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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 3, 1997
RALCORP HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Missouri 1-12766 43-1664297
(State or other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
800 Market Street, Suite 2900
St. Louis, MO 63101
(Address of principal executive offices) (Zip Code)
(314) 877-7000
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITIONS OR DISPOSITION OF ASSETS
SUMMARY
On January 3, 1997 the Registrant, Ralcorp Holdings, Inc. ("Ralcorp") issued a
press release (the "Press Release") announcing that at the close of business on
January 3, 1997, Ralston Foods, Inc. ("Foods"), a wholly owned subsidiary of
Ralcorp, consummated the sale of Ralston Resorts, Inc. ("Resorts") to Vail
Resorts, Inc. ("Vail") in exchange for Vail common stock and the assumption by
Vail of Resorts' debt. Foods, Resorts and Vail originally entered into a Stock
Purchase Agreement related to the sale of Resorts on July 22, 1996 (the "Stock
Purchase Agreement").
MANNER AND BACKGROUND OF SALE
The sale of Resorts was effectuated by Vail purchasing all of Resorts stock in
exchange for 3,777,203 shares of Vail Common Stock, $.01 par value ("Vail
Stock") and the assumption of $165 million in Resorts' debt. Foods is the
owner of the Vail Stock and entered into a Shareholder Agreement (the
"Shareholder Agreement") governing Foods' ability to sell and vote the Vail
Stock. The Shareholder Agreement is filed herewith as Exhibit 10.4. As a
result of the sale, Foods owns approximately 24% of Vail's outstanding stock.
On May 8, 1996, Ralcorp retained Salomon Brothers investment banking firm to
advise the Company with respect to various strategic options related to
Resorts. During their review, Ralcorp received several unsolicited bids for
the purchase of Resorts. Vail was one of the entities providing a bid and its
bid was the highest and within the range identified by Salomon Brothers as
being fair from a financial standpoint. Preliminary negotiations with Vail
yielded a refined bid that Salomon Brothers valued in excess of $310 million
and that included a structure minimizing adverse tax consequences to Ralcorp.
On May 16, 1996, in exchange for the refined bid, Ralcorp agreed to exclusively
negotiate with Vail towards a definitive agreement and to allow Vail to
complete its due diligence review of Resorts. The exclusivity provision
terminated on June 30, 1996, but was extended on July 10, 1996 until July 17,
1996. On July 22, 1996, Salomon Brothers delivered a written fairness opinion
to Ralcorp's Board of Directors in which Salomon Brothers opined that the
agreement to sell Resorts for at least 3,777,203 shares of Vail Stock, the
assumption of $165 million of Resorts' indebtedness and the reimbursement to
Foods in additional Vail Stock for investments by Foods in Resorts' operations
for the period between August 1, 1996 and the closing date of transaction was
fair from a financial standpoint. After reviewing the opinion and discussing
the proposed sale with management, the Ralcorp Board of Directors authorized
the Company to enter into a definitive agreement for the sale of Resorts on the
foregoing terms. As indicated above, the sale was completed on January 3, 1997.
BUSINESS DIVESTED
Resorts is comprised of the Keystone, Arapahoe Basin and Breckenridge ski
resorts located in Summit County, Colorado. Sales and operating profit for
Resorts for fiscal year 1996 were $135.4 million and $23.0 million,
respectively. Total skier visits for the year were 2.7 million. Operating
results for Resorts were highly seasonal and weather dependent.
EXHIBITS
The Stock Purchase Agreement and amendments thereto, the Shareholder Agreement
and the Press Release are attached to this Form 8-K as exhibits and are
incorporated herein by reference in their entirety.
2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired - not applicable.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Combined Financial Information.................... Page 3
Pro Forma Combined Statement of Earnings,
Year Ended September 30, 1996......................................... Page 4
Pro Forma Combined Balance Sheet at September 30, 1996................ Page 5
Notes to Unaudited Pro Forma Combined Financial Information........... Page 6
RALCORP HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The pro forma combined statement of earnings for the year ended September 30,
1996 presents the combined results of Ralcorp's operations assuming that the
sale of the Resort Operations segment and the announced but not yet completed
sale of the branded cereal and snack businesses (the "Branded Business") to
General Mills had occurred as of October 1, 1995. This statement of earnings
has been prepared by adjusting the historical statement of earnings for the
effect of costs and expenses and the recapitalization which might have occurred
had the sales of the Branded Business and Resort Operations occurred on
October 1, 1995.
The pro forma combined balance sheet at September 30, 1996 presents the
combined financial position of Ralcorp assuming the sales of the Branded
Business and Resort Operations had occurred at that date. This balance sheet
data has been prepared by adjusting the historical balance sheet for the
effect of assets, liabilities and recapitalization which might have occurred
had the sales of the Branded Business and Resort Operations occurred on
September 30, 1996.
The "Branded Business" and "Resort Operations" columns in the pro forma
combined statement of earnings represent the combined historical results of
operations of the Branded Business and the Resort Operations, respectively.
The "Branded Business" column in the pro forma combined balance sheet at
September 30, 1996 represents the specific assets and liabilities of the
Branded Business that will be acquired by General Mills once the transaction
has been effected. The "Resort Operations" column in the pro forma combined
balance at September 30, 1996 represents the combined financial position of the
Resort Operations at September 30, 1996.
Pro forma financial information on the Branded Business is presented because
the Company anticipates selling the Branded Business on or about January 31,
1997. As part of the sale, the Company will spin off its remaining businesses
to shareholders through a distribution of shares of New Ralcorp Holdings, Inc.
("New Ralcorp") to shareholders of record of Ralcorp on the closing date of
the sale. The sale of the Branded Business and related spin off are
described in greater detail in the Information Statement of New Ralcorp dated
December 27, 1996 and first mailed to the Company's shareholders on that date.
If you would like a copy of the Information Statement please contact the Company
and a copy will be sent to you free of charge.
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RALCORP HOLDINGS, INC.
PRO FORMA COMBINED STATEMENT OF EARNINGS
(IN MILLIONS EXCEPT PER SHARE DATA)
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
RESORT
BRANDED BUSINESS OPERATIONS
DISPOSITION DISPOSITION
ADJUSTMENTS RALCORP ADJUSTMENTS RALCORP
RALCORP BRANDED ---------------- WITH RESORT RESORT ---------------- WITHOUT RESORT
HISTORICAL BUSINESS DEBIT CREDIT OPERATIONS OPERATIONS DEBIT CREDIT OPERATIONS
---------- -------- ----- ------ ----------- ---------- ----- ------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales........... $ 1,027.4 $ (386.7) $ -- $ -- $ 640.7 $ (135.4) $ -- $ -- $ 505.3
-------- ------- ----- ----- ------- ------- ---- ---- --------
Costs and expenses:
Cost of products
sold............ 536.8 (114.1) 5.7(a) 428.4 (91.7) 336.7
Selling, general
and
administrative... 177.6 (52.5) 15.3(a) 140.4 (14.6) 125.8
Advertising and
promotion....... 233.3 (162.5) 70.8 (6.1) 64.7
Equity earnings in
Vail Resorts.... 4.5(b) (4.5)
Interest.......... 26.8 (4.2) 11.1(c) 11.5 (10.5) 1.0
Nonrecurring
charges......... 109.5 109.5 109.5
Restructuring
charge.......... 16.5 (2.5) -- -- 14.0 -- -- -- 14.0
-------- ------- ----- ----- ------- ------- ---- ---- --------
1,100.5 (335.8) 21.0 11.1 774.6 (122.9) -- 4.5 647.2
-------- ------- ----- ----- ------- ------- ---- ---- --------
(Loss) earnings
before income
taxes............. (73.1) (50.9) 21.0 11.1 (133.9) (12.5) 4.5 (141.9)
Income taxes........ (26.3) (19.3) -- 3.8(d) (49.4) (5.3) 1.7 (d) -- (53.0)
-------- ------- ----- ----- ------- ------- ---- ---- --------
Net (loss)
earnings.......... $ (46.8) $ (31.6) $21.0 $ 14.9 $ (84.5) $ (7.2) $1.7 $4.5 $ (88.9)
======== ======= ===== ===== ======= ======= ==== ==== ========
(Loss) earnings per
common share(e)... $ (1.42) $ (2.56) $ (2.69)
======== ======= ========
Outstanding shares
of common
stock(e).......... 33.0 33.0 33.0
======== ======= ========
</TABLE>
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RALCORP HOLDINGS, INC.
PRO FORMA COMBINED BALANCE SHEET
(IN MILLIONS EXCEPT SHARES)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
RESORT
BRANDED BUSINESS OPERATIONS
DISPOSITION RALCORP DISPOSITION RALCORP
ADJUSTMENTS WITH ADJUSTMENTS WITHOUT
RALCORP BRANDED ------------------ RESORT RESORT -------------- RESORT
HISTORICAL BUSINESS DEBIT CREDIT OPERATIONS OPERATIONS DEBIT CREDIT OPERATIONS
---------- -------- ------ ------ ---------- ---------- ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash..................... $ -- $ -- $ 13.6(f) $ 13.6(g) $ -- $ -- $ -- $-- $ --
Receivables, less
allowance for doubtful
accounts............... 75.5 75.5 (6.3) 69.2
Inventories.............. 103.3 (24.2) 79.1 (3.8) 75.3
Prepaid expenses......... 14.2 -- -- 0.7(h) 13.5 (0.8) -- -- 12.7
------ ------ ------ ------ ------ ------- ----- --- ------
Total current
assets............. 193.0 (24.2) 13.6 14.3 168.1 (10.9) 157.2
Equity investment in Vail
Resorts.................. 41.8 (i) 41.8
Deferred income taxes...... 23.4 2.8(h) 26.2 12.3 38.5
Investments and other
assets................... 88.1 -- -- -- 88.1 (77.9) -- -- 10.2
------ ------ ------ ------ ------ ------- ----- --- ------
Property at cost........... 537.0 (85.7) 451.3 (218.9) 232.4
Accumulated
depreciation....... 214.4 (48.4) -- -- 166.0 (71.5) -- -- 94.5
------ ------ ------ ------ ------ ------- ----- --- ------
322.6 (37.3) -- -- 285.3 (147.4) -- -- 137.9
------ ------ ------ ------ ------ ------- ----- --- ------
Total assets......... $627.1 $(61.5) $ 16.4 $ 14.3 $567.7 $ (223.9) $41.8 $-- $385.6
====== ====== ====== ====== ====== ======= ===== === ======
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of
long-term debt......... $ 1.8 $ -- $ -- $ -- $ 1.8 $ (1.8) $ -- $-- $ --
Accounts payable and
accrued liabilities.... 100.6 (10.6) -- -- 90.0 (15.1) -- -- 74.9
------ ------ ------ ------ ------ ------- ----- --- ------
Total current
liabilities........ 102.4 (10.6) 91.8 (16.9) 74.9
Long-term debt............. 376.6 227.0(j) 13.6(f) 163.2 (163.2)
Other liabilities.......... 40.7 (4.9) 35.8 (2.0) 33.8
Commitments and
contingencies............
General Mills common
stock.................... 343.0(j) 343.0(k)
Equity:
Shareholders' equity:
Common stock -- $.01
par value, issued
shares 33,924,848,
outstanding shares
32,916,916........... 0.3 0.3 0.3
Capital in excess of
par value............ 130.9 22.7(l) 108.2 108.2
Retained (deficit)
earnings............. (0.2) 4.7(g) 516.3(j) 168.4 168.4
343.0(k)
Common stock in treasury,
at cost -- 1,007,932
shares................... (22.7) 22.7(l)
Unearned portion of
restricted stock
awards................... (0.9) -- -- 0.9(m) -- -- -- -- --
------ ------ ------ ------ ------ ------- ----- --- ------
Total shareholders'
equity............. 107.4 -- 370.4 539.9 276.9 -- -- -- 276.9
------ ------ ------ ------ ------ ------- ----- --- ------
Total liabilities and
shareholders'
equity............. $627.1 $(15.5) $940.4 $896.5 $567.7 $ (182.1) $ -- $-- $385.6
====== ====== ====== ====== ====== ======= ===== === ======
</TABLE>
5
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RALCORP HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(a) To reflect the fixed costs (i.e., fixed manufacturing, information
systems, general administrative and corporate overhead) included in the
combined historical results of operations of the Branded Business that
will be absorbed by New Ralcorp upon completion of the sale of the
Branded Business.
(b) To reflect Ralcorp's equity earnings in Vail Resorts. The equity
earnings include $1.9 million of amortization income. The amortization
income is the result of the basis difference between the net book value
of the Resort Operations' net assets contributed to Vail Resorts and
Ralcorp's 22% equity interest in Vail Resorts' net assets. This
basis difference is being amortized ratably over 20 years.
(c) To reduce interest expense due to General Mills assuming $227.0 million
of Ralcorp debt upon completion of the sale of the Branded Business.
Residual interest expense shown of $1.0 million is related to estimated
revolving credit facility debt needed to finance working capital.
(d) To reflect the tax effect of the pro forma adjustments shown at an
effective rate of 38%.
(e) The weighted average number of shares used to compute Ralcorp
earnings per share is based on the weighted average number of Ralcorp
common shares outstanding during fiscal year 1996.
(f) To record $13.6 million of new indebtedness to be incurred by
Ralcorp immediately prior to the merger and to be assumed by General
Mills as a result of the merger. Cash proceeds from this debt will be
primarily used for the settlement of transaction expenses described in
footnote (g).
(g) Adjustment to reflect payment of transaction expenses. Expenses
incurred in connection with the dispositions are estimated at
approximately $13.6 million, consisting of payments for legal,
accounting and investment banking fees, redemption of common stock
purchase rights, accelerated vesting and cash settlement of stock
options and the net assets adjustment. Payments estimated at $4.7
million for the accelerated vesting and cash settlement of stock
options will not be recorded as a reduction to the gain described in
footnote (j).
(h) To reflect the write off of the current and deferred tax assets and
liabilities associated with the specific assets and liabilities of the
Branded Business that will be acquired by General Mills once the
distribution has been effected.
(i) To record Ralcorp's equity investment in Vail Resorts, which
represents the book value of the net assets contributed to Vail
Resorts, as presented in the "Resorts Operations" column of the pro
forma combined balance sheet. Due to the structure of the transaction,
it is accounted for as a non-monetary exchange. Accordingly, no gain or
loss on sale will be recorded by Ralcorp.
(j) To record the disposition of the Branded Business and the related gain
on sale. Proceeds of $570 million are comprised of approximately $343.0
million of General Mills common stock, received by Ralcorp
shareholders, and the assumption of approximately $227.0 million in
debt and accrued interest by General Mills. Following is the
calculation of the gain on sale to be recorded by Ralcorp:
<TABLE>
<S> <C>
Proceeds....................................................... 570.0
Net assets of Branded Business................................. (46.0)(n)
Current deferred tax assets.................................... (0.7)(h)
Deferred tax liabilities....................................... 2.8(h)
Transaction expenses........................................... (13.6)(g)
Cash settlement of stock options............................... 4.7(g)
Accelerated amortization of restricted stock awards............ (0.9)(m)
-----
Gain on sale............................................... 516.3(j)
=====
</TABLE>
(k) To reflect the deemed distribution of approximately $343.0 million of
the proceeds from the sale of the Branded Business. These proceeds are
in the form of General Mills common stock distributed by General Mills
directly to Ralcorp shareholders in the merger.
(l) To retire treasury stock outstanding as of the merger date.
(m) To record the accelerated amortization of restricted stock awards.
(n) Amount represents the specific net assets of the Branded Business,
which are reflected in the "Branded Business" column of the pro forma
combined balance sheet, that will be acquired by General Mills once the
distribution has been effected. While General Mills will acquire all
the operations of the Branded Business, certain assets and liabilities
reflected in the historical balance sheet of the Branded Business will
not be transferred to General Mills and, therefore, the amounts
reflected in the "Branded Business" column of the pro forma combined
balance sheet vary from the amounts shown in the Branded Business
historical balance sheet that is set forth in the Proxy
Statement-Prospectus that was mailed to Ralcorp shareholders with this
Information Statement. The most significant differences are (i) the
elimination of historical receivables associated with the Branded
Business, which are being retained by New Ralcorp because it is
impracticable to separate the Branded Business receivables from the
receivables associated with Ralcorp's remaining private label foods
businesses, and (ii) the elimination of fixed assets associated with
manufacturing plants (other than Ralcorp's Cincinnati plant, which will
be transferred to General Mills) that historically have produced both
Branded Business products and private label products, and that will be
retained by New Ralcorp. In addition, a portion of Ralcorp's long-term
debt was allocated to the Branded Business for purposes of the
historical balance sheet, but is not reflected under the column
"Branded Business" because the transfer of Ralcorp debt is separately
reflected under the column "Branded Business Disposition Adjustments."
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(c) Exhibits. The following exhibits are filed with this report of Form 8-K.
* 10.1 The Stock Purchase Agreement By and Among Vail Resorts,
Inc., Ralston Foods, Inc. and Ralston Resorts, Inc. dated July 22,
1996 (filed as Exhibit 10.3 to the Company's Form 10-Q for the
period ending June 30, 1996).
* 10.2 First Amendment to Stock Purchase Agreement By and Among
Vail Resorts, Inc. and Ralston Foods, Inc. and Ralston Resorts, Inc.,
dated July 22, 1996 (filed as Exhibit 10.25 to the Company's Form
10-K for the period ending September 30, 1996).
10.3 Second Amendment to Stock Purchase Agreement By and Among
Vail Resorts, Inc. and Ralston Foods, Inc. and Ralston Resorts,
Inc., dated July 22, 1996.
10.4 Shareholder Agreement Among Vail Resorts, Inc., Ralston
Resorts, Inc. and Apollo Ski Partners, L.P. dated January 3, 1997.
99.1 Press Release dated January 3, 1997.
* incorporated by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RALCORP HOLDINGS, INC.
(Registrant)
Date: January 21, 1997 By: /s/ Joe R. Micheletto
-------------------------
Joe R. Micheletto
Chief Executive Officer
and President
<PAGE> 1
EXHIBIT 10.3
SECOND AMENDMENT TO
THE STOCK PURCHASE AGREEMENT
This SECOND AMENDMENT TO THE STOCK PURCHASE AGREEMENT dated as of December
31, 1996 ("Second Amendment") is made by and among Vail Resorts, Inc., a
Delaware corporation ("Vail"), Ralston Foods, Inc., a Nevada corporation
("Foods"), and Ralston Resorts Inc., a Colorado corporation ("Ralston"),
amending certain provisions of the Stock Purchase Agreement dated as of July
22, 1996, as amended by a first amendment dated December 20, 1996 (the
"Purchase Agreement"), by and among Vail, Foods and Ralston. Terms not
otherwise defined herein that are defined in the Purchase Agreement shall have
the same respective meanings herein as therein.
WHEREAS, Vail, Foods and Ralston have agreed to modify certain terms and
conditions of the Purchase Agreement as specifically set forth in this Second
Amendment.
NOW, THEREFOR, in consideration of the premises and mutual agreements
contained herein and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
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ARTICLE I
AMENDMENTS TO PURCHASE AGREEMENT
1.1 The definition of Closing Date in Article I of the Purchase Agreement
is amended in its entirety to read as follows:
January 3, 1997.
1.2 The first sentence of Section 3.4 of the Purchase Agreement is amended
by deleting the word "Missouri" and substituting therefor the word "Nevada."
1.3 The second sentence of Section 4.1 is amended by deleting the figure
"3,612,809" and substituting therefor the figure "4,159,131" and by deleting
the figure "6,387,191" and substituting therefor the figure "6,213,110."
1.4 Section 9.3(b) of the Purchase Agreement is amended in its entirety
to read as follows:
The deposit and disbursement bank accounts used in
Ralston's business, and cash management activities related thereto, shall be
transferred to Vail and operated as provided on Schedule 9.3(b) attached
hereto.
ARTICLE II
SCHEDULES
Attached hereto are revised Schedules delivered by each of Foods and Vail
(except for Schedule 4.10 provided by Vail which shall remain the same as
initially delivered pursuant to the Purchase Agreement). Such Schedules
constitute the Schedules that are required to be delivered pursuant to the
Purchase Agreement.
ARTICLE III
PROVISIONS OF GENERAL APPLICATION
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3.1 Except as otherwise expressly provided by this Second Amendment, all
of the terms, conditions and provisions to the Purchase Agreement remain
unaltered. The Purchase Agreement and this Second Amendment shall be read and
construed as one agreement.
3.2 If any of the terms of this Second Amendment shall conflict in any
respect with any of the terms of the Purchase Agreement, the terms of the
Second Amendment shall be controlling.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to be executed by their duly authorized officers all as of the day and year
first above written.
VAIL RESORTS, INC.
By:
---------------------------
Name:
Title:
RALSTON FOODS, INC.
By:
----------------------------
Name:
Title:
RALSTON RESORTS, INC.
By:
----------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 10.4
SHAREHOLDER AGREEMENT
Among
VAIL RESORTS, INC.
RALSTON FOODS, INC.
AND
APOLLO SKI PARTNERS, L.P.
January 3, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS ..................................... 1
ARTICLE II - STANDSTILL AND VOTING PROVISIONS ............... 6
Section 2.1. Standstill Covenants .............. 6
Section 2.2. Acquisition of Vail Securities .... 8
Section 2.3. Voting of Vail Equity ............. 9
Section 2.4. Restrictions on Certain
Transactions Prior to IPO ....... 10
ARTICLE III - TRANSFER OF VAIL EQUITY ....................... 10
Section 3.1. Restrictions on Transfer .......... 10
Section 3.2. Exceptions to Restrictions ........ 10
Section 3.3. Improper Transfer ................. 11
Section 3.4. Restrictive Legend ................ 12
ARTICLE IV - RIGHT OF FIRST OFFER ........................... 13
Section 4.1. Sales by Foods .................... 13
ARTICLE V - REGISTRATION .................................... 14
Section 5.1. Demand Registration ............... 14
Section 5.2. Delay of Demand Registration ...... 16
Section 5.3. Piggyback Registration ............ 17
Section 5.4. Delay of Piggyback Registration ... 18
Section 5.5. Holdback Agreements ............... 18
Section 5.6. Right to Purchase in Lieu of
Registration .................... 19
ARTICLE VI - REGISTRATION EXPENSES .......................... 19
Section 6.1. Registration Expenses ............. 19
ARTICLE VII - REGISTRATION PROCEDURE ........................ 20
Section 7.1. Shareholder Information ........... 20
Section 7.2. Compliance ........................ 21
Section 7.3. Provision of Prospectuses ......... 21
Section 7.4. Blue Sky Compliance ............... 22
Section 7.5. Listing of Vail Equity ............ 22
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Page
----
Section 7.6. Stop Orders ....................... 22
ARTICLE VIII - INDEMNIFICATION AND CONTRIBUTION ............. 23
Section 8.1. Indemnification ................... 23
Section 8.2. Contribution ...................... 27
ARTICLE IX - TAKE-ALONG RIGHTS .............................. 28
Section 9.1. Take-Along Rights ................. 28
ARTICLE X - INITIAL PUBLIC OFFERING ......................... 29
Section 10.1. IPO Commitment .................... 29
Section 10.2. Co-Manager ........................ 29
Section 10.3. Foods Initiated IPO ............... 30
ARTICLE XI - ADDITIONAL COVENANTS ........................... 30
Section 11.1. Maintain Listing or Quotation ..... 30
Section 11.2. Board of Directors ................ 31
Section 11.3. No Inconsistent Agreements ........ 31
Section 11.4. Rules 144 and 144A ................ 31
Section 11.5. Limitations on Holdings of Foods
Associates ...................... 31
ARTICLE XII - MISCELLANEOUS ................................. 31
Section 12.1. Entire Agreement .................. 31
Section 12.2. Headings and Captions ............. 31
Section 12.3. Choice of Law ..................... 32
Section 12.4. Venue ............................. 32
Section 12.5. Notices ........................... 32
Section 12.6. Amendments ........................ 33
Section 12.7. Extended Meanings ................. 33
Section 12.8. Successors and Assigns ............ 33
Section 12.9. Severability ...................... 34
Section 12.10. Counterparts ...................... 34
Section 12.11. Remedies Cumulative ............... 34
Section 12.12. Binding Agreement ................. 34
Section 12.13. Recapitalizations, Exchanges, Etc.,
Affecting Vail Securities ....... 34
Section 12.14. Other Agreements .................. 35
Section 12.15. Termination ....................... 35
Section 12.16. Enforcement ....................... 35
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Page
----
Section 12.17. Confidentiality ................... 36
Section 12.18. Fiduciary Accounts ................ 36
-iii-
<PAGE> 5
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT, dated January 3, 1997 (the "Agreement"), is
among Vail Resorts, Inc., a Delaware corporation ("Vail"), Ralston Foods, Inc.,
a Nevada corporation ("Foods"), and Apollo Ski Partners, L.P., a Delaware
limited partnership ("Apollo") (Foods and Apollo and their respective legal
representatives, successors and assigns are referred to herein individually as
a "Shareholder" and collectively as the "Shareholders").
WHEREAS, pursuant to the Stock Purchase Agreement dated as of July 22,
1996, as amended, (the "Purchase Agreement") by and among Vail, Foods and
Ralston Resorts, Inc., a Colorado corporation ("Ralston"), Vail acquired all of
the outstanding shares of capital stock of Ralston in exchange for 3,777,203
shares of Common Stock, par value $.01 per share, of Vail ("Vail Stock"); and
WHEREAS, Apollo owns 1,325,669 shares of Vail Stock and 5,958,874 shares
of Class A Common Stock, par value $.01 per share, of Vail ("Vail Class A
Stock"); and
WHEREAS, the parties hereto desire to enter into this Agreement to provide
for certain rights and restrictions with respect to the shares of Vail Equity
(as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth herein, each of Vail and Foods agree as follows:
I
<PAGE> 6
DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms (whether used in the singular or plural) have the
meanings indicated herein. Any term used and not defined herein has the
meaning set forth in the Purchase Agreement.
"Affiliate" of a Person means any other Person that directly or indirectly
through one or more intermediaries Controls, is Controlled by or is under
common Control with such Person.
"Apollo" has the meaning set forth above in the recitals to this
Agreement.
"Apollo Option Period" has the meaning set forth in Section 4.1(c) of this
Agreement.
"Associate" of a Person means any of such Person's directors, officers,
shareholders, representatives, trustees, employees, attorneys, advisors or
agents.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday for commercial banks in New York City.
"Change of Control" means any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than Apollo or one or more Affiliates of Apollo, becomes the
beneficial owner of (i) more than 50% of the total outstanding Vail Securities
or (ii) such number of Vail Securities which would allow such person or group
to elect a majority of the Board of Directors of Vail.
"Closing" means the closing of the transactions contemplated by the
Purchase Agreement.
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"Control" (including the terms "Controlling," "Controlled by" and "under
common Control with") means the possession of the power, directly or
indirectly, (a) to elect a majority of the board of directors (or equivalent
governing body) of the entity in question; or (b) to direct or cause the
direction of the management and policies of or with respect to the entity or
assets in question, whether through ownership of securities, by contract or
otherwise.
"Demand Notice" has the meaning set forth in Section 5.1(a) of this
Agreement.
"Demand Registration" has the meaning set forth in Section 5.1(a) of this
Agreement.
"Discussion Period" has the meaning set forth in Section 10.3(b) of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"First Option" has the meaning set forth in Section 4.1(b) of this
Agreement.
"Foods" has the meaning set forth above in the recitals to this Agreement.
"Foods Initiated IPO" has the meaning set forth in Section 10.3(b) of this
Agreement.
"Foods Notice" has the meaning set forth in Section 10.3(b) of this
Agreement.
"GAAP" means accounting principles which are (a) consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors in effect from time to time and (b) applied on a basis
consistent with prior periods.
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"Group" means any group of Persons within the meaning of Section 13(d)(3)
of the Exchange Act.
"IPO" means the consummation of an initial public offering of Vail Stock
pursuant to a registration statement filed with the Securities and Exchange
Commission.
"Loss" has the meaning set forth in Section 8.1(a)(i) of this Agreement.
"Marketable Number" has the meaning set forth in Section 5.1(e) of this
Agreement.
"Non-Qualified Transferee" has the meaning set forth in Section 9.1 of
this Agreement.
"Non-Requesting Shareholder" has the meaning set forth in Section 5.1(e)
of this Agreement.
"Person" means an individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Piggyback Notice" has the meaning set forth in Section 5.3(a) of this
Agreement.
"Piggyback Registration" has the meaning set forth in Section 5.3(a) of
this Agreement.
"Piggyback Shareholder" has the meaning set forth in Section 5.3(a) of
this Agreement.
"Private Sale" has the meaning set forth in Section 2.2 of this Agreement.
"Purchase Agreement" has the meaning set forth above in the recitals to
this Agreement.
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"Ralston" has the meaning set forth above in the recitals to this
Agreement.
"Registration Statement" means any registration statement or comparable
document under Section 5 of the Securities Act through which a public sale or
disposition of Vail Securities may be registered other than a registration
statement (a) relating to an Employee Benefit Plan or similar plan or a
business combination or (b) on any form that is not available for a secondary
offering.
"Requesting Shareholder" has the meaning set forth in Section 5.1(d) of
this Agreement.
"SEC" means the Securities and Exchange Commission or other federal agency
at the time administering the Securities Act, the Exchange Act or any successor
acts thereto.
"Second Option" has the meaning set forth in Section 4.1(c) of this
Agreement.
"Section 4.1 Shares" has the meaning set forth in Section 4.1(a) of this
Agreement.
"Section 5.6 Shares" has the meaning set forth in Section 5.6 of this
Agreement.
"Section 9.1 Shares" has the meaning set forth in Section 9.1 of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Shareholder" means Apollo or Foods and its permitted successors and
assigns.
"Shareholder Indemnified Party" has the meaning set forth in Section
8.1(c) of this Agreement.
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"Transfer" with respect to all or any part of the Vail Equity means to
directly or indirectly (whether or not through an underwriter) sell, convey,
distribute, transfer (by merger or otherwise), assign, devise, exchange,
encumber, gift, pledge, hypothecate or otherwise dispose of such Vail Equity
(including without limitation the sale or disposition of an entity the primary
asset of which is Vail Equity).
"Transfer Notice" has the meaning set forth in Section 4.1(a) of this
Agreement.
"Trigger Date" has the meaning set forth in Section 10.3(a) of this
Agreement.
"Vail" has the meaning set forth above in the recitals to this Agreement.
"Vail Class A Stock" means the Class A Common Stock of Vail, par value
$.01 per share.
"Vail Equity" means (i) shares of Vail Stock acquired by Foods at the
Closing and any other Vail Securities owned, beneficially or of record, by
Foods or any of its Affiliates at any time during the term of this Agreement
and (ii) shares of Vail Stock, Vail Class A Stock and any other Vail Securities
owned, beneficially or of record, by Apollo or any of its Affiliates at any
time during the term of this Agreement.
"Vail Indemnified Party" has the meaning set forth in Section 8.1(a) of
this Agreement.
"Vail Market Price" means the average of the closing sale prices of the
Vail Stock being valued on the New York Stock Exchange or, if the Vail Stock is
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system of the principal
national securities exchange on which the Vail Stock is listed or admitted to
trading, for the twenty (20) trading days
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which end on the day immediately prior to the date of the Demand Notice. If
the Vail Stock is not listed or admitted to trading on any national securities
exchange, "Vail Market Price" means the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, for
the twenty (20) trading days which end on the day immediately prior to such
date or, if on any such trading day the Vail Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
two professional market makers making a market in the Vail Stock, one selected
in good faith by the board of directors of Vail and the other selected in good
faith by Foods. If the Vail Stock is not publicly held or so listed or
publicly traded, "Vail Market Price" means the cash price at which a willing
seller would sell and a willing buyer would buy such securities in an
arm's-length negotiated transaction without undue time restraints, as
determined in good faith by an investment banking firm selected by agreement
between Vail and Foods.
"Vail Option Period" has the meaning set forth in Section 4.1(b) of this
Agreement.
"Vail Securities" means the Vail Stock, Vail Class A Stock and any other
voting securities of Vail or its Affiliates, including any securities
convertible into or exercisable or exchangeable for any voting securities of
Vail.
"Vail Stock" has the meaning set forth above in the recitals to this
Agreement.
II
STANDSTILL AND VOTING PROVISIONS
A. Standstill Covenants. Unless otherwise permitted in this Agreement,
Foods agrees that during the term of this Agreement, it will not, directly or
indirectly:
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(a) acquire, offer to acquire, or agree to acquire by purchase or
otherwise, any Vail Securities except as a result of a stock split, stock
dividend or similar recapitalization by Vail;
(b) except in the ordinary course of business, acquire, offer to
acquire, or agree to acquire by purchase or otherwise, any assets of
Vail;
(c) initiate, solicit, propose, seek to effect or negotiate, alone
or with any other Person, (i) any form of business combination
transaction involving Vail or any Affiliate thereof, or (ii) any
restructuring, recapitalization or similar transaction with respect to
Vail or any Affiliate thereof;
(d) initiate, solicit, propose, seek to effect, negotiate, or
announce an intent to make, alone or with any other Person, any tender
offer, exchange offer, merger, consolidation or share exchange for any
Vail Securities, or disclose an intent, purpose, plan or proposal with
respect to Vail, any of its Affiliates or any Vail Securities
inconsistent with the provisions of this Agreement;
(e) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are defined or used in Regulation 14A under the
Exchange Act) with respect to Vail or any of its Affiliates or become a
"participant" in any "election contest" (as such terms are defined or
used in Rule 14a-11 under the Exchange Act) involving Vail or any of its
Affiliates;
(f) initiate, solicit or propose the approval of one or more
shareholder proposals with respect to Vail or any of its Affiliates or
induce or attempt to induce any other Person to initiate any such
shareholder proposal;
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(g) form, join or in any way participate in a Group with respect to
the Vail Securities;
(h) except as expressly provided herein, seek election to or seek to
place a representative on the board of directors of Vail or any of its
Affiliates or seek the removal of any member of the board of directors of
Vail or any of its Affiliates;
(i) except for participation on the board of directors of Vail, act
in concert with any other Person to seek to affect the management or
board of directors of Vail or any of its Affiliates or the business,
operations or affairs of Vail or any of its Affiliates;
(j) call or seek to have called any meeting of the shareholders of
Vail or any of its Affiliates;
(k) disclose to any third party or in any filing with any
governmental authority any intention, plan or arrangement inconsistent
with any of the foregoing or with the restrictions on transfer set forth
in this Agreement; or
(l) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing,
or advise, assist, encourage or influence any other Person to take any
action with respect to any of the foregoing.
IIB. Acquisition of Vail Securities. Notwith-standing Section 2.1 hereof,
Foods may purchase in one or more open market transactions or otherwise
(including the IPO) that number of shares of Vail Securities necessary for
Foods to continue to account for its investment in Vail under the equity
accounting method under GAAP; provided, that in no event shall any such
purchase result in the ownership by Foods and its Affiliates of Vail Securities
exceeding 23.5% of the total outstanding Vail Securities. In the event that
Vail proposes to register or otherwise offer any Vail Securities for sale for
its own account
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(including the IPO) under the Securities Act (other than a registration of
securities in connection with a merger, an acquisition, an exchange offer or an
employee benefit plan maintained by Vail or its Affiliates or on Form S-4 or
S-8 or any successor or similar form or by means of a shelf registration
pursuant to Rule 415 under the Securities Act) or in a transaction exempt from
registration under the Securities Act (a "Private Sale"), Vail will give
written notice to Foods of its intention to do so and of Foods' rights under
this Section 2.2, at least twenty (20) calendar days prior to the anticipated
filing date of a Registration Statement relating to such registration (or if
such transaction is a Private Sale a comparable period of time). Foods will
have the right, but not the obligation, to elect to purchase shares in such
offering (including the IPO), at the same price Vail is to receive for the
shares to be sold for its account provided that if such offering is not the IPO
Foods shall only have such purchase right if Apollo is purchasing Vail
Securities in such offering, in which case the number of Vail Securities that
Foods may purchase in such offering shall be equal to the number of shares
proposed to be purchased by Apollo multiplied by a fraction, the numerator of
which is the total number or shares of Vail Equity owned by Foods at such time
and the denominator of which is the sum of the total number of shares of Vail
Equity owned by Apollo and Foods at such time. In the event that the size of
such offering is increased after Foods has received notice of such offering,
Foods will have the right, but not the obligation, to proportionately increase
its purchase of shares in such offering. Foods may exercise its purchase
rights under this Section 2.2 by notifying Vail of its election to purchase
shares (which election shall be irrevocable) in such offering within ten days
of receiving notice from Vail (failure by Foods to give such notice within such
ten-business-day period shall be deemed an election by Foods not to purchase
Vail Securities in such offering). Any purchase by Foods of Vail Securities
pursuant to this Section 2.2 may not result in Foods and its Affiliates'
ownership exceeding 23.5% of the total outstanding Vail Securities. Foods
shall not be entitled to a Piggyback Registration with respect to any offering
if it has elected to purchase Vail Securities in such offering.
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IIC. Voting of Vail Equity. Foods agrees that during the term of this
Agreement, with respect to the election of directors of Vail, each class of
Vail Equity owned by Foods and its Affiliates shall be voted (i) "for" the
nominees recommended by the Board of Directors of Vail, provided Vail and
Apollo are in compliance with the terms of Section 11.2 of this Agreement, (ii)
in accordance with the recommendation of the Board of Directors of Vail on each
proposal of a security holder pursuant to Rule 14a-8 under the Exchange Act, so
long as the subject matter of such proposal does not fall within the proviso
hereto, and (iii) with respect to all other matters requiring a vote of the
Vail Equity, "for" any proposal in the same proportion as the votes cast "for"
such proposal by the holders of the Vail Securities of the same class
(excluding the Vail Equity owned by Foods), and "against" any proposal in the
same proportion as the votes cast "against" such proposal by the holders of
each such class of Vail Securities (excluding the Vail Equity owned by Foods)
and that with respect to broker non-votes and abstentions, each class of Vail
Equity owned by Foods will be voted in the same proportion as votes deemed
"for," "against" or "abstain," giving effect to broker non-votes and
abstentions as required under the laws and rules then applicable; provided,
however, that Foods shall retain the right to vote its Vail Equity in any
manner it sees fit with respect to any proposals for (1) the merger,
consolidation or other business combination of Vail or any subsidiary of Vail
with or into any other corporation, (2) the sale, lease, exchange, transfer or
other disposition of all or substantially all of the assets of Vail and all of
its subsidiaries taken together as a single business, (3) the creation of any
other class of stock with voting rights and (4) changes to the Certificate of
Incorporation or Bylaws of Vail that adversely affect Foods' rights under this
Agreement. The provisions of this Section 2.3 shall apply to both the casting
of votes at meetings of shareholders and execution of actions by written
consent.
IID. Restrictions on Certain Transactions Prior to IPO. Prior to the IPO,
Vail shall not, without the prior written
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approval of Foods, (1) enter into transactions with Apollo or its Affiliates
that are not on an arm's-length basis (other than the continuation or extension
of contracts or arrangements between Vail and Apollo and its Affiliates that
are in existence as of the date of this Agreement and have heretofore been
disclosed to Foods), (2) permit (a) the merger of Vail with or into any other
corporation (other than a subsidiary of Vail), (b) the sale, lease, exchange,
transfer or other disposition of all or substantially all of the assets of Vail
and all of its subsidiaries taken together as a single business, (c) the
creation of any other class of stock with voting rights that materially
adversely affects Foods' rights under this Agreement or (d) changes to the
Certificate of Incorporation or Bylaws of Vail that adversely affect Foods'
rights under this Agreement, or (3) enter into any material business not
currently conducted by Vail that is not related to the operation of ski
resorts, real estate or the vacation, leisure and entertainment industries.
III
TRANSFER OF VAIL EQUITY
IIIA. Restrictions on Transfer. During the term of this Agreement, Foods
agrees that it will not, and it will cause each of its Affiliates who acquire
Vail Equity not to, Transfer any Vail Equity, except as permitted by or in
accordance with this Agreement.
IIIB. Exceptions to Restrictions. Subject to all applicable laws, the
restrictions on Transfer set forth in Section 3.1 hereof shall not apply to any
of the following:
(a) a Transfer of some or all of the Vail Equity pro rata to all of
the holders of common stock of Foods as a dividend or distribution, in
redemption of the Foods Stock or pursuant to a similar transaction;
(b) a Transfer of some or all of the Vail Equity to an Affiliate of
Foods, provided that such Affiliate (i) shall
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agree to be bound by and subject to the provisions of this Agreement,
(ii) Foods shall remain liable for the performance by such Affiliate of
its obligations under this Agreement and (iii) such Affiliate shall have
executed and delivered to Vail the guaranty required by Section 5.14 of
the Purchase Agreement;
(c) a Transfer of some or all of the Vail Equity in accordance with
Section 5.1 or 5.3 of this Agreement;
(d) a Transfer of some or all of the Vail Equity in any tender
offer, self-tender, exchange offer, going private transaction or other
transaction involving a Transfer which is recommended to shareholders of
Vail by at least a majority of the Board of Directors of Vail;
(e) subject to Section 4.1, a Transfer of some or all of the Vail
Equity with the prior written consent of a majority of the Board of
Directors of Vail;
(f) subject to Section 4.1, a Transfer of some or all of the Vail
Equity pursuant to Rule 144 of the Securities Act if an IPO has not been
consummated by December 31, 1998;
(g) subject to Section 4.1, a Transfer of some or all of the Vail
Equity if an IPO has not been consummated by December 31, 1998 and such
transferee agrees to be bound by the terms of this Agreement; and
(h) subject to Section 4.1, a Transfer of some or all of the Vail
Equity on or after the date which is 18 months after the date of this
Agreement, provided that (i) the transferee agrees to be bound by and
subject to the provisions of this Agreement, (ii) after giving effect to
such Transfer, the transferee will not own, directly or indirectly, more
than 10% of the then outstanding Vail Securities and (iii) such
transferee agrees with Vail and Apollo not to thereafter purchase or
otherwise acquire, directly or indirectly, any additional Vail Securities
if it would result in such transferee owning, directly or
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indirectly, more than 10% of the then outstanding Vail Securities.
IIIC. Improper Transfer. Any attempt to Transfer any shares of Vail
Equity not in accordance with this Agreement will be null and void and Vail
will not give nor permit the transfer agent of Vail to give any effect to such
attempted Transfer in its stock records.
IIID. Restrictive Legend.
(a) A copy of this Agreement will be filed with the Secretary of Vail and
kept with the records of Vail. All certificates representing shares of Vail
Equity hereafter issued to or acquired by Foods or its successors or permitted
assigns, will bear the following legend (until such time as such shares are
sold pursuant to an effective registration statement or pursuant to Rule 144
under the Securities Act) noted conspicuously on such certificates:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT ONLY, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED (BY MERGER OR
OTHERWISE), ASSIGNED, DEVISED, EXCHANGED, GIFTED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND ANY APPLICABLE STATE SECURITIES
LAWS OR UNLESS SUCH TRANSFER IS EXEMPT FROM REGISTRATION, AND AN
ACCEPTABLE OPINION OF COUNSEL IS DELIVERED TO VAIL RESORTS, INC. WITH
REGARD TO SUCH EXEMPTION, OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND
SUCH STATE SECURITIES LAWS.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS
ON TRANSFER SET FORTH IN THE SHAREHOLDER AGREEMENT, DATED ,
1996. NO TRANSFER OF THESE SHARES WILL BE EFFECTIVE UNLESS AND UNTIL THE
TERMS AND CONDITIONS OF SUCH SHAREHOLDER AGREEMENT HAVE BEEN COMPLIED
WITH IN FULL AND NO PERSON MAY REQUEST VAIL RESORTS, INC. TO RECORD THE
TRANSFER OF ANY SHARES IF SUCH TRANSFER IS IN
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VIOLATION OF SUCH SHAREHOLDER AGREEMENT. A COPY OF THE SHAREHOLDER
AGREEMENT IS ON FILE AT THE EXECUTIVE OFFICES OF VAIL RESORTS, INC. AND
WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON
WRITTEN REQUEST. THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON VOTING PROVIDED FOR IN THE SHAREHOLDER AGREEMENT AND NO
VOTE OF SUCH SHARES THAT CONTRAVENES THE SHAREHOLDER AGREEMENT SHALL BE
EFFECTIVE.
(b) Until such time as the Vail Equity has been registered pursuant to a
registration statement under the Securities Act or sold pursuant to Rule 144 of
the Securities Act, the certificates representing Vail Equity (including,
without limitation, all certificates issued upon Transfer or in exchange or
substitution therefor) will also bear any legend required under any other
applicable laws, including state securities or blue sky laws.
(c) Vail may make a notation on its records or give stop-transfer
instructions to any transfer agents or registrars for the Vail Equity in order
to implement the restrictions set forth in this Article III.
(d) In the event Foods acquires any other or additional Vail Securities,
Foods will submit all certificates representing such Vail Securities to Vail so
that any appropriate legend or legends required by this Section 3.4 may be
placed thereon.
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IV
RIGHT OF FIRST OFFER
IVA. Sales by Foods.
(a) Prior to any Transfer pursuant to Section 3.2(e), (f), (g) and (h),
Foods must first give written notice of its intent to make such Transfer (a
"Transfer Notice") to Vail and Apollo setting forth the number of shares of
Vail Equity (the "Section 4.1 Shares") that Foods desires to Transfer and the
cash price that Foods proposes to be paid for such Section 4.1 Shares and the
other terms and conditions of such proposed Transfer.
(b) Vail shall have the right, but not the obligation, to purchase the
Section 4.1 Shares (the "First Option") on the same terms and conditions as set
forth in such notice, which option shall be exercised by delivering to Foods
irrevocable written notice of its commitment to purchase the Section 4.1 Shares
within ten business days after receipt of the Transfer Notice (the "Vail Option
Period"). Failure by Vail to give such notice within such ten-business-day
period shall be deemed an election by Vail not to purchase the Section 4.1
Shares.
(c) In the event that Vail decides not to purchase the Section 4.1 Shares
pursuant to Section 4.1(b), then Apollo will have the right, but not the
obligation, to purchase the Section 4.1 Shares (the "Second Option") on the
same terms and conditions as set forth in the Transfer Notice, which option
shall be exercised by delivering to Foods irrevocable written notice of its
commitment to purchase the Section 4.1 Shares within five business days after
the termination of the Vail Option Period (the "Apollo Option Period").
Failure by Apollo to give such notice within such five-business-day period
shall be deemed an election by Apollo not to purchase the Section 4.1 Shares.
(d) Delivery of written notice by Vail or Apollo accepting the First
Option or the Second Option, as the case may
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be, shall constitute a contract between Vail or Apollo, on the one hand, and
Foods, on the other hand, for the purchase and sale of the Section 4.1 Shares
on the terms and conditions set forth in the Transfer Notice. The purchase of
any shares pursuant to the exercise of the First Option or the Second Option,
as the case may be, shall be completed not later than 30 days following
delivery of the Transfer Notice with respect to the Section 4.1 Shares, subject
to receipt of any required material third-party or governmental approvals,
compliance with applicable laws and the absence of any injunction or similar
legal order preventing such transaction. In the event that neither the First
Option nor the Second Option is exercised, Foods shall have the right for a
period of 45 days after the termination of the Apollo Option Period to Transfer
the Section 4.1 Shares at a price not less than 90% of the price contained in,
and on terms and conditions no less favorable to Foods than those set forth in,
the Transfer Notice; provided that the Transferee agrees to be bound by the
terms and conditions of this Agreement (unless the Transfer is pursuant to Rule
144 under the Securities Act).
V
REGISTRATION
VA. Demand Registration.
(a) After the consummation of an IPO or at such time prior to the
consummation of an IPO as is permitted by Section 10.3 with respect to a given
Shareholder, upon a Shareholder's written request specifying the intended
manner of disposition (including the number of shares of Vail Equity to be
sold) (a "Demand Notice"), Vail will use its best efforts to prepare and file
with the SEC, as expeditiously as possible, a Registration Statement on an
available form for which Vail then qualifies (but not including by means of a
shelf registration pursuant to Rule 415 under the Securities Act), which legal
counsel for Vail deems appropriate and which is available for the sale of Vail
Equity to permit an underwritten public offering of some or all of the shares
of Vail Equity then held by such Shareholder and use its
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best efforts to cause such registration statement to become effective (a
"Demand Registration").
(b) A Demand Registration will not be deemed to have occurred until it has
become effective under the Securities Act (unless a Shareholder delivers a
Demand Notice and subsequently withdraws the Demand Notice, in which case such
Demand Registration will be deemed to have occurred unless such Shareholder
agrees to pay all reasonable out-of-pocket expenses associated with such
registration actually incurred by Vail); provided, however, that if, after a
Demand Registration has become effective, the offering of Vail Equity pursuant
to such Demand Registration is prohibited by any stop order, injunction or
other order or requirement of the SEC or other governmental agency or a court,
such Demand Registration will be deemed not to have occurred (unless such
prohibition on the sale of the Vail Equity is based on actions or omissions of
such Shareholder, in which case such Demand Registration will be deemed to have
occurred unless such Shareholder agrees to pay all reasonable out-of-pocket
expenses associated with such registration actually incurred by Vail).
(c) Vail shall only be obligated to effect one Demand Registration per
Shareholder in any twelve month period under this Section 5.1; provided,
however, that Vail will not be required to register the Vail Equity pursuant to
a Demand Notice under this Section 5.1 if at such time (i) the shares of Vail
Equity which a Shareholder is requesting to be registered pursuant to this
Section 5.1 constitute less than 6.0% (or, if less, all of the shares of Vail
Equity owned by such Shareholder) of the outstanding Vail Securities so
requested to be registered or (ii) such Demand Notice is given within six (6)
months after the effective date of any other registration of any Vail
Securities under the Securities Act.
(d) The managing underwriter will be selected by the Shareholder
requesting registration pursuant to this Section 5.1 (the "Requesting
Shareholder"); provided, however, that such underwriter shall be subject to the
approval of Vail, which
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approval shall not be unreasonably withheld. In the event there is one or more
co-managers, the first such co-manager shall be selected by Vail, provided that
such co-manager shall be subject to the approval of the Requesting Shareholder,
which approval shall not be unreasonably withheld or delayed, and all other
co-managers will be selected by the Requesting Shareholder.
(e) In connection with a Demand Registration, both the Shareholder not
requesting the Demand Registration (the "Non-Requesting Shareholder") and Vail
may elect to include additional shares of Vail Securities in such offering on
the same terms and conditions as the Vail Equity to be sold by the Requesting
Shareholder; provided, however, that if the managing underwriter(s) advises the
Requesting Shareholder, the Non-Requesting Shareholder and Vail that, in its
judgment, the number of shares proposed to be included in such offering exceeds
the largest number of Vail Securities which can be sold without having an
adverse effect on such offering, including the price at which such securities
can be sold (the "Marketable Number"), then the total number of shares to be
included in such offering shall be limited as follows: (i) first, all the
shares of Vail Equity that the Requesting Shareholder and the Non-Requesting
Shareholder propose to sell up to the Marketable Number, allocated pro rata
between the Requesting Shareholder and the Non-Requesting Shareholder on the
basis of the relative number of Vail Securities that the Requesting Shareholder
and the Non-Requesting Shareholder have proposed to be included in such
registration, and (ii) second, all the shares of Vail Securities that Vail
proposes to sell, which does not exceed the difference, if any, between the
Marketable Number and that number of shares which the Requesting Shareholder
and the Non-Requesting Shareholder have included pursuant to clauses (i) and
(ii) above.
VB. Delay of Demand Registration. Notwith-standing anything to the
contrary in Article V hereof, in the event that Vail determines in its
reasonable judgment that it may be advisable to delay filing a Registration
Statement described in Section 5.1 hereof or to withdraw such Registration
Statement if such Registration Statement has already been filed, Vail may
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delay filing such, or withdraw such previously filed, Registration Statement
for a period of not more than ninety (90) days from the date of receipt of the
request for the Demand Registration if Vail furnishes to the Requesting
Shareholder a certificate signed by an executive officer of Vail stating that
Vail has reasonably determined that (i) such a filing would adversely affect
any proposed financing or acquisition by Vail or (ii) such a filing would
otherwise represent an undue hardship for Vail; provided, however, that Vail
will, at the request of the Requesting Shareholder, file or refile, as the case
may be, such Registration Statement promptly after Vail, in its reasonable
judgment, determines that it is no longer advisable to delay filing or to
continue the withdrawal of such Registration Statement but in no event shall
the filing or re-filing of such Registration Statement be delayed more than the
aforementioned ninety (90) days.
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VC. Piggyback Registration.
(a) Right To Include Vail Equity.
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(2) If Vail or any other Person (other than a Shareholder) at any time
proposes to register any Vail Securities under the Securities Act (other than a
registration of securities in connection with a merger, an acquisition, an
exchange offer or an employee benefit plan maintained by Vail or its Affiliates
or on Form S-4 or S-8 or any successor or similar form or by means of a shelf
registration pursuant to Rule 415 under the Securities Act to permit sales of
Vail Securities by employees, officers and directors of Vail), whether or not
for sale for its own account, in a manner which would permit registration of
the Vail Equity for sale to the public under the Securities Act, it will give
written notice to each Shareholder of its intention to do so and of such
Shareholder's rights under this Section 5.3(a)(i), at least twenty (20)
calendar days prior to the anticipated filing date of a Registration Statement
relating to such registration (a "Piggyback Notice"). Such Piggyback Notice
will offer each Shareholder the opportunity to include in such Registration
Statement that number of shares of Vail Equity as such Shareholder may request.
Upon the written request (the "Piggyback Registration") (which request will
specify the number of shares of Vail Equity intended to be disposed of by each
Shareholder pursuant to such Registration Statement) of each Shareholder (the
"Piggyback Shareholder") made within ten (10) calendar days after the receipt
of the Piggyback Notice, Vail will use its best efforts to effect the
registration under the Securities Act of all shares of Vail Equity which Vail
has been so requested to register; provided, however, that each Shareholder
must sell its Vail Equity requested to be included in such registration to the
underwriter(s) selected by Vail on the same terms and conditions as apply to
other Persons, including Vail, and if, at any time after receiving a reply from
each Shareholder to a Piggyback Notice and prior to the effective date of the
Registration Statement filed in connection with such registration, Vail decides
for any reason not to register any shares of Vail Securities, Vail will notify
each Shareholder and thereupon be relieved of its obligation to register any
Vail Equity in connection with such registration.
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(3) No registration, whether or not effected under this Section 5.3(a),
will relieve Vail of its obligations to effect Demand Registrations under
Section 5.1 hereof.
(b) Priority in Piggyback Registrations. If the managing underwriter
advises Vail in writing that, in its opinion, the Marketable Number is less
than that intended to be included in a Registration Statement, Vail will
include in such Registration Statement (i) first, all of the Vail Securities
Vail proposes to sell for its own account, and (ii) second, the Vail Securities
requested to be included by the Shareholders and other Persons pursuant to
Section 5.3(a) hereof shall be allocated pro rata among the Shareholders on the
basis of the relative number of Vail Securities each Shareholder and such other
Persons has requested to be included in such registration.
Section 5.4 Delay of Piggyback Registration. Notwithstanding anything to
the contrary in this Article V, in the event that Vail determines in its
reasonable judgment that it may be advisable to delay filing a Registration
Statement described in Section 5.3 hereof or to withdraw such Registration
Statement if such Registration Statement has already been filed, Vail may delay
filing such, or withdraw such previously filed, Registration Statement in
accordance with the provisions of Section 5.2 hereof.
Section 5.5 Holdback Agreements.
(a) Whenever Vail effects an underwritten public offering of Vail Equity
pursuant to a registration statement (including the IPO), each Shareholder
agrees not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any Vail Securities (other
than as part of such registration) during the 15 days prior to, and during the
180-day period (or such shorter period as may be requested by the lead
underwriter for such offering) beginning on, the effective date of such
registration statement.
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(b) In connection with underwritten public offering of Vail Equity
pursuant to a registration statement under this Agreement, Vail agrees not
to effect any public sale or distribution of any Vail Securities (other than
as part of such registration or in connection with any employee stock option or
other benefit plan or any private issuance of Vail Equity where the recipient
also agrees to be bound by the hold back arrangements applicable to Vail under
this Section 5.5) during the 15 days prior to, and during the 90-day period (or
such shorter period as may be requested by the lead underwriter for such
offering) beginning on the effective date of, such registration statement.
Section 5.6 Right to Purchase in Lieu of Registration.
(a) Any time Vail receives a request for a Demand Registration or a
Piggyback Registration from Foods, Vail shall have the option to purchase all
but not less than all of the Vail Equity proposed to be disposed of in such
request (the "Section 5.6 Shares") at the Vail Market Price by delivering to
Foods, a notice of Vail's election to purchase the Section 5.6 Shares within
seven (7) days of receipt by Vail of the request for the Demand Registration or
Piggyback Registration, as the case may be, pursuant to Section 5.1 or Section
5.3(a), as the case may be.
(b) In the event that Vail decides not to purchase the Section 5.6 Shares
pursuant to Section 5.6(a), then Apollo will have the right, but not the
obligation, to purchase the Section 5.6 Shares at the Vail Market Price by
delivering to Foods a notice of Apollo's election to purchase the Section 5.6
Shares within seven (7) days of Vail deciding not to purchase the Section 5.6
Shares.
VI
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REGISTRATION EXPENSES
VIA. Registration Expenses.
(a) Subject to Section 5.1(b) of this Agreement, all expenses incident to
Vail's performance of or compliance with Articles V and VII of this Agreement
to effect Demand Registrations and Piggyback Registrations will be borne by
Vail, including, without limitation:
(2) all federal registration and filing fees;
(3) subject to Section 7.4, fees and expenses of compliance with
securities or blue sky laws; provided, however, that Vail will in no
event be obligated to pay the fees and disbursements of counsel for the
underwriters or the Shareholders in connection with blue sky
qualifications of the Vail Equity under the laws of such jurisdictions as
the managing underwriter(s) may designate;
(4) printing, messenger, telephone and delivery expenses;
(5) fees and disbursements of legal counsel for Vail;
(6) fees and disbursements of all independent certified public
accountants of Vail;
(7) NASD fees and disbursements of the underwriters; provided,
however, that in all cases a Shareholder will pay all costs of discounts,
commissions, spreads or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Vail Equity being sold by such Shareholder;
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(8) fees and expenses of other Persons retained by Vail; and
(9) listing or quotation fees and expenses required to be made
pursuant to Section 7.5 hereof in connection with the Registration
Statement.
(b) Each of Vail and the Shareholders will pay its own respective internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the fees and
expenses of any Person, including special experts, retained by Vail or the
Shareholders, respectively.
VII
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REGISTRATION PROCEDURE
VIIA. Shareholder Information. Each Shareholder will provide Vail with
such information about such Shareholder and the intended manner of distribution
of Vail Equity and otherwise cooperate with Vail and the underwriter(s) as may
be necessary in the reasonable opinion of Vail to satisfy any obligation of
Vail under this Agreement to register the Vail Equity under federal or state
securities laws and otherwise take actions related thereto. In the event of
the failure of a Shareholder to comply with the requirements of the preceding
sentence Vail may delay filing such, and withdraw such previously filed,
Registration Statement. Vail will file or refile, as the case may be, such
Registration Statement promptly following compliance with such requirements by
a Shareholder; provided, however, that a Shareholder will be responsible for
any reasonable out-of-pocket costs which arise out of such non-compliance. A
Shareholder will immediately notify Vail upon discovery that any information
provided by such Shareholder which is included in the prospectus that is
included in a Registration Statement, as then in effect, is untrue in any
material respect, or omits to state any material fact required to be stated
therein or to make the information stated therein not misleading in the light
of the circumstances under which it is presented.
VIIB. Compliance. Each Shareholder and Vail will comply with all rules
and regulations of the SEC and applicable state securities or blue sky laws
governing the manner of sale of securities in connection with the Transfer of
any of the Vail Equity pursuant to any Registration Statement.
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VIIC. Provision of Prospectuses.
(a) Vail will furnish to each Shareholder such number of copies of a
summary prospectus or other prospectus, including a prospectus subject to
completion in conformity with the requirements of the Securities Act, and such
other documents as such Shareholder may reasonably request in writing, in order
to facilitate the public sale or other disposition of the Vail Equity of each
Shareholder included in a Registration Statement.
(b) At any time when a sale or other disposition of Vail Equity pursuant
to a Registration Statement is subject to a prospectus delivery requirement,
Vail will notify each Shareholder of the occurrence of any event that causes
the prospectus included in such Registration Statement, as then in effect, to
include an untrue statement of a material fact or to omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing and Vail will
use its best efforts, as expeditiously as possible, to either amend the
prospectus or otherwise take any actions so that use of the previous prospectus
may be legally resumed. Upon receipt of such a notice, each Shareholder will
immediately discontinue all sales or other dispositions of Vail Equity pursuant
to the Registration Statement. Each Shareholder may resume such sales or
dispositions only upon receipt of an amended prospectus or after such
Shareholder is advised by Vail that the use of the previous prospectus may be
legally resumed.
VIID. Blue Sky Compliance. Vail will use its best efforts to (a) register
or qualify the Vail Equity included in a Registration Statement under the
securities or blue sky laws of such jurisdictions as each Shareholder
reasonably requests and (b) do any and all other acts that may be reasonably
necessary or advisable to enable each Shareholder to consummate the public sale
or disposition of such securities in such jurisdictions; provided, however,
that Vail is not required to consent to, or take any action that would subject
it to, general service of
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process or taxation in any jurisdiction where it is not then so subject, nor
qualify to do business in any jurisdiction where it is not then so qualified.
VIIE. Listing of Vail Equity. Vail will use its best efforts to cause the
Vail Equity when issued to be listed on all securities exchanges on which any
securities issued by Vail are then listed, or quoted on all automated quotation
systems on which any such securities of Vail are then quoted, including,
without limitation, entering into appropriate customary agreements (including a
listing application and indemnification agreement in customary form).
VIIF. Stop Orders. Vail will promptly notify each Shareholder of (a) the
receipt by Vail of any notification with respect to the issuance by the SEC of
any stop order or order suspending the effectiveness of any Registration
Statement covering any Vail Equity or the initiation of any proceedings for
that purpose or (b) the receipt by Vail of any notification with respect to the
limitation, restriction or suspension of the offer or sale of Vail Equity in
any jurisdiction in which the Vail Equity was qualified to be sold, or the
initiation of any proceedings for such purpose. In the event that Vail
notifies each Shareholder of any such event, each Shareholder will immediately
discontinue all sales or other dispositions of Vail Equity pursuant to the
Registration Statement until such time that Vail notifies each Shareholder of
the lifting of such stop order or similar order; provided, however, that such
a stop order or similar order issued by a state securities or blue sky
administrator will apply only to offers and sales in such state, unless each
Shareholder is advised otherwise by Vail. Vail, with the cooperation of each
Shareholder, will use its best efforts to contest any such proceedings and to
obtain the withdrawal of any such order at the earliest possible date.
VIII
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INDEMNIFICATION AND CONTRIBUTION
VIIIA. Indemnification.
(a) Indemnification by Foods.
(1) Foods agrees to indemnify and hold harmless Vail and its Affiliates
and Associates (each such Person being hereinafter referred to as a "Vail
Indemnified Party") from and against all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation and legal expenses)
(each a "Loss") arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
preliminary, final or summary prospectus covering the Vail Equity, or in any
amendment or supplement thereto, or in any document incorporated by reference
into any of the foregoing or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only if, and
only to the extent, such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to Vail or its representatives by or on behalf of Foods for use in
the preparation of such Registration Statement, preliminary, final or summary
prospectus or such amendment or supplement thereto, or such document
incorporated by reference. This indemnity will be in addition to any liability
which Foods may otherwise have. Foods will also indemnify the underwriter(s),
selling broker(s), dealer manager(s) and similar securities industry
professionals participating in the distribution, their officers and directors
and each Person who Controls such Persons to the same extent as provided above
with respect to the indemnification of a Vail Indemnified Party.
(2) Foods also agrees to indemnify and hold harmless any Vail Indemnified
Party to the same extent as provided in clause (i) above from and against all
Losses arising out of any action or proceeding brought against any Vail
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<PAGE> 35
Indemnified Party in connection with the distribution or proposed distribution
of Vail Equity to the holders of Foods Stock; provided, however, that this
Section 8.1(a)(ii) shall not apply to any Losses for which Vail is responsible
as provided in Section 8.1(c) of this Agreement.
(3) If any action or proceeding (including any governmental investigation
or inquiry) is brought or asserted against a Vail Indemnified Party in respect
of which indemnity may be sought from Foods, such Vail Indemnified Party will
promptly notify Foods in writing of the commencement of such action and Foods
shall assume the defense thereof and have primary control over any related suit
or proceeding, including the employment of legal counsel and the payment of all
expenses in connection therewith; provided, however, that the failure of any
Vail Indemnified Party to give notice as provided herein shall not relieve
Foods of its obligations under this Section 8.1(a) except to the extent that
Foods is actually materially prejudiced by such failure to give notice. A Vail
Indemnified Party shall have the right to participate in and jointly with
Foods, to the extent that it may wish, and employ separate counsel reasonably
satisfactory to such Vail Indemnified Party, provided, however, that Foods will
not be liable to such Vail Indemnified Party for any legal or other expenses
incurred by such Vail Indemnified Party in connection therewith, unless such
Vail Indemnified Party shall have been advised by counsel that a conflict of
interest between such Vail Indemnified Party and Foods is likely to exist in
respect of such claim.
(b) Indemnification by Apollo.
(i) Apollo agrees to indemnify and hold harmless each Vail Indemnified
Party from and against all Losses arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or preliminary, final or summary prospectus covering the
Vail Equity, or in any amendment or supplement thereto, or in any document
incorporated by reference into any of the foregoing or arising out of or based
upon any omission or alleged omission to
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state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only if, and only to the
extent, such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
Vail or its representatives by or on behalf of Apollo for use in the
preparation of such Registration Statement, preliminary, final or summary
prospectus or such amendment or supplement thereto, or such document
incorporated by reference. This indemnity will be in addition to any liability
which Apollo may otherwise have. Apollo will also indemnify the
underwriter(s), selling broker(s), dealer manager(s) and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who Controls such Persons to the same extent as
provided above with respect to the indemnification of a Vail Indemnified Party.
(ii) Apollo also agrees to indemnify and hold harmless any Vail
Indemnified Party to the same extent as provided in clause (i) above from and
against all Losses arising out of any action or proceeding brought against any
Vail Indemnified Party in connection with the distribution or proposed
distribution of Vail Equity to the holders of Apollo Stock; provided, however,
that this Section 8.1(b)(ii) shall not apply to any Losses for which Vail is
responsible as provided in Section 8.1(c) of this Agreement.
(iii) If any action or proceeding (including any governmental
investigation or inquiry) is brought or asserted against a Vail Indemnified
Party in respect of which indemnity may be sought from Apollo, such Vail
Indemnified Party will promptly notify Apollo in writing of the commencement of
such action and Apollo shall assume the defense thereof and have primary
control over any related suit or proceeding, including the employment of legal
counsel and the payment of all expenses in connection therewith; provided,
however, that the failure of any Vail Indemnified Party to give notice as
provided herein shall not relieve Apollo of its obligations under this Section
8.1(b) except to the extent that Apollo is actually
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materially prejudiced by such failure to give notice. A Vail Indemnified Party
shall have the right to participate in and jointly with Apollo, to the extent
that it may wish, and employ separate counsel reasonably satisfactory to such
Vail Indemnified Party, provided, however, that Apollo will not be liable to
such Vail Indemnified Party for any legal or other expenses incurred by such
Vail Indemnified Party in connection therewith, unless such Vail Indemnified
Party shall have been advised by counsel that a conflict of interest between
such Vail Indemnified Party and Apollo is likely to exist in respect of such
claim.
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(c) Indemnification by Vail.
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(i) Vail agrees to indemnify and hold harmless each Shareholder and its
Affiliates and Associates (each such person being hereinafter referred to as a
"Shareholder Indemnified Party") from and against all Losses arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary, final or summary
prospectus covering the Vail Equity, or in any amendment or supplement thereto,
or in any document incorporated by reference into any of the foregoing or
arising out of or based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statement therein not misleading, except insofar as such Losses arise out of or
are based solely upon any such untrue statement or omission or allegation
thereof based upon written information provided by or on behalf of a
Shareholder for inclusion in such Registration Statement, preliminary, final or
summary prospectus, or such amendment or supplement thereto, or such document
incorporated by reference; provided, however, that Vail will not be liable in
any such case to the extent that any such Loss arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if (A) such Shareholder failed to send or
deliver a copy of the final prospectus with or prior to the delivery of written
confirmation of the sale of the Vail Equity covered by the Registration
Statement to the Person asserting such Loss, and (B) the final prospectus
corrected such untrue statement or omission; and provided, further, that Vail
will not be liable in any such case to the extent that any such Loss arises out
of or is based upon an untrue statement or omission in the final prospectus, if
such untrue statement or omission is corrected in an amendment or supplement to
the final prospectus and if, having previously been furnished by or on behalf
of Vail with copies of the final prospectus as so amended or supplemented, such
Shareholder thereafter fails to deliver such prospectus as so amended or
supplemented, prior to or concurrently with the sale of the Vail Equity to the
Person asserting such Loss who purchased such Vail Equity which is the subject
thereof. This indemnity will be in addition to any liability which Vail may
otherwise have. Vail will also
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indemnify the underwriter(s), selling broker(s), dealer manager(s) and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who Controls such Persons to the same
extent as provided above with respect to the indemnification of a Shareholder
Indemnified Party.
(ii) If any action or proceeding is brought against a Shareholder
Indemnified Party in respect of which indemnity may be sought against such
Shareholder Indemnified Party, such Shareholder Indemnified Party will promptly
notify Vail in writing of the commencement of such action and Vail will assume
the defense thereof and have primary control over any related suit or
proceeding, including the employment of legal counsel and the payment of all
expenses in connection therewith; provided, however, that the failure of any
Shareholder Indemnified Party to give notice as provided herein shall not
relieve Vail of its obligations under this Section 8.1(c) except to the extent
that Vail is actually materially prejudiced by such failure to give notice. A
Shareholder Indemnified Party shall have the right to participate in and
jointly with Vail, to the extent that it may wish, and employ separate counsel
reasonably satisfactory to such Shareholder Indemnified Party, provided,
however, that Vail will not be liable to such Shareholder Indemnified Party for
any legal or other expenses incurred by such Shareholder Indemnified Party in
connection therewith, unless such Shareholder Indemnified Party shall have been
advised by counsel that a conflict of interest between such Shareholder
Indemnified Party and Vail is likely to exist in respect of such claim.
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VIIIB. Contribution.
(a) If the Indemnification provided for in Section 8.1 hereof is
unavailable to a Vail Indemnified Party or Shareholder Indemnified Party under
Section 8.1(a), 8.1(b) or Section 8.1(c) hereof (other than by reason of the
exceptions provided in Sections 8.1(a), 8.1(b) and 8.1(c)) in respect of any
Losses referred to therein, then such indemnifying party, in lieu of
indemnifying such indemnified party, will contribute to the amount paid or
payable by such indemnified party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the indemnifying party, on
the one hand, and the indemnified party, on the other hand, in connection with
the statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault of the indemnifying
party, on the one hand, and the indemnified party, on the other hand, shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such indemnified
party and each parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable by each party as a result of the Losses referred to above will be
deemed to include, subject to the limitations set forth in Sections 8.1(a),
8.1(b) and 8.1(c) hereof, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
(b) Notwithstanding the provisions of Section 8.2(a) hereof, no Person
found to be guilty of fraudulent misrepresentation shall be entitled to
contribution from any Person who is not found to be guilty of such fraudulent
misrepresentation.
IX
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TAKE-ALONG RIGHTS
IXA. Take-Along Rights. Apollo may not effect a Transfer (or a series of
related Transfers) of Vail Equity to one person or a related group of persons
if such Transfer would result in a Change of Control of Vail (other than
Transfers effected by sales of Vail Equity through underwriters in a public
offering or in the securities markets generally) (the "Section 9.1 Shares")
without first complying with this Section 9.1. If Apollo desires to Transfer
the Section 9.1 Shares, Apollo shall give written notice (the "Take-Along
Notice") to Foods stating (i) the name and address of the transferee (the
"Non-Qualified Transferee") and (ii) the price and terms upon which the
Non-Qualified Transferee proposes to purchase the Section 9.1 Shares. Foods
shall have the irrevocable option, but not the obligation (the "Take-Along
Option"), to sell to the Non-Qualified Transferee, up to a number of shares of
Vail Equity (the "Included Shares") determined in accordance with Section
9.1(a), at the price and on the terms set forth in the Take-Along Notice. The
Take-Along Option shall be exercised by Foods by giving written notice to
Apollo, within ten business days of receipt of the Take-Along Notice,
indicating its election to exercise the Take-Along Option. Failure by Foods to
give such notice within the ten business day period shall be deemed an election
by Foods not to sell its shares of Vail Equity pursuant to that Take-Along
Notice. The closing with respect to any sale to a Non-Qualified Transferee
pursuant to this Section 9.1 shall be held at the time and place specified in
the Take-Along Notice but in any event within 30 days of the date the
Take-Along Notice is given; provided that if through the exercise of reasonable
efforts Apollo is unable to cause such transaction to close within 30 days,
such period may be extended for such reasonable period of time as may be
necessary to close such transaction. Consummation of the sale of the Section
9.1 Shares by Apollo to a Non-Qualified Transferee shall be conditioned upon
consummation of the sale by Foods to such Non-Qualified Transferee of the
Included Shares, if any.
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(a) The number of Included Shares purchased from Foods shall be determined
by multiplying the number of Shares proposed to be purchased from Apollo by a
Non-Qualified Transferee by a fraction, the numerator of which is the total
number of shares of Vail Equity owned by Foods and the denominator of which is
the sum of the total number of shares of Vail Equity owned by Apollo and Foods.
(b) Apollo shall arrange for payment directly by the Non-Qualified
Transferee to Foods, upon delivery of the certificate or certificates
representing the Included Shares duly endorsed for transfer, together with such
other documents as the Non-Qualified Transferee may reasonably request. The
reasonable costs and expenses incurred by Apollo and Foods in connection with a
sale of shares of Vail Equity subject to this Section 9.1 shall be allocated
pro rata based upon the number of shares of Vail Equity sold by each
Shareholder to a Non-Qualified Transferee.
(c) If, at end of 30 days following the date on which a Take-Along Notice
was given, the sale of shares of Vail Equity by Apollo and the sale of the
Included Shares, if any, have not been completed in accordance with the terms
of the Non-Qualified Transferee's offer, all certificates representing the
Included Shares shall be returned to Foods, and all the restrictions on
Transfer contained in this Agreement with respect to shares of Vail Equity
owned by Apollo shall again be in effect.
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X
INITIAL PUBLIC OFFERING
XA. IPO Commitment. Vail and Apollo hereby agree to use reasonable
efforts to consummate the IPO as soon as possible following the Closing.
XB. Co-Manager. In connection with the IPO (unless the IPO is effected by
means of a Demand Registration by Foods), Foods shall select one of the
co-managers (other than the lead manager); provided, however, that such
co-manager shall be subject to the approval of Vail, which approval shall not
be unreasonably withheld.
XC. Foods Initiated IPO.
(a) If the IPO has not been consummated on the later of (i) September 30,
1997 or (ii) nine months after the Closing (the "Trigger Date"), Apollo, Vail
and Foods agree to abide by the procedures of this Section 10.3.
(b) Following the Trigger Date, Apollo and Foods agree to discuss in good
faith for a period of 30 days (the "Discussion Period") the timing of the IPO.
At the conclusion of the Discussion Period, Foods may deliver a notice to Vail
within 30 days (the "Foods Notice") stating that it will request a Demand
Registration unless Vail consummates the IPO within three months from the date
of the Foods Notice. If at the conclusion of such three-month period the IPO
has not been consummated, during the next six months Foods shall have the right
to request a Demand Registration and consummate the IPO by means of such Demand
Registration. If at the conclusion of such six-month period the IPO has not
been consummated, Foods' right to request a Demand Registration to effect the
IPO shall be suspended for a twelve-month period. If at the conclusion of such
twelve-month period the IPO has not otherwise been consummated, during the next
six months Foods shall again have the right to request a Demand
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Registration and consummate the IPO by means of such Demand Registration. If
the IPO is consummated by means of a Demand Registration by Foods (the "Foods
Initiated IPO"), then Foods shall select the lead manager for the Foods
Initiated IPO; provided, however, that such lead manager shall be subject to
the approval of Vail, which approval shall not be unreasonably withheld or
delayed. Vail may select one co-manager in connection with a Foods Initiated
IPO, subject to the approval of the lead manager for the Foods Initiated IPO,
which approval shall not be unreasonably withheld or delayed.
XI
ADDITIONAL COVENANTS
XIA. Maintain Listing or Quotation. Vail hereby covenants and agrees that
it shall use its best efforts to maintain its listing of Vail Securities on any
securities exchanges on which Vail Securities are listed in the future pursuant
to Section 7.5 hereof and to maintain its quotation of Vail Securities on any
automated quotation systems on which Vail Securities are quoted in the future
pursuant to Section 7.5 hereto.
XIB. Board of Directors. Vail and the Shareholders agree to take all
actions necessary to cause the Board of Directors to consist of no more than
twenty directors. As long as Foods owns at least 10% of the outstanding Vail
Securities, Vail and the Shareholders agree to take all actions necessary for
Foods to be able to nominate and appoint two directors to the Board of
Directors of Vail, including without limitation Apollo nominating and electing
such directors as Class 1 directors elected by the holders of the Vail Class A
Stock.
XIC. No Inconsistent Agreements. Vail hereby covenants and agrees that it
shall not enter into any agreements governing the transfer or registration of
shares of Vail Securities which would materially adversely affect Foods' rights
under this Agreement without Foods' prior written consent.
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XID. Rules 144 and 144A. Vail hereby covenants and agrees that it will
use its reasonable best efforts to file any reports required to be filed by it
under the Securities Act and the Exchange Act and it will take such further
action as Foods may reasonably request, all to the extent required from time to
time to enable Foods to sell its Vail Equity (subject to the terms hereof)
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 or 144A under the Securities Act, as such
Rules may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC.
Section XI.9 Limitations on Holdings of Foods Associates. Foods shall
use its best efforts to cause its Associates and Associates of its Affiliates
not to own, in the aggregate, 2% or more of the outstanding Vail Securities.
XII
MISCELLANEOUS
XIIA. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto relative to the subject matter hereof, and supersedes
all prior written or oral understandings, agreements, conditions or
representations.
XIIB. Headings and Captions. All headings and captions used in this
Agreement are for convenience only, and will not be construed to either limit
or broaden the language of this Agreement or any particular section.
XIIC. Choice of Law. This Agreement will be governed by and construed
under and in accordance with the laws of the State of New York, without giving
effect to the conflict of laws provisions thereof, except that all matters
relating to the internal affairs of Vail shall be governed by and construed
under and in accordance with the General Corporation Law of the State of
Delaware.
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XIID. Venue. Any action or legal proceedings to enforce this Agreement or
any of its terms, or for indemnification and the recovery of losses as provided
for in this Agreement by a party, may be brought and prosecuted in such court
or courts located in the State of New York as provided by law, and the parties
to this Agreement consent to the jurisdiction of said court or courts and to
service of process by registered mail, return receipt requested, or by any
other manner provided by New York law.
XIIE. Notices. Any notice or other communication required or permitted
hereunder is deemed delivered when delivered in person, when transmitted by
telecopier (which will also be sent concurrently by certified or registered
mail), on the next Business Day when sent by Federal Express or a similar
overnight delivery service, or on the third Business Day when sent by
registered or certified U.S. mail service as follows:
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If to Foods:
Ralston Foods, Inc.
800 Market Street
Suite 2900
St. Louis, Missouri 63101
Attn.: Robert W. Lockwood, Esq.
Facsimile No.: (314) 877-7748
If to Vail:
Vail Resorts, Inc. (Delivery other than
137 Benchmark Road mail)
Avon, Colorado 81620
Vail Resorts, Inc. (Mail Delivery)
Post Office Box 7
Vail, Colorado 81658
Attn.: James S. Mandel, Esq.
Facsimile No.: (970) 845-2912
If to Apollo:
1301 Avenue of the Americas
New York, New York 10019
Attn.: Marc Rowan
Facsimile No.: (212) 261-4071
With a copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
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The parties to this Agreement will promptly notify each other in the manner
provided in this Section 12.5 of any change in their respective addresses. A
notice of change of address will not be deemed to have been given until
received by the addressee.
Section XII.6 Amendments. No changes, modifications, amendments or
additions will be valid unless such be made in writing and signed by or on
behalf of each party.
XIIG. Extended Meanings. Words importing the singular number include the
plural and vice versa, and words importing the masculine gender include the
feminine and neuter genders.
XIIH. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided each of Foods and Vail shall have
the right to assign its rights and obligations under this Agreement as a whole
(i) in a transaction pursuant to Section 3.2(b), (g) or (h) or (ii) to the
surviving entity in a merger, consolidation, combination or other corporate
transaction involving it if the surviving entity agrees in writing to be bound
by the terms hereof, and Apollo shall have the right to assign its rights and
obligations under this Agreement to any of its Affiliates or in a bona fide
distribution of its assets following dissolution or liquidation, provided each
of the distributees agrees in writing to be bound by the terms hereof.
XIII. Severability. The invalidity or unenforceability of any provision
hereof in any jurisdiction will not affect the validity or enforceability of
this Agreement, including that provision, in any other jurisdiction. To the
extent permitted by applicable law, each party waives any provision of law that
renders any provision hereof prohibited or unenforceable in any respect. If
any term, provision, covenant or restriction in this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
parties hereto will use their best efforts to find and employ an alternative
means to achieve
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the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction and the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect, in order to achieve the intent of the parties to the extent possible.
XIIJ. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which is deemed an original, but all of which
together constitute a single agreement, and it is not necessary in making proof
of this Agreement to produce or account for more than one such counterpart.
XIIK. Remedies Cumulative. Except as otherwise expressly limited herein,
the remedies given to any party by this Agreement are in addition to all
remedies under any statute or rule of law. Any forbearance or failure or delay
in exercising any remedy hereunder is not deemed to be a waiver of any other
remedy a party may have under this Agreement.
XIIL. Binding Agreement. This Agreement will be deemed effective and
legally binding upon the parties when it has been executed and delivered by all
parties hereto. This Agreement will inure to the benefit of the parties hereto
and their successors and permitted assignees.
XIIM. Recapitalizations, Exchanges, Etc., Affecting Vail Securities. The
provisions of this Agreement apply to the full extent set forth herein with
respect to the Vail Equity, to any and all shares of capital stock of Vail or
any successor or assign of Vail (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of or in exchange or
substitution for Vail Equity and will be appropriately adjusted for any stock
dividends, splits, reverse splits, combinations, recapitalizations and the like
occurring after the date hereof.
XIIN. Other Agreements. Nothing contained in this Agreement will be
deemed to be a waiver of, or release from, any
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obligations any party hereto may have under any other agreement, including,
without limitation, the Purchase Agreement.
XIIO. Termination. This Agreement, and all rights and obligations of each
party hereto, shall terminate (i) upon agreement of each of the Shareholders,
(ii) upon the voluntary or involuntary dissolution of Vail, (iii) upon the sale
of all or substantially all of the assets of Vail or upon a Change of Control
of Vail, (iv) when Apollo and its Affiliates own less than 10% of the shares of
Vail Equity owned by Apollo on the date of this Agreement (adjusted accordingly
for any stock splits, stock dividends or similar recapitalizations by Vail
after the date hereof) or (v) when Foods and its Affiliates own less than 10%
of the outstanding Vail Securities. The provisions of Article VIII hereof
shall survive the termination of this Agreement.
XIIP. Enforcement. Each of Vail, Apollo and Foods agree that any breach
of the provisions contained in this Agreement by Vail, Apollo and/or Foods
would cause irreparable harm to the other and its Affiliates and therefore,
notwithstanding any right of Vail, Apollo and/or Foods to recover monetary
damages with respect to any such breach (a) as set forth in this Agreement or
(b) at law, Vail, Apollo and Foods will each be entitled to equitable relief to
enjoin any threatened or continuing breach of the other hereof and, in the
event of any action for specific performance, each party shall waive the
defense that a remedy at law would be adequate. If the scope of any
restriction contained in this Agreement is too broad to permit enforcement to
its fullest extent, then such restriction will be enforced to the maximum
extent permitted by law in the manner provided in Section 12.9 hereof. Nothing
herein stated will be construed as prohibiting any party from pursuing any
other remedies available to that party for a breach hereunder, including
recovery of damages.
XIIQ. Confidentiality. Each of Foods, Apollo and Vail acknowledges that
the other would be irreparably damaged if confidential knowledge of its
business and affairs were disclosed
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or utilized on behalf of any Person. Each of Vail, Apollo and Foods covenants
and agrees not to disclose or use any such confidential information of the
other unless such information has been made available to the public generally
(other than in violation of this Section 12.17) or Vail, Apollo and/or Foods is
required to disclose such information by a governmental body or regulatory
agency or by law in connection with a transaction that is not otherwise
prohibited hereby.
XIIR. Fiduciary Accounts. Vail, Apollo and Foods each acknowledge and
agree that this Agreement shall apply only to the Vail Securities owned by
Foods and Apollo for its own respective account and does not apply to any Vail
Securities which may be deemed to be beneficially owned or controlled by Foods
or their respective Affiliates and which shares are held in fiduciary accounts
in connection with any pension plans, profit sharing plans or other employee
benefit plans or held in any other fiduciary accounts.
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IN WITNESS WHEREOF, the parties have executed this Agreement by an officer
thereunto duly authorized, all as of the day and year first above written.
VAIL RESORTS, INC.
By:
----------------------------
Name:
Title:
RALSTON FOODS, INC.
By:
----------------------------
Name:
Title:
APOLLO SKI PARTNERS, L.P.
By: Apollo Investment Fund, L.P.
By: Apollo Advisors, L.P.
By: Apollo Capital Management, Inc.
By:
----------------------------
Name:
Authorized Signatory
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<PAGE> 1
[RALCORP HOLDINGS, INC. LETTERHEAD]
PRESS RELEASE
EXHIBIT 99.1
For Release:
Contact:
IMMEDIATE
PATRICK T. FARRELL
314/877-7095
SALE OF RALCORP SKI OPERATIONS TO VAIL APPROVED
ST. LOUIS, MO, JANUARY 3, 1997 . . . For the second time in nine days, a
government agency has agreed not to oppose the pending sale of a major Ralcorp
business unit. The United States Department of Justice today announced that
they have completed their investigation and will allow Ralcorp to complete the
sale of its ski resort holdings to Vail Resorts, Inc., provided Vail divests of
the smallest of Ralcorp's three resorts, Arapahoe Basin, after the sale is
completed. On December 26, 1996, Ralcorp also learned that the Federal Trade
Commission had agreed to allow the Company to complete the $570 million sale of
its branded cereal and snack business to General Mills.
In July, Ralcorp announced that it had reached a definitive agreement to sell
its three Colorado ski resorts to Vail Resorts, Inc., for stock and assumed
debt. The transaction was subject to anti-trust review pursuant to the
Hart-Scott-Rodino Act. With the filing of today's consent decree, Vail and
Ralcorp immediately closed the deal.
The Ralcorp ski transaction has been valued at $310 million. The value will be
realized through an approximate 25 percent ownership interest by Ralcorp in the
new ski company as well as the assumption of $165 million in Ralcorp debt by
Vail Resorts.
The combination of Ralcorp's Keystone, Breckenridge and Arapahoe Basin ski
areas and extensive related real estate holdings with Vail Resorts' Vail ski
area and Beaver Creek Resort, will create the largest ski resort company in the
world, based on revenues and skier days. Excluding Arapahoe Basin,
revenues and skier days of the combined companies for the last fiscal year were
approximately $320 million and 4.6 million, respectively.
<PAGE> 2
The Company announced on December 26, 1996, that it expects to complete the
General Mills transaction on January 31, 1997, provided shareholders approve
the cereal and snack transaction and the spin-off of the remaining Ralcorp
businesses.
"Once we complete both the ski and branded cereal transactions, Ralcorp
Holdings will emerge as a company that is focused on businesses where it has
strong positions -- private label cereal, private label crackers and cookies
and branded baby food -- and with a debt-free balance sheet," said Joe R.
Micheletto, President and Chief Executive Officer of Ralcorp Holdings. "This
will also allowed us to deliver approximately $880 million in value to our
shareholders and strengthen our remaining operations."
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