<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 2, 1998
REGISTRATION NO. 333-33369
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SNOWDANCE, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 7011 04-338-3839
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
ROUTE 44
BROWNSVILLE, VERMONT 05037
(802) 484-7000
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
STEVEN H. PLAUSTEINER
CHIEF EXECUTIVE OFFICER
SNOWDANCE, INC.
ROUTE 44
BROWNSVILLE, VERMONT 05037
(802) 484-7000
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
DENNIS N. BERMAN, ESQ. LAWRENCE B. FISHER, ESQ.
SONNENSCHEIN NATH & ROSENTHAL ORRICK, HERRINGTON & SUTCLIFFE LLP
1221 AVENUE OF THE AMERICAS 666 FIFTH AVENUE
NEW YORK, NEW YORK 10020 NEW YORK, NEW YORK 10103
(212) 768-6700 (212) 506-5000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is to be a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for the
same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF NUMBER OF SHARES OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED TO BE REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C>
Common Stock(2)............... 1,725,000shares $11.00 $18,975,000 $ 5,597.63
Representatives' Warrants..... 150,000Warrants(3) $ .001 $ 150 (3)
Common Stock underlying the
Representatives' Warrants
(4)......................... 150,000shares(4) $13.20 $ 1,980,000 $ 584.10
Totals........................ -- -- $20,955,150 $ 6,181.73
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) Includes 225,000 shares of Common Stock subject to the Underwriters'
over-allotment option.
(3) No fee due pursuant to Rule 457(g).
(4) Pursuant to Rule 416, the Registration Statement also covers such additional
shares of Common Stock as may be issued as a result of the anti-dilution
provisions of the Representatives' Warrants.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
SNOWDANCE, INC.
CROSS REFERENCE SHEET SHOWING LOCATION IN THE PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF PART I OF FORM SB-2
<TABLE>
<CAPTION>
FORM SB-2 ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
--------------------------------------------------------------- ------------------------------------------
<C> <S> <C>
1. Front of Registration Statement and Outside Front Cover Page of
Prospectus................................................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of Prospectus........ Inside Front and Outside Back Cover Pages
3. Summary Information and Risk Factors........................... Outside Front Cover Page; Prospectus
Summary; Risk Factors
4. Use of Proceeds................................................ Use of Proceeds
5. Determination of Offering Price................................ Outside Front Cover Page; Risk Factors;
Underwriting
6. Dilution....................................................... Dilution; Risk Factors
7. Selling Security Holders....................................... Not Applicable
8. Plan of Distribution........................................... Underwriting
9. Legal Proceedings.............................................. Business
10. Directors, Executive Officers, Promoters and Control Persons... Management
11. Security Ownership of Certain Beneficial Owners and
Management................................................... Principal Stockholders
12. Description of Securities to be Registered..................... Description of Capital Stock; Underwriting
13. Interest of Named Experts and Counsel.......................... Not Applicable
14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................... Description of Capital Stock
15. Organization Within Last Five Years............................ Prospectus Summary; Business; Certain
Transactions
16. Description of Business........................................ Prospectus Summary; Business
17. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................ Management's Discussion and Analysis of
Financial Condition and Results of
Operations
18. Description of Property........................................ Business
19. Certain Relationships and Related Transactions................. Business; Certain Transactions
20. Market For Common Equity and Related Stockholder Matters....... Outside Front Cover Page; Risk Factors;
Dividend Policy; Description of Capital
Stock; Shares Eligible for Future Sale
21. Executive Compensation......................................... Management
22. Financial Statements........................................... Index to Financial Statements
23. Changes in and Disagreements With Accountants and Financial
Disclosure................................................... Not Applicable
</TABLE>
<PAGE>
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 2, 1998
PROSPECTUS
1,500,000 SHARES
[LOGO]
COMMON STOCK
Snowdance, Inc., a Delaware corporation (the 'Company'), hereby offers
1,500,000 shares of common stock, par value $0.001 per share (the 'Common
Stock'). Prior to this offering (the 'Offering'), there has been no public
market for the Common Stock, and there can be no assurance that such a market
will develop or be sustained after completion of this Offering. It is presently
anticipated that the initial public offering price will be between $10.00 and
$11.00 per share. For information regarding the factors considered in
determining the initial public offering price of the Common Stock, see
'Underwriting.' The Common Stock has been approved for listing on the American
Stock Exchange under the symbol 'SND.'
------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE AND SUBSTANTIAL DILUTION. SEE 'RISK FACTORS'
BEGINNING ON PAGE 7 AND 'DILUTION.'
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share........................................................... $ $ $
Total(3)............................................................ $ $ $
</TABLE>
(1) Does not include compensation payable to Josephthal & Co. Inc.
('Josephthal') and Cruttenden Roth Incorporated ('Cruttenden', which
together with Josephthal are the representatives of the several underwriters
(collectively, the 'Representatives')) in the form of a non-accountable
expense allowance equal to 2.5% of the gross proceeds of this Offering.
Josephthal may be deemed to have a 'conflict of interest' with the Company
as defined by Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. ('NASD'). Therefore, Cruttenden is acting as a
Qualified Independent Underwriter as that term is defined in Rule 2720. See
'Underwriting' for information concerning indemnification and contribution
arrangements with, and other compensation payable to, the Underwriters.
(2) Before deducting estimated expenses of $1,367,500 payable by the Company
which includes the non-accountable expense allowance payable to the
Representatives.
(3) The Company has granted to the Underwriters a 45-day option to purchase up
to an additional 225,000 shares of Common Stock upon the same terms and
conditions as set forth above, solely to cover over-allotments, if any. If
such over-allotment option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ ,
$ , and $ , respectively. See 'Underwriting.'
------------------------
The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by the Underwriters, and
subject to approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify this Offering and to reject any order in whole or in part. It is expected
that delivery of the shares of Common Stock offered hereby will be made against
payment on or about , 1998 at the offices of Josephthal & Co.
Inc., New York, New York.
------------------------
JOSEPHTHAL & CO. INC. CRUTTENDEN ROTH
INCORPORATED
, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
<PAGE>
[Inside Front Cover]
[PHOTOS]
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES
OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE 'UNDERWRITING.'
THE COMPANY WILL FURNISH ITS STOCKHOLDERS WITH ANNUAL REPORTS CONTAINING
AUDITED FINANCIAL STATEMENTS CERTIFIED BY AN INDEPENDENT PUBLIC ACCOUNTING FIRM
AND WILL MAKE AVAILABLE QUARTERLY REPORTS CONTAINING UNAUDITED FINANCIAL
STATEMENTS FOR THE FIRST THREE QUARTERS OF EACH FISCAL YEAR.
2
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise noted, all information in this
Prospectus assumes: (i) that the Underwriters' over-allotment option to purchase
up to 225,000 shares of Common Stock from the Company has not been exercised;
(ii) that the acquisition of Hogback Mountain has been consummated (the 'Hogback
Acquisition'); (iii) that the Representatives' Warrants to purchase 150,000
shares of Common Stock have not been exercised; (iv) that all of the interests
in each of Ascutney Mountain Resort, L.P. and its affiliates, directly or
indirectly, shall have been exchanged for shares of common stock of Snowdance,
Inc. (the 'Combination Transaction') and (v) the conversion of a portion of the
Related Loans (as defined in 'Certain Transactions') to a capital contribution
to the Company. See 'Business -- Business Strategy -- Opportunities For Further
Development,' 'Certain Transactions' and 'Underwriting.'
Unless the context otherwise requires, the term 'Company' refers to (a)
Ascutney Mountain Resort, L.P. and its affiliates, as such entities existed
prior to the consummation of this Offering and the Combination Transaction, when
used with respect to historical information herein contained, and (b) Snowdance,
Inc. and its subsidiary as such entities exist immediately following this
Offering, when used with respect to information about events occurring upon
completion of or after this Offering and the Hogback Acquisition or when giving
pro forma effect thereto.
This Prospectus includes forward-looking statements which involve known and
unknown risks and uncertainties or other factors that may cause actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Factors that might cause such differences include,
but are not limited to, those discussed under the heading 'Risk Factors.' An
investment in the securities offered hereby involves a high degree of risk. See
'Risk Factors.'
THE COMPANY
Snowdance, Inc. owns and operates one of the premier fully-integrated, all
season mountain resorts in New England and further seeks to develop and operate
other fully-integrated year-round recreational resorts focusing on affordable
family vacations. The Company intends to develop resorts that emphasize skiing,
snowboarding and other winter recreational activities as well as warm weather
activities such as golf, tennis and hiking, thereby offering true year-round
amenities. The Company believes that the opportunity to develop and sell the
property surrounding these amenities could provide it with its greatest
potential source of cashflow and income. Such property related development is
expected to include weekly vacation ownership interval ('VOI') sales (also known
as time shares), and may also include condominium construction and sales, and
second home and land sales.
While the Company's strategy is to offer its guests many of the benefits
provided by the larger ski destination resorts, it retains a family-oriented
personal atmosphere. The Company's emphasis on affordable family vacations
permeates most aspects of its business. The Company believes that, as compared
to its competitors, it charges lower fees for the various amenities it offers,
and the prices of its lodging and meals are more reasonable.
To date, the Company has focused its resources on developing its first
fully-integrated family-oriented property, the Ascutney Mountain Resort
('Ascutney' or the 'Resort') located in Brownsville, Vermont. Recently, the
Company agreed to acquire its second property for potential future development
called Hogback Mountain in Marlboro, Vermont. Upon successful implementation of
its strategy at Ascutney, the Company intends to seek other opportunities that
fit its strategy of developing and operating year-round affordable, family
resorts.
ASCUTNEY MOUNTAIN RESORT
Ascutney was ranked among the top three ski resorts in the eastern United
States for value by Skiing magazine in its 1995 survey. It was also ranked one
of the top four ski resorts for families in the
3
<PAGE>
<PAGE>
same survey. Ascutney is a four-season destination resort. Its 750 acres contain
one of Vermont's major ski areas, a 212-room hotel (the fourth largest resort
hotel in Vermont) which is particularly well suited for timeshare sales due to
its large number of suites with lock-out features, an 18,000 square foot
comprehensive sports and fitness center, approximately 30,000 square feet of
conference facilities, several restaurants and condominium units, all set in a
charming New England style village.
While the Resort offers its guests many of the benefits provided by larger
ski facilities, it also retains a family-oriented, friendly atmosphere. The
Company provides a comprehensive destination resort experience by combining
quality ski facilities and resort services, including convenient ski-on/ski-off
lodging, with attractive four season amenities. The Resort attracts guests
primarily due to its affordable family-oriented vacations in a self-contained
resort village with easy accessibility from most major metropolitan areas in the
northeastern United States.
Since 1983, more than $85 million was invested in connection with the
expansion and development of the Resort. The Resort is one of Vermont's 14 major
ski resorts, with a 1,530 foot vertical rise on Mt. Ascutney. The ski area
includes four chairlifts, 31 trails and 115 skiable acres. Snowmaking capability
covers approximately 75% of the skiable terrain. There are approximately 20
miles of cross-country trails which range from open meadows suitable for
beginners to mountain touring trails suitable for more advanced skiers. At the
base of the mountain, tubing, ice skating, children's programs and apres ski
entertainment are available. The Resort's skier days exceeded 53,000 during the
1996-97 ski season, representing an increase of approximately 26% since the
commencement of operations in 1993 under its current management team.
To enhance the marketing and sales of the Resort's real estate, the
Company's expansion plans for the Resort include the development of an 18-hole
golf course with surrounding residential units, as well as additional commercial
development. The Company also plans to continue to enhance the skiing experience
at Ascutney through additional expansion of skiable terrain and upgrades to ski
lifts, snowmaking and grooming.
A key objective of the Company is to begin selling weekly VOIs in its hotel
at the base of Mt. Ascutney. The Company has entered into a marketing and sales
agreement with Westerly Resorts Group, Inc., an experienced VOI developer and
marketer with projects in the Caribbean and Colorado. Marketing of more than
5,000 VOIs in Ascutney's hotel is anticipated to commence in 1998. The Company
believes its hotel is an attractive VOI property due to, among other reasons,
the high number of suites in its hotel (many of which are duplex units), the
presence of existing and planned year-round amenities and Ascutney's proximity
to most major population centers of the Northeast, all of which can be reached
within 2 to 5 hours of driving time. (Air transportation is available at the
Lebanon, New Hampshire airport near Dartmouth College less than 20 miles away.)
HOGBACK MOUNTAIN
Upon closing of this Offering, the Company will acquire substantially all
of the assets of Hogback Mountain ('Hogback Mountain'), which comprises
approximately 800 acres of land located in southern Vermont, approximately 20
miles from the Mt. Snow and Haystack ski areas. The assets of Hogback Mountain
also include buildings whose tenants are currently a restaurant, a gift shop and
a nature museum. As Hogback Mountain offers an unobstructed, panoramic view of
three states and is within 30 minutes driving distance to several ski areas,
golf courses, large lakes, annual music festivals and other attractions, the
Company believes that Hogback Mountain offers attractive development potential.
Hogback Mountain is one of the tallest mountains in southern Vermont and is
situated on both sides of Route 9, a primary east-west thoroughfare in Vermont.
The Company intends to explore possible development opportunities regarding the
land at Hogback Mountain, including an examination of zoning and other
regulatory approvals necessary for any development. The Company also intends to
lease the buildings including the restaurant and gift shop at Hogback Mountain
to the current owner and operator of such businesses, the Vermont Natural
Company.
4
<PAGE>
<PAGE>
As consideration for the purchase of the Hogback Mountain assets, the
Company will issue an aggregate of 292,500 shares of Common Stock to Skyline
Partners, L.P., a New York limited partnership and the owner of the Hogback
Mountain assets. Skyline Partners, L.P. and Vermont Natural Company are
affiliates of Josepththal. See 'Underwriting.'
OTHER POSSIBLE OPPORTUNITIES
The Company believes there are other possible development opportunities
available to it. The Company further believes that there is strong interest in
families seeking affordable vacations in year-round resorts near their primary
residences that offer many of the amenities found at larger destination resorts
but on a friendlier, more personal level. The Company's management team combines
experience in ski resort operation, mountain resort development and finance, and
the Company believes that its management is well suited to carry out its
business strategy.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered......................... 1,500,000 shares
Common Stock to be outstanding after the
Offering................................... 3,000,000 shares(1)
Use of proceeds by the Company............... The Company intends to apply the net proceeds of the Offering to:
upgrades of ski lifts, snowmaking, grooming and trail systems;
hotel and Resort improvements including VOIs; commence
permitting, development and marketing of a golf course and
related Resort real estate; repayment of borrowings; and working
capital and general corporate purposes, including possible
business acquisitions. See 'Use of Proceeds.'
Risk factors................................. This Offering involves a high degree of risk and immediate and
substantial dilution. See 'Risk Factors' and 'Dilution.'
American Stock Exchange Symbol............... SND
</TABLE>
- ------------
(1) Excludes 150,000 shares of Common Stock underlying options available for
future grants under the Company's 1997 Stock Option Plan for Non-Employee
Directors and 40,000 shares of Common Stock underlying options granted
pursuant to an advisory and consulting agreement with Tallwood Associates,
Inc. See 'Management -- Advisory and Consulting Agreement' and
'Management -- 1997 Stock Option Plan for Non-Employee Directors.'
Snowdance, Inc. was incorporated in 1997, as successor to each of Ascutney
Mountain Resort Hotel, L.P., Ascutney Mountain Resort, L.P. and Ascutney
Mountain Resort Realty, L.P. The Company's principal executive offices are
located at Route 44, Brownsville, Vermont 05037, and its telephone number is
(802) 484-7000. The Company maintains a web site at http://www.ascutney.com. The
contents of the Company's web site are not a part of this Prospectus.
5
<PAGE>
<PAGE>
SUMMARY FINANCIAL DATA
The summary financial information set forth below should be read in
conjunction with financial statements appearing elsewhere in this Prospectus.
The summary historical financial data presented below has been derived from the
Company's financial statements. The unaudited pro forma and as adjusted summary
financial data are derived from the unaudited pro forma and as adjusted
financial data presented elsewhere in this Prospectus. The statement of
operations data for the nine-month period ended September 30, 1997 is not
necessarily indicative of the results of operations that may be expected for the
full year.
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL HISTORICAL PRO FORMA HISTORICAL NINE MONTHS NINE MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED SEPTEMBER 30, ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, ----------------------- SEPTEMBER 30,
1995 1996 1996(1) 1996 1997 1997(1)
------------ ------------ ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................. $3,866,418 $3,983,218 $ 3,983,218 $2,863,429 $2,976,014 $ 2,976,014
Net loss.................................. (576,689) (1,500,819) (1,500,819 ) (1,017,921) (541,185) (541,185)
Weighted average shares outstanding....... 1,207,500 1,207,500 1,500,000 1,207,500 1,207,500 1,500,000
Loss per common share..................... $(.48) $(1.24) $(1.00 ) $(.84) $(.45) $(.36)
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA AS ADJUSTED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1997(2) 1997(3)
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.............................................. $1,589,366 $ 1,551,027 $ 4,622,277 $16,700,277
Long-term debt............................................ 2,481,025 2,219,109 1,038,542 1,038,542
Total liabilities......................................... 3,638,521 4,066,142 2,885,575 1,683,575
Stockholders' equity (deficit)............................ (2,049,155) (2,515,115) 1,736,702 15,016,702
</TABLE>
- ------------
(1) Pro forma to give effect to (i) the Hogback Acquisition and (ii) the
conversion of a portion of the Related Loans (as defined in 'Certain
Transactions') to a capital contribution to the Company as if such
transactions had occurred on January 1, 1996.
(2) Pro forma to give effect to (i) the Hogback Acquisition and (ii) the
conversion of a portion of the Related Loans to a capital contribution to
the Company as if such transactions had occurred on September 30, 1997.
(3) As adjusted to give effect to the closing of the Offering and the
application of the estimated net proceeds therefrom as if the Offering had
occurred on September 30, 1997, as well as to give effect to the
transactions described in footnote (2) above.
6
<PAGE>
<PAGE>
RISK FACTORS
An investment in the securities offered hereby is speculative in nature and
involves a high degree of risk. Each prospective purchaser of the Common Stock
should carefully consider the following risk factors, as well as the other
information contained, and incorporated by reference, in this Prospectus before
making an investment decision. Information contained or incorporated by
reference in this Prospectus contains 'forward-looking statements' which can be
identified by the use of forward-looking terminology such as 'believes,'
'expects,' 'intends,' 'may,' 'will,' 'should' or 'anticipates' or the negative
thereof or other variations thereon or comparable terminology, or by discussions
of strategy or plans. See, e.g., 'Business -- Business Strategy.' No assurance
can be given that the future results covered by the forward-looking statements
will be achieved. The following matters constitute cautionary statements
identifying important factors with respect to such forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
vary materially or adversely from the future results covered in such
forward-looking statements. Factors that could cause actual results to vary
materially or adversely from the future results covered in such forward-looking
statements include, but are not limited to, those discussed below as well as
those discussed elsewhere in the Prospectus.
Limited Operating History; Significant and Continuing Losses. The Company
was formed in August 1993 in connection with the purchase of the assets of the
Ascutney Mountain Resort in an auction by the United States Bankruptcy Court for
the District of Vermont in accordance with Chapter 7 of the United States
Bankruptcy Code. The Ascutney Mountain Resort was purchased by three limited
partnerships, the predecessors in interest to the Company: Ascutney Mountain
Resort Hotel, L.P., Ascutney Mountain Resort, L.P. and Ascutney Mountain Resort
Realty, L.P. (collectively, the 'Limited Partnerships'). The Resort has only
operated under current management since September 1993 and, accordingly, the
Company has a limited operating history upon which an evaluation of the
Company's performance and prospects can be made. Since the inception of the
Limited Partnerships, the predecessors in interest to the Company, significant
annual losses have been incurred, including losses of $576,689 and $1,500,819,
for the years ended December 31, 1995 and 1996, respectively, and $541,185 for
the nine months ended September 30, 1997. It is possible that losses and
negative cash flow will continue until such time, if ever, as the Company is
able to generate sufficient revenues to offset its operating costs. The
Company's prospects must be considered in light of the numerous risks, expenses,
delays, problems and difficulties frequently encountered in the establishment of
a new business, particularly in an industry characterized by vigorous
competition. To address these risks, the Company must, among other things,
establish and increase market acceptance of its products and services, respond
effectively to competitive pressures and successfully market its products and
services. There can be no assurance that the Company will generate significant
revenues or maintain profitable operations. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and Financial
Statements.
Seasonality of Operations. Ski resort operations are highly seasonal. In
fiscal 1996 approximately 56% of the Company's operations revenue was generated
in the months of January, February, March and December, with approximately 44%
generated during the period from April to November. Furthermore, a significant
portion of operations revenue is generated on certain holidays, particularly
Christmas, President's Day and school spring breaks, and on weekends. Problems
during these peak periods, such as adverse weather conditions and equipment
failures, could have a material adverse effect on the Company's business,
financial condition and results of operations. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations.'
Unfavorable Weather Conditions. The Company's ability to attract visitors
to the Resort is substantially influenced by weather conditions and the amount
of snowfall during the ski season. Adverse weather conditions typically
discourage visitors from participating in outdoor activities at the Resort. In
addition, unseasonably warm weather may result in inadequate snowfall, which
increases the cost of snowmaking, and could render snowmaking wholly or
partially ineffective in maintaining quality skiing conditions. Prolonged
periods of adverse weather conditions, or the occurrence of such conditions
during peak periods of the ski season, could have a material adverse effect on
the Company's business, financial condition and results of operations.
7
<PAGE>
<PAGE>
Economic Downturn. Both skiing and golf are discretionary recreational
activities with relatively high participation costs. An economic downturn could
reduce spending on resort vacations and result in declines in the number of ski
visitors and revenues per visit at the Resort. A decrease in Resort visitors may
also result in a decrease in demand for Resort real estate. There can be no
assurance that an economic downturn will not have a material adverse effect on
the Company's business, financial condition and results of operations.
Uncertainty of Development of Vacation Ownership Intervals and Golf Course
Development. The Company's strategy is designed, in large part, to increase and
balance year-round utilization and to enhance real estate values at the Resort.
Accordingly, the Company's success will depend, in large part, upon its ability
to develop a more comprehensive resort experience beyond its ski operations,
including the development of vacation ownership intervals ('VOIs') at its
Resort. In connection with such efforts, the Company is expected to be largely
dependent upon an experienced developer and operator of resort real estate. The
Company has entered into a marketing and sales agreement (the 'Joint Venture')
with Westerly Resorts Group, Inc. (the 'Joint Venture Partner'), an experienced
VOI developer and marketer with projects in the Caribbean and Colorado. There
can be no assurance that the Company will sell any VOIs or construct any
additional units, nor can there be any assurance that vacation ownership
operations would be suitably developed and commenced in a timely manner or that
the Company would realize any benefits from such an operation or that the Joint
Venture Partner will not default on any of its obligations. See
'Business -- Vacation Ownership Program.' The Company's business strategy also
includes the possible development and construction of a golf course. Although
the previous owner of the Resort had obtained a conceptual Land Use Permit under
Vermont's principal environmental law, Act 250, for a golf course at the Resort,
no design or formal development program has commenced or previously commenced
for such golf course nor have any current permits been obtained. The conceptual
Land Use Permit formerly received under Act 250 has expired. Accordingly, there
can be no assurance that the Company will develop a golf course in a timely
manner, upon acceptable terms favorable to the Company or at all. See
'Business -- Regulation and Legislation.'
Vacation Ownership Industry Operating Risks. 'The Company, through the
Joint Venture, intends to commence the sale of VOIs in the Resort's hotel,
designed to increase destination visitors to the Resort and increase total
Resort revenue. Accordingly, the Joint Venture's business is expected to be
subject to all of the operating risks inherent in the vacation ownership
industry. These risks include, but are not limited to, the possibility of an
oversupply of VOIs, a reduction in demand for VOIs, changes in travel and
vacation patterns, changes in governmental regulation of the vacation ownership
industry and increases in taxes or construction costs for new construction, as
well as negative publicity concerning the industry generally. The vacation
ownership industry is highly fragmented, containing a large number of
developers. In the past, the vacation ownership industry as a whole has
experienced a negative image as a result of various developers employing high
pressure sales and marketing tactics, constructing low quality units and
engaging in other potentially misleading practices. Consequently, negative
publicity with respect to any one or more developers in the vacation ownership
industry could have a disproportionate effect on all of the developers and
marketers in the industry.
Risks of Joint Venture Operations. The Company's Joint Venture Partner may
from time to time have economic or business interests or goals which are
inconsistent with the business interests or goals of the Company. Further, the
Company may be required to consider the interests of such Joint Venture Partner
in connection with decisions concerning the operations of the Joint Venture. In
addition, the Company also faces the risks that its Joint Venture Partner may be
unable to meet its economic or other obligations and that the Company may be
required or choose to fulfill those obligations.
Inexperience of the Company in Vacation Ownership Industry. As part of the
Company's business strategy, the Company, through the Joint Venture, plans on
entering a line of business that is not currently part of its core business. As
a result, the Company, with its Joint Venture Partner, may co-manage the
development of a VOI program constituting a line of business in which the
Company has not previously participated. Although the Company entered into the
Joint Venture with the Joint Venture Partner in order to mitigate risks
associated with the VOI program, the arrangement is expected to require the
significant involvement of the Company's senior management and also involve the
investment of additional capital. The Company's senior management has no
experience in the
8
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vacation ownership industry. There can be no assurance that the Company will
successfully implement its VOI program. See 'Business -- Business Strategy.'
Growth Initiatives. The Company is currently engaged in and has plans for a
variety of development projects relating to the Resort's ski and hotel
operations as well as real estate operations. Additionally, the Company intends
to explore possible development projects regarding the land at Hogback Mountain.
There can be no assurance (i) as to when or whether such projects will be
completed, (ii) that the Company's estimated costs associated with such projects
will prove to be accurate, (iii) that the Company will receive the expected
benefits from such projects, or (iv) that the Company will receive the necessary
regulatory approvals for such projects. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and
'Business -- Business Strategy.'
Capital Expenditures and Possible Need for Additional Capital. The Company
operates in a capital intensive industry and requires significant capital
expenditures to maintain its competitive position. The Company expects to make
significant capital expenditures in the future to enhance and maintain the
operations of the Resort and to develop its real estate holdings. The Company
anticipates that, based on its present plans, the net proceeds of this Offering,
when combined with the Company's existing capital resources and anticipated
revenues from operations, will be sufficient to enable it to maintain its
current and planned operations for a period of at least 12 months after
consummation of this Offering. In the event that the Company's plans change or
its assumptions change or prove to be inaccurate or if the net proceeds of this
Offering or cash flow prove to be insufficient (due to unanticipated expenses or
otherwise), the Company may seek to minimize cash expenditures and/or obtain
additional financing in order to support its plan of operations. Additional
funding, whether obtained through public or private debt or equity financings,
or from strategic alliances, may not be available when needed or may not be
available on terms acceptable to the Company, if at all. Additional financings
may result in dilution to existing stockholders. Failure to secure needed
additional financing, if and when needed, may have a material adverse effect on
the Company's business, financial condition and results of operations.
Furthermore, at such time, when and if the Company should decide to purchase an
additional resort or property, the Company may require significant amounts of
additional capital in order to consummate any such transaction. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources' and 'Business -- Business
Strategy.'
Risks Associated with Possible Development Opportunities. Upon the
successful implementation of its strategy at Ascutney, the Company intends to
seek additional acquisition opportunities, some of which may be material. Future
acquisitions could be financed through a combination of internally generated
funds, bank borrowings, public offerings or private placements of equity (which
may cause dilution to existing holders of capital stock of the Company) or debt
securities, the combination of which will depend on the size of the acquired
resort or property and the Company's capital structure at the time of an
acquisition. However, there can be no assurance that attractive acquisition
candidates will be identified, that the Company will be able to make additional
acquisitions on terms favorable to it, that necessary financing will be
available on suitable terms, if at all, or that such acquisitions will be
permitted under applicable law. If the Company completes any acquisitions, it
will encounter various associated risks, including the possible inability of the
Company to integrate the acquired business into the Company's operations,
increased goodwill amortization and the possibility of significant losses during
the start-up phase of a new resort that could negatively impact the Company's
earnings. Significant management resources and time may be required to develop
and operate any acquired resorts or property and unanticipated problems or
liabilities with respect to such resorts or properties may further divert
management's attention from the Company as a whole, which could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Competition in the Ski Resort Industry. The industry in which the Company
operates is highly competitive. The Resort competes for both destination and day
skiers with other mountain resorts in the United States, Canada and Europe,
including other ski resorts in Vermont (many of which have greater financial
resources, greater name recognition and a greater share of the market). The
competitive position of the Resort is dependent upon many variables, including
location and accessibility, quality of snow conditions and terrain, extent and
quality of Resort facilities, quality of
9
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<PAGE>
service, price for services and nature of reputation. There can be no assurance
that the Company's principal competitors will not be successful in capturing a
share of the Company's present or potential customer base. The Company also
faces competition for destination visitors from other leisure industry
companies. Such competitors may be better positioned to withstand adverse
weather or economic conditions and they may have greater financial resources to
develop new attractions. With respect to day skiers, the Resort faces
competition from alternative recreational activities, many of which have lower
participation costs. See 'Business -- Competition.'
Control by Principal Stockholders. Following the Offering, Steven and Susan
Plausteiner, the Company's Chief Executive Officer and Chief Financial Officer,
respectively (the 'Principal Stockholders') will collectively beneficially own
or control (via proxy or otherwise) approximately 50% of the Company's
outstanding shares of Common Stock, giving the Principal Stockholders
approximately 50% of the combined voting power with respect to all matters
submitted for a vote of all stockholders. Subsequent to the closing of the
Offering, the Principal Stockholders will collectively be able to significantly
influence the election of the Board of Directors of the Company, the approval of
matters requiring approval by the Board of Directors and decisions on matters
submitted for stockholder consideration. This concentration of ownership under
certain circumstances could have the effect of delaying or preventing a change
in control of the Company. See 'Underwriting.'
Dependence on Key Employees. The success of the Company depends
significantly on its senior management, including Steven Plausteiner, the
Company's Chairman and Chief Executive Officer, Susan Plausteiner, the Company's
Chief Financial Officer, and Dusan Plausteiner, the Company's Chief Operating
Officer. Although the Company will have entered into employment agreements prior
to the consummation of the Offering with the Company's Chief Executive Officer
and the Chief Financial Officer, there can be no assurance that such individuals
will continue in their respective capacities with the Company for any particular
period of time. See 'Management -- Employment Agreements.' The unanticipated
departure of any key member of the Company's management team could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the Company does not have, and does not
contemplate securing, 'key-man' life insurance for any of its key employees. The
Company's future success also depends on its ability to attract and retain
additional highly qualified personnel experienced in the industry. Competition
for qualified personnel is intense and there can be no assurance that the
Company will be able to attract or retain personnel in the future. See
'Management.'
Permits and Regulatory Matters. The Company is subject to various laws and
regulations relating to the operation of its Resort and related activities,
which are administered by numerous federal, state and local governmental
agencies. In particular, development of the Company's property in Vermont is
subject to comprehensive Vermont environmental legislation, commonly referred to
as Act 250, as well as other state administrative regulations. This regulatory
framework, in general, encompasses such areas as water quantity and quality, air
quality, traffic considerations, availability of municipal services, use of
natural resources, impact of growth, energy conservation and utility services,
conformity with local and regional plans, and public building approvals,
together with a number of other safety and health regulations. Additionally,
each municipality has its own planning and zoning requirements. Permits and
approvals mandated by such regulation for development of any magnitude are often
numerous, significantly time-consuming and onerous to obtain and not guaranteed.
The permit processes are administered by numerous state, regional and local
boards and agencies with independent jurisdictions. Permits, when received, are
subject to appeal or collateral attack and, in some cases, are of limited
duration, after which review is necessary. These requirements have a direct
bearing on the ability of the Company or others to further develop their resorts
in Vermont. While the Company believes that its operations are in full
compliance in all material respects with applicable federal, state and local
requirements, the Company's growth and development opportunities in Vermont may
be limited and more costly as a result of legislative, regulatory or municipal
requirements. In particular, to further expand the Resort's ski operations to
the peak of Mt. Ascutney, the Company would be required to lease land from
either the State of Vermont and/or the Town of West Windsor. Under the terms of
such lease, either the Vermont Department of Forests and Parks or the Town of
West Windsor or both would be expected to have the right to review and comment
on the location, design and construction of improvements on the leased land and
on many operational matters. If the Company does enter into
10
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<PAGE>
such a lease, a termination of the lease could have a material adverse effect on
the Company's business, financial condition and results of operations. See
'Business -- Regulation and Legislation.'
Regulation of Marketing and Sales of Vacation Ownership Intervals. The
marketing and sales of VOIs and related operations are subject to extensive
regulation by the federal government and states in which the Joint Venture's
VOIs are expected to be marketed and sold. The federal government and many
states have adopted specific laws and regulations regarding the sale of VOIs,
telemarketing and certain of the Joint Venture's other potential related
activities. However, no assurance can be given that the cost of complying with
laws and regulations in all jurisdictions in which the Joint Venture may conduct
sales of VOIs would not be significant, would not impair the cost-effectiveness
of the marketing programs, or that the Joint Venture would in fact be in
compliance with all applicable laws and regulations. See 'Business -- Regulation
and Legislation.'
Competition in Vacation Ownership Intervals. As the Joint Venture develops
its marketing plan of VOIs, the Joint Venture may experience significant
competition for customers and for qualified personnel from other entities
engaged in the business of resort development, sales and operations, including
vacation interval ownership, condominiums, hotels and motels. Many well-known
lodging, hospitality and entertainment companies have begun to develop and sell
VOIs in resort properties, including ski resorts and other vacation resorts.
While many of the companies have targeted a different market segment than the
Company's market segment, there can be no assurance that the Company and those
companies will not compete on a direct or indirect basis or more broadly. In
such event, the Company will be required to compete with companies that may have
significantly greater resources. See 'Business -- Competition.'
Uncertainty of Adequacy of Insurance Coverage. The Company is insured
against property damage, business interruption and general liability. There can
be no assurance that such insurance will remain available to the Company at
commercially reasonable rates or that the amount of such coverage will be
adequate to cover any liability incurred by the Company. If the Company is held
liable for amounts exceeding the limits of its insurance coverage or for claims
outside the scope of that coverage, its business, financial condition and
results of operations could be materially adversely affected.
Potential Conflict of Interest of Josephthal. Under Rule 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc. ('NASD'),
Josephthal may be deemed to be an 'affiliate' of the Company and to have a
'conflict of interest' with the Company by virtue of the fact that affiliates of
Josephthal may be deemed to beneficially own approximately 10% of the voting
stock of the Company as a result of the consummation of the Hogback Acquisition.
See 'Underwriting.'
Ongoing Influence of the Representatives. Upon completion of the Offering,
(a) Josephthal and its affiliates will have beneficial ownership of 292,500
shares of Common Stock of the Company, (b) the Representatives will hold in the
aggregate warrants to purchase 150,000 shares of the Common Stock of the Company
and (c) Dan Purjes, Chairman and CEO of Josephthal will serve as a Director of
the Company. Josephthal also is the exclusive financial advisor of the Company
in connection with the Company's discussions and negotiations with timeshare
developers. These factors may result in the Representatives having significant
influence over the Company and/or result in the Company having difficulty
engaging any other investment advisor or underwriter which may result in the
failure of the Company to secure additional financing if and when needed and
therefore may have a material adverse effect on the Company's business,
financial condition and results of operations. See 'Underwriting.'
No Prior Public Market; Possible Volatility of Stock Price. Prior to the
Offering, there has been no public market for the Common Stock, and no assurance
can be given that an active public market for the Common Stock will develop or
be sustained after the Offering. Since there has been no active public market,
the initial public offering price may not bear any relationship to the actual
value of the Common Stock. The initial public offering price per share of the
Common Stock was determined by negotiations between the Company and the
Representatives, in accordance with the recommendation of the Qualified
Independent Underwriter, and is not necessarily related to the Company's asset
value, net worth or other established criteria of value, and may not be
indicative of the prices that will prevail in the public market. The Company
believes that there are relatively few comparable companies that have
publicly-traded equity securities which may also impact the trading price of the
Common Stock after the Offering. See 'Underwriting.' In addition, the stock
market has from time to time experienced price
11
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<PAGE>
and volume fluctuations that are often unrelated to the operating performance of
particular companies. The market price of the Common Stock, similar to that of
securities of other developing companies, may be highly volatile. The market
price of the Common Stock could be subject to significant fluctuations in
response to the Company's operating results and other factors, and there can be
no assurance that the market price of the Common Stock will not decline below
the initial public offering price.
Shares Eligible for Future Sale. Upon completion of this Offering, the
Company will have 3,000,000 shares of Common Stock outstanding. The 1,500,000
shares of Common Stock sold in this Offering will be freely tradeable without
restriction under the Securities Act of 1933, as amended (the 'Securities Act'),
except for any shares which may be purchased by an 'affiliate' of the Company.
The Company and the Company's officers, directors and existing stockholders have
agreed not to, directly or indirectly, offer to sell, sell, transfer,
hypothecate or otherwise encumber any shares of Common Stock or securities
convertible into Common Stock for a period of nine (9) months following the date
of the final Prospectus without the prior written consent of Josephthal and the
Company (except Skyline Partners, L.P., which has agreed, in connection with
those shares issued in connection with the Hogback Acquisition, not to, directly
or indirectly, offer to sell, sell, transfer, hypothecate or otherwise encumber
226,436 shares of Common Stock, representing those shares beneficially owned by
principals and employees of Josephthal, for a period of twenty four (24) months,
and 66,064 shares of Common Stock, representing those shares owned by
individuals not affiliated with Josephthal for a period of thirteen (13) months
without the prior written consent of the Company). Upon consummation of the
Offering, Skyline Partners, L.P. has agreed to grant an irrevocable proxy to the
Principal Stockholders allowing them to vote the respective number of shares of
Common Stock set forth above held by Skyline Partners, L.P. for the respective
periods of time during which the above restrictions apply. After nine (9) months
1,207,500 of the shares subject to the restrictions above, after thirteen (13)
months an additional 66,064 of the shares subject to the restrictions above, and
after twenty four (24) months an additional 226,436 of the shares subject to the
restrictions above will be eligible for sale in the public market pursuant to
Rule 144 under the Securities Act, subject to volume limitations and other
restrictions contained in Rule 144. No prediction can be made as to the effect,
if any, that future sales of shares, or the availability of shares for future
sale, will have on the market price of the Common Stock from time to time. Sales
of substantial amounts of Common Stock in the public market, or the perception
that such sales could occur, could adversely affect prevailing market prices for
the Common Stock and could impair the Company's ability to raise additional
capital through an offering of its equity securities. See 'Shares Eligible for
Future Sale.'
Potential Adverse Effect of Representatives' Warrants. At the consummation
of this Offering, the Company will sell to the Representatives for nominal
consideration the Representatives' Warrants to purchase 150,000 shares of Common
Stock (the 'Representatives' Warrants'). The Representatives' Warrants will be
exercisable for a period of four years commencing one year from the date of this
Prospectus at an exercise price equal to 120% of the initial public offering
price per share of Common Stock. For the term of the Representatives' Warrants,
the holders thereof will have, at nominal cost, the opportunity to profit from a
rise in the market price of the Common Stock without assuming the risk of
ownership, with a resulting dilution in the interest of other security holders.
As long as the Representatives' Warrants remain unexercised, the Company's
ability to obtain additional capital might be adversely affected. Moreover, the
holders of the Representatives' Warrants may be expected to exercise such
Warrants at a time when the Company would, in all likelihood, be able to obtain
any needed capital through a new offering of its securities on terms more
favorable than those provided by the Representatives' Warrants. See
'Underwriting.'
Possible Adverse Effects of Authorization of Preferred Stock; Anti-takeover
Provisions. The Company's Certificate of Incorporation authorizes the issuance
of 100,000 shares of 'blank check' preferred stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Company's Common Stock. In the event of issuance,
the preferred stock could be utilized, under certain circumstances, as a method
of discouraging, delaying or preventing a change in control of the Company.
Although the Company has
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no present intention to issue any shares of its preferred stock, there can be no
assurance that the Company will not do so in the future. The issuance of such
preferred stock could make the possible takeover of the Company or the removal
of management of the Company more difficult, discourage hostile bids for control
of the Company in which stockholders may receive premiums for their shares of
Common Stock or otherwise dilute the rights of holders of Common Stock and the
market price of the Common Stock.
Dividends. The Company has not paid any cash dividends on its Common Stock
and does not anticipate paying any cash dividends in the foreseeable future.
Additionally, under the terms of the Company's loan agreement with the Vermont
Economic Development Authority ('VEDA'), the Company may not make distributions,
except certain distributions with respect to the offset of income tax
liabilities, without the consent of VEDA. See 'Dividend Policy.'
Dilution. The assumed initial offering price of $10.50 is substantially
higher than the net tangible book value per share of Common Stock. Investors
purchasing shares of Common Stock in this Offering will incur immediate and
substantial dilution of approximately $5.49 (52%) per share of Common Stock from
the assumed initial public offering price (approximately $5.11 (49%) per share
if the Underwriters' over-allotment option is exercised in full). In the event
the Company issues additional Common Stock in the future, investors of Common
Stock pursuant to this Offering may experience further dilution. See 'Dilution.'
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USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the shares
of Common Stock offered hereby are estimated to be approximately $13,280,000
($15,418,063 if the Underwriters' over-allotment option is exercised in full)
based on an assumed initial public offering price of $10.50 per share, after
deducting underwriting discounts and commissions and estimated offering expenses
payable by the Company. The table below sets forth the intended application of
net proceeds of the Offering, the approximate dollar amount of such application
and the percentage of net proceeds of the Offering allocable to each intended
application.
<TABLE>
<CAPTION>
APPROXIMATE
APPROXIMATE PERCENTAGE OF
APPLICATION OF PROCEEDS DOLLAR AMOUNT NET PROCEEDS
- ------------------------------------------------------------------------ ------------- -------------
<S> <C> <C>
Upgrades of ski lifts, snowmaking, grooming and trail systems........... $ 3,000,000 23%
Hotel and Resort improvements including VOIs............................ 2,500,000 19%
Purchase of mountain equipment and vehicles............................. 500,000 4%
Commence permitting, development and marketing of a golf course and
related Resort real estate............................................ 3,000,000 23%
Preliminary feasibility study and development of Hogback Mountain....... 250,000 2%
Repayment of borrowings................................................. 2,000,000 15%
Working capital and general corporate purposes, including possible
business acquisitions and internal financing of VOI receivables....... 2,030,000 15%
------------- ---
Total.............................................................. $13,280,000 100%
------------- ---
------------- ---
</TABLE>
The foregoing represents the Company's best estimate of its allocation of
the net proceeds of this Offering based upon the current status of its business
operations, its current plans and current economic and industry conditions.
Future events as well as changes in economic or competitive conditions or the
Company's business and the results of the Company's sales and marketing
activities may make shifts in the allocation of funds within or between each of
the items referred to above, or to new or other applications, necessary or
desirable. Furthermore, from time to time, the Company may evaluate possible
acquisitions of or investments in businesses, assets, products and technologies
that are complementary to those of the Company, for which a portion of the net
proceeds from this Offering may be used. The Company has no plans, commitments
or agreements with respect to any such investments or acquisitions, except as
set forth in this Prospectus.
In the event the Underwriters exercise the over-allotment option, the
Company will use the additional net proceeds for general corporate purposes.
The Company anticipates, based on its present plans and assumptions
relating to its operations, that the net proceeds of this Offering, when
combined with the Company's existing capital resources and anticipated revenues
from operations, will be sufficient to enable it to maintain its current and
planned operations for a period of at least 12 months after the consummation of
this Offering. In the event that the Company's plans change or its assumptions
change or prove to be inaccurate or if the net proceeds of this Offering or cash
flow prove to be insufficient (due to unanticipated expenses or otherwise), the
Company may seek to minimize cash expenditures and/or obtain additional
financing in order to support its plan of operations. However, there can be no
assurance that additional financing will be available to the Company when needed
or on terms acceptable to the Company, if at all. See 'Risk Factors -- Capital
Expenditures and Possible Need for Additional Capital.'
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DIVIDEND POLICY
The Company intends to retain all future earnings for the operation and
expansion of its business and does not anticipate paying any cash dividends on
the Common Stock in the foreseeable future. Any future determination as to the
payment of cash dividends will depend on a number of factors, including future
earnings, results of operations, capital requirements, the financial condition
and prospects of the Company and any restrictions under credit agreements
existing from time to time, as well as such other factors as the Board of
Directors may deem relevant. No assurance can be given that the Company will pay
any dividends in the future. Under the terms of the Company's loan agreement
with VEDA, the Company may not make distributions, except certain distributions
with respect to the offset of income tax liabilities, without the consent of
VEDA.
DILUTION
The difference between the initial public offering price per share of
Common Stock and the pro forma net tangible book value per share after this
Offering constitutes the dilution to investors in this Offering. Net tangible
book value per share is determined by dividing the net tangible book value of
the Company (total tangible assets less total liabilities) by the number of
outstanding shares of Common Stock.
At September 30, 1997, the net tangible book value of the Company, after
giving effect to the Combination Transaction, the Hogback Acquisition and the
conversion of a portion of the Related Loans (as defined in 'Certain
Transactions') to a capital contribution to the Company was $1,736,702, or $1.16
per share. After giving effect to the Combination Transaction, the Hogback
Acquisition, the conversion of a portion of the Related Loans (as defined in
'Certain Transactions') to a capital contribution to the Company and the sale of
1,500,000 shares of Common Stock offered hereby at an assumed initial public
offering price of $10.50 per share and deducting underwriting discounts and
estimated expenses (including the non-accountable expense allowance payable to
the Representatives) of the Offering, the pro forma net tangible book value of
the Company as of September 30, 1997 would have been $15,016,702, or $5.01 per
share. This represents an immediate increase in net tangible book value of $3.85
per share to the existing stockholders and an immediate dilution of $5.49 (52%)
per share to new investors. The following table illustrates this dilution, on a
per share basis:
<TABLE>
<S> <C> <C>
Assumed initial public offering price of Common Stock................................. $10.50
------
Net tangible book value before Offering.......................................... $1.16
Increase attributable to new investors........................................... 3.85
-----
Pro forma net tangible book value after Offering...................................... 5.01
------
Total dilution to new investors....................................................... $ 5.49
------
------
</TABLE>
If the Underwriters' over-allotment option is exercised in full, the as
adjusted net tangible book value per share after the Offering would be $5.39 and
dilution per share to new investors in the Offering would be $5.11 (49%).
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CAPITALIZATION
Set forth below is the capitalization of the Company at September 30, 1997,
after giving pro forma effect to the Hogback Acquisition and the conversion of a
portion of the Related Loans to a capital contribution to the Company and as
adjusted to reflect the closing of the Offering and the application of the
estimated net proceeds therefrom.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
Long-term debt, excluding current installments............. $ 2,219,109 $ 1,038,542 $ 1,038,542
Stockholders' equity (deficit):
Preferred Stock, $.01 par value; 100,000 shares
authorized; none issued and outstanding............. -- -- --
Common Stock, $0.001 par value; 4,900,000 shares
authorized; 1,207,500 shares issued and outstanding
(actual), 1,500,000 shares issued and outstanding
(pro forma) and 3,000,000 shares issued and
outstanding (as adjusted)(1)........................ 1,208 1,500 3,000
Additional paid in capital................................. 1,125,225 5,376,750 18,655,250
Accumulated deficit........................................ (3,641,548) (3,641,548) (3,641,548)
----------- ----------- -----------
Total stockholders' equity (deficit).................. (2,515,115) 1,736,702 15,016,702
----------- ----------- -----------
Total capitalization............................. $ (296,006) $ 2,775,244 $16,055,244
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ------------
(1) Excludes 150,000 shares of Common Stock underlying options available for
future grants under the Company's 1997 Stock Option Plan for Non-Employee
Directors and 40,000 shares of Common Stock underlying options granted
pursuant to an advisory and consulting agreement with Tallwood Associates,
Inc. See 'Management -- Advisory and Consulting Agreement' and
'Management -- 1997 Stock Option Plan for Non-Employee Directors.'
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SELECTED FINANCIAL DATA
The following table sets forth selected financial information for the
Company for the periods and at the dates indicated. The selected historical
statement of operations and balance sheet data, at or for each of the full
fiscal years presented below was derived from the financial statements of the
Company, which were audited by Deloitte & Touche LLP, independent auditors. The
selected financial data presented below should be read in conjunction with
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and with the audited financial statements, including the notes
thereto, and other financial information appearing elsewhere in this Prospectus.
The unaudited pro forma and as adjusted selected financial data are derived from
the unaudited pro forma and as adjusted financial data presented elsewhere in
this Prospectus. The statement of operations data for the nine-month period
ended September 30, 1997 is not necessarily indicative of the results of
operations that may be expected for the full year.
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL HISTORICAL PRO FORMA HISTORICAL NINE MONTHS NINE MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED SEPTEMBER 30, ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, ---------------------- SEPTEMBER 30,
1995 1996 1996(1) 1996 1997 1997(1)
------------ ------------ ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................... $3,866,418 $3,983,218 $ 3,983,218 $2,863,429 $2,976,014 $ 2,976,014
Net loss..................................... (576,689) (1,500,819) (1,500,819 ) (1,017,921) (541,185) (541,185)
Weighted average shares outstanding.......... 1,207,500 1,207,500 1,500,000 1,207,500 1,207,500 1,500,000
Loss per common share........................ $(.48) $(1.24) $(1.00 ) $(.84) $(.45) $(.36)
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA AS ADJUSTED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1997(2) 1997(3)
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.............................................. $1,589,366 $ 1,551,027 $ 4,622,277 $16,700,277
Long-term debt............................................ 2,481,025 2,219,109 1,038,542 1,038,542
Total liabilities......................................... 3,638,521 4,066,142 2,885,575 1,683,575
Stockholders' equity (deficit)............................ (2,049,155) (2,515,115) 1,736,702 15,016,702
</TABLE>
- ------------
(1) Pro forma to give effect to (i) the Hogback Acquisition and (ii) the
conversion of a portion of the Related Loans (as defined in 'Certain
Transactions') to a capital contribution to the Company as if such
transactions had occurred on January 1, 1996.
(2) Pro forma to give effect to (i) the Hogback Acquisition and (ii) the
conversion of a portion of the Related Loans to a capital contribution to
the Company as if such transactions had occurred on September 30, 1997.
(3) As adjusted to give effect to the closing of the Offering and the
application of the estimated net proceeds therefrom as if the Offering had
occurred on September 30, 1997, as well as to give effect to the
transactions described in footnote (2) above.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
In September 1993, the Company purchased the Resort and commenced
operations shortly thereafter. Since its first full year of operations in 1994,
the Company has increased revenues to $3.98 million in 1996. The increase in
revenues was attributable to more guests utilizing the Resort and higher average
prices for lift tickets and hotel room rates. In addition, with the start of its
fourth ski season in December 1996, management has been able to better control
costs while experiencing growth in revenues. The Company expects this trend to
continue which should positively affect the Company's net income. The Company
has a diversified revenue base which, for the past two fiscal years, has
averaged approximately 43% from room occupancy, 27% from skiing and fitness, 24%
from food and beverage and 6% from other revenue.
RESULTS OF OPERATIONS
The financial condition and results of operations of the Company (without
giving effect to the Hogback Acquisition) are described below. For information
regarding the financial condition of the Company and its results of operations
on a combined basis with those of Hogback Mountain, which will be purchased by
the Company concurrent with the closing of this Offering, please refer to the
Unaudited Pro Forma Financial Information and the Selected Financial Data
presented elsewhere in this Prospectus. The Company anticipates that the impact
of the purchase of Hogback Mountain on its statement of operations will be
immaterial.
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED) COMPARED TO THE
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996 (UNAUDITED)
Revenue and Gross Profit. Revenue for the first three quarters of 1997 was
$2,976,014, an increase of $112,585 or 3.9% compared to the first three quarters
of 1996. The increase was attributable to a higher volume of ski business as
well as to price increases of lift tickets and hotel room rentals. Rooms revenue
increased by 5.5% and ski and fitness revenue increased by 21.5%. Food and
beverage revenue decreased by 13.9% and other revenue decreased by 8.8%. The
increase in lodging revenue was primarily a result of an 8.2% increase in the
average hotel room rates, as compared to the first three quarters of 1996. The
increase in ski and fitness revenue was primarily attributable to a 13.4%
increase in the number of lift tickets sold, an increase of 7.2% in the average
lift ticket price, a 35.7% increase in ski school revenues and a 31.7% increase
in season pass revenues. Fitness revenue for the first three quarters of 1997
was $83,915 accounting for 9.0% of ski and fitness revenue. During the first
three quarters of 1997, the volume of conference business declined as compared
to the first three quarters of 1996, which resulted in a decline of conference
related food and beverage revenues of $109,510 and a decline of conference rooms
revenue of $17,310. Food and beverage revenues and rooms revenue, other than
those generated by conference business, increased by 1.9% and 5.4%,
respectively, in the first three quarters of 1997 as compared to the first three
quarters of 1996.
Gross profit as a percentage of total revenues increased from 28.1% in the
first three quarters of 1996 to 41.1% in the first three quarters of 1997. This
is primarily due to better control of expenses combined with an 3.9% increase in
revenue as compared to the first three quarters of 1996. The Company believes
that it should be able to continue to increase revenues without a significant
increase in the cost of sales, which should positively affect the Company's
gross profit.
Operating Expenses. Operating expenses were $1,546,106 for the first three
quarters of 1997, representing a decrease of $126,854 or 7.6%, as compared to
the first three quarters of 1996. As a percentage of revenue, operating expenses
declined from 58.4% in the first three quarters of 1996 to 52.0% in the first
three quarters of 1997. Since a majority of the operating expenses do not
fluctuate significantly with the level of revenues, the Company believes its net
income should continue to be positively affected by increasing revenues.
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Net Operating Loss. The Company had a net operating loss in the first three
quarters of 1997 of $323,383 as compared to a net operating loss of $869,743 in
the first three quarters of 1996, representing a decrease in loss of $546,360 or
an improvement of 62.8%.
FISCAL YEAR ENDED DECEMBER 31, 1996 ('FISCAL 1996') COMPARED TO FISCAL YEAR
ENDED DECEMBER 31, 1995 ('FISCAL 1995')
Revenue and Gross Profit. Revenue increased from $3,866,418 in Fiscal 1995
to $3,983,218 in Fiscal 1996. This increase was due to a higher number of guests
utilizing the Resort as well as price increases of lift tickets and hotel room
rates. Lodging revenue increased by 10.1%, ski and fitness revenue increased by
6.7%, other revenue decreased by 20.6% and food and beverage revenue decreased
by 4.0%. This decrease in food and beverage revenue resulted primarily from a
decline in banquet revenues attributable to one large, multi-day conference held
in Fiscal 1995 that was not repeated in Fiscal 1996.
Gross profit as a percentage of total revenues decreased from 37.3% in
Fiscal 1995 to 30.5% in Fiscal 1996. The increase in the cost of sales was
primarily attributable to an increase in labor and other expenses associated
with expanded resort activities and programs.
Operating Expenses. Operating expenses were $2,493,238 for Fiscal 1996,
representing an increase of $118,086 or 5.0%, as compared to Fiscal 1995. As a
percentage of revenue, operating expenses increased slightly from 61.4% in
Fiscal 1995 to 62.6% in Fiscal 1996.
Net Operating Income Loss. The Company incurred a net operating loss in
Fiscal 1996 of $1,277,145 as compared to a net operating loss of $933,944 in
Fiscal 1995. The increase in the net loss was primarily due to the increase in
the cost of sales.
LIQUIDITY AND CAPITAL RESOURCES
Since acquiring the Resort in 1993, the Company has funded operations from
debt and equity financing provided by its Principal Stockholders, a bank line of
credit and other loans guaranteed by its Principal Stockholders, the sale of
real estate and cash flow from operations. During Fiscal 1995 the Company
financed its shortfalls primarily with the sale of six condominium units, each
at a price of $110,000 and through $400,000 of additional equity financing from
its Principal Stockholders. In November 1995 the Company transferred ownership
of its remaining condominium units to its Principal Stockholders, which were
subsequently financed with individual loans secured by mortgages, the proceeds
of which were then loaned by the Principal Stockholders to the Company. In
Fiscal 1995, such loan proceeds totalled $500,500 of which $280,000 was used by
the Company to repay existing Company financing secured by the condominium
units. In Fiscal 1996, such additional loan proceeds totalled $700,000 of which
$99,915 was used to repay the remaining financing that was secured by the
condominium units. In addition, the Principal Stockholders contributed an
additional $650,000 of equity in Fiscal 1996. In the first six months of 1997,
the Principal Stockholders made loans to the Company totaling $537,000.
Beginning January 1, 1998, the loans accrue interest at a rate of 8% per annum
and mature on January 1, 2008. See 'Certain Transactions' and Note 5 of Notes to
Financial Statements.
In connection with the commencement of the marketing and sales of its VOIs,
the Company reached a preliminary understanding, subject to definitive
documentation, with Richard R. Frary and Joel A. Mael under which they will each
loan the Company $50,000 pursuant to a promissory note. Under the terms of the
promissory notes, the loans are expected to accrue interest at the rate of 8%
per annum and have a maturity date of the earlier of (a) one year from the date
thereof and (b) the completion by the Company of a public offering in which
gross proceeds of $5,000,000 are raised from the sale of its securities. Should
the Company not complete a public offering by June 30, 1998, Mr. Frary and Mr.
Mael would each have the option, exercisable until the maturity date of the
loans, to exchange the principal and interest owed thereunder for 2.5% of the
limited partnership interests of each of Ascutney Mountain Resort Hotel, L.P.,
Ascutney Mountain Resort, L.P. and Ascutney Mountain Resort Realty, L.P. Should
the Company enter into the loans, it intends to repay the loans in full from the
proceeds of the Offering. Mr. Frary will serve as a director of the Company upon
the closing of the Offering. The Company has entered into an advisory and
consulting agreement with Tallwood
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Associates, Inc. ('Tallwood') of which Mr. Frary and Mr. Mael are the principal
stockholders. See 'Management -- Advisory and Consulting Agreement' and
'Management -- Executive Officers and Directors.'
Additionally, in December 1997, the Company borrowed $57,000 from
International Merona, Inc. pursuant to a promissory note. Under the terms of the
promissory note, the loan accrues interest at the rate of 10% per annum and has
a maturity date of the earlier of (a) December 8, 1998 and (b) the date upon
which the Company receives $5,000,000 from the sale of its securities. The
proceeds of this loan were used by the Company for expenses in connection with
the Offering, and the Company intends to repay the loan in full from the
proceeds of the Offering.
In July 1997, the Company obtained a $1.5 million line of credit from
Mascoma Savings Bank bearing interest at the prevailing prime rate plus 1.75%,
as adjusted from time to time (effective rate of 10.25% as of September 30,
1997). Approximately $900,000 was used to prepay the existing Fleet Bank line of
credit and to pay closing costs leaving an additional $600,000 of borrowing
capacity for working capital purposes. The Company intends to repay a portion of
the amount outstanding under the line of credit with the net proceeds of the
Offering. See 'Use of Proceeds.'
The Company also obtained a block grant loan in November 1994, having an
initial principal amount of $240,000 from the Town of West Windsor, Vermont. The
loan accrues interest at a rate of 5.0% per annum and has a maturity date of
February 20, 2010. The loan is guaranteed by the Company's Principal
Stockholders.
Additionally, the Company obtained a loan in May 1994, having an initial
principal amount of $400,000 from VEDA. The loan accrues interest at a rate of
5.5% per annum and has a maturity date of June 3, 2004. The loan is guaranteed
by the Company's Principal Stockholders and has a balloon payment due at
maturity of $171,639.
The net proceeds from the Offering will be used for upgrades and expansion
to the Resort's ski lifts, snowmaking, grooming and trail systems, purchase of
additional mountain equipment and vehicles, hotel and Resort improvements,
development of a golf course on Resort property, development of a vacation
ownership intervals program, repayment of debt, and for working capital
(including possible business acquisitions). In addition, the 17 condominium
units currently owned by the Company's owners will be leased to Snowdance, Inc.,
and approximately $1,180,000 of the related party debt will be contributed as
capital.
Upon the closing of the Offering, Snowdance, Inc. will acquire
approximately 800 acres of land known as Hogback Mountain, located in Marlboro,
Vermont. The Company plans to explore possible development opportunities for
this land. As consideration for the purchase of this land, the Company will
issue 292,500 shares of Common Stock to the owners of the assets.
The Company believes that based on its present plans, the net proceeds of
this Offering, when combined with the Company's existing capital resources and
anticipated revenues from operations, will be sufficient to enable it to
maintain current and planned operations for a period of at least 12 months after
the consummation of this Offering. In the event that the Company's plans change
or its assumptions change or prove to be inaccurate or if the net proceeds of
this Offering or cash flow prove to be insufficient (due to unanticipated
expenses or otherwise), the Company may seek to minimize cash expenditures
and/or obtain additional financing in order to support its plan of operations.
Sources of capital may include additional equity or debt financings.
Additionally, future acquisitions could be financed through a combination of
internally generated funds, bank borrowings, public offerings or private
placements of equity (which may cause dilution to existing holders of capital
stock of the Company) or debt securities, the combination of which will depend
on the size of the acquired resort or property and the Company's capital
structure at the time of an acquisition.
Cash used by operating activities was $760,604 for the nine months ended
September 30, 1997 compared to cash flow used for operating activities of
$1,069,435 for the same period in 1996. Cash used for operating activities was
$1,087,760 and $1,347,597 in Fiscal 1996 and 1995, respectively. The 28.9%
improvement in the first three quarters of 1997 compared to the first three
quarters of 1996 was primarily due to lower overall operating costs and to a
lesser extent, increased revenues.
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The Company's capital expenditures for the years ended December 31, 1995
and December 31, 1996 were $34,466 and $44,576, respectively. Assuming that the
Offering is successfully completed, management expects capital expenditures to
total approximately $6,000,000 over the next 12 months, approximately 50% of
which is intended to be spent upgrading the ski lifts, snowmaking, grooming and
trail systems.
Upon closing of the Offering, the Company will enter into three-year
employment agreements with Steven Plausteiner and with Susan Plausteiner. Steven
Plausteiner's agreement will provide for an annual base salary of $100,000 plus
a bonus determined by the Company's Board of Directors, and certain other
benefits. Susan Plausteiner's agreement will be substantially identical. See
'Management -- Employment Agreements.'
Management is not aware of any trends or events, commitments or
uncertainties which have not otherwise been disclosed that will or are likely to
impact liquidity in a material way.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company's operating results may fluctuate from quarter to quarter as a
result of the seasonal nature of the ski resort operations. The Company
recognizes its highest revenue levels during its first fiscal quarter. This
quarter accounted for approximately 36.6% and 40.6% for Fiscal 1995 and Fiscal
1996 total revenues, respectively.
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BUSINESS
OVERVIEW
Snowdance, Inc. owns and operates one of the premier fully-integrated, all
season mountain resorts in New England and further seeks to develop and operate
other fully-integrated year-round recreational resorts focusing on affordable
family vacations. The Company intends to develop resorts that emphasize skiing,
snowboarding and other winter recreational activities as well as warm weather
activities such as golf, tennis and hiking, thereby offering true year round
amenities. The Company believes that the opportunity to develop and sell the
property surrounding these amenities could provide it with its greatest
potential source of cashflow and income. Such property related development is
expected to include weekly vacation ownership interval ('VOI') sales (also known
as time shares), and may also include condominium construction and sales, and
second home and land sales. The Company has entered into a marketing and sales
agreement with Westerly Resorts Group, Inc., an experienced VOI developer and
marketer with projects in the Caribbean and Colorado. Marketing of more than
5,000 VOIs in Ascutney's hotel is anticipated to commence in 1998.
To date, the Company has focused its resources on developing its first
fully-integrated family-oriented property, the Ascutney Mountain Resort located
in Brownsville, Vermont. Recently, the Company agreed to acquire its second
property for potential future development called Hogback Mountain in Marlboro,
Vermont. Upon successful implementation of its strategy at Ascutney, the Company
intends to seek other opportunities that fit its strategy of developing and
operating year-round affordable, family resorts.
THE MOUNTAIN RESORT INDUSTRY
There are approximately 800 ski areas in North America, approximately 500
of which are located in the United States and approximately 300 of which are
located in Canada. During the 1996-97 ski season, these U.S. ski areas accounted
for approximately 52.5 million skier days (of which approximately 12.1 million
skier days were attributed to northeastern United States ski areas). A 'skier
day' is defined as one day representing a single day or night visit to a ski
area. The Company believes that of the 800 North American ski areas, only a
small number are fully-integrated, destination resorts.
North American ski resorts range from small regional ski areas which
primarily attract day skiers from nearby populations to large amenity-filled
resorts focused on destination visitors who seek a comprehensive vacation
experience. Day visitors generally tend to focus primarily on lift ticket prices
and resort accessibility. Destination visitors generally stay for one or more
nights, and primarily focus on the number of amenities and activities offered as
well as the perceived overall quality of their vacation experience. The Company
believes that destination visitors spend more on non-lift ticket items than day
visitors and may be less likely to change their skiing plans because of changes
in local weather conditions. As a result of these differences, destination
visitors generate significantly higher revenue per day than day visitors and
provide desirable balance to a resort's revenue mix.
While skier days generated by the Resort have grown by approximately 26%
since the 1993-94 ski season, total skier days generated by all United States
mountain resorts have decreased by a total of approximately 3.8% during the same
period. The Company believes that the primary reasons for the Resort's growth in
skier days since its acquisition by the current management team in 1993 relative
to the rest of the United States include the quality of the resort village, the
improved skiing experience and easy access from major metropolitan areas. See
'Risk Factors -- Limited Operating History; Significant and Continuing Losses.'
The mountain resort industry is characterized by significant barriers to
entry since the number of attractive sites is limited, the cost of resort
development is high and environmental regulations impose significant
restrictions on new development.
The Company believes that it benefits from current trends which favorably
affect the North American mountain resort industry, including (i) new innovative
equipment for skiers, such as parabolic or shaped skis which facilitate learning
and enhance performance, (ii) increased participation in mountain resort sports
such as snowboarding, mountain biking and hiking which are among the fastest
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growing sports in North America and (iii) demographics under which (a) the large
'baby boom' generation is entering the 45-65 year age category which
traditionally is the age group with the largest number of buyers of vacation
property and (b) the 'echo boom' generation is entering the teenage years, one
of the age groups with the most skiing and snowboarding activity. Moreover, the
Company believes that these trends will continue to attract additional
destination guests and increase demand from families for vacation real estate in
mountain resorts.
The Company believes that new ski equipment technologies, including
parabolic skis, will facilitate wider participation in downhill skiing.
Parabolic skis have a narrower mid-section than standard designs, generally
allowing for an easier curve and better control into parallel turns. Parabolic
skis are more flexible than standard skis and require less muscle strength to
turn, decreasing skier fatigue. The Company believes that as a result of the new
equipment technologies, it is easier for beginners to learn to ski, and for
intermediate and advanced skiers to perform beyond their present abilities. The
Company expects to benefit from the increased utilization of parabolic skis
which the Resort offers in its retail and rental shops and for which it provides
instruction through its ski school.
The Company believes that the growth in snowboarding will also have a
positive impact on the ski industry and will continue to be an important source
of lift ticket, ski school, retail and rental revenue growth for the Company. In
the United States, skier days attributable to snowboarders have increased an
average of 19% per year over the past 3 years and snowboarders are currently
estimated to represent 18% of all skier days in the United States. The
snowboarding population is expected to double as a percentage of skier days over
the next five years according to the 1995-96 survey of Transworld SNOWboarding
Business/National Ski Areas Association Resort Survey. Much of this growth can
be attributed to the greater acceptance of snowboarding as a competitive amateur
sport. In 1985, only 7% of U.S. ski resorts allowed snowboarding, while
approximately 93% do as of 1997. Also, the International Olympic Committee
recently designated snowboarding as a demonstration event at the 1998 Winter
Games in Nagano, Japan.
While snowboarding has increased interest in 'on-snow' sports among 13 to
24 year old males, the sport is increasingly appealing to a wider group of
enthusiasts. According to a recent survey by Ski Industries America, the average
age of snowboarders has risen to approximately 24 years old, and nearly
one-third of all current snowboarders is female. The Company further believes
that the growth in snowboarding among children and teens, who influence family
vacation decisions, should allow the Resort to attract additional family
destination guests. Consequently, the Resort has constructed a 'snowboard park,'
offers snowboarding lessons through its ski school and provides snowboarding
equipment in its retail and rental shops. The Company generally intends to place
greater emphasis on the Resort's snowboard attractions, programs and events.
RESORT OPERATIONS
The Company currently owns and controls all of the Resort's operations
enabling it to capture a high percentage of the total spending by its year-round
guests during their visit to the Resort. Accordingly, while lift ticket sales
are traditionally the largest source of revenues for most ski resorts, the
Company has a diversified revenue mix, including lodging, food services, lift
tickets, ski school, sports and fitness center, day care and retail shops.
Lodging revenue was the largest source of revenue in 1996, accounting for
approximately 43% of total Resort revenue. The Company expects non-lift ticket
revenue will continue to grow at a greater rate than lift ticket revenue as a
result of the ongoing expansion of activities and services offered by the
Company at the Resort.
ASCUTNEY MOUNTAIN RESORT
In 1995, Ascutney was ranked among the top three ski resorts for value and
the top four ski resorts for families, in the eastern United States by Skiing
magazine (October 1995). Since 1983, more than $85 million was invested in
connection with the expansion and development of the Resort. Ascutney is a
four-season, fully-integrated, destination resort that includes one of Vermont's
major ski areas, a 212-room hotel (the fourth largest resort hotel in Vermont)
which is suited for timeshare sales due to its larger number of suites, an
18,000 square foot comprehensive sports and fitness center, a three-story
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base lodge, a ski and rental shop, four restaurants, approximately 30,000 square
feet of conference facilities, and 17 slope-side condominium units to be leased
from the present owners, all set in a charming New England style village.
While the Resort offers its guests many of the benefits provided by larger
ski facilities, it also retains a family-oriented, friendly atmosphere. The
Company provides a comprehensive destination resort experience by combining
quality ski facilities and resort services, including convenient ski-on/ski-off
lodging, with attractive four season amenities. The Resort attracts guests
primarily due to its affordable family-oriented vacations in a self-contained
resort village with easy accessibility from most major metropolitan areas in the
northeastern United States.
The Resort is conveniently located in central Vermont's Connecticut River
Valley in Brownsville, Vermont, at the foot of Mt. Ascutney. The Resort is six
miles from, and is the closest major Vermont ski resort to, Interstate I-91, one
of the two main highways in Vermont. The Resort is easily accessible from most
major metropolitan areas in the northeastern United States from which it
attracts the majority of its visitors. During the 1996-97 ski season, the
majority of the Resort's visitors resided in Connecticut, Massachusetts, Vermont
and New York. Hartford, Boston and Albany are within a 2 1/2 hour drive and
Providence, Montreal and New York City are within a 4 1/2 hour drive. The Resort
is 18 miles from the Lebanon, New Hampshire airport which provides regular
service to and from Boston, New York, Newark and Albany and five miles from the
Amtrak train station in Windsor, Vermont. Approximately 15 miles from the Resort
lies Woodstock, Vermont, a quaint New England village where guests can visit
numerous art galleries, antique and specialty shops. The town of Manchester,
Vermont, located approximately 50 miles from the Resort, is one of Vermont's
busiest summer tourist attractions featuring designer discount outlets as well
as specialty shops.
ASCUTNEY MOUNTAIN SKI AREA
The Ascutney Mountain ski area is one of Vermont's 14 major ski resorts
with a 1,530 foot vertical rise on Mt. Ascutney. Ascutney Mountain's skier days
exceeded 53,000 during the 1996-97 ski season, representing an increase of
approximately 26% since the commencement of the Company's operations in 1993
under its current management team. The ski area includes 4 chairlifts, 31
trails, and 115 skiable acres with an approximately equal distribution of
beginner, intermediate and expert terrain, including an International Skiing
Federation-sanctioned giant slalom trail. The ski area is supported by a
three-story base lodge with a cafeteria and lounge seating a total of 500
persons, a two-story ski and rental shop and various maintenance and storage
buildings. Snowmaking capability covers approximately 75% of the skiable
terrain. There are approximately 20 miles of cross-country trails which range
from open meadows suitable for beginners to mountain touring trails suitable for
more advanced skiers. At the base of the mountain, tubing, ice skating,
children's programs and apres ski entertainment are available. Unlike many
Vermont ski resorts, the Company owns all of the land on which the ski
facilities are currently located. The Company operates its facilities 7 days a
week for skiing and related winter activities from approximately mid-November
until the following mid-April.
Lift Ticket Sales. The Company's goal is to manage lift ticket yields to
obtain premium prices during peak periods and increase aggregate lift ticket
revenue during non-peak periods. Accordingly, the Company offers a wide
selection of lift tickets which vary in price and usage. In all categories there
is a reduced price for junior tickets. Unlike the majority of ski resorts, the
Company sells junior priced tickets for guests up to the age of 16 years old as
opposed to the traditional 12 years; this expanded discount is intended to
attract the family market that largely frequents the Resort. Discounted lift
tickets and programs, including local school programs, group purchases, Vertical
Value discount card purchases and co-promotions with local and national
businesses are designed to bolster business during non-peak periods. Introduced
in 1995, the Vertical Value discount card was implemented to increase lift
ticket revenues as well as to encourage non-peak usage by offering greater
discounts during midweek and early and late seasons. The Company also markets
and sells hotel packages which combine accommodations, lift tickets and dining.
Such packages facilitate vacation planning while providing the Resort with
multi-day lift ticket sales.
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Ski School. The Company operates a ski school at the Resort that offers a
variety of programs to skiers, targeted to different ability levels and age
groups, including Flying D.U.C.K.S., Young Olympians and Mini Olympians
children's programs. The Company anticipates further growth in ski school
revenue resulting from technological advances in alpine skiing equipment, for
which the ski school has qualified instructors, and from the growth in
snowboarding. The Company has approximately 60 instructors on its ski school
staff. The Company has adopted a compensation incentive program to reward
instructors based on guest satisfaction.
ASCUTNEY MOUNTAIN RESORT HOTEL, LODGING AND RELATED OPERATIONS
Lodging. The Ascutney Mountain Resort Hotel is a 212-room hotel,
constructed in 1984, situated in five buildings at the base of Mt. Ascutney. The
rooms are approximately equally divided between standard hotel rooms and suites
which through lock-out capabilities may be rented as 1, 2 or 3-bedroom suites.
Each suite has a full kitchen, a dining room and a living room with a fireplace
and deck. The hotel is located along the lower ski slopes with each building
having direct ski-on/ski-off access to the slopes. The main hotel building
houses the 140-seat Harvest Inn Restaurant, Brown's Tavern, Biscotti's pizzeria
and game room, the two-story Crow's Nest lounge/function room, additional retail
space and conference space. The conference space in the hotel can accommodate
groups of up to 500 people. In addition, the Resort also includes approximately
17 condominium units at the base of the mountain, to be leased from the present
owners, which together with the hotel, can accommodate up to approximately 700
people.
Food and Beverage Service. Food and beverage service is an increasingly
important component in providing a satisfying guest experience at the Resort and
has been a significant source of revenue for the Company. The Company owns and
operates the Resort's four on mountain food and beverage facilities with more
than 500 seats. As a year-round mountain resort, the Resort generates food and
beverage revenues throughout the non-ski season, including banquet revenues from
groups utilizing the Resort's conference facilities and from wedding receptions.
Retail Shops. The Company owns and leases commercial space for a retail and
ski rental shop (with two locations at the Resort) containing approximately
3,500 square feet of sale/service area which is operated on a concession basis
by a third party only during the ski season. The shop sells ski accessories such
as goggles, sunglasses, hats and gloves as well as hard goods such as skis,
snowboards, boots and ski apparel.
ASCUTNEY MOUNTAIN RESORT SPORTS AND FITNESS CENTER
The Resort's sports and fitness center of approximately 18,000 square feet,
refurbished in the fall of 1993, is located adjacent to the hotel. The center
includes one indoor and one outdoor Olympic-sized swimming pool, seven outdoor
tennis courts (five har-tru and two all weather), an aerobics studio, two
racquetball courts, saunas, free-weights, nautilus and aerobic equipment. The
Company believes that the center is the only comprehensive sports and fitness
facility of this size in the area and attracts membership from a 20 mile radius.
The center, which is complimentary to hotel guests, sells monthly and
annual memberships. In addition, the center offers daily walk-in passes and
coupon books for single admissions. While the number of memberships varies
seasonally, on a monthly basis the number of club memberships ranges from
approximately 150 to 400 members. Additional fitness center revenues are derived
from personal training sessions, massage fees, racquetball fees and tennis and
swim instruction.
OPERATING STRENGTHS
The Company believes that the following operating strengths provide
competitive advantages which should enable it to achieve significant growth.
Upon the successful implementation of its strategy at Ascutney, the Company
intends to seek to acquire resorts or properties that are well suited to utilize
the operating strengths of the Company.
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CONTROL OF RESORT OPERATIONS
The Company controls multiple revenue sources at the Resort, thereby
diversifying its revenue mix and ensuring consistency and quality of its
operations. In addition to operating the ski lifts, the Company currently
manages virtually all ancillary operations at the Resort, including lodging,
food services, the ski school, the sports and fitness center and a day care
program. The Company's ownership of the commercial property at the Resort allows
it to ensure that its retail space enhances the overall appeal of the Resort.
APPEAL TO FAMILY VISITORS
While the Company's strategy is to offer its guests many of the benefits
provided by the larger ski destination resorts, it retains a family-oriented
personal atmosphere. The Company's emphasis on affordable family vacations
permeates most aspects of its business. The Company believes that, as compared
to its competitors, it charges lower fees for the various amenities it offers,
and the prices of its lodging and meals are more reasonable. The Company's
special programs and services are principally targeted to family destination
guests who tend to generate higher and more diversified revenues per guest than
day skiers. Programs range from the Mini Olympian and Young Olympian ski
schools, which are separate from the adult ski school, to supervised evening
programs such as Cheddar's Happy Hours, movies, puppet shows and Parents' Night
Out. In addition, the Company believes that the convenience of the
self-contained Resort village which offers ski-on/ski-off lodging in large
suites, coupled with virtually all facilities being located within walking
distance, is particularly attractive to families. Based on a survey by the
National Skier Opinion Survey for the 1996-97 ski season, more of the Resort's
visitors had children under the age of 16 and a higher percentage of visitors to
the Resort were accompanied by their children than the regional average of other
ski resorts.
ACCESSIBILITY AND LOCATION
The Resort is strategically located in central Vermont and is within
several hours driving distance from most major metropolitan areas in the
northeastern United States. The Company believes that the Resort's proximity to
Interstate I-91, one of the two main highways in Vermont, provides it with a
significant competitive advantage relative to most of the other major Vermont
mountain resorts. From the 1978-79 through the 1996-97 ski seasons, the
northeastern corridor has had the second largest number of skier/snowboarder
visits in the United States. Vermont had the largest number of skier days during
the 1995-96 ski season of all the northeastern states. Additionally, Vermont
benefits from an average of 250 inches of snowfall annually.
VACATION OWNERSHIP INTERVALS
The Company believes that its hotel is an attractive VOI property due to,
among other reasons, the high number of suites in its hotel (many of which are
duplex units), the presence of existing and planned year-round amenities and
Ascutney's proximity to most major population centers in the northeastern United
States, all of which can be reached within 2 to 5 hours of driving time. The
Company further believes that there is strong interest in families seeking
affordable vacations in year-round resorts near their primary residences that
offer many of the amenities found at larger destination resorts but on a
friendlier, more personal level. Marketing of more than 5,000 VOIs in Ascutney's
hotel is anticipated to commence in 1998. The Company also plans to further
develop its real estate holdings, including the construction of additional
residential units that could be sold as VOIs. The Company believes that the
opportunity to develop and sell the property surrounding its existing and
year-round amenities could provide it with its greatest potential source of
cashflow and income.
MANAGEMENT TEAM
Members of the Company's senior management team are recognized leaders in
the mountain resort industry. The Company's senior management team consists of
three individuals who are responsible for strategic direction, as well as
oversight of its business, including Resort operations and real estate
development activities. Together, the senior management team has over 50 years
of experience in the
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mountain resort industry, and have held positions on the Boards of Directors of
such recognized public and private organizations as the Vermont Ski Areas
Association and Vermont Economic Development Authority. Also, the Company's
Chief Operating Officer during a 20-year period held various positions at Mount
Snow, a leading Vermont ski resort, including Vice President -- Operation and
Planning of Mount Snow Development Corporation, Vice President for Planning and
Maintenance of Mount Snow Hotel Corporation and Operations Manager of Mount
Snow. In addition, the Company's Chief Operating Officer served as the Director
of Whiteface Mountain Ski Center responsible for planning and development of the
Ski Center in preparation for the 1980 Winter Olympics in Lake Placid, New York.
He was later promoted to Vice President for the Olympic Regional Development
Authority in charge of planning and construction for all of the 1980 Winter
Olympic venues.
Additionally, the Company entered into an advisory and consulting
arrangement with Tallwood for a one year period commencing on January 1, 1998.
Mr. Richard S. Frary and Mr. Joel A. Mael, the principals of Tallwood, have
extensive experience in real estate finance and development. Mr. Frary served as
head of Drexel Burnham Lambert Inc.'s Corporate Finance Department's real estate
group which was responsible for in excess of $15 billion of corporate and
mortgage financing for public and private real estate companies and corporate
clients. See 'Management -- Advisory and Consulting Agreement' and 'Management
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources.'
BUSINESS STRATEGY
The Company's operating formula links the staged expansion of its mountain
ski facilities at the Resort with the strategic development of its real estate.
The Company's primary objective is to maximize and diversify its revenue sources
by capitalizing on its operating strengths and through expansion of the Resort
and the development of its real estate as described below. This strategy is
designed to increase and balance year-round utilization and to enhance real
estate values at the Resort. The implementation of this strategy begins with the
continued enhancement of the skiing experience coupled with hotel improvements.
In addition, the Company has the capacity to expand ski operations to the peak
of Mt. Ascutney.
The Company intends to implement a multi-stage plan to realize the
significant value of its real estate. The Company plans to commence the sale of
VOIs in the Resort's hotel, designed to increase destination visitors to the
Resort and increase total Resort revenue. The intended sale of VOIs, commonly
known as timeshares, in the Resort's hotel is expected to be carefully managed
by the Company, in conjunction with its Joint Venture Partner. To enhance the
marketing and sales of the Resort's real estate, the Company's expansion plans
include the addition of an 18-hole golf course with additional adjacent
residential units, as well as additional commercial development. Finally, the
Company also intends to explore possible development opportunities regarding its
other real estate holdings, including examinations of zoning and other
regulatory approvals necessary for any such development. The Company believes
that the integration of the Resort with further real estate development should
attract increasing numbers of visitors and buyers of real estate.
The expansion of the Resort's mountain facilities, the offering of vacation
ownership intervals and the Company's further development of its real estate
holdings should together add to the Company's ability to increase year-round
utilization of the Resort. Specifically, the Company's strategy to maximize
revenues is as follows:
EXPANSION OF SKI AND YEAR-ROUND OPERATIONS
An important component of the Company's business strategy is the expansion
and enhancement of its core ski operations, while at the same time increasing
the range of complementary activities and services offered to its guests
throughout the year. The Company plans to enhance the skiing experience at the
Resort through major upgrades to the ski lifts, snowmaking, grooming and trail
systems. Principal improvements include the addition of one new high-speed quad
chairlift as well as the relocation of one of the existing chairlifts, which
will increase the mountain's total uphill capacity by more than 45% to
approximately 6,350 skiers per hour. In addition, the Company plans to increase
snowmaking
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capabilities at the Resort, bringing coverage to approximately 95% of the
skiable terrain. Major trail modifications have been designed to allow different
levels of skiers to utilize more of the mountain when combined with the planned
increased snowmaking. Further, the Company intends to explore expanding the
Resort's operations to a higher elevation on Mt. Ascutney, which if successfully
achieved would result in the Resort having the fourth highest vertical rise of
any Vermont ski operation. The plan also provides for the acquisition of Resort
equipment and is expected to include both on-road and off-road vehicles such as
snow groomers. See 'Use of Proceeds.'
The Company also seeks to increase year-round utilization of the Resort by
developing more summer and shoulder season activities and amenities. The Company
believes that increases in utilization during the summer and shoulder seasons
should enhance the Company's ability to attract additional restaurants and
shops, thereby enhancing the four-season appeal of the Resort and the demand for
and market value of its Resort real estate property. The Resort offers guests a
variety of activities during the non-ski season, including mountain biking (on
approximately 20 miles of the Resort's cross country trails), outdoor tennis,
swimming and hiking. Canoeing, horseback riding and fishing can be arranged for
at nearby facilities. Additionally, visitors during the summer and shoulder
seasons can take advantage of golf courses, historic sites, museums and antique
shops located near the Resort area. The 'shoulder season' is defined as the
off-season periods between the winter and summer seasons.
RESORT HOTEL IMPROVEMENTS
The Company plans hotel improvements as well as the acquisition of Resort
equipment and computer systems. The major components of the improvements include
selected refurbishing of hotel rooms and common areas, expanded activity areas
for children's programs, expansion of hotel dining facilities and infrastructure
improvements to roads and hotel parking lots. See 'Use of Proceeds.' With the
improvements contemplated by the Company's plan, the Resort is expected to
attract more hotel guests thereby increasing hotel occupancy and increasing
utilization of other existing Resort services such as food services, ski school,
day care and children's programs.
VACATION OWNERSHIP PROGRAM
The Company has entered into a marketing and sales agreement, dated as of
December 30, 1997 (the 'Joint Venture'), with Westerly Resorts Group, Inc.
regarding the marketing and sale of VOIs in the Resort's hotel. It is
contemplated that the Joint Venture will sell up to 5,000 VOIs in the Resort's
hotel. The Company believes its hotel is an attractive VOI property due to,
among other reasons, the high number of suites in its hotel (many of which are
duplex units), the presence of existing and planned year-round amenities and
Ascutney's proximity to most major population centers of the Northeast, all of
which can be reached within 2 to 5 hours of driving time (Air transportation is
available at the Lebanon, New Hampshire airport near Dartmouth College less than
20 miles away). Westerly Resorts Group, Inc. (the 'Joint Venture Partner') is an
experienced VOI developer and marketer with projects in the Caribbean and
Colorado. Under the terms of the Joint Venture, the Company will be responsible
for the management of the operations of the Ascutney Mountain Resort Hotel and
the Joint Venture Partner will be responsible for the marketing and sale of all
VOIs in the hotel. Further, pursuant to the Joint Venture, the Company will
retain as a fixed fee 25% of the gross sales price of each VOI sold.
Additionally, after payment and/or reimbursement for certain expenses of the
Company and all of the expenses of the Joint Venture Partner, all net profits
from sales pursuant to the Joint Venture, subject to certain limitations and
adjustments with respect to the calculation of expenses, will be distributed as
follows: 67.5% to be retained by the Company and 32.5% to the Joint Venture
Partner. Additionally, the Joint Venture Partner will receive a monthly expense
advance equal to 45% of the previous month's gross sales less certain
chargebacks and other amounts owed to the Company. Such expense advance will be
offset on a quarterly basis against the monies that the Joint Venture Partner is
entitled to receive as computed using the above formula. The Joint Venture is
for an initial term of 5 years from the date thereof, with the option to renew,
subject to the approval in writing by the Company and the Joint Venture Partner,
for 5 year increments thereafter. Upon an event of default, which includes the
failure to comply with the agreement by one party, the other party, upon giving
written notice, may terminate the Joint Venture. The Joint Venture may also be
terminated by the mutual agreement in writing by the
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parties or by either party individually. Should the Company exercise its right,
in its sole discretion, to terminate the Joint Venture, the Company will be
prohibited from selling VOIs in the Resort's hotel for a period of two years.
Similarly, should the Joint Venture exercise its right, in its sole discretion,
to terminate the Joint Venture, the Joint Venture Partner will be prohibited
from engaging in the timeshare business in the State of Vermont for a period of
two years. Additionally, the Company may terminate the Joint Venture upon 60
days' notice should the Joint Venture Partner fail to meet certain sales goals.
While the Joint Venture is only for the sale of VOIs in the Resort's hotel,
should the Company decide to sell other timeshare products in the Resort, the
Company has agreed to negotiate on an exclusive basis for a period of two months
after notice with the Joint Venture Partner regarding engaging it as a marketing
partner. By entering into the Joint Venture with the Joint Venture Partner, the
Company intends to mitigate its risks associated with the VOI program.
Additionally, the Company, along with the Joint Venture Partner, intends to
manage its inventory risk by initially offering for sale only part of the
Resort's hotel on a VOI basis, while operating the remainder of the Resort's
hotel on a traditional overnight basis. See 'Risk Factors -- Uncertainty of
Development of Vacation Ownership Intervals and Golf Course Development.'
The Company plans to initiate a VOI program for the Resort's hotel prior to
any new construction of additional units at the Resort, whereby fixed weekly
intervals will be sold in fully-furnished vacation units. The offering program
is expected to begin in 1998. When the Company's VOI program commences, the
Resort will be one of only two fully-integrated, destination resorts in Vermont
that offers a VOI program. The Company believes that the offering of VOIs in its
existing hotel will increase destination visitors to the Resort, which should
increase revenues for the Resort including lift tickets, food and beverage,
retail and other sources.
The Joint Venture is expected to direct its marketing and sales efforts for
VOIs in the Resort's hotel generally to family households in the middle and
upper middle income brackets who previously have visited the Resort or prefer
outdoor recreational activities at destination locations. It is anticipated that
the Joint Venture will spend significant amounts of money in the future on
marketing and sales as it offers VOIs in the Resort's hotel. The primary method
of marketing the Resort's vacation ownership property is expected to be through
direct mail mini-vacation invitations. The Joint Venture intends to provide
hotel accommodations to prospective purchasers at reduced prices while they tour
the Resort. Sales personnel are expected to be generally experienced in VOI
sales and to participate in ongoing training.
The resort component of the vacation industry is serviced primarily by two
alternatives for overnight accommodations: (i) commercial lodging establishments
and (ii) timeshare or 'vacation ownership' resorts. Commercial lodging consists
of hotels and motels in which a room is rented on a nightly, weekly or monthly
basis for the duration of the visit and is supplemented by rentals of
privately-owned condominium units or homes. For many vacationers, particularly
those with families, a lengthy stay at a quality commercial lodging
establishment can be very expensive. In addition, availability of commercial
lodging may be limited during peak periods.
VOIs have been one of the fastest growing segments of the hospitality
industry over the past two decades. The number of vacation ownership resorts
throughout the world increased from approximately 630 in 1981 to approximately
4,350 in 1996. During the years 1988 through 1996 worldwide vacation ownership
sales grew at about 15% per year, from under $500 million in 1988 to
approximately $5 billion in 1996. The Company believes there is substantial
capacity for additional growth since less than 2% of all households in the
United States owned a VOI as of 1996. According to the American Resort
Development Association, the typical vacation interval owner is
upper-middle-income, middle-aged, and well-educated. Additionally, of VOI owners
in the United States, 69.5% have incomes over $50,000, and 67.5% are 45 years of
age or older. The median annual household income of owners of VOIs in the United
States is approximately $71,000. The Company believes that its Resort can
capitalize on the growth of VOIs because its visitors' demographics are similar
to those of the typical VOI purchaser. In addition, over one-third of VOI owners
are from the northeast, the region from which the Resort draws approximately 75%
of its visitors.
The Company believes that a significant part of the success of the vacation
ownership industry may be attributable to the growth of timeshare exchanges
which have increased flexibility to owners of
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VOIs. Such timeshare exchange companies allow owners to exchange weeks and
locations. Of the 4,350 worldwide vacation ownership resorts, approximately 95%
are associated with an exchange company, with such companies arranging
approximately 80% of the timeshare vacations taken worldwide each year. The
Company expects that the Joint Venture will associate itself with one of the
leading exchange companies. The Company believes that another significant factor
contributing to the current success of the vacation ownership industry is the
entry into the vacation ownership market of some of the world's major lodging,
hospitality and entertainment companies, such as Marriott International, Inc.,
The Walt Disney Company, Hyatt Corporation, Four Seasons Hotels and
Inter-Continental Hotels and Resorts.
The Company anticipates that the Joint Venture will offer financing to
purchasers of up to approximately 90% of the purchase price of a VOI. Such
financing may be provided primarily by the Company and, if appropriate, through
third party lenders. It is anticipated that a significant number of purchasers
of the Company's VOIs will avail themselves of such financing. The Company
believes that such financing is expected to be attractive to purchasers who find
it convenient to handle all facets of the purchase of VOIs through a single
source and because down payments required by such financing are intended to be
similar to those required by banks and mortgage companies which offer such type
of credit. The typical financing extended by the Joint Venture is intended to be
a term of approximately seven years and at a fixed interest rate. For
information regarding the regulation of VOIs see 'Business -- Regulation and
Legislation.'
DEVELOPMENT OF REAL ESTATE
In light of the Resort's existing amenities, significant amount of
developable land and attractive location, the Company believes that the Resort
has numerous potential opportunities for further real estate development. The
Company believes that similar factors which motivate skier visits to the Resort,
such as accessibility, four-season attractions, amenities and proximity to major
markets, should also tend to enhance values of the Company's real estate over
time. Approximately 400 of the approximately 750 acres of the Company's land at
the Resort are currently undeveloped. The Company also owns related
infrastructure such as water and wastewater systems (which can support an
additional 390 residential units at the Resort), certain roads, parking lots and
maintenance facilities.
The Company plans to further develop its real estate holdings as part of
the overall expansion of the Resort. The original master development plan of the
previous owner of the Resort contemplated approximately 560 residential units
(172 of which have already been built), an 18-hole golf course, and further
commercial development. The Company believes that its current supply of land at
the Resort can support real estate development activities for approximately 10
to 15 years. The Company may also consider opportunities to add to its inventory
of available land. By carefully managing the number and mix of new real estate
interests it markets each year, the Company intends to achieve attractive
returns through a balanced utilization of the Resort and its real estate.
Previous plans for the Resort included the future construction of an
18-hole golf course to be surrounded by 100 to 140 townhouse units. In 1986, the
previous owner of the Resort had applied for conceptual approval in accordance
with Vermont's principal environmental law, Act 250, for a golf course at the
Resort and was issued a conceptual Land Use Permit on the basis of the
application, which permit has since expired. The District Environmental
Commission which issued the conceptual Land Use Permit found that the proposed
golf course and residential units were in conformance with the West Windsor Town
Plan. While these plans and projects were never completed, the Company believes
that potential opportunities still exist for these and other projects to be
constructed on the approximately 400 acres currently available for development
at the Resort. The Company is assessing the development of an 18-hole golf
course with additional adjacent residential units, all on land currently owned
by the Company.
Typically, golf is a primary attraction for mountain resorts in the summer
and shoulder seasons, generating revenues from greens fees, cart rentals and
pro-shop sales and should increase the overall demand for Resort real estate. In
addition, in such resorts, golf is also responsible for generating a significant
portion of the food and beverage and lodging revenues during the summer. The
developable land parcels adjacent to a golf course generally achieve higher
selling prices than other real estate.
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OPPORTUNITIES FOR FURTHER DEVELOPMENT
Upon the closing of this Offering, the Company will acquire substantially
all the assets of a former day ski area known as Hogback Mountain, which covers
approximately 800 acres of land located in southern Vermont and includes
buildings whose tenants are currently a restaurant, a gift shop and two small
museums, the businesses of which are not being acquired by the Company. Hogback
Mountain is located within 20 miles of the Mount Snow and Haystack ski areas and
offers an unobstructed, panoramic view of three states. Hogback Mountain is
within 30 minutes driving distance to several ski areas, golf courses, large
lakes, annual music festivals and other attractions. The Company believes that
Hogback Mountain offers attractive development potential.
One of the tallest mountains in southern Vermont, Hogback Mountain is
situated adjacent to Route 9, a primary east-west thoroughfare in Vermont. Route
9 connects Brattleboro in the southeast corner of Vermont with Bennington in the
southwest corner and is one of the most traveled roads in Vermont.
Over the years, the Hogback Mountain property developed in a number of
ways. A small ski area with a total of 24 trails and slopes and a base lodge was
developed. The ski area has not been operating since the mid 1980's. In
addition, a restaurant and gift shop as well as a few rental cottages were
built. Two small museums were also established, one of which is currently
expanding to a newer facility at Hogback Mountain. The Company believes that
Hogback Mountain could support cross-country and downhill skiing, snowmobiling
and other winter activities as well as certain summer and shoulder season
activities in the event that the necessary regulatory approvals were obtained
and appropriate development resources were expended. Hogback Mountain is
currently registered with VAST, the Vermont Association of Snow Travelers, a
snowmobiling association. The Company intends to explore possible development
opportunities regarding the land at Hogback Mountain, including an examination
of zoning and other regulatory approvals necessary for any development.
As consideration for the purchase of Hogback Mountain, the Company will
issue an aggregate of 292,500 shares of Common Stock to Skyline Partners, L.P.,
a New York limited partnership and the owner of the 800 acres of land at Hogback
Mountain and the buildings whose tenants are currently the Skyline Restaurant,
gift shop and the two small museums at Hogback Mountain. An independent
appraisal, dated November 7, 1997, has valued Hogback Mountain at approximately
$3,500,000. There can be no assurance, however, that such appraisal represents
the fair market value of Hogback Mountain. Pursuant to the purchase and sale
agreement, subsequent to the closing of the Offering, at the option of the
Company, Skyline Partners, L.P. may manage the Hogback Mountain property in
accordance with a management agreement between the Company and Skyline Partners,
L.P., pursuant to which the Company shall pay a monthly fee to Skyline Partners,
L.P. in an amount to be mutually agreed upon by the parties. The Company also
intends to lease the buildings including the Skyline Restaurant and gift shop at
Hogback Mountain to the Vermont Natural Company, the current owner and operator
of such businesses. The lease will be on a month-to-month basis, terminable by
the Company or by the tenant on 30 days notice, at a rent in an amount to be
mutually agreed upon by the parties. The Company will not, however, be
purchasing any portion of the businesses operating on such premises. Skyline
Partners, L.P. and, its wholly owned subsidiary, Vermont Natural Company, are
affiliates of Josephthal. See 'Certain Transactions' and 'Underwriting.'
Upon the successful implementation of its strategy at Ascutney, the Company
intends to seek other opportunities that fit its core strategy of developing and
operating year-round affordable, family resorts. The Company believes there are
other possible development opportunities available to it. The Company further
believes that there is strong interest in families seeking affordable vacations
in year-round resorts near their primary residences that offer many of the
amenities found at larger destination resorts but on a friendlier, more personal
level. The Company's management team combines experience in ski resort
operation, mountain resort development and finance, and the Company believes
that its management is well suited to carry out its business strategy.
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RESORT MARKETING AND SALES
The primary objectives of the Company's marketing strategy for its
operations include (i) increasing the Company's market share of northeastern ski
visitors by continuing to increase the recognition associated with the Resort,
(ii) building demand during both peak and non-peak periods and (iii) expanding
the summer and shoulder season business of the Resort.
The Company's marketing methods include print media advertising in ski
industry and lifestyle publications whose readership the Company believes
generally reflects the demographic profile of the Resort's customers. The
Company is also active in a number of promotional programs such as discount
programs offered through local retailers designed to attract local day skiers.
Since 1995, the Company has produced its own magazine which promotes the
Resort's features and attractions while promoting the surrounding region as
well. In addition, the Company uses direct mail advertising and is placing
increasing emphasis on its web site which has generated up to 44,000 hits in a
single month.
Given the Resort's characteristics and layout, the Company's marketing
efforts concentrate on both the family vacation market and the conference
market. With the convenience of a self-contained resort village, coupled with
large hotel suites, the Company believes that the Resort is particularly well
suited for families with young children. In addition, the Resort has also
attracted group and conference business including corporate meetings,
conventions, weddings and ski groups. The Resort has fifteen function rooms that
range in size from approximately 500 square feet to over 4,000 square feet and
can accommodate groups from as small as 20 to as large as 500. The Company
believes that the Resort ranks among the top four conference centers in Vermont.
To increase awareness of the Ascutney name, the Company has entered into
sponsorship relationships with local and national companies and has hosted
several entertainment events, including concerts of the Vermont Symphony
Orchestra. The Resort has also hosted a number of sporting events including the
Mountain Dew'tm' Vertical Challenge and the Boston College Winter Carnival.
REGULATION AND LEGISLATION
The Company is subject to various laws and regulations relating to the
operation of its Resort and related activities, which are administered by
numerous federal, state and local governmental agencies. Additionally, the
mountain resort industry is subject to extensive regulation. The Company is or
may be subject to various federal, state and local environmental, zoning and
other statutes and regulations regarding the sale, subdivision, and acquisition
of real estate and timeshare interests and their financing. The Company believes
that it is in full compliance in all material respects with such applicable laws
and regulations.
Development of the Company's property in Vermont is subject to
comprehensive environmental legislation, commonly referred to as Act 250, as
well as state administrative regulations. This regulatory framework, in general,
encompasses such areas as water quantity and quality, air quality, traffic
considerations, availability of municipal services, use of natural resources,
impact of growth, energy conservation and utility services, conformance with
local and regional plans, and public building approvals, together with a number
of other safety and health regulations. Additionally, each municipality has its
own planning and zoning requirements.
Permits and approvals mandated by such regulation for development of any
magnitude are often numerous, significantly time-consuming and onerous to obtain
and not guaranteed. The permit processes are administered by numerous state,
regional and local boards and agencies with independent jurisdictions. Permits
when received are subject to appeal or collateral attack and, in some cases, are
of limited duration, after which review is necessary. These requirements have a
direct bearing on the ability of the Company or others to further develop their
resorts in Vermont. All other Vermont ski areas are also subject to similar
processes. While the Company believes that its operations and development goals
are and will be in full compliance in all material respects with applicable
federal, state and local requirements, it must be recognized that growth and
development opportunities within Vermont may be limited and more costly as a
result of these legislative, regulatory or municipal requirements.
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An application for an Act 250 Permit was filed by the previous owner of the
Resort for conceptual approval of a master plan for the Resort, including 560
condominiums and an 18-hole golf course. The District Environmental Commission
of the State of Vermont (the 'Commission') issued a conceptual Land Use Permit
in response to such application. The Commission found that the project described
in the application would not cause or result in a detriment to public health,
safety or general welfare under the criteria described in 10 V.S.A., Section
6086(a). However, the conceptual Land Use Permit issued by the Commission in
August 1987 has expired. A new application and subsequent approval thereof, as
well as other regulatory approvals, would be needed if the Company decided to
develop a golf course.
The Company would need to lease additional land from either the State of
Vermont or the Town of West Windsor or both if it were to expand ski operations
to the peak of Mt. Ascutney. Under the terms of the lease, either the Vermont
Department of Forests and Parks and/or the Town of West Windsor would be
expected to have the right to review and comment on the location, design and
construction of improvements on the leased land and on many operational matters.
The Vermont Department of Forests and Parks leases land to 7 of the 19 ski areas
in Vermont. The terms of such leases are substantially similar for all ski areas
and the payment is calculated as a percentage of gross lift ticket revenues
based on the number of lifts that a ski area builds on state-owned land. To the
Company's knowledge, no lease for a ski resort has ever been terminated by the
Vermont Department of Forests and Parks. See 'Risk Factors -- Permits and
Regulatory Matters.'
Many state and local authorities have imposed restrictions and additional
regulations on developers of vacation ownership properties. The Company is
subject to various regulatory requirements including state and local approvals.
These restrictions are expected to generally increase the cost of selling VOIs.
In compliance with state laws, the Company expects that the Joint Venture will
provide its vacation ownership purchasers with a public disclosure statement
which contains, among other items, detailed information about the surrounding
vicinity, the Resort and the purchaser's rights and obligations as an interval
owner. While permissible under Vermont law, the State of Vermont does not
expressly regulate VOIs. However, condominium regulations are applicable to VOIs
in the State of Vermont. The Company has set up the VOIs so as to comply in all
material respects with the Vermont Condominium Ownership Act as well as other
applicable state regulations. Accordingly, the Company has obtained local zoning
approval and has also applied for and expects to receive state land use
approval.
The Company expects that the Joint Venture's customer financing activities
will also be subject to extensive regulation, which may include the
Truth-in-Lending -- Regulation Z, the Fair Debt Collection Practices Act, the
Equal Credit Opportunity Act -- Regulation B, the Electronic Funds Transfer
Act -- Regulation E, the Home Mortgage Disclosure Act -- Regulation C, Unfair or
Deceptive Acts or Practices -- Regulation AA, the Real Estate Settlement
Procedures Act, the Consumer Credit Protection Act and the Right to Financial
Privacy Act. The Company believes that the Joint Venture will be in compliance
in all material respects with such regulations.
COMPETITION
The ski industry is highly competitive. The Company competes with mountain
resort areas in the United States, Canada and Europe for both destination and
day skiers, including mountain resorts in Vermont (many of which have greater
financial resources, greater name recognition and a greater share of the
market). The Company also competes with other leisure industry companies,
including warm weather resorts, for the vacation guest. The Company's major
North American competitors include the major New England ski areas, Colorado and
Utah mountain resorts, the Lake Tahoe mountain resorts in California and Nevada,
the Quebec mountain resorts and the major ski areas in the Canadian Rockies.
Many of the Company's current competitors have longer operating histories,
greater name recognition, larger customer bases and significantly greater
financial and marketing resources than the Company. The Company believes that
the Resort is one of a relatively small number of ski areas in North America
able to attract both the day skier and the destination guest by providing a
comprehensive vacation experience. The competitive position of the Resort is
dependent upon many diverse factors such as proximity to major metropolitan
areas, prevailing weather conditions, availability and cost of transportation to
the Resort, pricing of ski services offered, snowmaking capabilities, type
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and quality of skiing offered, duration of the ski season, the number, quality
and price of related services and lodging facilities, and the reputation of the
Resort.
Additionally, as the Company through the Joint Venture develops the VOI
program at the Resort, it may experience significant competition for customers
and for qualified personnel from other entities engaged in the business of
resort development, sales and operations, including vacation interval ownership,
condominiums, hotels and motels. Beginning in 1984 with the successful entry of
Marriott International, Inc. into the VOI business, many of the world's leading
lodging and hospitality companies have begun to develop and sell VOIs. Major
companies which now operate or are developing VOI resorts include The Walt
Disney Corporation, Hilton Hotels Corporation, Hyatt Corporation, Four Seasons
Hotels and Inter-Continental Hotels and Resorts. These companies possess
significantly greater financial, marketing, personnel and other resources than
those of the Company. Nevertheless, the vacation ownership industry remains
highly fragmented with many of North America's vacation ownership resorts owned
and operated by small, regional companies. Furthermore, there are other hotels
and vacation resorts in the Company's market that provide competitive
alternatives to the purchase of a VOI at the Resort.
EMPLOYEES
As of September 30, 1997, the Company had approximately 75 full-time,
year-round employees (approximately 30% engaged in hotel operations,
approximately 12% engaged in mountain operations, approximately 19% engaged in
food and beverage operations and approximately 39% engaged in administrative and
other miscellaneous operations) and approximately 175 additional peak-season
employees (approximately 17% engaged in hotel operations, approximately 56%
engaged in mountain operations, approximately 14% engaged in food and beverage
operations and approximately 13% engaged in administrative and other
miscellaneous operations). The Company believes that its employee relations are
satisfactory.
LEGAL PROCEEDINGS
The Company from time to time is involved in litigation in the ordinary
course of its business. The Company does not believe that it is involved in any
litigation that will, individually or in the aggregate, have a material adverse
effect on its business, financial condition or results of operations.
The athletic nature of the Company's ski operations subjects the Company to
litigation in the ordinary course of business, including claims for personal
injury. The Company maintains liability insurance that it considers adequate to
insure claims related to usual and customary risks associated with the operation
of a ski resort. See 'Risk Factors -- Adequacy of Insurance Coverage.'
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the executive
officers and directors of the Company upon the closing of the Offering:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH COMPANY
- ------------------------------------ ----- -----------------------------------------------------------
<S> <C> <C>
Steven H. Plausteiner............... 37 Chairman of the Board and Chief Executive Officer
Susan D. Plausteiner................ 37 Director, Chief Financial Officer and Secretary
Dusan Plausteiner................... 63 Director and Chief Operating Officer
David N. Deutsch.................... 38 Director - Nominee
Richard S. Frary.................... 50 Director - Nominee
Henry B. Lunde...................... 53 Director - Nominee
Dan Purjes.......................... 47 Director - Nominee
</TABLE>
STEVEN H. PLAUSTEINER co-founded the Company and has served as its Chairman
of the Board and its Chief Executive Officer since its inception. From April
1993 to January 1994, Mr. Plausteiner served as Senior Managing Director in
charge of Mortgage Backed Securities Sales and Trading at Smith Barney Inc. From
May 1991 to April 1993, Mr. Plausteiner served as a Managing Director of Daiwa
Securities America Inc. in the Collateralized Mortgage Obligations (CMO) area.
From September 1982 to February 1991, Mr. Steven Plausteiner held various
positions, including Senior Vice President -- Mortgage Trading Desk, of
Prudential Securities, Inc., formerly Prudential-Bache Securities, Inc. In 1995,
Mr. Plausteiner was elected to serve a one-year term on the Board of Directors
of the Vermont Ski Areas Association, the leading trade association of the
Vermont ski industry, and has been re-elected twice to serve successive one-year
terms. Mr. Plausteiner holds a Bachelor of Arts degree from Boston College.
SUSAN D. PLAUSTEINER co-founded the Company and has served as its Chief
Financial Officer since its inception. In September 1996, Ms. Plausteiner was
appointed by the Governor of Vermont to serve on the Board of Directors of the
Vermont Economic Development Authority, which promotes business development
through low cost and attractive loans. From October 1994 through September 1997,
Ms. Plausteiner served on the Board of Directors of the Vermont Chamber of
Commerce and in November 1994, she was appointed to the Board of Incorporators
for David's House, a charitable organization having its principal offices in
Hanover, New Hampshire. From September 1985 to June 1990, Ms. Plausteiner held
various positions, including Vice President -- Financial Institutions Group, of
Prudential Securities, Inc. Ms. Plausteiner is a graduate of Tufts University
from which she received a Bachelor of Arts degree and holds a Masters of
Business Administration degree from the Wharton School at the University of
Pennsylvania.
DUSAN PLAUSTEINER co-founded the Company and has served as its Chief
Operating Officer since its inception. Prior to joining the Company, he has held
numerous senior operation positions at several ski resorts in the northeastern
United States. From July 1990 to October 1993, Mr. Plausteiner served as Vice
President of Planning and Construction for the Olympic Regional Development
Authority, where he was in charge of planning and construction for the Whiteface
and Gore Mountain Ski Areas, all of the 1980 Winter Olympic venues including the
bobsled and luge runs, the biathlon and cross-country complex, and the Olympic
ice arena in Lake Placid, New York. From October 1976 to June 1990, Mr.
Plausteiner held various positions, including Director and Associate Manager of
the Whiteface Ski Center in Lake Placid, New York, where he was, among other
things, responsible for planning and development of the Ski Center in
preparation for the 1980 Winter Olympics. From 1957 to 1976, Mr. Plausteiner
held various positions at Mount Snow, a leading Vermont ski resort, including
Vice President -- Operation and Planning of Mount Snow Development Corporation,
Vice President for Planning and Maintenance of Mount Snow Hotel Corporation and
Operations Manager of Mount Snow. In 1971, he was appointed to the Board of
Directors of the Mount Snow Corporation, the parent company for the Mount Snow
resort and ski operations, on which he served until June 1976. In 1973, Mr.
Plausteiner was appointed by the Governor of Vermont to the Vermont Tramway
Board where he chaired the Tramway Code Revision until June 1976.
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DAVID N. DEUTSCH will serve as a Director of the Company commencing with
the closing of this Offering. Mr. Deutsch is the founder and President of David
N. Deutsch & Company, Inc. ('DND & Co.'), a private investment banking and
strategic advisory firm. Prior to founding DND & Co. in September 1993, Mr.
Deutsch was Managing Director, Investment Banking at Congress Financial
Corporation ('Congress'), an asset-based lender specializing in the structuring,
financing and refinancing of middle market leveraged acquisitions and troubled
companies from May, 1990 to August, 1993. Before joining Congress, Mr. Deutsch
held positions with Bear, Stearns & Co. Inc., where he was a Vice President
specializing in debt and equity financings and Drexel Burnham Lambert
Incorporated, where he was a member of the Corporate Finance and High Yield and
Convertible Bond departments. Mr. Deutsch received his B.A. from Middlebury
College and his MBA from Columbia University School of Business.
RICHARD S. FRARY will serve as a Director of the Company commencing with
the closing of this Offering. Mr. Frary is one of the founding partners and a
managing director of Tallwood Associates, Inc. which advises real estate
companies on capital markets transactions and acquisitions and restructuring
opportunities and identifies and structures principal transactions for Tallwood
and outside investors. Prior to founding Tallwood in March 1990, Mr. Frary was a
managing director at Drexel Burnham Lambert Inc. During his eleven years at
Drexel, Mr. Frary was head of the Drexel Corporate Finance Department's real
estate group which was responsible for in excess of $15 billion of corporate and
mortgage financing for public and private real estate companies and corporate
clients and was a member of Drexel's Executive Committee. Mr. Frary is currently
serving on the Boards of Directors of Washington Homes, Inc., a publicly-held
homebuilding Company, Value Property Trust, a real estate investment company,
and CGA Group LTD., a Bermuda based real estate company. Mr. Frary received his
MBA from Harvard Business School. Mr. Frary is a principal of Tallwood. See
'Certain Transactions.'
HENRY B. LUNDE will serve as a Director of the Company commencing with the
closing of this Offering. Mr. Lunde is currently President and a Director of
Stowe Mountain Resort, a leading ski resort in North America. From 1969 to 1996,
Mr. Lunde held numerous positions at SKI Ltd., a mountain resort holding company
which owned ski resorts across the country including Killington, Vermont, Mount
Snow, Vermont, Haystack, Vermont, Waterville Valley, New Hampshire,
Sugarloaf/USA, Maine, and Bear Mountain, California, including President, Chief
Operating Officer and Director. Mr. Lunde has previously served on the Boards of
Directors of the Vermont Ski Areas Association, Resort Technology, Inc., a
designer and manufacturer of Snowmaking systems and equipment, Rutland Regional
Medical Center and the Proctor Bank. Mr. Lunde is currently serving on the
Boards of Directors of Fletcher Allen Health Care, a major regional medical
center located in Burlington, Vermont and The Vermont Health Plan, a non-profit,
Vermont-based health maintenance organization.
DAN PURJES will serve as a Director of the Company commencing with the
closing of this Offering. Mr. Purjes has been Chairman and CEO of Josephthal, an
investment banking and brokerage firm and a member of the New York Stock
Exchange and other principal exchanges since 1988. Previous to his appointment
as CEO of Josephthal, he served as its Director of Investment Banking. Prior to
joining Josephthal in 1985, Mr. Purjes was a Vice President with a number of
securities firms including Bear Stearns & Co. and L.F. Rothschild Unterberg
Towbin. Mr. Purjes is also Chairman of NUR Advanced Technologies, Ltd., a
digital jet printer company. Mr. Purjes has B.S. and M.S. degrees in Computer
Sciences from the City College of New York School of Engineering. Mr. Purjes is
an affiliate of Josephthal. See 'Certain Transactions.'
Ms. Susan Plausteiner is the wife of Mr. Steven Plausteiner and
daughter-in-law of Mr. Dusan Plausteiner. Mr. Steven Plausteiner is the son of
Dusan Plausteiner. There are no other family relationships among the officers
and directors of the Company.
Committees of the Board of Directors. Effective upon the closing of this
Offering, the Company will establish an Audit Committee which will consist of
such non-employee directors appointed upon the closing of the Offering as
designated by the Board of Directors. The Audit Committee will be responsible
for reviewing and making recommendations regarding the Company's employment of
independent auditors, the annual audit of the Company's financial statements and
the Company's
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internal accounting controls, practices and policies. Additionally, the Company
will establish a Compensation Committee which will consist of those non-employee
directors appointed upon the closing of the Offering as designated by the Board
of Directors. It will be responsible for making recommendations to the Board of
Directors regarding compensation arrangements for executive officers of the
Company, including annual bonus compensation, and will consult with management
of the Company regarding compensation policies and practices. The Compensation
Committee will also make recommendations concerning the adoption of any
compensation plans in which management is eligible to participate, including the
granting of stock options or other benefits under such plans.
Directors' and Officers' Terms and Directors' Fees. Effective upon the
closing of this Offering, the Company's Board of Directors will consist of six
members. Each director is elected for a period of one year at the Company's
annual meeting of stockholders and serves until his or her successor is duly
elected and qualified. Directors who are not employees of the Company will
receive an annual retainer of $1,000 and options to purchase shares of the
Company's Common Stock pursuant to the Company's 1997 Stock Option Plan for
Non-Employee Directors. Each option will have a term of five (5) years from the
date of grant, unless earlier terminated. The options are exercisable in whole
or in part on the earlier of (i) the first anniversary of the grant date of the
option, or (ii) death, or (iii) disability. See 'Management -- 1997 Stock Option
Plan for Non-Employee Directors.' All directors will be reimbursed for
out-of-pocket expenses incurred in connection with attendance at meetings of the
Board of Directors or committees thereof. Directors who are also officers of the
Company will not be compensated for their services as directors.
Each of the executive officers serves at the pleasure of the Company's
Board of Directors. See 'Management -- Employment Agreements.'
EXECUTIVE COMPENSATION
No compensation was paid or was payable to the Chief Executive Officer
('CEO') of the Company and none of the Company's most highly compensated
executive officers had combined salaries and bonuses that equalled or exceeded
$100,000 for the years ended December 31, 1994, 1995 and 1996 (collectively,
with the CEO, the 'Named Executive Officers'). The primary reason that the
Company incurred such limited salary expense was due to the need to make
significant investment in its business during the period of the commencement of
the Company's operations under its new management team.
EMPLOYMENT AGREEMENTS
Steven H. Plausteiner will enter into a three-year employment agreement
with the Company which is to commence upon the closing of the Offering. Under
the terms of his employment agreement, Steven Plausteiner will be entitled to
receive an annual base salary of $100,000, which may be increased at the sole
discretion of the Board of Directors, plus a bonus determined by the Board of
Directors after considering the Company's profitability, the CEO's performance,
and the total compensation given to executives in a similar position at
companies similar to the Company. Steven Plausteiner will also be entitled to
receive benefits offered to the Company's senior executives generally by the
Company.
In the event of the termination of Steven Plausteiner's employment by the
Company, other than for 'cause', the termination of employment by Steven
Plausteiner for 'good reason' or the termination by Steven Plausteiner following
a breach by the Company of any material provision of the agreement, Steven
Plausteiner will be entitled to a lump sum payment equal to the annual base
salary for the remaining term of the employment agreement. In the event of the
death of Steven Plausteiner during the term of his employment agreement, his
designated beneficiary (or if none, his estate) shall receive a lump sum payment
equal to the annual base salary for the remaining term of the employment
agreement. The Company will pay the premiums for life insurance on behalf of
Steven Plausteiner.
Susan D. Plausteiner will enter into a three-year employment agreement with
the Company which is to commence upon the closing of the Offering. Susan
Plausteiner's employment agreement will be substantially identical to Steven
Plausteiner's employment agreement with the Company with the only difference
being the amount of the premium for term life insurance.
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ADVISORY AND CONSULTING AGREEMENT
The Company has entered into an advisory and consulting agreement with
Tallwood for a one year period commencing January 1, 1998. Tallwood will advise
the Company on real estate finance and development. Mr. Frary, who is a
principal and managing director of Tallwood, will serve as a director of the
Company commencing with the closing of this Offering. As compensation for its
services to be rendered under the advisory and consulting agreement, Tallwood
was granted on January 1, 1998 options to purchase 40,000 shares of Common
Stock. The options have a term of 5 years from the date of grant and are
exercisable, in whole or in part, from the first anniversary of the grant date
of the option at an exercise price of $5.00 per share of Common Stock. Tallwood
has agreed not to sell or transfer, other than to family members or a trust for
the benefit of family members, any of its options for a period of twelve (12)
months commencing on the date of this Prospectus, without the prior written
consent of the Company. Mr. Frary and Mr. Mael, the principal stockholders of
Tallwood, are each expected to make a loan to the Company. See 'Management
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources.'
1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (THE '1997 PLAN')
The 1997 Plan was approved by the Board of Directors in August 1997 and is
expected to be approved by the stockholders prior to the closing of the
Offering.
The purpose of the 1997 Plan is to promote the interests of the Company and
its stockholders by increasing the proprietary and vested interest of
non-employee Directors in the growth and performance of the Company.
The 1997 Plan provides for awards of nonqualified options to individuals
who are non-employee Directors of the Company or its affiliates (other than Mr.
Dan Purjes who may only receive awards after serving on the Board of Directors
for twelve consecutive months) as of the date of grant of an option to him
('Eligible Directors'). Unless earlier terminated pursuant to the terms of the
1997 Plan, each option shall have a term of 5 years from the date of grant. The
options are exercisable in whole or in part on the earlier of (i) the first
anniversary of the grant date of the option, or (ii) death, or (iii) disability.
The exercise price per share of Common Stock shall be the greater of 100% of the
fair market value per share on the date the option is granted and the initial
public offering price of the Common Stock as set forth herein.
Pursuant to the 1997 Plan, each Eligible Director will be awarded an Annual
Grant (as defined below). Upon first election or appointment to the Board of
Directors at other than an annual meeting, each newly elected Eligible Director
will be granted an option to purchase a number of shares of Common Stock (the
'Initial Grant') determined by multiplying 7,500 by a fraction the numerator of
which is the number of whole months until the next Annual Grant and the
denominator of which is 12. Immediately following each annual meeting of the
stockholders commencing with the meeting in calendar year 1998, each Eligible
Director, provided that such Eligible Director has attended a required minimum
number of Board of Directors and committee meetings during the year, will be
granted an option to purchase 7,500 shares of Common Stock (an 'Annual Grant').
No Eligible Director may be awarded more than one Initial Grant.
The maximum number of shares of Common Stock with respect to which awards
may be granted under the 1997 Plan is 150,000. There are no outstanding awards
or options. Shares of Common Stock subject to options that terminate or expire
without the delivery of Common Stock will again be available for awards. Also,
shares tendered to the Company in satisfaction or partial satisfaction of the
exercise price of any award will increase the number of shares available for
awards except to the extent prohibited by Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'). The shares of Common
Stock to be delivered under the 1997 Plan will be made available from the
authorized but unissued shares of Common Stock or from treasury shares.
The Company has agreed with the Representative that for a nine (9)-month
period commencing on the date of this Prospectus, that it will not, without the
consent of the Representative, adopt or propose to adopt any plan or arrangement
permitting the grant, issue or sale of any shares of its Common Stock or issue,
sell or offer for sale any of its Common Stock, or grant an option for its
Common Stock, except
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for options to purchase up to an aggregate of 150,000 shares of Common Stock
which shall have an exercise price per share no less than the greater of (a) the
initial public offering price of the Common Stock set forth herein and (b) the
fair market value of the Common Stock on the date of grant. No option or other
right to acquire Common Stock granted, issued or sold during this period shall
permit (a) the payment with any form of consideration other than cash, (b)
payment of less than the full purchase price or exercise price for such shares
of Common Stock or other securities of the Company on or before the date of
issuance, or (c) the existence of stock appreciation rights, phantom options or
similar arrangements.
The 1997 Plan is administered by the Board of Directors. Subject to the
provisions of the 1997 Plan, the Board is authorized to interpret the 1997 Plan,
to establish, amend and rescind any rules and regulations relating to it and to
make all other determinations necessary or advisable for its administration;
provided, however, that the Board has no discretion with respect to the
selection of Directors to receive options, the number of shares of Common Stock
subject to any such options, the purchase price thereunder or the timing of
grants of options. The determinations of the Board in the administration of the
1997 Plan, as described herein, shall be final and conclusive.
The exercise price of options may be satisfied in cash or, if permitted by
the Board with respect to options granted after the nine (9) month period that
commences on the date of this Prospectus, at the time of grant, by exchanging
shares of Common Stock which have been owned by the optionee for at least six
months, or by a combination of cash and shares of Common Stock.
The options granted under the 1997 Plan may not be assigned or transferred,
except by will or the laws of descent and distribution.
No award may be granted under the 1997 Plan after the day following the
tenth annual meeting of stockholders at which Directors are elected.
The Board of Directors may amend or revise the 1997 Plan in whole or in
part at any time, subject to certain limitations set forth in the 1997 Plan.
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CERTAIN TRANSACTIONS
COMBINATION TRANSACTION
Prior to the consummation of the Offering, the Resort was owned by three
Delaware limited partnerships which are affiliates of the Company: Ascutney
Mountain Resort Hotel, L.P., Ascutney Mountain Resort, L.P. and Ascutney
Mountain Resort Realty, L.P. (collectively, the 'Limited Partnerships'). In
addition, Ascutney Mountain Resort Foods, Inc., a Vermont corporation and
affiliate of the Company ('Foods'), is the holder of a liquor license for the
Resort. Further, Ascutney Mountain Resort Services, Inc., a Delaware corporation
and affiliate of the Company ('Services'), managed the Resort on behalf of the
Limited Partnerships. Immediately prior to the closing of this Offering, the
Company will acquire all of the partnership interests of each of the Limited
Partnerships and all of the outstanding shares of capital stock of Foods. It is
expected that Services will be dissolved.
Immediately prior to the closing of the Offering, all of the partnership
interests in each of the Limited Partnerships will be exchanged for an aggregate
of 1,207,500 shares of Common Stock of Snowdance, Inc. (the 'Combination
Transaction'). The amount of shares of Common Stock that will be issued by the
Company in exchange for all of the partnership interests in each of the Limited
Partnerships was determined by the parties. The factors considered in
determining such consideration included, in addition to prevailing market
conditions, the history of and the prospects for the industry in which the
Company competes, an assessment of the Company's management, the prospects of
the Company, its capital structure and such other factors that were deemed
relevant. Each of the Limited Partnerships has a corporate general partner which
has a 1% interest in the Limited Partnership of which it is general partner. All
of the issued and outstanding shares in each of the corporate general partners
are owned by Susan D. Plausteiner. All other interests in the Limited
Partnerships are owned by Steven H. Plausteiner or Susan D. Plausteiner. As a
result of the Combination Transaction, immediately prior to the closing of this
Offering, all of the outstanding shares in the Company will be owned by Steven
H. Plausteiner or Susan D. Plausteiner. Based on discussions with its tax
advisor, the Company's management expects that the Combination Transaction will
be treated as an Internal Revenue Code Section 351 transaction and be tax free
to the Company and the Limited Partnerships. The Company has been advised by its
tax advisor that in the event the Combination Transaction is not treated as a
tax free transaction, any resulting tax liability would be the responsibility of
the Principal Stockholders, not of the Company or the Limited Partnerships. In
addition, immediately prior to the closing of this Offering, Steven H.
Plausteiner and Susan D. Plausteiner will contribute all of the outstanding
shares of capital stock of Foods to Snowdance, Inc. as a capital contribution
and Foods will become a wholly-owned subsidiary of Snowdance, Inc. As part of
the Combination Transaction, the Company will receive an ownership interest in
3/4 of 1 condominium unit which was previously owned by Ascutney Mountain Resort
Realty, L.P.
Immediately prior to the closing of this Offering, the Company, as lessee,
will enter into a 'net' lease agreement with Steven H. Plausteiner and Susan D.
Plausteiner, as lessors, to lease 17 slope side condominium units. It is
contemplated that the Company will pay all expenses associated with each of the
condominium units other than debt service on the underlying mortgage loans and
that the Company will have an option to buy each condominium unit for a net
purchase price of $110,000 at any time during the initial lease term or any
renewal term. The Company expects that the annual rent for each condominium unit
will be approximately $6,000 to $8,000 and that the lease will have a term of 5
years with an option to renew for 5 years. The foregoing lease transaction,
though not the result of arms-length negotiations, is on terms that the Company
believes are at least as favorable as those which the Company could have
obtained from an independent third party.
Upon the closing of the Offering, the Company will have a policy to deal
with conflicts of interest by requiring that the affirmative vote of at least a
majority of the distinterested members of the Board of Directors present at any
meeting be required for any action of the Board of Directors and such policy
shall otherwise be in accordance with Delaware General Corporation Law.
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AFFILIATE INVESTMENTS
Since acquiring the Resort in 1993, Steven and Susan Plausteiner have: (i)
provided cash to the Company of approximately $3,153,400 in the form of equity
financing, (ii) guaranteed loans for the Company having an aggregate initial
principal amount of $2,140,000 through September 30, 1997 and (iii) loaned the
Company approximately $1,737,500 through September 30, 1997 (the 'Related
Loans'). It is expected that approximately $1,180,000 of the Related Loans
currently outstanding will be converted, prior to the closing of the Offering,
by Steven and Susan Plausteiner to a capital contribution to the Company,
without any additional shares being issued to Steven and Susan Plausteiner in
connection with such capital contributions. The remaining $537,000 of Related
Loans which were made by Steven and Susan Plausteiner in the first six months of
1997 will continue to be obligations of the Company. Beginning January 1, 1998,
the Related Loans accrue interest at a rate of 8% per annum and mature on
January 1, 2008. All of the foregoing funds were used by the Resort to
recommence operations in the winter of 1993-94, to improve the Resort's
infrastructure, including upgraded snowmaking and grooming capabilities and for
working capital.
HOGBACK ACQUISITION
Upon the consummation of this Offering, the Company will exchange an
aggregate of 292,500 shares of Common Stock for Hogback Mountain which is
currently owned by Skyline Partners, L.P. An independent appraisal, dated
November 7, 1997, has valued Hogback Mountain at approximately $3,500,000. There
can be no assurance, however, that such appraisal represents the fair market
value of Hogback Mountain. The Company will lease certain buildings located at
Hogback Mountain to Vermont Natural Company. See 'Business -- Business
Strategy -- Opportunities for Further Development.' Skyline Partners, L.P. and
its wholly-owned subsidiary, Vermont Natural Company are controlled by Mr. Dan
Purjes, the Chairman and Chief Executive Officer of Josephthal, and a director
of the Company upon the closing of this Offering. Certain other affiliates of
Josephthal are also beneficial owners of Skyline Partners, L.P. See
'Underwriting.'
TALLWOOD AGREEMENTS
The Company has entered into a one year advisory and consulting agreement
with the Company. Mr. Frary, who is a principal and managing director of
Tallwood, will serve as a director of the Company upon the closing of the
Offering. The Company has also reached a preliminary understanding, subject to
definitive documentation, with Mr. Frary and Mr. Mael, the principal
stockholders of Tallwood, whereby they will loan the Company an aggregate amount
of $100,000. Should the Company enter into the loans, it intends to repay the
loans in full out of the proceeds of the Offering. See 'Management -- Consulting
Agreements' and 'Management Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources.'
41
<PAGE>
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock, assuming that the Combination
Transaction and the Hogback Acquisition have been consummated as of the date
hereof, before and after giving effect to the sale of the shares of Common Stock
offered hereby, by (i) each person who is known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
Director of the Company, (iii) each of the Named Executive Officers and (iv) all
Directors, Director-Nominees and Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
PERCENT BENEFICIALLY OWNED
NAME AND ADDRESS NUMBER OF SHARES ---------------------------------------
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) BEFORE OFFERING(1) AFTER OFFERING(1)
- ------------------------------------------- --------------------- ------------------ -----------------
<S> <C> <C> <C>
Steven H. Plausteiner(2) .................. 1,500,000 100% 50%
c/o Snowdance, Inc.
Route 44
Brownsville, VT 05037
Susan D. Plausteiner(2) ................... 1,500,000 100% 50%
c/o Snowdance, Inc.
Route 44
Brownsville, VT 05037
Skyline Partners, L.P.(3)(6) .............. 292,500 20% 10%
c/o Josephthal & Co. Inc.
200 Park Avenue
New York, NY 10166
Dusan Plausteiner ......................... 0 -- --
c/o Snowdance, Inc.
Route 44
Brownsville, VT 05037
David N. Deutsch .......................... 0 -- --
c/o David N. Deutsch & Company, Inc.
150 East 58th St.
New York, NY 10155
Richard S. Frary .......................... 0 -- --
c/o Tallwood Associates, Inc.
1350 Avenue of the Americas
New York, NY 10019
Henry B. Lunde ............................ 0 -- --
RD #1
Box 1022
Pittsford, VT 05763
Dan Purjes(3)(4)(5)(6) .................... 292,500 20% 10%
c/o Josephthal & Co. Inc.
200 Park Avenue
New York, NY 10166
All Directors, Director-nominees and
Executive Officers as a group (6
persons)................................. 1,500,000 100% 50%
</TABLE>
- ------------
(1) Unless otherwise indicated, each person has sole investment and voting power
with respect to the shares listed in the table.
(2) Represents 603,750 shares held by Steven H. Plausteiner, 603,750 held by
Susan D. Plausteiner, each a Director and a Named Executive Officer of the
Company and 292,500 shares over which the Principal Stockholders have voting
control for a limited time through an irrevocable proxy to be given to the
Principal Stockholders by Skyline Partners, L.P. upon consummation of the
Offering. See 'Underwriting.'
(3) Skyline Partners, L.P. is an entity controlled by Mr. Dan Purjes, who will
serve as a Director of the Company commencing with the closing of the
Offering. The general partner of Skyline Partners, L.P. is Skyline Partners,
Inc. Mr. Dan Purjes is the sole director of Skyline Partners, Inc. Skyline
Partners, L.P. will grant, upon the consummation of the Offering, an
irrevocable proxy to the Principal Stockholders for all of its 292,500
shares for a limited time. See 'Underwriting'.
(4) Mr. Purjes will serve as a Director of the Company commencing with the
closing of the Offering.
(5) Represents 292,500 shares of Common Stock held by Skyline Partners, L.P., an
entity which Mr. Purjes controls, and, accordingly he may be deemed to
beneficially own such shares.
(6) The directors and executive officers of Josephthal & Co. Inc. are Dan
Purjes, Lawrence Rice, Charles Roden and Scott Weisman.
42
<PAGE>
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 4,900,000 shares of
Common Stock, par value $0.001 per share, and 100,000 shares of preferred stock,
par value $.01 per share, issuable in series (the 'Preferred Stock'). As of
September 30, 1997, there were no shares of Common Stock outstanding. Upon the
completion of this Offering and consummation of the Hogback Acquisition, there
will be 3,000,000 shares of Common Stock outstanding (3,225,000 shares if the
Underwriters' over-allotment option is exercised in full) and no shares of
Preferred Stock outstanding.
The following description of the Company's capital stock does not purport
to be complete and is subject in all respects to applicable Delaware law and to
the provisions of the Company's Certificate of Incorporation and By-Laws, in
each case as amended to date.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor. Upon the liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to receive ratably
the net assets of the Company available after the payment of all debts and other
liabilities. Holders of Common Stock have no preemptive, subscription,
redemption or conversion rights. The outstanding shares of Common Stock are, and
the shares offered by the Company in this Offering will be, when issued and paid
for, fully paid and nonassessable.
PREFERRED STOCK
The Company's Certificate of Incorporation provides that the Board of
Directors (or a committee designated by the Board of Directors) is authorized,
subject to certain limitations prescribed by law, without further stockholder
approval, to issue from time to time up to an aggregate of 100,000 shares of
Preferred Stock in one or more series and to fix or alter the designations,
powers, preferences, rights and any qualifications, limitations and restrictions
of the shares of each such series thereof, including the dividend rights,
conversion rights, voting rights and the number of shares constituting any
series or designations of such series. The issuance of Preferred Stock may have
the effect of delaying, deferring or preventing a change in control of the
Company. The rights, preferences and privileges of holders of Common Stock are
subject to, and may be adversely affected by, the rights of the holders of
shares of any series of Preferred Stock which the Company may designate and
issue in the future. The Company has no present plans to issue any shares of
Preferred Stock.
REGISTRATION RIGHTS
The Representatives of the Underwriters, as holder of the Representatives'
Warrants, has 'piggyback' rights to include the shares underlying the
Representatives' Warrants in any registration statement filed by the Company
during the period ending six (6) years from the closing of this Offering and
also has 'demand' rights during the period ending five (5) years from the
closing of this Offering to require, by action of not less than the holders of a
majority of the Representatives' Warrants, up to one 'demand' registration by
the Company, of the shares underlying the Representatives' Warrants. In
addition, any holder of the Representatives' Warrants has 'demand' rights during
the period ending five (5) years from the closing of this Offering to require
one 'demand' registration of the shares underlying such holder's warrants,
solely at the expense of such holder.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the 'DGCL'). Subject to certain exceptions, Section 203
prohibits a publicly-held Delaware corporation from engaging in a 'business
combination' with an 'interested stockholder' for a period of three years
following the time that such stockholder became an interested stockholder,
unless the
43
<PAGE>
<PAGE>
interested stockholder attained such status with the approval of the Board of
Directors, owned at least 85% of the voting stock of the corporation outstanding
at the time the transaction commenced (subject to certain exclusions), or unless
the business combination is approved in a prescribed manner. A 'business
combination' includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder. Subject to certain exceptions,
an 'interested stockholder' is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
As permitted by the DGCL, the Certificate of Incorporation and By-Laws
provide that directors of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which
the director shall derive an improper personal benefit. In addition, the
Certificate of Incorporation provides that the Company shall, to the fullest
extent authorized by the DGCL, as amended from time to time, indemnify and hold
harmless all directors and officers against all expense, liability and loss
reasonably incurred or suffered by such indemnitee in connection therewith. Such
indemnification shall continue as to an indemnitee who has ceased to be a
director or officer and shall inure to the benefit of the indemnitee's heirs,
executors and administrators. The right to indemnification includes the right to
be advanced funds from the Company for expenses incurred in defending any
proceeding for which a right to indemnification is applicable.
The Company's By-Laws provide that special meetings of the stockholders may
be called at any time by resolution of the Board of Directors, or by the
Chairman of the Board, or at the request of stockholders owning 50% or more of
the issued and outstanding capital stock of the Company and entitled to vote,
but may not generally be called by other persons.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock of the Company is
Continental Stock Transfer & Trust Company, 2 Broadway, New York, New York
10004.
44
<PAGE>
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this Offering, the Company anticipates that it
will have 3,000,000 shares of Common Stock outstanding (3,225,000 if the
Underwriters' over-allotment option is exercised in full), excluding the shares
of Common Stock issuable upon exercise of the Representatives' Warrants. The
1,500,000 shares of Common Stock offered hereby (1,725,000 if the Underwriters'
over-allotment option is exercised in full), will be freely tradeable without
restriction or further registration under the Securities Act, except for any
shares purchased by an 'affiliate' of the Company (in general, a person who has
a control relationship with the Company) which will be subject to the
limitations of Rule 144 adopted under the Securities Act. All of the remaining
1,500,000 shares are deemed to be 'restricted securities,' as that term is
defined under Rule 144 promulgated under the Securities Act, in that such shares
were issued and sold by the Company in private transactions not involving a
public offering.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or other persons whose shares are aggregated), who has owned
restricted shares of common stock beneficially for at least one year is entitled
to sell, within any three-month period, a number of shares that does not exceed
the greater of one percent of the total number of outstanding shares of the same
class or the average weekly trading volume during the four calendar weeks
preceding the sale. A person who has not been an affiliate of the Company for at
least the three months immediately preceding the sale and who has beneficially
owned shares of common stock of the Company for at least two years is entitled
to sell such shares under Rule 144 without regard to any of the limitations
described above.
All of the Company's officers, directors and existing stockholders have
agreed not to, directly or indirectly, offer to sell, sell, transfer,
hypothecate or otherwise encumber any of their shares of Common Stock of the
Company for a period of nine (9) months from the date of this Prospectus,
without the prior written consent of Josephthal and the Company (except Skyline
Partners, L.P. which has agreed, in connection with the 292,500 shares of Common
Stock issued in connection with the Hogback Acquisition, not to, directly or
indirectly, offer to sell, sell, transfer, hypothecate or otherwise encumber
226,436 shares of Common Stock, representing those shares beneficially owned by
principals and employees of Josephthal, for a period of twenty four (24) months,
and 66,064 shares of Common Stock, representing those shares owned by
individuals not affiliated with Josephthal for a period of thirteen (13) months
without the prior written consent of the Company). Upon consummation of the
Offering, Skyline Partners, L.P. has agreed to grant an irrevocable proxy to the
Principal Stockholders allowing them to vote the respective number of shares of
Common Stock set forth above held by Skyline Partners, L.P. for the respective
periods of time during which the above restrictions apply.
In addition, prior to this Offering, there has been no market for the
Common Stock and no prediction can be made as to the effect, if any, that market
sales of shares of Common Stock or the availability of such shares for sale will
have on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of common stock of the Company may be sold
in the public market may adversely affect prevailing market prices for the
Common Stock and could impair the Company's ability to raise capital through the
sale of its equity securities. See 'Risk Factors -- No Prior Public Market;
Possible Volatility of Stock Price' and 'Risk Factors -- Shares Eligible for
Future Sale.'
45
<PAGE>
<PAGE>
UNDERWRITING
The Underwriters named below (the 'Underwriters'), for whom Josephthal &
Co. Inc. and Cruttenden Roth Incorporated are acting as the representatives (the
'Representatives'), have severally agreed, subject to the terms and conditions
of the Underwriting Agreement (the 'Underwriting Agreement'), to purchase from
the Company and the Company has agreed to sell to the Underwriters on a firm
commitment basis the respective number of shares of Common Stock set forth
opposite their names:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ------------------------------------------------------------------------------------- ----------------
<S> <C>
Josephthal & Co. Inc.................................................................
Cruttenden Roth Incorporated.........................................................
----------------
Total...................................................................... 1,500,000
----------------
----------------
</TABLE>
The Underwriters are committed to purchase all shares of the Common Stock
offered hereby if any of such shares are purchased. The Underwriting Agreement
provides that the obligations of the several Underwriters are subject to
conditions precedent specified therein.
The Company has been advised by the Representatives that the Underwriters
propose to initially offer the shares of Common Stock to the public at the
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less concessions of not in excess of $. per
share. Such dealers may reallow a concession not in excess of $. per share
of Common Stock to other dealers. After the initial distribution of the shares
of Common Stock offered hereby has been completed, the public offering price,
concession and reallowance may be changed by the Representatives. No such
change, however, shall change the amount of proceeds to be received by the
Company as set forth on the cover page of this Prospectus.
The Representatives have advised the Company that they do not anticipate
sales to discretionary accounts by the Underwriters to exceed five percent of
the total number of shares offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in connection with this
Offering. The Company has also agreed to pay to the Representatives an expense
allowance on a non-accountable basis equal to two and one-half percent (2 1/2%)
of the gross proceeds derived from the sale of the Common Stock underwritten,
none of which has been paid to date.
The Underwriters have been granted an option by the Company, exercisable
within forty-five (45) days after the date of this Prospectus, to purchase up to
an additional 225,000 shares of Common Stock at the initial public offering
price per share of Common Stock offered hereby, less underwriting discounts and
the non-accountable expense allowance. Such option may be exercised only for the
purpose of covering over-allotments, if any, incurred in the sale of the Common
Stock offered hereby. To the extent such option is exercised in whole or in
part, each Underwriter will have a firm commitment, subject to certain
conditions, to purchase the number of the additional shares of Common Stock
proportionate to its initial commitment.
Josephthal may be deemed an affiliate of the Company by virtue of the fact
that (i) an affiliate of Josephthal has entered into a business transaction with
the Company and has been issued 292,500 shares of Common Stock in connection
therewith, (ii) Josephthal may provide advisory services to the Company in the
future and (iii) an affiliate of Josephthal shall serve on the Company's Board
of Directors upon the closing of the Offering.
All of the Company's officers, directors and existing stockholders have
agreed not to, directly or indirectly, offer to sell, sell, transfer,
hypothecate or otherwise encumber any of their securities for nine (9) months
following the date of this Prospectus, without the prior written consent of
Josephthal and the Company (except Skyline Partners, L.P. which has agreed, in
connection with those shares issued in connection with the Hogback Acquisition,
not to, directly or indirectly, offer to sell, sell, transfer, hypothecate or
otherwise encumber 226,436 shares of Common Stock, representing those shares
beneficially owned by principals and employees of Josephthal, for a period of
twenty four (24) months,
46
<PAGE>
<PAGE>
and 66,064 shares of Common Stock, representing those shares owned by
individuals not associated or affiliated with Josephthal for a period of
thirteen (13) months without the prior written consent of the Company). Upon
consummation of the Offering, Skyline Partners, L.P. has agreed to grant an
irrevocable proxy to the Principal Stockholders allowing them to vote the
respective number of shares of Common Stock set forth above held by Skyline
Partners, L.P. for the respective periods of time during which the above
restrictions apply. An appropriate legend shall be marked on the face of the
certificates representing all of such securities.
The Company has also agreed that in connection with the Company's
discussions and negotiations with timeshare developers, Josephthal shall act as
the Company's exclusive financial advisor. Josephthal will receive a fee to be
mutually and reasonably agreed upon in good faith by the Company and Josephthal,
upon the consummation of a transaction with the Company and a timeshare
developer that Josephthal introduced to the Company.
In connection with this Offering, the Company has agreed to sell to the
Representatives, for nominal consideration, the Representatives' Warrants to
purchase from the Company 150,000 shares of Common Stock. The Representatives'
Warrants are initially exercisable for shares of Common Stock at a price per
share equal to 120% of the initial public offering price per share of Common
Stock for a period of four (4) years commencing one (1) year from the date of
this Prospectus and are restricted from sale, transfer, assignment, or
hypothecation for a period of twelve (12) months from the date hereof. The
Representatives' Warrants grant to the holders thereof certain rights of
registration for the securities issuable upon exercise of the Representatives'
Warrants. See 'Description of Capital Stock -- Registration Rights.'
The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Reference is made to a copy
of each such agreement which are filed as exhibits to the Registration
Statement. See 'Available Information.'
In connection with this Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offering than
they are committed to purchase from the Company, and in such case may purchase
Common Stock in the open market following completion of the Offering to cover
all or a portion of such short position. The Underwriters may also cover all or
a portion of such short positions, up to 225,000 shares of Common Stock, by
exercising the over-allotment option. In addition, the Representatives may
impose 'penalty bids' under contractual arrangements with the Underwriters,
whereby it may reclaim from an Underwriter (or dealer participating in the
Offering) for the account of other Underwriters, the selling concession with
respect to Common Stock that is distributed in the Offering but subsequently
purchased for the account of the Underwriters in the open market. Any of the
transactions described in this paragraph may result in the maintenance of the
price of the Common Stock at a level above that which might otherwise prevail in
the open market. None of the transactions described in this paragraph is
required, and, if they are undertaken, they may be discontinued at any time.
Upon the consummation of this Offering, the Company will exchange an
aggregate of 292,500 shares of its Common Stock for Hogback Mountain which is
currently owned by Skyline Partners, L.P. An independent appraisal, dated
November 7, 1997, has valued Hogback Mountain at approximately $3,500,000. There
can be no assurance, however, that such appraisal represents the fair market
value of Hogback Mountain. The Company also intends to lease the buildings
including the Skyline Restaurant and gift shop at Hogback Mountain to Vermont
Natural Company, the current owner and operator of such businesses. The lease
will be on a month-to-month basis, terminable by the Company or the tenant on 30
days notice at a rent in an amount to be mutually agreed upon by the parties.
See 'Business -- Business Strategy -- Opportunities For Further Development.'
Skyline Partners, L.P. and, by its wholly-owned subsidiary, the Vermont Natural
Company are controlled by Mr. Dan Purjes, the Chairman and Chief Executive
Officer of Josephthal and a director of the Company upon the closing of this
Offering.
47
<PAGE>
<PAGE>
Certain other affiliates of Josephthal are also beneficial owners of Skyline
Partners, L.P. and Vermont Natural Company.
Since Josephthal may have a 'conflict of interest' with the Company as
defined in Rule 2720 of the NASD's Conduct Rules, the Offering is being made in
conformity with certain applicable provisions of Rule 2720 of the NASD.
Accordingly, the initial public offering price of the shares of Common Stock may
not be higher than as recommended by an independent investment banking firm
which qualifies as a 'qualified independent underwriter' and 'which shall also
participate in the preparation of the registration statement and prospectus . .
. and which shall exercise the usual standards of due diligence.' Cruttenden
Roth Incorporated is acting as a 'qualified independent underwriter.'
Pursuant to Rule 2720 of the NASD, Cruttenden Roth Incorporated, a member
of the NASD, is required, in acting as a 'qualified independent underwriter,' to
undertake to the NASD the legal responsibilities and liabilities of an
underwriter under the Securities Act, specifically including those inherent in
Section 11 thereof. The Company will indemnify Cruttenden Roth Incorporated
against such liabilities, if any, to the extent permitted by law.
Prior to this Offering, there has been no public market for the Common
Stock. Accordingly, the initial public offering price of the Common Stock was
determined by negotiation between the Company and the Qualified Independent
Underwriter. The factors considered in determining such prices and terms, in
addition to the prevailing market conditions, include the history of and the
prospects for the industry in which the Company competes, an assessment of the
Company's management, the prospects of the Company, its capital structure and
such other factors that were deemed relevant. The offering price does not
necessarily bear any relationship to the assets, appraised value, results of
operations or net worth of the Company.
LEGAL MATTERS
The validity of the Common Stock offered hereby and certain legal matters
in connection with the Offering will be passed upon for the Company by
Sonnenschein Nath & Rosenthal, New York, New York. Orrick, Herrington &
Sutcliffe LLP, New York, New York has acted as counsel for the Underwriters in
connection with this Offering.
EXPERTS
The financial statements as of December 31, 1996 and for the years ended
December 31, 1996 and 1995 included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein, and have been so included in reliance upon the report of such firm given
upon their authority as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement on Form SB-2 relating to the Common Stock
offered hereby. This Prospectus, which is part of the Registration Statement,
does not contain all of the information included in the Registration Statement
and the exhibits and schedules thereto. For further information with respect to
the Company and the Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits and schedules thereto. Statements
contained in this Prospectus concerning the provisions or contents of any
contract, agreement or any other document referred to herein are not necessarily
complete. With respect to each such contract, agreement or document filed as an
exhibit to the Registration Statement, reference is made to such exhibit for a
more complete description of the matters involved and each such statement shall
be deemed qualified in its entirety by such reference.
The Registration Statement, including the exhibits and schedules thereto,
may be inspected without change at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Washington, DC 20549 and at the
Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
48
<PAGE>
<PAGE>
As a result of this Offering, the Company will become subject to the
information and periodic reporting requirements of the Exchange Act, and, in
accordance therewith, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the public
reference facilities and regional offices referred to above. The Commission also
maintains a Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission. The Common Stock is expected to be listed on
the American Stock Exchange and, upon such listing, such reports, proxy
statements and other information can also be inspected and copied at the offices
of the American Stock Exchange, 86 Trinity Place, New York, NY 10006.
The Company intends to furnish to its stockholders annual reports
containing audited consolidated financial statements certified by independent
public accountants for each fiscal year and will make available quarterly
reports containing unaudited consolidated financial statements for the first
three quarters of each fiscal year.
Any person receiving a copy of this Prospectus may obtain, without charge,
upon written or oral request, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents (other than the
exhibits expressly incorporated in such documents by reference). Requests should
be directed to: Snowdance, Inc., Route 44, Brownsville, Vermont 05037,
Attention: Steven H. Plausteiner (telephone (802) 484-7000).
49
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-------------
<S> <C>
Independent Auditors' Report....................................................................... F-2
Financial Statements:
Balance Sheets as of December 31, 1996 and September 30, 1997................................. F-3
Statements of Operations for the Years Ended December 31, 1995 and 1996 and the Nine Months
Ended September 30, 1996 and 1997............................................................ F-4
Statements of Changes in Stockholders' Deficit for the Years Ended December 31, 1995 and 1996
and the Nine Months Ended September 30, 1997................................................. F-5
Statements of Cash Flows for the Years Ended December 31, 1995 and 1996 and the Nine Months
Ended September 30, 1996 and 1997............................................................ F-6
Notes to Financial Statements................................................................. F-7 - F-12
Pro Forma Financial Information.................................................................... F-13 - F-17
</TABLE>
F-1
<PAGE>
<PAGE>
The accompanying financial statements give effect to the consummation of
the Combination as described in Note 1 to the financial statements. The
following report is in the form that will be furnished by Deloitte & Touche LLP
upon consummation of the Combination assuming that no other material events have
occurred that would affect the accompanying financial statements or required
disclosures therein.
DELOITTE & TOUCHE LLP
New York, New York
December 31, 1997
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
SNOWDANCE, INC.
We have audited the accompanying balance sheet of Snowdance, Inc. (formerly
Ascutney Mountain Resort, L.P. and affiliated entities) (see Note 1 to the
financial statements) as of December 31, 1996 and the related statements of
operations, stockholders' deficit and cash flows for the years ended December
31, 1995 and 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Snowdance, Inc. (formerly Ascutney Mountain
Resort, L.P. and affiliated entities -- See Note 1) as of December 31, 1996 and
the results of its operations and its cash flows for the years ended December
31, 1995 and 1996 in conformity with generally accepted accounting principles.
New York, New York
July 11, 1997 (January , 1998 as to Note 1)
F-2
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
DECEMBER 31, -------------
1996
------------ (UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash.......................................................................... $ 38,480 $ 13,576
Accounts receivable (less allowance for doubtful accounts of $8,000 in both
periods)..................................................................... 131,437 83,689
Other receivables............................................................. 44,492 90,966
Inventories................................................................... 47,402 32,623
Prepaid expenses.............................................................. 33,237 40,774
------------ -------------
Total current assets..................................................... 295,048 261,628
Property and equipment -- net...................................................... 1,210,376 1,156,238
Deferred financing costs -- net.................................................... 77,118 66,140
Other assets....................................................................... 6,824 67,021
------------ -------------
Total assets....................................................................... $ 1,589,366 $ 1,551,027
------------ -------------
------------ -------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.............................................................. $ 610,194 $ 238,654
Accrued expenses and other liabilities........................................ 179,354 198,212
Advance deposits.............................................................. 151,328 150,873
Current portion of long-term debt............................................. 216,620 1,259,294
------------ -------------
Total current liabilities................................................ 1,157,496 1,847,033
------------ -------------
Long-term debt:
Line of credit................................................................ 750,000 --
Loans payable................................................................. 550,458 522,675
Notes to related party........................................................ 1,180,567 1,696,434
------------ -------------
Total long-term debt..................................................... 2,481,025 2,219,109
Commitments and contingencies......................................................
Stockholders' deficit
Preferred stock (par value $.01 per share, 100,000 shares authorized, none
outstanding)................................................................. -- --
Common stock (par value $.001 per share, 4,900,000 shares authorized,
1,207,500 shares outstanding)................................................ 1,208 1,208
Additional paid-in capital.................................................... 1,050,000 1,125,225
Accumulated deficit........................................................... (3,100,363) (3,641,548)
------------ -------------
Total stockholders' deficit.............................................. (2,049,155) (2,515,115)
------------ -------------
Total liabilities and stockholders' deficit........................................ $ 1,589,366 $ 1,551,027
------------ -------------
------------ -------------
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- -------------------------
1995 1996 1996 1997
---------- ----------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Lodging............................................ $1,540,267 $ 1,695,845 $ 1,191,037 $1,255,965
Food and beverage.................................. 1,010,076 970,086 745,975 642,398
Ski and fitness.................................... 997,978 1,064,720 767,569 932,707
Other.............................................. 318,097 252,567 158,848 144,944
---------- ----------- ----------- ----------
Total revenues................................ 3,866,418 3,983,218 2,863,429 2,976,014
---------- ----------- ----------- ----------
Cost of Sales:
Lodging............................................ 630,158 827,620 636,254 513,164
Food and beverage.................................. 745,099 848,513 667,634 523,964
Ski and fitness.................................... 857,001 950,239 660,112 628,497
Other.............................................. 192,952 140,753 96,212 87,666
---------- ----------- ----------- ----------
Total cost of sales........................... 2,425,210 2,767,125 2,060,212 1,753,291
---------- ----------- ----------- ----------
Gross profit.................................. 1,441,208 1,216,093 803,217 1,222,723
---------- ----------- ----------- ----------
Operating Expenses:
Administrative and general......................... 522,321 478,411 349,155 355,111
Sales and marketing................................ 572,351 592,732 405,554 381,560
Depreciation....................................... 116,656 122,714 93,019 93,536
Heat, light and power.............................. 582,025 633,173 370,391 366,349
Insurance.......................................... 103,181 145,842 101,013 96,069
Real estate and other taxes........................ 106,162 149,610 84,868 68,463
Repairs and maintenance............................ 372,456 370,756 268,960 185,018
---------- ----------- ----------- ----------
Total operating expenses...................... 2,375,152 2,493,238 1,672,960 1,546,106
---------- ----------- ----------- ----------
Net Operating Loss...................................... (933,944) (1,277,145) (869,743) (323,383)
---------- ----------- ----------- ----------
Other Income (Expense):
Interest income.................................... 386 2,174 1,163 830
Gain on sale of assets............................. 562,267 18,115 18,701 --
Related party interest expense..................... (16,275) (85,027) (63,771) (74,147)
Interest expense................................... (189,123) (158,936) (104,271) (144,485)
---------- ----------- ----------- ----------
Total other income (expense).................. 357,255 (223,674) (148,178) (217,802)
---------- ----------- ----------- ----------
Net Loss................................................ $ (576,689) $(1,500,819) $(1,017,921) $ (541,185)
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Loss per Common Share................................... $ (.48) $ (1.24) $ (.84) $ (.45)
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Weighted average number of shares outstanding........... 1,207,500 1,207,500 1,207,500 1,207,500
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P AND AFFILIATED ENTITIES -- SEE NOTE 1)
STATEMENTS OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL ACCUMULATED
COMMON STOCK PAID-IN CAPITAL DEFICIT TOTAL
------------ --------------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, January 1, 1995........................... $1,208 $ (939,025) $ (937,817)
Capital contributions......................... $ 400,000 400,000
Distributions................................. (78,361) (78,361)
Net loss...................................... (576,689) (576,689)
------------ --------------- ----------- -----------
Balance, December 31, 1995......................... 1,208 400,000 (1,594,075) (1,192,867)
Capital contributions......................... 650,000 650,000
Distributions................................. (5,469) (5,469)
Net loss...................................... (1,500,819) (1,500,819)
------------ --------------- ----------- -----------
Balance, December 31, 1996......................... 1,208 1,050,000 (3,100,363) (2,049,155)
Capital contributions (unaudited).................. 75,225 75,225
Net loss (unaudited).......................... (541,185) (541,185)
------------ --------------- ----------- -----------
Balance, September 30, 1997
(unaudited)...................................... $1,208 $ 1,125,225 $(3,641,548) $(2,515,115)
------------ --------------- ----------- -----------
------------ --------------- ----------- -----------
</TABLE>
See notes to financial statements.
F-5
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- --------------------------
1995 1996 1996 1997
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss......................................... $ (576,689) $(1,500,819) $(1,017,921) $ (541,185)
Adjustments to reconcile net (loss) income to net
cash used in operating activities:
Depreciation................................ 116,656 122,714 93,019 93,536
Amortization................................ 10,743 10,726 8,057 16,863
Gain on sale of assets...................... (562,267) (18,115) (18,701) --
Executive services contributed.............. -- 75,000
Changes in assets -- (increase) decrease:
Accounts receivable.................... (105,181) 85,867 108,215 47,748
Other receivables...................... (50,404) 24,268 (53,456) (46,474)
Inventories............................ (5,439) 1,856 12,500 14,779
Prepaid expenses....................... 15,354 (10,167) (30,098) (7,537)
Other assets........................... (2,345) (2,476) (2,476) (60,197)
Changes in liabilities -- increase
(decrease):
Accounts payable....................... 145,002 155,488 (60,874) (371,540)
Advance deposits....................... 47,067 36,674 (42,911) (455)
Accrued expenses and other............. (380,094) 6,224 (64,789) 18,858
----------- ----------- ----------- -----------
Net cash used in operating
activities...................... (1,347,597) (1,087,760) (1,069,435) (760,604)
----------- ----------- ----------- -----------
Cash Flows from Investing Activities:
Purchases of property and equipment.............. (34,466) (44,576) (15,771) (39,398)
Sales of property and equipment.................. 587,653 19,053 19,595 --
----------- ----------- ----------- -----------
Net cash provided by (used in) investing
activities..................................... 553,187 (25,523) 3,824 (39,398)
----------- ----------- ----------- -----------
Cash Flows from Financing Activities:
Cash distributions............................... (5,172) (5,469) -- --
Increase in deferred financing costs............. (32,788) -- (543) (5,885)
Loan borrowings.................................. 3,537,515 3,215,000 1,890,000 3,877,328
Loan repayments.................................. (2,999,204) (2,826,000) (1,300,908) (3,096,570)
Capital contributions from owners................ 400,000 650,000 450,000 225
----------- ----------- ----------- -----------
Net cash provided by financing activities........ 900,351 1,033,531 1,038,549 775,098
----------- ----------- ----------- -----------
Net Increase (Decrease) in Cash....................... 105,941 (79,752) (27,062) (24,904)
Cash, Beginning of Period............................. 12,291 118,232 118,232 38,480
----------- ----------- ----------- -----------
Cash, End of Period................................... $ 118,232 $ 38,480 $ 91,170 $ 13,576
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Supplemental Disclosure of Non-Cash Investing and
Financing Activity:
Distribution of property to owners............... $ 73,189 $ -- $ -- $ --
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Capital contributed via executive services....... $ -- $ -- $ -- $ 75,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest......... $ 200,324 $ 194,605 $ 109,361 $ 113,481
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to financial statements.
F-6
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
1. BASIS OF PRESENTATION
Snowdance, Inc. is a Delaware corporation formed on August 7, 1997. On
, 1998, immediately prior to the date of this Prospectus,
Snowdance, Inc., in a transaction hereinafter referred to as the 'Combination,'
issued 603,750 shares of its common stock to each of Susan Plausteiner and
Steven Plausteiner in exchange for all of the partnership interests in three
limited partnerships: Ascutney Mountain Resort, L.P., Ascutney Mountain Resort
Hotel, L.P., and Ascutney Mountain Resort Realty, L.P. (the 'Partnerships'),
which together owned the Ascutney Mountain Resort in Brownsville, Vermont, and
for the common stock of Ascutney Mountain Foods, Inc. ('Foods'), the holder of
the resort's liquor license.
Each of the Partnerships had a general partner which had a 1% interest in
the limited partnership of which it was the general partner. All of the issued
and outstanding shares in each of the general partners (Snowdance Hotel Company,
Snowdance Ski Company and Snowdance Realty Company) were owned by Susan
Plausteiner. All of the limited partnership interests of the Partnerships and
all of the outstanding shares of Foods were owned by Susan and Steven
Plausteiner.
The Combination was accounted for as a reorganization of entities under
common control in a manner similar to a pooling of interests. Accordingly, the
accompanying financial statements reflect the operations of Snowdance, Inc. and
the Partnerships and Foods as if combined for all periods. All material
intercompany balances and transactions have been eliminated in combination. The
combined entities are hereinafter referred to as the 'Company.'
The Ascutney Mountain Resort is a four-season resort which includes a ski
area, an 18,000 square foot comprehensive fitness center, a 212 room hotel, four
restaurants, and 30,000 square feet of conference space. The resort was
purchased in the summer of 1993 for a cost of approximately $1.13 million and
reopened in December 1993.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method based upon the estimated
useful lives of the assets, ranging from 5 to 7 years for furniture and
equipment to thirty-nine years for buildings. The cost of maintenance, repairs,
minor renewals and improvements are charged to income as incurred.
The Company periodically reviews its property for impairment. Impairment is
determined to exist when estimated amounts recoverable through future operations
and sale of a property on an undiscounted basis are below that property's
carrying value. If a property is determined to be impaired, it must be written
down to its estimated fair value. Management of the Company believes that no
impairment exists at December 31, 1996.
INVENTORIES
Inventories consist primarily of food, beverages and supplies and are
stated at the lower of cost or market. Inventories are recorded using the FIFO
(first-in, first-out) method.
DEFERRED FINANCING COSTS
Deferred financing costs consist of costs directly associated with issuance
of debt and the line of credit. These costs are amortized over the life of the
related loans and credit line using the effective interest method. Accumulated
amortization was $30,345 at December 31, 1996.
F-7
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
INCOME TAXES
During the periods presented, the Company was comprised of partnerships and
Subchapter S corporations. These entities are not taxable for U.S. Federal
income tax purposes. The partners or shareholders report their distributive
share of the entities' losses in their individual income tax returns.
For income tax purposes, Partnership results are reported for the calendar
year. The principal difference between the accounting policies used for tax
reporting purposes and those used for financial reporting is that depreciation
is calculated using accelerated methods. The tax basis of the Partnerships'
assets and liabilities is approximately $131,000 lower than the amounts reported
for financial statement purposes at December 31, 1996.
After the Combination, the Company will be a taxable corporation.
Accordingly, it will account for income taxes according to Statement of
Financial Accounting Standards No. 109, 'Accounting for Income Taxes,' and
record deferred taxes for the temporary differences between the tax bases of
assets and liabilities and the amounts reported in the financial statements.
ADVERTISING EXPENSE
The Company expenses advertising costs as incurred. The Company expensed
$314,535 in 1996 and $284,788 in 1995.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has recently issued several new
accounting pronouncements. Statement No. 128, 'Earnings per Share' establishes
standards for computing and presenting earnings per share, and is effective for
financial statements for both interim and annual periods ending after December
15, 1997. Statement No. 129, 'Disclosure of Information about Capital Structure'
establishes standards for disclosing information about an entity's capital
structure, and is effective for financial statements for periods ending after
December 15, 1997. Statement No. 130, 'Reporting Comprehensive Income'
establishes standards for reporting and display of comprehensive income and its
components, and is effective for fiscal years beginning after December 15, 1997.
Statement No. 131, 'Disclosures about Segments of an Enterprise and Related
Information' establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers, and is effective for financial statements
for periods beginning after December 15, 1997.
Management of the Company does not believe that these new standards will
have a material effect on the Company's reported operating results, per share
amounts, financial position or cash flows.
F-8
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
INTERIM FINANCIAL DATA
The interim financial data and related notes included herein are unaudited;
however, in the opinion of management, the Company's interim financial data for
the nine month periods ended September 30, 1997 and 1996 includes all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results of the interim periods. The operating results
for interim periods may not be indicative of the results expected for the full
year.
3. PROPERTY AND EQUIPMENT -- NET
Major classifications of property and equipment are summarized below:
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Land........................................................................... $ 159,161
Buildings...................................................................... 820,610
Furniture, fixtures, and equipment............................................. 581,183
------------
1,560,954
------------
Less accumulated depreciation.................................................. (350,578)
------------
Property and equipment -- net.................................................. $1,210,376
------------
------------
</TABLE>
4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities at December 31, 1996 are
summarized as follows:
<TABLE>
<S> <C>
Payroll and payroll benefits...................................................... $ 87,309
Taxes............................................................................. 39,513
Utilities......................................................................... 25,601
Interest.......................................................................... 21,954
Other............................................................................. 4,977
--------
Total........................................................................ $179,354
--------
--------
</TABLE>
5. LONG-TERM DEBT
a. Loans Payable -- Loans payable at December 31, 1996 consisted of:
<TABLE>
<CAPTION>
BALANCE
LENDER MATURITY INTEREST RATE DECEMBER 31, 1996
- ----------------------------------------- ------------------ --------------- -----------------
<S> <C> <C> <C>
Vermont Economic Development Authority
('VEDA')(i)............................ June 3, 2004 5.50% per annum $ 352,600
West Windsor Block Grant(ii)............. February 20, 2010 5.00% per annum 229,225
-----------------
581,825
Less: Current Maturities................. 31,367
-----------------
Total long-term loans payable....... $ 550,458
-----------------
-----------------
</TABLE>
- ------------
(i) Guaranteed by the Company's current owners and by Snowdance Ski
Company and Snowdance Hotel Company. This loan has a balloon
payment at maturity of $171,639. Under the terms of this loan
agreement, the Company may not make distributions (except certain
distributions with respect to the offset of income tax
liabilities) without consent of VEDA.
(ii) Guaranteed by the Company's current owners.
F-9
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
Under the terms of the loans, interest and principal are payable monthly
until maturity, at which time the remaining principal balance is payable plus
any accrued interest.
b. Line of Credit -- Line of Credit payable at December 31, 1996 consisted
of:
<TABLE>
<CAPTION>
BALANCE
LENDER MATURITY INTEREST RATE DECEMBER 31, 1996
- ----------------- ------------------ ----------------------- -----------------
<S> <C> <C> <C>
Fleet Bank....... February 28, 2004 Prime + 1.75% per annum $ 925,000
</TABLE>
$175,000 of the line of credit is a current liability at December 31, 1996
and was paid during February 1997. The interest rate on this debt was 10.75% per
annum at December 31, 1996. Under the terms of the revolving line of credit, the
principal amount available is reduced by $175,000 annually, beginning in
February of 1996, with a scheduled balloon payment on the balance remaining at
maturity. This line of credit was guaranteed by the Company's current owners and
by Ascutney Mountain Resort Realty, L.P., Snowdance Ski Company, Snowdance Hotel
Company, and Snowdance Realty Company.
On June 30, 1997, the Company entered into a revolving line of credit
borrowing arrangement with Mascoma Bank. Total borrowings available under this
line of credit are $1,500,000, bear interest at the prime rate plus 1.75%, which
equalled 10.25% per annum at September 30, 1997, payable monthly, with principal
due on June 30, 1998. The debt is collateralized by a security interest in all
Resort assets, a first mortgage on the Company's real estate assets, as well as
on the two private residences owned by the Company's current owners and is
guaranteed by the Company's current owners. In July of 1997, the Company
borrowed $914,425 under this line and used the proceeds to prepay the Fleet Bank
line of credit and to pay loan fees and costs. Borrowings under this line
totalled $1,202,828 at September 30, 1997.
c. Notes Payable to Related Parties -- As part of its original purchase of
the resort, the Company acquired 24.75 condominium units. One of these units was
sold in 1994. In 1995, six of these units were sold through November for a gain
on sale of $562,267. In November of 1995, the Company transferred 17 units to
its current owners (cost basis of approximately $4,305 per unit, for a total of
$73,189). The current owners arranged for financial institution mortgage
financing collateralized by the condominium units, and loaned the proceeds to
the Company on terms which mirror the terms of the mortgage financing. The
Company is also entitled to use the condominium units as rental properties and
is responsible for all expenses relating to them (see Note 9).
Notes payable to related parties at December 31, 1996 consisted of the
following:
<TABLE>
<CAPTION>
INTEREST RATE BALANCE
MATURITY DECEMBER 31, 1996 DECEMBER 31, 1996
- ------------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
June 21, 2025............................................... 9.287% per annum $ 497,079
February 1, 2026............................................ 7.500 per annum 275,887
July 1, 2026(i)............................................. 7.875 per annum 139,512
April 1, 2026(ii)........................................... 7.625 per annum 278,342
-----------------
1,190,820
Less current maturities..................................... 10,253
-----------------
Long term notes payable to related party.................... $ 1,180,567
-----------------
-----------------
</TABLE>
- ------------
(i) The interest rate will reset on every July 1 and will be equal to
the weekly average yield on United States Treasury securities
adjusted to a constant maturity of one year as made
F-10
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
available by the Federal Reserve Board plus three percentage points.
The interest rate shall not exceed 13.875%.
(ii) The interest rate will reset on every April 1 and will be equal
to the weekly average yield on United States Treasury securities
adjusted to a constant maturity of one year as made available by
the Federal Reserve Board plus three percentage points. The
interest rate shall not exceed 13.625%.
Under the terms of the notes payable to related parties, interest and
principal are payable monthly until maturity.
During the nine months ended September 30, 1997, the Company's current
owners advanced the Company $537,000. These advances bear interest at the
rate of 8% beginning January 1, 1998, and mature January 1, 2008.
The scheduled principal maturities for the following five years,
including the loans payable, line of credit and notes payable to related
party are summarized below:
<TABLE>
<CAPTION>
YEAR TOTAL
- -------------------------------------------------------------------------------- ----------
<S> <C>
1997............................................................................ $ 216,620
1998............................................................................ 219,204
1999............................................................................ 221,960
2000............................................................................ 224,894
2001............................................................................ 228,019
Thereafter...................................................................... 1,586,948
----------
Total...................................................................... $2,697,645
----------
----------
</TABLE>
The Company's management believes that the fair value of its long-term
debt approximates its carrying value at December 31, 1996.
6. LEASES
The Company leases a ski rental shop to an unrelated third party. Rents
received by the Company were computed as 4.5% and 4.0% of the Company's gross
daily and season ticket sales in 1996 and 1995, respectively. Revenue earned
through this arrangement was $41,525 in 1996 and $26,679 in 1995.
7. LITIGATION
In the normal course of business, certain litigation is initiated against
the Company. Generally, those claims are insured and in the opinion of
management, disposition of litigation will not have a material adverse effect on
the Company's liquidity, financial position or results of operations.
8. EXECUTIVE COMPENSATION
The Company's current owners do not currently receive compensation from the
Company. The Company has determined that a reasonable salary expense for these
individuals would not be material to the Company's reported results of
operations or financial position for 1995 or 1996. Effective January 1, 1997,
the Company began to record compensation to its owners. Because no cash will be
paid for this compensation, it has been recorded as capital contributions by the
Company's owners; $75,000 was recorded as capital contributions during the nine
months ended September 30, 1997 (see Note 9).
F-11
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
9. SUBSEQUENT EVENTS
PLANNED EQUITY OFFERING
During 1997, the Company's management decided to seek additional equity
capital through a planned public offering of 1,500,000 shares of common stock
(the 'Offering'). The net proceeds from the Offering, anticipated to be
approximately $13,280,000, would be used for upgrades and expansion to the
resort's ski lifts, snowmaking, grooming and trail systems, purchase of
additional mountain equipment and vehicles, resort improvements, development of
a golf course on resort property, development of a vacation ownership intervals
program, repayment of debt, and for working capital. In addition, the 17
condominium units currently owned by the Company's owners (see Note 5) will be
leased to Snowdance, Inc. and approximately $1,180,567 of the related party debt
will be contributed as capital. The Company will enter into three-year
employment agreements with its current owners which will commence upon the
closing of the Offering. These agreements will provide for annual salaries of
$100,000 for each individual, annual bonuses as determined by the Company's
Board of Directors and certain benefits. The ability of the Company to
successfully complete the Offering and its timing cannot be determined at this
time.
REAL ESTATE PURCHASE
Upon the closing of the Offering, Snowdance Inc. will acquire approximately
800 acres of land known as Hogback Mountain, located in Marlboro, Vermont. The
Company plans to explore potential development opportunities for this land. As
consideration for the purchase of this land, Snowdance, Inc. will issue 292,500
shares of its common stock to the owners of the assets, one of whom is a
partnership whose principal beneficial owner will serve as a Director of
Snowdance, Inc. upon completion of the Offering.
VACATION OWNERSHIP PROGRAM
In December of 1997, the Company executed a marketing and sales agreement
with Westerly Resorts Group, Inc. regarding the marketing and sales of vacation
ownership intervals ('VOIs'), popularly known as timeshares, in the resort's
hotel.
CAPITAL RESOURCES
In addition to the borrowing capacity added by the Mascoma Bank line of
credit discussed above, the Company's current owners have set aside funds from
their personal assets in an amount they deem sufficient to fund the Company's
operations through at least June 30, 1998, or until successful completion of the
Offering or another source of capital can be secured.
F-12
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
PRO FORMA FINANCIAL INFORMATION
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
The pro forma financial information has been prepared to show the effect of
the Hogback Acquisition and the conversion of a portion of the Related Loans to
a capital contribution to the Company. The as adjusted financial information has
been prepared to show the effect of the closing of the Offering and application
of the estimated net proceeds therefrom.
The pro forma and as adjusted balance sheets of the Company have been
prepared as if the above transactions occurred on September 30, 1997. The pro
forma statements of operations for the year ended December 31, 1996 and the nine
months ended September 30, 1997, have been prepared as if the above transactions
occurred on January 1, 1996.
The pro forma and as adjusted financial information is based upon available
information and upon certain assumptions, as set forth in the notes to the pro
forma and as adjusted financial information, that management of the Company
believes are reasonable in the circumstances.
This pro forma and as adjusted information does not purport to represent
what the Company's financial position or results of operations would actually
have been if the above transactions had in fact occurred on such dates or at the
beginning of such periods or the Company's financial position or results of
operations for any future date or period.
F-13
<PAGE>
<PAGE>
SNOWDANCE, INC.
PRO FORMA AND AS ADJUSTED BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA OFFERING AS ADJUSTED
SEPTEMBER 30, 1997 ADJUSTMENTS SEPTEMBER 30, 1997 ADJUSTMENTS SEPTEMBER 30, 1997
------------------ ----------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................... $ 13,576 $ 13,576 $13,280,000(b) $ 12,091,576
(1,202,000)(c)
Accounts
receivable -- net.... 83,689 83,689 83,689
Other receivables...... 90,966 90,966 90,966
Inventories............ 32,623 32,623 32,623
Prepaid expenses....... 40,774 40,774 40,774
------------------ ------------------ ------------------
Total current
assets.......... 261,628 261,628 12,339,628
Property and
equipment -- net......... 1,156,238 $3,071,250 (a) 4,227,488 4,227,488
Deferred financing costs... 66,140 66,140 66,140
Other assets............... 67,021 67,021 67,021
------------------ ------------------ ------------------
Total assets...... $ 1,551,027 $ 4,622,277 $ 16,700,277
------------------
------------------ ------------------ ------------------
------------------ ------------------
LIABILITIES AND OWNERS'
DEFICIT
Current liabilities:
Accounts payable....... $ 238,654 $ 238,654 $ 238,654
Accrued expenses and
other liabilities.... 198,212 198,212 198,212
Advanced deposits...... 150,873 150,873 150,873
Current portion of long
term debt............ 1,259,294 1,259,294 (1,202,000)(c) 57,294
------------------ ------------------ ------------------
Total current
liabilities..... 1,847,033 1,847,033 645,033
------------------ ------------------ ------------------
Loans payable.............. 522,675 522,675 522,675
Notes to related
party................ 1,696,434 (1,180,567)(d) 515,867 515,867
------------------ ------------------ ------------------
Total long term
debt............ 2,219,109 1,038,542 1,038,542
------------------ ------------------ ------------------
Commitments and
Contingencies:
Stockholders' equity
(deficit)
Common stock $.001 par
value................ 1,208 292 (a) 1,500 1,500(b) 3,000
Additional paid in
capital.............. 1,125,225 3,070,958 (a) 5,376,750 13,278,500(b) 18,655,250
1,180,567 (d)
Accumulated deficit.... (3,641,548) (3,641,548) (3,641,548)
------------------ ------------------ ------------------
Total
stockholders'
equity
(deficit)....... (2,515,115) 1,736,702 15,016,702
------------------ ------------------ ------------------
Total liabilities and
stockholders' equity
(deficit)................ $ 1,551,027 $ 4,622,277 $ 16,700,277
------------------
------------------ ------------------ ------------------
------------------ ------------------
</TABLE>
See notes to pro forma and as adjusted financial statements
F-14
<PAGE>
<PAGE>
SNOWDANCE, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
DECEMBER 31, 1996 ADJUSTMENTS DECEMBER 31, 1996
----------------- ----------- -----------------
<S> <C> <C> <C>
Revenues:
Lodging...................................................... $ 1,695,845 $ 1,695,845
Food and beverage............................................ 970,086 970,086
Ski and fitness.............................................. 1,064,720 1,064,720
Other........................................................ 252,567 252,567
----------------- -----------------
Total revenues.......................................... 3,983,218 3,983,218
Cost of sales:
Lodging...................................................... 827,620 $85,027(e) 912,647
Food and beverage............................................ 848,513 848,513
Ski and fitness.............................................. 950,239 950,239
Other........................................................ 140,753 140,753
----------------- -----------------
Total cost of sales..................................... 2,767,125 2,852,152
Operating expenses:
Administrative and general................................... 478,411 478,411
Sales and marketing.......................................... 592,732 592,732
Depreciation................................................. 122,714 122,714
Heat, light and power........................................ 633,173 633,173
Insurance.................................................... 145,842 145,842
Real estate and other taxes.................................. 149,610 149,610
Repairs and maintenance...................................... 370,756 370,756
----------------- -----------------
Total operating expenses................................ 2,493,238 2,493,238
Net operating loss................................................ (1,277,145) (1,362,172)
----------------- -----------------
Other income (expense):
Interest income.............................................. 2,174 2,174
Gain on sale of assets....................................... 18,115 18,115
Related party interest expense............................... (85,027) 85,027(e) --
Interest expense............................................. (158,936) (158,936)
----------------- -----------------
Total other expenses.................................... (223,674) (138,647)
----------------- -----------------
Net loss.......................................................... $(1,500,819) $(1,500,819)
----------------- -----------------
----------------- -----------------
Loss Per Share.................................................... $ (1.24) $ (1.00)
----------------- -----------------
----------------- -----------------
Weighted Average Number of Shares(f).............................. 1,207,500 1,500,000
</TABLE>
See notes to pro forma and as adjusted financial statements.
F-15
<PAGE>
<PAGE>
SNOWDANCE, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
SEPTEMBER 30, 1997 ADJUSTMENTS SEPTEMBER 30, 1997
------------------ ----------- ------------------
<S> <C> <C> <C>
Revenues:
Lodging............................................... $1,255,965 $1,255,965
Food and beverage..................................... 642,398 642,398
Ski and fitness....................................... 932,707 932,707
Other................................................. 144,944 144,944
------------------ ------------------
Total revenues................................... 2,976,014 2,976,014
Cost of sales:
Lodging............................................... 513,164 $74,147(e) 587,311
Food and beverage..................................... 523,964 523,964
Ski and fitness....................................... 628,497 628,497
Other................................................. 87,666 87,666
------------------ ------------------
Total cost of sales.............................. 1.753,291 1,827,438
Operating expenses:
Administrative and general............................ 355,111 355,111
Sales and marketing................................... 381,560 381,560
Depreciation.......................................... 93,536 93,536
Heat, light and power................................. 366,349 366,349
Insurance............................................. 96,069 96,069
Real estate and other taxes........................... 68,463 68,463
Repairs and maintenance............................... 185,018 185,018
------------------ ------------------
Total operating expenses......................... 1,546,106 1,546,106
------------------ ------------------
Net operating loss......................................... (323,383) (397,530)
Other income (expense):
Interest income....................................... 830 830
Gain on sale of assets................................ -- --
Related party interest expense........................ (74,147) (74,147)(e) --
Interest expense...................................... (144,485) (144,485)
------------------ ------------------
Total other expenses............................. (217,802) (143,655)
------------------ ------------------
Net Loss................................................... $ (541,185) $ (541,185)
------------------ ------------------
------------------ ------------------
Loss per share............................................. $(.45) $(.36)
Weighted average number of shares(f)....................... 1,207,500 1,500,000
</TABLE>
See notes to pro forma and as adjusted financial statements.
F-16
<PAGE>
<PAGE>
SNOWDANCE, INC.
NOTES TO PRO FORMA AND AS ADJUSTED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(a) Reflects the acquisition of the Hogback assets through the issuance of
292,500 shares of common stock, par value $.001 per share, with a fair
value of $10.50 per share.
(b) Reflects the closing of the Offering and the application of the net
proceeds thereof. The Offering is assumed to include the issuance of
1,500,000 shares of common stock, par value $.001 per share, for $10.50 per
share, and offering expenses of $2,470,000 resulting in net proceeds to the
Company of $13,280,000.
(c) Reflects the assumed repayment of the balance outstanding on the Company's
line of credit as of September 30, 1997, $1,202,000, using a portion of the
net proceeds from the Offering. No other debt repayments are reflected; the
Company is evaluating appropriate application of Offering proceeds to other
debt.
(d) Reflects the conversion of $1,180,567 of the Related Loans to additional
paid-in capital of the Company.
(e) Reflects the effect of the planned lease by the Company of the 17
Mountain's Edge condominium units from Steven and Susan Plausteiner. For
purposes of the pro forma financial information, it is assumed that the
lease expense would have been equivalent to the interest expense paid on
the Related Loans contributed to capital, so this adjustment reclassifies
the related party interest expense to leasing expense, included in lodging
cost of sales.
(f) Historical loss per share is computed using 1,207,500 shares and pro forma
loss per share is computed using 1,500,000 weighted average common shares
outstanding.
F-17
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<PAGE>
<PAGE>
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<PAGE>
<PAGE>
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<PAGE>
<PAGE>
_______________________________ _______________________________
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF ANY OFFER TO BUY COMMON STOCK BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH AN OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................................................................................................... 3
Risk Factors........................................................................................................... 7
Use of Proceeds........................................................................................................ 14
Dividend Policy........................................................................................................ 15
Dilution............................................................................................................... 15
Capitalization......................................................................................................... 16
Selected Financial Data................................................................................................ 17
Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 18
Business............................................................................................................... 22
Management............................................................................................................. 35
Certain Transactions................................................................................................... 40
Principal Stockholders................................................................................................. 42
Description of Capital Stock........................................................................................... 43
Shares Eligible for Future Sale........................................................................................ 45
Underwriting........................................................................................................... 46
Legal Matters.......................................................................................................... 48
Experts................................................................................................................ 48
Available Information.................................................................................................. 48
Index to Financial Statements.......................................................................................... F-1
</TABLE>
------------------------
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
1,500,000 SHARES
[LOGO]
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
JOSEPHTHAL & CO. INC.
CRUTTENDEN ROTH
INCORPORATED
, 1998
_______________________________ _______________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ('DGCL'), inter alia,
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Similar indemnity is authorized for such persons against expenses (including
attorneys' fees) actually and reasonably incurred in connection with the defense
or settlement of any such threatened, pending or completed action or suit by or
in the right of the corporation if such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and provided further that (unless a court of competent
jurisdiction otherwise provides) such person shall not have been adjudged liable
to the corporation. Any such indemnification shall be made by the corporation
only as authorized in each specific case upon a determination by the
shareholders or disinterested directors or by independent legal counsel in a
written opinion that indemnification is proper in the circumstances because the
indemnitee has met the applicable standard of conduct. The Certificate of
Incorporation of the Company provides that directors and officers shall be
indemnified as described above in this paragraph to the fullest extent permitted
by the DGCL; provided, however, that any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person shall be
indemnified only if such proceeding (or part thereof) was authorized by the
board of directors of the Company.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under Section 145.
The Company's Certificate of Incorporation provides that, to the fullest
extent permitted by the DGCL, no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director. Section 102(b)(7) of the DGCL currently provides
that such provisions do not eliminate or limit the liability of a director (i)
for a breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL (relating to the declaration of dividends and purchase or redemption of
shares in violation of the DGCL), or (iv) for any transaction from which the
director derived an improper personal benefit. Reference is made to the
Company's Certificate of Incorporation and By-Laws filed as Exhibits 3.1 and 3.2
hereto, respectively.
The Company expects to maintain directors' and officers' liability
insurance policies covering certain liabilities of persons serving as officers
and directors and providing reimbursement to the Company for its indemnification
of such persons.
Pursuant to the Underwriting Agreement to be entered into among the Company
and the Underwriters, officers and directors of the Company are indemnified for
certain liabilities, including liabilities incurred under the Securities Act of
1933, as amended.
II-1
<PAGE>
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses (other than
underwriting discounts and the non-accountable expense allowance) expected to be
incurred in connection with the Offering described in this Registration
Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................................................... $ 6,181
NASD Examination Fee.................................................................................. $ 2,596
American Stock Exchange Listing Fee................................................................... $ 15,000
Accounting Fees and Expenses.......................................................................... $175,000
Printing and Engraving Expenses....................................................................... $150,000
Legal Fees and Expenses............................................................................... $450,000
Blue Sky Fees and Expenses............................................................................ $ 40,000
Transfer Agent Fees................................................................................... $ 3,600
Miscellaneous......................................................................................... $131,373
--------
Total............................................................................................ $973,750
</TABLE>
The foregoing items, except for the Securities and Exchange Commission and
NASD fees, are estimated. All expenses will be borne by the Company.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In the three years preceding the filing of this Registration Statement, the
Company has issued the following securities that were not registered under the
Securities Act:
(a) Immediately prior to the closing of the Offering, all of the
partnership interests in each of the Limited Partnerships will be exchanged
for 1,207,500 shares of Common Stock of Snowdance, Inc. (the 'Combination
Transaction'). Each of the Limited Partnerships has a corporate general
partner which has a 1% interest in the Limited Partnership of which it is
general partner. All of the issued and outstanding shares in each of the
corporate general partners are owned by Susan D. Plausteiner. All other
interests in the Limited Partnerships are owned by Steven H. Plausteiner or
Susan D. Plausteiner. As a result of the Combination Transaction,
immediately prior to the closing of this Offering, all of the outstanding
shares in Snowdance, Inc. will be owned by Steven H. Plausteiner and Susan
D. Plausteiner. It is expected that the Combination Transaction will be
treated as an Internal Revenue Code Section 351 transaction and be tax free
to the Company and the Limited Partnerships. In addition, immediately prior
to the Closing of this Offering, Steven H. Plausteiner and Susan D.
Plausteiner will contribute all of the outstanding shares of capital stock
of Foods to Snowdance, Inc. as a capital contribution and Foods will become
a wholly-owned subsidiary of Snowdance, Inc. As part of the Combination
Transaction, the Company will receive an ownership interest in 3/4 of 1
condominium unit which was previously owned by Ascutney Mountain Resort
Realty, L.P.
No underwriters were involved in the foregoing sales of securities. Such
sales were made in reliance upon an exemption from the registration provisions
of the Securities Act set forth in Section 4(2) thereof relative to sales by an
issuer not involving any public offering.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
1.1 -- Revised Proposed Form of Underwriting Agreement.
1.2** -- Proposed Form of Qualified Independent Underwriter Agreement
3.1** -- Certificate of Incorporation of the Company
3.2** -- By-Laws of the Company.
4.1* -- Form of specimen certificate representing the Company's Common Stock.
4.2 -- Revised Form of Representatives' Warrant Agreement including Form of Representatives' Warrant.
5.1* -- Opinion of Sonnenschein Nath & Rosenthal.
</TABLE>
II-2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
10.1** -- Loan and Security Agreement, dated June 30, 1997, among Ascutney Mountain Resort, L.P., Ascutney
Mountain Resort Hotel, L.P., Steven H. Plausteiner, Susan D. Plausteiner and Mascoma Savings Bank, fsb.
10.2** -- Loan Agreement, dated May 6, 1994, among Ascutney Mountain Resort, L.P., Ascutney Mountain Resort
Hotel, L.P., and the Vermont Economic Development Authority.
10.3** -- Loan and Security Agreement, dated November 3, 1994, among the Town of West Windsor, Vermont, Ascutney
Mountain Resort, L.P. and Ascutney Mountain Resort Hotel, L.P.
10.4** -- Draft Purchase and Sale Agreement, dated as of August , 1997, by and between the Company and Skyline
Partners, L.P.
10.5A -- Form of Lock-up Agreement with respect to Company's officers, directors and existing stockholders.
10.5B -- Form of Lock-up Agreement with respect to Skyline Partners, L.P.
10.6 -- Form of Condominium Lease Agreement, dated as of , 1997, among the Company, Steven
Plausteiner and Susan Plausteiner.
10.7 -- Form of Employment Agreement between the Company and Steven H. Plausteiner.
10.8 -- Form of Employment Agreement between the Company and Susan D. Plausteiner.
10.9** -- Form of 1997 Stock Option Plan for Non-Employee Directors.
10.10 -- Form of Exchange Agreement among Ascutney Mountain Resort, L.P., Ascutney Mountain Resort Hotel, L.P.,
Ascutney Mountain Resort Realty, L.P. and the Company.
10.11 -- Agreement, dated as of September , 1997, between Steven H. Plausteiner, Susan D. Plausteiner and the
Company.
10.12** -- Form of Letter of Intent dated September 26, 1997, between the Company and Westerly Resorts Group, Inc.
10.13 -- Marketing and Sales Agreement, dated December 30, 1997, between the Company and Westerly Resorts Group,
Inc.
10.14 -- Form of Consulting Agreement between the Company and Tallwood Associates, Inc.
10.15 -- Form of Unsecured Promissory Note made by the Company for the benefit of Richard S. Frary.
10.16 -- Form of Unsecured Promissory Note made by the Company for the benefit of Joel A. Mael.
23.1 -- Consent of Deloitte & Touche LLP.
23.2* -- Consent of Sonnenschein Nath & Rosenthal (to be included in Exhibit 5.1).
23.3 -- Form of Consent of Mr. Purjes, as Director Nominee.
23.4 -- Form of Consent of Mr. Lunde, as Director Nominee.
23.5 -- Form of Consent of Mr. Deutsch, as Director Nominee.
23.6 -- Form of Consent of Mr. Frary, as Director Nominee.
24.1** -- Powers of Attorney.
27.1 -- Financial Data Schedule.
</TABLE>
- ------------
* To be filed by amendment
** Previously filed
ITEM 28. UNDERTAKINGS.
The Company hereby undertakes:
(a) That it will:
(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events which
individually or together, represent a fundamental change in the
information in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
II-3
<PAGE>
<PAGE>
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
'Calculation of Registration Fee' table in the effective registration
statement; and
(iii) include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat such
post-effective amendment as a new registration statement of the Securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) That it will provide to the Representative at the closing specified in
the Underwriting Agreement certificates in such denominations and registered in
such names as required by the Representative to permit prompt delivery to each
purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
liabilities under the Securities Act (other than the payment by the Company of
expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
Securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(d) That it will:
(1) For purposes of determining any liability under the Securities
Act, treat the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company under Rules
424(b)(1), or (4) or 497(h) under the Securities Act as part of this
Registration Statement as of the time the Commission declared it effective.
(2) For the purpose of determining any liability under the Securities
Act, treat each post-effective amendment that contains a form of prospectus
as a new registration statement for the securities offered in the
registration statement, and that offering of the securities at the time as
the initial bona fide offering of those Securities.
II-4
<PAGE>
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form SB-2 and has authorized this Amendment No. 2
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Brownsville, State of Vermont, on this 2nd day
of January, 1998.
SNOWDANCE, INC.
By: /s/ STEVEN H. PLAUSTEINER
...................................
STEVEN H. PLAUSTEINER
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/S/ STEVEN H. PLAUSTEINER Chief Executive Officer and Director January 2, 1998
......................................... (Principal Executive Officer)
(STEVEN H. PLAUSTEINER)
/S/ SUSAN D. PLAUSTEINER Chief Financial Officer and Director January 2, 1998
......................................... (Principal Financial and Accounting
(SUSAN D. PLAUSTEINER) Officer)
* Chief Operating Officer and Director January 2, 1998
.........................................
(DUSAN PLAUSTEINER)
/s/ STEVEN H. PLAUSTEINER
.........................................
STEVEN H. PLAUSTEINER
AS ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
1.1 -- Revised Proposed Form of Underwriting Agreement.........................................
1.2** -- Proposed Form of Qualified Independent Underwriter Agreement............................
3.1** -- Certificate of Incorporation of the Company.............................................
3.2** -- By-Laws of the Company..................................................................
4.1* -- Form of specimen certificate representing the Company's Common Stock....................
4.2 -- Revised Form of Representatives' Warrant Agreement including Form of Representatives'
Warrant.................................................................................
5.1* -- Opinion of Sonnenschein Nath & Rosenthal................................................
10.1** -- Loan and Security Agreement, dated June 30, 1997, among Ascutney Mountain Resort, L.P.,
Ascutney Mountain Resort Hotel, L.P., Steven H. Plausteiner, Susan D. Plausteiner and
Mascoma Savings Bank, fsb...............................................................
10.2** -- Loan Agreement, dated May 6, 1994, among Ascutney Mountain Resort, L.P., Ascutney
Mountain Resort Hotel, L.P., and the Vermont Economic Development Authority.............
10.3** -- Loan and Security Agreement, dated November 3, 1994, among the Town of West Windsor,
Vermont, Ascutney Mountain Resort, L.P. and Ascutney Mountain Resort Hotel, L.P.........
10.4** -- Draft Purchase and Sale Agreement, dated as of August , 1997, by and between the
Company and Skyline Partners, L.P.......................................................
10.5A -- Form of Lock-up Agreement with respect to the Company's officers, directors and existing
stockholders............................................................................
10.5B -- Form of Lock-up Agreement with respect to Skyline Partners, L.P.........................
10.6 -- Form of Condominium Lease Agreement, dated as of , 1997, among the
Company, Steven Plausteiner and Susan Plausteiner.......................................
10.7 -- Form of Employment Agreement between the Company and Steven H. Plausteiner..............
10.8 -- Form of Employment Agreement between the Company and Susan D. Plausteiner...............
10.9** -- Form of 1997 Stock Option Plan for Non-Employee Directors...............................
10.10 -- Form of Exchange Agreement among Ascutney Mountain Resort, L.P., Ascutney Mountain
Resort Hotel, L.P., Ascutney Mountain Resort Realty, L.P. and the Company...............
10.11 -- Agreement, dated as of September , 1997 between Steven H. Plausteiner, Susan D.
Plausteiner and the Company.............................................................
10.12** -- Form of Letter of Intent, dated September 26, 1997, between the Company and Westerly
Resorts Group, Inc......................................................................
10.13 -- Form of Marketing and Sales Agreement, dated December 30, 1997, between the Company and
Westerly Resorts Group, Inc.............................................................
10.14 -- Form of Consulting Agreement between the Company and Tallwood Associates, Inc...........
10.15 -- Form of Unsecured Promissory Note made by the Company for the benefit of Richard S.
Frary...................................................................................
10.16 -- Form of Unsecured Promissory Note made by the Company for the benefit of Joel A.
Mael....................................................................................
23.1 -- Consent of Deloitte & Touche LLP........................................................
23.2* -- Consent of Sonnenschein Nath & Rosenthal (to be included in Exhibit 5.1)................
23.3 -- Form of Consent of Mr. Purjes, as Director Nominee......................................
23.4 -- Form of Consent of Mr. Lunde, as Director Nominee.......................................
23.5 -- Form of Consent of Mr. Deutsch, as Director Nominee.....................................
23.6 -- Form of Consent of Mr. Frary, as Director Nominee.......................................
24.1** -- Powers of Attorney......................................................................
27.1 -- Financial Data Schedule.................................................................
</TABLE>
- ------------
* To be filed by amendment
** Previously filed
<PAGE>
<PAGE>
GRAPHIC APPENDIX
Front Cover -- Color silhouette of Mt. Ascutney
Inside Front Cover -- Color montage of Skiers and Resort
Inside Back Cover -- Color montage of Resort during non-winter months
Outside Back Cover -- Color silhouette panorama of Mt. Ascutney with Skiers
STATEMENT OF DIFFERENCES
------------------------
The trademark symbol shall be expressed as ........................... 'tm'
The section symbol shall be expressed as.............................. 'SS'
The cent symbol shall be expressed as................................. [c]
<PAGE>
<PAGE>
[Form of Underwriting Agreement - Subject to Additional Review]
1,500,000 SHARES OF COMMON STOCK
SNOWDANCE, INC.
UNDERWRITING AGREEMENT
New York, New York
, 1998
JOSEPHTHAL & CO. INC.
CRUTTENDEN ROTH INCORPORATED
As Representatives of the
Several Underwriters listed on Schedule A hereto
c/o Josephthal & Co. Inc.
200 Park Avenue
24th Floor
New York, New York 10166
Ladies and Gentlemen:
Snowdance, Inc., a Delaware corporation (the "Company"),
confirms its agreement with Josephthal & Co. Inc. ("Josephthal"), Cruttenden
Roth Incorporated ("Cruttenden") and each of the underwriters named in Schedule
A hereto (collectively, the "Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 11), for whom
Josephthal and Cruttenden are acting as representatives (in such capacity,
Josephthal and Cruttenden each shall hereinafter sometimes be referred to as a
Representative and collectively as "you" or the "Representatives"), with respect
to the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of the Company's
common stock, $.001 par value per share ("Common Stock"), set forth in Schedule
A hereto. Such shares of Common Stock are hereinafter referred to as the "Firm
Shares."
Upon your request, as provided in Section 2(b) of this
Agreement, the Company shall also sell to the Underwriters, acting severally and
not jointly, up to an additional 225,000 shares of Common Stock for the purpose
of covering over-allotments, if any (the "Option Shares"). The Firm Shares and
the Option Shares are sometimes hereinafter referred to as the "Shares." The
<PAGE>
<PAGE>
Company also proposes to issue and sell to you warrants (the "Representatives'
Warrants") pursuant to the Representatives' Warrant Agreement (the
"Representatives' Warrant Agreement") for the purchase of an additional 150,000
shares of Common Stock. The shares of Common Stock issuable upon exercise of the
Representatives' Warrants are hereinafter referred to as the "Representatives'
Shares." The Firm Shares, the Option Shares, the Representatives' Warrants and
the Representatives' Shares (collectively, hereinafter referred to as the
"Securities") are more fully described in the Registration Statement and the
Prospectus referred to below.
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each of the Underwriters as of the date
hereof, and as of the Closing Date (hereinafter defined) and the Option Closing
Date (hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an amendment or
amendments thereto, on Form SB-2 (No. 333-33369), including any related
preliminary prospectus ("Preliminary Prospectus"), for the registration of the
Firm Shares and the Option Shares under the Securities Act of 1933, as amended
(the "Act"), which registration statement and amendment or amendments have been
prepared by the Company in conformity with the requirements of the Act, and the
rules and regulations (the "Regulations") of the Commission under the Act. The
Company will promptly file a further amendment to said registration statement in
the form heretofore delivered to the Underwriters and will not file any other
amendment thereto to which the Underwriters shall have objected in writing after
having been furnished with a copy thereof. Except as the context may otherwise
require, such registration statement, as amended, on file with the Commission at
the time the registration statement becomes effective (including the prospectus,
financial statements, schedules, exhibits and all other documents filed as a
part thereof or incorporated therein (including, but not limited to those
documents or information incorporated by reference therein) and all information
deemed to be a part thereof as of such time pursuant to paragraph (b) of Rule
430(A) of the Regulations)), is hereinafter called the "Registration Statement",
and the form of prospectus in the form first filed with the Commission pursuant
to Rule 424(b) of the Regulations, is hereinafter called the "Prospectus." For
purposes hereof, "Rules and Regulations" mean the rules and regulations adopted
by the Commission under either the Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority has issued
any order preventing or suspending the use of any Preliminary Prospectus, the
Registration Statement or the Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or to the Company's knowledge, threatened. Each of the Preliminary Prospectus,
Registration Statement and Prospectus at the time of filing thereof conformed
with the requirements of the Act and the Rules and Regulations, and none of the
Preliminary Prospectus, Registration Statement or Prospectus at the time of
filing thereof contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein and necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that this representation and warranty does not apply to
statements made in reliance upon and in conformity with written information
furnished to the Company
2
<PAGE>
<PAGE>
with respect to the Underwriters by or on behalf of the Underwriters expressly
for use in such Preliminary Prospectus, Registration Statement or Prospectus.
(c) When the Registration Statement becomes effective and at all times
subsequent thereto up to the Closing Date and each Option Closing Date, if any,
and during such longer period as the Prospectus may be required to be delivered
in connection with sales by the Underwriters or a dealer, the Registration
Statement and the Prospectus will contain all statements which are required to
be stated therein in accordance with the Act and the Rules and Regulations, and
will conform to the requirements of the Act and the Rules and Regulations;
neither the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, will contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, provided, however, that this representation and warranty
does not apply to statements made or statements omitted in reliance upon and in
conformity with information furnished to the Company in writing by or on behalf
of any Underwriter expressly for use in the Preliminary Prospectus, Registration
Statement or Prospectus or any amendment thereof or supplement thereto.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its incorporation.
Except as described in the Prospectus, the Company does not own an interest in
any corporation, partnership, trust, joint venture or other business entity. The
Company is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such qualification or
licensing. The Company has all requisite corporate power and authority, and the
Company has obtained any and all necessary authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all governmental or
regulatory officials and bodies (including, without limitation, those having
jurisdiction over environmental or similar matters), to own or lease its
properties and conduct its business as described in the Prospectus, except where
the failure to do so would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, position, prospectus, value, operation,
properties, business or results of operations of the Company (any such effect a
"Material Adverse Effect"); the Company is and has been doing business in
compliance with all such authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal, state and local laws,
rules and regulations; and the Company has not received any notice of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect. The disclosures in the
Registration Statement concerning the effects of federal, state and local laws,
rules and regulations on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made.
(e) The Company has, as of the date specified therein, a duly authorized,
issued and outstanding capitalization as set forth in the Prospectus, under
"Capitalization" and "Description of Capital Stock" and will have the adjusted
capitalization set forth therein on the Closing Date and the Option Closing
Date, if any, based upon the assumptions set forth therein,
3
<PAGE>
<PAGE>
and the Company is not a party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock, rights, warrants,
options or other securities, except for this Agreement, the Representatives'
Warrant Agreement and as described in the Prospectus. The Securities and all
other securities issued or issuable by the Company conform or, when issued and
paid for, will conform, in all material respects to all statements with respect
thereto contained in the Registration Statement and the Prospectus. All issued
and outstanding securities of the Company have been duly authorized and validly
issued and are fully paid and non-assessable and the holders thereof have no
rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of any security of
the Company or similar contractual rights granted by the Company. The Securities
are not and will not be subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid for and delivered
in accordance with the terms hereof, will be validly issued, fully paid and
non-assessable and will conform to the description thereof contained in the
Prospectus; the holders thereof will not be subject to any liability solely as
such holders; all corporate action required to be taken for the authorization,
issue and sale of the Securities has been duly and validly taken; and the
certificates representing the Securities will be in due and proper form. Upon
the issuance and delivery pursuant to the terms hereof of the Securities to be
sold by the Company hereunder, the Underwriters or the Representatives, as the
case may be, will acquire good and marketable title to such Securities free and
clear of any lien, charge, claim, encumbrance, pledge, security interest, defect
or other restriction or equity of any kind whatsoever.
(f) The financial statements, including the related notes and schedules
thereto, included in the Registration Statement, each Preliminary Prospectus and
the Prospectus fairly present the financial position, income, changes in cash
flows, changes in stockholders' equity, and the results of operations of the
Company at the respective dates and for the respective periods to which they
apply and the pro forma financial information included in the Registration
Statement and Prospectus presents fairly on a basis consistent with that of the
audited financial statements included therein, what the Company's pro forma
capitalization, financial position and results of operations would have been for
the respective periods and as of the respective dates to which they apply after
giving effect to the adjustments described therein. Such financial statements
have been prepared in conformity with generally accepted acc`ounting principles
and the Rules and Regulations, consistently applied throughout the periods
involved. There has been no adverse change or development involving a material
prospective change in the condition, financial or otherwise, or in the earnings,
position, prospects, value, operation, properties, business, or results of
operations of the Company whether or not arising in the ordinary course of
business, since the date of the financial statements included in the
Registration Statement and the Prospectus and the outstanding debt, the
property, both tangible and intangible, and the business of the Company conform
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. Financial information set forth in
the Prospectus under the headings "Summary Financial Data," "Selected Financial
Data," "Capitalization," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," fairly present, on the basis stated in the
Prospectus, the information set forth therein, have been derived from or
compiled on a basis consistent with that of the audited financial statements
included in the Prospectus.
4
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<PAGE>
(g) The Company (i) has paid all federal, state, local, and foreign taxes
for which it is liable and for which payment is due and payable, including, but
not limited to, withholding taxes and amounts payable under Chapters 21 through
24 of the Internal Revenue Code of 1986 (the "Code"), and has furnished all
information returns it is required to furnish pursuant to the Code, (ii) has
established adequate reserves for such taxes which are not due and payable, and
(iii) does not have any tax deficiency or claims outstanding, proposed or
assessed against it.
(h) No transfer tax, stamp duty or other similar tax is payable by or on
behalf of the Underwriters in connection with (i) the issuance by the Company of
the Securities, (ii) the purchase by the Underwriters of the Securities from the
Company and the purchase by the Representatives of the Representatives' Warrants
from the Company, (iii) the consummation by the Company of any of its
obligations under this Agreement or the Representatives' Warrant Agreement, or
(iv) resales of the Shares in connection with the distribution contemplated
hereby.
(i) The Company maintains insurance policies, including, but not limited
to, general liability and property insurance, which insures the Company and its
employees, against such losses and risks generally insured against by comparable
businesses. The Company (A) has not failed to give notice or present any
insurance claim with respect to any matter, including but not limited to the
Company's business, property or employees, under the insurance policy or surety
bond in a due and timely manner, (B) does not have any disputes or claims
against any underwriter of such insurance policies or surety bonds or has not
failed to pay any premiums due and payable thereunder, or (C) has not failed to
comply in all material respects with all conditions contained in such insurance
policies and surety bonds. There are no facts or circumstances under any such
insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company.
(j) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or business of, the Company
which (i) questions the validity of the capital stock of the Company, this
Agreement or the Representatives' Warrant Agreement or of any action taken or to
be taken by the Company pursuant to or in connection with this Agreement or the
Representatives' Warrant Agreement, (ii) is required to be disclosed in the
Registration Statement which is not so disclosed (and such proceedings as are
summarized in the Registration Statement are accurately summarized in all
material respects), or (iii) might, if adversely determined, have a Material
Adverse Effect.
(k) The Company has full legal right, power and authority to authorize,
issue, deliver and sell the Securities, enter into this Agreement and the
Representatives' Warrant Agreement and to consummate the transactions provided
for in such agreements; and this Agreement and the Representatives' Warrant
Agreement have each been duly and properly authorized, executed and delivered by
the Company. Each of this Agreement and the Representatives' Warrant Agreement
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification or
contribution provisions may be limited under applicable laws or the
5
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<PAGE>
public policies underlying such laws and (iii) that the remedies of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings may be brought. None of the Company's issue and sale of the
Securities, execution or delivery of this Agreement or the Representatives'
Warrant Agreement, its performance hereunder and thereunder, its consummation of
the transactions contemplated herein and therein, or the conduct of its business
as described in the Registration Statement, the Prospectus, and any amendments
or supplements thereto, conflicts with or will conflict with or results or will
result in any material breach or violation of any of the terms or provisions of,
or constitutes or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of the Company pursuant to the terms of, (i)
the certificate of incorporation or by-laws of the Company, (ii) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over the Company or
any of its activities or properties.
(l) Except as described in the Prospectus, no consent, approval,
authorization or order of, and no filing with, any court, regulatory body,
government agency or other body, domestic or foreign, is required for the
issuance of the Shares pursuant to the Prospectus and the Registration
Statement, the issuance of the Representatives' Warrants, the performance of
this Agreement and the Representatives' Warrant Agreement and the transactions
contemplated hereby and thereby, including without limitation, any waiver of any
preemptive, first refusal or other rights that any entity or person may have for
the issue and/or sale of any of the Shares, the Representatives' Warrants or the
Representatives' shares, except such as have been or under the rules of the
National Association of Securities Dealers, Inc. (the "NASD") or may be obtained
under the Act or may be required under state securities or Blue Sky laws in
connection with the Underwriters' purchase and distribution of the Shares, the
Representatives' Warrants and the Representaives' Shares to be sold by the
Company hereunder.
(m) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which any of its assets, properties or business may be subject have
been duly and validly authorized, executed and delivered by the Company, and
constitute the legal, valid and binding agreements of the Company, enforceable
against the Company, in accordance with their respective terms. The descriptions
in the Registration Statement of agreements, contracts and other documents are
accurate in all material respects and fairly present the information required to
be shown with respect thereto by Form SB-2, and there are no contracts or other
documents which are required by the Act to be described in the Registration
Statement or filed as exhibits to the Registration Statement which are not
described or filed as required, and the exhibits which have been filed are in
all material respects complete and correct copies of the documents of which they
purport to be copies.
6
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(n) Subsequent to the respective dates as of which information is set forth
in the Registration Statement and Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, (ii) entered into any transaction other than in the ordinary
course of business, or (iii) declared or paid any dividend or made any other
distribution on or in respect of its capital stock of any class, and there has
not been any change in the capital stock, or any material change in the debt
(long or short term) or liabilities or material adverse change in or affecting
the general affairs, management, financial operations, stockholders' equity or
results of operations of the Company.
(o) No default exists in the due performance and observance of any term,
covenant or condition of any license, contract, indenture, mortgage, installment
sale agreement, lease, deed of trust, voting trust agreement, stockholders
agreement, partnership agreement, note, loan or credit agreement, purchase
order, or any other agreement or instrument evidencing an obligation for
borrowed money, or any other agreement or instrument to which the Company is a
party or by which the Company may be bound or to which the property or assets
(tangible or intangible) of the Company is subject or affected which default
would have a Material Adverse Effect.
(p) The Company has generally enjoyed a satisfactory employer-employee
relationship with its employees and is in compliance in all material respects
with all federal, state, local, and foreign laws and regulations respecting
employment and employment practices, terms and conditions of employment and
wages and hours. There are, to the Company's knowledge, no pending
investigations involving the Company by the U.S. Department of Labor, or any
other governmental agency responsible for the enforcement of such federal,
state, local, or foreign laws and regulations. There is, to the Company's
knowledge, no unfair labor practice charge or complaint against the Company
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened against or
involving the Company or any predecessor entity, and none has ever occurred. No
representation question exists respecting the employees of the Company, and no
collective bargaining agreement or modification thereof is currently being
negotiated by the Company. No grievance or arbitration proceeding is, to the
Company's knowledge, pending under any expired or existing collective bargaining
agreements of the Company. No labor dispute with the employees of the Company
exists, or, to the Company's knowledge, is imminent.
(q) Except as described in the Prospectus, the Company does not maintain,
sponsor or contribute to any program or arrangement that is an "employee pension
benefit plan," an "employee welfare benefit plan," or a "multiemployer plan" as
such terms are defined in Sections 3(2), 3(1) and 3(37), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") ("ERISA
Plans"). The Company does not maintain or contribute, now or at any time
previously, to a defined benefit plan, as defined in Section 3(35) of ERISA. No
ERISA Plan (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code, which could subject the Company to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each ERISA Plan is in
compliance with all reporting, disclosure and other requirements of the Code and
ERISA as they relate to any such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each ERISA Plan
7
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<PAGE>
which is intended to comply with Code Section 401(a), stating that such ERISA
Plan and the attendant trust are qualified thereunder. The Company has never
completely or partially withdrawn from a "multiemployer plan."
(r) Neither the Company nor any of its employees, directors, stockholders,
partners, or affiliates (within the meaning of the Rules and Regulations) of any
of the foregoing has taken or will take, directly or indirectly, any action
designed to or which has constituted or which might be expected to cause or
result in, under the Exchange Act, or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities or otherwise.
(s) Except as otherwise disclosed in the Prospectus, none of the patents,
patent applications, trademarks, service marks, trade names and copyrights, and
licenses and rights to the foregoing presently owned or held by the Company are
in dispute so far as known by the Company or are in any conflict with the right
of any other person or entity. The Company (i) owns or has the right to use,
free and clear of all liens, charges, claims, encumbrances, pledges, security
interests, defects or other restrictions or equities of any kind whatsoever, all
patents, trademarks, service marks, trade names and copyrights, technology and
licenses and rights with respect to the foregoing, used in the conduct of its
business as now conducted or proposed to be conducted without infringing upon or
otherwise acting adversely to the right or claimed right of any person,
corporation or other entity under or with respect to any of the foregoing and
(ii) is not obligated or under any liability whatsoever to make any payment by
way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, trademark, service mark, trade name, copyright,
know-how, technology or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business or otherwise.
(t) The Company has good and marketable title to, or valid and enforceable
leasehold estates in, all items of real and personal property stated in the
Prospectus, to be owned or leased by it free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects, or other
restrictions or equities of any kind whatsoever, other than those referred to in
the Prospectus and liens for taxes not yet due and payable.
(u) Deloitte & Touche LLP ("D&T") whose report is filed with the Commission
as a part of the Registration Statement, are independent certified public
accountants as required by the Act and the Rules and Regulations.
(v) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which all of the holders of the Common Stock
and holders of securities exchangeable or exercisable for or convertible into
shares of Common Stock have agreed not to, directly or indirectly, offer to
sell, sell, grant any option for the sale of, assign, transfer, pledge,
hypothecate, distribute or otherwise encumber or dispose of any shares of Common
Stock or securities convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
(either pursuant to Rule 144 of the Rules and Regulations or otherwise) or
dispose of any beneficial interest therein for a period of not less than 13
months following the effective date of the Registration Statement without the
prior written consent of the Representatives. The Company will cause the
Transfer Agent, as defined
8
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below, to mark an appropriate legend on the face of stock certificates
representing all of such securities and to place "stop transfer" orders on the
Company's stock ledgers.
(w) Except as described in the Prospectus under "Underwriting," there are
no claims, payments, issuances, arrangements or understandings, whether oral or
written, for services in the nature of a finder's or origination fee with
respect to the sale of the Securities hereunder or any other arrangements,
agreements, understandings, payments or issuance with respect to the Company or
any of its officers, directors, stockholders, partners, employees or affiliates
that may affect the Underwriters' compensation, as determined by the National
Association of Securities Dealers, Inc. ("NASD").
(x) The Common Stock has been approved for quotation on the American Stock
Exchange ("Amex").
(y) Neither the Company nor any of its officers, employees, agents, or any
other person acting on behalf of the Company, has, directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or employee
of any governmental agency (domestic or foreign) or instrumentality of any
government (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a position to
help or hinder the business of the Company (or assist the Company in connection
with any actual or proposed transaction) which (a) might subject the Company, or
any other such person to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign), (b) if not given in
the past, might have had a materially adverse effect on the assets, business or
operations of the Company, or (c) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company.
The Company's internal accounting controls are sufficient to cause the Company
to comply with the Foreign Corrupt Practices Act of 1977, as amended.
(z) Except as set forth in the Prospectus, no officer, director or
stockholder of the Company, or any "affiliate" or "associate" (as these terms
are defined in Rule 405 promulgated under the Rules and Regulations) of any of
the foregoing persons or entities has or has had, either directly or indirectly,
(i) an interest in any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by
the Company, or (B) purchases from or sells or furnishes to the Company any
goods or services, or (ii) a beneficial interest in any contract or agreement to
which the Company is a party or by which it may be bound or affected. Except as
set forth in the Prospectus under "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company and any officer, director, or Principal Stockholder (as such term is
defined in the Prospectus) of the Company or any partner, affiliate or associate
of any of the foregoing persons or entities.
(aa) Any certificate signed by any officer of the Company, and delivered to
the Underwriters or to Underwriters' Counsel (as defined herein) shall be deemed
a representation and warranty by the Company to the Underwriters as to the
matters covered thereby.
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(bb) The minute books of the Company have been made available to the
Underwriters and contain a complete summary of all meetings and actions of the
directors, stockholders, audit committee, compensation committee and any other
committee of the Board of Directors of the Company, respectively, since the time
of its incorporation, and reflects all transactions referred to in such minutes
accurately in all material respects.
(cc) Except and to the extent described in the Prospectus, no holders of
any securities of the Company or of any options, warrants or other convertible
or exchangeable securities of the Company have the right to include any
securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company or to require the Company to
file a registration statement under the Act and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
(dd) The Company has as of the effective date of the Registration Statement
(i) entered into an employment agreement with each of Steven H. Plausteiner and
Susan D. Plausteiner, in the form filed as Exhibits 10.7, and 10.8,
respectively, to the Registration Statement and (ii) purchased term key-man
insurance on the life of Steven H. Plausteiner and Susan D. Plausteiner in the
amount of $1,000,000 each, which policies name the Company as the sole
beneficiary thereof.
(ee) As of the date hereof, the Company has effected: (i) the
reorganization pursuant to which all of the partnership interests in Ascutney
Mountain Resort Hotel, L.P., Ascutney Mountain Resort, L.P. and Ascutney
Mountain Resort Realty (collectively, the "Limited Partnerships") will be
exchanged for an aggregate 1,200,000 shares of Common Stock of the Company (the
"Combination Transaction"). The Combination Transaction has been duly and
validly authorized by the Company, and all certificates, agreements, contracts,
minutes or other documents necessary to effect the Combination Transaction
(collectively, the "Combination Transaction Documents") have been duly and
validly authorized, executed and delivered and, if necessary, filed with the
appropriate regulatory body, government agency or other body, domestic or
foreign, by the appropriate parties, and constitute the legal, valid and binding
agreements of such parties, enforceable against each of them in accordance with
their respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or equitable,
and except as rights to indemnity or contribution may be limited by applicable
law), and none of the execution or delivery of any of the Combination
Transaction Documents by the parties thereto, the performance by the Company
hereunder or by the Company and the Limited Partnerships thereunder, or
consummation of the transactions contemplated herein or therein, conflicts with
or will conflict with or results or will result in any breach or violation of
the terms or provisions of, or constitutes or will constitute a default under,
or result in the creation or imposition of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity of any kind
whatsoever upon, any property or assets (tangible or intangible) of the Company
pursuant to the terms of, (A) the certificate of incorporation or by-laws of the
Company, (B) any license, contract, collective bargaining agreement, indenture,
mortgage, deed of trust, lease, voting trust agreement, stockholders agreement,
note, loan or credit agreement or any other agreement or instrument to which the
Company is a party or by which it is or may be bound or to which its respective
properties or
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assets (tangible or intangible) is or may be subject, or any indebtedness, or
(C) any statute, judgment, decree, order, rule or regulation applicable to the
Company of any arbitrator, court, regulatory body or administrative agency or
other governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or properties. The
Combination Transaction Documents effectively convey to the Company all right,
title and interest to the business of the Company as described in the
Prospectus; and the descriptions in the Registration Statement of the
Reorganization are accurate and fairly present the information required to be
shown with respect thereto by Form SB-2.
2. Purchase, Sale and Delivery of the Securities and Representatives'
Warrants.
On the basis of the representations, warranties, covenants and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter, severally and
not jointly, agrees to purchase from the Company at a price of $_______ [93% of
the initial public offering price] per share of Common Stock, that number of
Firm Shares set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Firm Shares which such Underwriter may become obligated
to purchase pursuant to the provisions of Section 11 hereof.
(b) In addition, on the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase all or any part of an additional 225,000 shares of
Common Stock at a price of $____ [93% of the initial public offering price] per
share of Common Stock. The option granted hereby will expire 45 days after (i)
the date the Registration Statement becomes effective, if the Company has
elected not to rely on Rule 430A under the Rules and Regulations, or (ii) the
date of this Agreement if the Company has elected to rely upon Rule 430A under
the Rules and Regulations, and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Firm Shares upon notice by
the Representatives to the Company setting forth the number of Option Shares as
to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for any such Option Shares. Any such time and
date of delivery (an "Option Closing Date") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Date, as
hereinafter defined, unless otherwise agreed upon by the Representatives and the
Company. Nothing herein contained shall obligate the Underwriters to make any
over-allotments. No Option Shares shall be delivered unless the Firm Shares
shall be simultaneously delivered or shall theretofore have been delivered as
herein provided.
(c) Payment of the purchase price for, and delivery of certificates for,
the Firm Shares shall be made at the offices of Josephthal & Co. Inc. at 200
Park Avenue, 24th Floor, New York, New York 10166, or at such other place as
shall be agreed upon by the Representatives and the Company. Such delivery and
payment shall be made at 10:00 a.m. (New York City time) on , 1998 or at
such other time and date as shall be agreed upon by the Representatives and the
Company, but not less than three (3) nor more than seven (7) full business days
after the effective date of the Registration Statement (such time and date of
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payment and delivery being herein called "Closing Date"). In addition, in the
event that any or all of the Option Shares are purchased by the Underwriters,
payment of the purchase price for, and delivery of certificates for, such Option
Shares shall be made at the above mentioned office of Josephthal or at such
other place as shall be agreed upon by the Representatives and the Company on
each Option Closing Date as specified in the notice from the Representatives to
the Company. Delivery of the certificates for the Firm Shares and the Option
Shares, if any, shall be made to the Underwriters against payment by the
Underwriters, severally and not jointly, of the purchase price for the Firm
Shares and the Option Shares, if any, to the order of the Company for the Firm
Shares and the Option Shares, if any, by New York Clearing House funds. In the
event such option is exercised, each of the Underwriters, acting severally and
not jointly, shall purchase that proportion of the total number of Option Shares
then being purchased which the number of Firm Shares set forth in Schedule A
hereto opposite the name of such Underwriter bears to the total number of Firm
Shares, subject in each case to such adjustments as the Representatives in their
discretion shall make to eliminate any sales or purchases of fractional shares.
Certificates for the Firm Shares and the Option Shares, if any, shall be in
definitive, fully registered form, shall bear no restrictive legends and shall
be in such denominations and registered in such names as the Underwriters may
request in writing at least two (2) business days prior to the Closing Date or
the relevant Option Closing Date, as the case may be. The certificates for the
Firm Shares and the Option Shares, if any, shall be made available to the
Representatives at such office or such other place as the Representatives may
designate for inspection, checking and packaging no later than 9:30 a.m. on the
last business day prior to Closing Date or the relevant Option Closing Date, as
the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representatives Representatives' Warrants at a purchase price of $.0001 per
warrant, which warrants shall entitle the holders thereof to purchase an
aggregate of 150,000 shares of Common Stock. The Representatives' Warrants shall
be exercisable for a period of four years commencing one year from the effective
date of the Registration Statement at a price equaling one hundred twenty
percent (120%) of the initial public offering price of the shares of Common
Stock. The Representatives' Warrant Agreement and form of Warrant Certificate
shall be substantially in the form filed as Exhibit 4.2 to the Registration
Statement. Payment for the Representatives' Warrants shall be made on the
Closing Date.
3. Public Offering of the Shares. As soon after the Registration Statement
becomes effective as the Representatives deem advisable, the Underwriters shall
make a public offering of the Shares (other than to residents of or in any
jurisdiction in which qualification of the Shares is required and has not become
effective) at the price and upon the other terms set forth in the Prospectus.
The Representatives may from time to time increase or decrease the public
offering price after distribution of the Shares has been completed to such
extent as the Representatives, in their discretion deem advisable. The
Underwriters may enter into one of more agreements as the Underwriters, in each
of their sole discretion, deem advisable with one or more broker-dealers who
shall act as dealers in connection with such public offering.
4. Covenants and Agreements of the Company.
The Company covenants and agrees with each of the Underwriters as follows:
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(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable and will not at any time, whether before or after the effective date
of the Registration Statement, file any amendment to the Registration Statement
or supplement to the Prospectus or file any document under the Act or Exchange
Act before termination of the offering of the Shares by the Underwriters of
which the Representatives shall not previously have been advised and furnished
with a copy, or to which the Representatives shall have objected or which is not
in compliance with the Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof, the
Company will advise the Representatives and confirm the notice in writing, (i)
when the Registration Statement, as amended, becomes effective, if the
provisions of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective, (ii)
of the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto, or the
institution of proceedings for that purpose, (iii) of the issuance by the
Commission or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the receipt of any comments from the Commission; and (v)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional information.
If the Commission or any state securities commission authority shall enter a
stop order or suspend such qualification at any time, the Company will make
every effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representatives) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424(b)(1) (or, if applicable and if consented to by the Representatives,
pursuant to Rule 424(b)(4)) not later than the Commission's close of business on
the earlier of (i) the second business day following the execution and delivery
of this Agreement and (ii) the fifteenth business day after the effective date
of the Registration Statement.
(d) The Company will give the Representatives notice of its intention to
file or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities which differs
from the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
and will furnish the Representatives with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such prospectus to which the
Representatives or Orrick, Herrington & Sutcliffe LLP ("Underwriters' Counsel"),
shall object.
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(e) The Company shall endeavor in good faith, in cooperation with the
Representatives, at or prior to the time the Registration Statement becomes
effective, to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as the Representatives may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such documents
and furnish such information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a foreign corporation
or file a general or limited consent to service of process in any such
jurisdiction. In each jurisdiction where such qualification shall be effected,
the Company will, unless the Representatives agree that such action is not at
the time necessary or advisable, use all reasonable efforts to file and make
such statements or reports at such times as are or may reasonably be required by
the laws of such jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be delivered under the
Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when a prospectus relating
to the Securities or the Representatives' Shares is required to be delivered
under the Act, any event shall have occurred as a result of which, in the
opinion of counsel for the Company or Underwriters' Counsel, the Prospectus, as
then amended or supplemented, 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, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will notify the Representatives
promptly and prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act, each such amendment or
supplement to be satisfactory to Underwriters' Counsel, and the Company will
furnish to the Underwriters copies of such amendment or supplement as soon as
available and in such quantities as the Underwriters may request.
(g) As soon as practicable, but in any event not later than 45 days after
the end of the 12-month period beginning on the day after the end of the fiscal
quarter of the Company during which the effective date of the Registration
Statement occurs (90 days in the event that the end of such fiscal quarter is
the end of the Company's fiscal year), the Company shall make generally
available to its security holders, in the manner specified in Rule 158(b) of the
Rules and Regulations, and to the Representatives, an earnings statement which
will be in the detail required by, and will otherwise comply with, the
provisions of Section 11(a) of the Act and Rule 158(a) of the Rules and
Regulations, which statement need not be audited unless required by the Act,
covering a period of at least 12 consecutive months after the effective date of
the Registration Statement.
(h) During a period of five (5) years after the date hereof, the Company
will furnish to its stockholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly reports of earnings, and will deliver to the
Representatives:
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i) concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company for each quarter in the
form furnished to the Company's stockholders and certified by the Company's
principal financial or accounting officer;
ii) concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company as at the end of the preceding
fiscal year, together with statements of operations, stockholders' equity,
and cash flows of the Company for such fiscal year, accompanied by a copy
of the certificate thereon of independent certified public accountants;
iii) as soon as they are available, copies of all reports (financial
or other) mailed to stockholders;
iv) as soon as they are available, copies of all reports and financial
statements furnished to or filed with the Commission, the NASD or any
securities exchange;
v) every press release and every material news item or article of
interest to the financial community in respect of the Company, or its
affairs which was released or prepared by or on behalf of the Company; and
vi) any additional information of a public nature concerning the
Company (and any future subsidiary) or its businesses which the
Representatives may request.
During such five-year period, if the Company has an active subsidiary, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiary are consolidated, and will
be accompanied by similar financial statements for any significant subsidiary
which is not so consolidated.
(i) The Company will maintain a Transfer Agent and, if necessary under the
jurisdiction of incorporation of the Company, a Registrar (which may be the same
entity as the Transfer Agent) for its Common Stock.
(j) The Company will furnish to the Representatives or on the
Representatives' order, without charge, at such place as the Representatives may
designate, copies of each Preliminary Prospectus, the Registration Statement and
any pre-effective or post-effective amendments thereto (two of which copies will
be signed and will include all financial statements and exhibits), the
Prospectus, and all amendments and supplements thereto, including any prospectus
prepared after the effective date of the Registration Statement, in each case as
soon as available and in such quantities as the Representatives may request.
(k) On or before the effective date of the Registration Statement, the
Company shall provide the Representatives with true copies of duly executed,
legally binding and enforceable agreements pursuant to which for a period of 13
months from the effective date of the Registration Statement, the holders of all
shares of Common Stock and holders of securities exchangeable or exercisable for
or convertible into shares of Common Stock, agree that it or he
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or she will not directly or indirectly, issue, offer to sell, sell, grant an
option for the sale of, assign, transfer, pledge, hypothecate, distribute or
otherwise encumber or dispose of any shares of Common Stock or securities
convertible into, exercisable or exchangeable for or evidencing any right to
purchase or subscribe for any shares of Common Stock (either pursuant to Rule
144 of the Rules and Regulations or otherwise) or dispose of any beneficial
interest therein without the prior written consent of the Representatives
(collectively, the "Lock-up Agreements"). During the 13 month period commencing
with the effective date of the Registration Statement, the Company shall not,
without the prior written consent of the Representatives, sell, contract or
offer to sell, issue, transfer, assign, pledge, hypothecate, distribute, or
otherwise dispose of, directly or indirectly, any shares of Common Stock or any
options, rights or warrants with respect to any shares of Common Stock. On or
before the Closing Date, the Company shall deliver instructions to the Transfer
Agent authorizing it to place appropriate legends on the certificates
representing the securities subject to the Lock-up Agreements and to place
appropriate stop transfer orders on the Company's ledgers.
(l) Neither the Company, nor any of its officers, directors, stockholders,
nor any of their respective affiliates (within the meaning of the Rules and
Regulations) will take, directly or indirectly, any action designed to, or which
might in the future reasonably be expected to cause or result in, stabilization
or manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "Use of
Proceeds" in the Prospectus. Except as described in the Prospectus, no portion
of the net proceeds will be used, directly or indirectly, to acquire any
securities issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form SR as may be
required pursuant to Rule 463 under the Act) from time to time, under the Act,
the Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Act, the Exchange Act, and the Rules and Regulations.
(o) The Company shall furnish to the Representatives as early as
practicable prior to each of the date hereof, the Closing Date and each Option
Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date of the Registration Statement) which have been read by
the Company's independent public accountants, as stated in its letter to be
furnished pursuant to Section 6(i) hereof.
(p) The Company shall cause the Common Stock to be quoted on Amex and for a
period of seven (7) years from the date hereof, use its best efforts to maintain
the Amex quotation of the Common Stock to the extent outstanding.
(q) For a period of five (5) years from the Closing Date, the Company shall
furnish to the Representatives at either Representative's request and at the
Company's sole expense, (i) daily consolidated transfer sheets relating to the
Common Stock, (ii) the list of
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holders of all of the Company's securities and (iii) a Blue Sky "Trading Survey"
for secondary Sales of the Company's securities prepared by counsel to the
Company.
(r) As soon as practicable, (i) but in no event more than 5 business days
before the effective date of the Registration Statement, file a Form 8-A with
the Commission providing for the registration under the Exchange Act of the
Securities and (ii) but in no event more than 30 days from the effective date of
the Registration Statement, take all necessary and appropriate actions to be
included in Standard and Poor's Corporation Descriptions and Moody's OTC Manual
and to continue such inclusion for a period of not less than five (5) years.
(s) The Company hereby agrees that it will not for a period of thirteen
(13) months from the effective date of the Registration Statement, adopt,
propose to adopt or otherwise permit to exist any employee, officer, director,
consultant or compensation plan or arrangement permitting the grant, issue or
sale of any shares of Common Stock or other securities of the Company (i) in an
amount greater than an aggregate of [_______] shares, (ii) at an exercise or
sale price per share less than the greater of (a) the initial public offering
price of the Shares set forth herein and (b) the fair market value of the Common
Stock on the date of grant or sale, (iii) to any direct or indirect beneficial
holder on the date hereof of more than 10% of the issued and outstanding shares
of Common Stock at an exercise price greater than 110% of the fair market value
of the Common Stock on the date of the grant, (iv) with the payment for such
securities with any form of consideration other than cash, (v) upon payment of
less than the full purchase or exercise price for such shares of Common Stock or
other securities of the Company on the date of grant or issuance, or (vi)
permitting the existence of stock appreciation rights, phantom options or
similar arrangements.
(t) Until the completion of the distribution of the Shares, the Company
shall not without the prior written consent of the Representatives and
Underwriters' Counsel, issue, directly or indirectly, any press release or other
communication or hold any press conference with respect to the Company or its
activities or the offering contemplated hereby, other than trade releases issued
in the ordinary course of the Company's business consistent with past practices
with respect to the Company's operations.
(u) For a period equal to the lesser of (i) seven (7) years from the date
hereof, and (ii) the sale to the public of the Representatives' Shares, the
Company will not take any action or actions which may prevent or disqualify the
Company's use of Form SB-2 or Form S-1 (or other appropriate form) for the
registration under the Act of the Representatives' Shares.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and the
Option Closing Date (to the extent not paid at the Closing Date) all expenses
and fees (other than fees of Underwriters' Counsel, except as provided in (iv)
below) incident to the performance of the obligations of the Company under this
Agreement and the Representatives' Warrant Agreement, including, without
limitation, (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing, (including mailing and handling charges)
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the
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Prospectus and any amendments and supplements thereto and the printing, mailing
(including the payment of postage with respect thereto) and delivery of this
Agreement, the Agreement Among Underwriters, the Selected Dealer Agreements, and
related documents, including the cost of all copies thereof and of the
Preliminary Prospectuses and of the Prospectus and any amendments thereof or
supplements thereto supplied to the Underwriters and such dealers as the
Underwriters may request, in quantities as hereinabove stated, (iii) the
printing, engraving, issuance and delivery of the Securities including, but not
limited to, (x) the purchase by the Underwriters of the Shares and the purchase
by the Representatives of the Representatives' Warrants from the Company, (y)
the consummation by the Company of any of its obligations under this Agreement
and the Representatives' Warrant Agreement, and (z) resale of the Shares by the
Underwriters in connection with the distribution contemplated hereby, (iv) the
qualification of the Securities under state or foreign securities or "Blue Sky"
laws and determination of the status of such securities under legal investment
laws, including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum," the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and disbursements and fees of counsel in connection therewith
(such fees not to exceed $50,000), (v) costs and expenses in connection with due
diligence investigations, including but not limited to the fees of any
independent counsel or consultant retained, (vi) fees and expenses of the
transfer agent and registrar, (vii) applications for assignments of a rating of
the Securities by qualified rating agencies, (viii) the fees payable to the
Commission and the NASD, and (ix) the fees and expenses incurred in connection
with the quotation of the Securities on Amex and any other exchange.
(b) If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 6 or Section 12, the Company shall reimburse and
indemnify the Representatives for all of their actual out-of-pocket expenses,
including the fees and disbursements of Underwriters' Counsel, less any amounts
already paid pursuant to Section 5(c) hereof.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 5, it will pay to the Representatives
on the Closing Date by certified or bank cashier's check or, at the election of
the Representatives, by deduction from the proceeds of the offering contemplated
herein a non-accountable expense allowance equal to two and one-half percent
(2.5%) of the gross proceeds received by the Company from the sale of the Firm
Shares, all of which shall be paid upon the Closing Date. In the event the
Representatives elect to exercise the over-allotment option described in Section
2(b) hereof, the Company agrees to pay to the Representatives on the Option
Closing Date (by certified or bank cashier's check or, at the Representatives'
election, by deduction from the proceeds of the Option Shares) a non-accountable
expense allowance equal to two and one-half percent (2.5%) of the gross proceeds
received by the Company from the sale of the Option Shares.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any, with respect to the
Company as if it had been made on and as of the Closing Date or each Option
Closing Date, as the case may be; the accuracy on and as of the Closing Date or
Option Closing Date, if any, of the statements of the officers of the Company
made pursuant to the provisions hereof; and the performance by the Company on
and as of the Closing Date and each
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Option Closing Date, if any, of its covenants and obligations hereunder and to
the following further conditions:
(a) The Registration Statement shall have become effective not later than
12:00 Noon, New York time, on the date of this Agreement or such later date and
time as shall be consented to in writing by the Representatives, and, at Closing
Date and each Option Closing Date, if any, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of Underwriters' Counsel. If the Company has elected to rely upon
Rule 430A of the Rules and Regulations, the price of the Shares and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to Closing Date the Company shall
have provided evidence satisfactory to the Representatives of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Rules and Regulations.
(b) The Representatives shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representatives' opinion, is material, or omits to state a
fact which, in the Representatives' opinion, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, or
that the Prospectus, or any supplement thereto, contains an untrue statement of
fact which, in the Representatives' opinion, is material, or omits to state a
fact which, in the Representatives' opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Representatives shall have
received from Underwriters' Counsel, such opinion or opinions with respect to
the organization of the Company, the validity of the Securities, the
Representatives' Warrants, the Registration Statement, the Prospectus and other
related matters as the Representatives may request and Underwriters' Counsel
shall have received such papers and information as they request to enable them
to pass upon such matters.
(d) At Closing Date, the Underwriters shall have received the favorable
opinion of Sonnenschein Nath & Rosenthal, special counsel to the Company, dated
the Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
i) Company (A) has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction, (B) is
duly qualified and licensed and in good standing as a foreign corporation
in each jurisdiction in which its ownership or leasing of any properties or
the character of its operations requires such qualification or licensing,
and (C) has all requisite corporate power and authority; and the Company
has obtained any and all
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necessary authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials
and bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and has
been doing business in material compliance with all such authorizations,
approvals, orders, licenses, certificates, franchises and permits and all
federal, state and local laws, rules and regulations; the Company has not
received any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license,
certificate, franchise, or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially
adversely affect the business, operations, condition, financial or
otherwise, or the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operations of the Company.
The disclosures in the Registration Statement concerning the effects of
federal, state and local laws, rules and regulations on the Company's
business as currently conducted and as contemplated are correct in all
material respects and do not omit to state a fact necessary to make the
statements contained therein not misleading in light of the circumstances
in which they were made;
ii) except as set forth in the Prospectus, to the best of such
counsel's knowledge, the Company does not own an interest in any other
corporation, partnership, joint venture, trust or other business entity;
iii) the Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and any amendment or
supplement thereto, under "Capitalization" and "Description of Capital
Stock," and, to the best of such counsel's knowledge, the Company is not a
party to or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants, options or
other securities, except for this Agreement, the Representatives' Warrant
Agreement and as described in the Prospectus. The Securities, and all other
securities issued or issuable by the Company conform in all material
respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding
securities of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; the holders thereof have no rights of
rescission with respect thereto, and are not subject to personal liability
by reason of being such holders; and none of such securities were issued in
violation of the preemptive rights of any holders of any security of the
Company. The Shares, the Representatives'
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Warrants and the Representatives' Shares to be sold by the Company
hereunder and under the Representatives' Warrant Agreement are not and will
not be subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid for and
delivered in accordance with the terms hereof, will be validly issued,
fully paid and non-assessable and conform to the description thereof
contained in the Prospectus; the holders thereof will not be subject to any
liability solely as such holders; all corporate action required to be taken
for the authorization, issue and sale of the Shares, the Representatives'
Warrants and the Representatives' Shares has been duly and validly taken;
and the certificates representing the Shares and the Representatives'
Warrants are in due and proper form. The Representatives' Warrants
constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment therefor, the number and type of
securities of the Company called for thereby. Upon the issuance and
delivery pursuant to this Agreement and the Representatives' Warrant
Agreement of the Shares and the Representatives' Warrants, respectively, to
be sold by the Company, the Underwriters and the Representatives,
respectively, will acquire good and marketable title to the Shares and
Representatives' Warrants free and clear of any pledge, lien, charge,
claim, encumbrance, pledge, security interest, or other restriction or
equity of any kind whatsoever. No transfer tax is payable by or on behalf
of the Underwriters in connection with (A) the issuance by the Company of
the Shares, (B) the purchase by the Underwriters and the Representatives of
the Shares and the Representatives' Warrants, respectively, from the
Company, (C) the consummation by the Company of any of its obligations
under this Agreement or the Representatives' Warrant Agreement, or (D)
resales of the Shares in connection with the distribution contemplated
hereby;
iv) the Registration Statement is effective under the Act, and, if
applicable, filing of all pricing information has been timely made in the
appropriate form under Rule 430A, and no stop order suspending the use of
the Preliminary Prospectus, the Registration Statement or Prospectus or any
part of any thereof or suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or, to the best of such counsel's knowledge,
threatened or contemplated under the Act;
v) each of the Preliminary Prospectus, the Registration Statement, and
the Prospectus and any amendments or supplements thereto (other than the
financial statements and other financial and statistical data included
therein, as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations;
vi) to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be
described in the Registration Statement and the Prospectus and filed as
exhibits to the Registration Statement other than those described in the
Registration Statement (or required to be filed under the Exchange Act if
upon such filing they would be incorporated, in whole or in part, by
reference therein) and the Prospectus and filed as exhibits thereto, and
the exhibits which have been filed are correct copies of the documents of
which they purport to be copies; (B) the descriptions in the Registration
Statement and the Prospectus and any supplement or amendment thereto of
contracts and other documents to which the Company is a party or by which
it is bound, including any document to which the Company is a party or by
which it is bound, incorporated by reference into the Prospectus and any
supplement or amendment thereto, are accurate in all material respects and
fairly
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represent the information required to be shown by Form SB-2; (C) there is
not pending or threatened against the Company any action, arbitration,
suit, proceeding, inquiry, investigation, litigation, governmental or other
proceeding (including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, pending or
threatened against, or involving the properties or business of the Company
which (x) is required to be disclosed in the Registration Statement which
is not so disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all material respects),
(y) questions the validity of the capital stock of the Company or this
Agreement or the Representatives' Warrant Agreement, or of any action taken
or to be taken by the Company pursuant to or in connection with any of the
foregoing; (D) no statute or regulation or legal or governmental proceeding
required to be described in the Prospectus is not described as required;
and (E) there is no action, suit or proceeding pending, or threatened,
against or affecting the Company before any court or arbitrator or
governmental body, agency or official (or any basis thereof known to such
counsel), which, if adversely determined would have a Material Adverse
Effect or which could adversely affect the present or prospective ability
of the Company to perform its obligations under this Agreement or the
Representatives' Warrant Agreement or which in any manner draws into
question the validity or enforceability of this Agreement or the
Representatives' Warrant Agreement;
vii) the Company has full legal right, power and authority to enter
into each of this Agreement and the Representatives' Warrant Agreement, and
to consummate the transactions provided for herein and therein; and each of
this Agreement and the Representatives' Warrant Agreement has been duly
authorized, executed and delivered by the Company. Each of this Agreement
and the Representatives' Warrant Agreement, assuming due authorization,
execution and delivery by each other party thereto constitutes a legal,
valid and binding agreement of the Company enforceable against the Company
in accordance with its terms (except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any
action, legal or equitable, and except as rights to indemnity or
contribution may be limited by applicable law), and none of the Company's
execution or delivery of this Agreement and the Representatives' Warrant
Agreement, its performance hereunder or thereunder, its consummation of the
transactions contemplated herein or therein, or the conduct of its business
as described in the Registration Statement, the Prospectus, and any
amendments or supplements thereto, conflicts with or will conflict with or
results or will result in any material breach or violation of any of the
terms or provisions of, or constitutes or will constitute a default under,
or result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or
equity of any kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of, (A) the certificate of
incorporation or by-laws of the Company, (B) any license, contract,
indenture, mortgage, deed of trust, voting trust agreement, stockholders
agreement, note,
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loan or credit agreement or any other agreement or instrument to which the
Company is a party or by which it is or may be bound or to which any of its
respective properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (C) any statute, judgment, decree, order,
rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or
body (including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having jurisdiction
over the Company or any of its activities or properties;
viii) except as described in the Prospectus, no consent, approval,
authorization or order of, and no filing with, any court, regulatory body,
government agency or other body (other than such as may be required under
Blue Sky laws, as to which no opinion need be rendered) is required in
connection with the issuance of the Shares pursuant to the Prospectus, the
issuance of the Representatives' Warrants, and the Registration Statement,
the performance of this Agreement and the Representatives' Warrant
Agreement, and the transactions contemplated hereby and thereby;
ix) to the best of such counsel's knowledge the properties and
business of the Company conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus; and the
Company has good and marketable title to, or valid and enforceable
leasehold estates in, all items of real and personal property stated in the
Prospectus to be owned or leased by it, in each case free and clear of all
liens, charges, claims, encumbrances, pledges, security interests, defects
or other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus and liens for taxes not yet due and payable;
x) to the best knowledge of such counsel, the Company is not in breach
of, or in default under, any term or provision of any license, contract,
indenture, mortgage, installment sale agreement, deed of trust, lease,
voting trust agreement, stockholders' agreement, partnership agreement,
note, loan or credit agreement or any other agreement or instrument
evidencing an obligation for borrowed money, or any other agreement or
instrument to which the Company is a party or by which the Company may be
bound or to which the property or assets (tangible or intangible) of the
Company is subject or affected; and the Company is not in violation of any
term or provision of its certificate of incorporation by-laws, or in
violation of any franchise, license, permit, judgment, decree, order,
statute, rule or regulation;
xi) the statements in the Prospectus under "BUSINESS," "MANAGEMENT,"
"PRINCIPAL STOCKHOLDERS," "CERTAIN TRANSACTIONS," "DESCRIPTION OF CAPITAL
STOCK," and "SHARES ELIGIBLE FOR FUTURE SALE" have been reviewed by such
counsel, and insofar as they refer to statements of law, descriptions of
statutes, licenses, rules or regulations or legal conclusions, are correct
in all material respects;
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xii) the Shares have been accepted for quotation on the Amex;
xiii) the persons listed under the caption "PRINCIPAL STOCKHOLDERS" in
the Prospectus are the respective "beneficial owners" (as such phrase is
defined in regulation 13d-3 under the Exchange Act) of the securities set
forth opposite their respective names thereunder as and to the extent set
forth therein;
xiv) except as described in the Prospectus, no person, corporation,
trust, partnership, association or other entity has the right to include
and/or register any securities of the Company in the Registration
Statement, require the Company to file any registration statement or, if
filed, to include any security in such registration statement;
xv) to the best of such counsel's knowledge, except as described in
the Prospectus, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee
with respect to the sale of the Securities hereunder or financial
consulting arrangement or any other arrangements, agreements,
understandings, payments or issuances that may affect the Underwriters'
compensation, as determined by the NASD;
xvi) assuming due execution by the parties thereto other than the
Company, the Lock-up Agreements are legal, valid and binding obligations of
parties thereto, enforceable against the party and any subsequent holder of
the securities subject thereto in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to
or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as
rights to indemnity or contribution may be limited by applicable law); and
xvii) except as described in the Prospectus, the Company does not (A)
maintain, sponsor or contribute to any ERISA Plans, (B) maintain or
contribute, now or at any time previously, to a defined benefit plan, as
defined in Section 3(35) of ERISA, and (C) has never completely or
partially withdrawn from a "multiemployer plan".
xviii) neither the execution of the Combination Transaction Documents
nor the consummation of the transactions contemplated thereby, nor the
consummation of any other of the transactions contemplated herein or
therein by the Limited Partnerships, nor the fulfillment of the terms
hereof or thereof by the Limited Partnerships, will conflict with, result
in a breach of, or constitute a default under the respective articles of
incorporation or by-laws of any of the Limited Partnerships or the terms of
any other agreement or instrument to which any of the Limited Partnerships
or any of their respective subsidiaries is a party or by which any of their
prospective properties are bound or affected, or any order, regulation or
judgement applicable to any of the Limited Partnerships or any of
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their respective subsidiaries of any court regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over any of the
Limited Partnerships or any of their prospective subsidiaries; and
xix) the Combination Transaction Documents (I) have been duly
authorized, executed and delivered by the Limited partnerships and
constitute valid and binding obligations of the Limited Partnerships
enforceable in accordance with their respective terms and (ii) effectively
convey from the Limited Partnerships to the Company all right, title and
interest to the business of the Limited Partnerships as described in the
Prospectus.
Such counsel shall state that such counsel has participated in conferences
with officers and other representatives of the Company and representatives of
the independent public accountants for the Company at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Preliminary Prospectus, the Registration
Statement, the Prospectus, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which lead
them to believe that either the Registration Statement or any amendment thereto,
at the time such Registration Statement or amendment became effective or the
Preliminary Prospectus or Prospectus or amendment or supplement thereto as of
the date of such opinion contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
opinion with respect to the financial statements and schedules and other
financial and statistical data included in the Preliminary Prospectus, the
Registration Statement or Prospectus).
Such opinion shall not state that it is to be governed or qualified by, or
that it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991), or any comparable State bar
accord.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of responsible officers of the Company, and certificates
or other written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such statements or certificates
shall be delivered to Underwriters' Counsel if requested. The opinion of such
counsel for the Company shall state that the opinion of any such other counsel
is in form satisfactory to such counsel and that the Representatives and they
are justified in relying thereon.
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At each Option Closing Date, if any, the Underwriters shall have received
the favorable opinion of Sonnenschein Nath & Rosenthal, special counsel to the
Company, dated the Option Closing Date, addressed to the Underwriters and in
form and substance satisfactory to Underwriters' Counsel confirming as of Option
Closing Date the statements made by Sonnenschein Nath & Rosenthal, in its
opinion delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing Date, if
any, Underwriters' Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions of the
Company, or herein contained.
(f) Prior to each of the Closing Date and each Option Closing Date, if any,
(i) there shall have been no material adverse change nor development involving a
prospective change in the condition, financial or otherwise, prospects,
stockholders' equity or the business activities of the Company, whether or not
in the ordinary course of business, from the latest dates as of which such
condition is set forth in the Registration Statement and Prospectus; (ii) there
shall have been no transaction, not in the ordinary course of business, entered
into by the Company, from the latest date as of which the financial condition of
the Company is set forth in the Registration Statement and Prospectus which is
materially adverse to the Company; (iii) the Company shall not be in default
under any provision of any instrument relating to any outstanding indebtedness;
(iv) the Company shall not have issued any securities (other than the
Securities); the Company shall not have declared or paid any dividend or made
any distribution in respect of its capital stock of any class; and there has not
been any change in the capital stock of the Company, or any material change in
the debt (long or short term) or liabilities or obligations of the Company
(contingent or otherwise); (v) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus; (vi) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened (or circumstances giving rise to
same) against the Company, or affecting any of its properties or business before
or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
materially adversely affect the business, operations, prospects or financial
condition or income of the Company, except as set forth in the Registration
Statement and Prospectus; and (vii) no stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission.
(g) At each of the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received a certificate of the Company signed by the
principal executive officer and by the chief financial or chief accounting
officer of the Company, dated the Closing Date or Option Closing Date, as the
case may be, to the effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that:
i) The representations and warranties of the Company in this Agreement
are true and correct, as if made on and as of the Closing Date or the
Option Closing Date, as the case may be, and the Company has complied in
all material respects with all agreements and covenants and satisfied all
conditions
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contained in this Agreement on its part to be performed or satisfied at or
prior to such Closing Date or Option Closing Date, as the case may be;
ii) No stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the best of each of such
person's knowledge, after due inquiry are contemplated or threatened under
the Act;
iii) The Registration Statement and the Prospectus and, if any, each
amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes
any 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,
in light of the circumstances under which they were made, not misleading
and neither the Preliminary Prospectus or any supplement thereto included
any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and
iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (a) the Company has
not incurred up to and including the Closing Date or the Option Closing
Date, as the case may be, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent;
(b) the Company has not paid or declared any dividends or other
distributions on its capital stock; (c) the Company has not entered into
any transactions not in the ordinary course of business; (d) there has not
been any change in the capital stock of the Company or any material change
in the debt (long or short-term) of the Company; (e) the Company has not
sustained any material loss or damage to its property or assets, whether or
not insured; (g) there is no litigation which is pending or threatened (or
circumstances giving rise to same) against the Company, or any affiliated
party of any of the foregoing which is required to be set forth in an
amended or supplemented Prospectus which has not been set forth; and (h)
there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(h) By the Closing Date, the Underwriters will have received clearance from
the NASD as to the amount of compensation allowable or payable to the
Underwriters, as described in the Registration Statement.
(i) At the time this Agreement is executed, the Underwriters shall have received
a letter, dated such date, addressed to the Underwriters in form and substance
satisfactory (including the non-material nature of the changes or decreases, if
any, referred to in
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clause (iii) below) in all respects to the Underwriters and Underwriters'
Counsel, from Deloitte & Touche LLP;
i) confirming that they are independent certified public accountants
with respect to the Company within the meaning of the Act and the
applicable Rules and Regulations;
ii) stating that it is their opinion that the financial statements and
supporting schedules of the Company included in the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations thereunder and that
the Representatives may rely upon the opinion of Deloitte & Touche LLP with
respect to such financial statements and supporting schedules included in
the Registration Statement;
iii) stating that, on the basis of a limited review which included a
reading of the latest available unaudited interim financial statements of
the Company, a reading of the latest available minutes of the stockholders
and board of directors and the various committees of the boards of
directors of the Company, consultations with officers and other employees
of the Company responsible for financial and accounting matters and other
specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that (A) the pro forma financial
information contained in the Registration Statement and Prospectus does not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations or is not fairly
presented in conformity with generally accepted accounting principles
applied on a basis consistent with that of the audited financial statements
of the Company or the unaudited pro forma financial information included in
the Registration Statement, (B) the unaudited financial statements and
supporting schedules of the Company included in the Registration Statement
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations or are not
fairly presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements of the Company included in the Registration
Statement, or (C) at a specified date not more than five (5) days prior to
the effective date of the Registration Statement, there has been any change
in the capital stock of the Company, any change in the long-term debt of
the Company, or any decrease in the stockholders' equity of the Company or
any decrease in the net current assets or net assets of the Company as
compared with amounts shown in the June 30, 1997 balance sheets included in
the Registration Statement, other than as set forth in or contemplated by
the Registration Statement, or, if there was any change or decrease,
setting forth the amount of such change or decrease, and (D) during the
period from June 30, 1997 to a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there was any
decrease in net revenues or net earnings of the Company or increase in net
earnings per common share of the Company, in each case as compared with the
corresponding period beginning June 30, 1996
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other than as set forth in or contemplated by the Registration Statement,
or, if there was any such decrease, setting forth the amount of such
decrease;
iv) setting forth, at a date not later than five (5) days prior to the
date of the Registration Statement, the amount of liabilities of the
Company (including a break-down of commercial paper and notes payable to
banks);
v) stating that they have compared specific dollar amounts, numbers of
shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Prospectus
in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting
records, including work sheets, of the Company and excluding any questions
requiring an interpretation by legal counsel, with the results obtained
from the application of specified readings, inquiries and other appropriate
procedures (which procedures do not constitute an examination in accordance
with generally accepted auditing standards) set forth in the letter and
found them to be in agreement; and
vi) statements as to such other matters incident to the transaction
contemplated hereby as the Representatives may request.
(j) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from Deloitte & Touche LLP a letter, dated as
of the Closing Date or the Option Closing Date, as the case may be, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (i) of this Section hereof except that the specified date referred
to shall be a date not more than five days prior to the Closing Date or the
Option Closing Date, as the case may be, and, if the Company has elected to rely
on Rule 430A of the Rules and Regulations, to the further effect that they have
carried out procedures as specified in clause (v) of subsection (i) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Representatives and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (v).
(k) The Company shall have delivered to the Representatives a letter from
Deloitte & Touche LLP addressed to the Company stating that they have not during
the immediately preceding two year period brought to the attention of the
Company's management any "material weakness" as defined in Statement of Auditing
Standards No. 60 "Communication of Internal Control Structure Related Matters
Noted in an Audit," in any of the Company's internal controls.
(l) On each of the Closing Date and Option Closing Date, if any, there
shall have been duly tendered to the Representatives for the several
Underwriters' accounts the appropriate number of Shares.
(m) No order suspending the sale of the Securities in any jurisdiction
designated by the Representatives pursuant to subsection (A)(v) of Section 5
hereof shall have
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been issued on either the Closing Date or the Option Closing Date, if any, and
no proceedings for that purpose shall have been instituted or shall be
contemplated.
(n) On or before the Closing Date, the Company shall have executed and
delivered to the Representatives, (i) the Representatives' Warrant Agreement
substantially in the form filed as Exhibit 4.3 to the Registration Statement in
final form and substance satisfactory to the Representatives, and (ii) the
Representatives' Warrants in such denominations and to such designees as shall
have been provided to the Company.
(o) On or before the Closing Date, the Shares shall have been duly approved
for quotation on Amex subject to official notice of issuance.
(p) On or before the Closing Date, there shall have been delivered to the
Representatives all of the Lock-Up Agreements, in form and substance
satisfactory to Underwriters' Counsel.
(q) On or before the Closing Date, the Company shall have effected the
Combination Transaction as described in the Prospectus.
If any condition to the Underwriters' obligations hereunder to be fulfilled
prior to or at the Closing Date or the relevant Option Closing Date, as the case
may be, is not so fulfilled, the Representatives may terminate this Agreement
or, if the Representatives so elect, it may waive any such conditions which have
not been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company, agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the Underwriter,
including specifically each person who may be substituted for an Underwriter as
provided in Section 11 hereof), and each person, if any, who controls the
Underwriter ("controlling person") within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions,
proceedings, investigations, inquiries, and suits in respect thereof),
whatsoever (including but not limited to any and all costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
such action, proceeding, investigation, inquiry or suit, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon (A) any untrue statement
or alleged untrue statement of a material fact contained (i) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as from time to time
amended and supplemented); (ii) in any post-effective amendment or amendments or
any new registration statement and prospectus in which is included securities of
the Company issued or issuable upon exercise of the Securities; or (iii) in any
application or other document or written communication (in this Section 8
collectively called "application") executed by the Company or based upon written
information furnished by the Company filed, delivered or used in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any state securities
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commission or agency, Amex or any other securities exchange, (B) the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of the
Prospectus, in the light of the circumstances under which they were made), or
(C) any breach of any representation, warranty, covenant or agreement of the
Company contained herein or in any certificate by or on behalf of the Company or
any of its officers delivered pursuant hereto unless, in the case of clause (A)
or (B) above, such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company with respect to any
Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or any Prospectus, or any
amendment thereof or supplement thereto, or in any application, as the case may
be.
The indemnity agreement in this subsection (a) shall be in addition to any
liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each other person, if
any, who controls the Company within the meaning of the Act, to the same extent
as the foregoing indemnity from the Company to the Underwriters but only with
respect to statements or omissions, if any, made in any Preliminary Prospectus,
the Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in strict conformity
with, written information furnished to the Company with respect to any
Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any such application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriters in connection with this Offering. The
Company acknowledges that the statements with respect to the public offering of
the Securities set forth under the heading "Underwriting" and the stabilization
legend in the Prospectus have been furnished by the Underwriters expressly for
use therein and constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in addition to any
liability which the Underwriters may have at common law or otherwise.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, suit or proceeding, such indemnified
party shall, if a claim in respect thereof is to be made against one or more
indemnifying parties under this Section 7, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action, investigation,
inquiry, suit or proceeding is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the
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aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action at the
expense of the indemnifying party, (ii) the indemnifying parties shall not have
employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action, investigation, inquiry, suit or
proceeding on behalf of the indemnified party or parties), in any of which
events such fees and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action, investigation, inquiry, suit or proceeding or separate but
similar or related actions, investigations, inquiries, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances. Anything in this Section 7 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent; provided, however, that such consent was
not unreasonably withheld. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
investigation, inquiry, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in any case in
which (i) an indemnified party makes claim for indemnification pursuant to this
Section 7, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
this Section 7 provide for indemnification in such case, or (ii) contribution
under the Act may be required on the part of any indemnified party, then each
indemnifying party shall contribute to the amount paid as a result of such
losses, claims, damages, expenses or liabilities (or actions, investigations,
inquiries, suits or proceedings in respect thereof) (A) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand, from the offering of the Securities or (B) if the allocation
provided by clause (A) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, expenses or liabilities, as well as any other relevant
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equitable considerations. In any case where the Company is the contributing
party and the Underwriters are the indemnified party, the relative benefits
received by the Company on the one hand, and the Underwriters, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) bear to the total
underwriting discounts received by the Underwriters hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions, investigations, inquiries,
suits or proceedings in respect thereof) referred to above in this subdivision
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action, claim, investigation, inquiry, suit or proceeding. Notwithstanding the
provisions of this subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by the Underwriters hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Act, each officer of the
Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subparagraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit, inquiry,
investigation or proceeding against such party in respect to which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have hereunder or otherwise than under this subparagraph (d), or to
the extent that such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto, shall be
deemed to be representations, warranties and agreements at the Closing Date and
the Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the indemnity agreements contained
in Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company, any controlling person of any Underwriter or the Company, and shall
survive termination of this Agreement or the issuance and delivery of the
Securities to the Underwriters and the Representatives, as the case may be.
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9. Effective Date.
(a) This Agreement shall become effective at 10:00 a.m., New York City
time, on the next full business day following the date hereof, or at such
earlier time after the Registration Statement becomes effective as the
Representatives, in their discretion, shall release the Shares for sale to the
public; provided, however, that the provisions of Sections 5, 7 and 10 of this
Agreement shall at all times be effective. For purposes of this Section 9, the
Shares to be purchased hereunder shall be deemed to have been so released upon
the earlier of dispatch by the Representatives of telegrams to securities
dealers releasing such shares for offering or the release by the Representatives
for publication of the first newspaper advertisement which is subsequently
published relating to the Shares.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the Representatives shall
have the right to terminate this Agreement, after the date hereof, (i) if any
domestic or international event or act or occurrence has materially disrupted,
or in the Representatives' opinion will in the immediate future materially
adversely disrupt the financial markets; or (ii) any material adverse change in
the financial markets shall have occurred; or (iii) if trading generally shall
have been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Boston Stock Exchange, the Chicago
Board of Trade, the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange, the Commission or any other government authority having jurisdiction;
or (iv) if trading of any of the securities of the Company shall have been
suspended, or any of the securities of the Company shall have been delisted, on
any exchange or in any over-the-counter market; or (v) if the United States
shall have become involved in a war or major hostilities, or if there shall have
been an escalation in an existing war or major hostilities or a national
emergency shall have been declared in the United States; or (vi) if a banking
moratorium has been declared by a state or federal authority; or (vii) if a
moratorium in foreign exchange trading has been declared; or (viii) if the
Company shall have sustained a loss material or substantial to the Company by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall have been insured, will,
in the Representatives' opinion, make it inadvisable to proceed with the
delivery of the Securities; or (viii) if there shall have occurred any outbreak
or escalation of hostilities or any calamity or crisis or there shall have been
such a material adverse change in the conditions or prospects of the Company, or
such material adverse change in the general market, political or economic
conditions, in the United States or elsewhere as in the Representatives'
judgment would make it inadvisable to proceed with the offering, sale and/or
delivery of the Securities or (ix) if [Steven H. Plausteiner and Susan D.
Plausteiner] shall no longer serve the Company in their present capacity.
(b) If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 10(a) the Company shall promptly reimburse and
indemnify the Representatives for all of their actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriters (less
amounts previously paid pursuant to Section 5(c) above). Notwithstanding any
contrary provision contained in this Agreement, if this Agreement shall not be
carried out within the time specified herein, or any extension thereof
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granted to the Representatives, by reason of any failure on the part of the
Company to perform any undertaking or satisfy any condition of this Agreement by
it to be performed or satisfied (including, without limitation, pursuant to
Section 6 or Section 12) then, the Company shall promptly reimburse and
indemnify the Representatives for all of their actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriters. In
addition, the Company shall remain liable for all Blue Sky counsel fees (such
fees not to exceed $50,000) and expenses and filing fees. Notwithstanding any
contrary provision contained in this Agreement, any election hereunder or any
termination of this Agreement (including, without limitation, pursuant to
Sections 6, 10, 11 and 12 hereof), and whether or not this Agreement is
otherwise carried out, the provisions of Section 5 and Section 7 shall not be in
any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
11. Substitution of the Underwriters. If one or more of the Underwriters
shall fail (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 6, Section 10 or Section 12
hereof) to purchase the Securities which it or they are obligated to purchase on
such date under this Agreement (the "Defaulted Securities"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangement for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
i) if the number of Defaulted Securities does not exceed 10% of the
total number of Firm Shares to be purchased on such date, the
non-defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
ii) if the number of Defaulted Securities exceeds 10% of the total
number of Firm Shares, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default which does not result in a termination of
this Agreement, the Representatives shall have the right to postpone the Closing
Date for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements.
12. Default by the Company. If the Company shall fail at the Closing Date
or at any Option Closing Date, as applicable, to sell and deliver the number of
Shares which it is obligated to sell hereunder on such date, then this Agreement
shall terminate (or, if such default shall occur with respect to any Option
Shares to be purchased on an Option Closing Date, the Underwriters may at the
Representatives' option, by notice from the Representatives to the Company,
terminate the Underwriters' obligation to purchase Option Shares from the
Company on such date) without any liability on the part of any non-defaulting
party other than pursuant to
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Section 5, Section 7 and Section 10 hereof. No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representatives c/o Josephthal & Co. Inc., 200 Park Avenue, 24th Floor, New
York, New York 10166, Attention: Scott A. Weisman, with a copy to Orrick,
Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York 10103,
Attention: Lawrence B. Fisher, Esq. Notices to the Company shall be directed to
the Company at Snowdance, Inc., Route 44, Brownsville, Vermont 05037, Attention:
Steven H. Plausteiner, Chief Executive Officer, with a copy to Sonnenschein Nath
& Rosenthal, 1221 Avenue of the Americas, New York, New York 10020, Attention:
Dennis N. Berman, Esq. .
14. Parties. This Agreement shall inure solely to the benefit of and shall
be binding upon, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 7 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement and the Representatives'
Warrant Agreement constitute the entire agreement of the parties hereto and
supersede all prior written or oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may not be amended
except in a writing, signed by the Representatives and the Company.
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If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
SNOWDANCE, INC.
By:
---------------------------------
Steven H. Plausteiner
Chief Executive Officer
Confirmed and accepted as of
the date first above written.
JOSEPHTHAL & CO. INC.
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By:
---------------------------------
CRUTTENDEN ROTH INCORPORATED
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By:
---------------------------------
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<PAGE>
SCHEDULE A
================================================================================
Number of Firm Shares
Name of Underwriters to be Purchased
- --------------------------------------------------------------------------------
Josephthal & Co. Inc.............................
Cruttenden Roth Incorporated.....................
- --------------------------------------------------------------------------------
Total............................................ 1,500,000
=========
================================================================================
<PAGE>
<PAGE>
[FORM OF REPRESENTATIVES' WARRANT AGREEMENT]
[SUBJECT TO ADDITIONAL REVIEW]
- --------------------------------------------------------------------------------
SNOWDANCE, INC.
AND
JOSEPHTHAL & CO. INC.
AND
CRUTTENDEN ROTH INCORPORATED
REPRESENTATIVES'
WARRANT AGREEMENT
DATED AS OF ________, 1998
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
REPRESENTATIVES' WARRANT AGREEMENT dated as of _______, 1998 by and
among SNOWDANCE, INC., a Delaware corporation (the "Company"), JOSEPHTHAL & CO.
INC., and CRUTTENDEN ROTH INCORPORATED (hereinafter referred to variously as the
"Holders" or the "Representatives").
W I T N E S E T H:
WHEREAS, the Company proposes to issue to the Representatives or their
designees warrants ("Warrants") to purchase up to an aggregate 150,000 shares of
common stock of the Company, par value $.001 per share ("Common Stock"); and
WHEREAS, the Representatives have agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof by and
among Josephthal & Co. Inc. and Cruttenden Roth Incorporated, as the
Representatives of the Several Underwriters named in Schedule A thereto, and the
Company to act as the Representatives in connection with the Company's proposed
public offering of up to 1,500,000 shares of Common Stock at a public offering
price of $_____ per share of Common Stock (the "Public Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representatives in consideration for, and as
part of the Representatives' compensation in connection with the Representatives
acting as the Representatives pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Representatives to the Company of an aggregate fifteen dollars ($15.00), the
agreements herein
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<PAGE>
set forth and other good and valuable consideration, hereby acknowledged, the
parties hereto agree as follows:
1. Grant. The Representatives are hereby granted the right to purchase,
at any time from _______, 1999 [one year from the effective date of the
registration statement], until 5:30 P.M., New York time, on ____________, 2003
[five years from the effective date of the registration statement], up to an
aggregate of 150,000 shares of Common Stock (the "Shares") at an initial
exercise price (subject to adjustment as provided in Section 8 hereof) of $_____
per share of Common Stock [120% of the initial public offering price per share]
subject to the terms and conditions of this Agreement. Except as set forth
herein, the Shares issuable upon exercise of the Warrants are in all respects
identical to the shares of Common Stock being purchased by the Underwriters for
resale to the public pursuant to the terms and provisions of the Underwriting
Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant.
'SS'3.1 Method of Exercise. The Warrants initially are exercisable at
an aggregate initial exercise price (subject to adjustment as provided in
Section 8 hereof) per share of Common Stock set forth in Section 6 hereof
payable by certified or official bank check in New York Clearing House funds,
subject to adjustment as provided in Section 8 hereof. Upon surrender of a
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
shares of Common Stock
<PAGE>
<PAGE>
purchased at the Company's principal offices in Brownsville, Vermont (presently
located at Snowdance, Inc., Route 44, Brownsville, Vermont 05037) the registered
holder of a Warrant Certificate ("Holder" or "Holders") shall be entitled to
receive a certificate or certificates for the shares of Common Stock so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock underlying the Warrants). Warrants may
be exercised to purchase all or part of the shares of Common Stock represented
thereby. In the case of the purchase of less than all the shares of Common Stock
purchasable under any Warrant Certificate, the Company shall cancel said Warrant
Certificate upon the surrender thereof and shall execute and deliver a new
Warrant Certificate of like tenor for the balance of the shares of Common Stock
purchasable thereunder.
'SS'3.2 Exercise by Surrender of Warrant. In addition to the method of
payment set forth in Section 3.1 and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrants shall have the right at any time and
from time to time to exercise the Warrants in full or in part by surrendering
the Warrant Certificate in the manner specified in Section 3.1 in exchange for
the number of Shares equal to the product of (x) the number of Shares as to
which the Warrants are being exercised multiplied by (y) a fraction, the
numerator of which is the Market Price (as defined in Section 3.3 below) of the
Shares less the Exercise Price and the denominator of which is such Market
Price. Solely for the purposes of this paragraph, Market Price shall be
calculated either (i) on the date which the form of election attached hereto is
deemed to have been sent to the Company pursuant to Section 12 hereof ("Notice
Date") or (ii) as the average of the Market Prices for each of the five trading
days preceding the Notice Date, whichever of (i) or (ii) is greater.
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<PAGE>
'SS'3.3 Definition of Market Price. As used herein, the phrase "Market
Price" at any date shall be deemed to be the last reported sale price, or, in
case no such reported sale takes place, on such day, the average of the last
reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading or by the Nasdaq SmallCap Market
("Nasdaq" and the Pacific Exchange ("PE")), or, if the Common Stock is not
listed or admitted to trading on any national securities exchanged or quoted by
Nasdaq or the PE, the average closing bid price as furnished by the Nasdaq or
the PE through or similar organization if Nasdaq or the PE is no longer
reporting such information, or if the Common Stock is not quoted on Nasdaq or
the PE, as determined in good faith by resolution of the Board of Directors of
the Company, based on the best information available to it.
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock and/or other securities,
properties or rights underlying such Warrants, shall be made forthwith (and in
any event within five (5) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the provisions
of Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
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The Warrant Certificates and the certificates representing the Shares
underlying the Warrants (and/or other securities, property or rights issuable
upon the exercise of the Warrants) shall be executed on behalf of the Company by
the manual or facsimile signature of the then Chairman or Vice Chairman of the
Board of Directors or President or Vice President of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
5. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof; that the Warrants may not be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, for a period of one (1) year from
the date hereof, except to officers of the Representatives.
6. Exercise Price.
'SS'6.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 8 hereof, the initial exercise price of each Warrant shall
be $____ [120% of the initial public offering price] per share of Common Stock.
The adjusted exercise price shall be the price which shall result from time to
time from any and all adjustments of the initial exercise price in accordance
with the provisions of Section 8 hereof.
'SS'6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
'SS'7.1 Registration Under the Securities Act of 1933. The Warrants,
the Shares, and any of the other securities issuable upon exercise of the
Warrants have been registered under the Securities Act of 1933, as amended (the
"Act"), pursuant to the Company's Registration
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Statement on Form SB-2 (Registration No. 333-33369) (the "Registration
Statement"). All of the representations and warranties of the Company contained
in the Underwriting Agreement relating to the Registration Statement, the
Preliminary Prospectus and Prospectus (as such terms are defined in the
Underwriting Agreement) and made as of the dates provided therein, are hereby
incorporated by reference. The Company agrees and covenants to promptly file
post-effective amendments to such Registration Statement as may be necessary in
order to maintain its effectiveness and otherwise to take such action as may be
necessary to maintain the effectiveness of the Registration Statement as long as
any Warrants are outstanding. In the event that, for any reason, whatsoever, the
Company shall fail to maintain the effectiveness of the Registration Statement,
upon exercise, in part or in whole, of the Warrants, certificates representing
the Shares underlying the Warrants, and any of the other securities issuable
upon exercise of the Warrants (collectively, the "Warrant Securities") shall
bear the following legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act"), and may not be
offered or sold except pursuant to (i) an effective registration
statement under the Act, (ii) to the extent applicable, Rule 144 under
the Act (or any similar rule under such Act relating to the disposition
of securities), or (iii) an opinion of counsel, if such opinion shall
be reasonably satisfactory to counsel to the issuer, that an exemption
from registration under such Act is available.
'SS'7.2 Piggyback Registration. If, at any time commencing after the
date hereof and expiring seven (7) years from the date hereof, the Company
proposes to register any of its securities under the Act (other than in
connection with a merger or pursuant to Form S-8), it will give written notice
by registered mail, at least twenty (20) days prior to the filing of each such
registration statement, to the Representatives and to all other Holders of the
Warrants and/or the Warrant Securities of its intention to do so. If the
Representatives or other Holders of the Warrants and/or Warrant Securities
notify the Company within twenty (20) business days
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after receipt of any such notice of its or their desire to include any such
securities in such proposed registration statement, the Company shall afford the
Representatives and such Holders of the Warrants and/or Warrant Securities the
opportunity to have any such Warrant Securities registered under such
registration statement (sometimes referred to herein as the "Piggyback
Registration").
Notwithstanding the provisions of this Section 7.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.2 (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof.
'SS'7.3 Demand Registration.
(a) At any time commencing one (1) year after the date hereof and
expiring five (5) years from the date hereof, the Holder of the Warrants and/or
Warrant Securities representing a "Majority" (as hereinafter defined) of such
securities (assuming the exercise of all of the Warrants) shall have the right
(which right is in addition to the registration rights under Section 7.2
hereof), exercisable by written notice to the Company, to have the Company
prepare and file with the Securities and Exchange Commission (the "Commission"),
on one occasion, a registration statement and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for the Representatives and Holders, in order to comply with the
provisions of the Act, so as to permit a public offering and sale of their
respective Warrant Securities for nine (9) consecutive months by such Holder and
any other Holder of the Warrants and/or Warrant Securities who notify the
Company within ten (10) days after receiving notice from the Company of such
request.
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(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.3 by any Holder or Holders to all
other registered Holder of the Warrants and the Warrant Securities within ten
(10) days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under Section 7.2 and
subsection (a) of this Section 7.3, at any time commencing after the date hereof
and expiring five (5) years thereafter, any Holder of Warrants and/or Warrant
Securities shall have the right, exercisable by written request to the Company,
to have the Company prepare and file, on one occasion, with the Commission a
registration statement so as to permit a public offering and sale for nine (9)
consecutive months by any such Holder of its Warrant Securities provided,
however, that the provisions of Section 7.4(b) hereof shall not apply to any
such registration request and registration and all costs incident thereto shall
be at the expense of the Holder or Holders making such request.
(d) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the Warrant Securities
within the time period specified in Section 7.4(a) hereof pursuant to the
written notice specified in Section 7.3(a) of a Majority of the Holder of the
Warrants and/or Warrant Securities, the Company shall have the option, upon the
written notice of election of a Majority of the Holder of the Warrants and/or
Warrant Securities, to repurchase (i) any and all Warrant Securities at the
higher of the Market Price per share of Common Stock on (x) the date of the
notice sent pursuant to Section 7.3(a) or (y) the expiration of the period
specified in Section 7.4(a) and (ii) any and all Warrants at such Market Price
less the Exercise Price of such Warrant. Such repurchase shall be in immediately
available funds and shall close within two (2) days after the later of (i) the
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expiration of the period specified in Section 7.4(a) or (ii) the delivery of the
written notice of election specified in this Section 7.3(d).
'SS'7.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 7.2 or 7.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within forty-five (45) days of receipt of any demand therefor, shall
use its best efforts to have any registration statements declared effective at
the earliest possible time, and shall furnish each Holder desiring to sell
Warrant Securities such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses. The
Holder(s) will pay all costs, fees and expenses in connection with any
registration statement filed pursuant to Section 7.3(c). If the Company shall
fail to comply with the provisions of Section 7.4(a), the Company shall, in
addition to any other equitable or other relief available to the Holder(s), be
liable for any or all incidental or special damages sustained by the Holder(s)
requesting registration of their Warrant Securities.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Warrant Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general
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consent to service of process or to qualify as a foreign corporation to do
business under the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant Securities
to be sold pursuant to any registration statement and each person, if any, who
controls such Holder within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement but only to the same
extent and with the same effect as the provisions pursuant to which the Company
has agreed to indemnify each of the Underwriters contained in Section 7 of the
Underwriting Agreement.
(e) The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holder, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 7 of the Underwriting
Agreement pursuant to which the Underwriters have agreed to indemnify the
Company.
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(f) Nothing contained in this Agreement shall be construed as requiring
the Holder(s) to exercise their Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities other
than the Warrant Securities to be included in any registration statement filed
pursuant to Section 7.3 hereof, or permit any other registration statement to be
or remain effective during the effectiveness of a registration statement filed
pursuant to Section 7.3 hereof, without the prior written consent of the Holders
of the Warrants and Warrant Securities representing a Majority of such
securities.
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holders or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
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(i) The Company shall as soon as practicable after the effective date
of the registration statement, and in any event within 15 months thereafter,
make "generally available to its security holder" (within the meaning of Rule
158 under the Act) an earnings statement (which need not be audited) complying
with Section 11(a) of the Act and covering a period of at least 12 consecutive
months beginning after the effective date of the registration statement.
(j) The Company shall deliver promptly to each Holder participating in
the offering requesting the correspondence and memoranda described below and to
the managing underwriters, copies of all correspondence between the Commission
and the Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the registration
statement and permit each Holder and underwriters to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD"). Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as any such Holder or underwriter shall
reasonably request.
(k) The Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Securities requested to be included in such
underwriting, which may be the Representative. Such agreement shall be
satisfactory in form and substance to the Company, each Holder and such managing
underwriter(s), and shall contain such representations, warranties and covenants
by the Company and such other terms as are customarily contained in agreements
of that type
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used by the managing underwriters. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of their Warrant
Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriter(s) shall also be made to and for the benefit of such
Holders. Such Holders shall not be required to make any representations or
warranties to or agreements with the Company or the underwriter(s) except as
they may relate to such Holder and their intended methods of distribution.
(l) In addition to the Warrant Securities, upon the written request
therefor by any Holder(s), the Company shall include in the registration
statement any other securities of the Company held by such Holder(s) as of the
date of filing of such registration statement, including without limitation
restricted shares of Common Stock, options, warrants or any other securities
convertible into shares of Common Stock.
(m) For purposes of this Agreement, the term "Majority" in reference to
the Holder of Warrants or Warrant Securities, shall mean in excess of fifty
percent (50%) of the then outstanding Warrants or Warrant Securities that (i)
are not held by the Company, an affiliate, officer, creditor, employee or agent
thereof or any of their respective affiliates, members of their family, persons
acting as nominees or in conjunction therewith and (ii) have not been resold to
the public pursuant to a registration statement filed with the Commission under
the Act.
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8. Adjustments to Exercise Price and Number of Securities.
'SS'8.1 Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
'SS'8.2 Stock Dividends and Distributions. In case the Company shall
pay a dividend in, or make a distribution of, shares of Common Stock or of the
Company's capital stock convertible into Common Stock, the Exercise Price shall
forthwith be proportionately decreased. An adjustment made pursuant to this
Section 8.2 shall be made as of the record date for the subject stock dividend
or distribution.
'SS'8.3 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 8, the number of
Warrant Securities issuable upon the exercise at the adjusted exercise price of
each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Securities issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
'SS'8.4 Definition of Common Stock. For the purpose of this Agreement,
the term "Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Certificate of Incorporation of the Company as may be amended as of
the date hereof, or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value.
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'SS'8.5 Merger or Consolidation. In case of any consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holders a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
'SS'8.6 No Adjustment of Exercise Price in Certain Cases. No adjustment
of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the shares
of Common Stock issuable upon the exercise of the Warrants;
(b) If the amount of said adjustment shall be less than two
cents (2[c]) per Warrant Security, provided, however, that in such case
any adjustment that would otherwise be required then to be made shall
be carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment so
carried forward, shall amount to at least two cents (2[c]) per Warrant
Security.
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9. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
11. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all shares of Common Stock and other securities issuable upon such exercise
shall be
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duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder. As long as the Warrants shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of the Warrants to be listed (subject to
official notice of issuance) on all securities exchanges on which the Common
Stock issued to the public in connection herewith may then be listed and/or
quoted on Nasdaq or the PE.
12. Notices to Warrant Holder. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholder for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holder of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holder of its Common
Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock
of the Company, or any option, right or warrant to subscribe therefor;
or
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(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholder entitled to such dividend, distribution, convertible or exchangeable
securities or subscription rights, or entitled to vote on such proposed
dissolution, liquidation, winding up or sale. Such notice shall specify such
record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made and sent when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holders of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice
to the Holders.
14. Supplements and Amendments. The Company and the Representative may
from time to time supplement or amend this Agreement without the approval of any
holder of
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Warrant Certificates (other than the Representative) in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Representatives may deem necessary or desirable and which the Company
and the Representatives deem shall not adversely affect the interests of the
Holder of Warrant Certificates.
15. Successors. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holder(s) and
their respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the close of
business on _______, 2003. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination until the close of
business on _______, 2011.
17. Governing Law; Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company, the Representatives and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York or of the United States of America for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Representatives and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the
Representatives and
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the Holders (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
set forth in Section 13 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the party so served in any action,
proceeding or claim. The Company, the Representatives and the Holders agree that
the prevailing party(ies) in any such action or proceeding shall be entitled to
recover from the other party(ies) all of its/their reasonable legal costs and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
18. Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the modification or
amendment is sought.
19. Severability. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Representatives and any other registered Holder(s) of the Warrant Certificates
or Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole benefit
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of the Company and the Representative and any other registered Holder of Warrant
Certificates or Warrant Securities.
22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
SNOWDANCE, INC.
By:
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Name:
Title:
Attest:
- ---------------------------------
Secretary
JOSEPHTHAL & CO. INC.
By:
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Name:
Title:
CRUTTENDEN ROTH INCORPORATED
By:
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Name:
Title:
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, __________, 2003
No. W- Warrants to Purchase
____ Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that _________, or registered
assigns, is the registered holder of ____ Warrants to purchase initially, at any
time from __________, 1998 [one year from the effective date of the Registration
Statement] until 5:30 p.m. New York time on ___________, 2003 [five years from
the effective date of the Registration Statement] ("Expiration Date"), up to
__________ fully-paid and non-assessable shares of common stock, ("Common
Stock") of SNOWDANCE, INC., a Delaware corporation (the "Company"), (one share
of Common Stock referred to individually as a "Security" and collectively as the
"Securities") at the initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), of $______ [120% of the initial public offering
price] per share of Common Stock upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of
_______, 1998 among the Company, JOSEPHTHAL & CO. INC. and CRUTTENDEN ROTH
INCORPORATED (the "Warrant Agreement"). Payment of the Exercise Price shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company.
<PAGE>
<PAGE>
No Warrant may be exercised after 5:30 p.m., New York time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holder (the words "holder" or "holders" meaning the registered
holder or registered holders) of the Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by
this Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in
the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of ___________, 1998
SNOWDANCE, INC.
[SEAL] By:
---------------------------------
Name:
Title:
Attest:
- -----------------------------------
Secretary
<PAGE>
<PAGE>
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
[ ]_______________________________ shares of Common Stock;
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of Snowdance, Inc.
in the amount of $____, all in accordance with the terms of Section 3.1 of the
Representatives Warrant Agreement dated as of _____, 1998 among Snowdance, Inc.,
Josephthal & Co. Inc. and Cruttenden Roth Incorporated. The undersigned requests
that a certificate for such securities be registered in the name of _________
whose address is _________________ and that such Certificate be delivered
to____________ whose address is____________ .
Dated:
Signature___________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
<PAGE>
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED_________________________________ hereby sells,
assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint________________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated:__________________________ Signature:_______________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
_________________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE>
<PAGE>
Josephthal Lyon & Ross Incorporated
200 Park Avenue, 24th Floor
New York, N.Y. 10166
Ladies and Gentlemen:
In order to induce Joseph Lyon & Ross Incorporated, or an
affiliate thereof (collectively, "Josephthal" or the "Underwriter") and
Snowdance, Inc. (the "Company") to enter into an underwriting agreement (the
"Underwriting Agreement") with respect to the proposed public offering of
securities issued by the Company, the undersigned intending to be legally bound
hereby agrees that for a period commencing on the date hereof and ending nine
(9) months following the effective date of the registration statement (the
"Registration Statement") relating to the underwritten public offering of
securities issued by the Company, he, she or it will not, without the prior
written consent of Josephthal and the Company, directly or indirectly, offer to
sell, sell, transfer, hypothecate or otherwise encumber any securities
issued by the Company, including common stock or securities convertible
into or exchangeable or exercisable for or evidencing any right to
purchase or subscribe for any shares of common stock ("Securities") (either
pursuant to Rule 144 of the regulations under the Securities Act of 1933, as
amended, or otherwise) whether or not beneficially owned by the
undersigned, or dispose of any beneficial interest therein.
In addition, the undersigned agrees that for the period
commencing on the date hereof and extending twelve (12) months following the
effective date of the Registration Statement, any sales of Securities shall be
made through the Underwriter in accordance with its customary brokerage
policies, either on a principal or agency basis.
In order to enable the aforesaid covenants, the undersigned
hereby consents to the placing of legends and/or stop-transfer orders with the
Transfer Agent of the Company's securities with respect to any of the Company's
securities registered in the name of the undersigned or beneficially owned by
the undersigned.
This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York without giving effect to
the choice of law or conflicts of laws principles.
Dated: , 1998 -------------------------------
---------------- Signature
- ----------------------------- --------------------------------
Print Address Print Name
- ----------------------------- --------------------------------
Print Address Print Social Security Number or
Taxpayer I.D. Number
<PAGE>
<PAGE>
Snowdance, Inc.
Route 44
Brownsville, VT 05037
Ladies and Gentlemen:
In order to induce Josephthal Lyon & Ross Incorporated
("Josephthal"), Cruttenden Roth Incorporated and Snowdance, Inc. (the "Company")
to enter into an underwriting agreement (the "Underwriting Agreement") with
respect to the proposed public offering of securities issued by the Company, the
undersigned intending to be legally bound hereby agrees that, for a period
commencing on the date hereof and ending on the date that is the number of
months set forth in Column A below following the effective date of the
registration statement (the "Registration Statement") relating to the
underwritten public offering of securities issued by the Company, it will not,
without the prior written consent of the Company, directly or indirectly,
offer to sell, sell, transfer, hypothecate or otherwise encumber or dispose of
the respective number of shares of common stock set forth in Column B below,
which shares were issued by the Company to the undersigned pursuant to that
certain Purchase and Sale Agreement by and between the Company and the
undersigned, dated as of _____________ ___, 1997 (the "Securities"), either
pursuant to Rule 144 of the regulations under the Securities Act of 1933,
as amended, or otherwise, or dispose of any beneficial interest therein:
COLUMN A COLUMN B
-------- --------
24 months 226,436 shares
13 months 66,064 shares
The 226,436 shares of common stock of the Company set forth in
Column B above represents the shares held by the undersigned that are
beneficially owned by Josephthal, its principals and employees pursuant to their
percentage of partnership interest in the undersigned.
In order to enable the aforesaid covenant, the undersigned hereby
consents to the placing of legends and/or stop-transfer orders with the transfer
agent of the Company's securities with respect to the Securities.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York without giving effect to the
choice of law or conflicts of law principles.
Dated: ____________________, 1998 Skyline Partners, L.P.
By: Skyline Partners, Inc.,
Its General Partner
200 Park Avenue
New York, NY 10166 By:
- --------------------------------- -----------------------------
Print Address Name: Dan Purjes
Title: President
13-3751283
- ---------------------------------
Print Taxpayer I.D. Number
<PAGE>
<PAGE>
FORM OF LEASE AGREEMENT
THIS LEASE, is entered into as of ______________, ________, between Susan
D. Plausteiner and Steven Plausteiner, having an address for notice purposes and
payment of rent of P.O Box 338 Brownsville, VT 05037 ("Landlord"), and
Snowdance, Inc., a Delaware corporation, having an address for notice purposes
of P.O Box 699 Brownsville, VT 05037 ("Tenant").
W I T N E S S E T H:
For good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEMISE OF PREMISES
Landlord hereby leases to Tenant, and Tenant hereby rents from Landlord,
seventeen (17) condominiums units more particularly described on Schedule A. The
condominium units, together with all improvements, appurtenances, easements and
privileges belonging thereto, and all personalty therein as of the date of this
lease (and all replacements thereof) shall hereinafter be called the "Leased
Premises".
ARTICLE II
USE
Tenant may use the Leased Premises for any lawful purpose consistent with
the terms of this Lease.
ARTICLE III
TERM AND COMMENCEMENT OF RENT
This lease shall be effective upon its execution by both Landlord and
Tenant. This lease shall have an initial term of ten (10) years, and shall renew
automatically for additional one year terms unless terminated by Landlord upon
written notice delivered at least sixty (60) days prior to the end of the
current term.
ARTICLE IV
BASE RENT
On the first calendar day of each month, commencing with December 1, 1997,
the Tenant shall pay to Landlord Base Rent of $9,500 for all seventeen of the
condominium units. On November 1 of each year thereafter (a "Rental Increase
Date"), Landlord shall have the option to increase the rent for the next twelve
(12) month period by an amount not exceed five percent (5%) of the Base Rent for
the previous twelve month period. Landlord may, from year to year, forego all or
a portion of such increase in Base Rent, however Landlord's failure to institute
all or any portion of such increase in Base Rent shall not be deemed to be a
waiver of Landlord's right to increase the Base Rent on any future Rental
<PAGE>
<PAGE>
Increase Date. In the event one or more of the condominium units are sold, Base
Rent shall be reduced proportionately.
ARTICLE V
UTILITIES
In addition to Base Rent, Tenant shall pay when due all bills for water,
sewer, trash and garbage services, gas, electricity, snow removal, garden
maintenance, heating and cooling, and all other utilities used on the Leased
Premises until expiration of the term of this lease. Unless otherwise specified
by Tenant, the source of supply and vendor of each such commodity shall be the
local public utility company or municipality commonly servicing the area. Tenant
shall also obtain and maintain water service, sewer, and electric service lines,
gas service, all adequate to service the Leased Premises for the purposes herein
provided. Landlord shall have no responsibility for providing or maintaining
utilities to the Leased Premises.
ARTICLE VI
CONDOMINIUM FEES
Tenant shall pay when due all condominium fees and assessments, including
any special assessments.
ARTICLE VII
ALTERATIONS BY TENANT; REPLACEMENT OF PERSONALTY
Tenant may make alterations and additions to the Leased Premises upon
Landlord's written consent, which consent shall not be unreasonably withheld.
Such alterations and additions shall be paid for by Tenant and shall become a
part of the Leased Premises and the property of Landlord. Tenant shall, at
Tenant's cost, replace any personalty in the leased premises as and when
necessary in order to maintain the leased premises and such personalty in good
condition.
ARTICLE VIII
PROPERTY TAXES AND OPERATING EXPENSES
Tenant shall be liable for and shall pay before delinquency all taxes and
assessments, and penalties and interest thereon, if any, levied against Tenant's
property and any other personal property of whatsoever kind and to whomsoever
belonging situate or installed in and upon the Leased Premises, whether or not
affixed to the realty. Tenant shall be liable for and shall pay before
delinquency all real property taxes upon the Leased Premises.
ARTICLE IX
RESPONSIBILITY FOR REPAIRS AND CONDITION OF PREMISES
Tenant shall at its sole cost during the term hereof keep and maintain the
Leased Premises, the improvements thereto, and every part thereof in good and
sanitary order, condition and repair and
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<PAGE>
in compliance with all laws and regulations applicable thereto unless such
damage or repair is due to the gross negligence of Landlord, its agents or
employees. Landlord shall have the right but not the obligation to enter on the
Leased Premises, upon reasonable notice under the circumstances (no notice being
necessary in an emergency) to take any steps deemed necessary by Landlord to
cure any default by Tenant in performing its obligations under this Article.
ARTICLE X
DAMAGE OR DESTRUCTION
Tenant agrees to notify the Landlord as soon as practicable in the case of
damage to, or destruction of, the Leased Premises or any portion thereof
resulting from fire or other casualty. The Tenant shall, as soon as practicable,
repair, reconstruct and restore the Leased Premises (including personalty) to
substantially the same or an improved condition or utility value as existed
prior to the event causing such damage. Any plans for repair, reconstruction, or
restoration shall require Landlord's prior written approval.
ARTICLE XI
INSURANCE
Throughout the term of this lease, Tenant shall, at its own cost and
expense, provide and keep in force for the mutual benefit of Landlord and Tenant
the following insurance:
(i) Broad Coverage Comprehensive general public liability insurance,
against claims for bodily injury, death, or property damage occurring in or
about the Leased Premises (including, without limitation, bodily injury,
death or property damage resulting directly or indirectly from any change,
alteration, improvement or repair thereof) with limits acceptable to
Landlord for bodily injury or death to any number of persons in respect of
any one accident or occurrence, and an amount acceptable for Landlord for
damage to property;
(ii) Insurance against loss or damage by fire and such other risks as are
customarily included in broad form extended coverage endorsements covering
"all risks" and which are attached to fire insurance policies covering
property in the State of Vermont similar to the subject building and all
replacements, additions and improvements thereof and all fixtures,
equipment and other personal property therein, in amounts sufficient to
prevent Landlord or Tenant from becoming a co-insurer under the terms of
the applicable policies, but in no event in an amount less than eighty
percent (80%) of the full replacement cost, thereof. The Landlord's
mortgagee shall be named as an insured in all policies.
All insurance to be provided and kept in force by Tenant under the
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<PAGE>
<PAGE>
provision of this lease (except Workman's Compensation insurance) shall name as
the insured Landlord and Tenant and the holders of any fee or leasehold
mortgages as their respective interest may appear. All such insurance shall be
obtained and paid for by Tenant and shall be procured from reputable and
financially sound insurance companies of recognized responsibility licensed to
do business in the State of Vermont. Tenant shall deliver to such mortgagees and
to Landlord the certificates and renewal certificates thereof, as required to be
obtained by Tenant.
ARTICLE XII
RISK OF LOSS
The Tenant takes all risk of any damage to its property, and to any
property brought on the Leased Premises by it or its agents, servants, licensees
or invitees, that may occur by reason of any cause whatsoever, except the
intentional act or gross negligence of the Landlord or its agents and the
failure of the Landlord to perform the obligations of Landlord contained herein.
ARTICLE XIII
ENVIRONMENTAL INDEMNIFICATION
Tenant shall indemnify and hold harmless Landlord from and against any and
all claims, damages, fines, judgments, penalties, costs, liabilities or lawsuits
(including, without limitation, any and all sums paid for settlement of claims,
attorneys' fees, consultant and expert fees) from or in connection with the
presence or suspected presence of Hazardous Substances in or on the Leased
Premises, that is caused by the Tenant. This indemnification shall include any
and all costs incurred due to any investigation to the site or any cleanup,
removal, or restoration mandated by a federal, state or local agency or
political subdivision. This indemnification shall specifically include any and
all costs due to hazardous substances that flow, diffuse, migrate or percolate
into, onto or under the Premises. "Hazardous Substance" includes any and all
materials or substances that are defined as "hazardous waste", "extremely
hazardous waste", "hazardous substances", or "hazardous material" pursuant to
state, federal or local government law.
ARTICLE XIV
DEFAULT
Each of the following events shall constitute a default hereunder:
(i) if the Tenant shall not pay rent or other amounts required to be paid
to Landlord or others at the times and in the manner stated herein or shall
fail to keep and perform any other material condition, stipulation or
agreement herein contained on the part of the Tenant to be kept and
performed;
(ii) the securing or permitting of the entry of a decree or order of the
court having jurisdiction in the premises
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<PAGE>
adjudging the Tenant bankrupt or insolvent, or approving as properly filed
a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Tenant under the Federal Bankruptcy Code or any
other similar insolvency (federal or state) law, or appointing a receiver,
liquidator, trustee, sequestrator (or other similar official) of the
Tenant, or any substantial part of its property, or ordering the winding up
or liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of thirty (30) consecutive days;
or
(iii) if the Leased Premises shall be seized under any levy, execution,
attachment or other process of court or sold by judicial sale relating to
Tenant and the same shall not be promptly vacated or stayed on appeal or
otherwise proved for. In any such events, the Landlord may, at Landlord's
option terminate and end this lease and re-enter upon the property,
whereupon the term hereby granted, and, at the Landlord's option, all
rights, title and interest under it, shall end and the Tenant become a
tenant-at-sufferance; or else the Landlord may take possession of the
premises and rent the same for the account of the Tenant; or pursue any
other remedy afforded by law, the exercise of any of which options herein
contained shall not be deemed the exclusive Landlord's remedy.
Notwithstanding any other provision of this lease or this paragraph:
(a) In the event the Tenant or its successors or assignees shall become
insolvent, bankrupt, or make an assignment for the benefit of the
creditors, or if it or their interest hereunder shall be levied upon or
sold under execution or other legal process, the Landlord may terminate the
lease.
(b) The failure on the part of the Landlord to re-enter or repossess the
premises, or to exercise any of its rights hereunder upon any default,
shall not be deemed a waiver of any of the terms and conditions of this
lease, and shall not preclude the Landlord from the exercise of any such
rights upon any subsequent occurring default or defaults.
(c) Notwithstanding the foregoing, the Tenant shall not be deemed to be in
default of this lease if it has cured any default other than a payment
default (for which there is no grace period) under the terms of this lease
within a period of thirty (30) days from the date of written notice of such
default by Landlord to Tenant, or, if such default cannot be cured within
said thirty (30) day period, Tenant shall use due diligence to cure said
default.
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<PAGE>
<PAGE>
ARTICLE XV
OPTION TO PURCHASE
Tenant shall have the option to purchase any one or more of the seventeen
(17) condominiums for $110,000 cash at any time during the term of this Lease
upon thirty (30) days written notice. In such event, Base Rent and all other
amounts due hereunder shall be prorated as appropriate.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
15.1 Landlord shall have the right to enter and inspect the Leased
Premises, or to show it to prospective purchasers or mortgagees at any time upon
reasonable notice.
15.2 The provisions of this lease relating to insurance proceeds shall also
apply to condemnation proceeds.
15.3 No payment by Tenant, or acceptance by the Landlord of a lesser amount
then due from Tenant to Landlord shall be treated otherwise than as a payment on
account. The acceptance by Landlord of any such lesser amount with an
endorsement or statement thereon, or upon any letter accompanying such check,
that such lesser amount is payment in full, shall be given no effect, and
Landlord may accept such check without prejudice to any other rights or remedies
which Landlord may have against Tenant.
15.4 Tenant, subject to the terms and provisions of this lease, on payment
of the rent reserved hereunder and other charges, and observing, keeping and
performing all of the other terms and provisions of this lease on Tenant's part
to be observed, kept and performed, shall lawfully, peaceably and quietly have,
hold, occupy and enjoy the Leased Premises during the term hereof, without
hindrance or ejection by any persons lawfully claiming under Landlord to have
title to the Leased Premises superior to Tenant. The foregoing covenant of quiet
enjoyment is in lieu of any other covenant, express or implied, and it is
understood and agreed that this covenant and any and all other covenants of
Landlord contained in this lease shall be binding upon Landlord and Landlord's
successors.
15.5 No act or thing done by Landlord during the lease term shall be deemed
an acceptance of a surrender of the Leased Premises, and no agreement to accept
such surrender shall be valid, unless in writing signed by Landlord. No employee
of Landlord or of Landlord's agents shall have any power to accept the keys of
the Leased Premises prior to the termination of this lease.
15.6 If any term or provision of this lease, or the application thereof to
any person or circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this lease, or the application of such term or provision to
persons or circumstances other than those as to which is held invalid or
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<PAGE>
unenforceable, shall not be affected thereby, and each term and provision of
this lease shall be valid and be enforced to the fullest extent permitted by
law.
15.7 Except as herein otherwise provided, the terms hereof shall be binding
upon and shall inure to the benefit of the successors and assigns, respectively,
of Landlord and Tenant. Each term and each provision of this lease to be
performed by Tenant shall be construed to be both a covenant and a condition.
15.8 Whenever, by the terms of this lease, notice shall or may be given
either to Landlord or to Tenant, such notice shall be in writing and shall be
sent by registered or certified mail, postage prepaid to the addresses set forth
at the beginning of this lease. All such notices shall be effective when
deposited in the United States, provided that the same are received in ordinary
course at the address to which the same were sent.
15.9 Tenant may sublease one or more of the condominiums for periods not
exceeding one year. Tenant may not assign this lease in whole or in part (i.e.,
with respect to one or more condominiums for the remaining term of the lease).
15.10 The paragraph headings throughout this instrument are for convenience
and reference only, and the words contained there in shall in no way be held to
explain, modify, amplify or aid in the interpretation, construction or meaning
of the provisions of this lease.
15.11 Either party, on the request of the other, shall promptly furnish a
statement of the status of any matter pertaining to this lease, including,
without limitation, acknowledgements that (or the extent to which) each party is
in compliance with its obligations under the terms of this lease.
15.12 This lease shall be construed according to the laws of
the State of Vermont.
15.13 In the event it becomes necessary for the Landlord to enforce any
provision of this lease by suit or through an attorney, Landlord shall be
awarded reasonable legal expenses incurred.
IN WITNESS HEREOF the parties have executed this lease on the ___ day of
_____________, 1997.
LANDLORDS
- ------------------------------ -------------------------------------
WITNESS Steven Plausteiner
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<PAGE>
<PAGE>
- ------------------------------ -------------------------------------
WITNESS Susan D. Plausteiner
TENANT: Snowdance, Inc.
By:
- ------------------------------ -----------------------------------
WITNESS Name:
Title:
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<PAGE>
<PAGE>
FORM OF EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of this day of , 1998, is made by and
between SNOWDANCE, INC., a Delaware corporation (the "Company"), and STEVEN H.
PLAUSTEINER (the "Executive").
WHEREAS, the Company desires to obtain the services of the Executive, and
the Executive is willing to render such services, in accordance with the terms
hereinafter set forth; and
WHEREAS, the Board of Directors of the Company by appropriate resolution
have authorized the employment of the Executive as provided for in this
Agreement.
NOW, THEREFORE, the Company and the Executive agree as follows:
ARTICLE I.
DEFINITIONS
1.1 "Accrued Annual Base Salary" means that portion of the Executive's
Annual Base Salary which is accrued but unpaid as of the Date of Termination.
1.2 "Accrued Annual Incentive Bonus" means the amount of any Annual
Incentive Bonus earned with respect to the Fiscal Year ending prior to the Date
of Termination but which is unpaid as of the Date of Termination.
1.3 "Annual Base Salary" has the meaning specified in Section 4.1 of this
Agreement.
1.4 "Annual Incentive Bonus" has the meaning specified in Section 4.2 of
this Agreement.
1.5 "Beneficiary" shall have the meaning specified in Section 6.2 of this
Agreement.
1.6 "Board" means the Board of Directors of the Company.
1.7 "Cause" means (a) the Executive's committing any felony or other crime
involving dishonesty; (b) any serious willful misconduct in the course of the
Executive's employment; or (c) the Executive's habitual neglect of the
Executive's duties (other than on account of Disability), except that (d) Cause
as defined in clauses (b) and (c) shall not mean:
(i) bad judgment;
(ii) negligence other than habitual neglect of duty;
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<PAGE>
(iii) any act or omission believed by the Executive in good faith to
have been in or not opposed to the interest of the Company (without intent
of the Executive to gain therefrom, directly or indirectly, a profit to
which the Executive was not legally entitled); or
(iv) any act or omission which can be the subject of indemnification
of the Executive under the Bylaws or Articles of Incorporation of either
of the Company or applicable law.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause without (1) advance written notice provided to the
Executive not less than fourteen (14) days prior to the Date of Termination
setting forth the Company's intention to consider terminating the Executive
including a statement of the Date of Termination and the specific detailed basis
for such consideration for Cause, (2) an opportunity for the Executive, together
with his counsel, to be heard before the Board during the fourteen day period
ending on the Date of Termination, (3) determinations by the members of the
Board that the actions of the Executive constituted Cause and that the
Executive's employment should accordingly be terminated for Cause; and (4) a
written determination provided by the Board setting forth in full specificity
the basis of such Termination of Employment.
1.8 "Code" means the Internal Revenue Code of 1986 and any subsequent
Internal Revenue Code, as amended from time to time.
1.9 "Commencement Date" shall have the meaning specified in Section 3.1 of
this Agreement.
1.10 "Company" has the meaning specified in the Recitals to this
Agreement.
1.11 "Contract Term" has the meaning specified in Section 3.1 of this
Agreement.
1.12 "Date of Termination" means the date as of which the Executive's
employment with the Company is terminated by either of the Company or by the
Executive for any reason including, but not limited to, death or Disability.
1.13 "Disability" means a mental or physical condition which, in the
opinion of the Board, renders a Participant unable or incompetent to carry out
the job responsibilities which such Participant held or the duties to which such
Participant was assigned at the time the disability was incurred, which has
existed for at least six (6) months and which is expected to be permanent or to
last for an indefinite duration.
1.14 "Executive" has the meaning specified in the recitals to this
Agreement.
1.15 "Fiscal Year" means the period beginning July 1 and ending June 30 of
each year.
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<PAGE>
1.16 "Good Reason" means the occurrence of any one of the following
events:
(a) failure of the Executive to be appointed and to continue to be
appointed to the position of Chief Executive Officer and Chairman of the
Board of Directors of the Company or any present or future affiliate of
the Company;
(b) assignment to the Executive of any duties materially and
adversely inconsistent with the Executive's position as specified in
Article II hereof (or such other position to which he may be promoted),
including status, offices, or responsibilities as contemplated under
Article II of this Agreement or any other action by the Company which
results in a material and adverse change in such position, status,
offices, titles or responsibilities;
(c) any change in the Executive's reporting responsibility being
solely to the Board of Directors of the Company;
(d) any material breach by the Company of the provisions of this
Agreement;
(e) any purported termination of the Executive's employment under
this Agreement which is not for Cause in strict accordance with Section
1.7 hereof; or
1.17 "Termination of Employment" occurs on the first day on which an
individual is for any reason no longer employed by the Company.
1.18 "Termination of Employment Without Cause" or "Without Cause" means a
termination of the Executive's employment by the Company for any reason other
than Cause.
ARTICLE II.
DUTIES
2.1 Duties. The Executive shall be a member of the Board of Directors, the
Chairman of the Board of Directors and Chief Executive Officer of the Company,
and shall assume the duties and responsibilities as specified in the Company's
By-Laws, if applicable, and/or as assigned as of the date hereof by the Board of
Directors of the Company, it being contemplated that the shareholders and
Directors of the Company will elect and re-elect the Executive to those offices
throughout the Contract Term. The Executive will report solely to the Board.
During the Contract Term, and excluding any periods of vacation, sick leave or
Disability to which the Executive is entitled, the Executive agrees to devote
100% of the Executive's working time to the business and affairs of the Company
as is necessary for the performance of his duties and to use the Executive's
best efforts to perform faithfully and efficiently the duties and
responsibilities of the Executive's positions as described herein.
2.2 Other Activities. During the Contract Term, it shall not be a
violation of this Agreement for the Executive to (a) serve on corporate, civic
or charitable boards or committees,
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(b) deliver lectures, fulfill speaking engagements or teach at educational
institutions or (c) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's duties in
accordance with this Agreement.
ARTICLE III.
TERM OF AGREEMENT
3.1 Term. Subject to the termination provisions hereinafter provided, the
initial term of this Agreement shall commence on the date hereof as set forth in
the first paragraph of this Agreement (the "Commencement Date") and end three
years after such date. The term "Contract Term" shall mean the initial term of
this Agreement plus any extensions thereto. Except as provided in Article VI,
the Agreement shall not be terminated prior to the end of the Contract Term.
ARTICLE IV.
COMPENSATION
4.1 Salary. Commencing with the date hereof, the Company shall pay to the
Executive in accordance with the normal payroll practices of the Company (not
less frequently than monthly) an annual salary at a rate of $100,000 per year
for each year of the Contract Term ("Annual Base Salary"). During the Contract
Term, the Annual Base Salary may be increased at any time and from time to time
as may be determined from time to time by the Board or the Compensation
Committee designated by the Board. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase
without the express written consent of the Executive. The term Annual Base
Salary as used in this Agreement shall refer to the Annual Base Salary as so
increased.
4.2 Bonus. The Company shall pay or cause to be paid to the Executive an
annual bonus ("Annual Incentive Bonus") in either cash or options to purchase
the Company's Shares. In determining the amount of such bonus, the Company shall
consider the Company's profitability, the Executive's performance, and the total
compensation given to executives in a similar position at companies similar to
the Company.
ARTICLE V.
OTHER BENEFITS
5.1 Incentive, Savings and Retirement Plans. In addition to Annual Base
Salary and Annual Incentive Bonus, the Executive shall be entitled to
participate during the Contract Term in all incentives, savings and retirement
plans, practices, policies and programs applicable to other senior executives of
the Company, and other perquisites which are available to senior executives of
the Company or which hereafter are made available to the senior executive
employees of the Company.
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5.2 Life Insurance. During the Contract Term, the Company shall pay the
premiums on a life insurance policy for the Executive, such policy to contain
coverage of not less than $ .
5.3 Welfare Benefits. During the Contract Term, the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive any and all benefits under welfare benefit plans, practices,
policies and programs provided by the Company (including, and without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, dependent life, accidental death and travel accident
insurance plans and programs) applicable to other senior executives of the
Company.
5.4 Fringe Benefits. During the Contract Term, the Executive shall be
entitled to fringe benefits applicable to other senior executives of the
Company.
5.5 Vacation. During the Contract Term, the Executive shall be entitled to
paid vacation time in accordance with the plans, practices, policies, and
programs applicable to other senior executives of the Company, but in no event
shall such vacation time be less than four weeks per year.
5.6 Expenses. During the Contract Term, the Executive shall be entitled to
receive prompt reimbursement for all reasonable employment-related expenses
incurred by the Executive upon the Company's receipt of accountings in
accordance with practices, policies and procedures applicable to senior
executives of the Company.
5.7 Legal Fees and Expenses.
(a) If the Executive incurs legal or other fees and expenses in an
effort to establish entitlement to compensation and benefits under this
Agreement or to negotiate and draft a new employment agreement with the
Company, the Company shall reimburse the Executive for such fees and
expenses.
(b) The Company shall provide reimbursement of fees and expenses, as
described in paragraph (a) above, to the Executive on a monthly basis upon
the Executive's written submission of a request for reimbursement together
with proof that the fees and expenses were incurred.
(c) If Executive does not prevail (after exhaustion of all available
judicial remedies), and a court of competent jurisdiction decides that the
Executive had no reasonable basis for bringing an action hereunder or
there was an absence of good faith for bringing an action hereunder, no
further reimbursement for legal fees and expenses shall be due to the
Executive, and Executive shall repay the Company for any amounts
previously paid by the Company hereunder with respect to any such action
subject to such determination.
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ARTICLE VI.
TERMINATION BENEFITS
6.1 Termination of Employment for Cause or Other Than for Good Reason. If,
before the end of the Contract Term, the Company terminates the Executive's
employment for Cause or the Executive terminates employment other than for Good
Reason, the Company shall pay immediately after the Date of Termination to the
Executive, in a lump sum, an amount equal to the sum of (a) the Executive's
Accrued Annual Base Salary, and (b) his Accrued Annual Incentive Bonus.
6.2 Termination of Employment for Death or Disability. If, before the end
of the Contract Term, the Executive's employment terminates due to death or
Disability, the Company shall pay to the Executive, the beneficiaries designated
in writing by the Executive, or the Executive's estate, as the case may be,
immediately after the Date of Termination, in a lump sum, an amount which is
equal to the sum of (a) the Executive's Accrued Annual Base Salary as of the
Date of Termination, and (b) the Executive's Accrued Annual Incentive Bonus, and
(c) the Executive's Annual Base Salary for the remainder of the Contract Term.
If the Executive dies prior to receiving all of the compensation and benefits
payable hereunder, such compensation and benefits shall be paid in the form, at
the times and in such amounts as are provided in this contract to the
beneficiary designated in writing by the Executive ("Beneficiary") and if no
such Beneficiary is designated, to the Executive's estate.
6.3 Termination of Employment By The Company Without Cause Or By the
Executive for Good Reason. If, before the end of the Contract Term, there is a
Termination of Employment Without Cause or a Termination of Employment by the
Executive for Good Reason:
(a) the Company shall pay the Executive, immediately after the Date
of Termination in immediately available funds, in a lump sum, an amount
equal to the sum of (1) the Executive's Accrued Annual Base Salary, (2)
any Accrued Annual Incentive Bonus, (3) the Executive's Annual Base Salary
for the remainder of the Contract Term, and (4) the Executive's Annual
Incentive Bonus for the remainder of the Contract Term, such amount to be
equal to the amount of the last Annual Incentive Bonus multiplied by a
fraction the numerator of which is the number of months remaining in the
Contract Term and the denominator of which is twelve; and
(b) for a period equal to the greater of two years or the remainder
of the Contract Term, Executive shall continue to participate and shall
continue to receive all benefits under any Company sponsored incentives,
savings and retirement plans, welfare benefit plans, health plans, etc. to
which the Executive participates prior to such Termination of Employment;
provided, however, that any amounts paid under this Subsection 6.3(b)
shall be reduced by any similar benefits earned by the Executive as a
result of employment by another employer.
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6.4 Other Termination Benefits. In addition to any amounts or benefits
payable upon Termination of Employment hereunder and except as otherwise
provided herein, the Executive shall be entitled to any payments or benefits
explicitly provided under the terms of any plan, policy or program of the
Company or as otherwise required by applicable law.
ARTICLE VII.
MISCELLANEOUS
7.1 Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including without
limitation, set-off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement, nor shall the amount of any payment hereunder
be reduced, except as otherwise specifically provided herein, by any
compensation earned by the Executive as result of employment by another
employer.
7.2 Assignment, Successors. The Company may freely assign its respective
rights and obligations under this Agreement to a successor of the Company's
business, without the prior written consent of the Executive, provided that any
such assignment of the Company's obligations under this Agreement shall not
release the Company from such obligations to Executive. This Agreement shall be
binding upon and inure to the benefit of the Executive and the Executive's
estate and the Company and any assignee of or successor to the Company.
7.3 Nonalienation of Benefits. Benefits payable under this Agreement shall
not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, prior to actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
hereunder shall be void.
7.4 Severability. If all or any part of this Agreement is declared by any
court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any paragraph or part of a paragraph so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such paragraph or part of a paragraph to
the fullest extent possible while remaining lawful and valid.
7.5 Amendment and Waiver. This Agreement shall not be altered, amended or
modified except by written instrument executed by the Company and Executive. A
waiver of any term, covenant, agreement or condition contained in this Agreement
shall not be deemed a waiver of any other term, covenant, agreement or
condition, and any waiver of any default in any such term, covenant, agreement
or condition shall not be deemed a waiver of any later default thereof or of any
other term, covenant, agreement or condition.
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7.6 Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including without
implication of limitation any claims of unlawful employment discrimination
whether based on age or otherwise) shall, to the fullest extent permitted by
law, be settled by arbitration in any forum and form agreed upon by the parties
or, in the absence of such an agreement, under the auspices of the American
Arbitration Association ("AAA"), in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, this provision shall not preclude either
party from pursuing a court action for the sole purpose of obtaining a temporary
restraining order or a preliminary injunction in circumstances in which such
relief is appropriate, provided that any other relief shall be pursued through
an arbitration proceeding pursuant to this Section 7.6.
7.7 Notices. All notices and other communications hereunder shall be in
writing and delivered by hand or by first class registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company: Snowdance, Inc.
Route 44
Brownsville, Vermont 05037
If to the Executive: Steven H. Plausteiner
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With copy to: Dennis N. Berman, Esq.
Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas
New York, NY 1221
Either party may from time to time designate a new address by notice given in
accordance with this Section. Notice and communications shall be effective when
actually received by the addressee.
7.8 Counterpart Originals. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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7.9 Entire Agreement. This Agreement forms the entire agreement between
the parties hereto with respect to any severance payment and with respect to the
subject matter contained in the Agreement.
7.10 Applicable Law. The provisions of this Agreement shall be interpreted
and construed in accordance with the laws of the state of Delaware, without
regard to its choice of law principles.
7.11 Survival of Executive's Rights. All of the Executive's rights
hereunder, including but not limited to his rights to compensation and benefits
shall survive the termination of the Executive's employment and/or the
termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
ATTEST: SNOWDANCE, INC.
_______________________________ By: ____________________________________
Its:________________________________
ATTEST: EXECUTIVE:
_______________________________ ________________________________________
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FORM OF EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of this day of , 1998, is made by and
between SNOWDANCE, INC., a Delaware corporation (the "Company"), and SUSAN D.
PLAUSTEINER (the "Executive").
WHEREAS, the Company desires to obtain the services of the Executive, and
the Executive is willing to render such services, in accordance with the terms
hereinafter set forth; and
WHEREAS, the Board of Directors of the Company by appropriate resolution
have authorized the employment of the Executive as provided for in this
Agreement.
NOW, THEREFORE, the Company and the Executive agree as follows:
ARTICLE I.
DEFINITIONS
1.1 "Accrued Annual Base Salary" means that portion of the Executive's
Annual Base Salary which is accrued but unpaid as of the Date of Termination.
1.2 "Accrued Annual Incentive Bonus" means the amount of any Annual
Incentive Bonus earned with respect to the Fiscal Year ending prior to the Date
of Termination but which is unpaid as of the Date of Termination.
1.3 "Annual Base Salary" has the meaning specified in Section 4.1 of this
Agreement.
1.4 "Annual Incentive Bonus" has the meaning specified in Section 4.2 of
this Agreement.
1.5 "Beneficiary" shall have the meaning specified in Section 6.2 of this
Agreement.
1.6 "Board" means the Board of Directors of the Company.
1.7 "Cause" means (a) the Executive's committing any felony or other crime
involving dishonesty; (b) any serious willful misconduct in the course of the
Executive's employment; or (c) the Executive's habitual neglect of the
Executive's duties (other than on account of Disability), except that (d) Cause
as defined in clauses (b) and (c) shall not mean:
(i) bad judgment;
(ii) negligence other than habitual neglect of duty;
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(iii) any act or omission believed by the Executive in good faith to
have been in or not opposed to the interest of the Company (without intent
of the Executive to gain therefrom, directly or indirectly, a profit to
which the Executive was not legally entitled); or
(iv) any act or omission which can be the subject of indemnification
of the Executive under the Bylaws or Articles of Incorporation of either
of the Company or applicable law.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause without (1) advance written notice provided to the
Executive not less than fourteen (14) days prior to the Date of Termination
setting forth the Company's intention to consider terminating the Executive
including a statement of the Date of Termination and the specific detailed basis
for such consideration for Cause, (2) an opportunity for the Executive, together
with his counsel, to be heard before the Board during the fourteen day period
ending on the Date of Termination, (3) determinations by the members of the
Board that the actions of the Executive constituted Cause and that the
Executive's employment should accordingly be terminated for Cause; and (4) a
written determination provided by the Board setting forth in full specificity
the basis of such Termination of Employment.
1.8 "Code" means the Internal Revenue Code of 1986 and any subsequent
Internal Revenue Code, as amended from time to time.
1.9 "Commencement Date" shall have the meaning specified in Section 3.1 of
this Agreement.
1.10 "Company" has the meaning specified in the Recitals to this
Agreement.
1.11 "Contract Term" has the meaning specified in Section 3.1 of this
Agreement.
1.12 "Date of Termination" means the date as of which the Executive's
employment with the Company is terminated by either of the Company or by the
Executive for any reason including, but not limited to, death or Disability.
1.13 "Disability" means a mental or physical condition which, in the
opinion of the Board, renders a Participant unable or incompetent to carry out
the job responsibilities which such Participant held or the duties to which such
Participant was assigned at the time the disability was incurred, which has
existed for at least six (6) months and which is expected to be permanent or to
last for an indefinite duration.
1.14 "Executive" has the meaning specified in the recitals to this
Agreement.
1.15 "Fiscal Year" means the period beginning July 1 and ending June 30 of
each year.
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1.16 "Good Reason" means the occurrence of any one of the following
events:
(a) failure of the Executive to be appointed and to continue to be
appointed to the position of Chief Financial Officer of the Company or any
present or future affiliate of the Company;
(b) assignment to the Executive of any duties materially and
adversely inconsistent with the Executive's position as specified in
Article II hereof (or such other position to which he may be promoted),
including status, offices, or responsibilities as contemplated under
Article II of this Agreement or any other action by the Company which
results in a material and adverse change in such position, status,
offices, titles or responsibilities;
(c) any material breach by the Company of the provisions of this
Agreement;
(d) any purported termination of the Executive's employment under
this Agreement which is not for Cause in strict accordance with Section
1.7 hereof; or
1.17 "Termination of Employment" occurs on the first day on which an
individual is for any reason no longer employed by the Company.
1.18 "Termination of Employment Without Cause" or "Without Cause" means a
termination of the Executive's employment by the Company for any reason other
than Cause.
ARTICLE II.
DUTIES
2.1 Duties. The Executive shall be Chief Financial Officer of the Company,
and shall assume the duties and responsibilities as specified in the Company's
By-Laws, if applicable, and/or as assigned as of the date hereof by the Board of
Directors of the Company, it being contemplated that the Directors of the
Company will elect and re-elect the Executive to that office throughout the
Contract Term. During the Contract Term, and excluding any periods of vacation,
sick leave or Disability to which the Executive is entitled, the Executive
agrees to devote 100% of the Executive's working time to the business and
affairs of the Company as is necessary for the performance of his duties and to
use the Executive's best efforts to perform faithfully and efficiently the
duties and responsibilities of the Executive's positions as described herein.
2.2 Other Activities. During the Contract Term, it shall not be a
violation of this Agreement for the Executive to (a) serve on corporate, civic
or charitable boards or committees,
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(b) deliver lectures, fulfill speaking engagements or teach at educational
institutions or (c) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's duties in
accordance with this Agreement.
ARTICLE III.
TERM OF AGREEMENT
3.1 Term. Subject to the termination provisions hereinafter provided, the
initial term of this Agreement shall commence on the date hereof as set forth in
the first paragraph of this Agreement (the "Commencement Date") and end three
years after such date. The term "Contract Term" shall mean the initial term of
this Agreement plus any extensions thereto. Except as provided in Article VI,
the Agreement shall not be terminated prior to the end of the Contract Term.
ARTICLE IV.
COMPENSATION
4.1 Salary. Commencing with the date hereof, the Company shall pay to the
Executive in accordance with the normal payroll practices of the Company (not
less frequently than monthly) an annual salary at a rate of $100,000 per year
for each year of the Contract Term ("Annual Base Salary"). During the Contract
Term, the Annual Base Salary may be increased at any time and from time to time
as may be determined from time to time by the Board or the Compensation
Committee designated by the Board. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase
without the express written consent of the Executive. The term Annual Base
Salary as used in this Agreement shall refer to the Annual Base Salary as so
increased.
4.2 Bonus. The Company shall pay or cause to be paid to the Executive an
annual bonus ("Annual Incentive Bonus") in either cash or options to purchase
the Company's Shares. In determining the amount of such bonus, the Company shall
consider the Company's profitability, the Executive's performance, and the total
compensation given to executives in a similar position at companies similar to
the Company.
ARTICLE V.
OTHER BENEFITS
5.1 Incentive, Savings and Retirement Plans. In addition to Annual Base
Salary and Annual Incentive Bonus, the Executive shall be entitled to
participate during the Contract Term in all incentives, savings and retirement
plans, practices, policies and programs applicable to other senior executives of
the Company, and other perquisites which are available to senior executives of
the Company or which hereafter are made available to the senior executive
employees of the Company.
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5.2 Life Insurance. During the Contract Term, the Company shall pay the
premiums on a life insurance policy for the Executive, such policy to contain
coverage of not less than $ .
5.3 Welfare Benefits. During the Contract Term, the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive any and all benefits under welfare benefit plans, practices,
policies and programs provided by the Company (including, and without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, dependent life, accidental death and travel accident
insurance plans and programs) applicable to other senior executives of the
Company.
5.4 Fringe Benefits. During the Contract Term, the Executive shall be
entitled to fringe benefits applicable to other senior executives of the
Company.
5.5 Vacation. During the Contract Term, the Executive shall be entitled to
paid vacation time in accordance with the plans, practices, policies, and
programs applicable to other senior executives of the Company, but in no event
shall such vacation time be less than four weeks per year.
5.6 Expenses. During the Contract Term, the Executive shall be entitled to
receive prompt reimbursement for all reasonable employment-related expenses
incurred by the Executive upon the Company's receipt of accountings in
accordance with practices, policies and procedures applicable to senior
executives of the Company.
5.7 Legal Fees and Expenses.
(a) If the Executive incurs legal or other fees and expenses in an
effort to establish entitlement to compensation and benefits under this
Agreement or to negotiate and draft a new employment agreement with the
Company, the Company shall reimburse the Executive for such fees and
expenses.
(b) The Company shall provide reimbursement of fees and expenses, as
described in paragraph (a) above, to the Executive on a monthly basis upon
the Executive's written submission of a request for reimbursement together
with proof that the fees and expenses were incurred.
(c) If Executive does not prevail (after exhaustion of all available
judicial remedies), and a court of competent jurisdiction decides that the
Executive had no reasonable basis for bringing an action hereunder or
there was an absence of good faith for bringing an action hereunder, no
further reimbursement for legal fees and expenses shall be due to the
Executive, and Executive shall repay the Company for any amounts
previously paid by the Company hereunder with respect to any such action
subject to such determination.
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ARTICLE VI.
TERMINATION BENEFITS
6.1 Termination of Employment for Cause or Other Than for Good Reason. If,
before the end of the Contract Term, the Company terminates the Executive's
employment for Cause or the Executive terminates employment other than for Good
Reason, the Company shall pay immediately after the Date of Termination to the
Executive, in a lump sum, an amount equal to the sum of (a) the Executive's
Accrued Annual Base Salary, and (b) his Accrued Annual Incentive Bonus.
6.2 Termination of Employment for Death or Disability. If, before the end
of the Contract Term, the Executive's employment terminates due to death or
Disability, the Company shall pay to the Executive, the beneficiaries designated
in writing by the Executive, or the Executive's estate, as the case may be,
immediately after the Date of Termination, in a lump sum, an amount which is
equal to the sum of (a) the Executive's Accrued Annual Base Salary as of the
Date of Termination, and (b) the Executive's Accrued Annual Incentive Bonus, and
(c) the Executive's Annual Base Salary for the remainder of the Contract Term.
If the Executive dies prior to receiving all of the compensation and benefits
payable hereunder, such compensation and benefits shall be paid in the form, at
the times and in such amounts as are provided in this contract to the
beneficiary designated in writing by the Executive ("Beneficiary") and if no
such Beneficiary is designated, to the Executive's estate.
6.3 Termination of Employment By The Company Without Cause Or By the
Executive for Good Reason. If, before the end of the Contract Term, there is a
Termination of Employment Without Cause or a Termination of Employment by the
Executive for Good Reason:
(a) the Company shall pay the Executive, immediately after the Date
of Termination in immediately available funds, in a lump sum, an amount
equal to the sum of (1) the Executive's Accrued Annual Base Salary, (2)
any Accrued Annual Incentive Bonus, (3) the Executive's Annual Base Salary
for the remainder of the Contract Term, and (4) the Executive's Annual
Incentive Bonus for the remainder of the Contract Term, such amount to be
equal to the amount of the last Annual Incentive Bonus multiplied by a
fraction the numerator of which is the number of months remaining in the
Contract Term and the denominator of which is twelve; and
(b) for a period equal to the greater of two years or the remainder
of the Contract Term, Executive shall continue to participate and shall
continue to receive all benefits under any Company sponsored incentives,
savings and retirement plans, welfare benefit plans, health plans, etc. to
which the Executive participates prior to such Termination of Employment;
provided, however, that any amounts paid under this Subsection 6.3(b)
shall be reduced by any similar benefits earned by the Executive as a
result of employment by another employer.
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6.4 Other Termination Benefits. In addition to any amounts or benefits
payable upon Termination of Employment hereunder and except as otherwise
provided herein, the Executive shall be entitled to any payments or benefits
explicitly provided under the terms of any plan, policy or program of the
Company or as otherwise required by applicable law.
ARTICLE VII.
MISCELLANEOUS
7.1 Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including without
limitation, set-off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement, nor shall the amount of any payment hereunder
be reduced, except as otherwise specifically provided herein, by any
compensation earned by the Executive as result of employment by another
employer.
7.2 Assignment, Successors. The Company may freely assign its respective
rights and obligations under this Agreement to a successor of the Company's
business, without the prior written consent of the Executive, provided that any
such assignment of the Company's obligations under this Agreement shall not
release the Company from such obligations to Executive. This Agreement shall be
binding upon and inure to the benefit of the Executive and the Executive's
estate and the Company and any assignee of or successor to the Company.
7.3 Nonalienation of Benefits. Benefits payable under this Agreement shall
not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, prior to actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
hereunder shall be void.
7.4 Severability. If all or any part of this Agreement is declared by any
court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any paragraph or part of a paragraph so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such paragraph or part of a paragraph to
the fullest extent possible while remaining lawful and valid.
7.5 Amendment and Waiver. This Agreement shall not be altered, amended or
modified except by written instrument executed by the Company and Executive. A
waiver of any term, covenant, agreement or condition contained in this Agreement
shall not be deemed a waiver of any other term, covenant, agreement or
condition, and any waiver of any default in any such term, covenant, agreement
or condition shall not be deemed a waiver of any later default thereof or of any
other term, covenant, agreement or condition.
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7.6 Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including without
implication of limitation any claims of unlawful employment discrimination
whether based on age or otherwise) shall, to the fullest extent permitted by
law, be settled by arbitration in any forum and form agreed upon by the parties
or, in the absence of such an agreement, under the auspices of the American
Arbitration Association ("AAA"), in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, this provision shall not preclude either
party from pursuing a court action for the sole purpose of obtaining a temporary
restraining order or a preliminary injunction in circumstances in which such
relief is appropriate, provided that any other relief shall be pursued through
an arbitration proceeding pursuant to this Section 7.6.
7.7 Notices. All notices and other communications hereunder shall be in
writing and delivered by hand or by first class registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company: Snowdance, Inc.
Route 44
Brownsville, Vermont 05037
If to the Executive: Susan D. Plausteiner
____________________________________
____________________________________
With copy to: Dennis N. Berman, Esq.
Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas
New York, NY 1221
Either party may from time to time designate a new address by notice given in
accordance with this Section. Notice and communications shall be effective when
actually received by the addressee.
7.8 Counterpart Originals. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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7.9 Entire Agreement. This Agreement forms the entire agreement between
the parties hereto with respect to any severance payment and with respect to the
subject matter contained in the Agreement.
7.10 Applicable Law. The provisions of this Agreement shall be interpreted
and construed in accordance with the laws of the state of Delaware, without
regard to its choice of law principles.
7.11 Survival of Executive's Rights. All of the Executive's rights
hereunder, including but not limited to his rights to compensation and benefits
shall survive the termination of the Executive's employment and/or the
termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
ATTEST: SNOWDANCE, INC.
_________________________________ By: ____________________________________
Its: _______________________________
ATTEST: EXECUTIVE:
_________________________________ ________________________________________
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FORM OF EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made and entered into as of
, 1998 by and among Steven H. Plausteiner, a resident of the State of
Vermont, ("Steven"), Susan D. Plausteiner, a resident of the State of Vermont
("Susan"; Susan and Steven are sometimes referred to herein collectively as the
"Plausteiners"), Snowdance Ski Company ("Ski"), a Delaware corporation and
general partner of Ascutney Mountain Resort, L.P., Snowdance Hotel Company
("Hotel"), a Delaware corporation and general partner of Ascutney Mountain
Resort Hotel, L.P., Snowdance Realty Company ("Realty"), a Delaware corporation
and general partner of Ascutney Mountain Resort Realty, L.P.; Steven, Susan,
Ski, Hotel and Realty are sometimes collectively referred to herein as the
"Partners" and individually as a "Partner") and Snowdance, Inc., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, the partnership interests (the "Resort Partnership Interests")
of Ascutney Mountain Resort, L.P. ("Resort L.P.") are owned beneficially and
held of record as follows:
Ski ..................................................... 1%
Susan ................................................... 89%
Steven .................................................. 10%;
WHEREAS, the partnership interests (the "Hotel Partnership Interests") of
Ascutney Mountain Resort Hotel, L.P. ("Hotel L.P.") are owned beneficially and
held of record as follows:
Hotel.................................................... 1%
Susan ................................................... 89%
Steven .................................................. 10%;
WHEREAS, the partnership interests (the "Realty Partnership Interests")
of Ascutney Mountain Resort Realty, L.P. ("Realty L.P.") are owned beneficially
and held of record as follows:
Realty .................................................. 1%
Susan ................................................... 89%
Steven .................................................. 10%;
WHEREAS, Susan is the sole beneficial and record owner of the outstanding
capital stock of Ski, Hotel and Realty;
WHEREAS, Susan and Steven are the only beneficial and record owners of the
outstanding capital stock of Ascutney Mountain Foods, Inc. ("Foods"), a Vermont
corporation; and
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WHEREAS, after the exchange below, the parties also desire to terminate
the following Partnership Agreements, each dated as of August 23, 1993 (the
"Partnership Agreements"): Agreement of Limited Partnership Agreement among
Ski, Susan and Steven; Agreement of Limited Partnership Agreement among Hotel,
Susan and Steven and Agreement of Limited Partnership Agreement among Realty,
Susan and Steven.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, the parties hereto agree as follows:
1. Transfer of Partnership Interests by the Plausteiners. Each of the
Plausteiners hereby transfers and assigns to the Company, and the Company hereby
acquires from the Plausteiners, (a) all of the Resort Partnership Interests
owned beneficially and held by the Plausteiners, (b) all of the Hotel
Partnership Interests owned beneficially and held by the Plausteiners and (c)
all of the Realty Partnership Interests owned beneficially and held by the
Plausteiners (collectively, the "Partnership Interests").
2. Transfer of Common Stock by Susan and Steven. Susan hereby transfers
and assigns to the Company, and the Company hereby acquires from Susan, (a) all
of the common stock of Ski owned beneficially and held by Susan, (b) all of the
common stock of Hotel owned beneficially and held by Susan and (c) all of the
common stock of Realty owned beneficially and held by Susan (collectively, the
"GP Common Stock"). In addition, the Plausteiners hereby transfer and assign to
the Company and the Company hereby acquires from the Plausteiners all of the
common stock of Foods owned beneficially and held by the Plausteiners.
3. Issuance of Shares by the Company. In exchange for each of the
Partnership Interests transferred by the Plausteiners to the Company pursuant to
Section 1 and all of the GP Common Stock transferred by Susan to the Company
pursuant to Section 2, the Company hereby issues to each of Susan and Steven
603,750 of duly authorized, validly issued, fully paid and nonassessable
shares of Company Common Stock.
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4. Termination of Partnership Agreements. After the exchanges pursuant to
Sections 1, 2 and 3 above, the parties agree that the Partnership Agreements are
hereby terminated and shall have no further force and effect.
5. Representations of the Partners.
5.1 Each of the Partners severally represents and warrants to the
Company that he or she or it has valid and marketable title to its respective
Resort Partnership Interests, Hotel Partnership Interests and Realty Partnership
Interests set forth in the Recitals, free and clear of all liens, charges,
encumbrances, equities, claims, options, proxies, pledges, security interests
and rights of whatever nature, and the transfer of such partnership interests to
the Company by the Plausteiners, directly, and by Ski, Hotel and Realty,
indirectly, hereunder shall pass good and marketable title to such Resort
Partnership Interests, Hotel Partnership Interests and Realty Partnership
Interests, free and clear of all liens, charges, encumbrances, equities, claims,
options, proxies, pledges, security interests and rights of whatever nature.
5.2 Each of the Partners severally represents and warrants to the
Company that he or she or it has the absolute and unrestricted right, power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, and this Agreement is a valid and binding agreement of each of the
Partners enforceable against each of them in accordance with its terms.
5.3 Each of the Plausteiners severally represents and warrants to the
Company that he or she is acquiring the Company Common Stock for investment and
not with a view to or for sale in connection with any distribution of the
Company Common Stock. Each of the Plausteiners severally acknowledges that the
Company Common Stock has not been registered under the Securities Act of 1933,
as amended, that any disposition of the Company Common Stock is subject to
restrictions imposed by federal and state law, and that the certificates
representing the Company Common Stock will bear a restrictive legend. Each of
the Plausteiners severally also acknowledges that he or she cannot dispose of
the Company Common Stock absent registration and qualification, or an
available exemption from registration and qualification.
6. Representation of the Company. The Company represents and warrants to
each of the Plausteiners (i) that the Company has the absolute and unrestricted
right, power and authority to execute and deliver this Agreement and to perform
its obligations
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hereunder, (ii) this Agreement is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms and (iii) that the
shares of Company Common Stock have been duly authorized and validly issued, and
are fully paid and nonassessable.
7. Further Assurances. Each of the parties hereto covenants that he, she
or it shall cooperate with the other parties hereto and execute such further
instruments and documents as any of the parties shall reasonably request to
carry out the transactions contemplated by this Agreement.
8. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first written above.
____________________________________
STEVEN H. PLAUSTEINER
____________________________________
SUSAN D. PLAUSTEINER
____________________________________
SNOWDANCE SKI COMPANY
By: ________________________________
Its:________________________________
SNOWDANCE HOTEL COMPANY
By: ________________________________
Its:________________________________
SNOWDANCE REALTY COMPANY
By: ________________________________
Its:________________________________
SNOWDANCE, INC.
By: ________________________________
Its:________________________________
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A G R E E M E N T
AGREEMENT by and between Steven H. Plausteiner and Susan B. Plausteiner
(the "Shareholders") and Snowdance, Inc., a Delaware Corporation (the
"Company"), dated as of September __, 1997.
The Shareholders agree to forgive a sum of $1,180,000 of the outstanding
Related Loans (as such terms is defined in the Company's Registration Statement
on Form SB-2) (the "Contribution") to the Company as a capital contribution.
The Company agrees to accept the Contribution from the Shareholders and to
record it as a capital contribution on its books and records.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf as of the date first above written.
STEVEN H. PLAUSTEINER
_____________________________
SUSAN B. PLAUSTEINER
_____________________________
SNOWDANCE, INC.
By:__________________________
Name:
Title:
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EXHIBIT 10.13
FORM OF MARKETING AND SALES AGREEMENT
THIS MARKETING AND SALES AGREEMENT (this "Agreement") is made and
entered into as of December __, 1997, by and between Snowdance, Inc., a Delaware
corporation ("Snowdance"), and Westerly Resorts Group, Inc., a Virgin Islands
corporation ("Westerly").
RECITALS
A. Snowdance is the owner of the Ascutney Mountain Resort (the
"Resort") located in Brownsville, Vermont and the Ascutney Mountain Resort Hotel
(the "Hotel") located within the Resort.
B. Westerly is an experienced marketer and developer of vacation
ownership intervals (also known as time shares).
C. Snowdance desires to develop and sell weekly vacation ownership
intervals in the Hotel (the "VOIs") and to engage Westerly to assist it in the
marketing and sale of such VOIs. Additionally, Snowdance wishes to develop a
Snowdance Club (the "Club") through which purchasers of VOIs will be able to
receive additional services. Snowdance and Westerly are entering into this
Agreement in order to set forth the rights and duties of each of the parties
with respect to the marketing and sale of the VOIs and the creation and
management of the Club.
AGREEMENT
NOW, THEREFORE, Snowdance and Westerly do hereby agree as follows:
1. Recitals. The foregoing Recitals are hereby incorporated herein and
made a part hereof.
2. Relationship Between the Parties. Snowdance is contracting with
Westerly to provide the functions and services set forth in this Agreement (the
"Services") and Westerly agrees to use its best efforts in the provision of the
Services in a prompt and timely manner. In all matters in connection with this
Agreement, final decision authority shall rest with Steven H. Plausteiner for
Snowdance and Jim Graves and Mike Finn for Westerly.
3. Scope of Agreement. This Agreement encompasses the provision of the
Services regarding the sale of VOIs in the Hotel and Snowdance agrees that for
such time as this Agreement is in effect it will not engage any other party to
perform such Services in connection with the sale of VOIs in the Hotel. Should
Snowdance decide to sell other timeshare products in the Resort (other than in
the Hotel), Snowdance agrees to negotiate in good faith on an exclusive basis
with Westerly for a period of two months (after written notice from Snowdance to
Westerly) to engage it as marketing partner for the sale of such
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additional products. If at the end of such two month period no agreement is
reached then Snowdance shall be free to enter into an agreement with another
party regarding the sale of such additional products.
4. Units Available for Sale. A "Unit" shall consist of one suite in the
Hotel which has been properly converted so as to allow for the sale of VOIs in
the Unit. Snowdance shall be responsible for upgrading the Units and for making
them available to Westerly for sale to the public. Initially, Snowdance will
make available to Westerly five (5) Units in the Hanover building of the Hotel
for VOI sales. Snowdance, at its sole discretion, shall make available
additional Units to Westerly for sale. Once all of the Units in the Hanover
building of the Hotel are sold, additional Units shall be made available in the
Windsor, Bennington, Windham and Essex buildings of the Hotel, at such time and
in such order as Snowdance in its sole discretion, with the advice of Westerly,
deems appropriate.
5. Roles and Duties of the Parties. Westerly will create, subject to
prior written approval of Snowdance, the overall Club concept, including
membership classifications and related features and benefits of the memberships,
and be responsible for the marketing and sales of memberships and for
identifying operational and facility requirements for the Club, which shall
include but not be limited to the following:
5.1 Marketing Plan. Westerly will develop and implement,
subject to the prior written approval of Snowdance, a Marketing/Sales Plan (the
"Marketing Plan"), attached hereto as Exhibit A, for the sale of Club
memberships, which Marketing Plan shall include the development of marketing
materials, media advertising, and in-house marketing and sales programs, the
staffing requirements for the Club and methods of implementing and supervising a
membership marketing and sales program. The Marketing Plan will also include
goals and objectives, tactics, expectations and the anticipated costs of each
program. The Marketing Plan shall be updated on an annual basis, with each new
plan subject to the prior written approval of Snowdance. The programs and
activities provided for in the Marketing Plan shall be implemented and conducted
in accordance with the terms and conditions provided for therein. All sales and
marketing materials, including but not limited to direct mail pieces, print
advertisements and telemarketing scripts, shall require the written approval of
Snowdance prior to being used by Westerly. Westerly will be responsible for
payment of all sales and marketing costs associated with the implementation of
the Marketing Plan except for Resort brochures and credit card commissions on
deposits made on the purchase of a VOI. Any customer requests to pay the entire
sales price of a VOI via credit card must be approved by Snowdance prior to
acceptance. If Westerly chooses to use the Ascutney Magazine for mailings, then
Westerly shall reimburse Snowdance for the actual proportional costs incurred by
the use of the magazine.
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The Marketing Plan shall also contain a sales and marketing package and
an owner's membership package which will include, among other things, discounted
hotel, lift ticket and ski school rates, as well as food and beverage discounts.
Snowdance will provide Westerly with discounted rates for mini-vacation programs
for sales and marketing purposes. Snowdance will also coordinate the Resort's
overall marketing and advertising programs to include and feature the sale of
VOIs and the Club program. A current listing of agreed upon rates and discounts
is attached hereto as Exhibit B.
5.2 VOI Sales. Subject to Westerly's approval, Snowdance will
have the responsibility for drafting all forms of documents required for the
sale of VOIs, including but not limited to, condominium documents, by-laws,
sales agreements, consumer note agreements and Federal-Truth-In-Lending
disclosure documents. Snowdance shall be responsible that all documents comply
with any applicable local or state requirements concerning the sale of VOIs.
Westerly shall be responsible for the sale and marketing of Club memberships and
VOIs, including sales representatives' hiring, training, compensation and
management. Westerly will also be responsible for the payment of all sales
commissions.
5.3 Exchange Company. Snowdance and Westerly shall select a
VOI exchange company (the "Exchange Company"). Snowdance shall be responsible
for the affiliation of the Resort with the Exchange Company and it will be the
responsibility of Westerly to enroll the VOI purchaser in the Exchange Company.
It is anticipated that the sale of VOIs will be structured by using a contract
for a deed where the deed is held in escrow until either (a) any loan made by
Snowdance or a third party financing source to the purchaser of the VOI is fully
satisfied, or (b) the purchaser has paid in full and funds have cleared. As part
of the sales contract, each purchaser will be responsible for all costs to
record the deed and Snowdance agrees to obtain the necessary releases required
to record such deeds.
5.4 Operating Budgets. Westerly will advise Snowdance in
preparing operating budgets for the condominium and/or timeshare association for
the Units in the Hotel, required to be organized in order to sell the VOIs, and
as to an appropriate per Unit maintenance fee pricing. Westerly and Snowdance
recognize that the ultimate responsibility for setting the operating budget for
such condominium and/or timeshare association will be borne by the manager or
the Board of Directors of the condominium and/or timeshare association.
5.5 Club Membership Documents. Westerly will advise Snowdance
in developing the Club and in preparing all necessary Club documents, including,
without limitation, declaration of condominium, membership plan, articles of
incorporation, membership by-laws, membership policies, Club rules, membership
applications, membership agreements and membership sales contracts. All of the
above documents shall be prepared at the expense of Snowdance and, in addition
to the ownership structure of the Club, are subject to review by Westerly.
Snowdance will provide all necessary documents required to sell the VOIs in the
State of Vermont as a contract for deed, including purchase contracts, mortgage
notes, Federal-Truth-In-Lending documents and owner's disclosure checklists.
Maintenance
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fee schedules and per week maintenance pricing for the Units will also be
provided by Snowdance. Should Westerly and Snowdance mutually agree to sell VOIs
in any other state besides Vermont, the costs required to comply with such
states regulations on sales shall be shared equally.
5.6 Goals and Budget. Snowdance and Westerly have agreed to
the sales price schedule for the VOIs attached hereto as Exhibit C and Westerly
agrees to use its best efforts to sell such VOIs as set forth in Exhibit C and
to otherwise comply with the schedule. Any changes in the sales price for VOIs
or in any VOI sales discount program must be approved in advance in writing by
Snowdance. Westerly and Snowdance agree to periodically review the VOI sales
prices set forth in Exhibit C and to compare these prices with timeshare
projects in the region. Any changes in VOI prices shall be mutually agreed upon
in writing by Westerly and Snowdance.
5.7 Reporting and Controls. Westerly will provide the
following reports to Snowdance:
(a) Weekly VOI sales and marketing reports
(b) Monthly VOI sales and commission reports
(c) Quarterly marketing expense reports, reconciled
against marketing and sales fees.
(d) the Marketing Pan described in Section 5.1.
5.8 Design. Snowdance will, with the assistance of Westerly,
redecorate the Club residences and provide the necessary model Units (at least
1-2 bedroom Unit and 1-3 bedroom Unit) and renderings necessary for the VOI
sales and marketing program with a target completion date for such redecoration
of February 15, 1998. In addition, Snowdance will provide Westerly with the
already existing details and renderings of the Resort expansion, including the
details and renderings of the proposed golf course, for use as sales tools on or
before the commencement of VOI sales. The owner's disclosure checklist to be
provided to potential VOI purchasers will contain a Snowdance and Westerly
approved statement disclosing the plans for the completion of the proposed golf
course. As more detailed plans become available, Snowdance will provide these
plans to Westerly for sales and marketing purposes. Notwithstanding anything to
the contrary, Westerly shall have no responsibility or liability for any design
or construction defects concerning the buildings containing the VOIs.
5.9 Construction of Facility. Snowdance will furnish and equip
the Club facilities in accordance with plans and specifications mutually and
reasonably satisfactory to Snowdance and Westerly and obtain and maintain all
certificates of occupancy or other permits required to operate the Club.
Snowdance shall be responsible for all renovation costs related to the
renovation of the Club residences and facilities.
5.10 Participation of Westerly Principals. Westerly hereby
designates Michael Finn to be the on-site principal for marketing and sales of
VOIs and Jim Graves for overall Westerly responsibilities under this Agreement.
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6. Expense Advance. On the 8th day of each month, Snowdance shall pay
to Westerly the sum of 45% of the previous month's Approved Sales (as
hereinafter defined) presented to Snowdance (the "Expense Advance"), less any
Chargebacks (as hereinafter defined) and any monies owed to Snowdance for
promotions, premiums or other charges that Westerly may owe.
An "Approved Sale" is a sale of a VOI in which all deposits or
other full or partial payments have cleared the bank, the applicable five (5)
day rescission period has passed and the following information, in a form
satisfactory to Snowdance and Westerly, has been obtained:
(a) Signed and notarized Deed (if applicable)
(b) Signed sales agreement
(c) Signed mortgage note (if applicable)
(d) Signed Truth-In-Lending Agreement (if applicable)
(e) Signed owner's checklist
(f) Signed sure-pay agreement (if applicable)
(g) other documentation that may be mutually agreed upon from
time to time
7. Chargebacks. A loan to a purchaser of a VOI shall be considered in
default (a "Defaulted Loan") if any payment required to paid thereunder is more
than ninety (90) days in arrears. In the case of a Defaulted Loan in which a
purchaser has made less than (12) scheduled monthly payments, Westerly shall pay
to Snowdance (a "Chargeback") the sum of any monies received from Snowdance in
regards to the sale of the VOI which resulted in the Defaulted Loan, less the
sum of any down payments or scheduled principal and interest payments received
by Snowdance in connection with such sale.
8. Quarterly Reconciliation. Within seven (7) days after the end of
each three (3) month period (a "Quarter"), with the first Quarter to begin on
January 1, 1998, or at such other period as is mutually agreed to by the
parties, Snowdance and Westerly shall each submit to the other an accrual basis
accounting of the sales and marketing expenses and the sales revenue for the
Quarter (the "Accounting"). Each party shall have five (5) days after the end of
such seven (7) day period to present in writing to the other any dispute that it
may have regarding the Accounting furnished by the other party. If there is no
dispute between the parties, then the parties shall pay each other any amounts
owed as determined pursuant to Section 9 below. Should there be a dispute, the
parties shall then have an additional five (5) days to resolve any such dispute.
Should any such dispute not be resolved within such five (5) day period, then
the parties shall submit the Accounting to a certified public accounting firm
(the "CPA Firm") mutually agreed to by the parties. The CPA Firm shall render a
decision in the dispute within ten (10) days and both parties agree to abide by
the terms of such decision. Regardless of whether or not there is a dispute,
Snowdance shall have the right, upon giving five (5) days prior notice, to
review all of Westerly's tax returns and books and records, and any working
papers produced in connection therewith, which, in the
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reasonable discretion of Snowdance, relate to any actions taken by Westerly
pursuant to this Agreement.
9. Marketing and Sales Fees. In accordance with the terms of Section 8
above, at the end of each Quarter, Westerly shall be paid the sum of (a) its
Marketing and Sales Expenses (as hereinafter defined) for the Quarter and (b)
32.5% of the Net Proceeds (as hereinafter defined) for the Quarter, less the sum
of (x) any Expense Advances previously paid during the Quarter and (y) any
Chargebacks for the Quarter that have not yet been applied to an Expense
Advance. "Marketing and Sales Expenses" shall include all actual out of pocket
expenses incurred by Westerly in the sale and marketing of VOIs during the
Quarter. The Marketing and Sales Expenses shall be limited at 50% of the gross
sales from VOIs for the Quarter ("Gross Sales"); provided, however, that such
limit shall be 60% for the that Quarter beginning on January 1, 1998. Should the
Marketing and Sales Expenses for any Quarter be less than 43% of Gross Sales,
then the Marketing and Sales Expenses shall be deemed to be 43% of Gross Sales.
"Net Proceeds" is the sum of 75% of Gross Sales, less the sum of (a) the
Marketing and Sales Expenses, and (b) any out of pocket expenses incurred by
Snowdance for any marketing or sales activities which it performs (except for
those activities provided required to be performed pursuant to this Agreement).
10. Term. This Agreement shall have an initial term of five (5) years
from the date hereof, with the option to renew, subject to approval in writing
by both parties, for five (5) year increments thereafter.
11. Indemnification.
11.1 Indemnification by Snowdance. Snowdance shall indemnify
and hold Westerly and Westerly's shareholders, officers, directors, employees,
agents and representatives harmless from all liability, loss, damage, cost or
expense (including reasonable attorney's fees and expenses) resulting from
Westerly's activities contemplated in this Agreement, to the fullest extent
permitted by law, except those liabilities arising from or in any manner in
connection with (i) any failure of Westerly or any of its shareholders,
officers, directors, employees, agents or representatives to observe or properly
perform Westerly's duties or obligations under this Agreement, or (ii)
Westerly's or any of its shareholders, officers, directors, employees, agents or
representatives negligence, recklessness, improper sales practices or
solicitations including contacts in non-registered areas, willful misconduct or
illegal acts. Westerly will notify Snowdance of such action, suit or proceeding,
and Snowdance may, and upon Westerly's request shall, at Snowdance's expense,
defend such action, suit or proceeding, or cause the same to be defended by
counsel designated by Westerly, provided that Snowdance shall have the right to
approve such counsel, such approval, however, not to be unreasonably withheld.
11.2 Indemnification by Westerly. Westerly shall indemnify and
hold Snowdance and Snowdance's shareholders, officers, directors, employees,
agents and legal representatives harmless from all liability, loss, damage, cost
or expense (including reasonable attorney's fees and expenses) resulting from
Snowdance's activities contemplated in this
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Agreement, to the fullest extent permitted by law, except those liabilities
arising from or in any manner in connection with (i) any failure of Snowdance or
any of its employees, agents or representatives to observe or properly perform
Snowdance's duties or obligations under this Agreement, or (ii) Snowdance's or
any of its employees, agents or representatives negligence, recklessness,
improper sales practices or solicitations including contacts in non-registered
areas, willful misconduct or illegal acts. Snowdance will notify Westerly of
such action, suit or proceeding, and Westerly may, and upon Snowdance's request
shall, at Westerly's expense, defend such action, suit or proceeding with
counsel reasonably acceptable to Snowdance, or cause the same to be defended by
counsel designated by Snowdance, provided that Westerly shall have the right to
approve such counsel, such approval, however, not to be unreasonably withheld.
12. Events of Default. The occurrence of any one or more of the
following events which is not cured in the time permitted shall constitute a
default under this Agreement ("Event of Default"):
12.1 Failure to Pay Sums Due. Either party's failure to pay
any sums payable under this Agreement when due and such failure shall continue
for a period of thirty (30) days after written notice to the defaulting party
specifying the sums not paid.
12.2 Failure to Comply. Either party's failure to comply with
any of the covenants, agreements, terms or conditions of this Agreement and such
failure shall continue for a period of thirty (30) days after written notice to
the defaulting party specifying in detail the nature of such failure.
12.3 Bankruptcy. If either party (i) applies for or consents
to the appointment of a receiver, trustee, or liquidator of itself or any of its
property, (ii) is unable to pay its debts as they mature or admits in writing
its inability to pay its debts as they mature; (iii) makes a general assignment
for the benefit of creditors; (iv) is adjudicated as bankruptcy or insolvent; or
(v) files a voluntary petition in bankruptcy or a petition or an answer seeking
reorganization or an arrangement with creditors, or taking advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or admits the material allegations of a petition
filed against it in any proceedings under any such law, or if any action shall
be taken by said party for the purpose of effecting any of the foregoing.
12.4 Reorganization, Receiver. An order, judgment, or decree
is entered without the application, approval or consent of either party by any
court of competent jurisdiction approving a petition seeking reorganization of
said party or appointing a receiver, trustee, or liquidator of said party, or of
all or a substantial part of any of the assets of said party, and such order,
judgment, or decree remains unstayed and in effect for a period of ninety (90)
days from the date of entry thereof.
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13. Remedies Upon Default. Upon the occurrence of an Event of Default,
the non-defaulting party may exercise any remedies in equity and in law.
Remedies shall include damages, specific performance and the right to terminate
this Agreement.
14. Termination.
14.1 Termination Events. This Agreement shall terminate upon
the first to occur of the following:
14.1.1 An Event of Default by Westerly, and Snowdance
sends to Westerly a written notice of termination;
14.1.2 An Event of Default by Snowdance, and Westerly
sends to Snowdance a written notice of termination;
14.1.3 Upon sixty (60) days written notice from
Snowdance to Westerly that the progress of membership sales is materially behind
the sales schedule set forth on Exhibit C, and provided that being materially
behind schedule is a result of deficiencies in the Marketing Plan and not
mitigating factors beyond Westerly's control, and Westerly fails to restore
material compliance with the schedule set forth on Exhibit C within the 60 day
period following the receipt of such notice from Snowdance, and Snowdance sends
to Westerly a written notice of termination. Should Snowdance send such notice
of termination as provided for in this Section 14.1.3, then the effective date
of the termination of this Agreement and the date that is 120 days thereafter
shall each be deemed to be the end of a Quarter for the purposes of Section 9
above and following such dates Westerly shall receive such sums as it would
receive upon the end of Quarter as provided for in Section 9 above.
14.1.4 The exercise of a party's right to terminate,
as expressly set forth in this Agreement;
14.1.5 The parties mutually agree in writing to
terminate this Agreement;
14.1.6 Snowdance exercises its right, in its sole
discretion, to terminate this Agreement, by 30 days written notice to Westerly,
provided, however, that Snowdance agrees it shall not sell VOIs in the Hotel for
a period of two years from the date of such termination.
14.1.7 Westerly exercises its right, in its sole
discretion, to terminate this Agreement. Westerly agrees that Westerly, it
shareholders, directors and officers will not engage, directly or indirectly, in
the VOI or timeshare business in the State of Vermont for a period of two years
from the date of such termination.
14.2. Post Termination Obligations. Upon termination
of this Agreement, the following shall occur:
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14.2.1 All sums owed by either party to the other
shall be paid when required under the terms of this Agreement, provided that any
sums due and payable under this Agreement at the time of termination shall be
paid within thirty (30) days of the effective date of such termination except as
set forth herein. Such payments shall be subject to such adjustments, if any,
net of any monies owed to Ascutney.
14.2.2 The rights and obligations of the parties
under this Agreement will cease except as to amounts due from one party to the
other and as set forth in Section 14.1.6 and 14.1.7, and claims of either party
against the other or liabilities of either party to the other. Any termination
of this Agreement shall not release either party from the indemnification
provisions under Section 11 of this Agreement or the confidentiality provisions
under Section 27 of this Agreement which shall survive the termination of this
Agreement.
15. Notices. Any notices or any communications required or permitted
hereunder shall be sufficiently given if in writing and (i) delivered
personally; or (ii) sent by certified mail, return receipt requested, postage
prepaid, addressed as shown on the signature page, or to such other address as
the party concerned may substitute by written notice to the other. All notice
personally delivered shall be deemed received on date of delivery. All notices
forwarded by mail shall be deemed received on a date three (3) business days
following date of deposit in the U.S. mail, provided, however, the return
receipt indicating the date upon which all notices were received shall be prima
facie evidence that such notices were received on the date of the return
receipt.
16. Amendment and Waiver. This Agreement may not be amended except in a
writing executed by all parties. Waiver of a term of this Agreement shall not
affect any other term or subsequent performance of the waived term.
17. Attorney's Fees. Except as set forth in Section 20, should any
action be taken by any party to enforce or interpret this Agreement, the
nonprevailing party shall reimburse the prevailing party for all reasonable
expenses incurred, including out-of-pocket expenses and attorneys and legal
assistant fees.
18. Headings. The headings are not intended to affect the
interpretation of this Agreement.
19. Choice of Law. THIS AGREEMENT SHALL BE INTERPRETED UNDER THE
LAWS OF THE STATE OF VERMONT.
20. Arbitration. If any controversy, disagreement or dispute should
arise between or among the parties in the performance, interpretation or
application of this Agreement, any party may serve upon the other a written
notice stating that such party desires to have the controversy, disagreement or
dispute reviewed by a board of three arbitrators and naming the person whom such
party has designated to act as an arbitrator. Within fifteen (15) days after
receipt of such notice, the other party shall designate a person to act as
arbitrator and shall
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<PAGE>
notify the party requesting arbitration of that designation. The two arbitrators
designated shall promptly select a third; provided, however, if the two shall
fail to designate a third within ten (10) days after the second arbitrator is
appointed, then either arbitrator on five (5) days written notice to the other,
shall apply to the American Arbitration Association to designate and appoint a
third arbitrator. If the party upon whom the original request for arbitration is
served shall fail to designate its arbitrator within the fifteen (15) day period
after receipt of the notice, then the arbitrator designated by the party
requesting arbitration shall act as sole arbitrator and shall be deemed to be
the single common mutually approved arbitrator to resolve the controversy,
disagreement or dispute. A decision and award of the majority of the
arbitrators, or of such sole arbitrator shall be binding upon the parties and
shall be enforceable in accordance with the applicable laws of the State of
Vermont. The fees and expenses of the sole arbitrator or arbitrators, as the
case may be, incurred in connection with such arbitration proceeding shall be
borne or apportioned and paid as determined by the arbitration. Arbitration
shall take place in Vermont, in accordance with the applicable rules of the
American Arbitration Association and judgment upon the arbitration award may be
entered in a court of competent jurisdiction.
21. Entire Agreement. This Agreement contains all the understandings
between the parties with respect to this subject matter.
22. Savings Clause. The invalidity of any part of this Agreement shall
not render the remainder ineffective or unenforceable.
23. Time. Time is of the essence in this Agreement.
24. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives, and assigns, where permitted herein. Snowdance shall be
allowed to assign this Agreement to its affiliate without the prior consent of
Westerly.
25. Outside Businesses. Except as set forth in Section 14.1.6 and
Section 14.1.7, nothing contained in this Agreement shall be construed to
restrict or prevent any party or any party's affiliates from engaging in any
other businesses or investments.
26. Unavoidable Delays. The provisions of this Section shall be
applicable if there shall occur during the term of this Agreement any (i)
strikes, lockouts or labor disputes; (ii) inability to obtain labor or
materials, or reasonable substitutes therefor; (iii) acts of God, governmental
restrictions, regulations or controls, enemy or hostile governmental action,
civil commotion, fire, or other casualty; or (iv) other conditions similar to
those enumerated in this Section beyond the reasonable control of the party
obligated to perform. If either party shall, as the result of any of the
above-described events, fail punctually to perform any obligation on its part to
be performed under this Agreement, then, upon written notice to the other,
within ten (10) days of such event, such failure shall be excused and not be a
breach of this Agreement by the party claiming an unavoidable delay (an
"Unavoidable Delay"), but only to the extent occasioned by such event. If any
right or option of either party to take any action
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under or with respect to this Agreement is conditioned upon the same being
exercised within any prescribed period of time or at or before a named date,
then such prescribed period of time or such named date shall be deemed to be
extended or delayed as the case may be, upon written notice, as provided above,
for a time equal to the period of the Unavoidable Delay. The provisions of this
section shall not apply to either party's obligation to pay any sums of money.
27. Confidentiality. Westerly acknowledges that certain of the
information concerning Snowdance furnished or made known hereunder to Westerly
or its directors, officers, agents or representatives, including but not limited
to all financial information and information regarding sales, expenses, progress
of marketing and sales efforts, may contain material, non-public information and
accordingly, is confidential and Westerly will maintain the confidentiality of
all such information and not use the information for any other purpose other
than to assist the Company as contemplated hereunder. Such information shall not
be deemed to be confidential to the extent it is publicly available from a
source other than Snowdance. Westerly may disclose such information if it is
required to do so by law or by any governmental body or agency. Westerly shall
give Snowdance prior written notice of any such disclosure. Notwithstanding
anything contained herein to the contrary, the provisions of this Section 27
shall provide the termination of this Agreement.
28. No Hires. Westerly and Snowdance hereby acknowledge that each has
spent considerable time and money in the training of its employees and that such
employees constitute a valuable asset of each. As such, Westerly and Snowdance
hereby agree that so long as this Agreement is in effect and for a period of six
(6) months thereafter, each party will not hire the other's employees without
the other party's prior written consent.
27. Consent to Jurisdiction. With respect to any suit, action or
proceeding relating to this Agreement (a "Proceeding"), Westerly and Snowdance
irrevocably (a) submit to the non-exclusive jurisdiction of the courts of the
State of Vermont and the United States District court located in Vermont; and
(b) waive any objection which they may have at any time to the laying of venue
of any Proceeding brought in any such court, waive any claim that any such
Proceeding has been brought in an inconvenient forum and further waive the right
to object, with respect to such Proceeding, that such court does not have
jurisdiction over such party.
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IN WITTNESS HEREOF, the parties below do hereby sign their name below
as of the date first written above.
SNOWDANCE, INC., a Delaware corporation
By :
Name:__________________
Title:___________________
WESTERLY RESORTS GROUP, INC., a Virgin
Islands corporation
By :
Name:__________________
Title:___________________
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EXHIBITS
EXHIBIT A: Marketing Program
EXHIBIT B: Owners Club Benefits
EXHIBIT C: VOI Sales Prices
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EXHIBIT B
Premiums
1) Room Rates 50% off published rates
2) Lift tickets prices for the 1997/1998 ski season:
a) For OPC programs $20
b) For Mini Vacation's $15
3) 30% off food and beverages in Hotel restaurants
Club Benefits
1) 25% off daily lift ticket prices anytime during ski season
2) Year round membership in swim and fitness facilities for immediate
family
3) Year round 10% discount on food and beverages at Hotel restaurants
4) Year round room discounts of 25% off published rates
5) Bonus time year round discounts - 50% off any room booked within 5 days
of arrival
Administration
1) Jim Graves and Bill Sullivan receive complimentary room nights during
their stay at the Resort.
2) Project Manager, Mike Finn, first 90 days complimentary (except for
utilities) at Mt. Edge condominium. After 90 days, $500 per month plus
utilities with possible annual increases to be mutually agreed upon.
3) Potential new employees of Westerly receive complimentary room nights
in the Hotel for initial visit, hired 30 days complimentary room nights
in the Hotel; thereafter rate per room night to be mutually agreed
upon.
4) Sales Office space - Real Estate office on ground floor complimentary,
phone service direct or through Hotel. If Westerly uses Hotel telephone
switch Snowdance will bill Westerly monthly for usage rates. Snowdance
will make available to Westerly its sales offices and presentation
rooms for any FF&E it may need to conduct sales. Snowdance will make
its best efforts to provide Westerly with chairs and couches for the
sales reception center. Office equipment such as a computer, copier and
fax machines, will be Westerly's responsibility. (For the first 30 days
Westerly may need to use Snowdance's copier and fax machines)
5) Private office space off of sales office included with sales office
with the same terms as number 4 above.
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EXHIBIT 10.14
December 30, 1997
Mr. Steven H. Plausteiner
Chief Executive Officer
Snowdance, Inc.
Route 44
Brownsville, Vermont 05037
Dear Steve:
This letter agreement (the 'Agreement') will confirm the understanding between
Snowdance, Inc. (the 'Company') and Tallwood Associates, Inc. ('Tallwood'),
pursuant to which the Company has retained Tallwood on a nonexclusive as its
consultant and financial advisor, on the terms and subject to the conditions set
forth herein, to assist the Company in real estate finance and development.
Tallwood's two principals are Richard S. Frary and Joel A. Mael.
In particular, with respect to the Company's real estate operations Tallwood
will, at the request of the Company, (i) review the general operations including
any business plans; (ii) evaluate personnel; (iii) analyze historical financial
statements; (iv) review projections prepared by the Company; (v) assist in
structuring, negotiating and reviewing any financing and development proposals;
and (vi) advise the Company with respect to financing and development
alternatives.
The Company hereby retains Tallwood for a one year period commencing January 1,
1998 (the 'Retention Period') to perform the above services.
In consideration of the services previously performed by Tallwood prior to the
date hereof and to be performed by Tallwood pursuant to this Agreement, the
Company will pay Tallwood:
A) Options (the 'Options') exercisable into 40,000 shares of common stock
of the Company at $5 per share price at any time during a period of four
years,
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commencing one year after the closing of the Company's initial
public offering (the 'IPO'). Further, the Options cannot be transferred
or sold by the principals of Tallwood, other than to family members, or
a trust for the benefit of family members, who agree to such
restrictions of exercise, prior to the first anniversary of the closing
of the IPO. The Options are due and payable upon execution of this
agreement. The Options to acquire 40,000 shares are deemed earned upon
execution of this agreement based on work performed to date although
this agreement contemplates continuing for one year. The Options to
acquire 40,000 shares assumes 1,207,500 shares are owned by Susan and
Steven Plausteiner immediately prior to the IPO and that standard
anti-dilution provisions would apply prior to the closing of the IPO.
The anti-dilution provisions on the Options will not apply, assuming the
capitalization prior to the closing of the IPO described above, to
shares issued pursuant to the IPO and any shares issued to Skyline
Partners, L.P. pursuant to the acquisition of Hogback Mountain. After
the closing of the IPO and the issuance of shares to Skyline Partners,
L.P. pursuant to the acquisition of Hogback Mountain, standard
anti-dilution provisions will apply with regard to any stock dividend,
stock distribution or combination or subdivision of the Company's common
stock.
In addition, after approval by the Company, the Company will reimburse Tallwood,
upon demand, for all reasonable out-of-pocket expenses (including fees and
disbursements of Tallwood's counsel, if any) incurred in connection with this
engagement which obligation shall survive the expiration of this Agreement.
The Company agrees to provide Tallwood with such financial and other information
concerning the Company that Tallwood may request from time to time in connection
with the services to be performed hereunder. The Company hereby represents and
warrants that all information provided to Tallwood by the Company hereunder and
containing facts prepared by the Company about the Company will be accurate and
complete in all material respects. In rendering its services, Tallwood will be
relying, without independent verification, on the accuracy and completeness of
all financial and other information that is and will be publicly available or
furnished to us by the Company.
The Company agrees to indemnify Tallwood in accordance with the terms contained
in the indemnification letter attached hereto. The foregoing indemnity shall
survive the expiration of this Agreement.
Tallwood acknowledges that certain of the information concerning the Company
furnished by the Company to Tallwood may contain material, non-public
information and accordingly, is confidential and Tallwood will maintain the
confidentiality of all such information and not use the information for any
purpose other than assist the Company as contemplated hereunder. Such
information shall not be deemed to be confidential to the extent it is already
known to Tallwood
2
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from a source other than the Company, or becomes publicly
available from a source other than Tallwood. Tallwood may disclose such
information if it is required to do so by law or required to do so by any
governmental body or agency.
This Agreement and the indemnification letter incorporate the entire
understanding of the parties with respect to the subject matter of this
Agreement and supersede all previous agreements should they exist and shall be
governed by the construed in accordance with the laws of the State of New York
without regard to principles of conflicts of law.
This Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which shall constitute the same instrument.
This Agreement has been and is made solely for the benefit of the Company and
Tallwood and of the persons, agents, employees, officers, directors and
controlling persons referred to in the indemnification letter between us, and
their respective successors and permitted assigns and heirs, and no other person
shall acquire or have any right under or by virtur of this Agreement.
Please confirm that the foregoing is in accordance with your understanding by
signing and returning to us the duplicates of this agreement and the
indemnification letter attached hereto, which shall thereupon constitute
binding agreements.
Very truly yours,
TALLWOOD ASSOCIATED, INC.
By:
.......................
Name: Joel A. Mael
Title: Managing Director
Accepted and agreed
as of the first date written above:
SNOWDANCE, INC.
By: ...............................
Name: Steven H. Plausteiner
3
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EXHIBIT 10.15
Form of Unsecured Promissory Note
Due January __, 1999
$50,000 January __, 1998
FOR VALUE RECEIVED, Ascutney Mountain Resort, L.P., a Delaware limited
partnership and Ascutney Mountain Resort Hotel, L.P., a Delaware limited
partnership (collectively, "Borrower"), promise to pay to the order of Richard
S. Frary ("Lender"), the principal sum of FIFTY THOUSAND DOLLARS ($50,000),
together with interest at the rate of 8.0% per annum (computed on the basis of a
360-day year of twelve 30-day months) on the Maturity Date (as hereinafter
defined), which interest shall accrue from the date hereof to and including the
date all principal and interest due under this Note (the "Note") is paid in
full. All such payments of principal and interest hereon and all other amounts
payable hereunder shall be paid on the Maturity Date and shall be made in
currency of the United States of America by check to such address specified by
Lender to the Borrower in writing, without deduction, set-off or counterclaim.
1. Maturity Date. The Maturity Date shall be the earlier to occur of
(a) January __, 1999 or (b) the completion of the sale of securities pursuant to
an initial public offering (the "IPO") by Snowdance, Inc. ("Snowdance"), a
Delaware corporation, with gross proceeds of at least $5,000,000, if such IPO is
completed by June 30, 1998.
2. Lender's Right to Convert. From and after the earlier to occur of
(a) the sale of all or substantially all of the assets of (of which sale
Borrower shall give Lender seven days prior written notice) or equity interests
in Borrower or Ascutney Mountain Resort Realty, L.P and any successors in
interest thereto (the "Limited Partnerships"), except in connection with that
certain Exchange Agreement by and among Steven H. Plausteiner, Susan D.
Plausteiner, Snowdance Ski Company, Snowdance Hotel Company, Snowdance Realty
Company, and Snowdance, pursuant to which the limited partnership interests (the
"Limited Partnership Interests") and the general partnership interests in the
Limited Partnerships will be contributed to Snowdance in order to facilitate the
IPO and (b) July 1, 1998, and until the Maturity Date, Lender shall have the
right, but not the obligation, upon the giving of notice to Borrower, to convert
the outstanding principal and all accrued interest due under this Note into 2.5%
of the outstanding Limited Partnership Interests. Such conversion shall occur
pursuant to an assignment by Susan D. Plausteiner of certain Limited Partnership
Interests currently held by her resulting in Lender holding 2.5% of the Limited
Partnership Interests. All interest and principal due under this Note shall be
deemed paid in full upon the receipt by Lender of any Limited Partnership
Interests totalling 2.5% of all of the Limited Partnership Interests.
3. Defaults and Remedies. Upon the occurrence of an Event of Default
(as hereinafter defined), the entire unpaid principal balance of this Note, all
accrued and unpaid interest and all other amounts payable to Lender pursuant to
this Note shall, at Lender's option, be accelerated and become immediately due
and payable, and Lender shall also be entitled to any and all other remedies
conferred by statute or rule of law. Lender's rights and remedies, whether
pursuant hereto or any other statute or rule of law, shall be cumulative and
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<PAGE>
not alternative. For purposes hereof, an "Event of Default" shall occur (a) if
Borrower shall not pay in full on the Maturity Date the entire principal amount
hereof, together with interest thereon and (b) any petition in bankruptcy shall
be filed by or against Borrower or any proceeding in bankruptcy or under any
Acts of Congress relating to the relief of debtors shall be commenced for the
relief or readjustment of any indebtedness of Borrower.
4. No Transfer. This Note may not be assigned, pledged, hypothecated or
otherwise transferred by Lender to anyone other than a brother, sister, son,
daughter or spouse of Lender, or a trust for the benefit of such persons,
without the prior written consent of Borrower.
5. No Waiver. No failure to exercise and no delay in exercising any
right, power or privilege hereunder by Lender, or any course of dealing between
Borrower and Lender, shall operate as a waiver of any right, power or privilege
hereunder, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude the exercise of any other right, power or
privilege.
6. Amendments. This Note may be amended or varied only by a document in
writing, of even or subsequent date hereof, executed by Borrower and Lender.
7. Severability. The invalidity or unenforceability of any provision of
this Note shall not affect the validity or enforceability of any other
provision.
8. Headings. The descriptive headings in this Note are for convenience
of references only, and shall not be deemed to affect the meaning or
construction of any of the provisions hereof.
9. Notice. The Limited Partnerships shall give notice in writing to
Lender prior to the sale or transfer of any Limited Partnership Interests.
10. No Right of Set-off. Borrower shall not set-off, appropriate or
apply any credit, indebtedness or claim, whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by Lender to or for
the credit or the account of Borrower against and on the account of the
principal and interest due hereunder or any other obligation or liability owing
from Borrower to Lender hereunder.
11. Expenses. Borrower hereby promises to pay all costs and expenses,
including reasonable attorneys' fees, incurred by Lender in connection with this
Note and in enforcing its rights hereunder upon an Event of Default.
12. Governing Law. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED UNDER THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF
CONFLICTS) OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, Borrower has executed this Note as of the
date first written above.
ASCUTNEY MOUNTAIN RESORT, L.P.
By: SNOWDANCE SKI COMPANY, its
general partner
By:_______________________________
Name:
Title:
ASCUTNEY MOUNTAIN RESORT
HOTEL, L.P.
By: SNOWDANCE HOTEL COMPANY,
its general partner
By:_______________________________
Name:
Title:
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The following parties, by signing below, hereby consent to and
acknowledge that they will abide by the terms and conditions of Paragraph 2
hereto.
-------------------------------
Susan D. Plausteiner
SNOWDANCE SKI COMPANY
By:_______________________________
Name:
Title:
SNOWDANCE HOTEL COMPANY
By:_______________________________
Name:
Title:
SNOWDANCE REALTY COMPANY
By:_______________________________
Name:
Title:
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EXHIBIT 10.16
Form of Unsecured Promissory Note
Due January __, 1999
$50,000 January __, 1998
FOR VALUE RECEIVED, Ascutney Mountain Resort, L.P., a Delaware limited
partnership and Ascutney Mountain Resort Hotel, L.P., a Delaware limited
partnership (collectively, "Borrower"), promise to pay to the order of Joel A.
Mael ("Lender"), the principal sum of FIFTY THOUSAND DOLLARS ($50,000), together
with interest at the rate of 8.0% per annum (computed on the basis of a 360-day
year of twelve 30-day months) on the Maturity Date (as hereinafter defined),
which interest shall accrue from the date hereof to and including the date all
principal and interest due under this Note (the "Note") is paid in full. All
such payments of principal and interest hereon and all other amounts payable
hereunder shall be paid on the Maturity Date and shall be made in currency of
the United States of America by check to such address specified by Lender to the
Borrower in writing, without deduction, set-off or counterclaim.
1. Maturity Date. The Maturity Date shall be the earlier to occur of
(a) January __, 1999 or (b) the completion of the sale of securities pursuant to
an initial public offering (the "IPO") by Snowdance, Inc. ("Snowdance"), a
Delaware corporation, with gross proceeds of at least $5,000,000, if such IPO is
completed by June 30, 1998.
2. Lender's Right to Convert. From and after the earlier to occur of
(a) the sale of all or substantially all of the assets of (of which sale
Borrower shall give Lender seven days prior written notice) or equity interests
in Borrower or Ascutney Mountain Resort Realty, L.P and any successors in
interest thereto (the "Limited Partnerships"), except in connection with that
certain Exchange Agreement by and among Steven H. Plausteiner, Susan D.
Plausteiner, Snowdance Ski Company, Snowdance Hotel Company, Snowdance Realty
Company, and Snowdance, pursuant to which the limited partnership interests (the
"Limited Partnership Interests") and the general partnership interests in the
Limited Partnerships will be contributed to Snowdance in order to facilitate the
IPO and (b) July 1, 1998, and until the Maturity Date, Lender shall have the
right, but not the obligation, upon the giving of notice to Borrower, to convert
the outstanding principal and all accrued interest due under this Note into 2.5%
of the outstanding Limited Partnership Interests. Such conversion shall occur
pursuant to an assignment by Susan D. Plausteiner of certain Limited Partnership
Interests currently held by her resulting in Lender holding 2.5% of the Limited
Partnership Interests. All interest and principal due under this Note shall be
deemed paid in full upon the receipt by Lender of any Limited Partnership
Interests totalling 2.5% of all of the Limited Partnership Interests.
3. Defaults and Remedies. Upon the occurrence of an Event of Default
(as hereinafter defined), the entire unpaid principal balance of this Note, all
accrued and unpaid interest and all other amounts payable to Lender pursuant to
this Note shall, at Lender's option, be accelerated and become immediately due
and payable, and Lender shall also be entitled to any and all other remedies
conferred by statute or rule of law. Lender's rights and remedies, whether
pursuant hereto or any other statute or rule of law, shall be cumulative and
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not alternative. For purposes hereof, an "Event of Default" shall occur (a) if
Borrower shall not pay in full on the Maturity Date the entire principal amount
hereof, together with interest thereon and (b) any petition in bankruptcy shall
be filed by or against Borrower or any proceeding in bankruptcy or under any
Acts of Congress relating to the relief of debtors shall be commenced for the
relief or readjustment of any indebtedness of Borrower.
4. No Transfer. This Note may not be assigned, pledged, hypothecated or
otherwise transferred by Lender to anyone other than a brother, sister, son,
daughter or spouse of Lender, or a trust for the benefit of such persons,
without the prior written consent of Borrower.
5. No Waiver. No failure to exercise and no delay in exercising any
right, power or privilege hereunder by Lender, or any course of dealing between
Borrower and Lender, shall operate as a waiver of any right, power or privilege
hereunder, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude the exercise of any other right, power or
privilege.
6. Amendments. This Note may be amended or varied only by a document in
writing, of even or subsequent date hereof, executed by Borrower and Lender.
7. Severability. The invalidity or unenforceability of any provision of
this Note shall not affect the validity or enforceability of any other
provision.
8. Headings. The descriptive headings in this Note are for convenience
of references only, and shall not be deemed to affect the meaning or
construction of any of the provisions hereof.
9. Notice. The Limited Partnerships shall give notice in writing to
Lender prior to the sale or transfer of any Limited Partnership Interests.
10. No Right of Set-off. Borrower shall not set-off, appropriate or
apply any credit, indebtedness or claim, whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by Lender to or for
the credit or the account of Borrower against and on the account of the
principal and interest due hereunder or any other obligation or liability owing
from Borrower to Lender hereunder.
11. Expenses. Borrower hereby promises to pay all costs and expenses,
including reasonable attorneys' fees, incurred by Lender in connection with this
Note and in enforcing its rights hereunder upon an Event of Default.
12. Governing Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER
THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF CONFLICTS) OF THE STATE OF NEW
YORK.
-2-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Borrower has executed this Note as of the
date first written above.
ASCUTNEY MOUNTAIN RESORT, L.P.
By: SNOWDANCE SKI COMPANY, its
general partner
By:_______________________________
Name:
Title:
ASCUTNEY MOUNTAIN RESORT
HOTEL, L.P.
By: SNOWDANCE HOTEL COMPANY,
its general partner
By:_______________________________
Name:
Title:
-3-
<PAGE>
<PAGE>
The following parties, by signing below, hereby consent to and
acknowledge that they will abide by the terms and conditions of Paragraph 2
hereto.
-------------------------------
Susan D. Plausteiner
SNOWDANCE SKI COMPANY
By:_______________________________
Name:
Title:
SNOWDANCE HOTEL COMPANY
By:_______________________________
Name:
Title:
SNOWDANCE REALTY COMPANY
By:_______________________________
Name:
Title:
-4-
<PAGE>
<PAGE>
EXHIBIT 23.1
The accompanying financial statements give effect to the consummation of
the Combination as described in Note 1 to the financial statements. The
following consent is in the form that will be furnished by Deloitte & Touche LLP
upon consummation of the Combination assuming that no other material events have
occurred that would affect the accompanying financial statements or required
disclosures therein.
DELOITTE & TOUCHE LLP
New York, New York
December 31, 1997
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Snowdance, Inc. on
Form SB-2 of our report dated July 11, 1997 (January , 1998 as to Note 1),
appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the headings 'Selected
Financial Data' and 'Experts' in such Prospectus.
New York, New York
January , 1998
<PAGE>
<PAGE>
CONSENT
I, Dan Purjes, do hereby consent to the use of my name in the
Registration Statement on Form SB-2 to be filed by Snowdance, Inc. on
January 2, 1998 in connection with the issuance of 1,500,000 shares of its
Common Stock and any subsequent ammendments thereto.
_____________________________
Dan Purjes
<PAGE>
<PAGE>
CONSENT
I, Henry B. Lunde, do hereby consent to the use of my name in the
Registration Statement on Form SB-2 to be filed by Snowdance, Inc. on
January 2, 1998 in connection with the issuance of 1,500,000 shares of its
Common Stock and any amendments thereto.
_____________________________
Henry B. Lunde
<PAGE>
<PAGE>
CONSENTS
I, David N. Deutsch, do hereby consent to the use of my name in the
Registration Statement on Form SB-2 to be filed by Snowdance, Inc. on
January 2, 1998 in connection with the issuance of 1,500,000 shares of its
Common Stock and any amendments thereto.
_____________________________
David N. Deutsch
<PAGE>
<PAGE>
CONSENT
I, Richard S. Frary, do hereby consent to the use of my name in the
Registration Statement on Form SB-2 to be filed by Snowdance, Inc. on
January 2, 1998 in connection with the issuance of 1,500,000 shares of its
Common Stock and any subsequent ammendments thereto.
_____________________________
Richard S. Frary
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 SEP-30-1997
<CASH> 38,480 13,576
<SECURITIES> 0 0
<RECEIVABLES> 183,929 182,655
<ALLOWANCES> 8,000 8,000
<INVENTORY> 47,402 32,623
<CURRENT-ASSETS> 295,048 261,628
<PP&E> 1,560,954 1,600,352
<DEPRECIATION> 350,578 444,114
<TOTAL-ASSETS> 1,589,366 1,551,027
<CURRENT-LIABILITIES> 1,157,496 1,847,033
<BONDS> 2,481,025 2,219,109
<COMMON> 1,200 1,200
0 0
0 0
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<TOTAL-LIABILITY-AND-EQUITY> 1,589,366 1,551,027
<SALES> 3,983,218 2,976,014
<TOTAL-REVENUES> 4,003,507 2,976,844
<CGS> 2,767,125 1,753,291
<TOTAL-COSTS> 5,260,363 3,299,397
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 8,000 0
<INTEREST-EXPENSE> 243,963 218,632
<INCOME-PRETAX> (1,500,819) (541,185)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,500,819) (541,185)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,500,819) (541,185)
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<PAGE>
