section 3.02 of the
Stockholders' Agreement;
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37
(f) Independent Directors. The Board shall include three Independent
Directors (as such term is defined in the Stockholders' Agreement)
reasonably satisfactory to each of the Company and Oak Hill and to be
elected, if necessary, at the Closing; and
(g) Class I Option Benefits. The Company shall have entered into
agreements with certain holders of Class I Options (as such term is
described in the Company Benefit Plans), mutually satisfactory to Oak Hill
and the Company, limiting the rights of such holders with respect to fixed
benefit tax "gross-ups" upon exercise of such options.
SECTION 6.02. Conditions to Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the satisfaction or written waiver (where permissible)
of the following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Purchasers contained in this Agreement shall have
been true and correct in all material respects when made and as of the
Closing, with the same force and effect as if made as of the Closing Date,
and the covenants and agreements contained in this Agreement to be
complied with by the Purchasers on or before the Closing shall have been
complied with in all material respects, and the Company shall have
received a certificate from each Purchaser to such effect signed by a duly
authorized officer thereof;
(b) Stockholders' Agreement. The Stockholders' Agreement shall have
been duly authorized, executed and delivered by each Purchaser; and
(c) Purchasers Closing Deliveries. The Company shall have received
the closing deliveries of the Purchasers set forth in Section 2.05 and
such other certificates dated the Closing Date as it may reasonably
request.
SECTION 6.03. Conditions to Obligations of the Purchasers. The
obligations of the Purchasers to consummate the transactions contemplated by
this Agreement are subject to the satisfaction or written waiver (where
permissible), with Oak Hill's written waiver constituting an effective waiver on
behalf of all Purchasers, of the following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Company contained in this Agreement shall have been
true and correct in all material respects when made and as of the Closing,
with the same force and effect as if made as of the Closing Date, other
than such representations and warranties as are made as of another date,
which shall be true and correct as of such date (provided, however, that
if any portion of any representation or warranty is already qualified by
materiality, for purposes of determining whether this Section 6.03(a) has
been satisfied with respect to such portion of such representation or
warranty, such portion of such representation or warranty as so qualified
must be true and correct in all respects), and the covenants and
agreements contained in this Agreement to be complied with by the Company
on or before the Closing shall have been complied with in all material
respects,
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and each Purchaser shall have received a certificate of the Company to
such effect signed by a duly authorized officer thereof;
(b) Stockholders' Agreement. The Stockholders' Agreement shall have
been duly authorized, executed and delivered by the Company, Mr. Otten,
and ING;
(c) Company Closing Deliveries. The Purchasers shall have received
the closing deliveries of the Company indicated in Section 2.04 and such
other certificates dated the Closing Date as Oak Hill may reasonably
request;
(d) Voting Agreement. The voting agreement shall have been duly
authorized and executed by each of the parties thereto (other than Oak
Hill) and delivered by the Company on behalf of each of the parties
thereto (other than Oak Hill) as contemplated herein;
(e) Purchaser Directors. The Certificate of Designation shall have
been filed with the Secretary of State of Maine and the Oak Hill Designees
shall have become Directors;
(f) Amendments to Credit Agreements and the Indenture. Oak Hill
shall have received, in form and substance reasonably satisfactory to it,
copies of amendments made to certain of the Amended and Restated Credit
Agreements, the Credit Agreement dated as of November 10, 1997 between ING
and Mr. Otten, the Resort Properties Credit Agreement and the Indenture,
reflecting such changes as Oak Hill may reasonably request;
(g) Budget. Oak Hill shall have received, in form and substance
reasonably satisfactory to it, a proposed operating and capital budget of
the Company for fiscal year 2000; and
(h) Employment Agreement of Mr. Otten. Oak Hill shall have received,
in form and substance reasonably satisfactory to it, an executed copy of
an employment agreement between Mr. Otten and the Company.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Survival of Representations and Warranties. The
representations and warranties of the Company and the Purchasers contained in
this Agreement shall survive until the second anniversary of the Closing Date,
except that all representations and warranties of the Company as to any Tax
Claim shall survive until 30 days after assessment of the liability to which any
such Tax Claim may relate is barred by all applicable statutes of limitation
(taking into
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39
account any applicable waivers or extensions). If written notice of a claim has
been given prior to the expiration of the applicable representations and
warranties by the Company or the Purchasers, then the relevant representations
and warranties of the other party shall survive as to such claim, until such
claim has been finally resolved.
SECTION 7.02. Indemnification. (a) Each of the Purchasers, their
respective Affiliates and their respective successors and assigns and the
officers, directors, employees and agents of each of the Purchasers, their
respective Affiliates and their respective successors and assigns shall be
indemnified and held harmless by the Company for any and all Liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, reasonable attorneys' fees and
expenses) actually suffered or incurred by them (including, without limitation,
any Action brought or otherwise initiated by any of them) (hereinafter, a
"Purchaser Loss") arising out of or resulting from:
(i) the breach of any representation or warranty made by the Company
contained in this Agreement; or
(ii) the breach of any covenant or agreement by the Company
contained in this Agreement.
(b) The Company, its Affiliates and its successors and assigns and
the officers, directors, employees and agents of the Company, its Affiliates and
its successors and assigns shall be indemnified and held harmless by Oak Hill
for any and all Liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without limitation,
reasonable attorneys' fees and expenses) actually suffered or incurred by them
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter, a "Company Loss", and each of a Company Loss and a
Purchaser Loss is hereinafter referred to as a "Loss" with respect to such
party) arising out of or resulting from:
(i) the breach of any representation or warranty made by any
Purchaser contained in this Agreement; or
(ii) the breach of any covenant or agreement by any Purchaser
contained in this Agreement.
(c) Whenever a claim shall arise for indemnification under this
Article VII, the party entitled to indemnification (the "Indemnified Party")
shall give notice to the other party (the "Indemnifying Party") of any matter
that the Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement promptly, but in no event later
than 30 days after the Indemnified Party first learns of such claim, stating the
amount of the Loss, if known, and method of computation thereof, and containing
a reference to the provisions of this Agreement in respect of which such right
of indemnification is claimed or arises. The obligations and Liabilities of the
Indemnifying Party under this Article VII with respect to Losses arising from
claims of any third party which are subject to the indemnification provided for
in
<PAGE>
40
this Article VII ("Third Party Claims") shall be governed by and contingent upon
the following additional terms and conditions: if an Indemnified Party shall
receive notice of any Third Party Claim, the Indemnified Party shall give the
Indemnifying Party notice of such Third Party Claim following receipt by the
Indemnified Party of such notice in the time frame provided above; provided,
however, that the failure to provide such notice shall not release the
Indemnifying Party from any of its obligations under this Article VII except to
the extent the Indemnifying Party is materially prejudiced by such failure and
shall not relieve the Indemnifying Party from any other obligation or Liability
that it may have to any Indemnified Party otherwise than under this Article VII.
The Indemnifying Party shall be entitled to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice if it
gives notice of its intention to do so to the Indemnified Party within ten days
of the receipt of such notice from the Indemnified Party; provided, however,
that if there exists or is reasonably likely to exist a conflict of interest
that would prevent the same counsel from representing both the Indemnified Party
and the Indemnifying Party, then the Indemnified Party shall be entitled to
retain its own counsel at the expense of the Indemnifying Party. In the event
the Indemnifying Party exercises the right to undertake any such defense against
any such Third Party Claim as provided above, the Indemnified Party shall
cooperate with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Third Party Claim may be settled by the Indemnifying Party
without the prior written consent of the Indemnified Party.
SECTION 7.03. Limits on Indemnification. (a) Notwithstanding
anything to the contrary contained in this Agreement, (i) the maximum amount of
indemnifiable Purchaser Losses which may be recovered by any Purchaser from the
Company arising out of or resulting from the causes enumerated in Section
7.02(a) with respect to it shall be an amount equal to one half of the portion
of the Purchase Price paid by it as set forth in Annex A hereto and (ii) no
claim may be made against the Company for indemnification pursuant to Section
7.02(a) with respect to any individual item of a Purchaser Loss or items of
Purchaser Losses arising out of substantially similar facts and circumstances,
unless such item or items of Purchaser Losses exceed $10,000, and no claim may
be made against the Company pursuant to Section 7.02(a) unless the aggregate of
all such Purchaser Losses shall exceed $250,000 (the "Basket Amount"), in which
case the Company shall then be required to pay or be liable for any excess
amount of Purchaser Losses beyond the Basket Amount.
(b) Notwithstanding anything to the contrary elsewhere in this
Agreement, Losses shall not include, and no Indemnifying Party shall, in any
event, be liable to any other
<PAGE>
41
party for, any consequential, punitive or special damages (including, but not
limited to, damages for lost profits).
SECTION 7.04. Form of Payment of Purchaser Losses. The Company, at
the election of the Board, may, in lieu of making any cash payment with respect
to, and in full satisfaction of, any obligation of the Company arising under
Section 7.02(a) to indemnify for Purchaser Losses, issue additional shares of
Series B Preferred. For purposes of calculating the number of shares of Series B
Preferred issuable pursuant to this Section 7.04, the price per share of Series
B Preferred will be deemed to be $1,000.
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination. This Agreement may be terminated and the
other transactions contemplated by this Agreement may be abandoned at any time
prior to the Closing Date, notwithstanding any requisite approval and adoption
of this Agreement and the transactions contemplated by this Agreement, as
follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Oak Hill and the Company;
(b) by either Oak Hill or the Company if the Closing Date shall not
have occurred on or before August 31, 1999; provided, however, that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose breach has caused the failure of the Closing
to occur on or before such date;
(c) there shall be any Governmental Order which is final and
nonappealable preventing the transactions contemplated by this Agreement;
(d) by Oak Hill upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have
become untrue, in either case such that the conditions set forth in
Section 6.03(a) would not be satisfied ("Terminating Company Breach");
provided, however, that if such Terminating Company Breach is curable by
the Company through the exercise of its best efforts and for as long as
the Company continues to exercise such best efforts, but not beyond the
date specified in paragraph (b) above, Oak Hill may not terminate this
Agreement under this Section 8.01(d);
(e) by the Company upon a breach of any representation, warranty,
covenant or agreement on the part of any Purchaser set forth in this
Agreement, or if any representation or warranty of any Purchaser shall
have become untrue, in either case such
<PAGE>
42
that the conditions set forth in Section 6.02(a) would not be satisfied
("Terminating Purchaser Breach"); provided, however, that if such
Terminating Purchaser Breach is curable by any Purchaser through the
exercise of its respective best efforts and for as long as such Purchaser
continues to exercise such best efforts, but not beyond the date specified
in paragraph (b) above, the Company may not terminate this Agreement under
this Section 8.01(e); or
(f) by the Company if the Board determines, after consultation with
its independent legal counsel (who may be the Company's regularly engaged
outside legal counsel), that such termination is required by the Board's
fiduciary duties to the Company's stockholders under applicable Law in
order to permit the Company to enter into a definitive agreement with
respect to a Competing Transaction that constitutes a Superior Proposal;
provided, however, that the termination of this Agreement by the Company
under this paragraph (f) shall not become effective until the fee required
to be paid under Section 9.02(b) shall have been paid in full.
SECTION 8.02. Effect of Termination. Except as provided in Section
7.01, in the event of termination of this Agreement pursuant to Section 8.01,
this Agreement shall forthwith become void, there shall be no liability under
this Agreement on the part of the Purchasers or the Company or any of their
respective officers or directors, and all rights and obligations of each party
hereto shall cease, subject to the remedies of the parties set forth in Section
9.02(b); provided, however, that nothing herein shall relieve any party from
liability for the breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Waiver. The Company, on the one hand, and Oak Hill, on
behalf of each Purchaser on the other hand, may (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered by the other party pursuant hereto
or (iii) waive compliance with any of the agreements or conditions of the other
party contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party to be bound thereby. Any
waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure of any
party to assert any of its rights hereunder shall not constitute a waiver of any
of such rights.
SECTION 9.02. Expenses. (a) Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial
<PAGE>
43
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses; provided, however, (i) if the purchase of Shares is consummated as
contemplated by this Agreement, the Company shall pay the Oak Hill Fee and the
reasonable out-of-pocket expenses of Oak Hill in connection with the
transactions contemplated by this Agreement, which expenses shall in no event
exceed in the aggregate the amount of the Company's allowable fees and expenses
(excluding the Oak Hill Fee, consent fees and investment banking fees) and (ii)
the Company's fees (excluding the Oak Hill Fee and any fees and expenses
associated with any solicitation of consents or approvals in connection with the
restructuring of the Company's capital structure in accordance with the terms of
the Indenture) shall not exceed $7.5 million.
(b) The Company agrees to pay to Oak Hill an amount equal to the sum
of $10,000,000 if either (i) the Company shall terminate this Agreement pursuant
to Section 8.01(f) or (ii) the Company shall terminate this Agreement pursuant
to Section 8.01(b) and the Company shall consummate a Competing Transaction that
constitutes a Superior Proposal within one year of the date of such termination.
SECTION 9.03. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy, by e-mail or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 9.03):
(a) If to the Company:
American Skiing Company
Sunday River Road
Bethel, ME 04217
Telecopy: (207) 824-5110
Attention: Leslie B. Otten
Christopher E. Howard
with copies (which shall not constitute notice to the
Company) to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: (212) 848-7179
Attention: Robert Evans III, Esq.
(e-mail: [email protected])
Peter D. Lyons, Esq.
(e-mail: [email protected])
<PAGE>
44
and
Pierce Atwood
One Monument Square
Portland, ME 04101
Telecopy: (207) 791-1350
Attention: David J. Champoux, Esq.
(e-mail: [email protected])
(b) If to the Purchasers:
Oak Hill Capital Partners, L.P.
201 Main Street
Fort Worth, Texas 76102
Attention: Ray Pinson
and
Oak Hill Capital Management, Inc.
Park Avenue Tower
65 East 55th Street
New York, NY 10022
Telecopy: (212) 754-5685
Attention: Steven B. Gruber
Bradford E. Bernstein
with a copy (which shall not constitute notice to the
Purchasers) to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Telecopy: (212) 373-2377
Attention: Matthew Nimetz, Esq.
SECTION 9.04. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. No party to this Agreement
shall be deemed to be the draftsman of this Agreement.
SECTION 9.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
<PAGE>
45
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 9.06. Entire Agreement. This Agreement and the Stockholders'
Agreement, when executed, constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, among the Company and the
Purchasers with respect to the subject matter hereof and thereof.
SECTION 9.07. Assignment. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties;
provided, however, neither the Company, on the one hand, nor Oak Hill on behalf
of each Purchaser, on the other hand, shall assign or delegate any of the rights
or obligations created under this Agreement without the prior written consent of
the other party, except to Affiliates of Oak Hill or to Oak Hill Securities
Fund, L.P.; provided, however, that no such assignment shall release Oak Hill or
any of the other Purchasers from any of their obligations hereunder.
SECTION 9.08. No Third Party Beneficiaries. Except for the
provisions of Article VII relating to Indemnified Parties, this Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns, and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Company and Oak Hill, on behalf of each Purchaser, or (b) by a waiver in
accordance with Section 9.01.
SECTION 9.10. Governing Law; Forum; Arbitration. (a) This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York applicable to contracts executed in and to be performed entirely in
that state and without regard to any applicable conflicts of law principles.
(b) Except as provided in Section 9.10(c) below, all actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in the United States District Court for the Southern District of New
York or in any state or federal court in Maine. Each of the parties to this
Agreement (a) consents to submit itself to the personal jurisdiction of any New
York State or federal court sitting in the City of New York, County of Manhattan
or of any state or federal court in Maine, in the event that any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court and (c) agrees that it
will not bring any action in relation to this Agreement or any of the other
transactions contemplated by this Agreement in any court other than any New York
State or
<PAGE>
46
federal court sitting in the City of New York, County of Manhattan or any state
or federal court in Maine.
(c) After the Closing Date, notwithstanding anything to the contrary
in this Agreement, the parties hereto agree that any claim, action, suit or
proceeding (a "Claim") seeking to enforce any provision of, or based upon any
matter arising out of, Article VII shall be finally resolved through
arbitration, subject to the following provisions:
(i) In the event that any of the parties hereto asserts a Claim for
purposes of Article VII, it shall notify in writing the other parties of
such alleged Claim (a "Dispute Notice") and such parties shall in good
faith attempt to reach a mutually satisfactory settlement of such Claim.
If such parties fail to reach a settlement within 30 days of the date of
the Dispute Notice, any such party, after giving written notice to all
such other parties of its intention to do so, may, by means of a demand of
arbitration (a "Demand of Arbitration"), refer the existence of a Claim to
arbitration in accordance with the provisions set forth herein.
(ii) The arbitration shall, subject to the provisions herein agreed
to, be governed by the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA"). The arbitration shall be administered
and conducted by the AAA. The AAA shall be the appointing authority. The
place of the arbitration and the place of the making of the decision shall
be New York, New York. The substantive law to be applied by the
arbitrators shall be the law as set forth in paragraph (a) of this Section
9.10.
(iii) The arbitration panel (the "Arbitration Panel") shall be
composed of three arbitrators, designated as follows. The parties or party
alleging a Claim (the "Claimant") shall, in its Demand of Arbitration,
appoint one arbitrator. The party or parties purportedly responsible for
the alleged Claim (the "Respondent") shall, no later than 10 days after
being notified of the Demand of Arbitration, appoint one arbitrator. If
the Respondent fails to appoint such arbitrator within such 10 days, the
AAA shall appoint such arbitrator no later than 15 days after being
notified of the Respondent's failure to timely appoint such arbitrator.
Once both arbitrators are appointed, they shall mutually appoint the third
arbitrator.
(iv) The Arbitration Panel shall render its decision (the
"Decision") not later than 90 days after such panel has been duly
constituted. In the event that the Arbitration Panel fails to render the
Decision within such time limit, the Arbitration Panel shall, nonetheless,
retain jurisdiction over the dispute.
(v) The Decision shall be in writing. The Arbitration Panel shall
set forth the reasons for the Decision. The Decision shall be final and
binding upon all parties hereto.
<PAGE>
47
SECTION 9.11. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 9.12. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
<PAGE>
48
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AMERICAN SKIING COMPANY
By: /s/ Leslie B. Otten
-------------------
Name: Leslie B. Otten
Title: President and Chief Executive Officer
OAK HILL CAPITAL PARTNERS, L.P.
By: OHCP GEN PAR, L.P., its general partner
By: OHCP NGP, LLC, its general partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Managing Member
<PAGE>
49
ANNEX A
PURCHASERS
NUMBER OF
JURISDICTION AND SHARES
NAME TYPE OF ORGANIZATION PURCHASED PURCHASE PRICE
---- -------------------- --------- --------------
Oak Hill Capital Partners, Delaware L.P. 150,000 $150,000,000
L.P.
<PAGE>
AMENDMENT NO. 1 (this "Amendment"), dated as of August 6, 1999 to
the Preferred Stock Subscription Agreement, dated July 9, 1999 (the
"Agreement"), among American Skiing Company (the "Company"), Oak Hill Capital
Partners, L.P. ("Oak Hill") and the other entities named in Annex A thereto.
Capitalized terms used in this Amendment but not defined herein shall have the
respective meanings given such terms in the Agreement.
WHEREAS, pursuant to Section 9.09 of the Agreement, the parties
hereto wish to amend the Agreement in the manner set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. Oak Hill Capital Management Partners, L.P., Oak Hill Securities
Fund, L.P., and OHCP Ski, L.P. (collectively, the "Additional Investors") shall
each be added as Purchasers to the Agreement. In this regard, Annex A shall be
changed to reflect the addition of these parties as Purchasers and to reflect
the number of shares of Series B Preferred to be purchased and the purchase
price to be paid by each of the Purchasers. A copy of the restated Annex A is
attached to this Amendment.
2. Each of the Additional Investors hereby acknowledges their
agreement to become Purchasers by signing below as indicated and that by so
signing they hereby become parties to the Agreement.
3. Each of the Company and Oak Hill hereby ratifies and confirms
that it continues to be bound by the terms and provisions of the Agreement.
Except as expressly modified hereby, all of the terms and provisions of the
Agreement shall continue in full force and effect.
4. This Amendment may be executed in one or more counterparts, all
of which shall be considered one and the same agreement, and shall become
effective when one or more of the counterparts has been signed by each of the
parties hereto, it being understood that each party need not sign the same
counterpart.
<PAGE>
2
IN WITNESS WHEREOF, each of the parties hereto has signed this
Amendment as of the date first above written by their respective officers
thereunto duly organized.
AMERICAN SKIING COMPANY
By: /s/ Chris Howard
----------------
Name: Chris Howard
Title: Executive Vice President
OAK HILL CAPITAL PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Managing Member
OAK HILL CAPITAL MANAGEMENT
PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its General Partner
By: OHCP MGP, LLC,
its General Partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Vice President
<PAGE>
3
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: /s/ Glenn R. August
-------------------
Name: Glenn R. August
Title: President
OHCP SKI, L.P.
By: Oak Hill Capital Partners, L.P.,
its General Partner
By: OHCP GenPar, L.P.,
its General Partner
By: OHCP MGP, LLC,
its General Partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Vice President
<PAGE>
ANNEX A
PURCHASERS
NUMBER OF
JURISDICTION AND SHARES
NAME TYPE OF ORGANIZATION PURCHASED PURCHASE PRICE
- ---- -------------------- --------- --------------
Oak Hill Capital Partners, L.P. Delaware L.P. 129,870 $129,870,000
Oak Hill Capital Management Delaware L.P. 3,330 $3,330,000
Partners, L.P.
Oak Hill Securities Fund, L.P. Delaware L.P. 14,800 $14,800,000
OHCP SKI, L.P. Delaware L.P. 2,000 $2,000,000
Total......................................... 150,000 $150,000,000
VOTING AGREEMENT dated as of August 6, 1999 (this "Agreement") among
AMERICAN SKIING COMPANY, a Maine corporation (the "Company"), the persons and
entities listed on Schedule I hereto (each a "Stockholder" and collectively the
"Stockholders") and OAK HILL CAPITAL PARTNERS, L.P. ("Oak Hill"), on behalf of
the Purchasers identified in the Stock Subscription Agreement (defined below).
Unless otherwise defined in this Agreement, capitalized terms are used herein as
defined in the Stock Subscription Agreement (defined below).
WHEREAS this Agreement is being executed pursuant to the provisions
of Sections 615 and 617 of the Maine Business Corporation Act and in conjunction
with the Preferred Stock Subscription Agreement dated July 9, 1999 by and
between the Company and the Purchasers, as amended by Amendment No.1 thereto by
and among the Company and the Purchasers (collectively, the "Stock Subscription
Agreement"), pursuant to which the Company is selling to the Purchasers, and the
Purchasers are purchasing from the Company, the Company's 8.5% Series B
Convertible Participating Preferred Stock, par value $.01 per share, upon the
terms and subject to the conditions set forth in the Stock Subscription
Agreement (the "Preferred Stock Sale").
WHEREAS, as of the date hereof, the Stockholders have beneficial
ownership of, and own or possess voting power with respect to, the shares of
Class A Common Stock, the Common Stock and the Senior Preferred Stock as set
forth on Schedule I.
WHEREAS, as a condition to the willingness of the Purchasers to
close the transaction contemplated by the Stock Subscription Agreement, Oak Hill
has required that each Stockholder and the Company agree, and in order to induce
the Purchasers to close such transactions, each Stockholder and the Company has
agreed, to enter into this Agreement with respect to all the shares of Class A
Common Stock, Common Stock and Senior Preferred Stock now owned and which may
hereafter be acquired by each Stockholder (the "Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
VOTING OF SHARES
SECTION 1.01. Voting Agreement. Each Stockholder hereby agrees that
at any meeting of the stockholders of the Company, however called, and in any
action by unanimous consent of the stockholders of the Company, such Stockholder
shall vote the Shares: (A) in favor
<PAGE>
2
of the Preferred Stock Sale and the transactions contemplated by the Stock
Subscription Agreement, (B) against any Competing Transaction, (C) in favor of
the Delaware Reincorporation, (D) in favor of the approval of the issuance of
the Conversion Stock, if any, pursuant to the Stock Subscription Agreement and
as required by the rules of the New York Stock Exchange ("NYSE Authorization")
and (E) to the extent consistent with such a vote in favor of the Delaware
Reincorporation or the NYSE Authorization, in such a manner as shall be
necessary, with respect to any procedural matters presented at any such meeting
at which any action is scheduled to be taken with respect to the Delaware
Reincorporation or the NYSE Authorization.
SECTION 1.02. Irrevocable Proxy. In the event a Stockholder shall
fail (whether willfully, negligently or inadvertently) to comply with the
provisions of Section 1.01 hereof as determined by Oak Hill in its reasonable
judgment (a "Defaulting Stockholder"), such Stockholder agrees that such failure
shall constitute, without any further action by such Stockholder, the
irrevocable appointment of Oak Hill, until termination of this Agreement, as
such Stockholder's attorney and proxy pursuant to the provisions of Section 615
of the Maine Business Corporation Act, with full power of substitution, to vote,
and otherwise act (by written consent or otherwise) with respect to the Shares
which such Stockholder is entitled to vote at any meeting of stockholders of the
Company (whether annual or special and whether or not an adjourned or postponed
meeting) or unanimous consent in lieu of any such meeting or otherwise, on the
matters and in the manner specified in Section 1.01 hereof. THIS PROXY AND POWER
OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST. Each Stockholder hereby
revokes all other proxies and powers of attorney with respect to the Shares
which such Stockholder may have heretofore appointed or granted to the extent
any such proxy conflicts with the proxy granted hereunder, and with respect to
the revocation made concerning Shares beneficially owned by Mr. Otten, to the
extent this Agreement requires, ING expressly acknowledges and agrees to such
revocation; provided that, subject to Article III, such acknowledgment and
agreement shall in no way alter any existing or future rights of ING with
respect to the pledge of Class A Common Stock and Common Stock granted to it by
Mr. Otten. No subsequent proxy or power of attorney shall be given or written
consent executed (and if given or executed, shall not be effective) by such
Stockholder with respect thereto. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of each Stockholder and any
obligation of a Stockholder under this Agreement shall be binding upon the
heirs, personal representatives and successors of such Stockholder (subject,
however, to the proviso set forth in Section 4.03 hereof). Oak Hill may effect
its rights to exercise the proxy pursuant to this Section 1.02 without notice to
any Defaulting Stockholder, and the Company shall accept any such proxy
delivered to the Company by Oak Hill with respect to a vote or stockholder
action referred to in Section 1.01 and such proxy shall override any purported
vote or action by the relevant Defaulting Stockholder.
<PAGE>
3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to Oak Hill as
follows:
SECTION 2.01. Authority Relative to This Agreement. (a) In the case
of a Stockholder that is a corporation, trust or other business organization,
such Stockholder has all necessary power and authority to execute and deliver
this Agreement, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby.
(b) In the case of a Stockholder who is an individual, such
Stockholder is an adult, is a citizen of the United States of America and is
competent to execute and deliver this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby.
(c) This Agreement has been duly executed and delivered by each
Stockholder, and (assuming due authorization, execution and delivery by Oak
Hill) this Agreement constitutes a legal, valid and binding obligation of each
Stockholder, enforceable against each Stockholder in accordance with its terms.
SECTION 2.02. No Conflict. (a) The execution, delivery and
performance of this Agreement by each Stockholder does not and will not, (i)
conflict with or violate any law, order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority applicable to such Stockholder or by which the Shares are bound or
affected, (ii) in the case of any Stockholder that is a corporation or other
business organization, violate, conflict with or result in the breach of any
provision of the articles of incorporation or by-laws (or similar organizational
documents), (iii) in the case of any Stockholder that is a trust, violate or
conflict with any term or provision of the indenture, or other governing or
testamentary instrument relating to such trust, or (iv) conflict with, result in
any breach of, constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of a lien
or encumbrance on any of the Shares pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument, obligation or arrangement or other proxy, voting trust,
stockholder agreement or similar instrument or agreement to which such
Stockholder is a party or by which such Stockholder or the Shares are bound or
affected, except, in the case of the foregoing, for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
unreasonably delay the performance by such Stockholder of its obligations under
this Agreement.
<PAGE>
4
(b) The execution, delivery and performance of this Agreement by
each Stockholder does not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to, any
Governmental Authority except for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended.
SECTION 2.03. Title to the Shares. As of the date hereof, each
Stockholder is the beneficial owner of, and/or owns or possesses voting power
with respect to, the number of shares of Class A Common Stock, Common Stock and
Senior Preferred Stock as set forth on Schedule I and such securities are all
the securities of the Company owned (either of record or beneficially) by each
Stockholder or over which each Stockholder owns or possesses voting power. As of
the date hereof and at any meeting of the stockholders of the Company held
during the term of this Agreement, each Stockholder has, and shall have, the
ability to vote all of the shares of Class A Common Stock, Common Stock and
Senior Preferred Stock as set forth on Schedule I in accordance with Section
1.01 this Agreement. Except as referred to in this Agreement or in the schedule
hereto, each Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Shares.
ARTICLE III
COVENANTS OF THE STOCKHOLDERS
SECTION 3.01. No Inconsistent Agreements. Each Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement and the
Stock Subscription Agreement, such Stockholder shall not enter into any voting
agreement or grant a proxy or power of attorney with respect to the Shares which
is inconsistent with this Agreement.
SECTION 3.02. Transfer of Title. (a) Each Stockholder and ING hereby
covenants and agrees that such party shall not transfer record or beneficial
ownership of, or any voting interest with respect to, any of the Shares unless
Oak Hill is provided with prior notice of such transfer and the transferee
agrees in writing, in form reasonably acceptable to Oak Hill, to be bound by the
terms and conditions of this Agreement; provided, however, that notwithstanding
the foregoing, Madeline LLC may transfer its interests in the shares of Common
Stock set forth under its name on Schedule I in open market transactions without
restriction.
(b) Notwithstanding Section 3.02(a), Oak Hill hereby consents to any
Transfer (as that term is defined in the Stockholders Agreement) by Mr. Otten of
all or any portion of the 833,333 Shares of Common Stock owned or controlled by
him in (i) a Transfer to Oak Hill or any of its Affiliates, or (ii) a Transfer
permitted by Section 4.02(a)(B) of the Stockholders' Agreement provided that,
immediately after giving effect to such Transfer, the aggregate voting power of
the Shares remaining subject to this Agreement must be greater than 50% of the
Shares entitled to vote on each of the Delaware Reincorporation and the NYSE
Authorization.
<PAGE>
5
SECTION 3.03. Notice of Voting Intention. Each of the Stockholders
and ING hereby covenants and agrees that such party shall provide Oak Hill with
notice of its intention to vote for or against, or to abstain from voting on,
any of the matters described in clauses (A) through (E) of Section 1.01.
SECTION 3.04. ING Exercise of Voting Rights. In the event that ING
elects to foreclose on Shares pledged to it by Mr. Otten or to exercise voting
rights with respect to such Shares, ING shall provide Oak Hill with prior notice
of such intent.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Termination. This Agreement shall terminate upon the
earlier of (i) the termination of the Stock Subscription Agreement in accordance
with its terms (but without regard to the survival provisions of such agreement)
and (ii) the consummation of the events contemplated by Section 5.06(i) of the
Stock Subscription Agreement.
SECTION 4.02. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms and provisions hereof, in addition
to any other remedy at law or in equity.
SECTION 4.03. Successors and Affiliates; Assignment. This Agreement
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective heirs, legal representatives and assigns. If any person shall
acquire additional Shares from a Stockholder in any manner, whether by operation
of law or otherwise, such Shares shall be held subject to all of the terms of
this Agreement, and by taking and holding such Shares, such person shall be
conclusively deemed to have agreed to be bound by and to comply with all of the
terms and provisions of this Agreement; provided, however, that the provisions
of this sentence shall not apply to any Transfer of Shares pursuant to Section
3.02(b) of this Agreement. Without limiting the foregoing, each Stockholder
specifically agrees that the obligations of such Stockholder hereunder shall not
be terminated by operation of law, whether by the death or incapacity of any
individual Stockholder or, in the case of a trust, by the death or incapacity of
any trustee or the termination of such trust.
SECTION 4.04. Entire Agreement. This Agreement, together with the
Stockholders' Agreement, constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements
and understandings, both written and oral, among the Company, Oak Hill and each
Stockholder with respect to the subject matter hereof.
<PAGE>
6
SECTION 4.05. Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by the parties hereto.
SECTION 4.06. Waivers. Except as provided in this Agreement, no
action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
SECTION 4.07. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
SECTION 4.08. Governing Law; Forum. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Maine applicable
to contracts executed in and to be performed entirely in that state and without
regard to any applicable conflicts of law principles. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in the United States District Court for the Southern District of New
York. Each of the parties to this Agreement (a) consents to submit itself to the
personal jurisdiction of the United States District Court for the Southern
District of New York, in the event that any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action in relation to this Agreement or any of the other transactions
contemplated by this Agreement in any court other than the United States
District Court for the Southern District of New York.
SECTION 4.09. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. No party to this Agreement
shall be deemed to be the draftsman of this Agreement.
SECTION 4.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
<PAGE>
7
IN WITNESS WHEREOF, each of the Company, the Stockholders and Oak
Hill have caused this Agreement to be duly executed on the date hereof.
AMERICAN SKIING COMPANY
By: /s/ Leslie B. Otten
-------------------
Name: Leslie B. Otten
Title: As President
/s/ Leslie B. Otten
-------------------
LESLIE B. OTTEN
ALBERT OTTEN TRUST
F/B/O MILDRED OTTEN
By: /s/ Leslie B. Otten
-------------------
Name: Leslie B. Otten
Title: Trustee
AGREED AND APPROVED:
ING US CAPITAL LLC,
AS PLEDGEE OF SHARES
OF CLASS A COMMON
STOCK AND COMMON STOCK
BENEFICIALLY OWNED BY
LESLIE B. OTTEN
By: /s/ Robert L. Fellows
---------------------
Name: Robert L. Fellows
Title: Director
<PAGE>
8
OAK HILL CAPITAL PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Managing Member
OAK HILL CAPITAL MANAGEMENT
PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Vice President
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: /s/ Glenn R. August
-------------------
Name: Glenn R. August
Title: President
<PAGE>
9
OHCP SKI, L.P.
By: Oak Hill Capital Partners, L.P.
its general partner
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Vice President
<PAGE>
10
MADELEINE LLC
By: /s/ Robert Davenport
--------------------
Name: Robert Davenport
Title: Managing Director
<PAGE>
11
SCHEDULE I
BENEFICIAL OWNERSHIP OF CAPITAL STOCK OF THE COMPANY
Leslie B. Otten
- ---------------
14,760,530 shares of Class A Common Stock,
833,333 shares of Common Stock, and
0 shares of Senior Preferred Stock.
Albert Otten Trust f/b/o Mildred Otten
- --------------------------------------
0 shares of Class A Common Stock,
30,000 shares of Common Stock, and
0 shares of Senior Preferred Stock.
<PAGE>
12
Madeleine LLC
- -------------
No shares of Class A Common Stock,
1,352,800 shares of Common Stock, and
36,626 shares of Senior Preferred Stock.
================================================================================
STOCKHOLDERS' AGREEMENT
AMONG
AMERICAN SKIING COMPANY,
OAK HILL CAPITAL PARTNERS, L.P.,
THE OTHER ENTITIES NAMED IN ANNEX A HERETO
AND
LESLIE B. OTTEN
Dated as of August 6, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Definitions...........................................................1
ARTICLE II
GOVERNANCE
2.01. Board Representation..................................................6
2.02. Resignations and Replacements.........................................7
2.03. Rights of Estate of Mr. Otten.........................................8
2.04. Committees Generally; Nominating Committee............................8
2.05. Meetings; Budget; Board Fees and Expenses.............................9
2.06. Termination of Executives............................................10
2.07. Employee Plans.......................................................10
2.08. Removal of Chief Executive Officer...................................10
ARTICLE III
VOTING RIGHTS
3.01. Voting Restrictions..................................................10
3.02. Special Board Rights.................................................10
ARTICLE IV
STANDSTILL PROVISIONS
4.01. Ownership of the Series B Preferred..................................13
4.02. Transfer Restrictions................................................13
4.03. Acquisition of Additional Shares; Other Restrictions.................14
4.04. Additional Shares....................................................16
4.05. Anti-Dilutive Rights.................................................16
<PAGE>
ARTICLE V
REGISTRATION RIGHTS
5.01. Restrictive Legend...................................................18
5.02. Notice of Proposed Transfer..........................................18
5.03. Request for Registration.............................................19
5.04. Incidental Registration..............................................22
5.05. Shelf Registration...................................................23
5.06. Obligations of the Company...........................................24
5.07. Furnish Information..................................................26
5.08. Expenses of Registration.............................................26
5.09. Underwriting Requirements............................................27
5.10. Indemnification......................................................27
5.11. Lockup...............................................................30
5.12. Transfer of Registration Rights......................................30
5.13. Rule 144 Information.................................................30
ARTICLE VI
FURNISHING OF INFORMATION
6.01. Furnishing of Information............................................31
ARTICLE VII
GENERAL PROVISIONS
7.01. Waiver...............................................................32
7.02. Expenses; Attorneys' Fees............................................32
7.03. Notices..............................................................32
7.04. Headings.............................................................34
7.05. Severability.........................................................34
7.06. Entire Agreement.....................................................34
7.07. Assignment...........................................................35
7.08. No Third Party Beneficiaries.........................................35
7.09. Amendment............................................................35
7.10. Governing Law; Forum.................................................35
7.11. Effect of Delaware Reincorporation...................................36
7.12. Counterparts.........................................................36
7.13. Specific Performance.................................................36
Annex A Stockholders
<PAGE>
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT dated August 6, 1999 (this "Agreement")
among OAK HILL CAPITAL PARTNERS, L.P., a Delaware limited partnership ("Oak
Hill") and the other entities identified in Annex A attached hereto (together
with Oak Hill, the "Stockholders"), LESLIE B. OTTEN ("Mr. Otten") and AMERICAN
SKIING COMPANY, a Maine corporation (the "Company").
WHEREAS, the execution and delivery of this Agreement is a condition
to the obligations of the Company and the Stockholders under the Preferred Stock
Subscription Agreement dated July 9, 1999 by and between the Company and the
Stockholders (the "Subscription Agreement"), pursuant to which the Company shall
sell to the Stockholders, and the Stockholders shall purchase from the Company,
the Company's 8.5% Series B Convertible Participating Preferred Stock, par value
$.01 per share (the "Series B Preferred"), upon the terms and subject to the
conditions set forth in the Subscription Agreement;
WHEREAS, upon consummation of the transaction contemplated by the
Subscription Agreement, the Stockholders will beneficially own an aggregate of
150,000 shares of Series B Preferred, each of which may be convertible into
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"); and
WHEREAS, the Company, Mr. Otten and the Stockholders now wish to
enter into this Agreement to set forth their agreement as to the matters set
forth herein with respect to, among other things, representation on the
Company's Board of Directors (the "Board") and the Transfer (as defined below)
of the Restricted Securities (as defined below);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company, Mr. Otten and the Stockholders hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. (a) Unless otherwise defined in this
Agreement, capitalized terms are used herein as defined in the Subscription
Agreement.
(b) As used in this Agreement, the following terms shall have the
following meanings:
<PAGE>
2
"Affiliate" has the meaning set forth in Rule 12b-2, as in effect on
the date hereof, under the Exchange Act.
"Associate" has the meaning set forth in Rule 12b-2, as in effect on
the date hereof, under the Exchange Act.
"Beneficially Own" has the meaning set forth below:
A Person shall be deemed to "Beneficially Own" any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3 of
the Exchange Act, as in effect on the date of this Agreement;
(ii) which are Beneficially Owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such other Person) with
which such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting or disposing of such
securities; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time or upon
the satisfaction of conditions) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in The City of
New York or the State of Maine.
"By-laws" means the by-laws of the Company, as amended and restated
as of the date hereof and as may be amended from time to time.
"Change of Control" means any event that gives any Person or Group
other than holders of the Series B Preferred, the Stockholders, Mr. Otten or
their Permitted Transferees the ability to control the Company (a) through the
acquisition of either (i) substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, or (ii) a majority of the aggregate voting power
of the Company's capital stock or (b) by otherwise being able to elect or
designate a majority of the Board through a management contract or otherwise.
<PAGE>
3
"Class A Common Stock" means the Company's Class A common stock, par
value $.01 per share.
"Class A Director" means a Director elected by holders of the Class
A Common Stock pursuant to the Articles of Incorporation.
"Common Stock Director" means a Director elected by the holders of
Common Stock pursuant to the Articles of Incorporation.
"Conversion Stock" means the Common Stock issued by the Company upon
conversion of the Series B Preferred.
"Director" means a member of the Board.
"Employee Plan" means any equity incentive plan, agreement, bonus,
award, stock purchase plan, stock option plan or other stock arrangement with
respect to any directors, officers or other employees of the Company.
"Executive Committee" means the executive committee of the Board
established in accordance with the By-laws.
"Fair Market Value" shall mean for any applicable measurement date
the closing price of the Common Stock on the NYSE or, in the event that trading
hours on the NYSE are extended past 4:00 p.m. (EST), the last sale price at 4:00
p.m. (EST).
"Fully Diluted Basis" means, in respect of the Common Stock, the
method of calculating the number of shares of Common Stock outstanding on an
applicable measurement date, pursuant to which the following shares shall be
deemed to be outstanding: (i) all shares of Common Stock outstanding on the date
hereof, (ii) all shares of Common Stock issuable upon conversion of outstanding
shares of the Class A Common Stock or the Series B Preferred, (iii) all shares
of Common Stock issued after the date hereof pursuant to the exercise of stock
options under Employee Plans or upon conversion of the Class A Common Stock, the
Series B Preferred or the Senior Preferred Stock, (iv) all shares of Common
Stock issuable pursuant to any securities or stock options of the Company
outstanding at any time which are convertible into or exercisable for shares of
Common Stock at a conversion or exercise price at or below the then current Fair
Market Value of the Common Stock, (v) any shares of Common Stock issued after
the date hereof, other than pursuant to clause (ii), (iii) or (iv) above, at a
price per share at or above $10.50 per share; provided that such issuance has
been approved by at least eight members of the Board and (vi) any shares of
Common Stock issued for any consideration other than cash as may be approved by
the Board.
<PAGE>
4
"Group" has the meaning set forth in Rule 13d-5, as in effect on the
date hereof, under the Exchange Act.
"Holders" means the Stockholders, Mr. Otten or any Permitted
Transferee to whom the rights under this Agreement are assigned in accordance
with the provisions of Section 5.12 hereof.
"Independent" means, in respect of a Director, an individual who
meets the following criteria: (i) is not, and has not previously been, within
the past three years, an employee of the Company, Mr. Otten, the Stockholders or
any of their Affiliates; (ii) is not related by birth or marriage to Mr. Otten
or any employee of the Company, the Stockholders, or their respective
Affiliates; and (iii) is otherwise independent of Mr. Otten, the Stockholders
and their respective Affiliates.
"ING Registration Rights Agreement" means the Registration Rights
Agreement dated as of November 10, 1997 between the Company and ING.
"Maturity Date" means August 6, 2009.
"Nominating Committee" means the nominating committee of the Board
established in accordance with the By-laws that shall be responsible for, among
other things, identifying and nominating certain Independent individuals to be
elected as Directors of the Company.
"Otten Director" means a Director elected by the holders of Class A
Common Stock or a Director designated by Mr. Otten pursuant to the terms of this
Agreement.
"Person" means any individual, firm, corporation, partnership,
limited partnership, limited liability company, association, trust,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3), as in effect on the
date hereof, of the Exchange Act.
"Pledge Agreement" means that certain Pledge Agreement between Mr.
Otten and ING dated as of November 10, 1997 pursuant to which all of the shares
of Class A Common Stock and Common Stock Beneficially Owned by Mr. Otten are
pledged to ING.
"Register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document with the SEC in compliance with the Securities Act and the
declaration or ordering of effectiveness by the SEC of such registration
statement or document.
<PAGE>
5
"Registrable Stock" shall mean (i) the Conversion Stock, (ii) the
Series B Preferred, (iii) any shares of Common Stock Beneficially Owned by Mr.
Otten, the Stockholders or their Permitted Transferees or (iv) any Common Stock
issued as (or upon the conversion or exercise of any warrant, right, option or
other convertible security which is issued as) a dividend or other distribution
with respect to, or in exchange for, or in replacement of, the Series B
Preferred or the Conversion Stock. For purposes of this Agreement, any
Registrable Stock shall cease to be Registrable Stock when with respect to such
Registrable Stock (w) a registration statement covering such Registrable Stock
has been declared effective and such Registrable Stock has been disposed of
pursuant to such effective registration statement, (x) such Registrable Stock is
sold in a transaction in which the rights under the provisions of Article V are
not assigned in accordance with Section 5.12, (y) such Registrable Stock may be
sold pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144(A)) without registration under the Securities Act or (z) Mr. Otten, on
the one hand, or the Stockholders, on the other hand, no longer Beneficially Own
at least 2% of the outstanding shares of Common Stock (on a Fully Diluted
Basis).
"Restricted Securities" means the Senior Preferred Stock, Series B
Preferred, the Conversion Stock, the Class A Common Stock and Common Stock,
including any of such stock issued as payment of a dividend.
"Standstill Period" shall mean any time during the period beginning
on the date hereof and ending on August 6, 2004 during which either (i) the
Stockholders Beneficially Own 15% or more of the outstanding shares of Common
Stock (on a Fully Diluted Basis) or (ii) the Stockholders and their Affiliates
or Associates Beneficially Own 33 1/3% or more of the outstanding shares of
Senior Preferred Stock.
"Stockholder Director" means a Director designated by the
Stockholders pursuant to this Agreement or elected by the holders of the Series
B Preferred pursuant to the Articles of Incorporation.
(c) The following terms have the meanings set forth in the Sections
set forth below:
Term Location
Agreement...................................................Preamble
Anti-Dilutive Rights........................................ss.4.05(a)
Board.......................................................Recitals
Budget......................................................ss.3.02(a)(i)
Common Stock................................................Recitals
Company.....................................................Preamble
Departing Otten Director....................................ss.2.02(b)
<PAGE>
6
Departing Stockholder Director..............................ss.2.02(a)
Executive...................................................ss.2.06
Initiating Holders..........................................ss.5.03(a)
Maintenance Securities......................................ss.4.05(a)
Material Subsidiaries.......................................ss.2.04(a)
Maximum Stockholder Stock Ownership Percentage..............ss.4.03(a)
Mr. Otten...................................................Preamble
Oak Hill....................................................Preamble
Otten Permitted Transferee..................................ss.4.02(a)
Permitted Transferees.......................................ss.4.02(a)
Series B Preferred..........................................Recitals
Shelf Registration..........................................ss.5.05(a)
Stockholder Permitted Transferee............................ss.4.02(a)
Stockholders................................................Preamble
Subscription Agreement......................................Recitals
Transfer....................................................ss.4.02(a)
(d) References in this Agreement to annexes, articles, sections,
paragraphs, clauses, schedules and exhibits are to annexes, articles, sections,
paragraphs, clauses, schedules and exhibits in or to this Agreement unless
otherwise indicated. Whenever the context may require, any pronoun includes the
corresponding masculine, feminine and neuter forms. Any term defined by
reference to any agreement, instrument or document has the meaning assigned to
it whether or not such agreement, instrument or document is in effect. The words
"include", "includes" and "including" are deemed to be followed by the phrase
"without limitation". Unless the context otherwise requires, any agreement,
instrument or other document defined or referred to herein refers to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified from time to time. Unless the context
otherwise requires, references herein to any Person or entity include its
successors and assigns. The words "shall" and "will" have the same meaning and
effect.
ARTICLE II
GOVERNANCE
SECTION 2.01. Board Representation. (a) In accordance with the
Certificate of Designation and subject to the rights of holders of the Company's
serial preferred stock, as of the date hereof and for so long as the
Stockholders shall be entitled to nominate at least one Director pursuant to
Section 2.01(b), the Board shall consist of 11 members, initially consisting of
(i) four Stockholder Directors, (ii) four Otten Directors and (iii) three
Independent Common Stock Directors recommended by the Nominating Committee and
approved by the Board.
<PAGE>
7
(b) Each of Mr. Otten and the Stockholders shall vote all Restricted
Securities Beneficially Owned by him or it, as the case may be, to cause, and
the parties hereto each shall otherwise use its best efforts to cause, there to
be (i) four Stockholder Directors for so long as the Stockholders Beneficially
Own at least 25% of the outstanding shares of Common Stock (on a Fully Diluted
Basis), (ii) three Stockholder Directors for so long as the Stockholders
Beneficially Own at least 20% but less than 25% of the outstanding shares of
Common Stock (on a Fully Diluted Basis), (iii) two Stockholder Directors for so
long as the Stockholders Beneficially Own at least 15% but less than 20% of the
outstanding shares of Common Stock (on a Fully Diluted Basis), or (iv) one
Stockholder Director for so long as the Stockholders Beneficially Own at least
5% but less than 15% of the outstanding shares of Common Stock (on a Fully
Diluted Basis).
(c) Each of Mr. Otten and the Stockholders shall vote all Restricted
Securities Beneficially Owned by him or it, as the case may be, to cause, and
the parties hereto each shall otherwise use its best efforts to cause, there to
be (i) four Otten Directors for so long as Mr. Otten Beneficially Owns at least
25% of the outstanding shares of Common Stock (on a Fully Diluted Basis), (ii)
three Otten Directors for so long as Mr. Otten Beneficially Owns at least 20%
but less than 25% of the outstanding shares of Common Stock (on a Fully Diluted
Basis), (iii) two Otten Directors for so long as Mr. Otten Beneficially Owns at
least 15% but less than 20% of the outstanding shares of Common Stock (on a
Fully Diluted Basis), or (iv) one Otten Director for so long as Mr. Otten
Beneficially Owns at least 5% but less than 15% of the outstanding shares of
Common Stock (on a Fully Diluted Basis).
(d) Mr. Otten shall cause holders of Class A Common Stock to
exercise their rights to elect Class A Directors in order to effectuate, to the
extent necessary, the provisions contained in this Section 2.01; provided,
however, notwithstanding anything contained in this Section 2.01 to the
contrary, for so long as any shares of Class A Common Stock are outstanding and
entitled to elect Class A Directors, holders of shares of Class A Common Stock
shall have the sole right to elect Class A Directors.
SECTION 2.02. Resignations and Replacements. (a) If any Stockholder
Director is removed or otherwise ceases to serve as a Director for any reason
other than in accordance with the Certificate of Designation (a "Departing
Stockholder Director") or Section 2.01(b) or 2.02(c), the parties hereto each
shall use its best efforts to cause the vacancy created by such Director ceasing
to serve to be filled by a Stockholder Director who shall serve out the
remaining term of the Departing Stockholder Director, after which time, such
Stockholder Director position shall be filled according to Section 2.01(b).
(b) If any Otten Director is removed or otherwise ceases to serve as
a Director for any reason (a "Departing Otten Director") other than in
accordance with Section 2.01(c) or 2.02(d), the parties hereto each shall use
its best efforts to cause the vacancy created by such Director ceasing to serve
to be filled by an Otten Director who shall serve out the remaining term
<PAGE>
8
of the Departing Otten Director, after which time, such Otten Director position
shall be filled according to Section 2.01(c).
(c) In the event that at any time any Stockholder Director is
elected or appointed to the Board pursuant to Section 2.01(b) and the number of
Stockholder Directors is greater than the number of Directors that the
Stockholders have the right to designate by virtue of Section 2.01(b) of this
Agreement, then that excess number of Stockholder Directors (starting with any
Class A Director that is a Stockholder Director or, in the event that no
Stockholder Director is a Class A Director, starting with the Stockholder
Director with the longest remaining term of office) shall be deemed to have
resigned immediately upon the occurrence of such event such that the remaining
number of Stockholder Directors, if any, conform to the provisions of this
Agreement, and the Stockholders or Mr. Otten, as the case may be, shall take all
action promptly to effect the resignation or removal of such Director. The
parties hereto each shall use its best efforts to cause the vacancy created by
such Stockholder Director ceasing to serve to be filled by an Independent
individual recommended by the Nominating Committee and approved by the Board or,
in the case of a Class A Director, to be filled by a designee of Mr. Otten.
(d) In the event that at any time any Otten Director is elected or
appointed to the Board pursuant to Section 2.01(c) and the number of Otten
Directors is greater than the number of Directors that Mr. Otten has the right
to designate by virtue of Section 2.01(c) of this Agreement, then that excess
number of Otten Directors (starting with the Otten Director with the longest
remaining term of office) shall be deemed to have resigned immediately upon the
occurrence of such event such that the remaining number of Otten Directors, if
any, conform to the provisions of this Agreement, and the Stockholders or Mr.
Otten, as the case may be, shall take all action promptly to effect the
resignation or removal of such Director. The parties hereto each shall use its
best efforts to cause the vacancy created by such Otten Director ceasing to
serve to be filled by an Independent individual recommended by the Nominating
Committee and approved by the Board.
SECTION 2.03. Rights of Estate of Mr. Otten. Mr. Otten hereby agrees
and hereby directs his estate that in the event of his death, all of his shares
of Class A Common Stock shall be converted into Common Stock effective as the
date of such death.
SECTION 2.04. Committees Generally; Nominating Committee. (a) For so
long as the Stockholders Beneficially Own at least 20% of the outstanding shares
of Common Stock (on a Fully Diluted Basis), each of the parties hereto shall use
its best efforts to cause the Nominating Committee to have two members and to
cause one Stockholder Director (i) to serve as a member of each committee of the
Board, (ii) to serve as a member of the board of directors of each of ASC East,
Inc., ASC West, Inc., ASC Utah and American Skiing Company Resort Properties,
Inc. or any other board or comparable body necessary to manage any subsidiary of
the Company, whether existing now or created after the date hereof, that is
material to the Company and its subsidiaries, taken as a whole (together, the
"Material Subsidiaries") and (iii) to serve as a
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9
member of each committee of the board of directors of the Material Subsidiaries;
provided, however, that if any applicable law or regulation of the NYSE (or
other exchange on which the Common Stock is listed) shall prohibit the Board
from appointing any of the Stockholder Directors to serve on any committee, this
Agreement shall not require any Stockholder Director to serve on such committee;
provided, further, however, that in such event, the Company and Mr. Otten shall
consult with the Stockholders and each shall use its best efforts to ensure that
the Stockholders are able to achieve a level of participation in the operation
of the Board and the boards of each of the Material Subsidiaries that is
substantially similar to such committee representation and to otherwise preserve
the rights described in this Section 2.04.
(b) Each of the parties hereto shall use its best efforts to cause
the Board (i) to approve any Independent individual recommended by the
Nominating Committee for election to the Board and (ii) to recommend to the
stockholders of the Company that such nominee be elected to the Board.
(c) For so long as there shall be at least one Otten Director and
Mr. Otten is the Company's chief executive officer, each of the parties hereto
shall use its best efforts to cause at least one Otten Director to be a member
of the Nominating Committee.
SECTION 2.05. Meetings; Budget; Board Fees and Expenses. (a) The
Board shall meet at least four times during each fiscal year, except that there
shall be at least six meetings of the Board during the first fiscal year
following the issuance of the Series B Preferred.
(b) Beginning January 1, 2000, proposals for the Budget (as
hereinafter defined) shall be presented to the Board by management of the
Company at least 60 days prior to the beginning of the Company's fiscal year.
The parties hereto each shall use its best efforts to cause the Board to approve
a Budget conforming to Section 3.02(a)(i) prior the beginning of each fiscal
year. At each meeting of the Board, the Budget approved for the current fiscal
year shall be reported on and updated and any additional "material" (as
"materiality" is described in Section 3.02(a)(i)(E)) changes to the Budget since
the previous Board meeting will be subject to Board approval.
(c) The Stockholder Directors shall be entitled to receive
compensation in the same amount as the Company's other non-employee Directors
and to be reimbursed for all reasonable expenses related to attending meetings
and performing other customary duties incident to their directorship. The Otten
Directors shall be entitled to receive compensation in their capacity as
Directors in the same amount as the Company's other non-Stockholder Directors
receive in their capacity as Directors as set forth in the By-Laws and to be
reimbursed all reasonable expenses related to attending meetings and performing
other customary duties incident to their directorship.
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10
SECTION 2.06. Termination of Executives. Any decision to terminate
the chief operating officer, president (other than Mr. Otten), chief financial
officer or the general counsel of the Company or the chief operating officer (or
equivalent position) of American Skiing Company Resort Properties, Inc. (each,
an "Executive") will be made by Mr. Otten for so long as he continues to serve
as the Company's chief executive officer; provided, however, that before
terminating any Executive, Mr. Otten must (i) seek the approval of the Executive
Committee of such termination at a duly called meeting and (ii) in the event
that the Executive Committee does not approve such termination, seek the
approval of the Board of such termination at a duly called meeting, after which
time Mr. Otten may terminate such Executive without any such approval.
SECTION 2.07. Employee Plans. No Employee Plan will be adopted or
amended in any material respect unless it has been approved by the compensation
and stock option committee of the Board, such approval to include the
affirmative vote of at least one Stockholder Director.
SECTION 2.08. Removal of Chief Executive Officer. Each of the
parties hereto shall use its best efforts to cause the Board to amend the
By-laws of the Company to require that the termination of the chief executive
officer of the Company will require either (i) the affirmative vote of at least
seven Directors, in the event that there are 11 Directors, (ii) the affirmative
vote of at least six Directors (including at least one Independent Director), in
the event that there are 10 Directors, (iii) the affirmative vote of at least
two-thirds of the Directors (including at least one Independent Director), in
the event that there are fewer than 10 Directors or (iv) the affirmative vote of
at least a majority of the Directors (including at least one Independent
Director), in the event that there are more than 11 Directors.
ARTICLE III
VOTING RIGHTS
SECTION 3.01. Voting Restrictions. (a) Mr. Otten agrees to vote the
shares of Common Stock or Class A Common Stock Beneficially Owned by him to
effect the terms of Article II of this Agreement and on other matters to vote in
a manner consistent with the terms of this Agreement.
(b) The Stockholders agree to vote any shares of Common Stock or
Series B Preferred Beneficially Owned by the Stockholders to effect the terms of
Article II of this Agreement and on other matters to vote in a manner consistent
with the terms of this Agreement.
SECTION 3.02. Special Board Rights. (a) For so long as the
Stockholders Beneficially Own at least 20% of the outstanding shares of Common
Stock (on a Fully Diluted Basis), the Company shall not take the actions listed
in clauses (i) through (ix) below without the
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11
affirmative vote of at least one Stockholder Director, either as part of the
vote of the full Board or the Executive Committee.
(i) Approval of an annual operating and capital budget, which shall
include operating plans, detailed capital expenditure plans and a business
plan (the "Budget"), which Budget will include, without limitation:
(A) detailed operating assumptions relating to, without
limitation, (1) pricing, (2) expected skier visits, (3) an
explanation of changes in operating cost from the prior year, (4)
head-count and expected seasonal head-count, (5) departmental
"sales, general and administrative" expenses, including marketing
plans and related budgets, and (6) a detailed analyses of all
required capital expenditures, including return on investment
analysis and a prioritization of both growth and maintenance capital
expenditures;
(B) planned material acquisitions, divestitures and other
development decisions (1) involving more than $2,000,000 in the
aggregate or (2) reasonably expected to have an impact of 5% or more
on the Company's consolidated revenues or earnings;
(C) overall corporate strategy, including actions that involve
repositioning the Company, commencing new lines of business or
significantly expanding lines of existing business (other than the
skiing business) or making material investments in joint ventures or
non-controlled operating companies;
(D) requirements for capital in accordance with the Budget,
including, without limitation, planned material financings (whether
in the form of debt or equity), including (1) issuance of debt or
equity securities, (2) entering into material new credit or
financing agreements, (3) materially increasing lines of credit or
making material changes in existing credit arrangements, (4)
pledging material assets, (5) the payment of dividends on
outstanding capital stock of the Company and (6) any redemption or
repurchase of capital stock of the Company, other than (x) the
redemption or repurchase of the Series B Preferred and (y)
redemptions in accordance with the terms of an Employee Plan; and
(E) a "materiality" standard for variations in the Budget
requiring Board approval.
(ii) Significant executive personnel decisions (other than
terminations), including, without limitation, hiring decisions or
decisions materially changing the compensation or responsibilities of any
Executive and the chief executive officer of the Company.
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12
(iii) Material actions that are likely to affect the Company's
operating and strategic direction that are reasonably expected or likely
to have an impact of 5% or more on the Company's consolidated revenues or
earnings.
(iv) Any amendment to the Articles of Incorporation or By-laws.
(v) Any voluntary liquidation, dissolution, winding up,
recapitalization or reorganization of the Company.
(vi) Initiation of material litigation other than with respect to
any counterclaim made by the Company in response to any claim made by a
third party.
(vii) Any merger, consolidation or other business combination of the
Company with or into another Person or any sale of all or substantially
all the assets of the Company or any of its Material Subsidiaries.
(viii) Material changes to or reduction in insurance coverage.
(ix) Material financing or capital markets activity not expressly
provided in the Budget.
(b) The Stockholders shall use their best efforts to cause the
Stockholder Directors to abstain from voting on all matters in which the
Stockholders have an interest that differs from those of the Company's other
stockholders in accordance with applicable law and customary corporate practice,
including, without limitation, matters relating to any (i) dividend on the
Series B Preferred (other than as part of the Budget approval process provided
in Section 3.02(a)(i)), (ii) redemption of the Series B Preferred, (iii)
amendment of or waiver under any agreement to which any Stockholder or Affiliate
or Associate thereof is a party or (iv) any other transaction between the
Company and/or any of its Subsidiaries or other Affiliates and any Stockholder
and/or any Affiliate or Associate thereof.
(c) Mr. Otten shall use his best efforts to cause the Otten
Directors to abstain from voting on all matters in which such Directors have an
interest that differs from those of the Company's other stockholders in
accordance with applicable law and customary corporate practice, including,
without limitation, matters relating to (i) any amendment of or waiver under any
agreement to which any such Otten Director or any Affiliate or Associate of such
Otten Director is a party or (ii) any other transaction between the Company
and/or any of its Subsidiaries or other Affiliates and any such Otten Director
and/or any Affiliate or Associate of such Director.
<PAGE>
13
ARTICLE IV
STANDSTILL PROVISIONS
SECTION 4.01. Ownership of the Series B Preferred. The Stockholders
severally and not jointly, represent and warrant to all other parties hereto
that the Stockholders, together with their Affiliates and Associates,
Beneficially Own in the aggregate, as of the date hereof, 150,000 shares of
Series B Preferred and no other securities of the Company.
SECTION 4.02. Transfer Restrictions. (a) Until the earlier of (i)
August 6, 2000 or (ii) the occurrence of a Change of Control, the Stockholders
and Mr. Otten shall not, and shall cause their Permitted Transferees not to,
directly or indirectly, sell, transfer, assign, pledge, hypothecate or otherwise
dispose of ("Transfer") any Restricted Securities, except (A) to an Affiliate
that expressly assumes all of such Stockholder's or Mr. Otten's, as the case may
be, obligations under this Agreement (with respect to any Stockholder, a
"Stockholder Permitted Transferee", with respect to Mr. Otten, an "Otten
Permitted Transferee", and together with the Stockholder Permitted Transferees,
"Permitted Transferees") following the delivery of written notice of such
Transfer to the Company, (B) any Transfer from Mr. Otten or any Otten Permitted
Transferee to ING (or its successor) pursuant to the terms of the Pledge
Agreement or any sale by Mr. Otten or any Otten Permitted Transferee to any
third party if all of the net after tax proceeds from such sale are used to
repay indebtedness under the Credit Agreement dated as of November 10, 1997
between Mr. Otten and ING, including any amendment, replacement or refinancing
thereof, (C) any Transfer by the estate of Mr. Otten or any Otten Permitted
Transferee following Mr. Otten's death, (D) any Transfer by Mr. Otten or any
Otten Permitted Transferee, which together with all other Transfers by Mr. Otten
or any Otten Permitted Transferee during the immediately preceding 12 months
(other than pursuant to clause (B) above), does not exceed 10% of the number of
shares of Common Stock Beneficially Owned by Mr. Otten and the Otten Permitted
Transferees on the date hereof, (E) any Transfer by Mr. Otten or any Otten
Permitted Transferee at any time following the termination of Mr. Otten's
employment with the Company as chief executive officer, (F) in transactions
(including tender offers and exchange offers) either (1) approved by the Board
or (2) with respect to the Stockholders or any Stockholder Permitted Transferees
only, in which Mr. Otten Transfers any Restricted Securities (other than
pursuant to clauses (B)-(E) above) and (G) any pledge of Restricted Securities;
provided, however, that in the event of a material breach or default under this
Agreement, the Voting Agreement or the Subscription Agreement (x) by Mr. Otten
or the Company, then any Stockholder or any Stockholder Permitted Transferee may
Transfer Restricted Securities or (y) by any of the Stockholders, then Mr. Otten
or any Otten Permitted Transferee may Transfer Restricted Securities, in each
case, subject only to the restrictions contained in Section 4.02(b).
(b) Notwithstanding paragraph (a) above, the Stockholders, Mr. Otten
and the Permitted Transferees shall not Transfer any Restricted Securities (i)
except through private or public sales that comply with applicable securities
laws, (ii) to Persons (or any other reasonably
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14
foreseeable subsequent transferee) who, to the knowledge of any of the
Stockholders, Mr. Otten or their Permitted Transferees, as the case may be,
following such Transfer would Beneficially Own 10% or more of the outstanding
shares of Common Stock (on a Fully Diluted Basis) or (iii) to a Person (A) that
is a direct competitor in any major line of business of the Company or its
Subsidiaries or (B) whose ownership of the Restricted Securities could
reasonably be expected, in the opinion of the Board, to materially disadvantage
the businesses of the Company and its Subsidiaries or could reasonably be
expected to have an adverse effect on the future profitability of the Company
and its Subsidiaries, taken as a whole.
(c) Each Stockholder agrees not to, directly or indirectly, Transfer
its interests in any Stockholder Permitted Transferee so that it ceases to be a
Stockholder Permitted Transferee unless prior thereto the Restricted Securities
held by such entity are transferred to any Stockholder or one or more
Stockholder Permitted Transferees.
(d) Mr. Otten agrees not to, directly or indirectly, Transfer his
interests in any Otten Permitted Transferee so that it ceases to be an Otten
Permitted Transferee unless prior thereto the Restricted Securities held by such
entity are transferred to Mr. Otten or one or more Otten Permitted Transferees.
(e) No transferee (other than a Stockholder, Mr. Otten or their
Permitted Transferees) of Restricted Securities shall be entitled to any of the
rights set forth under this Agreement by virtue of its ownership of such
Restricted Securities.
(f) Any attempted Transfer in violation of this Section 4.02 shall
be null, void and of no force and effect, and the Company shall not give effect
to any such attempted Transfer.
SECTION 4.03. Acquisition of Additional Shares; Other Restrictions.
During the Standstill Period, except with the prior approval of a majority of
the Directors who are not Stockholder Directors and except as expressly
permitted by this Agreement or any amendment hereto, the Stockholders shall not,
directly or indirectly, and shall cause the Stockholder Permitted Transferees
not to, directly or indirectly:
(a) acquire, announce an intention to acquire, offer to
acquire, or enter into any agreement, arrangement or undertaking of any
kind the purpose of which is to acquire, by purchase, exchange or
otherwise (i) Beneficial Ownership of any shares of Common Stock or any
other security convertible into, or any option, warrant or right to
acquire, Common Stock, if such acquisition would cause the Beneficial
Ownership of the Stockholders and the Stockholder Permitted Transferees to
be (A) more than 49.9% of the outstanding shares of Common Stock (on a
Fully Diluted Basis) if prior to such transaction the Stockholders and the
Stockholder Permitted Transferees Beneficially Own 40% or more of the
outstanding shares of Common Stock (on a Fully Diluted Basis) or (B) more
than 40% of the outstanding shares of Common Stock (on a Fully Diluted
<PAGE>
15
Basis) if prior to such transaction the Stockholders and the Stockholder
Permitted Transferees Beneficially Own less than 40% of the outstanding
shares of Common Stock (on a Fully Diluted Basis) (each of the percentages
described in clauses (A) and (B) above being hereinafter referred to, as
applicable, as the "Maximum Stockholder Stock Ownership Percentage"), (ii)
one-third or more of the outstanding shares of Senior Preferred Stock or
(iii) a significant portion of the assets of the Company or any of its
Affiliates. With respect to clause (i) above, any increase in Beneficial
Ownership by the Stockholders and any Stockholder Permitted Transferees
resulting from any Accretion Amounts (as such term is defined in the
Certificate of Designation), from any dividend in the form of Common Stock
made with respect to the Conversion Stock, or from any repurchase of
Common Stock by the Company shall not be included in the Maximum Stock
Ownership Percentage; provided, however, that in all cases, the
Stockholders may acquire securities of the Company pursuant to Section
4.05 or pursuant to the issuance of any dividends on Common Stock.
(b) solicit, or participate in any solicitation of, proxies
with respect to any Common Stock or other voting securities of the
Company, or become a "participant" in a "solicitation" (as such terms are
defined in Rule 14A of the Exchange Act) in opposition to any matter that
has been recommended by a majority of the Directors or in favor of any
matter that has not been approved by a majority of the Directors unless
the Company or Mr. Otten has breached any material provision of Article II
or Article III (which breach shall not have been cured within 10 Business
Days following receipt by the breaching party of written notice of such
breach);
(c) propose or otherwise solicit stockholders of the Company
for the approval of one or more stockholder proposals, seek or solicit
support for (whether publicly or privately) any written consent of
stockholders of the Company, attempt to call a special meeting of
stockholders, nominate or attempt to nominate any Person for election as a
Director (except in accordance with Article II), or seek the removal or
resignation of any Director (except in accordance with Article II), in
each case in opposition to any matter that has been recommended by a
majority of the Directors or in favor of any matter that has not been
approved by a majority of the Directors unless the Company or Mr. Otten
has breached any material provision of Article II or Article III (which
breach shall not have been cured within 10 Business Days following receipt
by the breaching party of written notice of such breach);
(d) deposit any securities of the Company into a voting trust
or similar agreement or subject any securities of the Company to any
arrangement or agreement with respect to the voting of such Common Stock
other than an agreement or arrangement solely among the Stockholders and
the Stockholder Permitted Transferees;
<PAGE>
16
(e) take any action to form, join or in any way participate in
any partnership, limited partnership, syndicate or other Group with
respect to Common Stock or otherwise act in concert with any Person for
the purpose of circumventing the provisions or purposes of this Agreement;
(f) unless the Company is the subject of a bona fide
unsolicited tender offer, exchange offer or other takeover attempt,
propose (or publicly announce or otherwise disclose an intention to
propose), any tender or exchange offer, merger, consolidation, share
exchange, business combination, restructuring, recapitalization or similar
transaction involving the Company;
(g) solicit, offer, seek to effect, negotiate with or provide
any confidential information relating to the Company or its business to
any other Person with respect to any tender or exchange offer, merger,
consolidation, share exchange, business combination, restructuring,
recapitalization or similar transaction involving the Company;
(h) make or in any way advance any request or proposal to
amend, modify or waive any provision of this Agreement in a manner that
requires public disclosure by any of the parties hereto; or
(i) announce an intention to do, or solicit, assist, prompt,
induce or attempt to induce any Person to do, any of the actions
restricted or prohibited under subparagraphs (a) through (h) above.
SECTION 4.04. Additional Shares. All shares of Restricted Securities
acquired by any of the parties hereto or the Permitted Transferees pursuant to
or in compliance with this Article IV or as a result of a recapitalization of
the Company, or any Accretion Amount (as such term is defined in the Certificate
of Designation) or stock dividends or any other action taken by the Company,
shall be subject to all of the terms, covenants and conditions of this
Agreement.
SECTION 4.05. Anti-Dilutive Rights. (a) Except as provided in
Section 4.05(c) below, the Company shall not issue, sell or transfer to any
Person any Common Stock or securities convertible into, or exercisable for,
Common Stock unless the Stockholders, Mr. Otten and any Permitted Transferees
are offered in writing the right to purchase, at the same price and on the same
terms proposed to be issued and sold, an amount of such Common Stock or other
securities (the "Maintenance Securities") as is necessary for each of the
Stockholders, Mr. Otten and any Permitted Transferees to maintain, individually,
the same level of its respective percentage Beneficial Ownership of Common Stock
(on a Fully Diluted Basis) as it owned immediately prior to such issuance
("Anti-Dilutive Rights"). In the case of a public offering, the Company shall,
as part of its offer, provide a copy of any preliminary prospectus containing
either the indicative price range of the offered securities or trading
information relating to the offered securities, as the case may be, and other
information concerning the offering reasonably
<PAGE>
17
requested by the Stockholders, Mr. Otten or any Permitted Transferee. The
Stockholders, Mr. Otten and any Permitted Transferee shall have the right,
during the period specified in Section 4.05(b), to accept the offer for any or
all of the Maintenance Securities offered to each of them on their own behalf or
on behalf of any Affiliate (and, in the case of Oak Hill, on behalf of Oak Hill
Securities Fund, L.P.) not otherwise accepting such offer to acquire Maintenance
Securities under this Section 4.05.
(b) If any Stockholder, Mr. Otten or any Permitted Transferee does
not deliver to the Company written notice of acceptance of any offer made
pursuant to Section 4.05(a) with respect to a public offering within five
Business Days after receipt by such Stockholder, Mr. Otten, or any Permitted
Transferee, as the case may be, of a preliminary prospectus (filed with the SEC
as part of a registration statement) containing the pricing information
indicated in Section 4.05(a) above, or, with respect to any transaction other
than a public offering, within 15 Business Days after receipt of such offer by
such Stockholder, Mr. Otten, or any Permitted Transferee, as the case may be,
such Stockholder, Mr. Otten or Permitted Transferee shall be deemed to have
waived its or his, as the case may be, right to purchase all or any part of its
Maintenance Securities as set forth in such offer but such Stockholder, Mr.
Otten or any such Permitted Transferee shall retain its or his, as the case may
be, rights under this Section 4.05 with respect to future offers.
(c) The Anti-Dilutive Rights set forth above shall not apply to (i)
the grant or exercise of options to purchase Common Stock or the issuance of
shares of Common Stock to employees or Directors of the Company or any of its
Subsidiaries or otherwise pursuant to an Employee Plan or similar plan whether
in existence on the date hereof or otherwise duly adopted by the Board hereafter
(whether or not such options were issued prior to the date hereof, or are
hereafter issued), (ii) the issuance of warrant shares, or of shares of Common
Stock issuable upon exercise of any option, warrant, convertible security or
other rights to purchase or subscribe for Common Stock which, in each case, had
been issued prior to the date hereof or in compliance with Section 4.05(a) or
Section 4.05(c)(i), (iii) securities issued pursuant to any stock split, stock
dividend or other similar stock recapitalization or (iv) securities issued by
the Company for any consideration other than cash as may be approved by the
Board.
(d) A closing for the purchase of such Maintenance Securities
pursuant to this Section 4.05(d) shall occur on the later of (i) the date on
which such public or private issuance occurs and (ii) such date as may be
mutually agreed to by the Company, Mr. Otten, any Otten Permitted Transferee and
Oak Hill on behalf of any Stockholder and any Stockholder Permitted Transferee,
as the case may be, and shall take place at the offices of the Company or at
such other reasonable location as the Company may otherwise notify any
Stockholder, Mr. Otten and/or any Permitted Transferee, as the case may be, at
the time specified by the Company in such notice provided to any Stockholder,
Mr. Otten or any Permitted Transferee, as the case may be, at least five days
prior to such closing date. In connection with such closing, the Company, Mr.
Otten, any Stockholder or any Permitted Transferee, as the case may be, shall
provide such closing
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18
certificates and other closing deliveries provided in the transaction giving
rise to the rights specified in Section 4.05.
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01. Restrictive Legend. Each certificate representing the
Series B Preferred or Conversion Stock shall, except as otherwise provided in
this Article V, be stamped or otherwise imprinted with legends substantially in
the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS IT HAS BEEN REGISTERED UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THE SECURITY REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND CERTAIN RESTRICTIONS ON VOTING CONTAINED IN
THE STOCKHOLDERS' AGREEMENT, DATED AUGUST 6, 1999, AS THE SAME MAY BE
AMENDED, AMONG THE COMPANY AND CERTAIN STOCKHOLDERS LISTED ON THE
SIGNATURE PAGES THEREOF.
A certificate shall not bear the Securities Act legend or the legend regarding
this Agreement, as the case may be, if in the opinion of counsel satisfactory to
the Company (it being agreed that Shearman & Sterling shall be satisfactory) the
securities being sold thereby may be publicly sold without registration under
the Securities Act or may be sold without being subject to the restrictions on
sale specified in Article IV.
SECTION 5.02. Notice of Proposed Transfer. Prior to any proposed
Transfer of any shares of Registrable Stock (other than under the circumstances
described in Section 5.03, 5.04 or 5.05), permitted under Article IV, the holder
thereof shall give written notice to the Company of its intention to effect such
Transfer. Each such notice shall describe the manner of the proposed Transfer
and, if known, the identity of the proposed transferee and, if requested by the
Company, shall be accompanied by an opinion of counsel satisfactory to the
Company to the effect that the proposed Transfer may be effected without
registration under the Securities Act, whereupon the holder of such stock shall
be entitled to Transfer such stock in accordance with the terms of its notice,
subject in any event to the restrictions in Article IV; provided, however, that
no such opinion of counsel shall be required for a Transfer to one or more
Permitted Transferees subject in any event to the restrictions in Article IV.
Each certificate representing
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19
Registrable Stock transferred as above provided shall bear the legends set forth
in Section 5.01, except that such certificate shall not bear such legends if (i)
such Transfer is in accordance with the provisions of Rule 144 of the Securities
Act (or any other rule permitting public sale without registration under the
Securities Act, but not Rule 144A) or (ii) the opinion of counsel referred to
above is to the further effect that the transferee and any subsequent transferee
(other than an Affiliate of the Company) would be entitled to Transfer such
securities in a public sale without registration under the Securities Act. The
restrictions provided for in this Section 5.02 shall not apply to securities
that are not required to bear the legends prescribed by Section 5.01 in
accordance with the provisions of Section 5.01.
SECTION 5.03. Request for Registration. (a) Subject to the
provisions of Article IV, at any time after August 6, 2000, one or more Holders
of Registrable Stock (the "Initiating Holders") may request in a written notice
(which notice shall state the number of shares of Registrable Stock to be so
registered and the intended method of distribution) that the Company file a
registration statement under the Securities Act (or a similar document pursuant
to any other statute then in effect corresponding to the Securities Act)
covering the registration of any or all Registrable Stock held by such
Initiating Holders in the manner specified in such notice; provided, however,
that there must be included in such registration at least 10% of the Registrable
Stock issued (or any lesser percentage if the anticipated aggregate offering
price would exceed $25 million). Following receipt of any notice under this
Section 5.03, the Company shall (x) within 30 days notify all other Holders of
such request in writing and (y) use its best efforts to cause to be registered
under the Securities Act all Registrable Stock that the Initiating Holders and
such other Holders have, within ten days after the Company has given such
notice, requested be registered in accordance with the manner of disposition
specified in such notice by the Initiating Holders.
(b) If the Initiating Holders intend to have the Registrable Stock
distributed by means of an underwritten offering, the Company shall include such
information in the written notice referred to in clause (x) of paragraph (a)
above. In such event, the right of any Holder to include its Registrable Stock
in such registration shall be conditioned upon such Holder's participation in
such underwritten offering and the inclusion of such Holder's Registrable Stock
in the underwritten offering (unless otherwise mutually agreed by a majority in
interest of the Initiating Holders and such Holder) to the extent provided
below. All Holders proposing to distribute Registrable Stock through such
underwritten offering shall enter into an underwriting agreement in customary
form with the underwriter or underwriters. Such underwriter or underwriters
shall be selected by a majority in interest of the Initiating Holders and shall
be approved by the Company, which approval shall not be unreasonably withheld.
(c) Notwithstanding any provision of this Agreement to the contrary,
(i) the Company shall not be required to effect a registration
pursuant to this Section 5.03 during the period starting with the date
which is 30 days prior to the date of
<PAGE>
20
the initial public filing by the Company of, and ending on a date that is
120 days following the effective date of, a registration statement
pertaining to a public offering of securities for the account of the
Company or on behalf of the selling stockholders under any other
registration rights agreement that the Holders have been entitled to join
pursuant to Section 5.04; provided, however, that the Company shall
actively employ in good faith all reasonable efforts to cause such
registration statement to become effective as promptly as practicable;
(ii) if (A)(i) the Company is in possession of material nonpublic
information relating to the Company or any of its Subsidiaries and (ii)
the Company determines in good faith that public disclosure of such
material nonpublic information would not be in the best interests of the
Company and its stockholders, (B)(i) the Company has made a public
announcement relating to an acquisition or business combination
transaction that includes the Company and/or one or more of its
Subsidiaries that is material to the Company and its Subsidiaries taken as
a whole and (ii) the Company determines in good faith that (x) offers and
sales of Registrable Stock pursuant to any registration statement prior to
the consummation of such transaction (or such earlier date as the Company
shall determine) is not in the best interests of the Company and its
stockholders or (y) it would be impracticable at the time to obtain any
financial statements relating to such acquisition or business combination
transaction that would be required to be set forth in a registration
statement or (C) the Company shall furnish to such Holders a certificate
signed by the president of the Company stating that in the good faith
opinion of the Board such registration would interfere with any material
transaction or financing, confidential negotiations, including, without
limitation, negotiations relating to an acquisition or business
combination transaction, or business activities then being pursued by the
Company or any of its Subsidiaries, then, in any such case, the Company's
obligation to use all reasonable efforts to file a registration statement
shall be deferred, or the effectiveness of any registration statement may
be suspended, in each case for a period not to exceed 120 days; provided,
however, that the Company may not delay the filing or suspend the
effectiveness of any registration statement under this Section 5.03(ii) on
more than one occasion in any consecutive twelve-month period;
(iii) the Company shall not be required to effect a registration
pursuant to this Section 5.03 if the Registrable Stock requested by all
Holders to be registered pursuant to such registration are included in,
and eligible for sale under, a Shelf Registration (as defined below); and
(iv) the Company shall not be required to effect a registration
pursuant to this Section 5.03 more than one time in any consecutive
twelve-month period.
(d) With respect to any registration pursuant to this Section 5.03,
the Company may include in such registration any of its primary securities sold
on its own behalf or
<PAGE>
21
securities being offered by ING pursuant to the ING Registration Rights
Agreement. If, in the opinion of the managing underwriter (or, in the case of a
non-underwritten offering, in the opinion of the Company), the total amount of
all securities to be registered, including Registrable Stock, will exceed the
maximum amount of the Company's securities which can be marketed (i) at a price
reasonably related to the then current market value of such securities, and (ii)
without otherwise materially and adversely affecting the entire offering, then
subject to the registration rights of the holders of the Senior Preferred Stock
and ING, the Company securities and Registrable Stock to be included in such
registration shall be included in the order as set forth in clauses (1) and (2)
below:
(1) In any registration pursuant to this Section 5.03 where the
Stockholders are the Initiating Holders:
(A) first, any securities of the Initiating Holders;
(B) second, any securities offered by the Company; and
(C) third, other Holders requesting registration of
Registrable Stock in proportion (as nearly as practicable) to
the amount of Registrable Stock requested to be included by
such Holder at the time of filing the registration statement.
(2) In any registration pursuant to this Section 5.03 where Mr.
Otten is the Initiating Holder:
(A) first, any securities of the Company; and
(B) second, any securities of Holders requesting registration
of Registrable Stock, in proportion (as nearly as practicable)
to the amount of Registrable Stock requested to be included by
such Holder at the time of filing the registration;
Notwithstanding clause (2) above, but subject to the registration rights of the
holders of the Senior Preferred Stock and ING, Mr. Otten, his estate or the
Otten Permitted Transferees, as the case may be, shall have priority over the
Company and each other Holder in selling any and all of their shares of
Registrable Stock on one occasion within two years following Mr. Otten's (1)
termination or resignation from the office of chief executive officer of the
Company or (2) death.
(e) The Company shall not be obligated to effect and pay for more
than four registrations of the Stockholders (two of which may be Shelf
Registrations requested pursuant to Section 5.05) and three registrations of Mr.
Otten (one of which may be a Shelf Registration requested pursuant to Section
5.05) pursuant to this Section 5.03; provided, however, that a
<PAGE>
22
registration requested by any Holder pursuant to this Section 5.03 shall not be
deemed to have been effected for purposes of this Section 5.03(e) unless (i) it
has been declared effective by the SEC, (ii) it has remained effective for the
period set forth in Section 5.06(a), (iii) the offering of Registrable Stock
pursuant to such registration is not subject to any stop order, injunction or
other order or requirement of the SEC (other than any such stop order,
injunction, or other requirement of the SEC prompted by any act or omission of
Holders of Registrable Stock) and (iv) such Holder was permitted to include in
such registration at least one-half of the Registrable Stock requested by it or
him, as the case may be, to be included in such registration.
SECTION 5.04. Incidental Registration. (a) Subject to Section 5.09
and to the registration rights of the holders of the Senior Preferred Stock and
ING, if at any time the Company determines that it shall file a registration
statement under the Securities Act for the registration of Common Stock (other
than a registration statement on a Form S-4 or S-8 or an offering of securities
solely to the Company's existing stockholders) on any form that would also
permit the registration of the Registrable Stock and such filing is to be on its
behalf or on behalf of selling holders of its securities for the general
registration of Common Stock to be sold for cash, the Company shall each such
time promptly give the Holders written notice of such determination setting
forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than 15 days from the date of such
notice, and advising the Holders of their right to have Registrable Stock
included in such registration. In the case of a registration statement to be
filed on behalf of selling holders of its securities, the Company shall also
indicate in such notice whether it will be registering securities on its own
behalf as part of such registration statement. Upon the written request of any
Holder received by the Company not later than 15 days after the date of the
Company's notice (which request shall state the number of Registrable Shares to
be so registered and the intended method of distribution), the Company shall,
subject to Section 5.04(b) below, use all reasonable efforts to cause to be
registered under the Securities Act all of the Registrable Stock that each such
Holder has so requested to be registered; provided, however, that the Company
shall have the right to postpone or withdraw any registration effected pursuant
to this Section 5.04 without obligation or liability to such Holder.
(b) If, in the opinion of the managing underwriter (or, in the case
of a non-underwritten offering, in the opinion of the Company), the total amount
of such securities to be so registered, including such Registrable Stock, will
exceed the maximum amount of the Company's securities which can be marketed (i)
at a price reasonably related to the then current market value of such
securities and (ii) without otherwise materially and adversely affecting the
entire offering, then subject to the registration rights of the holders of the
Senior Preferred Stock and ING, the Company securities and Registrable Stock to
be included in such registration shall be included in the following order:
(A) first, any securities of the Company;
<PAGE>
23
(B) second, any Registrable Stock of the Stockholders or the Stockholder
Permitted Transferees; and
(C) third, any Registrable Stock of Mr. Otten or the Otten Permitted
Transferees or any other stockholder hereafter granted incidental
registration rights in proportion (as nearly as practicable) to the amount
of Registrable Stock requested to be included by Mr. Otten, the Otten
Permitted Transferees or such stockholders at the time of the filing of
the registration statement.
SECTION 5.05. Shelf Registration. (a) An Initiating Holder may use
registration rights granted pursuant to Section 5.03, subject to the limitations
of paragraphs (d) and (e) of Section 5.03, to request that the Company file a
"shelf" registration statement pursuant to Rule 415 under the Securities Act or
any successor rule (the "Shelf Registration") with respect to the Registrable
Stock. The Company shall (i) use all reasonable efforts to have the Shelf
Registration filed within 30 days of such request and declared effective as soon
as reasonably practicable following such request and (ii) subject to Section
5.03(c)(iii), use all reasonable efforts to keep the Shelf Registration
continuously effective from the date that such Shelf Registration is declared
effective until at least the earlier of such time as (A) all such Registrable
Stock has been sold thereunder or (B) the second anniversary of such effective
date in order to permit the prospectus forming a part thereof to be usable by
Holders during such period.
(b) Subject to Section 5.03(c)(iii), the Company shall supplement or
amend the Shelf Registration, (i) as required by the registration form utilized
by the Company or by the instructions applicable to such registration form or by
the Securities Act, (ii) to include in such Shelf Registration any additional
securities that become Registrable Stock by operation of the definition thereof
and (iii) following the written request of an Initiating Holder pursuant to
Section 5.05(c), to cover offers and sales of all or a part of the Registrable
Stock by means of an underwriting. The Company shall furnish to the Holders of
the Registrable Stock to which the Shelf Registration relates copies of any such
supplement or amendment sufficiently in advance (but in no event less than five
Business Days in advance) of its use or filing with the SEC to allow the Holders
a meaningful opportunity to comment thereon.
(c) The Holders may, at their election and upon written notice by an
Initiating Holder to the Company, subject to the limitations set forth in
Section 5.03(c)(iii), effect offers and sales under the Shelf Registration by
means of one or more underwritten offerings, in which case the provisions of
Section 5.03(b) shall apply to any such underwritten distribution of securities
under the Shelf Registration and such underwriting shall, if sales of
Registrable Stock pursuant thereto shall have closed, be regarded as the
exercise of one of the registration rights contemplated by Section 5.03.
<PAGE>
24
SECTION 5.06. Obligations of the Company. Whenever required under
Sections 5.03 and 5.05 to use all reasonable efforts to effect the registration
and sale of any Registrable Stock under the Securities Act, the Company shall:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Stock (which shall be filed in no event later
than 90 days after written notice requesting a registration statement
under Section 5.03 or 5.05 has been received) and use all reasonable
efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated thereby
determined as provided hereafter; provided, however, that the Company
shall not be required to keep any Registration Statement (other than the
Shelf Registration) effective more than 120 days;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Stock
covered by such registration statement;
(c) furnish to the Holders such reasonable numbers of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus and any amendments or supplements thereto) in
conformity with the requirements of the Securities Act, any exhibits filed
therewith and such other documents and information as they may reasonably
request;
(d) use all reasonable efforts to register or qualify the
Registrable Stock covered by such registration statement under such other
securities or "blue sky" laws of such jurisdiction within the United
States and Puerto Rico as shall be reasonably appropriate for the
distribution of the Registrable Stock covered by the registration
statement; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business
in or to file a general consent to service of process in any jurisdiction
wherein it would not, but for the requirements of this paragraph (except
that the Company will use all reasonable efforts to register or qualify
Registrable Stock in such additional jurisdictions as the Holder may
request subject to the foregoing proviso and at the Holder's own expense),
be obligated to do so; and provided further that the Company shall not be
required to qualify such Registrable Stock in any jurisdiction in which
the securities regulatory authority requires that any Holder submit any
shares of its Registrable Stock to the terms, provisions and restrictions
of any escrow, lockup or similar agreement(s) for consent to sell
Registrable Stock in such jurisdiction unless such Holder agrees to do so;
(e) promptly notify each Holder for whom such Registrable Stock is
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of
<PAGE>
25
which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they were made, and at the request of any such Holder promptly
prepare and furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include 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 not misleading in light of the
circumstances under which they were made. In the event the Company shall
give such notice, the Company shall extend the period during which such
Registration Statement shall be maintained effective as provided in
Section 5.06(a) (or, in the case of the Shelf Registration, Section
5.05(a)) by the number of days during the period from and including the
date of the giving of such notice to the date when the Company shall make
available to the Holders such supplemented or amended prospectus;
(f) furnish, at the request of any Holder requesting registration of
Registrable Stock pursuant to Section 5.03 or 5.05, if the method of
distribution is by means of an underwriting, on the date that the Shares
of Registrable Stock are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Stock is not being sold
through underwriters, on the date that the registration statement with
respect to such shares of Registrable Stock becomes effective, (1) a
signed opinion, dated on or about such date, of the independent legal
counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and if such Registrable Stock is
not being sold through underwriters, then to the Holders making such
request, as to such matters as such underwriters or the Holders holding a
majority of the Registrable Stock included in such registration, as the
case may be, may reasonably request and as would be customary in such a
transaction, and (2) letters dated on or about such date and the date the
offering is priced from the independent certified public accountants of
the Company, addressed to the underwriters, if any, and if such
Registrable Stock is not being sold through underwriters, then to the
Holders making such request and, if such accountants refuse to deliver
such letters to such Holders, then to the Company (i) stating that they
are independent certified public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements and other financial data of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereto, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and (ii) covering such other
financial matters (including information as to the period ending not more
than five Business Days prior to the date of such letters) with respect to
the registration in respect of which such letter is being given as such
underwriters or the Holders holding a majority of the Registrable Stock
included in such registration, as the case may be, may reasonably request
and as would be customary in such a transaction;
<PAGE>
26
(g) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Stock
to be so included in the registration statement;
(h) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, but not later than 18
months after the effective date of the registration statement, an earnings
statement covering the period of at least 12 months beginning with the
first full month after the effective date of such registration statement,
which earnings statements shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder; and
(i) use all reasonable efforts to list the Registrable Stock covered
by such registration statement with any U.S. nationally recognized
securities exchange on which the Common Stock is then listed.
For purposes of Sections 5.06(a) and 5.06(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and six months after the effective
date thereof.
SECTION 5.07. Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to Article V of
this Agreement that the Holders shall furnish to the Company such information
regarding themselves, the Registrable Stock held by them, and the intended
method of disposition of such securities as the Company shall reasonably request
and as shall be required in connection with the action to be taken by the
Company.
SECTION 5.08. Expenses of Registration. All expenses incurred in
connection with each registration pursuant to Sections 5.03, 5.04 and 5.05 of
this Agreement, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incidental to such performance and compliance), fees of the National Association
of Securities Dealers, Inc. or listing fees, messenger and delivery expenses,
all fees and expenses of complying with state securities or "blue sky" laws, and
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders (which counsel, subject to
the registration rights of holders of the Senior Preferred Stock and ING, shall
be selected by the Holders holding a majority in interest of the Registrable
Stock being registered), shall be paid by the Company; provided, however, that
if a registration request pursuant to Section 5.03 or
<PAGE>
27
5.05 is subsequently withdrawn by the Holders the Company shall not be required
to pay any expenses of such registration proceeding, and such withdrawing
Holders shall bear such expenses. The Holders shall bear and pay the
underwriting commissions and discounts applicable to securities offered for
their account and the fees and disbursements of any additional counsel in
connection with any registrations, filings and qualifications made pursuant to
this Agreement.
SECTION 5.09. Underwriting Requirements. In connection with any
underwritten offering, the Company shall not be required under Section 5.04 to
include shares of Registrable Stock in such underwritten offering unless the
Holders of such shares of Registrable Stock accept the terms of the underwriting
of such offering that have been reasonably agreed upon between the Company and
the underwriters selected by the Stockholders.
SECTION 5.10. Indemnification. In the event any Registrable Stock is
included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder, such
Holder's directors and officers, agents of such Holder, each person who
participates in the offering of such Registrable Stock, including
underwriters (as defined in the Securities Act), and each Person, if any,
who controls such Holder or participating person within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which they may become subject under the Securities Act, the
Exchange Act, state securities or "blue sky" laws or otherwise, insofar as
such losses, claims, damages or liabilities (or proceedings in respect
thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in such registration statement on
the effective date thereof (including any prospectus filed under Rule 424
under the Securities Act or any amendments or supplements thereto) or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse each such
Holder, such Holder's directors and officers, agents, such participating
person or controlling person for any legal or other expenses reasonably
incurred by them (but not in excess of expenses incurred in respect of one
counsel for Mr. Otten and any Otten Permitted Transferee and one counsel
for the Stockholders and any Stockholder Permitted Transferee, as the case
may be, all of them unless there is an actual conflict of interest between
any indemnified parties, which indemnified parties may be represented by
separate counsel) in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 5.10(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company;
provided further that the Company shall not be liable to any Holder, such
Holder's directors and officers, agents, participating person or
controlling person in any such case for any such loss, claim, damage,
liability or action to the extent that it arises
<PAGE>
28
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in connection with such registration
statement, preliminary prospectus, final prospectus or amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by any such Holder, such Holder's directors and officers,
agents, participating person or controlling person. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of any such Holder, such Holder's directors and officers,
agents, participating person or controlling person, and shall survive the
Transfer of such securities by such Holder.
(b) Each Holder requesting or joining in a registration severally
and not jointly shall indemnify and hold harmless the Company, each of its
directors and officers, each Person, if any, who controls the Company
within the meaning of the Securities Act, and each agent and any
underwriter for the Company (within the meaning of the Securities Act)
against any losses, claims, damages or liabilities, joint or several, to
which the Company or any such director, officer, controlling person, agent
or underwriter may become subject, under the Securities Act, Exchange Act,
state securities or "blue sky" laws or otherwise, insofar as such losses,
claims, damages or liabilities (or proceedings in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such registration statement on the
effective date thereof (including any prospectus filed under Rule 424
under the Securities Act or any amendments or supplements thereto) or
arise out of or are based upon the omission or alleged omission 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 alleged untrue statement
or omission or alleged omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished by or
on behalf of such Holder expressly for use in connection with such
registration; and each such Holder shall reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, agent or underwriter (but not in excess of expenses
incurred in respect of one counsel for all of them unless there is an
actual conflict of interest between any indemnified parties which
indemnified parties may be represented by separate counsel) in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 5.10(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of such Holder; and provided further that the
liability of each Holder hereunder shall be limited to the proportion of
any such loss, claim, damage, liability or expense which is equal to the
proportion that the net proceeds from the sale of the Shares sold by such
Holder under such registration statement bears to the total net proceeds
from the sale of all securities sold thereunder, but not in any event
<PAGE>
29
to exceed the net proceeds received by such Holder from the sale of
Registrable Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this
Section 5.10 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5.10, notify the indemnifying party
in writing of the commencement thereof and the indemnifying party shall
have the right to participate in and assume the defense thereof with
counsel selected by the indemnifying party and reasonably satisfactory to
the indemnified party; provided, however, that an indemnified party shall
have the right to retain its own counsel, with all fees and expenses
thereof to be paid by such indemnified party, and to be apprised of all
progress in any proceeding the defense of which has been assumed by the
indemnifying party. The failure to notify an indemnifying party promptly
of the commencement of any such action shall not relieve the indemnifying
party from any liability in respect of such action which it may have to
such indemnified party on account of the indemnity contained in this
Section 5.10, unless (and only to the extent) the indemnifying party was
prejudiced by such failure, and in no event shall such failure relieve the
indemnifying party from any other liability which it may have to such
indemnified party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any claim or
pending or threatened proceeding in respect of which the 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 arising
out of such claim or proceeding.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by applicable law, the 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 the relative fault of the indemnifying party and the indemnified
party in connection with the actions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether or not any action in question, including any untrue or alleged
untrue statement of material fact or omission or alleged omission to state
a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of
the losses, claims, damages or liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
<PAGE>
30
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.10(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
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.
SECTION 5.11. Lockup. Each Holder shall, in connection with any
registration of the Company's securities, upon the request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
agree in writing not to effect any sale, disposition or distribution of any
Registrable Stock (other than (i) the Registrable Stock included in such
registration or (ii) as permitted by clause (B) of Section 4.02(a)), without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time from 60 days prior to the effective date of such
registration to such time as the Company or the underwriters may specify;
provided, however, that (x) all Executives and Directors shall also have agreed
not to effect any sale, disposition or distribution of any Registrable Stock
under the circumstances and pursuant to the terms set forth in this Section 5.11
and (y) in no event shall the Holders be required to not effect any sale,
disposition or distribution for longer than 180 days after the Registration
Statement becomes effective pursuant to this Section 5.11.
SECTION 5.12. Transfer of Registration Rights. Subject to Article
IV, the registration rights of the Stockholders or Mr. Otten under this
Agreement with respect to any Registrable Stock may be transferred to any
Permitted Transferee of such Registrable Stock; provided, however, that (i) the
Stockholders and Mr. Otten shall give the Company written notice at or prior to
the time of such Transfer stating the name and address of the Permitted
Transferee and identifying the securities with respect to which the rights under
this Agreement are being transferred; (ii) such Permitted Transferee shall agree
in writing, in form and substance reasonable satisfactory to the Company, to be
bound as a Holder by the provisions of this Agreement; and (iii) immediately
following such Transfer, the further disposition of such securities by such
Permitted Transferee is restricted under the Securities Act. Except as set forth
in this Section 5.12, no Transfer of Registrable Stock shall cause such
Registrable Stock to lose such status.
SECTION 5.13. Rule 144 Information. Subject to Article IV, and with
a view to making available the benefits of certain rules and regulations of the
SEC which may at any time permit the sale of the Registrable Stock to the public
without registration, at all times after 90 days after any Shelf Registration
Statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
<PAGE>
31
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities
Act and the Exchange Act; and
(c) furnish to each Holder of Registrable Stock forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as
such Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing such Holder to sell any Registrable Stock
without registration.
ARTICLE VI
FURNISHING OF INFORMATION
SECTION 6.01. Furnishing of Information. For so long as the
Stockholders, on the one hand, and Mr. Otten, on the other hand, Beneficially
Own at least 5% of the outstanding shares of Common Stock (on a Fully Diluted
Basis):
(a) The Company will furnish or make available to the Stockholders
and/or Mr. Otten, as the case may be, its annual reports to stockholders
and any quarterly or other financial reports and information furnished by
it to stockholders pursuant to the requirements of the Exchange Act.
(b) If the Company is not required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, it shall furnish
to the Stockholders and/or Mr. Otten, as the case may be, its financial
statements, including any notes thereto (and with respect to annual
reports, an auditors' report by a nationally recognized firm of
independent certified public accountants), a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and such other
information which the Company would otherwise be required to include in
annual and quarterly reports filed under the Exchange Act.
(c) The Company shall, at any reasonable time and from time to time,
permit the Stockholders and/or Mr. Otten, as the case may be, or any agent
or representative thereof, to examine and make copies of and abstracts
from the records and books of account of the Company, and to discuss the
records, finances and accounts of the
<PAGE>
32
Company with any of its officers, Directors and with their independent
certified public accountants.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Waiver. The parties hereto may agree to (a) extend the
time for the performance of any of the obligations or other acts of other
parties, (b) waive any inaccuracies in the representations and warranties of
other parties contained herein or in any document delivered by other parties
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of other parties contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the parties to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights. Oak Hill shall have all authority to act on behalf of the
other Stockholders under this Section 7.01.
SECTION 7.02. Expenses; Attorneys' Fees. (a) Except as otherwise
specified in this Agreement, all costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
(b) A party in breach of this Agreement shall, on demand, indemnify
and hold harmless the other parties for and against all reasonable out-of-pocket
expenses, including legal fees, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement. The payment of
such expenses is in addition to any other relief to which such other party may
be entitled.
SECTION 7.03. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy, by e-mail or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 7.03):
<PAGE>
33
(a) if to the Company or Mr. Otten,
American Skiing Company
Sunday River Road
Bethel, ME 04217
Telecopy: (207) 824-5110
Attention: Leslie B. Otten
Christopher E. Howard
with copies (which shall not constitute notice to the
Company or Mr. Otten) to:
Pierce Atwood
One Monument Square
Portland, ME 04101
Telecopy: (207) 791-1350
Attention: David J. Champoux, Esq.
(e-mail: [email protected])
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: (212) 848-7179
Attention: Robert Evans III, Esq.
(e-mail: [email protected])
Peter D. Lyons, Esq.
(e-mail: [email protected])
<PAGE>
34
(b) if to the Stockholders,
Oak Hill Capital Partners, L.P.
201 Main Street
Fort Worth, Texas 76102
Attention: Ray Pinson
and
Oak Hill Capital Management, Inc.
Park Avenue Tower
65 East 55th Street
New York, NY 10022
Telecopy: 212-754-5685
Attention: Steven B. Gruber
Bradford E. Bernstein
with a copy (which shall not constitute notice to the Stockholders)
to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Telecopy: (212) 373-2377
Attention: Matthew Nimetz, Esq.
SECTION 7.04. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. No party to this Agreement
shall be deemed to be the draftsman of this Agreement.
SECTION 7.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 7.06. Entire Agreement. This Agreement, together with the
Voting Agreement, constitutes the entire agreement of the parties hereto with
respect to the subject
<PAGE>
35
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, between the parties with respect to the subject matter hereof.
SECTION 7.07. Assignment. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, with respect to the Company, any successor corporation; provided,
however, other than as contemplated by the Delaware Reincorporation or any other
merger involving the Company, no party hereto shall assign or delegate any of
the rights or obligations created under this Agreement without the prior written
consent of the other parties, except to Affiliates of Oak Hill or to Oak Hill
Securities Fund, L.P.; provided, however, that no such assignment shall release
Oak Hill or any of the other Stockholders from any of their obligations
hereunder. Oak Hill shall have all authority to act on behalf of the other
Stockholders under this Section 7.07.
SECTION 7.08. No Third Party Beneficiaries. Except for the
provisions of Article V relating to indemnified parties, this Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 7.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
parties hereto or (b) by a waiver in accordance with Section 7.01. Oak Hill
shall have all authority to act on behalf of the other Stockholders under this
Section 7.09.
SECTION 7.10. Governing Law; Forum. (a) Prior to the Delaware
Reincorporation, this Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maine and (b) on or after the
occurrence of the Delaware Reincorporation, this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, in each
case, as applicable to contracts executed in and to be performed entirely in
that state and without regard to any applicable conflicts of law principles. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any State or federal court in Maine (if such action or
proceeding is commenced prior to the Delaware Reincorporation) or in Delaware
(if such action or proceeding is commenced after the Delaware Reincorporation).
Each of the parties to this Agreement (a) consents to submit itself to the
personal jurisdiction of any Maine or Delaware State or federal court, as the
case may be, in the event that any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
in relation to this Agreement or any of the other transactions contemplated by
this Agreement in any court other than any Maine or Delaware State or federal
court, as the case may be.
<PAGE>
36
SECTION 7.11. Effect of Delaware Reincorporation. This agreement
shall continue in full force and effect notwithstanding any actions taken in
connection with the Delaware Reincorporation.
SECTION 7.12. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 7.13. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first above written.
AMERICAN SKIING COMPANY
By: /s/ Leslie B. Otten
-------------------
Name: Leslie B. Otten
Title: As President
LESLIE B. OTTEN
/s/ Leslie B. Otten
-------------------
CONSENTED TO AND ACKNOWLEDGED BY:
ING US CAPITAL LLC,
AS PLEDGEE OF SHARES
OF CLASS A COMMON
STOCK AND COMMON STOCK
BENEFICIALLY OWNED BY
LESLIE B. OTTEN
By: /s/ Robert L. Fellows
---------------------
Name: Robert L. Fellows
Title: Director
<PAGE>
OAK HILL CAPITAL PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Managing Member
OAK HILL CAPITAL MANAGEMENT
PARTNERS, L.P.
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Vice President
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: /s/ Glenn R. August
-------------------
Name: Glenn R. August
Title: President
<PAGE>
OHCP SKI, L.P.
By: Oak Hill Capital Partners, L.P.
its general partner
By: OHCP GenPar, L.P.,
its general partner
By: OHCP MGP, LLC,
its general partner
By: /s/ Steven B. Gruber
--------------------
Name: Steven B. Gruber
Title: Vice President
<PAGE>
ANNEX A
STOCKHOLDERS
JURISDICTION AND
NAME TYPE OF ORGANIZATION
- ---- --------------------
Oak Hill Capital Partners, L.P. Delaware L.P.
Oak Hill Capital Management Delaware L.P.
Partners, L.P.
Oak Hill Securities Fund, L.P. Delaware L.P.
OHCP SKI, L.P. Delaware L.P.
- -------------------------------------------------------------------------------
Certificate of Designation
of Preferences and Rights
of the
8.50% Series B Convertible Participating Preferred Stock
of
American Skiing Company
RESOLVED:That pursuant to Articles SECOND and FIFTH of the Corporation's
Amendment to Articles of Incorporation dated July 16, 1997, as further
amended by the Corporation's Amendments to Articles of Incorporation
dated October 14, 1997, November 10, 1997 and November 12, 1997, the
Board of Directors of the Corporation hereby creates and authorizes a
series of serial Preferred Stock (the "Preferred Stock") having the
following rights and preferences, designations, voting powers and
terms, in addition to those fixed by and set forth in such Articles
SECOND and FIFTH:
As used herein, the following terms have the following meanings
(with terms defined in the singular having comparable meanings when used in the
plural and vice versa), unless the context otherwise requires:
"Accretion Amounts" shall have the meaning specified in Section 3.
"Accretion Rate" shall have the meaning specified in Section 3.
"Additional Preferred Directors" shall have the meaning specified in
Section 6(b)(i)(i).
"Acquisition Transaction" shall mean any transaction or series of
transactions in which at least a majority of the outstanding Common Stock is
acquired by any Person, whether pursuant to a tender offer, merger, acquisition
or otherwise.
"Applicable Base Price" shall mean (a) with respect to an
Acquisition Transaction, the Average Market Price of Company Common Stock and
(b) with respect to a Stock Transaction, (i) the greater of the conversion price
per share and the Average Market Price if convertible preferred stock is issued
in the Stock Transaction, (ii) the Average Market Price if newly issued shares
of Company Common Stock are sold in the Stock Transaction and (iii) the price
per share paid if the outstanding Company Common Stock is sold in the Stock
Transaction.
<PAGE>
"Average Market Price" shall mean, with respect to an Acquisition
Transaction or Stock Transaction, the average of the daily closing prices of the
Company Common Stock on the NYSE or, if not then listed or traded on the NYSE,
such other exchange, market or system that the Company Common Stock is then
listed or traded on, for 10 consecutive trading days, commencing on the fifth
business day after the consummation of such Acquisition Transaction or Stock
Transaction.
"Board of Directors" shall mean the board of directors of the
Corporation.
"Business Day" shall mean any day that is not a Saturday, Sunday or
a Legal Holiday.
"Change of Control" shall mean any event that gives any Person or
Group other than the Holders, the Stockholders, Leslie B. Otten or their
Permitted Transferees the ability to "control" the Corporation (a) through the
acquisition of either (i) substantially all of the assets of the Corporation and
its subsidiaries, taken as a whole, or (ii) at least a majority of the aggregate
voting power of the Corporation's capital stock or (b) by otherwise being able
to elect or designate a majority of the Board of Directors through a management
contract or otherwise.
"Class A Common Stock" shall mean the Class A common stock, $.01 par
value per share, of the Corporation.
"Common Stock" shall mean the Company Common Stock and the Class A
Common Stock as the same exist as of the date hereof or as such stock may be
constituted from time to time.
"Company Common Stock" shall mean the common stock, $.01 par value
per share, of the Corporation.
"Conversion Date" shall have the meaning specified in Section 9(b).
"Conversion Price" shall mean the applicable price at which
Conversion Shares shall be delivered upon conversion of shares of the
Convertible Preferred Stock as specified in Section 9(a).
"Conversion Shares" shall have the meaning specified in Section
9(a).
"Convertible Preferred Stock" shall mean the Corporation's 8.50%
Series B Convertible Participating Preferred Stock, $.01 par value per share,
designated herein.
"Current Market Price" shall mean the Current Market Price of the
Company Common Stock calculated in accordance with Section 9(c)(iv).
<PAGE>
"Default Voting Event" shall have the meaning specified in Section
6(b)(ii).
"Definitive Agreements" shall mean the Preferred Stock Subscription
Agreement, together with the schedules attached thereto, the Stockholders'
Agreement, and the Voting Agreement.
"Delaware Reincorporation" shall mean the Corporation's merger with
and into a newly formed subsidiary that is incorporated in the State of Delaware
(with such new Delaware subsidiary surviving the merger) and that, after giving
effect to such merger, will have the identical authorized, issued and
outstanding capital stock with the same rights and preferences as the
Corporation and a board to which the directors are elected annually instead of a
staggered board of directors.
"Delaware Reincorporation Vote" shall mean a vote in favor of the
Delaware Reincorporation by a majority of the outstanding voting securities of
the Corporation.
"Distribution Date" shall have the meaning specified in Section
9(c)(iii).
"Dividend Rate" shall have the meaning specified in Section 3.
"Equity Equivalents" shall mean Common Stock or rights, warrants,
options or other convertible securities (including the Repriced Preferred Stock
and any other convertible debt or equity) representing the right to acquire
Common Stock, but excluding the exercise of options which were granted prior to
the initial public offering of the Corporation or options that were or are set
at the market price at the time such options were or are granted by the
Corporation or as determined by the Board of Directors or a duly authorized
committee or delegee thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fully Diluted Basis" shall have the meaning given to such term in
the Stockholders' Agreement.
"Group" shall have the meaning set forth in Rule 13d-5, as in effect
on the date hereof, under the Exchange Act.
"Holders" shall mean the holders of the Convertible Preferred Stock.
"Issue Date" shall mean August 9, 1999, the original date of
issuance of the Convertible Preferred Stock.
<PAGE>
"Junior Preferred" shall have the meaning specified in Section 2.
"Junior Stock" shall have the meaning specified in Section 2.
"Legal Holiday" shall mean any day on which banking institutions are
obligated or authorized to close in The City of New York or in the State of
Maine.
"Liquidation Price" shall mean, as of any date, an amount equal to
$1,000 per share, plus (x) where cash dividends are not paid pursuant to Section
3, the aggregate Accretion Amounts through such date and (y) all accrued and
unpaid dividends to such date, whether or not declared, to the extent such
accrued and unpaid dividends are not taken into account in determining the
Accretion Amounts under clause (x).
"Liquidation Right" shall mean for each share of Convertible
Preferred Stock the greater of (i) the Liquidation Price and (ii) the amount
that would be received in liquidation following conversion of a share of
Convertible Preferred Stock into Common Stock.
"Majority Holders" shall mean the Holders of a majority of the then
outstanding shares of Convertible Preferred Stock.
"Mandatory Redemption" shall mean any mandatory redemption of the
Convertible Preferred Stock as specified in Section 5(a).
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"Notice" shall have the meaning specified in Section 5(b).
"NYSE" shall mean the New York Stock Exchange.
"Permitted Transferees" shall have the meaning given to such term in
the Stockholders' Agreement.
"Person" means any individual, firm, corporation, partnership,
limited partnership, limited liability company, association, trust,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3), as in effect on the
date hereof, of the Exchange Act.
"Preferred Directors" shall have the meaning specified in Section
6(b)(i).
"Preferred Stock" shall have the meaning specified in the preamble.
<PAGE>
"Preferred Stock Subscription Agreement" shall mean the Preferred
Stock Subscription Agreement dated July 9, 1999 among the Corporation, Oak Hill
Capital Partners, L.P., and the other entities identified on Annex A attached
thereto.
"Redemption Price" shall have the meaning specified in Section 5(b).
"Repriced Preferred Stock" shall mean the 10.5% Repriced Convertible
Exchangeable Preferred Stock, $.01 par value per share, of the Corporation.
"Requisite NYSE Shareholder Approval" shall mean the approval by the
Corporation's shareholders to the extent required by the NYSE in connection with
the issuance of Conversion Shares.
"Rights" shall have the meaning specified in Section 9(c)(iii).
"Senior Liquidation Stock" shall have the meaning specified in
Section 4.
"Stock Transaction" shall mean any transaction or series of
transactions pursuant to which the Corporation issues or sells shares of common
stock representing, or convertible preferred stock convertible into, 40% or more
of the outstanding shares of Common Stock on a Fully Diluted Basis.
"Stockholder Director" shall mean a director designated by the
Stockholders pursuant to the Stockholders' Agreement.
"Stockholders" shall mean Oak Hill Capital Partners, L.P. and the
other entities identified in Annex A to the Preferred Stock Subscription
Agreement.
"Stockholders' Agreement" shall mean the Stockholders' Agreement
dated August 6, 1999 among the Corporation, the Holders, Leslie B. Otten and ING
(U.S.) Capital Corporation.
"Third Party Redemption Date" shall have the meaning specified in
Section 5(a).
"Third Party Transaction" shall mean any Acquisition Transaction or
Stock Transaction in which the financial terms, in the judgment of the Board of
Directors, are superior to those set forth in the Definitive Agreements.
Section 1. DESIGNATION AND AMOUNT. The designation of such series of
Preferred Stock shall be the Convertible Preferred Stock. The number of issuable
shares of Convertible Preferred Stock shall be 150,000.
<PAGE>
Section 2. RANK. All shares of Convertible Preferred Stock, both as to
payment of dividends and to distribution of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, shall rank
(i) senior to all of the Corporation's now or hereafter issued preferred stock
(the "Junior Preferred") except for the Repriced Preferred Stock, as to which it
shall rank junior, and (ii) senior to all of the Corporation's now or hereafter
issued Common Stock or any other common stock of any class of the Corporation
(collectively with the Junior Preferred, the "Junior Stock").
Section 3. DIVIDENDS AND CERTAIN RESTRICTIONS. The Holders shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds of the Corporation legally available therefor, dividends at a rate per
share of 8.50% per annum (as may be adjusted from time to time as provided in
this Section 3) of the Liquidation Price (the "Dividend Rate"), which shall be
fully cumulative, shall accrue, and shall be compounded and payable quarterly on
October 31, January 31, April 30 and July 31 of each year, commencing on October
31, 1999 (except that if such date is a Saturday, Sunday or Legal Holiday, then
such dividend will be payable on the next Business Day) to Holders of record as
they appear on the stock transfer books of the Corporation on the record date
for the payment of such dividend, which shall be not more than 60 nor less than
30 days preceding the payment date for such dividend, as is fixed by the Board
of Directors. Dividends may, at the option of the Corporation, be paid (i) in
cash at the Dividend Rate or (ii) until the five-year anniversary of the Issue
Date, by way of an increase in the Liquidation Price in effect immediately prior
to the relevant quarterly dividend payment date in an amount calculated based on
the following rates per annum, compounded quarterly (such rate being the
"Accretion Rate" and each such amount being an "Accretion Amount") (a) 8.50% of
the Liquidation Price until January 31, 2001, (b) 9.50% of the Liquidation Price
until January 31, 2002 and (c) 10.5% of the Liquidation Price thereafter until
July 31, 2004, in the case of clauses (i) and (ii), payable quarterly in arrears
on October 31, January 31, April 30 and July 31 of each year. Notwithstanding
the foregoing, dividends shall be payable solely in accordance with clause (ii)
if cash dividends have not been paid on the Repriced Preferred Stock on the
immediately preceding dividend payment date with respect to such Repriced
Preferred Stock. The Dividend Rate and the Accretion Rate on the Convertible
Preferred Stock shall also be subject to adjustment as provided below.
In addition to the dividends described in the preceding paragraph, the
Holders shall be entitled to receive an amount equal to the amount that the
Holders would be entitled to receive if the Convertible Preferred Stock were
fully converted into Company Common Stock on the record date for the payment of
any such dividends.
<PAGE>
The Dividend Rate and the Accretion Rate shall increase to 12.5% per
annum, compounded quarterly, of the Liquidation Price in the event that either
(a) the Delaware Reincorporation Vote or (b) the Requisite NYSE Shareholder
Approval is not obtained on or before December 31, 1999. Once the Delaware
Reincorporation Vote and the Requisite NYSE Shareholder Approval are obtained,
such increased rate will revert back to the applicable rate set forth in the
first paragraph of Section 3. In addition, the Dividend Rate and the Accretion
Rate on the Convertible Preferred Stock shall be increased by 2% per annum upon
a declaration of Default Voting Event as set forth in Section 6(b)(ii) for so
long as such Dividend Default remains uncured.
On any such dividend payment date all dividends which shall have
accrued on each share of Convertible Preferred Stock outstanding on such
dividend payment date shall accumulate and be deemed to become "due" but shall
nonetheless be payable as set forth in the first paragraph of this Section 3. If
such dividends are not fully paid on such dividend payment date, such accrued
dividends shall also be added to the Liquidation Price of the Convertible
Preferred Stock effective as of such dividend payment date and shall thereafter
accrue additional dividends in respect thereof until such unpaid dividends have
been paid in full. Dividends paid on shares of Convertible Preferred Stock in an
amount less than the total amount of such dividends at the time accumulated and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
Any reference to "distribution" contained in this Section 3 shall not
be deemed to include any distribution made in connection with any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
that is effected in accordance with the preferences and priorities set forth in
the Corporation's Articles of Incorporation and all certificates of designation
setting forth the rights of the holders of the Corporation's Preferred Stock.
Section 4. LIQUIDATION RIGHT. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the Holders shall be entitled to receive out of the assets of the Corporation,
whether such assets are stated capital or surplus of any nature, the Liquidation
Right, before any payment shall be made or any assets distributed to the holders
of Common Stock or any other class or series of the Corporation's capital stock
ranking junior as to liquidation rights to the Convertible Preferred Stock;
provided, however, that such rights shall accrue to the Holders only in the
event that the Corporation's payments with respect to the liquidation
preferences of the holders of capital stock of the Corporation ranking senior as
to liquidation rights to the Convertible Preferred Stock (the "Senior
Liquidation Stock") are fully met. If the assets of the Corporation available
for distribution after the liquidation preferences of the Senior Liquidation
Stock are fully met are not sufficient to pay an amount equal to the Liquidation
Right to the holders of outstanding shares of Convertible Preferred Stock, then
the assets of the Corporation shall be distributed ratably among the Holders.
Neither a consolidation, merger or other business combination of the Corporation
with or into another corporation or other entity nor a sale or offer of all or
part of the Corporation's assets for cash, securities or other property shall be
considered a liquidation, dissolution or winding up of the Corporation for
purposes of this Section 4 (unless in connection therewith the liquidation of
the Corporation is specifically approved).
<PAGE>
Section 5. REDEMPTION.
(a) MANDATORY REDEMPTION. The Corporation shall mandatorily redeem all
of the outstanding shares of Convertible Preferred Stock (each of the following
being a "Mandatory Redemption") (i) on August 9, 2009, at a redemption price
equal to the Liquidation Price per share (plus an amount equal to all accrued
and unpaid dividends to such date of redemption) or (ii) if (A) either the
Delaware Reincorporation Vote or the Requisite NYSE Shareholder Approval is not
obtained by December 31, 1999 and (B) if within twelve months following the date
of the Preferred Stock Subscription Agreement, the Corporation announces or
consummates a Third Party Transaction, at the Liquidation Price plus the excess,
if any, of (x) the Applicable Base Price over (y) $5.25, as such number may be
adjusted from time to time as provided in Section 9, multiplied by the number of
Conversion Shares into which the Convertible Preferred Stock being redeemed is
convertible on the date immediately preceding such announcement or consummation
of the Third Party Transaction (a "Third Party Redemption Date"). In addition,
if the Company Common Stock continues to be publicly traded following the
consummation of any Third Party Transaction, the Holders whose Convertible
Preferred Stock has been redeemed pursuant to clause (ii) of this Section 5(a)
shall be entitled to receive within ten days after the first anniversary of the
Third Party Redemption Date an amount equal to the excess, if any, of (i) the
highest average consecutive 30-day trading price of the Company Common Stock
during the 12 months following the Third Party Redemption Date over (ii) the
Applicable Base Price, multiplied by the number of Conversion Shares into which
the Convertible Preferred Stock could have been converted on the Third Party
Redemption Date.
No Mandatory Redemption pursuant to this Section 5(a) shall be made
unless and until all outstanding Repriced Preferred Stock has been converted,
repurchased, redeemed or otherwise retired. If, upon any Mandatory Redemption,
funds are not legally available to the Corporation for redemption of all the
shares of Convertible Preferred Stock, the Corporation shall redeem on such
date, at the applicable redemption price, that number of shares of Convertible
Preferred Stock which it can lawfully redeem, and from time to time thereafter,
as soon as funds are legally available, the Corporation shall redeem at the
applicable redemption price shares of Convertible Preferred Stock until the
Corporation has redeemed the shares of Convertible Preferred Stock in full.
In the event that the Corporation is in arrears in the redemption of
its Convertible Preferred Stock pursuant to a Mandatory Redemption, the
Corporation may not (i) purchase, redeem or pay dividends on any Junior Stock or
(ii) make any mandatory purchase or redemption of any Convertible Preferred
Stock or stock on a parity therewith except pro rata according to all such
obligations then due or in arrears among all such outstanding stock.
<PAGE>
(b) OPTIONAL REDEMPTION. Other than pursuant to a Mandatory Redemption
in accordance with Section 5(a) or a redemption upon a Change of Control in
accordance with Section 5(c), the shares of Convertible Preferred Stock shall
not be redeemable at the option of the Company by the Corporation until
following the four-year anniversary of the Issue Date. Following such date, the
Corporation shall have the right, at its option, upon not less than 60 days'
prior written notice ("Notice"), but subject to the right of the Holders to
convert their shares of Convertible Preferred Stock into shares of Common Stock
pursuant to Section 9, to redeem, out of funds legally available therefor, all
or a portion of the shares of Convertible Preferred Stock during the 12-month
period beginning on July 31 of the years indicated below (subject to the right
of the Holder of record on a record date for the payment of a dividend on the
Convertible Preferred Stock to receive the dividend due on such shares of
Convertible Preferred Stock on the corresponding dividend payment date, if such
dividend payment date is prior to the date set for redemption) at the redemption
prices (expressed as a percentage of the Liquidation Price) set forth below
(each a "Redemption Price"):
Year Redemption Price
2003 105%
2004 104%
2005 103%
2006 102%
2007 101%
2008 and thereafter 100%
provided that the Corporation shall not be entitled to redeem Convertible
Preferred Stock in accordance with this subparagraph (b) unless the closing
sales price for shares of Common Stock on the NYSE for the 30 consecutive
trading days immediately preceding the date of the Notice shall be at least 350%
of the current Conversion Price on or prior to June 30, 2004 and at least 150%
of the current Conversion Price thereafter.
In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the Corporation shall select the shares of
Convertible Preferred Stock to be redeemed in accordance with any method
permitted by the national securities exchange on which the Convertible Preferred
Stock is then listed, or if not so listed, the Corporation shall designate by
lot, or in such other manner as the Board of Directors may determine, the shares
to be redeemed, or shall effect such redemption pro rata. Notwithstanding the
foregoing, the Corporation shall not redeem less than all of the Convertible
Preferred Stock at any time outstanding until all dividends accrued to such
payment date upon all Convertible Preferred Stock then outstanding shall have
been paid.
<PAGE>
The Notice shall be given by first class mail, postage prepaid, to each
Holder of record of the Convertible Preferred Stock to be redeemed, at such
Holder's address as it shall appear upon the stock transfer books of the
Corporation. Each such notice of redemption shall specify the date fixed for
redemption, the Redemption Price, the then current Conversion Price, the place
or places of payment and conversion and that payment or conversion will be made
upon presentation of and surrender of the certificates evidencing the shares of
Convertible Preferred Stock to be redeemed or converted, and that the
Convertible Preferred Stock may be converted at any time before the close of
business on such date fixed for redemption.
Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder of the Convertible
Preferred Stock receives such notice; and failure to give such notice by mail,
or any defect in such notice, to a Holder of any shares designated for
redemption shall not affect the validity of the proceedings for the redemption
of any shares of Convertible Preferred Stock owned by other Holders to whom such
notice was duly given. On or after the date fixed for redemption as stated in
such Notice, each Holder of the shares called for redemption shall surrender the
certificate evidencing such shares to the Corporation at the place designated in
such notice and shall thereupon be entitled to receive payment of the Redemption
Price. If less than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued without cost to the
Holder thereof representing the unredeemed shares. If such Notice shall have
been so mailed and if, on or prior to the redemption date specified in such
notice, all funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the account
of the holders of the shares so to be redeemed (as to be and continue to be
available therefor), then on and after the redemption date, notwithstanding that
any certificate for shares of the Convertible Preferred Stock so called for
redemption shall not have been surrendered for cancellation, all shares of the
Convertible Preferred Stock with respect to which such notice shall have been
mailed and such funds shall have been set aside shall be deemed to be no longer
outstanding and all rights with respect to such shares of the Convertible
Preferred Stock so called for redemption shall forthwith cease and terminate,
except the right of the Holders to receive out of the funds so set aside in
trust the amount payable on the redemption thereof (including an amount equal to
accrued and unpaid dividends to the redemption date) without interest thereon.
The Holder of any shares of Convertible Preferred Stock redeemed upon
any exercise of the Corporation's redemption right under this Section 5(b) shall
not be entitled to receive payment of the Redemption Price for such shares until
such Holder shall cause to be delivered to the place specified in the Notice (i)
the certificate(s) representing such shares of Convertible Preferred Stock
redeemed and (ii) transfer instrument(s) satisfactory to the Corporation and
sufficient to transfer such shares of Convertible Preferred Stock to the
Corporation free of any adverse interests; provided that the foregoing is
subject to the other provisions of the Corporation's Articles of Incorporation
governing lost certificates generally.
(c) CHANGE OF CONTROL. Upon the occurrence of a Change of Control, each
Holder may require the Corporation to redeem such requesting Holder's
Convertible Preferred Stock at a purchase price in cash in an amount equal to
101.0% of the applicable Liquidation Price per share (plus an amount equal to
all accrued and unpaid dividends to such date of redemption) (the "Change of
Control Price").
<PAGE>
Within 45 days following any Change of Control, the Corporation shall
give to each Holder a written notice (a "Change of Control Notice") stating:
(i) that a Change of Control has occurred and that such Holder has the
right to require the Corporation to redeem such Holder's Convertible Preferred
Stock at the Change of Control Price as set forth above;
(ii) the circumstances and relevant facts regarding such Change of
Control;
(iii) the redemption date, which date shall be no earlier than 45 days
nor later than 60 days from the date such notice is mailed; and
(iv) the instructions a Holder must follow in order to have its
Convertible Preferred Stock redeemed pursuant to this Section 5(c).
Change of Control Notices shall otherwise be governed by the provisions
set forth above in paragraph (b) relating to Notices.
Holders electing to have Convertible Preferred Stock redeemed under
this Section 5(c) will be required to surrender such Convertible Preferred Stock
to the Corporation at the address specified in the Change of Control Notice at
least five Business Days prior to the specified redemption date. Any Holder will
be entitled to withdraw its election if the Corporation receives, not later than
three Business Days prior to the redemption date, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the amount of the
Convertible Preferred Stock delivered for redemption by such Holder as to which
its election is to be withdrawn and a statement that such Holder is withdrawing
its election to have such Convertible Preferred Stock redeemed.
No Change of Control Notice shall be issued pursuant to this Section
5(c) unless and until all outstanding Repriced Preferred Stock has been, or
shall have been as part of the Change of Control, converted, repurchased,
redeemed or otherwise retired. If, upon any Change of Control, funds are not
legally available to the Corporation for redemption of the shares of Convertible
Preferred Stock that the Holders have requested to be redeemed, the Corporation
shall redeem on such date, at the Change of Control Price, that number of shares
of Convertible Preferred Stock which it can lawfully redeem, and from time to
time thereafter, as soon as funds are legally available, the Corporation shall
redeem at the Change of Control Price shares of Convertible Preferred Stock
until the Corporation has redeemed all the shares of Convertible Preferred Stock
that the Holders have requested be redeemed.
<PAGE>
Section 6. VOTING RIGHTS.
(a) GENERAL. The Holders shall vote together with the holders of the
Common Stock (and any other class of equity securities which may similarly vote
with the holders of the Common Stock as a single class with respect to any
matter) upon all matters upon which stockholders are entitled to vote, except
for the election of directors (on which the Holders shall be entitled to vote as
a separate class pursuant to paragraph (b) below) and except for the Requisite
NYSE Shareholder Approval or the Delaware Reincorporation, and shall be entitled
to a number of votes per share of Convertible Preferred Stock equal to the
number of shares of Common Stock into which the shares of the Convertible
Preferred Stock are convertible on the record date of the determination of
stockholders entitled to notice of and to vote on such matter; provided, that,
nothing in this Section 6(a) shall prevent Oak Hill from exercising or enforcing
its rights under the Voting Agreement, dated as of August 6, 1999, among the
Corporation, Oak Hill, and certain of the Corporation's stockholders. In
addition, the Holders will have all voting rights required by law, and shall
also have all special voting rights provided below. Any shares of Convertible
Preferred Stock held by the Corporation or any entity controlled by the
Corporation shall not have voting rights hereunder and shall not be counted in
determining the presence of a quorum.
(b) CLASS VOTING RIGHTS.
(i) RIGHT TO ELECT DIRECTORS. So long as any shares of
Convertible Preferred Stock are outstanding, the minimum number of directors on
the Board of Directors shall be eleven. The Holders shall be entitled to vote
together as a class to elect four directors of the Corporation (the "Preferred
Directors"); provided at least 112,000 shares of the Convertible Preferred Stock
remain outstanding. In the event that (i) fewer than 112,000 shares and 75,000
or more shares of Convertible Preferred Stock are outstanding, the Holders shall
be entitled to elect three Preferred Directors, (ii) fewer than 75,000 shares
and 37,500 or more shares of Convertible Preferred Stock are outstanding, the
Holders shall be entitled to elect two Preferred Directors, (iii) fewer than
37,500 shares and 7,500 or more shares of Convertible Preferred Stock are
outstanding, the Holders shall be entitled to elect one Preferred Director and
(iv) fewer than 7,500 shares of Convertible Preferred Stock are outstanding, the
Holders shall not be entitled to elect any Preferred Directors.
<PAGE>
(ii) DEFAULT VOTING RIGHTS. If, without either the consent of
Majority Holders or the consent of at least one Preferred Director or
Stockholder Director, the Corporation (a) fails to make any quarterly dividend
payment (in accordance with Section 3) on the Convertible Preferred Stock or (b)
breaches a material covenant contained in the Definitive Agreements or the
provisions of Section 6(b)(iii) hereof (any event described in clause (a) or (b)
being a "Default Voting Event"), the Holders, following in the case of clause
(b), a declaration of default by the Majority Holders, will have the right to
elect two additional Preferred Directors ("Additional Preferred Directors"). In
addition, the Dividend Rate and the Accretion Rate on the Convertible Preferred
Stock shall be increased by 2% per annum for so long as any Default Voting Event
remains uncured by the Corporation. At such time as a Default Voting Event no
longer exists, any Additional Preferred Directors elected pursuant to this
Section 6(b)(ii) shall be deemed to have automatically resigned from the Board
of Directors and they shall cease to be directors of the Corporation. The
Holders (voting separately as a class) will have the exclusive right to vote for
and elect such Additional Preferred Directors pursuant to a written consent or
at a meeting of stockholders without any further action on the part of the
Corporation or the Holders as provided below.
(iii) ACTIONS REQUIRING AFFIRMATIVE VOTE. So long as shares of
Convertible Preferred Stock are outstanding, the Corporation shall not, directly
or indirectly, or through merger or consolidation with any other person, without
the affirmative vote or consent of the Majority Holders, with the Holders voting
separately as a class, (a) amend, alter or repeal (by merger, consolidation or
otherwise) any provision of the Articles of Incorporation or the By-laws of the
Corporation, as amended, so as to affect adversely the relative rights,
preferences, powers (including, without limitation, voting powers) and
privileges of the Convertible Preferred Stock, (b) authorize or issue any new
class of shares or Equity Equivalents having a preference with respect to
dividends, redemption and/or liquidation over, or on parity with, the
Convertible Preferred Stock, (c) reclassify any of its capital stock into shares
having a preference with respect to dividends, redemption and/or liquidation
over, or on parity with, the Convertible Preferred Stock or (d) issue any
additional shares of Convertible Preferred Stock. In connection with any right
to vote pursuant to this Section 6(b)(iii), each Holder will have one vote for
each share of Convertible Preferred Stock held.
(iv) SPECIAL MEETING. Whenever the rights described above
shall vest, they may be exercised initially by the vote of the Majority Holders
present and voting, in person or by proxy, at a special meeting of Holders or at
the next annual meeting of stockholders, or by written consent of the Majority
Holders without a meeting. Unless such action shall have been taken by written
consent as aforesaid, a special meeting of the Holders for the exercise of any
such right shall be called by the Clerk of the Corporation as promptly as
possible in compliance with applicable law and regulations, and in any event
within 10 days after receipt of a written request signed by the Holders of
record of at least 25% of the then outstanding shares of the Convertible
Preferred Stock, subject to any applicable notice requirements imposed by law or
by any national securities exchange on which any Convertible Preferred Stock is
listed. Such meeting shall be held at the earliest practicable date thereafter.
<PAGE>
(v) TERM OF OFFICE OF DIRECTORS. Any Preferred Director shall
hold office for a term expiring at the next annual meeting of stockholders and
during such term may be removed at any time, either for or without cause, by and
only by, the affirmative vote of the Majority Holders of record, with the
Convertible Preferred Stock voting as a single class, present and voting, in
person or by proxy, at a special meeting of such stockholders called for such
purpose, or by written consent without a meeting of the Majority Holders of
record, with the Convertible Preferred Stock voting as a single class. A special
meeting of the Holders for the removal of a director elected by the Holders in
accordance with this subparagraph (b) and the filling of the vacancy created
thereby shall be called by the Clerk of the Corporation as promptly as possible
and in any event within 10 days after receipt of request therefor signed by the
holders of not less than 25% of the outstanding shares of the Convertible
Preferred Stock taken as a single class, subject to any applicable notice
requirements imposed by law or any national securities exchange on which any
Convertible Preferred Stock is listed. Such meeting shall be held at the
earliest practicable date thereafter.
(vi) VACANCIES. Any vacancy caused by the death, resignation
or removal of any Preferred Director may be filled by the remaining Preferred
Directors or, if not so filled, or if there are no Preferred Directors on the
Board of Directors, by and only by a vote of the Majority Holders present and
voting as a single class, in person or by proxy, at a meeting of such Holders
called for such purpose, or by written consent without a meeting of the Majority
Holders. Unless such vacancy shall have been filled by the remaining Preferred
Directors or by written consent as aforesaid, such meeting shall be called by
the Clerk of the Corporation at the earliest practicable date after such death,
resignation or removal, and in any event within 10 days after the receipt of a
written request signed by the Holders of record of at least 25% of the
outstanding shares of the Convertible Preferred Stock taken as a single class.
(vii) STOCKHOLDERS' RIGHT TO CALL MEETING. If any meeting of
the Holders required by this subparagraph (b) to be called shall not have been
called within 10 days after personal service of a written request therefor upon
the Clerk of the Corporation or within 15 days after mailing the same within the
United States of America by registered mail addressed to the Clerk of the
Corporation at its principal office, subject to any applicable notice
requirements imposed by law or any national securities exchange on which any
Convertible Preferred Stock is then listed, then the Holders of record of at
least 25% of the then outstanding shares of the Convertible Preferred Stock may
designate in writing a Holder of the Convertible Preferred Stock to call such
meeting at the reasonable expense of the Corporation, and such meeting may be
called by such Person so designated upon the notice required for annual meetings
of stockholders or such shorter notice (but in no event shorter than permitted
by law or any national securities exchange on which the Convertible Preferred
Stock is then listed) as may be acceptable to the Majority Holders. Any Holder
of Convertible Preferred Stock so designated shall have reasonable access to the
stock books of the Corporation relating solely to the Convertible Preferred
Stock for the purpose of causing such meeting to be called pursuant to these
provisions.
(viii) QUORUM. At any meeting of the Holders called in
accordance with the provisions of this subparagraph (b) for the election or
removal of directors, the presence in person or by proxy of the Majority Holders
with the Holders of Convertible Preferred Stock voting as a single class shall
be required to constitute a quorum; in the absence of a quorum, a majority of
the Holders present in person or by proxy shall have power to adjourn the
meeting from time to time without notice, other than announcement at the
meeting, until a quorum shall be present.
<PAGE>
Section 7. OUTSTANDING SHARES. For purposes of this Resolution, all
shares of Convertible Preferred Stock shall be deemed outstanding except (i)
from the date fixed for redemption pursuant to Section 5, all shares of
Convertible Preferred Stock that have been so called for redemption under
Section 5 if funds necessary for payment of the Redemption Price have been
irrevocably deposited in trust, for the account of the Holders of the shares so
to be redeemed (so as to be and continue to be available therefor), with a
corporation organized and doing business under the laws of the United States or
any State or territory thereof or of the District of Columbia (or a corporation
or other person permitted to act as a trustee by the Securities and Exchange
Commission), authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $100,000,000 and subject to
supervision or examination by Federal, State or District of Columbia or
territorial authority; and (ii) from the date of registration of transfer, all
shares of Convertible Preferred Stock held of record by the Corporation or any
subsidiary of the Corporation.
Section 8. STATUS OF ACQUIRED SHARES. The Corporation shall take all
such actions as are necessary to cause any shares of Convertible Preferred Stock
redeemed by the Corporation, received upon conversion pursuant to Section 9, or
otherwise acquired by the Corporation, to be restored to the status of
authorized and unissued shares of Preferred Stock, without designation as to
series, and such shares may thereafter be issued, but not as shares of
Convertible Preferred Stock unless the other provisions of this Resolution have
been complied with.
Section 9. CONVERSION.
(a) Except as provided in the next succeeding sentence, each share of
the Convertible Preferred Stock shall be convertible at any time, after the
Requisite NYSE Shareholder Approval is obtained, at the option of the Holder
thereof, into validly issued, fully paid and non-assessable shares of the
Company Common Stock ("Conversion Shares") at the Conversion Price, determined
as hereinafter provided, in effect at the time of conversion. Unless default be
made in the payment in full of the Redemption Price and any accrued and unpaid
dividends, shares of Convertible Preferred Stock called for redemption in
accordance with the terms herein shall cease to be convertible into Conversion
Shares at the close of business on the redemption date. The Conversion Price
shall be initially $5.25 per share. The number of Conversion Shares issuable
upon conversion of a share of Convertible Preferred Stock is determined by
dividing the Liquidation Price (inclusive of any accrued and unpaid dividends)
of a share of Convertible Preferred Stock by the Conversion Price in effect on
the Conversion Date (as hereinafter defined) and rounding the result to the
nearest 1/100th of a share. The Conversion Price shall be subject to adjustment
as provided below. Upon conversion, any accrued and unpaid dividends on the
Convertible Preferred Stock shall be paid to the Holder thereof in accordance
with the provisions of Section 3. If a holder converts more than one share at
the same time, the number of full shares issuable upon the conversion shall be
based upon the total number of shares converted.
<PAGE>
(b) In order to convert shares of the Convertible Preferred Stock into
Conversion Shares, the Holder thereof shall surrender at the office of any
transfer agent for the Convertible Preferred Stock (or in the absence of any
transfer agent, the Corporation) the certificate or certificates therefor, duly
endorsed to the Corporation or in blank, and give written notice to the
Corporation at said office that he or she elects to convert such shares. Shares
of the Convertible Preferred Stock shall be deemed to have been converted
immediately prior to the close of business on the date of surrender of such
shares for conversion in accordance with the foregoing provisions (hereinafter
the "Conversion Date"), and the person or persons entitled to receive Conversion
Shares issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Conversion Shares at such time. As promptly as
practicable after the Conversion Date, the Corporation shall issue and deliver
at said office the certificate or certificates for the number of full Conversion
Shares issuable upon such conversion, together with a cash payment in lieu of
any fraction of a Conversion Share, as hereinafter provided, to the person or
persons entitled to receive the same or to the nominee or nominees of such
person or persons.
(c) The Conversion Price shall be subject to adjustment as follows:
(i) In case the Corporation shall (i) pay a dividend in shares
of any class of its Common Stock to all holders of such class, (ii) make a
distribution in shares of any class of its Common Stock to all holders of such
class, (iii) subdivide any of its outstanding Common Stock into a greater number
of shares, or (iv) combine any of its outstanding Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior thereto shall
be adjusted so that the holder of any shares of Convertible Preferred Stock
thereafter surrendered for conversion shall be entitled to receive that number
of Conversion Shares representing the percentage of all outstanding shares of
Common Stock which the Holder would have owned had such Convertible Preferred
Stock been converted immediately prior to the happening of such event and the
Conversion Price shall be adjusted accordingly. An adjustment made pursuant to
this subsection (i) shall become effective immediately after the record date in
the case of a dividend in shares or distribution and shall become effective
immediately after the effective date in the case of subdivision or combination.
<PAGE>
(ii) In case the Corporation shall issue Equity Equivalents to
all or substantially all holders of any class of its Common Stock or to any
other person (other than the Holders) entitling such person or persons to
subscribe for, purchase or otherwise acquire shares of Common Stock (or
securities in any manner representing the right to acquire Common Stock) at a
price per share that is less than the then Current Market Price per share of
Common Stock (as determined in accordance with subsection (v) below) at the
record date for the determination of shareholders entitled to receive such
Equity Equivalents on the date of issuance thereof or, with respect to issuances
to persons other than Holders, on the issue date, as applicable, the Conversion
Price in effect immediately prior thereto shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to such record date or issue date, as applicable, by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding on such record date or issue date, as applicable, plus the number of
shares which the aggregate offering price of the total number of shares of
Common Stock so offered, (or the aggregate conversion price of the convertible
securities so offered) would purchase at such Current Market Price (as defined
in subsection (iv) below), and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date or issue date, as
applicable, plus the number of additional shares of Common Stock offered (or
into which the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever any Equity Equivalents are
issued, and shall become effective immediately after such record date or such
sale date, as applicable. If at the end of the period during which such Equity
Equivalents are exercisable not all such Equity Equivalents shall have been
exercised, the adjusted Conversion Price shall be readjusted to what it would
have been based upon the number of additional shares of Common Stock actually
issued (or the number of shares of Common Stock issuable upon conversion of
convertible securities actually issued).
(iii) In case the Corporation shall distribute to all or
substantially all holders of any class of Common Stock any shares of capital
stock of the Corporation (other than Common Stock), evidences of indebtedness or
other non-cash assets (including securities of any company other than the
Corporation), or shall distribute to all or substantially all holders of any
class of Common Stock rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in subsection (ii) above), then in each
such case the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the date of such distribution by a fraction of which the numerator
shall be the Current Market Price per share (as defined in subsection (iv)
below) of the Conversion Shares on the record date mentioned below less the fair
market value on such record date (as reasonably determined by the Board of
Directors, whose determination shall be conclusive evidence of such fair market
value) of the portion of the capital stock or assets or evidences of
indebtedness so distributed or of such rights or warrants applicable to one
share of Common Stock (determined on the basis of the number of shares of Common
Stock outstanding on the record date), and of which the denominator shall be the
Current Market Price per share (as defined in subsection (iv) below) of the
Conversion Shares on such record date. Such adjustment shall become effective
immediately after the record date for the determination of shareholders entitled
to receive such distribution.
<PAGE>
Notwithstanding the foregoing, in the event that the
Corporation shall distribute rights or warrants (other than those referred to in
subsection (ii) above) ("Rights") pro rata to holders of any class of Common
Stock, the Corporation may, at its option, in lieu of making any adjustment
pursuant to this Section 9, make proper provision so that each holder of
Convertible Preferred Stock who converts such stock (or any portion thereof)
after the record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such conversion, in
addition to the shares of Conversion Stock issuable upon such conversion, a
number of Rights to be determined as follows: (i) if such conversion occurs on
or prior to the date for the distribution to the holders of Rights of separate
certificates evidencing such Rights (the "Distribution Date"), the same number
of Rights to which a holder of a number of shares of Common Stock equal to the
number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the Rights and
(ii) if such conversion occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares of Common Stock into which the
principal amount of the security so converted was convertible immediately prior
to the Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the Rights.
(iv) For the purpose of any computation under subsections (ii)
and (iii) of this Section 9(c), the current market price (the "Current Market
Price") per Conversion Share on any date shall be deemed to be equal to the
average of the daily closing prices of the Common Stock on the NYSE or, if not
then listed or traded on the NYSE, such other exchange, market or system that
the Common Stock is then listed or traded on for the 10 trading days immediately
prior to the record date or date of issuance with respect to distributions,
issuances or other events requiring such computation under subsection (ii) or
(iii) above; provided that in the case of an underwritten public offering of
Equity Equivalents which are currently traded, the Current Market Price shall be
the closing price of the Common Stock on the issuance date, less an allowance
for a customary discount to the current market trading price which is reasonably
required to effect such offering. The closing price for each day shall be the
closing price on the NYSE or the last reported sales price or, if the Conversion
Shares are not listed or admitted to trading on the NYSE, on the principal
national securities exchange on which the Conversion Shares are listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, the closing sales price of the Conversion Shares as quoted
by NASDAQ or, in case no reported sale takes place, the average of the closing
bid and asked prices as quoted by NASDAQ or any comparable system or, if the
Conversion Shares are not quoted on NASDAQ or any comparable system, the closing
sales price or, in case no reported sale takes place, the average of the closing
bid and asked prices, as furnished by any two members of the National
Association of Securities Dealers, Inc. selected from time to time by the
Corporation for that purpose. If no such prices are available, the Current
Market Price per share shall be the fair value of a Conversion Share as
reasonably determined by the Board of Directors.
<PAGE>
(v) In any case in which this Section 9 shall require that an
adjustment be made following a record date the Corporation may elect to defer
(but only until five Business Days following the mailing by the Corporation to
the holders of the notice of adjustment described in subsection (ix) below)
issuing to the Holder of any Convertible Preferred Stock converted after such
record date the Conversion Shares and other capital stock of the Corporation
issuable upon such conversion over and above the Conversion Shares and other
capital stock of the Corporation issuable upon such conversion only on the basis
of the Conversion Price prior to adjustment; and, in lieu of the shares the
issuance of which is so deferred, the Corporation shall issue or cause its
transfer agents to issue due bills or other appropriate evidence prepared by the
Corporation of the right to receive such shares. If any distribution in respect
of which an adjustment to the Conversion Price is required to be made as of the
record date therefor is not thereafter made or paid by the Corporation for any
reason, the Conversion Price shall be readjusted to the Conversion Price which
would then be in effect if such record date had not been fixed or such effective
date had not occurred.
(vi) NO ADJUSTMENT. No adjustment in the Conversion Price
shall be required unless the adjustment would require an increase or decrease of
at least 1% in the Conversion Price as last adjusted; provided, however, that
any adjustments which by reason of this subsection (vi) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 9 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
No adjustment need be made for a transaction referred to in
paragraph (c)(i), (ii) or (iii) above if all Holders of Convertible Preferred
Stock are entitled to participate in the transaction on a basis and with notice
that the Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of Common Stock participate in the
transaction. The Corporation shall give 30 days prior notice to any transfer
agent and to the Holders of the Convertible Preferred Stock of any such
determination.
No adjustment need be made for (a) issuances of Common Stock
pursuant to a Corporation plan for reinvestment of dividends or interest, (b) a
change in the par value or a change to no par value of the Common Stock and (c)
the issuance of Common Stock to directors, officers and employees of the
Corporation and its subsidiaries pursuant to any stock-based incentive plan duly
approved by the Board of Directors or any duly authorized committee or delegee
thereof.
To the extent that the Convertible Preferred Stock becomes
convertible into the right to receive cash, no adjustment need be made
thereafter as to the cash. Interest will not accrue on the cash.
(vii) ADJUSTMENT FOR TAX PURPOSES. The Corporation shall be
entitled to make such reductions in the Conversion Price, in addition to those
required by other provisions of this Section 9, as it in its discretion shall
determine to be advisable in order that any stock dividends, subdivisions of
shares, distributions of rights to purchase stock or securities or distributions
of securities convertible into or exchangeable for stock hereafter made by the
Corporation to its shareholders shall not be taxable.
<PAGE>
(viii) NOTICE OF ADJUSTMENT. Whenever the Conversion Price is
adjusted, the Corporation shall promptly mail to holders of the Convertible
Preferred Stock and to the transfer agent a notice of the adjustment briefly
stating the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence of the correctness of such adjustment.
(ix) NOTICE OF CERTAIN TRANSACTIONS.
In the event that:
(A) the Corporation takes any action which would
require an adjustment in the Conversion Price;
(B) the Corporation consolidates or merges with, or
transfers all or substantially all of its assets to, another corporation and
shareholders of the Corporation must approve the transaction (excluding the
Delaware Reincorporation); or
(C) there is a dissolution or liquidation of the
Corporation, the Corporation shall mail to holders of the Convertible Preferred
Stock and to any transfer agent a notice stating the proposed record or
effective date, as the case may be. The Corporation shall mail the notice at
least 10 days before such date. Failure to mail such notice or any defect
therein shall not affect the validity of any transaction referred to in clause
(A), (B) or (C) of this Section 9(c)(ix).
<PAGE>
(x) EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE
ON CONVERSION PRIVILEGE. If any of the following (which shall not include the
Delaware Reincorporation) shall occur, namely: (a) any reclassification or
change of Conversion Shares issuable upon conversion of the Convertible
Preferred Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination, or any other change for which an adjustment is provided in (c)(i),
(ii) or (iii) above); (b) any consolidation or merger to which the Corporation
is a party other than a merger in which the Corporation is the continuing
corporation and which does not result in any reclassification of, or change
(other than a change in name, or in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination) in, outstanding shares of Common Stock; or (c) any sale or
conveyance of all or substantially all of the assets of the Corporation as an
entirety, then the Corporation, or such successor or purchasing corporation, as
the case may be, shall, as a condition precedent to such reclassification,
change, consolidation, merger, sale or conveyance, ensure that effective
provision be made in the certificate of incorporation of the resulting or
surviving corporation or otherwise that each holder of Convertible Preferred
Stock then outstanding shall have the right to convert such Convertible
Preferred Stock into the kind and amount of shares of stock and other securities
and property (including cash) receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Conversion Stock deliverable upon conversion of such Convertible Preferred Stock
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance, and that the Conversion Price shall continue to be subject to
adjustment which shall be as nearly equivalent as may be practicable to the
adjustments of the Conversion Price provided for in this Section 9. If in the
case of any such consolidation, merger, sale or conveyance, the stock or other
securities and property (including cash) receivable thereupon by a holder of
Conversion Stock include shares of stock or other securities and property of a
corporation other than the successor or purchasing corporation, as the case may
be, in such consolidation, merger, sale or conveyance, then effective provision
shall also be made in the certificate of incorporation of such other corporation
or otherwise of such additional antidilution provisions as are necessary to
protect the interests of the holders of the Convertible Preferred Stock by
reason of the foregoing. The provisions of this Section 9(c)(x) shall similarly
apply to successive consolidations, mergers, sales or conveyances.
Section 10. REPORTS. So long as the Convertible Preferred Stock remains
outstanding, the Corporation shall cause its annual reports to stockholders and
any quarterly or other financial reports and information furnished by it to
stockholders pursuant to the requirements of the Exchange Act, to be mailed to
the holders of the Convertible Preferred Stock (contemporaneously with the
mailing of such materials to the Corporation's stockholders) at their addresses
appearing on the books of the Corporation. If the Corporation is not required to
furnish annual or quarterly reports to its stockholders pursuant to the Exchange
Act, it shall cause its financial statements, including any notes thereto (and
with respect to annual reports, an auditors' report by a nationally recognized
firm of independent certified public accounts), a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and such other
information which the Corporation would otherwise by required to include in
annual and quarterly reports filed under the Exchange Act, to be mailed to the
holders of the Convertible Preferred Stock, within 120 days after the end of
each of the Corporation's fiscal years and within 60 days after the end of each
of its first three fiscal quarters.
Section 11. SEVERABILITY OF PROVISIONS. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
FORWARD PURCHASE AGREEMENT, dated as of August 9, 1999 by and among
Oak Hill Securities Fund, L.P., a Delaware limited partnership (the "Seller"),
and Oak Hill Securities Fund II, L.P., a Delaware limited partnership (the
"Purchaser").
WHEREAS, on the date hereof, the Seller purchased convertible
preferred stock with a final maturity date of August 15, 2009 in the aggregate
principal amount of $14,800,000 (the "Preferred Stock") issued by American
Skiing Company (the "Company"); and
WHEREAS, the Seller wishes to sell to the Purchaser, and the
Purchaser wishes to purchase from the Seller, on a forward basis, Preferred
Stock having an initial aggregate principal amount of $7,400,000 (the "Acquired
Preferred Stock") upon the terms and subject to the conditions set forth herein;
and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Acquired Preferred Stock": as defined in the recitals.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person.
"Agreement": this Forward Purchase Agreement, as amended,
supplemented or otherwise modified from time to time.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Closing Date": December 20, 1999.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Company": as defined in the recitals.
"Dollars" and "$": dollars in lawful currency of the United States
of America.
<PAGE>
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Purchaser or (b) the validity or enforceability of this Agreement or the
rights or remedies of the Seller hereunder or thereunder.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Preferred Stock": as defined in the recitals.
"Purchaser": as defined in the recitals.
"Requirement of Law": as to any Person, the Certificate of
Incorporation, By-Laws, Certificate of Formation or Limited Liability Company
Agreement or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Seller" as defined in the recitals.
1.2 Other Definitional Provisions. (a) As used herein and in any
certificate or other document made or delivered pursuant hereto, accounting
terms relating to the Purchaser not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not defined, shall have
the respective meanings given to them under GAAP.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. SALE AND PURCHASE
2.1 Purchase and Sale of Acquired Preferred Stock. On the Closing
Date, the Seller agrees that it will sell to the Purchaser, and the Purchaser
agrees that it will acquire from the Seller, the Acquired Preferred Stock upon
the terms and conditions set forth below. The aggregate purchase price of the
Acquired Preferred Stock shall be $7,400,000 PLUS an amount of interest accruing
at the rate per annum of 15% from the date of this Agreement until the Closing
Date (or such other earlier date of the purchase of Acquired Preferred Stock
pursuant to Section 2.3).
2.2 Procedure for Sale and Purchase of the Acquired Preferred Stock.
The sale and purchase of any Acquired Preferred Stock shall take place at a
closing to be held at the offices of Oak Hill Advisors, Inc. at 10:00 a.m. New
York City time on the Closing Date or such other earlier date pursuant to
Section 2.3. At the closing, the Seller shall deliver the applicable Acquired
Preferred Stock to the Purchaser duly endorsed without recourse against delivery
by the Purchaser to the Seller of the purchase price specified herein. Payment
of such purchase price shall be in Dollars by wire transfer.
2.3 Optional Purchase. The Purchaser may, upon not less than one
Business Days' notice to the Seller, purchase any of the Acquired Preferred
Stock, in whole or in part, prior to the Closing Date for such Acquired
Preferred Stock. The purchase price for such Acquired Preferred Stock shall be
determined for such date in accordance with Section 2.4.
2.4 Purchase Price. On any date prior to the Closing Date, the
purchase price to be paid for any Acquired Preferred Stock to be purchased on
that date shall be paid in Dollars and shall be calculated as: the sum of (a)
the initial principal amount of such Acquired Preferred Stock PLUS (b) an amount
determined by: (i) multiplying the total purchase price for the Acquired
Preferred Stock set forth in Section 2.1, as appropriate, less the initial
principal amount of such Acquired Preferred Stock by a fraction, the numerator
of which is the amount of the Acquired Preferred Stock being sold and the
denominator of which is the total aggregate amount of the Acquired Preferred
Stock and then (ii) multiplying such resulting amount by a fraction, the
numerator of which is the number of days since the date hereof until the
purchase date and the denominator of which is the number of days between the
date hereof and the Closing Date.
2.5 Settlement upon Redemption of the Acquired Preferred Stock by
the Company. If the Acquired Preferred Stock is redeemed or required to be
redeemed by the Company prior to the Closing Date, then, to the extent that
proceeds received by the Seller for such redemption are (a) less than the amount
that the Seller would have received pursuant to Section 2.4 had the Acquired
Preferred Stock been purchased on that date pursuant to the terms hereof, then
the Purchaser will forthwith pay the difference to the Seller or (b) more than
the amount that the Seller would have been received pursuant to Section 2.4 had
the Acquired Preferred Stock been purchased on that date, then the Seller will
pay the difference to the Purchaser.
<PAGE>
2.6 Obligations. The obligations of the Purchaser under this
Agreement are absolute and unconditional, and the Purchaser shall be obligated
to pay the purchase price of each Acquired Preferred Stock to be purchased by it
hereunder free and clear of any taxes or other charges and without deduction,
set-off or counterclaim, irrespective of the value, genuineness, legality,
validity, binding effect or enforceability of any Acquired Preferred Stock;
provided that the Seller shall, simultaneously with the payment of the purchase
price of any Acquired Preferred Stock hereunder, deliver such Acquired Preferred
Stock to the Purchaser, duly endorsed without recourse.
2.7 No Obligation to Mitigate, Etc. The Purchaser hereby waives any
right to initiate or raise any action, suit, claim, counterclaim or defense (in
connection with an action for specific performance or otherwise) based upon (i)
any obligation of the Seller or any other Person to mitigate damages, (ii) the
Seller or any other Person having an adequate remedy at law, or (iii) any
differential between the value of any of the Preferred Stock and the purchase
price therefor hereunder. The Purchaser further covenants, to the fullest extent
it may lawfully do so, that it will not at any time insist upon, or plead or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Agreement; and the Purchaser, to
the fullest extent it may lawfully do so, hereby expressly waives all benefit
and advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Seller, but will suffer
and permit the execution of every such power as though no such law had been
enacted. The Purchaser waives diligence, presentment, demand, protest and all
notices whatsoever. The Purchaser acknowledges that if for reasons outside the
control of the Seller the Seller is barred from delivering the Acquired
Preferred Stock to the Purchaser hereunder, the Seller may notify the Purchaser
that the Seller is holding the Acquired Preferred Stock for account of the
Purchaser, whereupon the Acquired Preferred Stock will be deemed to have been
tendered and delivered to, and accepted by, the Purchaser, and the Seller shall
be entitled to proceed against the Purchaser for the purchase price (and the
Seller shall, to the fullest extent permitted by applicable law, be entitled to
specific performance of the Purchaser's obligation to pay the purchase price).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
To induce the Seller to enter into this Agreement, the Purchaser
hereby represents and warrants to the Seller that:
3.1 Existence; Compliance with Law. The Purchaser (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property and to conduct the business in which it
is currently engaged and (c) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
<PAGE>
3.2 Power; Authorization; Enforceable Obligations. The Purchaser has
the power and authority, and the legal right, to make, deliver and perform this
Agreement and to perform the transactions contemplated hereby and has taken all
necessary action to authorize the transactions contemplated hereby on the terms
and conditions of this Agreement and to authorize the execution, delivery and
performance of this Agreement. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with the performance of the transactions
contemplated hereby or with the execution, delivery, performance, validity or
enforceability of this Agreement. This Agreement has been duly executed and
delivered on behalf of the Purchaser. This Agreement constitutes a legal, valid
and binding obligation of the Purchaser enforceable against it in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
3.3 No Legal Bar. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby will not violate any
Requirement of Law.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER
To induce the Purchaser to enter into this Agreement and to purchase
the Acquired Preferred Stock, the Seller hereby represents and warrants to the
Purchaser that:
4.1 Corporate Existence; Compliance with Law. The Seller (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate power and authority, and
the legal right, to conduct the business in which it is currently engaged and
(c) is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, have a Material Adverse
Effect.
4.2 Corporate Power; Authorization; Enforceable Obligations. The
Seller has the corporate power and authority, and the legal right, to make,
deliver and perform this Agreement and to perform the transactions contemplated
hereby and has taken all necessary corporate action to authorize the
transactions contemplated hereby on the terms and conditions of this Agreement
and to authorize the execution, delivery and performance of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the transactions contemplated hereby or with the execution,
delivery, performance, validity or enforceability of this Agreement. This
Agreement has been duly executed and delivered on behalf of the Seller. This
Agreement constitutes a legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
<PAGE>
4.3 No Legal Bar. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby will not violate any
Requirement of Law of the Seller.
4.4 No Recourse. The Purchaser acknowledges and agrees as of the
date hereof and as of the date of the purchase of the Acquired Preferred Stock
hereunder that (i) each sale of any Acquired Preferred Stock hereunder is
without recourse to the Seller, (ii) neither the Seller nor any Person acting
for or on behalf of the Seller, nor any Affiliate of the Seller, has made any
representation or warranty, express or implied, as to the value, genuineness,
legality, validity, binding effect or enforceability of any Acquired Preferred
Stock or the due incorporation, power, authority, creditworthiness or any other
matter with respect to the Company, except that the Seller represents and
warrants to the Purchaser as of the time of the purchase of any Acquired
Preferred Stock hereunder that the Seller has not transferred or created any
lien on or security interest in such Acquired Preferred Stock, (iii) in
purchasing the Acquired Preferred Stock and performing its other obligations
under this Agreement the Purchaser is not relying on any representation or
warranty whatsoever made by or on behalf of the Seller or any Affiliate of the
Seller (other than as expressly stated in clause (ii) above), (iv) the Acquired
Preferred Stock have not been registered under the Securities Act of 1933, as
amended, or any applicable State law, and may not be offered for sale, sold or
otherwise transferred unless registered under said Act and any applicable State
law or pursuant to an exemption from registration thereunder, and (v) it is and
will be purchasing the Acquired Preferred Stock for its own account and not with
a view to any sale or other distribution thereof.
SECTION 5. MISCELLANEOUS
5.1 Amendments and Waivers. Neither this Agreement nor any terms
hereof may be amended, supplemented or modified except in accordance with the
provisions of this subsection. The Seller may, from time to time, (a) enter into
with the Purchaser written amendments, supplements or modifications hereto for
the purpose of adding any provisions to this Agreement or changing in any manner
the rights of the Seller or of the Purchaser hereunder or (b) waive, on such
terms and conditions as the Seller may specify in such instrument or any of the
requirements of this Agreement. Any such waiver and any such amendment,
supplement or modification shall be binding upon the Purchaser and the Seller.
In the case of any waiver, the Purchaser and the Seller shall be restored to
their former positions and rights hereunder.
5.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows:
<PAGE>
(i) IF TO THE SELLER:
201 Main Street, Suite 2600
Fort Worth, TX 76102
Attention: Chuck Irwin
(817) 390-8739
(ii) IF TO THE PURCHASER:
201 Main Street, Suite 2600
Fort Worth, TX 76102
Attention: Chuck Irwin
(817) 390-8739
5.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Seller, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
5.4 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and performance of the transactions contemplated
hereby.
5.5 Payment of Expenses and Taxes. The Purchaser agrees (a) to pay
or reimburse the Seller for all its out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and any other documents
prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Seller, (b) to pay or reimburse the Seller for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement and any such other documents, including, without limitation, the
fees and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to the Seller, (c) to pay, indemnify, and hold the Seller
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or administration
of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect
<PAGE>
of, this Agreement and any such other documents, and (d) to pay, indemnify, and
hold the Seller harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement and any such other documents (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided that the Purchaser shall
have no obligation hereunder to the Seller with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of the
Seller. The agreements in this subsection shall survive performance of the
transactions contemplated hereby.
5.6. Successors and Assigns; Participations and Assignments. This
Agreement shall be binding upon and inure to the benefit of the Purchaser and
the Seller and their respective successors and assigns, except that the
Purchaser may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the Seller.
5.7 Set-Off. In addition to any rights and remedies of the Seller
provided by law, the Seller shall have the right, without prior notice to the
Purchaser, any such notice being expressly waived by the Purchaser to the extent
permitted by applicable law, upon any amount becoming due and payable by
Purchaser hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Seller or any branch or agency
thereof to or for the credit or the account of the Purchaser. The Seller agrees
promptly to notify the Purchaser after any such set-off and application made by
the Seller, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
5.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
5.9 Severability. 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
5.10 Integration. This Agreement represents the agreement of the
Purchaser and the Seller with respect to the subject matter hereof, and there
are no promises, undertakings, representations or warranties by the Seller
relative to subject matter hereof not expressly set forth or referred to herein.
<PAGE>
5.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
5.12 Submission To Jurisdiction; Waivers. The Purchaser hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement to which it is a party, or for
recognition and enforcement of any judgement in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York
located in Manhattan, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Purchaser at its address set forth in this Agreement or at such other address of
which the Seller shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential damages.
5.13 WAIVERS OF JURY TRIAL. THE PURCHASER AND THE SELLER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER PURCHASE DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
its general partner
By: Oak Hill Securities MGP, L.P.,
its general partner
By: /s/ Scott D. Krase
------------------
Scott D. Krase
Vice President
OAK HILL SECURITIES FUND II, L.P.
By: Oak Hill Securities GenPar II, L.P.,
its general partner
By: Oak Hill Securities MGP II, L.P.,
its general partner
By: /s/ Scott D. Krase
------------------
Scott D. Krase
Vice President
