1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
TBA ENTERTAINMENT CORPORATION
AS SELLER
AND
VAIL SUMMIT RESORTS, INC.
AS PURCHASER
July 10, 1998
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TABLE OF CONTENTS
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ARTICLE 1 - Purchase and Sale of Stock..................................................... 1
1.1 Purchase and Sale of Stock...................................................... 4
1.2 Purchase Price.................................................................. 1
1.3 Closing.......................................................................... 3
1.4 Further Action................................................................... 3
ARTICLE 2 - Representations and Warranties of Vail.......................................... 4
2.1 Organization and Qualification................................................... 4
2.2 Authority Relative to this Agreement............................................. 4
2.3 Certain Corporate Matters........................................................ 4
2.4 Broker's Fees.................................................................... 4
2.5 Litigation....................................................................... 5
2.6 Bankruptcy, Etc.................................................................. 5
2.7 Disclosure....................................................................... 5
ARTICLE 3 - Representations and Warranties of TBA........................................... 5
3.1 Organization, Qualification and Corporate Power.................................. 5
3.2 Capitalization................................................................... 6
3.3 Authorization of Transaction..................................................... 6
3.4 Subsidiaries..................................................................... 7
3.5 Financial Statements............................................................. 7
3.6 Events Subsequent to Financial Statements........................................ 7
3.7 Undisclosed Liabilities.......................................................... 9
3.8 Tax Returns and Audits........................................................... 9
3.9 Books and Records............................................................... 10
3.10 Real Property................................................................... 10
3.11 Tangible Property............................................................... 11
3.12 Intellectual Property........................................................... 11
3.13 Contracts....................................................................... 12
3.14 Suppliers and Customers......................................................... 14
3.15 Notes; Accounts Receivable; Inventory........................................... 14
3.16 Powers of Attorney.............................................................. 14
3.17 Insurance....................................................................... 14
3.18 Litigation...................................................................... 14
3.19 Employees....................................................................... 15
3.20 Employee Benefit Plans.......................................................... 15
3.21 Guarantees...................................................................... 16
3.22 Legal Compliance................................................................ 16
3.23 Broker's Fees................................................................... 16
3.24 Condemnation.................................................................... 16
3.25 Zoning.......................................................................... 16
3.26 Bankruptcy, Etc................................................................. 17
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TABLE OF CONTENTS
(Continued)
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3.27 Bank Accounts................................................................... 17
3.28 Environmental................................................................... 17
3.29 Disclosure...................................................................... 17
3.30 Attachment of Disclosure Schedule and Exhibits.................................. 17
ARTICLE 4 - Conduct of Business Pending The Closing........................................ 18
4.1 Conduct of Business Pending the Closing......................................... 18
4.2 Lines of Business and Capital Expenditures...................................... 20
4.3 Accounting Methods.............................................................. 20
4.4 Other Actions................................................................... 20
4.5 Notices, etc.....................................................................21
ARTICLE 5 - Additional Agreements.......................................................... 21
5.1 Expenses........................................................................ 21
5.2 Notification of Certain Matters................................................. 21
5.3 Access to Information........................................................... 21
5.4 Taking of Necessary Action...................................................... 21
5.5 Press Releases.................................................................. 21
5.6 Employee Matters................................................................ 21
5.7 Tax and Financial Matters....................................................... 22
5.8 Acknowledgment.................................................................. 22
5.9 No Solicitation................................................................. 22
5.10 Agreement by Vail to Contract with Avalon Entertainment Group, Inc.............. 23
5.11 Section 338(h)(10) Election..................................................... 23
ARTICLE 6 - Conditions to Closing.......................................................... 23
6.1 Conditions to Obligations of Each Party to Effect the Closing................... 23
6.2 Additional Conditions to Vail's Obligations..................................... 24
6.3 Additional Conditions to TBA's Obligations...................................... 25
ARTICLE 7 - Termination, Amendment and Waiver.............................................. 27
7.1 Termination..................................................................... 27
7.2 Amendment....................................................................... 27
7.3 Waiver.......................................................................... 27
7.4 Effect of Termination........................................................... 27
ARTICLE 8 - Indemnification................................................................ 28
8.1 Indemnification................................................................. 28
8.2 Limitations of Indemnification.................................................. 29
8.3 Indemnification Procedures--Third Party Claims.................................. 29
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TABLE OF CONTENTS
(Continued)
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8.4 Procedure for Indemnification--Other Claims,
Indemnification Generally....................................................... 31
8.5 Payment of Indemnification Obligation........................................... 31
ARTICLE 9 - As Is, Where Is................................................................ 31
9.1 General......................................................................... 31
9.2 Excluded Items.................................................................. 32
ARTICLE 10 - General Provisions............................................................ 32
10.1 Survival of Representations and Warranties...................................... 32
10.2 Specific Performance............................................................ 32
10.3 Notices......................................................................... 32
10.4 Interpretation.................................................................. 33
10.5 Severability.................................................................... 33
10.6 Miscellaneous................................................................... 34
10.7 Counterparts.................................................................... 34
10.8 Binding Effect.................................................................. 34
SCHEDULE 1 Disclosure Schedule
EXHIBIT A Form of Escrow Agreement
EXHIBIT B Form of Opinion of Counsel to TBA
EXHIBIT C Form of Opinion of Counsel to Vail
EXHIBIT D Form of East West Purchase Agreement
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT, dated as of July 10, 1998 (this
"Agreement"), is by and between TBA ENTERTAINMENT CORPORATION, a Delaware
corporation ("TBA"), and VAIL SUMMIT RESORTS, INC., a Colorado corporation
("Vail").
RECITALS
WHEREAS, TBA owns one hundred percent (100%) of the issued and
outstanding capital stock (the "Stock") of (i) The Village at Breckenridge
Acquisition Corp., Inc., a Tennessee corporation ("VAB"), and (ii) Property
Management Acquisition Corp., Inc., a Tennessee corporation ("Manager");
WHEREAS, TBA desires to sell the Stock to Vail, and Vail desires to
purchase the Stock from TBA, on the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the conditions set forth herein, the parties hereto
agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale of Stock. Subject to the terms and conditions of
and in reliance upon the representations and warranties set forth in this
Agreement, TBA agrees to sell, assign, transfer and deliver to Vail and Vail
agrees to purchase from TBA, the Stock, free and clear of all security
interests, liens, charges and other encumbrances and claims of any nature
whatsoever ("Liens"). The sale of the Stock by TBA to Vail shall be referred to
as the "Acquisition."
1.2 Purchase Price. The Stock shall be sold by TBA and shall be
purchased by Vail for an aggregate purchase price (the "Purchase Price") equal
to $34,000,000, and shall be paid or delivered as follows:
(a) At the Closing (as hereinafter defined), Vail shall pay to
the holders of the indebtedness herebelow listed (collectively, the
"Mortgage Indebtedness") the outstanding principal balance and all
accrued and unpaid interest on the Mortgage Indebtedness, to wit:
(i) Security Bank Debt. That certain Amended and Restated
Promissory Note (as amended, the "Security Bank Note") dated
November 4, 1997, executed by VAB, payable to the order of
Security Bank of Kansas City, a Kansas banking corporation
("Security Bank") in the stated principal amount of
$19,803,000.00,
PURCHASE AGREEMENT - PAGE 1
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which Security Bank Note is secured by, among other documents,
(a) that certain Amended and Restated Deed of Trust, Security
Agreement, Assignment of Rents and Fixture Filing, dated as of
November 4, 1997, executed by VAB to the Public Trustee of Summit
County, Colorado, for the benefit of Security Bank, recorded in
the office of the Recorder of Summit County, Colorado (the
"Recorder") on November 10, 1997 as Reception No. 551631, (b)
that certain Amended and Restated Assignment of Leases, Rents,
Contracts and Sale Proceeds, dated as of November 4, 1997,
executed by VAB to Security Bank, recorded in the office of the
Recorder on November 10, 1997 as Reception No. 551632, (c) that
certain Amended and Restated Assignment of Management Contracts
and Security Agreement, dated as of November 4, 1997, executed by
Manager to Security Bank, and (d) that certain Security Agreement
(FF&E, Room Rentals, etc.), dated as of November 4, 1997,
executed by VAB and Security Bank;
(ii) Carryback Debt. (a) That certain Village Wraparound
Promissory Note (Security Bank) dated December 21, 1994, executed
by Ibex Breckenridge Partners, Ltd. and Oklawaha Farms, Inc.
(collectively, "Prior Owner") and payable to the order of
Breckenville Partnership, L.P., a Missouri limited partnership
("Breckenville"), in the original principal amount of
$12,521,294.78, secured by, among others, that certain Village
Wraparound Deed of Trust to Public Trustee, Security Agreement,
Financing Statement and Assignment of Rents and Leases given by
Prior Owner to the Public Trustee of Summit County, Colorado, as
trustee for Breckenville, dated December 21, 1994 and recorded on
December 23, 1994 in the office of the Recorder as Reception No.
483243, and (b) that certain BML Wraparound Promissory Note
(Boatmen's), dated December 21, 1994, executed by Prior Owner,
payable to the order of Breckenville Management Corp. ("BMC") in
the original principal amount of $1,869,185.50, secured by, among
others, that certain BML Wraparound Deed of Trust to Public
Trustee, Security Agreement, Financing Statement and Assignment
of Rents and Leases given by Prior Owner to the Public Trustee of
Summit County, Colorado, as trustee for BMC, dated December 21,
1994 and recorded on December 23, 1994 in the office of the
Recorder as Reception No. 483244;
(iii) That certain Promissory Note dated December 23,
1997, executed by Manager, payable to the order of Security Bank,
in the stated principal amount of $280,000.00.
(b) At the Closing, Vail shall deliver to an escrow agent
mutually acceptable to TBA and Vail (the "Escrow Agent") by wire
transfer to one or more accounts designated in writing by the Escrow
Agent cash in an amount equal to Three Million Dollars ($3,000,000) (the
"Escrow Consideration") which Escrow Consideration shall be governed by
the terms of an Escrow Agreement (herein so called) in the form attached
hereto as Exhibit A to be executed by Vail, TBA and the Escrow Agent as
of the Closing Date; and
(c) The balance of the Purchase Price (i.e., $34,000,000 less the
sum of (a) and (b)) shall be paid in cash by Vail to TBA at the Closing
by wire transfer to one or more
PURCHASE AGREEMENT - PAGE 2
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accounts designated in writing by TBA to Vail prior to the Closing Date
(the "Closing Date Cash Consideration").
(d) TBA and Vail agree that within 45 days following the Closing
Date, Vail shall cause its independent accountants to prepare, audit and
deliver to TBA a balance sheet of each of VAB and Manager as of the
Closing Date (the "Closing Date Balance Sheet"), which Closing Date
Balance Sheet shall be prepared in a manner consistent with the
preparation of the Financial Statements (as defined in Section 3.5). TBA
shall have 10 days to review the Closing Date Balance Sheet and provide
any comments to Vail. Vail and TBA shall mutually resolve any disputes
with respect to the preparation of the Closing Date Balance Sheet. In
the event that Vail and TBA are unable to resolve such disputes, the
parties agree to be bound by the determination of Xxxxxx Xxxxxxxx LLP.
To the extent that the aggregate current liabilities exceed the
aggregate current assets (as such terms are defined under generally
accepted accounting principles) of VAB and Manager (the "Excess
Shortfall Amount"), TBA shall pay to Vail the Excess Shortfall Amount
within 10 days of the delivery of the Closing Date Balance Sheet. In
addition, Vail shall reimburse TBA for the amount of capital
expenditures paid or incurred by VAB and Manager during the months of
June and July 1998.
1.3 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxxxxxxx Xxxxx
Xxxxxx & Xxxxxxxxxx, P.C., 000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxx
00000 on August 5, 1998 or as soon as reasonably practicable thereafter as the
conditions set forth in Article 6 have been satisfied or waived (the "Closing
Date"). At the Closing:
(a) Vail will (i) pay to the holders of the Mortgage Indebtedness
the outstanding principal balance and all accrued and unpaid interest on
the Mortgage Indebtedness, (ii) pay to TBA the Closing Date Cash
Consideration by wire transfer of immediately available funds, (iii) pay
to the Escrow Agent the Escrow Consideration by wire transfer of
immediately available funds, and (iv) execute and deliver to TBA and the
Escrow Agent such other documents and instruments required to be
executed and delivered by Vail under the terms of this Agreement; and
(b) TBA will deliver to Vail (i) certificates representing the
Stock (duly endorsed for transfer and accompanied by stock powers
executed in blank), (ii) an affidavit from TBA pursuant to the Foreign
Investment in Real Property Tax Act, (iii) resignations of the officers
and directors of each of VAB and Manager, (iv) the corporate minute
books for each of VAB and Manager, and (v) such other documents and
instruments required to be delivered by TBA and the Escrow Agent under
the terms of this Agreement.
1.4 Further Action. If, at any time after the Closing Date, any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest Vail with full right, title and possession and all rights, privileges
and immunities with respect to the Stock, TBA shall take all such action.
PURCHASE AGREEMENT - PAGE 3
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF VAIL
Vail hereby represents and warrants to TBA as follows as of the date
hereof and as of the Closing Date:
2.1 Organization and Qualification. Vail has been duly incorporated and
is validly existing as a corporation and is in good standing under the laws of
the State of Colorado and has the requisite corporate power to carry on its
business as now conducted.
2.2 Authority Relative to this Agreement. Vail has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Vail and
the consummation by Vail of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Vail and no other corporate proceedings
on the part of Vail are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Vail and constitutes the valid and binding obligation of Vail
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
None of the execution and delivery of this Agreement by Vail, the performance by
Vail of its obligations hereunder or the consummation of the transactions
contemplated hereby by Vail will require any consent, approval or notice under,
or violate, breach, be in conflict with or constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default) under,
or permit the termination of, or result in the creation or imposition of any
lien upon any properties, assets or business of Vail under any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit, authorization,
license, contract, instrument or other agreement or commitment or any order,
judgment or decree to which Vail is a party or by which Vail or any of its
assets or properties is bound or encumbered, except those that have already been
given, obtained or filed or those that would not have a material adverse effect
on Vail's ability to consummate the transactions contemplated hereby. No
authorization, consent or approval of, or filing with, any public body, court or
authority is necessary on the part of Vail for the consummation by Vail of the
transactions contemplated by this Agreement.
2.3 Certain Corporate Matters. Vail is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which the
ownership of its properties, the employment of its personnel or the conduct of
its business requires it to be so qualified, other than in such jurisdictions
where the failure to so qualify would not, individually or in the aggregate,
have a materially adverse effect on Vail and its subsidiaries, taken as a whole.
Vail has full corporate power and authority and all authorizations, licenses and
permits necessary to carry on the business in which it engages or in which it
proposes presently to engage and to own and use the properties owned and used by
it. Vail has delivered to TBA true, accurate and complete copies of its charter
documents and bylaws which reflect all amendments made thereto at any time prior
to the date of this Agreement.
2.4 Broker's Fees. Neither Vail nor anyone on its behalf has any
liability to any broker, finder, investment banker or agent, or has agreed to
pay any brokerage fees, finder's fees or
PURCHASE AGREEMENT - PAGE 4
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commissions, or to reimburse any expenses of any broker, finder, investment
banker or agent in connection with the Acquisition or any similar transaction.
2.5 Litigation. There is no action, suit or proceeding, claim,
arbitration or investigation pending or, to the best of Vail's knowledge,
threatened against Vail which would impair the ability of Vail to consummate the
transactions contemplated by this Agreement.
2.6 Bankruptcy, Etc. There are no attachments, executions, assignments
for the benefit of creditors, or voluntary or involuntary proceedings in
bankruptcy, or under any other debtor relief laws, contemplated by Vail or
pending against Vail, or to the best of Vail's knowledge, threatened against
Vail.
2.7 Disclosure. The representations and warranties and statements of
fact made by Vail in this Agreement and in certificates and other written
statements or agreements delivered or to be delivered pursuant to this Agreement
are accurate, correct and complete on the date of this Agreement and will,
except as contemplated hereby, be accurate, correct and complete at the Closing
and do not and will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained herein or therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TBA
Except as set forth in the correspondingly numbered section of the
disclosure schedule attached hereto as Schedule 1 and incorporated herein by
this reference (the "Disclosure Schedule"), as such Disclosure Schedule is
amended pursuant to Section 3.30 hereof, TBA hereby represents and warrants to
Vail as follows as of the date hereof and as of the Closing Date.
3.1 Organization, Qualification and Corporate Power. Each of TBA, VAB
and Manager is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and is duly
qualified to do business as a foreign corporation and is in good standing in the
jurisdictions specified in Section 3.1 of the Disclosure Schedule, which are the
jurisdictions in which the ownership of its properties, the employment of its
personnel or the conduct of its business requires that it be so qualified or
where a failure to be so qualified would have a material adverse effect on its
business, assets, properties, results of operations, condition (financial or
otherwise) or prospects or the ability of TBA to consummate the transactions
contemplated hereby (a "Material Adverse Effect"). Each of TBA, VAB and Manager
has delivered to Vail true, accurate and complete copies of its charter and
bylaws which reflect all amendments made thereto at any time prior to the date
of this Agreement. The minute books containing the records of meetings of the
shareholders and Boards of Directors of each of TBA, VAB and Manager and the
stock certificate books and the stock record books of each of TBA, VAB and
Manager are complete and correct in all material respects. The stock record
books of VAB and Manager and the shareholder list of VAB and Manager are
complete and correct in all respects and accurately reflect the record ownership
and the beneficial ownership of all the outstanding shares of capital stock of
VAB and Manager and all other outstanding securities issued by VAB and Manager.
All material corporate actions taken by each of TBA, VAB and Manager since
formation have been duly authorized and/or subsequently
PURCHASE AGREEMENT - PAGE 5
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ratified as necessary. None of TBA, VAB or Manager is in default under or in
violation of any provision of its charter or bylaws. None of TBA, VAB or Manager
is in default or in violation of any material restriction, lien, encumbrance,
indenture, contract, lease, sublease, loan agreement, note or other obligation
or liability by which it is bound or to which any of its assets is subject. The
books of account of VAB and Manager are complete and correct in all material
respects and there have been no material transactions involving the business of
VAB and Manager which properly should have been set forth in those books and
which are not accurately so set forth. No consent of any person or entity is or
will be required for TBA to sell the Stock to Vail pursuant to this Agreement
which consent has not been obtained and set forth in Section 3.1 of the
Disclosure Schedule.
3.2 Capitalization. VAB's entire authorized capital stock consist of
10,000 shares of no par value common stock (the "VAB Common Shares") of which
1,000 shares are issued and outstanding and 1,000 shares will be issued and
outstanding immediately prior to the Closing. Manager's entire authorized
capital stock consists of 10,000 shares of no par value common stock (the
"Manager Common Shares") of which 1,000 shares are issued and outstanding and
1,000 shares will be issued and outstanding immediately prior to the Closing.
The VAB Common Shares and the Manager Common Shares may hereinafter be
collectively referred to as the "Common Shares." All of the issued and
outstanding Common Shares have been and, as of the Closing Date, will be duly
authorized and are and, as of the Closing Date, will be validly issued, fully
paid and nonassessable and have not been and, as of the Closing Date, will not
be issued in violation of any pre-emptive rights. There are no outstanding or
authorized options, rights, warrants, calls, convertible securities, rights to
subscribe, conversion rights or other agreements or commitments to which either
VAB or Manager is a party or which are binding upon either VAB or Manager
providing for the issuance or transfer by either VAB or Manager of additional
shares of their respective capital stock and neither VAB nor Manager has
reserved any shares of its capital stock for issuance, nor are there any
outstanding stock option rights, phantom equity or similar rights, contracts,
arrangements, or commitments based upon the book value, income or other
attribute of either VAB or Manager. There are no voting trusts or any other
agreements or understandings with respect to the voting of either VAB's or
Manager's capital stock. On consummation of the Acquisition, Vail will own one
hundred percent (100%) of the equity interests in each of VAB and Manager and
neither VAB nor Manager will have outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock, nor have
outstanding any rights, options, agreements or arrangements to subscribe for or
to purchase their capital stock or any stock or securities convertible into or
exchangeable for their capital stock. All capital stock, options, warrants, and
other securities issued by VAB and Manager were issued in compliance, in all
respects, with all applicable federal and state securities laws. At the time of
the Closing, TBA will own, beneficially and of record, the Common Shares free
and clear of any Liens. Upon consummation of the Acquisition in accordance with
the terms of this Agreement, Vail will acquire the Common Shares free and clear
of any Liens.
3.3 Authorization of Transaction. This Agreement has been duly executed
and delivered by TBA and constitutes the valid and binding obligation of TBA,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
None of the execution and delivery of this Agreement by TBA, the performance by
TBA of its obligations hereunder or the consummation of the transactions
contemplated hereby by TBA will require any consent, approval or notice under,
or violate, breach, be in conflict with or constitute a default (or
PURCHASE AGREEMENT - PAGE 6
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an event that, with notice or lapse of time or both, would constitute a default)
under, or permit the termination of, or result in the creation or imposition of
any lien upon any properties, assets or business of any of TBA, VAB or Manager
under any of their respective governing documents, note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument or other agreement or commitment or any order, judgment or
decree to which TBA, VAB or Manager is a party or by which TBA, VAB or Manager
or any of their respective assets or properties is bound or encumbered, except
those that have already been given, obtained or filed, all as set forth in
Section 3.3 of the Disclosure Schedule, except for consents, approvals and
filings relating to the change in the control of A Travel Company. No notice to,
filing with or authorization, consent or approval of any public body or
authority is necessary for the consummation by TBA of the transactions
contemplated by this Agreement, except those that have already been given,
obtained or filed, all as set forth in Section 3.3 of the Disclosure Schedule.
3.4 Subsidiaries. Neither VAB nor Manager owns nor is obligated to
purchase any equity interest in or any other interest convertible into or
exchangeable for an equity interest in any entity.
3.5 Financial Statements. TBA has delivered to Vail (a) unaudited
balance sheets and unaudited statements of operations for the aggregate
operations of VAB and Manager for the years ended December 31, 1996 and 1997,
(b) an unaudited balance sheet for the aggregate operations of VAB and Manager
as of May 31, 1998, and (c) unaudited statements of operations for the aggregate
operations of VAB and Manager for the five (5) months ended May 31, 1998
(collectively, the "Financial Statements"). The Financial Statements present
fairly the aggregate financial condition of VAB and Manager as of such dates and
the results of their operations for such periods, have been prepared in
accordance with generally accepted accounting principles consistently applied,
have been prepared from and are consistent with the books and records of VAB and
Manager, and include all adjustments, consisting of normal accruals which the
management of VAB and Manager believe is necessary for a presentation of the
financial condition of VAB and Manager. Except as set forth in Section 3.5 of
the Disclosure Schedule, since December 31, 1997 there has been no significant
change in any accounting (including tax accounting) policies, practices or
procedures of VAB or Manager.
3.6 Events Subsequent to Financial Statements. Except as disclosed in
the Financial Statements or in Section 3.6 of the Disclosure Schedule, since
December 31, 1997, there has not been:
(a) any Material Adverse Effect on either VAB or Manager;
(b) any sale, lease, transfer, license or assignment of any
material assets, tangible or intangible, of either VAB or Manager, other
than in the ordinary course of business;
(c) any material damage, destruction or property loss, whether or
not covered by insurance, affecting adversely the properties or business
of either VAB or Manager;
(d) any declaration or setting aside or payment of any
distribution with respect to the Stock;
PURCHASE AGREEMENT - PAGE 7
12
(e) any mortgage or pledge of, or subjection to any lien, charge,
security interest or encumbrance of any kind on, any of the assets,
tangible or intangible, of either VAB or Manager (other than liens
arising by operation of law which secure obligations which are not yet
due and payable);
(f) any incurrence of indebtedness or liability or assumption of
obligations by either VAB or Manager other than (i) those incurred in
the ordinary course of business and (ii) those which do not exceed
$100,000 in the aggregate;
(g) any cancellation or compromise by either VAB or Manager of
any material debt or claim, except for adjustments made in the ordinary
course of business which, in the aggregate, are not material;
(h) any waiver or release by either VAB or Manager of any right
of any material value;
(i) any sale, assignment, transfer or grant by either VAB or
Manager of any rights under any concessions, leases, licenses,
agreements, patents, inventions, trademarks, trade names or copyrights
or with respect to any know-how or other intangible assets;
(j) any material arrangement, agreement or undertaking entered
into by either VAB or Manager not terminable on 30 days or less notice
without cost or liability (including, without limitation, any payment of
or promise to pay any bonus or special compensation) with employees or
any increase in compensation or benefits to officers or directors of
either VAB or Manager, other than in the ordinary course of business;
(k) any change made or authorized in the charter or bylaws of
either VAB or Manager;
(l) any issuance, sale or other disposition by either VAB or
Manager of shares of its capital stock or other equity securities or
interests, or any grant of any options, warrants or other rights to
purchase or obtain (including upon conversion or exercise) shares of
capital stock or other equity securities or interests;
(m) any loan to or other transaction with TBA, any affiliate of
TBA, or any officer, director, shareholder, employee or consultant of
any of TBA, any affiliate of TBA, VAB or Manager giving rise to any
claim or right of any of TBA, any affiliate of TBA, VAB or Manager
against any such person or of such person against any of TBA, any
affiliate of TBA, VAB or Manager;
(n) any payment to or other transaction with TBA, any affiliate
of TBA, or any officer, director, shareholder, employee or consultant of
any of TBA, any affiliate of TBA, VAB or Manager involving an amount in
excess of $10,000, individually or in the aggregate, other than the
payment of monthly compensation consistent with customary practice;
(o) any acceleration, termination, modification or cancellation
or threat thereof by any party of any contract, lease or other agreement
or instrument to which VAB or
PURCHASE AGREEMENT - PAGE 8
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Manager is a party or by which they are bound so as to affect,
materially and adversely, the properties or business of VAB or Manager;
or
(p) any commitment to do any of the foregoing or any other
material transaction or commitment entered into other than in the
ordinary course of business by VAB and Manager.
3.7 Undisclosed Liabilities. Neither VAB nor Manager has any material
liability or obligation whatsoever, known or unknown, either accrued, absolute,
contingent or otherwise, except to the extent shown on the face of the Financial
Statements or incurred in the normal and ordinary course of business since
January 1, 1998. Neither VAB nor Manager is indebted, directly or indirectly, to
any person which is an officer, director, or shareholder of VAB or Manager or
any affiliate of any such person any amount whatsoever other than for salaries
for services rendered or reimbursable business expenses, and no such officer,
director or shareholder or affiliate is indebted to VAB or Manager, except for
advances made to employees of VAB or Manager in the ordinary course of business
to meet reimbursable business expenses anticipated to being incurred by such
obligor.
3.8 Tax Returns and Audits. For purposes of this Section 3.8, the term
"Group" shall mean, individually and collectively, (i) VAB, (ii) Manager, (iii)
TBA, and (iv) any corporation or other entity for which either VAB or Manager
may be liable for taxes incurred by such corporation or other entity. The
taxable year of the Group ends December 31. The Group has duly and timely filed
or caused to be filed all tax returns (the "Tax Returns") required to be filed
on behalf of itself and has paid in full all taxes, interest, penalties,
assessments and deficiencies due or claimed to be due on behalf of itself to
foreign, federal, state or local taxing authorities (including taxes on
properties, income, franchises, licenses, sales, use and payrolls). Such Tax
Returns are correct in all material respects, and the Group is not required to
pay any other taxes for such periods except as shown in such Tax Returns. The
income tax returns filed by the Group have not been, and are not being, to the
knowledge of TBA, examined by the Internal Revenue Service or other applicable
taxing authorities for any period. All taxes or estimates thereof that are due,
or are claimed or asserted by any taxing authority to be due, have been timely
and appropriately paid so as to avoid penalties for underpayment. Except for
amounts not yet due and payable, all tax liabilities to which the properties of
the Group may be subject have been paid and discharged. The provisions for
income and other taxes payable reflected in the Financial Statements make
adequate provision for all then accrued and unpaid taxes of VAB and Manager.
There are no tax liens (other than liens for taxes which are not yet due and
payable) on any of the properties of VAB or Manager, nor are there any pending
or threatened examinations or tax claims asserted. The Group has not granted any
extensions of limitation periods applicable to tax claims. Except in
jurisdictions in which the Group voluntarily files tax returns, no claim has
ever been made by a taxing authority that the Group is or may be subject to
taxation by that jurisdiction. True and correct copies of all federal, foreign,
state and local income and other tax returns, notices from foreign, federal,
state and local taxing authorities, tax examination reports and statements of
deficiencies assessed against or agreed to by the Group since January 1, 1996,
have been, with respect to federal and state income tax returns, delivered to
Vail (and with respect to non-income tax returns have been made available to
Vail), and the same are listed in Section 3.8 of the Disclosure Schedule.
Neither VAB nor Manager is a party to, or bound by, any tax indemnity, tax
sharing or tax allocation agreement. Neither VAB nor Manager is a party to any
agreement that has resulted or would result in the payment of any "excess
PURCHASE AGREEMENT - PAGE 9
14
parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"). The Group has not granted any extensions
of limitation periods applicable to tax claims or filed a consent under Section
341(f) of the Code relating to collapsible corporations. Neither VAB nor Manager
is a United States real property holding corporation as defined in Section 897
of the Code. All positions taken on federal Tax Returns that could give rise to
a penalty for substantial understatement pursuant to Section 6662(d) of the Code
have been disclosed on such Tax Returns. TBA is not a foreign person within the
meaning of Section 1445(b)(2) of the Code. None of the assets and properties of
either VAB or Manager is an asset or property that Vail or any of its affiliates
is or will be required to treat as being (i) owned by any other person pursuant
to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended, and in effect immediately before the enactment of the Tax Reform Act of
1986, or (ii) tax-exempt use property within the meaning of Section 168(h)(1) of
the Code. No closing agreement pursuant to Section 7121 of the Code (or any
predecessor provision) or any similar provision of any state, local, or foreign
law has been entered into by or with respect to either VAB or Manager or any
assets thereof. Neither VAB nor Manager has agreed to or is required to make any
adjustment pursuant to Section 481(a) of the Code (or any predecessor provision)
by reason of any change in any accounting method, neither VAB nor Manager has
applications pending with any taxing authority requesting permission for any
changes in any accounting method, and the Internal Revenue Service has not
proposed any such adjustment or change in accounting method therefor. Neither
VAB nor Manager has been or is in violation (or with notice or lapse of time or
both, would be in violation) of any applicable law relating to the payment of
withholding of taxes. VAB and Manager have duly and timely withheld from
salaries, wages and other compensation and paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all periods
under all applicable laws.
3.9 Books and Records. The general ledgers and books of account of VAB
and Manager are in all material respects complete and correct and have been
maintained in accordance with good business practice and in accordance with all
applicable procedures required by laws and regulations in all material respects.
3.10 Real Property. Set forth in Section 3.10 of the Disclosure Schedule
is a complete and accurate list and a brief description of all real property
owned or leased by or from VAB or Manager. With respect to each lease so set
forth: (a) the lease has been validly executed and delivered by VAB or Manager,
as applicable, and, to the knowledge of TBA, by the other party or parties
thereto and is in full force and effect; (b) neither VAB nor Manager, as
applicable, and, to the knowledge of TBA, any other party to the lease is in
material breach or default, and no event has occurred on the part of VAB or
Manager, as applicable, or, to the knowledge of TBA, on the part of any other
party which, with notice or lapse of time, would constitute such a breach or
default or permit termination, modification or acceleration under the lease; (c)
the lease will continue to be binding in accordance with its terms following the
consummation of the Acquisition; (d) neither VAB nor Manager, as applicable, has
repudiated and, to the knowledge of TBA, no other party to the lease has
repudiated any provision thereof; (e) there are no disputes, oral agreements or
delayed payment programs in effect as to the lease; and (f) all facilities
leased thereunder have been approved by all necessary governmental authorities,
have been maintained in accordance with normal industry practice and are in good
condition, working order and repair.
PURCHASE AGREEMENT - PAGE 10
15
3.11 Tangible Property. Each of VAB and Manager has good and marketable
title to, or a valid leasehold interest in, each item of tangible property,
whether real, personal or mixed, reflected on its books and records as owned or
used by it, free and clear of all Liens other than those Liens to be released at
Closing or as disclosed on Section 3.11 of the Disclosure Schedule. None of the
assets located at the real property disclosed on Schedule 3.10 are owned by TBA
or any of its affiliates other than VAB and Manager.
3.12 Intellectual Property.
(a) Section 3.12(a) of the Disclosure Schedule sets forth a list
of intellectual property owned by VAB and Manager including all patents,
patent applications, trademarks, service marks, trade dress, trade
names, trade secrets, corporate names, customer lists, copyrights, mask
works, technology or intellectual property that are material to the
business of VAB and Manager and registrations or applications to
register any of the foregoing and a list of all licenses or other
contracts related thereto (collectively, the "Intellectual Property").
With respect to each such item of Intellectual Property:
(i) VAB or Manager, as applicable, is the sole and
exclusive owner and has the sole and exclusive right to use the
item in the conduct of its business;
(ii) no proceedings have been instituted, are pending or
to TBA's knowledge are threatened which challenge the validity,
enforceability, use or ownership thereof;
(iii) to the knowledge of TBA, the item (A) does not
infringe upon or otherwise violate the rights of others, (B) is
not being infringed upon by others and (C) is not subject to any
outstanding order, decree, judgment, stipulation or charge;
(iv) no license, sublicense or agreement pertaining to
the item has been granted by VAB or Manager, as applicable;
(v) VAB or Manager, as applicable, has not received any
charge of interference or infringement with respect to the item;
(vi) except in the ordinary course of business, VAB or
Manager, as applicable, has not agreed to indemnify any person or
entity for or against any infringement with respect to the item;
(vii) the transactions contemplated by this Agreement will
have no adverse effect on the right, title and interest of VAB or
Manager, as applicable, in the item; and
(viii) VAB or Manager, as applicable, has taken all steps
which are commercially reasonable to protect the rights set forth
in Section 3.12(a) of the Disclosure Schedule and will continue
to use commercially reasonable efforts to maintain those rights
prior to the Closing Date so as to not materially adversely
affect the validity or enforcement of such rights.
PURCHASE AGREEMENT - PAGE 11
16
(b) Section 3.12(b) of the Disclosure Schedule sets forth a list
describing all patents, trademarks, trade names, service marks,
copyrights, trade secrets, mask works or technology of others which VAB
or Manager practices or uses that are material to VAB or Manager. With
respect to each such item of intellectual property:
(i) any license agreement covering the item is a valid and
binding agreement and is in full force and effect;
(ii) no event has occurred which constitutes a breach of
such license agreement, VAB or Manager, as applicable, has not
repudiated and, to the knowledge of TBA, no other party thereto
has repudiated any provision thereof and there are no disputes,
oral arrangements or delayed payment programs in effect as to any
such license agreement;
(iii) TBA has supplied Vail with a true and complete copy
of any such license agreement;
(iv) the transactions contemplated by this Agreement will
have no material adverse effect on the ability of VAB or Manager,
as applicable, to continue using or practicing each such item;
and
(v) TBA is not aware of any claim that the exercise of the
rights granted to VAB or Manager, as applicable, with respect to
such item infringes upon the intellectual property rights of any
third party.
(c) To the knowledge of TBA, neither VAB nor Manager has
infringed, misappropriated or otherwise violated any intellectual
property rights of any third party. TBA is not aware of any
infringement, misappropriation or violation with respect to intellectual
property which will occur as a result of the continued operation of the
business of VAB and Manager as now conducted or as presently proposed to
be conducted.
(d) VAB and Manager have taken commercially reasonable security
measures to protect the security, confidentiality and value of all the
material Intellectual Property owned by them.
3.13 Contracts. Section 3.13 of the Disclosure Schedule sets for a true
and correct list of all contracts, leases, licenses or other instruments,
agreements or binding commitments of VAB or Manager ("Contracts"), whether or
not in written form which provide for or fall within any of the following
categories (collectively, the "Material Contracts"):
(a) all management contracts to which Manager or VAB is a party;
(b) any contract for the lease of personal property from or to
third parties providing for lease payments in excess of $10,000.00 per
annum;
PURCHASE AGREEMENT - PAGE 12
17
(c) any contract for the purchase or sale of personal property or
for the furnishing or receipt of services which contract calls for
performance over a period of more than one year or which involves more
than the sum of $10,000.00;
(d) any joint venture or partnership agreement;
(e) any agreement or instrument under which VAB or Manager is or
may become indebted for borrowed money , the issuance of any letter of
credit or the guaranty of another person's indebtedness or Contracts of
suretyship or relating to the repurchase of any goods or assets;
(f) any Contract limiting, restricting or prohibiting either VAB
or Manager from conducting its business anywhere in the United States or
elsewhere in the world;
(g) contracts of employment or for the retention of consultants
or the furnishing of services by any third party;
(h) contracts which indemnify any other person or which provide
for charitable contributions or which are in the nature of a severance
agreement;
(i) contracts granting, or consenting to the existence of, any
Lien in favor of any person;
(j) contracts granting to any person a right of first refusal,
first offer, option or similar preferential right to purchase or acquire
any of its assets, properties, securities or other equity;
(k) contracts with TBA or any affiliate of TBA;
(l) any other contract in which the consequences of a default or
termination could reasonably be expected to have a materially adverse
effect on the financial condition of VAB or Manager or on the prospects
or the conduct of the business of VAB or Manager;
(m) any standard form of license agreement; and
(n) any other contract or arrangement not entered into in the
ordinary course of business.
All Material Contracts listed in Section 3.13 of the Disclosure Schedule are
valid and binding agreements. Neither VAB nor Manager is and, to the knowledge
of TBA, no other party is in breach or default, and no event has occurred on the
part of VAB or Manager or, to the knowledge of TBA, on the part of any other
party to any such Material Contract which with notice or lapse of time would
constitute a breach or default or permit termination under any such contract or
arrangement. None of such Material Contracts will be terminated or modified by
the consummation of the Acquisition. True and correct copies of each of the
Material Contracts (together will all amendments thereto) have been made
available to Vail. Neither VAB nor Manager is a party to any verbal contract or
PURCHASE AGREEMENT - PAGE 13
18
arrangement which, if reduced to written form, would be required to be listed in
Section 3.13 of the Disclosure Schedule under the terms of subsections (a)-(n)
of this Section 3.13.
3.14 Suppliers and Customers. Section 3.14 of the Disclosure Schedule is
a true and correct list of all suppliers to whom either VAB or Manager made
payments during the year ended December 31, 1997, in excess of one percent of
their respective gross revenues as reflected in the Financial Statements for
such year and all customers of either VAB or Manager that paid, during the
fiscal year ended December 31, 1997, more than five percent of the gross
revenues of either VAB or Manager as reflected in the Financial Statements for
such year. Since December 31, 1997, no customer listed in Schedule 3.14 has
notified either VAB or Manager that it will substantially decrease or cease
doing business with either VAB or Manager.
3.15 Notes; Accounts Receivable; Inventory. As of the Closing Date, all
notes payable to and accounts receivable of VAB and Manager will be properly
reflected on their books and records and will be valid receivables subject to no
setoffs or counterclaims and all inventory of VAB and Manager is fairly valued
and will be saleable in the ordinary course of business (subject to ordinary
spoilage and any merchandise bearing the "Wyndham" name or logo, which must be
disposed of in accordance to the Wyndham Hotel Franchise Agreement dated
February 1, 1996 (the "Wyndham Hotel Franchise Agreement") should the Wyndham
Hotel Franchise Agreement be terminated).
3.16 Powers of Attorney. There are no outstanding powers of attorney or
similar instruments executed by either VAB or Manager.
3.17 Insurance. VAB and Manager are insured under the policies listed in
Section 3.17 of the Disclosure Schedule (the "Insurance Policies"). The
Insurance Policies are in full force and effect. All premiums due on the
Insurance Policies or renewals thereof have been paid and there is no default
under any of the Insurance Policies. Neither TBA, VAB nor Manager has received
or has knowledge of any notice or request from any insurance company or the
Board of Fire Underwriters (or similar organization) requiring the performance
of any work or canceling or threatening to cancel any of the insurance policies.
Since May 1, 1996, neither VAB nor Manager has been denied any insurance
coverage for which it has requested.
3.18 Litigation. Section 3.18 of the Disclosure Schedule sets forth any
instances in which (a) VAB or Manager is a party as a defendant in any actions,
suits, proceedings (including arbitration or alternative dispute proceedings),
claims or governmental investigations (each, an "action") or where, to the
knowledge of TBA, any such action is threatened, (b) either VAB or Manager is
subject to any judgment or order (other than orders of general applicability) of
any court or quasi-judicial or administrative agency of any jurisdiction,
domestic or foreign, or where there is any charge, complaint, lawsuit or
governmental investigation pending or threatened against either VAB or Manager;
or (c) either VAB or Manager is a plaintiff in any action, domestic or foreign,
judicial or administrative, or any such action exists in which a counterclaim
against either VAB or Manager is pending or might be brought. None of the
actions, suits, proceedings or investigations set forth in Section 3.18 of the
Disclosure Schedule could result in any Material Adverse Effect of either VAB or
Manager. There are no unsatisfied judgments, orders (other than orders of
general applicability), decrees or stipulations affecting either VAB or Manager
or to which either VAB or
PURCHASE AGREEMENT - PAGE 14
19
Manager is a party and there is no reason to believe that any such action, suit,
proceeding or investigation may be brought or threatened against either VAB or
Manager.
3.19 Employees. Section 3.19 of the Disclosure Schedule sets forth and
TBA has made available to Vail true and complete copies of any written
employment agreements or offer letters for employees of VAB or Manager,
including those which by their terms may not be terminated by either VAB or
Manager at will or which xxxxx xxxxxxxxx payments. Neither VAB nor Manager has
entered into any similar oral employment agreements. Neither VAB nor Manager is
a party to or bound by any collective bargaining agreement. There are no loans
or other obligations payable or owing by either VAB or Manager to any officer,
director or employee of either VAB or Manager (except salaries and wages
incurred and accrued in the ordinary course of business), nor are there any
loans or debts payable or owing by any of such persons to either VAB or Manager
or any guarantees by either VAB or Manager of any loan or obligation of any
nature to which any such person is a party. To the knowledge of TBA, VAB and
Manager have complied in all material respects with all laws and regulations
which relate to the employment of labor, employee civil rights, equal employment
opportunities, workers' compensation, unemployment compensation and laws and
regulations under the Occupational Safety and Health Act, and neither VAB nor
Manager have received notice from any governmental authority alleging violation
of any such laws and regulations. During the last two years, neither VAB nor
Manager have been the subject of any charge or complaint of unfair labor
practice, employment discrimination or similar matters, and to the knowledge of
TBA, no such charge or complaint is pending or threatened.
3.20 Employee Benefit Plans. Section 3.20 of the Disclosure Schedule
sets forth and TBA has made available to Vail true and complete copies of (a)
any nonqualified deferred or incentive compensation or retirement plans or
arrangements, (b) any qualified retirement plans or arrangements, (c) any other
employee compensation, severance or termination pay or welfare benefit plans,
programs or arrangements, (d) any related trusts, insurance contracts or other
funding arrangements maintained, established or contributed to by either VAB or
Manager or to which either VAB or Manager is a party or otherwise is bound
("Employee Benefit Plans") and (e) any Determination Letter(s) from the Internal
Revenue Service which have been received by VAB and Manager with respect to
Employee Benefit Plans. With respect to the Employee Benefit Plans listed in
Section 3.20 of the Disclosure Schedule, TBA has made available to Vail true and
complete copies of (i) any summary plan description or other employee
communication materials, (ii) the latest financial statements and annual reports
and (iii) all documents filed with the Internal Revenue Service or the
Department of Labor since December 31, 1994. All Employee Benefit Plans and
related trusts listed in Section 3.20 of the Disclosure Schedule and maintained
or contributed to by VAB and Manager or with respect to which VAB and Manager
now have or have ever had any liability or potential liability comply in form
and in operation with all material requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and the Code. All required
reports with respect to such plans required by applicable law have been filed
and all contributions or payments presently anticipated hereunder have been made
or properly accrued. No applications for rulings, determination letters,
advisory opinions or prohibited transaction exemptions are currently pending
before the Internal Revenue Service, the Department of Labor or the Pension
Benefit Guaranty Corporation with respect to any such employee benefit plans or
arrangements or any related trusts. None of such employee benefit plans or
arrangements, any related trusts, the trustees of any related trusts or
employees of either VAB or Manager is the subject of any lawsuit, arbitration or
other proceeding concerning any benefit claim or other benefit-related
PURCHASE AGREEMENT - PAGE 15
20
matter (other than routine claims in the ordinary course of business), and to
the knowledge of TBA, there have been no prohibited transactions as described in
Section 406 of ERISA or as defined in Section 4975 of the Code with respect to
any such plan. Neither VAB, Manager nor TBA has ever maintained or contributed
to, or otherwise had any liability, direct or indirect, with respect to a plan
subject to the provisions of Title IV of ERISA. To the knowledge of TBA, neither
VAB, Manager, TBA, employees of VAB or Manager, nor any other fiduciary, as such
term is defined in Section 3 of ERISA, has committed any breach of fiduciary
responsibility imposed by ERISA or any other applicable law which would subject
VAB, Manager, TBA, employees of VAB or Manager to liability under ERISA or any
applicable law. The execution and performance of the transactions contemplated
by this Agreement shall not constitute an event under any of the Employee
Benefit Plans under which Vail may incur a liability that will result in any
payment (whether severance pay or otherwise) acceleration, vesting or increase
in benefits with respect to any employees of VAB, Manager and/or TBA.
3.21 Guarantees. Neither VAB nor Manager is a guarantor or otherwise
liable for any material indebtedness of any other person, firm or corporation.
3.22 Legal Compliance. To the knowledge of TBA, VAB, Manager and the
officers, directors and employees of VAB and Manager (the individuals only in
their capacities as representatives of VAB and Manager) have complied in all
material respects with all applicable laws and regulations of foreign, federal,
state and local governments and all agencies thereof (including those relating
to the hiring of employees), and no claim has been filed against VAB or Manager
alleging a violation of any such laws or regulations. To the knowledge of TBA,
VAB and Manager hold all of the material permits, licenses, certificates or
other authorizations of foreign, federal, state or local governmental agencies
required for the conduct of their respective business as presently conducted or
proposed to be conducted, each of which shall be unaffected by the transactions
contemplated hereby.
3.23 Broker's Fees. Except for commissions or fees due to CIBC
Xxxxxxxxxxx Corp. and Wheat First Securities, neither TBA, VAB or Manager nor
anyone on their behalf has any liability to any broker, finder, investment
banker or agent, or has agreed to pay any brokerage fees, finder's fees or
commissions, or to reimburse any expenses of any broker, finder, investment
banker or agent in connection with the Acquisition or any similar transaction.
The fees of CBIC Xxxxxxxxxxx and Wheat First Securities shall be paid by TBA.
3.24 Condemnation. To the knowledge of TBA, there are no pending or
threatened condemnation or eminent domain proceedings which would affect any of
the real property owned by VAB or Manager.
3.25 Zoning. Neither VAB nor Manager is currently making and will not,
between the date of this Agreement and the Closing Date, make any application
for a change in the zoning or use of any of the real property owned by VAB or
Manager; provided, however, Vail hereby acknowledges that East West Partners,
Ltd. has heretofore made a presentation to the Town of Breckenridge in regard to
a potential request for rezoning of portions of the real property owned by VAB.
PURCHASE AGREEMENT - PAGE 16
21
3.26 Bankruptcy, Etc. To the knowledge of TBA, there are no attachments,
executions, assignments for the benefit of creditors, or voluntary or
involuntary proceedings in bankruptcy, or under any other debtor relief laws,
contemplated by either VAB or Manager or pending against either VAB or Manager
or threatened against either VAB or Manager.
3.27 Bank Accounts. Section 3.27 of the Disclosure Schedule sets for a
true and complete list of each bank account of either VAB or Manager and the
persons entitled to draw thereon.
3.28 Environmental. Neither VAB nor Manager has received any written
notice from any governmental entity or regulatory authority or any other person
alleging that either of them is not in material compliance with any
Environmental Law and, except as set forth in Section 3.28 of the Disclosure
Schedule, neither of them have any actual knowledge of any material violation by
VAB or Manager of any Environmental Law. For purposes hereof, "Environmental
Law" means any and all current federal, state, local, provincial and foreign,
civil and criminal laws, statutes, ordinances, orders, codes, rules,
regulations, policies, guidance documents, judgments, decrees, injunctions, or
agreements with any governmental entity or regulatory authority, relating to the
protection of health and the environment, worker health and safety, and/or
governing the handling, use, generation, treatment, storage, transportation,
disposal, manufacture, distribution, formulation, packaging, labeling, or
release of hazardous substances as in effect on the date hereof.
3.29 Disclosure. The representations and warranties and statements of
fact made by TBA in this Agreement, in the Disclosure Schedule and in
certificates and other written statements or agreements delivered or to be
delivered pursuant to this Agreement are accurate, correct and complete in all
material respects on the date of this Agreement and will, except as contemplated
hereby, be accurate, correct and complete in all material respects at the
Closing Date and do not and will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained herein or therein not misleading.
3.30 Attachment of Disclosure Schedule and Exhibits. Each of VAB and
Vail acknowledge that the Disclosure Schedule and the Exhibits contemplated by
this Agreement were not prepared and in final form on the date of execution of
this Agreement by TBA and Vail. Each of TBA and Vail agree to negotiate in good
faith the final form of the Disclosure Schedule and the Exhibits contemplated by
this Agreement and have such Disclosure Schedule and Exhibits attached hereto
prior to the Closing Date. In furtherance of such agreement, TBA shall deliver
to Vail proposed versions of the Disclosure Schedule and the Exhibits by 5:00
p.m., Denver, Colorado time, on Thursday, July 23, 1998. Vail shall have until
5:00 p.m., Denver, Colorado time on Monday, July 27, 1998, to review and approve
such proposed form of Disclosure Schedule and Exhibits. Failure of Vail to
respond by 5:00 p.m., Denver, Colorado time on July 27, 1998, shall constitute
approval thereof. If Vail objects to the form of Disclosure Schedule or the
Exhibits, Vail shall have the right in its sole and absolute discretion to
terminate this Agreement upon written notice to TBA delivered by 5:00 p.m.,
Denver, Colorado time, on July 27, 1998. In the event Vail notifies TBA of its
desire to terminate this Agreement as provided herein, TBA shall have until 5:00
p.m., Denver, Colorado time, on Wednesday, July 29, 1998, to agree to a revised
Disclosure Schedule and/or revised Exhibits in satisfaction of Vail's objection
thereof. If TBA does not revise the objectionable portions of the Disclosure
Schedule and/or Exhibits prior to 5:00 p.m., Denver, Colorado time, on
Wednesday, July 29, 1998, then Vail shall in writing either elect to proceed to
close the transactions contemplated herein without change to the Disclosure
Schedule and/or Exhibits or to terminate this
PURCHASE AGREEMENT - PAGE 17
22
Agreement. If TBA does not deliver proposed versions of the Disclosure Schedule
and Exhibits by 5:00 p.m., Denver, Colorado time, on Thursday, July 23, 1998,
Vail shall have the right in its sole and absolute discretion to terminate this
Agreement by providing written notice of such election to TBA. With respect to
the Escrow Agreement to be attached as Exhibit A hereto, the parties acknowledge
and agree that the Escrow Consideration will be provided from the net proceeds
of the Purchase Price. Although the terms of the Escrow Agreement shall control,
it is the intent of the parties that such amount shall be paid to TBA in the
event that the real property the subject of the East West Purchase Agreement (or
an amendment thereof) is conveyed to Main Street Station Breckenridge LLC or its
assigns or to one or more of its affiliates, and to Vail in the event that such
conveyance of real property does not occur. Interest on the Escrow Consideration
shall be paid to the party to whom the Escrow Consideration is paid.
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1 Conduct of Business Pending the Closing. TBA covenants and agrees
that, prior to the Closing, unless Vail shall otherwise agree in writing or as
otherwise expressly contemplated or permitted by this Agreement:
(a) Each of VAB and Manager shall conduct its business and
operations, including its cash management practices, the collection of
receivables, maintenance of facilities, payment of payables, and
performance under Contracts only in the usual and ordinary course of
business and consistent with past custom and practice in all material
respects;
(b) VAB and Manager shall not directly or indirectly do any of
the following: (i) sell, pledge, dispose of or encumber any material
portion of its assets, except in the ordinary course of business; (ii)
amend or propose to amend its charter or bylaws; (iii) split, combine or
reclassify any outstanding shares of its capital stock, or declare, set
aside or pay any dividend or other distribution payable in cash, stock,
property or otherwise with respect to shares of its capital stock
provided, however, each of VAB and Manager shall be allowed to
distribute cash with respect to shares of its capital stock in an amount
equal to one hundred percent (100%) of its net income for the period
beginning January 1, 1998 and ending on the Closing Date, provided
further that the amount of such distribution may in no event exceed the
amount of contributions made by TBA to VAB and Manager during such
period, and provided further, neither TBA nor Manager have made nor
shall make any distributions to TBA for the period beginning May 31,
1998 and ending on the Closing Date; (iv) redeem, purchase or acquire or
offer to acquire any shares of its capital stock or other securities;
(v) create any subsidiaries; (vi) pay any fee to TBA or its affiliates;
or (vii) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this Section
4.1(b);
(c) Neither VAB nor Manager shall (i) issue, sell, pledge or
dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or any options, warrants, conversion privileges or
rights of any kind to acquire any shares of, its capital; (ii) acquire
(by merger, consolidation, acquisition of stock or assets or otherwise)
any corporation,
PURCHASE AGREEMENT - PAGE 18
23
partnership or other business organization or division or material
assets thereof; (iii) incur any indebtedness for borrowed money, issue
any debt securities or guarantee any indebtedness to others; or (iv)
enter into or modify any contract, agreement, commitment or arrangement
with respect to any of the foregoing;
(d) Neither VAB nor Manager shall, except as contemplated in
Section 4.1(b) hereof (i) enter into or modify any employment, severance
or similar agreements or arrangements with, or grant any bonus, salary
increase, severance or termination pay to any officer or director of
either VAB or Manager; or (ii) with respect to their respective
employees, take any action other than in the ordinary course of business
and consistent in all material respects with past practice (none of
which shall be unreasonable or unusual) with respect to the grant of any
bonuses, salary increases, severance or termination pay or with respect
to any increase of benefits payable in effect on January 1, 1998;
(e) Neither VAB nor Manager shall adopt or amend any bonus,
profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare of any
employee;
(f) Each of VAB and Manager shall use commercially reasonable
efforts to cause its current insurance (or reinsurance) policies not to
be cancelled or terminated or any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance and reinsurance companies
of nationally recognized standing providing coverage equal to or greater
than the coverage under the cancelled, terminated or lapsed policies for
substantially similar premiums are in full force and effect;
(g) Each of VAB and Manager shall (i) use commercially reasonable
efforts to preserve intact its business organization and goodwill, keep
in full force and effect all material rights, contracts, licenses,
permits and franchises relating to its business, keep available the
services of its employees as a group and maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with it; (ii) report on a regular and frequent
basis, at reasonable times, to representatives of Vail regarding
operational matters and the general status of ongoing operations; (iii)
use commercially reasonable efforts not to take any action which would
render, or which reasonably may be expected to render, any
representation or warranty made in this Agreement untrue in any material
respect at any time prior to the Closing Date if then made; and (iv)
notify Vail of any emergency or other change in the normal course of
business or in the operation of its properties and of any tax audits,
tax claims, governmental or third party complaints, investigations or
hearings (or communications indicating that the same may be
contemplated) if such emergency, change, audit, claim, complaint,
investigation or hearing would be material, individually or in the
aggregate, to the financial condition, results of operations or business
of either VAB or Manager, or to the ability of TBA or Vail to consummate
the transactions contemplated by this Agreement;
(h) TBA shall deliver to Vail promptly (but in any event within
two business days) after the discovery or receipt of notice of any
default under any material agreement to
PURCHASE AGREEMENT - PAGE 19
24
which either VAB or Manager is a party or any other material adverse
event or circumstance affecting either VAB or Manager (including the
filing of any material litigation against either VAB or Manager or the
existence of any dispute with any person or entity which involves a
reasonable likelihood of such litigation being commenced), and what
actions VAB or Manager, as applicable, has taken and proposes to take
with respect thereto;
(i) Each of VAB and Manager shall use commercially reasonable
efforts to maintain its assets in customary repair, order and condition,
replace in accordance with past practice its inoperable assets with
assets of quality at least comparable to the original quality of the
assets being replaced and maintain in all material respects its books,
accounts and records in accordance with past custom and practice as used
in the preparation of the Financial Statements;
(j) Each of VAB and Manager shall use commercially reasonable
efforts to maintain in full force and effect the existence of all
material patents, inventions, trademarks, service marks, trade dress,
trade names, corporate names, copyrights, mask works, trade secrets,
licenses, computer software, data and documentation and other
proprietary rights, which it uses or owns;
(k) Each of VAB and Manager shall comply in all material respects
with all legal requirements and contractual obligations applicable to
its operations and business and pay all applicable taxes;
(l) Neither VAB nor Manager shall incur any indebtedness for
borrowed money;
(m) Each of VAB and Manager shall pay, discharge or satisfy
before it is due any claim or liability; and
(n) Neither VAB nor Manager shall make any capital expenditures
or non-budgeted operating expenditures without the prior written
approval of Vail.
4.2 Lines of Business and Capital Expenditures. Unless approved in
writing by Vail, TBA covenants that it will not permit either VAB or Manager to
(a) enter into any new lines of business; (b) change their investment, liability
management and other material policies in any material respect; or (c) incur or
commit to any capital expenditures or non-budgeted operating expenditures,
obligations or liabilities in connection therewith.
4.3 Accounting Methods. Unless approved in writing by Vail, TBA
covenants that neither VAB nor Manager will change its methods of accounting in
effect at December 31, 1997, except as required by changes in generally accepted
accounting principles as concurred in by Xxxxxx Xxxxxxxx LLP.
4.4 Other Actions. Unless approved in writing by Vail, TBA covenants
that neither VAB nor Manager will take any action that would or might reasonably
be expected to result in any of the representations and warranties of TBA set
forth in this Agreement (including those set forth in Section 3.6) becoming
untrue in any material respect after the date hereof or any of the conditions to
the Acquisition set forth in Article 6 of this Agreement not being satisfied.
PURCHASE AGREEMENT - PAGE 20
25
4.5 Notices, etc. For purposes of this Article 4, all notices,
deliveries and/or requests for consents from TBA to Vail shall be addressed to
Vail at the address set forth in Section 10.3 hereof and addressed to Xxxx
Xxxxxxxxxxx, Esq.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement and the other agreements
contemplated hereby and the transactions contemplated hereby and thereby shall
be paid by the party incurring such expenses.
5.2 Notification of Certain Matters. Each party shall give prompt notice
to the other of (a) the occurrence or failure to occur of any event, which
occurrence or failure could reasonably be expected to result in a Material
Adverse Effect, and (b) any failure of such party, or any employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied hereunder.
5.3 Access to Information. From the date hereof to the Closing Date, TBA
shall, and shall cause VAB, Manager and their respective officers, directors,
employees and agents to, afford the officers, employees, agents and
representatives of the other party hereto complete access at all reasonable
times to themselves and to such officers, employees and agents and their
properties, books and records (all such access to be arranged through the
respective officers of corporate parties hereto so as not to be unreasonably
disruptive to any of the parties), and shall furnish each of such parties all
financial, operating, personnel, compensation, tax and other data and
information as such parties, through their respective officers, employees,
agents or representatives, may request.
5.4 Taking of Necessary Action. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees, subject to applicable laws,
to use all reasonable efforts promptly to take or cause to be taken all action
and promptly to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the foregoing, TBA
and Vail shall use their commercially reasonable efforts to maintain and make
all filings with and obtain all consents, approvals, and/or assurances from
third parties and appropriate governmental agencies and authorities necessary or
advisable for the consummation of the transactions contemplated by this
Agreement. Each party shall cooperate with the other in good faith to help the
other satisfy its obligations in this Section 5.4.
5.5 Press Releases. TBA and Vail shall approve the form and substance of
any press release or other public disclosure of matters related to this
Agreement or any of the transactions contemplated hereby; provided, however,
that nothing in this Section 5.5 shall be deemed to prohibit any party hereto
from making any disclosure that is required to fulfill such party's disclosure
obligations imposed by law, including, without limitation, federal securities
laws.
5.6 Employee Matters. TBA and Vail agree that all employees of VAB and
Manager immediately prior to the Closing shall be employed by VAB and Manager
immediately after the Closing, it being understood that Vail shall not have any
obligations to continue employing such
PURCHASE AGREEMENT - PAGE 21
26
employees for any length of time or at any level of pay for any length of time
thereafter, except as set forth in binding agreements of employment as disclosed
in Section 3.19 of the Disclosure Schedules.
5.7 Tax and Financial Matters. From and after the Closing, TBA, on the
one hand, and Vail, on the other hand, shall cooperate fully with each other and
make available or cause to be made available to each other for consultation,
inspection and copying (at such other party's expense) in a timely fashion such
personnel, tax data, tax returns and filings, files, books, records, documents,
financial, technical and operating data, computer records and other information
as may be reasonably required (1) for the preparation by either of them of any
tax returns, elections, consents or certificates required to be prepared and
filed by such parties or by VAB or Manager or (2) in connection with any audit
or proceeding relating to taxes relating to the assets of VAB or Manager. Vail
agrees to retain all books and records with respect to tax matters pertinent to
VAB or Manager relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority. None of the parties hereto shall cause an election to be made,
an accounting for tax purposes to be adopted, or a position to be taken on any
tax return, or in any tax proceeding, that is inconsistent with the provisions
of this Agreement. In addition, as custodian of the books and records of VAB and
Manager as of the Closing Date, Vail, or its authorized representatives, shall
be responsible for closing such books and records as of the Closing Date for
state and federal income tax and financial reporting purposes. TBA and Vail
shall cooperate fully with each other in connection with such closing and Vail
shall make available to TBA all financial and income tax data, statements,
reports and information relating to such closing of the books and records as of
the Closing Date.
5.8 Acknowledgment. Vail hereby acknowledges the existence of that
certain Purchase and Sale Agreement, dated as of July 10, 1998, by and between
VAB, as seller, and Main Street Station Breckenridge LLC, as purchaser, relating
to the sale by VAB of the Xxxx Tower Mall, Chalets and Development Site, each as
defined in said Purchase and Sale Agreement (the "East West Purchase
Agreement"), a copy of which is attached hereto as Exhibit "D". Vail further
acknowledges that it is acquiring the Stock subject to VAB's obligations under
the East West Purchase Agreement. Vail hereby further acknowledges that it has
been advised that East West Partners, Ltd. ("East West"), an affiliate of Main
Street Station Breckenridge LLC, has heretofore asserted certain claims, actions
and/or causes of action against TBA and VAB concerning certain purported
obligations, responsibilities and liabilities of TBA and/or VAB to East West
with respect to the proposed redevelopment of certain of the real property
assets owned by VAB. Vail further hereby acknowledges that it has been advised
that TBA and VAB deny such claims and likewise deny the existence of any binding
obligations, responsibilities or liabilities of TBA and VAB to East West with
respect to any such proposed redevelopment, other than as are specifically set
forth in the East West Purchase Agreement. The East West Purchase Agreement has
not been amended or modified.
5.9 No Solicitation. Except as set forth in Section 5.8, prior to the
Closing, none of TBA, VAB, Manager or any of their respective affiliates will,
directly or indirectly (including, without limitation, through bankers,
investment bankers, attorneys or agents), solicit, initiate, facilitate or
encourage (including, without limitation, by way of furnishing or disclosing
non-public information) any inquiries or the making of any proposal with respect
to the sale of all or
PURCHASE AGREEMENT - PAGE 22
27
substantially all of the assets of either VAB or Manager, any merger,
consolidation or other business combination involving VAB or Manager (an
"Acquisition Transaction") or negotiate, explore or otherwise engage in
discussions with any person (other than Vail and its representatives) with
respect to any Acquisition Transaction or enter into any agreement, arrangement
or understanding with respect to any such Acquisition Transaction.
5.10 Agreement by Vail to Contract with Avalon Entertainment Group, Inc.
For the three (3) year period following the Closing Date (which three-year
period shall automatically terminate if TBA no longer owns more than 50% of the
outstanding equity interests of Avalon Entertainment Group, Inc. ("AEGI")), and
subject to Vail's continued satisfaction with the services provided by AEGI,
Vail and Vail's affiliates agree to use for their own account, and to refer
customers and clients whenever possible, the corporate entertainment services
offered by AEGI, an affiliate of TBA. Should the volume of corporate
entertainment services at the Village at Breckenridge Resort and/or other
properties owned by Vail in the State of Colorado justify onsite corporate
entertainment services personnel, TBA shall cause AEGI to place a full-time
account executive at the Village at Breckenridge Resort or other comparable
location in an office provided by Vail. Such onsite employee will work with
Vail's convention sales director and other sales personnel to assist in the
provision of entertainment, meeting and event production. In consideration for
contracting with AEGI for such corporate entertainment and related services, TBA
will cause AEGI to pay to Vail twenty percent (20%) of the net production profit
realized by AEGI on all programs produced by AEGI at facilities owned by Vail
and its affiliates. In addition, Vail and TBA agree to negotiate in good faith
with respect to the development by TBA of entertainment marketing programs,
consisting primarily of live television specials and other programming
opportunities, at resort properties owned by Vail and its affiliates.
5.11 Section 338(h)(10) Election. If requested by Vail, Vail and TBA
shall jointly elect to treat the Acquisition as a "qualified stock purchase"
within the meaning of section 338 of the Code and shall timely prepare and file
with the Internal Revenue Service a section 338(h)(10) election on Form 8023.
TBA acknowledges that TBA is responsible for the payment of any taxes resulting
from such election.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Each Party to Effect the Closing. The
respective obligations of each party to effect the Closing shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) no order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal
the consummation of the transactions contemplated hereby; and
(b) no action, suit, investigation, inquiry or other proceeding
by any governmental entity or any other person shall have been
instituted or threatened which (i) could reasonably be expected to
result in a Material Adverse Effect or could reasonably
PURCHASE AGREEMENT - PAGE 23
28
be expected to materially impair, hinder or adversely affect the ability
of TBA or Vail to consummate the transactions contemplated hereby; (ii)
arises out of or relates to this Agreement or the transactions
contemplated hereby; or (iii) questions the validity hereof or
transactions contemplated hereby or seeks to obtain substantial damages
in respect thereof.
6.2 Additional Conditions to Vail's Obligations. The obligations of Vail
to effect the Acquisition are subject to the satisfaction of the following
conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 3 of
this Agreement will be true and correct in all material respects (other
than for those representations and warranties which by their terms are
qualified by materiality which shall be true and correct in all
respects) as of the date hereof and at and as of the Closing Date, as
though then made and as though the Closing Date were substituted for the
date of this Agreement throughout such representations and warranties
and with appropriate modifications of tense with respect to
representations and warranties made as of a specified date;
(b) TBA shall have performed, in all material respects, each
obligation and agreement and complied, in all material respects, with
each covenant to be performed and complied with by TBA under this
Agreement prior to the Closing Date, including, without limitation, all
of its agreements contained in Articles 4 and 5 of this Agreement;
(c) Except as otherwise disclosed on the Disclosure Schedule, all
consents by governmental or regulatory agencies or otherwise that are
required for the consummation of the transactions contemplated hereby or
that are required for Vail to own the Stock or to prevent a breach of or
a default under or a termination of any agreement material to VAB or
Manager to which VAB or Manager is a party or to which any material
portion of the assets of VAB or Manager is subject, will have been
obtained;
(d) Vail shall have received from VAB (at TBA's expense)
endorsement number 107.3 to the Owner's Title Policy, number LTH961138
issued by Old Republic National Title (the "Title Company") to VAB,
dated April 29, 1996, indicating that, since the date of issuance of
such Title Policy, there has been no change in the state of title and no
exceptions to the coverage of the Title Policy not theretofore approved
by Vail and increasing the aggregate amount of the insurance to the
Purchase Price hereunder;
(e) Vail shall have received from Xxxxxxxx Xxxxxxxx & Xxxxxx
P.C., counsel to TBA, an opinion addressed to Vail, dated the Closing
Date and substantially in the form of Exhibit B attached hereto;
(f) Vail shall have received from Xxxxx, Xxxxxxx & Xxxxx, special
Tennessee counsel to VAB and Manager, an opinion addressed to Vail,
dated the Closing Date, opining as to the due incorporation of each of
VAB and Manager under the laws of the State of Tennessee;
(g) On the Closing Date, TBA, Vail and the Escrow Agent shall
execute and deliver the Escrow Agreement;
PURCHASE AGREEMENT - PAGE 24
29
(h) On the Closing Date, TBA shall have delivered to Vail the
following:
(i) a good standing or comparable certificate for each of
TBA, VAB and Manager from its respective jurisdiction of
incorporation and from every jurisdiction where a failure to be
qualified or licensed would have a material adverse effect on the
financial condition, results of operations or business of VAB and
Manager, dated as of a recent date prior to the Closing Date;
(ii) copies of all third party (including, without
limitation, the consent of Wyndham Hotel Company, Ltd. under the
Wyndham Hotel Franchise Agreement ) and governmental consents (or
other evidence satisfactory to Vail) that TBA is required to
obtain in order to effect the transactions contemplated by this
Agreement;
(iii) a copy of the charter or other incorporation
document of each of TBA, VAB and Manager certified by the
Secretary of State of each such corporation's respective
jurisdiction of incorporation;
(iv) certified copies of the resolutions duly adopted by
TBA's Board of Directors approving the Acquisition and
authorizing the execution, delivery and performance of this
Agreement;
(v) certificates evidencing the Stock duly endorsed for
transfer;
(vi) an affidavit from TBA pursuant to the Foreign
Investment in Real Property Tax Act;
(vii) resignations of the officers and directors of each
VAB and Manager;
(viii) the corporate minute books for each of VAB and
Manager;
(ix) a certificate executed on behalf of TBA by its Chief
Executive Officer stating that the conditions set forth in
Sections 6.2(a) through 6.2(d) of this Agreement have been
satisfied; and
(x) such other documents as Vail may reasonably request in
connection with the transactions contemplated hereby.
(i) All proceedings to be taken by TBA in connection with the
consummation of the Acquisition at the Closing Date and the other
transactions contemplated hereby and all documents required to be
delivered by TBA in connection with the Acquisition and the other
transactions contemplated hereby will be reasonably satisfactory in form
and substance to Vail.
6.3 Additional Conditions to TBA's Obligations. The obligations of TBA
to effect the Acquisition are subject to the satisfaction of the following
conditions on or before the Closing Date;
PURCHASE AGREEMENT - PAGE 25
30
(a) The representations and warranties set forth in Article 2 of
this Agreement will be true and correct in all material respects (other
than for those representations and warranties which by their terms are
qualified by materiality which shall be true and correct in all
respects) as of the date hereof and at and as of the Closing Date, as
though then made and as though the Closing Date were substituted for the
date of this Agreement throughout such representations and warranties
and with appropriate modifications of tense with respect to
representations and warranties made as of a specified date;
(b) Vail shall have performed, in all material respects, each
obligation and agreement and complied, in all material respects, with
each covenant required to be performed and complied with by Vail under
this Agreement prior to the Closing Date, including, without limitation,
all of its agreements contained in Article 5 of this Agreement;
(c) TBA shall have received from Xxxxxxxxxx Xxxxx Xxxxxx &
Xxxxxxxxxx, P.C., counsel to Vail, an opinion addressed to TBA, dated
the Closing Date and substantially in the form of Exhibit C attached
hereto;
(d) TBA shall have received from the Office of the General
Counsel of Vail an opinion addressed to TBA, dated the Closing Date,
opining as to the due incorporation of Vail under the laws of the State
of Colorado;
(e) On the Closing Date, TBA, Vail and the Escrow Agent shall
execute and deliver the Escrow Agreement;
(f) On the Closing Date, TBA shall receive so-called "payoff
letters" or similar statements from the holders of the Mortgage
Indebtedness (as defined in Section 1.2(a) hereof) together with
appropriate releases in recordable form acceptable to TBA of all deeds
of trust and related documents of record (if any) securing such Mortgage
Indebtedness, which releases shall be furnished at closing to the Title
Company for recording and filing in the applicable real property
records.
(g) On the Closing Date, Vail will have delivered to TBA the
following:
(i) certified copies of the resolutions duly adopted by
Vail's Board of Directors approving the Acquisition and
authorizing the execution, delivery and performance of this
Agreement;
(ii) a good standing or comparable certificate for Vail
from the Secretaries of State of the States of Delaware and
Colorado, dated as of a recent date prior to the Closing Date;
(iii) copies of all third party and governmental or
regulatory consents (or other evidence satisfactory to TBA) that
Vail is required to obtain in order to effect the transactions
contemplated by this Agreement;
(iv) copies of Vail's Certificate of Incorporation
certified by the Secretary of State of the State of Colorado;
PURCHASE AGREEMENT - PAGE 26
31
(v) a certificate executed on behalf of Vail by its
President stating that the conditions set forth in Sections
6.3(a) through 6.3(c) of this Agreement have been satisfied; and
(vi) such other documents as TBA may reasonably request in
connection with the transactions contemplated hereby.
(h) All proceedings to be taken by Vail in connection with the
consummation of the Acquisition and all documents required to be
delivered by Vail in connection with the transactions contemplated
hereby will be reasonably satisfactory in form and substance to TBA.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date upon the occurrence of any of the following:
(a) by mutual consent of the Boards of Directors of TBA and
Vail;
(b) by either Vail or TBA if the Closing shall not have been
consummated by August 1, 1998 and provided that the party seeking
termination is not then in willful breach of any representation,
warranty or agreement in this Agreement;
(c) by Vail if there has been a misrepresentation or a breach of
a representation or warranty or a failure to perform a covenant on the
part of TBA with respect to its representations, warranties and
covenants set forth in this Agreement and any such breach or failure
could reasonably result in damages to Vail in excess of $100,000; and
(d) by TBA if there has been a misrepresentation or a breach of a
representation or warranty or a failure to perform a covenant on the
part of Vail with respect to its representations, warranties and
covenants set forth in this Agreement and any such breach or failure
could reasonably result in damages to TBA in excess of $100,000.
7.2 Amendment. This Agreement may not be amended except by an instrument
signed by each of the parties hereto.
7.3 Waiver. At any time prior to the Closing Date, (a) Vail may (i)
extend the time for the performance of any of the obligations or other acts of
TBA or (ii) waive compliance with any of the agreements of TBA or with any
conditions to its own obligations, and (b) TBA may (i) extend the time for the
performance of any of the obligations or other acts of Vail or (ii) waive
compliance with any of the agreements of Vail or with any conditions to its own
obligations in each case only to the extent such obligations, agreements and
conditions are intended for their benefit.
7.4 Effect of Termination. If this Agreement is terminated as provided
in Section 7.1, this Agreement shall become void and there shall be no liability
or further obligation on the part of
PURCHASE AGREEMENT - PAGE 27
32
any party hereto or any of their respective members, shareholders, officers or
directors, except (a) that nothing herein and no termination pursuant hereto
will relieve any party from liability for any breach of this Agreement and (b)
the provisions of Sections 5.1 and 5.5 and any confidentiality agreements by and
between TBA and Vail will survive such termination.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification.
(a) By TBA. TBA shall, indemnify and hold harmless Vail and its
directors, officers, employees, affiliates, subsidiaries and agents
(collectively, the "Vail Indemnified Parties"), at all times from and
after the Closing Date, against and in respect of Damages arising from
or relating to: (i) any breach of any of the representations or
warranties made by TBA in this Agreement (without regard to any
materiality or Material Adverse Effect qualification contained therein),
(ii) any breach of the covenants and agreements made by TBA in this
Agreement, the Escrow Agreement or in any of the other documents
executed and delivered by TBA on the Closing Date, (iii) VAB's indemnity
obligations to Main Street Station Breckenridge LLC under Section 11.3
of the East West Purchase Agreement (other than Section 11.3(iii)) in
the form attached hereto as Exhibit "D", but only to the extent such
indemnity obligation arises with respect to matters or conditions
existing on or prior to the Closing Date of this Agreement, (iv) any
liability for taxes for any period ending prior to the Closing Date, and
(v) the Excluded Liabilities.
(b) By Vail. Vail shall indemnify and hold harmless TBA and its
directors, officers, employees, affiliates, subsidiaries and agents
(collectively, the "TBA Indemnified Parties") at all times from and
after the Closing Date against and in respect of Damages arising from or
relating to: (i) any breach of any of the representations or warranties
made by Vail in this Agreement; and (ii) any breach of the covenants and
agreements made by Vail in this Agreement, the Escrow Agreement or in
any of the other documents executed and delivered by Vail on the Closing
Date.
(c) For purposes of this Agreement, "Damages" means any and all
liabilities, losses, damages (including, without limitation,
consequential damages and punitive damages), costs, penalties, fines and
expenses (including, without limitation, interest charges, costs of
investigation and the reasonable fees and disbursements of attorneys and
other professionals and experts), imposed upon or incurred, directly or
indirectly, by any Indemnified Party, which in any way relates to or
arises from any claim, demand, investigation, action, arbitration or
other proceeding.
(d) For purposes hereof, "Excluded Liabilities" means any and all
liabilities and obligations of VAB and Manager other than those (i) set
forth on the Financial Statements, (ii) which have arisen in the
ordinary course of business since the date of the Financial Statements
and which do not otherwise constitute a breach of this Agreement, or
(iii) which are disclosed on the face of the Disclosure Schedules.
PURCHASE AGREEMENT - PAGE 28
33
8.2 Limitations of Indemnity. In no event shall a claim for
indemnification be made or be otherwise payable under Section 8.1(a)(i) or
(b)(i), as the case may be, unless the aggregate amount of all Losses suffered
by the Vail Indemnified Parties or the TBA Indemnified Parties, as the case may
be, exceed (other than in the case of Damages for taxes or a breach of Section
3.2) $100,000 in the aggregate (in which event only the amount in excess of such
amount shall be payable). In no event shall the aggregate liability of TBA under
Sections 8.1(a)(i) and (v) exceed $7,000,000 in the aggregate. In no event shall
the aggregate liability of Vail under Section 8.1(b)(i) exceed $7,000,000 in the
aggregate.
8.3 Indemnification Procedures--Third Party Claims.
(a) The rights and obligations of a party claiming a right to
indemnification hereunder (each an "Indemnitee") from a party to this
Agreement (each an "Indemnitor") in any way relating to a third party
claim shall be governed by the following provisions of this Section 8.3:
(i) The Indemnitee shall give prompt written notice to the
Indemnitor of the commencement of any claim, action, suit or
proceeding, or any threat thereof, or any state of facts which
Indemnitee determines will give rise to a claim by the Indemnitee
against the Indemnitor based on the indemnity agreements
contained in this Agreement setting forth, in reasonable detail,
the nature and basis of the claim and the amount thereof, to the
extent known, and any other relevant information in the
possession of the Indemnitee (a "Notice of Claim"). The Notice of
Claim shall be accompanied by any relevant documents in the
possession of the Indemnitee relating to the claim (such as
copies of any summons, complaint or pleading which may have been
served and/or any written demand or document evidencing the
same). No failure to give a Notice of Claim shall affect, limit
or reduce the indemnification obligations of an Indemnitor
hereunder, except to the extent such failure actually prejudices
such Indemnitor's ability successfully to defend the claim,
action, suit or proceeding giving rise to the indemnification
claim.
(ii) In the event that an Indemnitee furnishes an
Indemnitor with a Notice of Claim, then upon the written
acknowledgment by the Indemnitor given to the Indemnitee within
thirty (30) days of receipt of the Notice of Claim, stating that
the Indemnitor is undertaking and will prosecute the defense of
the claim under such indemnity agreements and confirming that as
between the Indemnitor and the Indemnitee, the claim covered by
the Notice of Claim is subject to this Article 8 and that the
Indemnitor will be able to pay the full amount of potential
liability in connection with any such claim (including, without
limitation, any action, suit or proceeding and all proceedings on
appeal or other review which counsel for the Indemnitee may
reasonably consider appropriate) (an "Indemnification
Acknowledgment"), then the claim covered by the Notice of Claim
may be defended by the Indemnitor, at the sole cost and expense
of the Indemnitor; provided, however, that the Indemnitee is
authorized to file any motion, answer or other pleading that may
be reasonably necessary or appropriate to protect its interests
during such thirty (30) day period. However, in the event the
Indemnitor does not furnish an Indemnification Acknowledgment to
the Indemnitee or does not offer reasonable
PURCHASE AGREEMENT - PAGE 29
34
assurances to the Indemnitee as to Indemnitor's financial
capacity to satisfy any final judgment or settlement, the
Indemnitee may, upon written notice to the Indemnitor, assume the
defense (with legal counsel chosen by the Indemnitee) and dispose
of the claim, at the sole cost and expense of the Indemnitor.
Notwithstanding receipt of an Indemnification Acknowledgment, the
Indemnitee shall have the right to employ its own counsel in
respect of any such claim, action, suit or proceeding, but the
fees and expenses of such counsel shall be at the Indemnitee's
own cost and expense, unless (A) the employment of such counsel
and the payment of such fees and expenses shall have been
specifically authorized by the Indemnitor in connection with the
defense of such claim, action, suit or proceeding or (B) the
Indemnitee shall have reasonably concluded based upon a written
opinion of counsel that there may be specific defenses available
to the Indemnitee which are different from or in addition to
those available to the Indemnitor in which case the costs and
expenses incurred by the Indemnitee shall be borne by the
Indemnitor.
(iii) The Indemnitee or the Indemnitor, as the case may
be, who is controlling the defense of the action, suit,
proceeding or claim, shall keep the other fully informed of such
claim, action, suit or proceeding at all stages thereof, whether
or not such party is represented by counsel. The parties hereto
agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper
and adequate defense of any such claim, action, suit or
proceeding. Subject to the Indemnitor furnishing the Indemnitee
with an Indemnification Acknowledgment in accordance with Section
8.3(a)(ii), the Indemnitee shall cooperate with the Indemnitor
and provide such assistance, at the sole cost and expense of the
Indemnitor, as the Indemnitee may reasonably request in
connection with the defense of any such claim, action, suit or
proceeding, including, but not limited to, providing the
Indemnitor with access to and use of all relevant corporate
records and making available its officers and employees for
depositions, pre-trial discovery and as witnesses at trial, if
required. In requesting any such cooperation, the Indemnitor
shall have due regard for, and attempt to not be disruptive of,
the business and day-to-day operations of the Indemnitee and
shall follow the requests of the Indemnitee regarding any
documents or instruments which the Indemnitee believes should be
given confidential treatment.
(b) The Indemnitor shall not make or enter into any settlement of
any claim, action, suit or proceeding which Indemnitor has undertaken to
defend, without the Indemnitee's prior written consent (which consent
shall not be unreasonably withheld or delayed), unless there is no
obligation, directly or indirectly, on the part of the Indemnitee to
contribute to any portion of the payment for any of the Damages, the
Indemnitee receives a general and unconditional release with respect to
the claim (in form, substance and scope reasonably acceptable to the
Indemnitee), there is no finding or admission of any violation of law
by, or effect on any other claim that may be made against the Indemnitee
and, in the reasonable judgment of the Indemnitee, the relief granted in
connection therewith is not likely to have a material adverse effect on
the Indemnitee or the Indemnitee's reputation or prospects.
PURCHASE AGREEMENT - PAGE 30
35
(c) Any claim for indemnification that may be made under more
than one subsection under Section 8.1 may be made under the subsection
that the claiming party may elect in its sole discretion,
notwithstanding that such claim may be made under more than one
subsection.
8.4 Procedure for Indemnification -- Other Claims, Indemnification
Generally A claim for indemnification for any matter not relating to a
third-party claim may be asserted by notice directly by the Indemnitee to the
Indemnitor.
8.5 Payment of Indemnification Obligation. All indemnification by TBA or
Vail hereunder shall be effected by payment by wire transfer or delivery of a
cashier's or certified check in the amount of the indemnification liability.
ARTICLE 9
AS IS, WHERE IS
9.1 GENERAL. VAIL HEREBY EXPRESSLY ACKNOWLEDGES THAT IT HAS OR WILL
HAVE, PRIOR TO THE CLOSING, THOROUGHLY INSPECTED AND EXAMINED THE REAL PROPERTY
AND REAL PROPERTY IMPROVEMENTS OWNED BY VAB (COLLECTIVELY, THE "PROPERTY") TO
THE EXTENT DEEMED NECESSARY BY VAIL IN ORDER TO ENABLE VAIL TO EVALUATE THE
PROPERTY. VAIL REPRESENTS THAT VAIL IS A KNOWLEDGEABLE PURCHASER OF DEVELOPMENTS
SUCH AS THE PROPERTY, EXCEPT AS PROVIDED IN SECTION 9.2, AND THAT VAIL IS
RELYING SOLELY ON VAIL'S OWN EXPERTISE AND THAT OF VAIL'S CONSULTANTS, AND THAT
VAIL WILL CONDUCT SUCH INSPECTIONS AND INVESTIGATIONS OF THE PROPERTY,
INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS
THEREOF, AND SHALL RELY UPON SAME, AND, UPON CLOSING, EXCEPT AS PROVIDED IN
SECTION 9.2, SHALL ASSUME THE RISK OF ANY ADVERSE MATTERS, INCLUDING, BUT NOT
LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, THAT MAY NOT HAVE
BEEN REVEALED BY VAIL'S INSPECTIONS AND INVESTIGATIONS. EXCEPT AS PROVIDED IN
SECTION 9.2, VAIL FURTHER ACKNOWLEDGES AND AGREES THAT VAIL IS ACQUIRING THE
PROPERTY UPON PURCHASE OF THE STOCK ON AN AS IS, WHERE IS AND WITH ALL FAULTS
BASIS, WITHOUT REPRESENTATIONS, WARRANTIES OR COVENANTS, EXPRESS OR IMPLIED, OF
ANY KIND OR NATURE. VAIL HEREBY WAIVES AND RELINQUISHES ALL RIGHTS AND
PRIVILEGES ARISING OUT OF, OR WITH RESPECT OR IN RELATION TO, ANY
REPRESENTATIONS, WARRANTIES OR COVENANTS, WHETHER EXPRESS OR IMPLIED, WHICH MAY
HAVE BEEN MADE OR GIVEN, OR WHICH MAY HAVE BEEN DEEMED TO HAVE BEEN MADE OR
GIVEN, BY TBA, VAB OR MANAGER WITH RESPECT TO THE PROPERTY. EXCEPT AS PROVIDED
IN SECTION 9.2, VAIL HEREBY ASSUMES ALL RISKS AND LIABILITY (AND AGREES THAT
TBA, VAB AND MANAGER SHALL NOT BE LIABLE FOR ANY SPECIAL, DIRECT, INDIRECT,
PUNITIVE, CONSEQUENTIAL, EXEMPLARY OR OTHER DAMAGES) RESULTING OR ARISING FROM
OR RELATING TO THE OWNERSHIP, USE, CONDITION, LOCATION, MAINTENANCE, REPAIR, OR
OPERATION OF THE PROPERTY.
PURCHASE AGREEMENT - PAGE 31
36
9.2 EXCLUDED ITEMS. NOTWITHSTANDING ANY SEEMING CONTRADICTION, IT IS
AGREED AND UNDERSTOOD THAT THE PROVISIONS OF THIS ARTICLE 9 ARE LIMITED SO AS
NOT TO BE CONSTRUED AS DIMINISHING OR NEGATING TBA'S RESPONSIBILITY FOR ANY
REPRESENTATIONS , WARRANTIES OR COVENANTS CONTAINED IN THIS AGREEMENT OR THE
ESCROW AGREEMENT (BUT ONLY TO THE EXTENT EXPRESSLY PROVIDED AND SUBJECT TO THE
LIMITATIONS THEREIN SET FORTH AND FOR THE DURATION THEREIN STATED).
ARTICLE 10
GENERAL PROVISIONS
10.1 Survival of Representations and Warranties. The representations and
warranties set forth in this Agreement shall survive the Closing for a period of
eighteen (18) months. Notwithstanding the above, claims resulting from any
breach of any representation or warranty concerning tax or Employee Benefit Plan
matters shall expire one hundred twenty (120) days after the expiration of any
applicable statute of limitations and the representations and warranties
contained in Sections 3.1, 3.2, 3.3, 3.4 and the first sentence of 3.11 shall
not terminate. Any litigation arising out of or attributable to a breach of any
representation or warranty contained herein must be commenced within the
applicable period described above. If not commenced within the applicable
period, any such claim will thereafter conclusively be deemed to be waived
regardless of when such claim is or should have been discovered.
10.2 Specific Performance. TBA and Vail understand and agree that the
covenants and undertakings on each of their parts herein contained are uniquely
related to the desire of TBA and Vail to consummate the Acquisition, that the
Acquisition is a unique business opportunity for TBA and Vail and that, although
monetary damages may be available for the breach of such covenants and
undertakings, monetary damages would be an inadequate remedy therefor.
Accordingly, without limiting any other rights of TBA or Vail, TBA and Vail
agree that Vail shall be entitled to obtain specific performance by TBA of every
such covenant and undertaking contained herein to be performed by TBA and that
TBA shall be entitled to obtain specific performance from Vail of each and every
covenant and undertaking herein contained to be observed or performed by Vail.
10.3 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
sent by telex, telecopy, facsimile or overnight courier, to the party to whom
the same is so delivered or sent at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to TBA:
TBA Entertainment Corporation
000 Xxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxx Xxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx III
Telecopy: (000) 000-0000
PURCHASE AGREEMENT - PAGE 32
37
with a copy to:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to Vail:
Vail Associates, Inc.
Attn: Xx. Xxxx X. Xxxx
Chairman and Chief Executive Officer
000 Xxxxxxxxx Xxxx
Xxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxxx Hyatt Xxxxxx & Xxxxxxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
and
Xxxx Xxxxxxxxxxx, Esq.
Vail Resorts Development Company
000 Xxxxxxxxx Xxxx
Xxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Notices delivered personally or by telex, telecopy or facsimile shall be deemed
delivered as of the business day of actual receipt, and overnight courier
notices shall be deemed delivered one business day after the date of sending.
10.4 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated.
10.5 Severability. If any term, provision, covenant or Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants, and restrictions of this
Agreement shall remain in full force and effect and shall in no way
PURCHASE AGREEMENT - PAGE 33
38
be affected, impaired or invalidated and the parties shall negotiate in good
faith to modify the Agreement to preserve each party's anticipated benefits
under the Agreement.
10.6 Miscellaneous. This Agreement (together with all other documents
and instruments referred to herein): (a) except for any confidentiality
agreements executed in connection with the transactions contemplated hereby,
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties with respect to the
subject matter hereof; (b) except as expressly set forth herein, is not intended
to confer upon any other person any rights or remedies hereunder; (c) shall not
be assigned by operation of law or otherwise; and (d) shall be governed in all
respects, including validity, interpretation and effect, by the internal laws of
the State of Colorado, without giving effect to the principles of conflict of
laws thereof. Courts within the State of Colorado will have jurisdiction over
any and all disputes between the parties hereto, whether in law or equity,
arising out of or relating to this Agreement. The parties consent to and agree
to submit to the jurisdiction of such courts.
10.7 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature to each such counterpart
were upon the same instrument.
10.8 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and, if
applicable, permitted assigns.
[REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
PURCHASE AGREEMENT - PAGE 34
39
PURCHASE AGREEMENT
Signature Page
IN WITNESS WHEREOF, TBA and Vail have caused this Agreement to be
executed on the date first written above.
TBA ENTERTAINMENT CORPORATION
/s/ Xxxxxx Xxxxxxx Xxxxxx III
-----------------------------------------
By: Xxxxxx Xxxxxxx Xxxxxx III
Its: Chief Executive Officer
VAIL SUMMIT RESORTS, INC.
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
By: Xxxxxx X. Xxxxx
Its: President
PURCHASE AGREEMENT - PAGE 35
40
SCHEDULE 1
DISCLOSURE SCHEDULE
41
EXHIBIT A
FORM OF ESCROW AGREEMENT
42
EXHIBIT B
FORM OF OPINION TO COUNSEL TO TBA
43
EXHIBIT C
FORM OF OPINION OF COUNSEL TO VAIL
44
EXHIBIT D
FORM OF EAST WEST PURCHASE AGREEMENT
