Exhibit 2.1
STOCK PURCHASE AGREEMENT
AMONG
KAMORI INTERNATIONAL CORPORATION, as the Seller
ASC WEST, as the Buyer
AND
ASC HOLDINGS, INC.
August 1, 1997
TABLE OF CONTENTS
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1. Definitions.......................................................... 1
2. Purchase and Sale of Shares.......................................... 7
(a) Basic Transaction.............................................. 7
(b) Purchase Price................................................. 7
(c) Working Capital Adjustment..................................... 8
(d) Additional Payment............................................. 9
(e) Operating Losses............................................... 9
(f) The Closing.................................................... 11
(g) Deliveries at the Closing...................................... 11
(h) Excluded Assets................................................ 11
3. Additional Agreements by the Seller, the Buyer and ASC............... 11
(a) Planned Capital Expenditure Program............................ 11
(b) Sales and Transfer Taxes and Fees.............................. 13
4. Representations and Warranties Concerning the Transac tion........... 13
(a) Representations and Warranties of the Seller................... 13
(b) Representations and Warranties of the Buyer and ASC............ 15
5. Representations and Warranties Concerning the Companies.............. 16
(a) Organization, Qualification, and Corporate Power............... 16
(b) Capitalization................................................. 16
(c) Noncontravention............................................... 17
(d) Brokers' Fees.................................................. 17
(e) Title to Tangible Assets....................................... 18
(f) Financial Statements........................................... 18
(g) Events Subsequent to Most Recent Fiscal Month End.............. 18
(h) Legal Compliance............................................... 18
(i) Tax Matters.................................................... 19
(j) Real Property.................................................. 19
(k) Intellectual Property.......................................... 21
(l) Contracts...................................................... 21
(m) Powers of Attorney............................................. 22
(n) Litigation..................................................... 22
(o) Employee Benefits.............................................. 22
(p) USFS Permits................................................... 23
(q) Labor Matters.................................................. 23
(r) Books and Records.............................................. 24
(s) Insurance...................................................... 24
(t) Environment, Health, and Safety................................ 24
(u) Water Rights................................................... 25
(v) Condition and Sufficiency of Assets............................ 25
(w) Relationships with Affiliates.................................. 26
(x) Guarantees..................................................... 26
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6. Pre-closing Covenants................................................ 26
(a) General........................................................ 26
(b) Notices to and Consents by Government.......................... 26
(c) Operation of Business.......................................... 27
(d) Maintenance of Assets.......................................... 27
(e) Full Access, Disclosure, Press Release......................... 27
(f) Notice of Developments......................................... 28
(g) Payment of Indebtedness........................................ 28
(h) USFS Permit.................................................... 28
(i) Cooperation.................................................... 28
(j) Qualification of the Buyer to Secure Permits, Licenses
and Other Approvals............................................ 28
(k) Escrow Agreement............................................... 29
(l) Financial Statements........................................... 29
(m) No Shop........................................................ 29
7. Post-Closing Covenants............................................... 29
(a) General........................................................ 29
(b) Litigation Support............................................. 29
(c) Perpetual Lift and Golf Passes................................. 30
(d) Employment..................................................... 31
(e) Bonus.......................................................... 31
8. Conditions to Obligation to Close.................................... 31
(a) Conditions to Obligation of the Buyer and ASC.................. 31
(b) Conditions to Obligation of the Seller......................... 32
9. Tax Matters.......................................................... 33
(a) Tax Sharing Agreements......................................... 33
(b) Returns for Periods Through the Closing Date................... 33
(c) Audits......................................................... 34
(d) Section 338(h)(10) Election.................................... 34
10. Remedies for Breaches of This Agreement.............................. 35
(a) Survival of Representations and Warranties..................... 35
(b) Indemnification Provisions for Benefit of the Buyer............ 35
(c) Indemnification Provisions for Benefit of the Seller........... 36
(d) Matters Involving Third Parties................................ 37
(e) Determination of Adverse Consequences.......................... 37
(f) Exclusive Remedy............................................... 37
(g) Liquidated Damages............................................. 37
11. Termination.......................................................... 38
(a) Termination of Agreement....................................... 38
(b) Effect of Termination.......................................... 39
12. Miscellaneous........................................................ 39
(a) Arbitration.................................................... 39
(b) No Third Party Beneficiaries................................... 40
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(c) Entire Agreement............................................... 40
(d) Succession and Assignment...................................... 40
(e) Counterparts................................................... 40
(f) Headings....................................................... 40
(g) Notices........................................................ 40
(h) Governing Law.................................................. 41
(i) Amendments and Waivers......................................... 42
(j) Severability................................................... 42
(k) Expenses....................................................... 42
(l) Construction................................................... 42
(m) Incorporation of Exhibits, Annexes, and Schedules.............. 42
(n) Joint and Several Obligations of the Buyer and ASC............. 42
Exhibit A -- Financial Statements
Exhibit B -- USFS Permits
Exhibit C -- Residence Purchase Agreement
Exhibit D -- Computer Software Licensing Agreement
Exhibit E -- Trademark Licensing Agreement
Exhibit F -- Capital Improvements
Exhibit G -- Escrow Agreement
Annex I -- Exceptions to the Seller's Representations and
Warranties Concerning the Transaction
Annex II -- Exceptions to the Buyer's Representations and
Warranties Concerning the Transaction
Schedule 2(h)(ii) -- Excluded Assets
Schedule 6(g) -- Indebtedness
Schedule 7(c)(i) -- Ski Passes
Schedule 7(e) -- Bonuses
Schedule 9(k) -- Allocation Schedule
Disclosure Schedule -- Exceptions to Representations and Warranties
Concerning the Companies
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STOCK PURCHASE AGREEMENT
Agreement entered into as of August, 1, 1997, by and among ASC West,
a Maine corporation (the "Buyer"), Kamori International Corporation, a Delaware
corporation (the "Seller"), and ASC Holdings, Inc., a Maine corporation ("ASC").
The Buyer, the Seller and ASC are referred to herein collectively as the
"Parties" and individually as a "Party."
The Seller owns all of the outstanding capital stock (the "Shares")
of Steamboat Ski & Resort Corporation, a Delaware corporation ("SSRC"),
Steamboat Development Corporation, a Delaware corporation ("SDC"), Orlando
Resort Corporation, a Delaware corporation ("ORC"), Heavenly Valley Ski & Resort
Corporation, a Delaware corporation ("HVSRC"), and Heavenly Corporation, a
Delaware corporation ("HC"). HVSRC and HC collectively own all of the
partnership interests in Heavenly Valley, Limited Partnership, a Nevada limited
partnership ("HVLP" and, collectively with SSRC, SDC, ORC, HVSRC and HC, the
"Companies").
This Agreement contemplates a transaction in which ASC will purchase
through the Buyer, its direct wholly-owned subsidiary, from the Seller, and the
Seller will sell to the Buyer, all of the outstanding capital stock of each of
the Companies in return for cash.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Adjusted Amount" has the meaning set forth in ss. 2(b) below.
"Adverse Consequences" means, whether or not involving a third party
claim, all actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,
damages, diminution in monetary value, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
ss. 1504.
"Applicable Federal Rate" means the short term applicable Federal Rate as
published from time to time by the Internal Revenue Service in accordance with
the Code.
"ASC" has the meaning set forth in the preface above.
"Banking Day" means any day other than a Saturday, Sunday or a day when
banks are authorized or required by law to close in New York, New York.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in ss. 2(f) below.
"Closing Date" has the meaning set forth in ss. 2(f) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" has the meaning set forth in the preface above.
"Confidential Information" means any information concerning the businesses
and affairs of the Companies and their subsidiaries that is not already
generally available to the public.
"Contract Deposit" has the meaning set forth in ss. 6(k) below.
"Disclosure Schedule" has the meaning set forth in ss. 5 below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA ss.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA ss.
3(1).
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"Environmental Laws" means all foreign, federal, state and local laws,
regulations, rules and ordinances relating to pollution or protection of human
health or the environment, including, without limitation, laws relating to
releases or threatened releases of Hazardous Substances into the indoor or
outdoor environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, release,
transport or handling of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means the LTCB Trust Company.
"Expedited Arbitration" has the meaning set forth in ss. 12(b) below.
"Financial Statements" has the meaning set forth in ss. 5(f) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Governmental Authorization" means any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" means any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any
court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
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"Hazardous Substances" means all substances defined as such in the
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss.
300.5, or defined as such by, or regulated as such under, any Environmental Law,
including, but not limited to, petroleum, asbestos, or polychlorinated
biphenyls.
"Income Tax" means any Tax or measured by net income.
"Income Tax Return" means any return, declaration, report or information
return or statement relating to Income Taxes, including any schedule or
attachment thereto.
"Indebtedness" means, with respect to any Person, without duplication any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing capital lease obligations or the balance deferred
and unpaid of the purchase price of any property or representing any hedging
obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and hedging obligations) would appear as a liability upon
a balance sheet of such Person prepared in accordance with GAAP and any
guarantee by such Person of any Indebtedness of any other Person.
"Indemnified Party" has the meaning set forth in ss. 10(d) below.
"Indemnifying Party" has the meaning set forth in ss. 10(d) below.
"Knowledge" -- the Seller will be deemed to have "Knowledge" of a
particular fact or other matter if any executive officer of any of the Companies
is actually aware of such fact or other matter or should reasonably be expected
to discover or otherwise become aware of such fact or matter in the Ordinary
Course of Business.
"Legal Requirement" means any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Management" means persons employed by either SSRC, HVSRC, HC or HVLP as
President or Vice President as of the date of this Agreement.
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"Material Adverse Effect" means a material adverse effect upon the
business, properties, results of operations or financial position of the
Companies as a whole.
"Most Recent Financial Statements" has the meaning set forth in ss. 5(f)
below.
"Most Recent Fiscal Month End" has the meaning set forth in ss. 5(f)
below.
"New USFS Permits" has the meaning set forth in ss. 6(h) below.
"Net Working Capital" means the value of trade receivables determined on
an aged basis in accordance with GAAP, minus (x) the amount of trade payables
(excluding from this amount payables associated with the capital expenditures
indicated on Exhibit F attached hereto), and (y) deposits and other amounts
constituting prepayments for goods or services to be provided by any of the
Companies following the Closing, including without limitation, amounts paid for
the 1997-1998 ski passes or other pre-season or discount ticket sales, all as
reflected on the September 30 Balance Sheets, as determined in accordance with
GAAP and excluding items relating to transactions among the Companies and its
Affiliates.
"Operating Cash Flow Deficit" has the meaning set forth in ss. 2(e)(i)
below.
"Operating Cash Flow Deficit Reimbursement" has the meaning set forth in
ss. 2(e)(i) below.
"Ordinary Course of Business" means, with respect to the Companies, the
ordinary course of business consistent with past custom and practice, taking
into account the seasonality of their businesses.
"Organizational Documents" means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the limited partnership
agreement and the certificate of limited partnership of a limited partnership;
(c) any charter or similar document adopted or filed in connection with the
creation, formation, or organization of a Person; and (d) any amendment to any
of the foregoing.
"Parties" has the meaning set forth in the preface above.
"Permitted Liens" shall mean (A) mechanics' carriers', workmens',
repairmens' and other like liens for work performed for, or services rendered or
supplies furnished to, any of the Companies in the ordinary course of business
(but excluding Security Interests), (B) liens for real estate taxes, assessments
and other
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governmental charges that are not yet due and payable or that may thereafter by
paid without penalty, or that are being contested in good faith by appropriate
proceedings, (C) imperfections of title that are not substantial in character,
(D) easements, covenants, rights-of-way, claims and other encumbrances (but
excluding any Security Interests), (E) zoning, building and other similar
restrictions, and (F) any conditions that may be shown by a current, accurate
survey or physical inspection of any of the real property of the Companies made
prior to Closing, none of which items set forth in clauses (a) through (f)
above, individually or in the aggregate, have, had or would reasonably be
expected to have a Material Adverse Effect.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Preliminary September 30 Balance Sheets" has the meaning set forth in ss.
2(c)(ii) below.
"Proceeding" has the meaning set forth in ss. 5(n) below.
"Reportable Event" has the meaning set forth in ERISA ss. 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens securing trade payables or capital expenditures pursuant to ss.
3(c), (b) liens for taxes not yet due and payable or for taxes that the taxpayer
is contesting in good faith through appropriate proceedings and for which
adequate reserves are made in the Financial Statements, (c) purchase money liens
securing trade payables or capital expenditures pursuant to ss.3 (c), and (d)
other liens arising in the Ordinary Course of Business.
"Seller" has the meaning set forth in the preface above.
"September 30 Balance Sheets" has the meaning set forth in ss. 2(c)(iv)
below.
"September 30 Net Working Capital" has the meaning set forth in ss.
2(c)(i) below.
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"Shares" means all of the outstanding shares of the Common Stock of each
of SSRC, SDC, ORC, HVSRC and HC.
"Tax and Taxes" any taxes imposed by the United States or any state, local
or foreign Governmental Body.
"Tax Returns" means any return, declaration, report or information return
or statement relating to Taxes, including any schedule or attachment thereto.
"Third Party Claim" has the meaning set forth in ss. 10(d) below.
"Threatened" --a claim, proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any written statement has been made or
any written notice has been given, that would lead a prudent Person to conclude
that such a claim, proceeding, dispute, action or other matter is likely to be
asserted, commenced, taken, or otherwise pursued in the future.
"Unadjusted Purchase Price" has the meaning set forth in ss. 2(b) below.
"USFS" means the United States Forest Service.
2. Purchase and Sale of Shares.
(a) Basic Transaction. On the terms and subject to the conditions of
this Agreement, the ASC and the Buyer jointly and severally agree to purchase
from the Seller, and the Seller agrees to sell to the Buyer, all of the Shares
for the consideration specified below in this ss. 2.
(b) Purchase Price. The Buyer shall pay to the Seller $288.3 million
(the "Unadjusted Purchase Price") plus or minus, as the case may be, an
Adjustment Amount. The Adjustment Amount shall be the sum of (i) the Net Working
Capital calculated pursuant to ss. 2(c) below; (ii) the Additional Payment
calculated pursuant to ss. 2(d) below; and (iii) the Operating Cash Flow Deficit
Reimbursement calculated pursuant to ss. 2(e) below.
Upon execution of this Agreement, the Buyer shall deposit with the
Escrow Agent the Contract Deposit. Such Contract Deposit shall be a check made
payable to the order of the Escrow Agent and shall be partial payment of the
Unadjusted Purchase Price. On the Closing Date, the Buyer shall pay, in cash
payable by wire transfer or delivery of other immediately available funds: (i)
the balance of the Unadjusted Purchase Price and (ii) the Additional Payment.
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The positive Net Working Capital and the Operating Cash Flow Deficit
Reimbursement shall be paid in cash payable by wire transfer or delivery of
other immediately available funds as promptly as practicable and in accordance
with ss. 2(c) and ss. 2(e) below.
Upon consummation of the transactions contemplated hereby, the
Seller shall retain the Contract Deposit. The Unadjusted Purchase Price shall be
allocated to the capital stock of each of the Companies based on an appraisal by
a firm or firms through a procedure mutually acceptable to the Parties to this
Agreement promptly after execution of this Agreement but prior to the Closing.
(c) Working Capital Adjustment.
(i) The Buyer shall pay all positive Net Working Capital as
calculated from the September 30 Balance Sheets (the "September 30 Net
Working Capital") to the Seller. If the September Net Working Capital is
negative then the Seller shall deliver to the Buyer the amount of such
September 30 Net Working Capital. Payments must be made in immediately
available funds and to such accounts as the receiving party will specify.
(ii) Within sixty (60) days following the Closing Date, the Seller
shall cause its Certified Public Accountant (currently Xxxxxx Xxxxxxxx
LLP) to prepare and deliver to the Buyer audited balance sheets of the
Companies as of September 30, 1997 (the "Preliminary September 30 Balance
Sheets"). The Preliminary September 30 Balance Sheets shall be accompanied
by an opinion of the Certified Public Accountant to the following effect;
the Preliminary September 30 Balance Sheets will present fairly the
consolidated financial position of the Companies as of September 30, 1997
and will be in conformity with GAAP. The Buyer shall, and shall cause the
Companies to, fully cooperate in good faith with the Seller in the
preparation of the Preliminary September 30 Balance Sheets, such
cooperation to include, without limiting the generality of the foregoing,
full access to the books and records of the Companies for such purpose.
The Seller and the Buyer shall each pay 50% of the fees and expenses of
the Certified Public Accountant.
(iii) Upon receipt of the Preliminary September 30 Balance Sheets,
the Buyer and its accountants shall have the right during the succeeding
thirty (30)-day period to examine, at the Buyer's expense, the Preliminary
September 30 Balance Sheets and all records used to prepare such
Preliminary September 30 Balance Sheets. The Buyer shall notify the
8
Seller in writing, on or before the last day of the thirty (30)-day
period, of any good faith objections to the Preliminary September 30
Balance Sheets, setting forth a detailed description of the Buyer's
objections and the dollar amount of each objection. If the Buyer does not
deliver such notice within such thirty (30)-day period, the Preliminary
September 30 Balance Sheets shall be deemed to have been accepted by the
Buyer.
(iv) If the Buyer in good faith objects to the Preliminary September
30 Balance Sheets, the Seller and the Buyer shall attempt to resolve any
such objections within ten (10) days of the Seller's receipt of the
Buyer's objections. If the Parties agree upon the resolution of their
dispute, such resolution shall be conclusive and binding upon the Parties.
If the Parties are unable to resolve the matter within such ten (10) day
period, then the Parties shall submit such dispute for final resolution in
accordance with the procedures set forth in ss. 12(b). The Preliminary
September 30 Balance Sheets after the acceptance thereof by the Buyer or
the resolution of all disputes in connection therewith pursuant to ss.
12(b) hereof is referred to herein as the "September 30 Balance Sheets."
(d) Additional Payment. The Buyer agrees to pay to the seller an
additional amount (the "Additional Payment") equal to the Unadjusted Purchase
Price multiplied by the short-term Applicable Federal Rate for October, 1997 as
published by the Internal Revenue Service and a fraction, the numerator of which
is the number of days from and including October 1, 1997 and to and excluding
the Closing Date, and the denominator of which is 360.
(e) Operating Losses.
(i) The Buyer shall reimburse the Seller for the sum of operating
cash flow deficits (the "Operating Cash Flow Deficit Reimbursement") of
each of the Companies' operations realized by the Companies for the period
from and including October 1, 1997 to the Closing as provided below. The
Operating Cash Flow Deficit for a Company during this period shall be
defined as the loss before income taxes, computed on the accrual basis of
accounting in accordance with GAAP, minus (a) depreciation expense, (b)
amortization expense related to deferred loan costs, (c) interest expense,
(d) bad debt expense related to accounts and mortgages receivable, and (e)
cash received by the Companies during the period from October 1, 1997 to
the Closing Date related to the sale of ski passes for the 1997-98 ski
season (or any subsequent ski season) of such Company; provided, however,
without duplication, any amount paid in respect of trade payables on the
September 30 Balance Sheets
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paid between September 30, 1997 and the Closing shall be added to the
Operating Cash Flow Deficit. For example, if the loss before income taxes
computed on the accrual basis of accounting in accordance with GAAP were
$100, and depreciation expenses were $25 then the Operating Cash Flow
Deficit would be $75. Payments must be made in immediately available funds
and to such account as the Seller will specify and shall be made together
with interest at the Applicable Federal Rate for the month of October 1997
compounded daily beginning on the Closing Date and ending on the date of
payment.
(ii) Within sixty (60) days following the Closing, the Seller shall
cause its Certified Public Accountant to determine the actual amount of
the Operating Cash Flow Deficit Reimbursement and to give notice thereof
to the Buyer which notice (the "Cash Flow Notice") shall include said
Certified Public Accountant's documentation of such final determination.
The Buyer shall, and shall cause the Companies to, fully cooperate in good
faith with the Seller in such determination, such cooperation to include,
without limiting the generality of the foregoing, full access to the books
and records of the Companies for such purpose. The Seller and the Buyer
shall each pay 50% of the fees and expenses of the Certified Public
Accountant.
(iii) Upon receipt of the Cash Flow Notice, the Buyer and its
accountants shall have the right during the succeeding thirty (30)-day
period to examine, at the Buyer's expense, the Cash Flow Notice and all
records used to prepare such. The Buyer shall notify the Seller in
writing, on or before the last day of the thirty (30)-day period, of any
good faith objections to the Cash Flow Notice, setting forth a detailed
description of the Buyer's objections and the dollar amount of each
objection. If the Buyer does not deliver such notice within such thirty
(30)-day period, the Cash Flow Notice shall be deemed to have been
accepted by the Buyer.
(iv) If the Buyer in good faith objects to the Cash Flow Notice, the
Seller and the Buyer shall attempt to resolve any such objections within
ten (10) days of the Seller's receipt of the Buyer's objections. If the
Parties agree upon the resolution of their dispute, such resolution shall
be conclusive and binding upon the Parties. If the Parties are unable to
resolve the matter within such ten (10) day period, then the Parties shall
submit such dispute for final resolution in accordance with the procedures
set forth in ss. 12(b).
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(f) The Closing.
(i) The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 commencing at
9:00 a.m. local time on the second Banking Day following the satisfaction
or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions
with respect to actions the respective Parties will take at the Closing
itself) or such other Banking Day as the Buyer and the Seller may mutually
determine (the "Closing Date"); provided, however, that the Closing Date
shall be no earlier than October 15, 1997; provided, further, that the
Buyer may accelerate the Closing Date with 15 days' written notice to the
Seller.
(ii) Time shall be of the essence with respect to the Closing Date
and all other periods of time set forth herein.
(g) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in ss. 8(a) below, (ii) the Buyer will deliver to the Seller the
various certificates, instruments, and documents referred to in ss. 8(b) below,
(iii) the Seller will deliver to the Buyer stock certificates representing all
of the Shares, endorsed in blank or accompanied by duly executed assignment
documents, and (iv) the Buyer will deliver to the Seller the consideration
specified in ss. 2(b) above.
(h) Excluded Assets. Notwithstanding anything contained in this
Agreement to the contrary, the Seller has not agreed to sell to the Buyer and is
not obligated to transfer to the Buyer and the Buyer has not agreed to purchase
and is not entitled to acquire from the Seller (i) Cash, and (ii) any of the
assets set forth in Schedule 2(h)(ii) attached hereto, and all of which shall
remain the sole and exclusive property of the Seller, and all of which shall be
distributable pursuant to ss. 6(d) herein.
3. Additional Agreements by the Seller, the Buyer and ASC.
(a) Planned Capital Expenditure Program.
(i) The Seller shall cause the Companies, prior to the Closing
Date, to proceed diligently with the capital improvements to the assets
which are described on Exhibit F hereto (each a "Capital Improvement").
Said Exhibit F sets forth the estimated cost of performing each Capital
Improvement. Unless the Seller otherwise agrees in writing, the aggregate
estimated cost of performing all Capital Improve-
11
ments by the Companies shall not exceed the aggregate amount of performing
all Capital Improvements set forth in Exhibit F attached hereto.
(ii) The Seller agrees that all work to be done in connection
with performing any or all such Capital Improvements shall, if and when
commenced, be performed with due diligence in a good and workmanlike
manner and in compliance with all laws in conformity with the standard
observed by prudent owners of comparable facilities and all applicable
legal and insurance requirements.
(iii) On the Closing Date, the Seller shall pay to the Buyer
an amount equal to 85% ("Pre-Closing Capital Expenditure Payment") of the
excess of (i) the aggregate amount indicated on Exhibit F attached hereto
over (ii) the Seller's estimate of the aggregate amount ("Pre-Closing
Capital Expenditures") the Seller has paid in connection with the capital
expenditures in Exhibit F as of the Closing Date.
(iv) Within sixty (60) days following the Closing, the Buyer
shall cause its Certified Public Accountant to determine the actual amount
of the Pre-Closing Capital Expenditures ("Actual Pre-Closing Capital
Expenditures") and to give notice thereof to the Seller which notice (the
"Capital Expenditure Notice") shall include said Certified Public
Accountant's documentation of such final determination. The Capital
Expenditure Notice shall also set forth the excess of (i) the aggregate
amount indicated on Exhibit F attached hereto over (ii) the sum of (A) the
Pre-Closing Capital Expenditures Payment and (B) Actual Pre-Closing
Capital Expenditures ("Capital Expenditure Adjustment"). The Seller shall
pay the Buyer the Capital Expenditure Adjustment pursuant to the
procedures set forth below. The Buyer shall pay the fees and expenses of
the Certified Public Accountant.
(v) Upon receipt of the Capital Expenditure Notice, the Seller
and its accountants shall have the right during the succeeding thirty
(30)-day period to examine, at the Seller's expense, the Capital
Expenditure Notice and all records used to prepare such. The Seller shall
notify the Buyer in writing, on or before the last day of the thirty
(30)-day period, of any good faith objections to the Capital Expenditure
Notice, setting forth a detailed description of the Seller's objections
and the dollar amount of each objection. If the Seller does not deliver
such notice within such thirty (30)-day period, the Capital Expenditure
Notice shall be deemed to have been accepted by the Seller.
12
(vi) If the Seller in good faith objects to the Capital
Expenditure Notice, the Buyer and the Seller shall attempt to resolve any
such objections within ten (10) days of the Buyer's receipt of the
Seller's objections. If the Parties agree upon the resolution of their
dispute, such resolution shall be conclusive and binding upon the Parties.
If the Parties are unable to resolve the matter within such ten (10)-day
period, then the Parties shall submit such dispute for final resolution in
accordance with the procedures set forth in ss. 12(b).
(vii) No later than 10 days after May 31, 1998, the Buyer
shall deliver to the Seller an invoice itemizing, in the same manner as
set forth in Exhibit F, all expenditures incurred in connection with
performing the Capital Improvements for the period from and including the
Closing Date to and including May 31, 1998 ("Post-Closing Capital
Expenditures"). The Buyer shall pay the Seller an amount equal to 49% of
the excess of (i) the aggregate amount of capital expenditures set forth
in Exhibit F over the (ii) the sum of (A) the Pre-Closing Capital
Expenditures and (B) the Post-Closing Capital Expenditures.
(b) Sales and Transfer Taxes and Fees. The Buyer shall pay all state
and local taxes, other than franchise taxes or Income Taxes or taxes in the
nature thereof, with respect to the transactions contemplated by this Agreement,
including documentary fees and sales and transfer taxes.
4. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer and ASC that the statements contained in
this ss. 4(a) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this ss. 4(a)) with respect to itself, except as set forth in Annex I
attached hereto.
(i) Organization. The Seller is a corporation duly organized and
validly existing under the laws of Delaware. The Seller is duly authorized
to execute, deliver and perform this Agreement. Subject to obtaining the
consents set forth in ss. 5(c) of the Disclosure Schedule, upon execution
and delivery, and assuming the due authorization, execution and delivery
by the Buyer, this Agreement will constitute the legal, valid and binding
obligations of the Seller, enforceable against the Seller in accordance
with its terms, except
13
as such enforceability may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization and other similar laws affecting creditor's
rights generally and (ii) the general principles of equity, regardless of
whether asserted in a proceeding in equity or at law. The execution,
delivery and performance of this Agreement by the Seller will not violate
any law or regulation applicable to it, or its Certificate of
Incorporation or by-laws, and will not constitute or result in a breach or
default under any written agreement or other written instrument to which
it is a party or by which it is bound or which affects any of its assets.
(ii) No Conflict. Except as otherwise consented to, and subject to
obtaining the consents listed in ss. 5(c) of the Disclosure Schedule, the
execution and delivery of this Agreement by the Seller, the performance or
compliance by the Seller of and with the terms and conditions hereof to be
performed and complied with by the Seller, and the consummation by the
Seller of the transactions contemplated hereby will not violate, conflict
with or constitute a breach of (i) the terms, conditions or provisions of,
or constitute a default under, any contract or agreement to which the
Seller is a party or by which the Seller or its assets are bound or
affected, that will be in effect at the Closing, or (ii) any law or
regulation or any order, writ, injunction, or decree of any federal,
state, local, or foreign court, department, agency, or instrumentally to
which the Seller is subject or any or its assets is bound.
(iii) Brokers' Fees. The Seller has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement, for which the Buyer
could become liable or obligated except for such obligations to the
Long-Term Credit Bank of Japan, Ltd., and any such fees or commissions
payable to the Long-Term Credit Bank of Japan, Ltd. shall be the
obligations of the Seller.
(iv) Shares. The Seller holds of record and owns beneficially the
number of Shares set forth next to its name in ss. 5(b) of the Disclosure
Schedule, free and clear of any restrictions on transfer (other than
restrictions under the Securities Act and state securities laws), taxes,
Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. The Seller is not a party to
any option, warrant, purchase right, or other contract or commitment that
could require the Seller to sell, transfer, or otherwise dispose of any
capital stock of the Companies (other than this Agreement). The Seller is
not a party to any voting trust, proxy, or other agreement or
14
understanding with respect to the voting of any capital stock of the
Companies.
(b) Representations and Warranties of the Buyer and ASC. The Buyer
and ASC jointly and severally represent and warrant to the Seller that the
statements contained in this ss. 4(b) are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this ss. 4(b)), except as set forth in Annex II
attached hereto.
(i) Organization. The Buyer and ASC are corporations duly organized
and validly existing under the laws of Maine. The Buyer is a direct
wholly-owned subsidiary of ASC. ASC owns all the capital stock of American
Skiing Company. The Buyer and ASC are duly authorized to execute, deliver
and perform this Agreement. Upon execution and delivery, this Agreement
will constitute the legal, valid and binding obligations of the Buyer and
ASC, enforceable against the Buyer and ASC in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization and other similar laws affecting
creditor's rights generally and (ii) the general principles of equity,
regardless of whether asserted in a proceeding in equity or at law. The
execution, delivery and performance of this Agreement by the Buyer and ASC
will not violate any law or regulation applicable to them, or their
respective Certificate of Incorporation or by-laws, and will not
constitute or result in a breach or default under any written agreement or
other written instrument to which any of them is a party or by which any
of them is bound or which affects any of their assets.
(ii) No Conflict. The execution and delivery of this Agreement by
the Buyer and ASC, the performance or compliance by the Buyer and ASC of
and with the terms and conditions hereof to be performed and complied with
the Buyer and ASC, and the consummation by the Buyer and ASC of the
transactions contemplated hereby will not violate, conflict with or
constitute a breach of the terms, conditions or provisions of, or
constitute a default under any contract or agreement to which either the
Buyer or ASC is a party or by which either the Buyer or ASC or any of
their assets are bound or affected, or (ii) any law or regulation or any
order, writ, injunction, or decree of any federal, state, local, or
foreign court, department, agency, or instrumentally to which either the
buyer or ASC is subject or any or any of their assets is bound. Xx. Xxx
Xxxxx owns a majority of the issued and outstanding capital stock of ASC.
None of Xx. Xxxxx, ASC or
15
the Buyer is party to any contract or agreement that limits, restricts or
prohibits the ability of the Buyer or ASC to issue, or Xx. Xxxxx to
approve the issuance of, capital stock of the Buyer or ASC to finance the
transactions contemplated hereby.
(iii) Brokers' Fees. None of the Buyer, ASC, or American Skiing
Company has any liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated
by this Agreement.
(iv) Investment. Neither the Buyer nor ASC is acquiring the Shares
with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
(v) Management. Neither the Buyer nor ASC has any current plan or
intention to reshuffle, layoff or reassign one or more of the Management
as of the Closing. The Buyer and ASC reserve the right to assess the
Management's performance on a going forward basis after the Closing.
5. Representations and Warranties Concerning the Companies. The Seller
represents and warrants to the Buyer and ASC that the statements contained in
this ss. 5 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
ss. 5), except as set forth in the disclosure schedule delivered by the Seller
to the Buyer on the date hereof and initialed by the Parties (the "Disclosure
Schedule").
(a) Organization, Qualification, and Corporate Power. Each of the
Companies is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation. Each of the
Companies is duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is required. Each of the
Companies has full corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it. ss.
5(a) of the Disclosure Schedule lists the name, jurisdictions in which it is
authorized to do business and directors and officers of each of the Companies.
The Seller has delivered to the Buyer copies of the Organizational Documents of
each of the Companies, as currently in effect.
(b) Capitalization. The entire authorized capital stock of SSRC
consists of 22 shares, of which 18 shares are issued and outstanding. The entire
authorized capital stock of SDC consists of 100 shares, of which 20 shares are
issued and outstanding. The entire authorized capital stock of ORC consists of
10,000 shares,
16
of which 200 shares are issued and outstanding. The entire authorized capital
stock of HVSRC consists of 100 shares, of which 69 shares are issued and
outstanding. The entire authorized capital stock of HC consists of 100 shares,
of which 31 shares are issued and outstanding. All of the issued and outstanding
shares of each of SSRC, SDC, ORC, HVSRC and HC have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record by the
Seller as set forth in ss. 5(b) of the Disclosure Schedule. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Companies to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to the Companies.
(c) Noncontravention. To the Knowledge of the Seller, except as set
forth in ss. 5(c) of the Disclosure Schedule, neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which any of the Companies
is subject or any provision of the charter or bylaws of any of the Companies or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice or consent under any agreement,
contract, lease, license, instrument, or other arrangement to which any of the
Companies is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). Except for the consents set forth in ss. 5(c) of the Disclosure
Schedule, to the Knowledge of the Seller, none of the Companies needs to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Body in order for the Parties to consummate the
transactions contemplated by this Agreement. Except as set forth in ss. 5(c) of
the Disclosure Schedule, to the Knowledge of the Seller, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will, directly or indirectly (with or without notice or
lapse of time), give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate, or modify, any Governmental Authorization that is
held by any of the Companies or that otherwise relates to the business of, or
any of the assets owned or used by, any of the Companies.
(d) Brokers' Fees. None of the Companies has any liability or
obligation to pay any fees or commissions to any
17
broker, finder, or agent with respect to the transactions contemplated by this
Agreement.
(e) Title to Tangible Assets. Except as set forth in ss. 5(e) of the
Disclosure Schedule, to the Knowledge of the Seller, the Companies have good
title to, or a valid leasehold interest in, the tangible assets they use in the
conduct of their respective businesses or which are reflected in the Financial
Statements, true and clear of all Security Interests. This section does not
cover real estate, which is covered exclusively by ss. 5(j), intellectual
property, which is covered exclusively by ss. 5(k) or contracts, which are
covered by ss. 5(l).
(f) Financial Statements. Attached hereto as Exhibit A are the
following financial statements (collectively the "Financial Statements"): (i)
audited consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal years ended May 31,
1994, 1995, and 1996 for the Companies; and (ii) unaudited consolidated balance
sheets and statements of income, changes in stockholders' equity, and cash flow
(the "Most Recent Financial Statements") as of and for the twelve months ended
May 31, 1997 (the "Most Recent Fiscal Month End") for the Companies. The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of the Companies as
of such dates and the results of operations of the Companies for such periods;
provided, however, that the Most Recent Financial Statements are subject to
normal year-end adjustments and lack footnotes and other presentation items.
(g) Events Subsequent to Most Recent Fiscal Month End. Except as
provided in ss. 5(g) in the Disclosure Schedule, since the Most Recent Fiscal
Month End, there has not been any change that has resulted, and to the Knowledge
of the Seller, there has not been any event that is very likely to result, in a
Material Adverse Effect compared with the comparable prior period. Without
limiting the generality of the foregoing, since that date none of the Companies
has engaged in any practice, taken any action, or entered into any transaction
outside the Ordinary Course of Business.
(h) Legal Compliance. To the Knowledge of the Seller, each of the
Companies is in compliance with all Legal Requirements and Governmental
Authorizations. To the Knowledge of the Seller, none of the Companies has
received any written notice or written communication from any Governmental Body
or any other Person which are currently not remedied in full or pending
regarding (A) any actual, alleged,
18
possible, or potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential obligation on
the part of any of the Companies to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature. This section does not cover
environmental matters which are covered exclusively by ss. 5(t) below.
(i) Tax Matters.
(i) Each of the Companies has filed all Tax Returns that it was
required to file, such Tax Returns are true, accurate and complete, and
each of the Companies has paid all Taxes due. Each of the Companies has
complied with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes.
(ii) ss. 5(i)(ii) of the Disclosure Schedule lists all Income Tax
Returns filed with respect to any of the Companies for taxable periods
ended on or after May 31, 1994, indicates those Income Tax Returns that
have been audited, and indicates those Income Tax Returns that currently
are the subject of audit. The Seller shall deliver to the Buyer correct
and complete copies of all federal Income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by
any of the Companies since the tax year ended May 31, 1994.
(iii) The Affiliated Group with Seller as parent and the Companies
as subsidiary members has filed all Income Tax Returns that it was
required to file for each taxable period during which any of the Companies
was a member of the group, such Income Tax Returns are true, accurate and
complete, and the Affiliated Group has paid all Income Taxes shown thereon
as owing.
(iv) The charges, accruals and reserves with respect to Taxes on the
respective books of each of the Companies are adequate (determined in
accordance with GAAP). There exists no proposed tax assessment against any
of the Companies except as disclosed in the Financial Statements or in ss.
5(i)(iv) of the Disclosure Schedule.
(j) Real Property.
(i) Except as provided in ss. 5(j)(i) of the Disclosure Schedule,
ss. 5(j)(i) of the Disclosure Schedule lists all real property that any of
the Companies owns, which constitutes all owned real property used in the
operations of the Companies' business or otherwise occupied in connection
with the operations by the Companies, and/or reflected on the Financial
Statements or acquired since the date thereof. Neither the
19
Seller nor its Affiliates own any real property located in the States of
California, Colorado, Florida or Nevada other than those described in
Schedule ss. 2(h)(ii) herein. The Seller has delivered or made available
to the Buyer copies of the deeds and other instruments (as recorded) by
which the Companies acquired such real property interests, and copies of
all title insurance policies, opinions, abstracts, and surveys in the
possession of the Seller or the Companies and relating to such real
property interests. With respect to each such parcel of owned real
property:
(A) The identified owner has good and marketable title to the
parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for Permitted
Liens;
(B) Except as set forth in ss. 5(j)(i)(B) of the Disclosure
Schedule there are no leases, licenses, concessions, or other
agreements pursuant to which any of the Companies has granted to any
other party or parties the right of use or occupancy of any portion
of the parcel of real property described in ss. 5(j)(i) of the
Disclosure Schedule; and
(C) Except as may be provided in the instruments referred to
in ss. 5(j)(i)(A) of the Disclosure Schedule, there are no
outstanding options or rights of first refusal to purchase the
parcel of real property described in ss. 5(j)(i) of the Disclosure
Schedule, or any portion thereof or interest therein.
(ii) ss. 5(j)(ii) of the Disclosure Schedule lists all real property
leased or subleased to any of the Companies which constitutes all of the
real property leased or subleased to any of the Companies for the regular
use in the operation of their respective businesses, otherwise occupied by
the Companies and/or reflected on the Financial Statements or acquired or
disposed of in the Ordinary Course of Business since the date of the
Financial Statements. The Seller has delivered to the Buyer correct and
complete copies of the leases and subleases listed in ss. 5(j)(ii) of the
Disclosure Schedule (as amended to date). To the Knowledge of the Seller,
each lease and sublease listed in ss. 5(j)(ii) of the Disclosure Schedule
is in full force and effect, each Company is in full compliance therewith
and there exists no defaults, or events which with the passage of time or
giving of notice, could constitute a default.
(iii) Except as provided in ss. 5(j)(i) or (ii) of the Disclosure
Schedule, ss. 5(j)(i) and (ii) of the Disclosure
20
Schedule lists all real property that the Company owns, regularly uses or
occupies in connection with the operation of the Companies' respective
businesses.
(k) Intellectual Property. Except as disclosed in ss. 5(k) of the
Disclosure Schedule, to the Knowledge of the Companies, the Companies own or
possess adequate licenses or other valid rights to use or operate within the
scope of all Untied States and foreign patents, trademarks, trade names,
copyrights, service marks, all applications therefor and registrations thereof,
confidential or proprietary technical and business information, know-how and
trade secrets, and computer software (collectively, "Intellectual Property")
which are material to the operations of the Companies, as currently conducted.
ss. 5(k) of the Disclosure Schedule sets forth a full and complete list of the
service marks, trademarks, and copyrights owned by any of the Companies. Except
as disclosed in ss. 5(k) of the Disclosure Schedule, such Intellectual Property
that is owned by the Companies is not subject to any Security Interest. To the
Knowledge of the Companies, there are no infringements or other violations or
conflicts with the rights of others with respect to the use of or other conduct
by the Companies within the scope of, ownership of, validity or enforceability
of any Intellectual Property owned by the Companies.
(l) Contracts. ss. 5(l) of the Disclosure Schedule lists, other than
agreements for Indebtedness which the Seller or any of the Companies is
obligated to pay prior to or at Closing, (i) all written contracts currently in
effect and other written agreements currently in effect to which any of the
Companies is a party the performance of which will involve consideration in
excess of $100,000 or is otherwise material to the operation of the business,
and each licensing agreement or other contract with respect to patents,
trademarks, copyrights, or other intellectual property, including agreements
with current or former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual Property; (ii)
each collective bargaining agreement and other contract to or with any labor
union or other employee representative of a group of employees; (iii) each joint
venture and partnership agreement involving a sharing of profits, losses, costs,
or liabilities by any of the Companies with any other Person; and (iv) each
contract containing covenants that in any way purport to restrict the business
activity of any of the Companies or any Affiliate of any of the Companies or
limit the freedom of any of the Companies or any Affiliate of any of the
Companies to engage in any line of business or to compete with any Person. The
Seller has delivered to the Buyer a correct and complete copy of each contract
or other agreement listed in 5(l) of the Disclosure Schedule (as amended to
date).
21
To the Seller's Knowledge, all the contracts listed in ss. 5(l) of
the Disclosure Schedule are in full force and effect and neither the Seller nor
any of the Companies has received any written notice of breach, violation or
other default of any nature, or any event which with the passage of time or
giving of notice or both, would constitute an event of default, breach or other
violation with respect to any such contracts.
(m) Powers of Attorney. As of the completion of the Closing, there
will be no outstanding powers of attorney executed on behalf of any of the
Companies.
(n) Litigation. ss. 5(n) of the Disclosure Schedule sets forth each
instance in which any of the Companies (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction (the "Proceeding"), except where such Proceeding would
relate to matters with respect to which the Companies are fully insured and the
defense is being provided by the insurer or (iii) has any Knowledge that any
such Proceeding has been Threatened by written correspondence to any of the
Companies since January 1, 1995.
(o) Employee Benefits.
(i) ss. 5(o) of the Disclosure Schedule lists each Employee Benefit
Plan that any of the Companies maintains or to which any of the Companies
contributes. No Employee Company Benefit Plans are subject to Title IV of
ERISA.
(A) To the Knowledge of the Seller, each such Employee Benefit
Plan (and each related trust, insurance contract, or fund) complies
in form and in operation in all respects with the applicable
requirements of ERISA and the Code.
(B) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been
paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(C) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan has received a determination letter from the
Internal Revenue Service to the effect that it meets the
requirements of Code ss. 401(a).
(D) The Seller has delivered to the Buyer correct and complete
copies of the plan documents and summary
22
plan descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts, and
other funding agreements which implement each such Employee Benefit
Plan.
(ii) No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets of any
Employee Benefit Plan that any of the Companies maintains or ever has
maintained or to which any of them contributes, ever has contributed, or
ever has been required to contribute (other than routine claims for
benefits) is pending or to the Knowledge of the Companies has been
Threatened since January 1, 1995.
(p) USFS Permits. Annexed hereto as Exhibit B are true, complete and
correct copies of the existing USFS permits (including all amendments thereto).
The existing USFS Permits are in full force and effect and, to the best of its
knowledge, there are no defaults or amounts owing to USFS thereunder.
(q) Labor Matters. Since January 1, 1994, none of the Companies has
been or is a party to any collective bargaining or other labor contract. Since
January 1, 1994, to the Knowledge of the Seller, there has not been, there is
not presently pending or existing, and there is not Threatened, (a) any strike,
slowdown, picketing, work stoppage, or union grievances, (b) any proceeding
against or affecting any of the Companies relating to the alleged violation of
any Legal Requirement pertaining to labor relations or employment matters,
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable Governmental Body or organizational activity, against or
affecting any of the Companies or their premises, or (c) any application for
certification of a collective bargaining agent. There is no lockout of any
employees by any of the Companies, and no such action is contemplated by any of
the Companies. Each of the Companies has complied with all Legal Requirements
relating to employment, equal employment opportunity, discrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing.
To the Seller's Knowledge, ss.5(q) of the Disclosure Schedule
contains a complete and accurate list of the following information for each
employee or director of the Companies, including each employee on leave of
absence or layoff status; employer; name; job title; current compensation paid
or payable;
23
and any enforceable employment contracts of any of the Companies, if any.
(r) Books and Records. The books of account, minute books, stock
record books, and other records of the Companies, all of which have been made
available to the Buyer, are complete and correct and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books of the Companies contain
accurate and complete records of all meetings held of, and corporate action
taken by, the stockholders, the boards of directors, and committees of the
boards of directors of the Companies, and no meeting of any such stockholders,
board of directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Companies.
(s) Insurance. ss. 5(s) of the Disclosure Schedule sets forth a
complete and correct list and summary description of all insurance policies
maintained by or on behalf of any of the Companies as of the date hereof. Such
policies are in full force and effect, and all premiums due thereon have been
paid. The Companies have complied in all material respects with the terms and
provisions of such policies. The insurance coverage provided by such policies is
believed by each of the Companies to be suitable for the respective business and
operations of each of the Companies.
(t) Environment, Health, and Safety.
To the Knowledge of Seller:
(i) Each of the Companies is in compliance with, and there has been
no violation by the Companies of, since the respective date the Seller
acquired each of the Companies, all applicable Environmental Laws. Such
compliance includes, but is not limited to, the possession by each of the
Companies of all permits and other governmental authorizations required
under applicable Environmental Laws;
(ii) There is no pending or Threatened claim, lawsuit, or
administrative proceeding against any of the Companies under any
Environmental Law. Neither Seller nor any of the Companies has received
written notice or written communication from any federal, state, or local
governmental agency, having jurisdiction since the respective date the
Seller acquired each of the Companies, alleging that any of the Companies
are in violation of any applicable Environmental Law or otherwise
24
may be in liable under any applicable Environmental Law, which violation
or liability is unresolved; and
(iii) There have been no releases, spills or discharges of Hazardous
Substances on or underneath any of the real property currently owned or
leased by any of the Companies (the "Real Property") since the respective
date the Seller acquired each of the Companies;
(iv) The Seller and the Companies have made available to the Buyer
for the Buyer's review, true and complete records of (A) all reports
assessing the Companies' compliance with Environmental Laws or the
environmental condition of the properties that have been prepared within
the last five years from the date hereof, to the extent that such reports
are within the possession of Seller or the Companies; (B) all test results
relating to whether any of the Properties have been impacted by Hazardous
Substances, to the extent such test results are within the possession of
Seller or the Companies on the date of this Agreement; and (C) any written
notices of violation, administrative or judicial complaints, or
administrative or judicial orders (collectively, "Environmental
Documents"), relating to (1) violations or alleged violations of
Environmental Law or (2) releases, spills or discharges of Hazardous
Substances, to the extent, in both cases, that such Environmental
Documents relate to the Properties, are within the possession of Seller or
the Companies, and involve pending matters or were issued within the last
three years.
(v) The representations and warranties in this Section 5(u) are the
sole and exclusive representations and warranties in this Agreement
related to environmental matters.
(u) Water Rights. ss. 5(u) of the Disclosure Schedule contains a
list of all of the water rights (whether decreed or undecreed, tributary,
non-tributary, surface, underground or water authority or company stock) owned
by, used in connection with the businesses of the Companies or appurtenant to
real property owned by the Companies (the "Water Rights"). ss. 5(u) of the
Disclosure Schedule also identifies all sources of water (other than natural
snowfall) used by the Companies for snowmaking purposes during the 1996-1997 ski
season setting forth the estimated annual amounts used from each source. For
each of the fiscal years ended May 31, 1994, 1995, 1996 and 1997, each of the
Companies had all necessary right, title, and interest in and to sufficient
water rights to operate their respective businesses.
(v) Condition and Sufficiency of Assets. To the Knowledge of the
Seller, the buildings, plants, structures, and equipment, including all lifts,
snow-making and associated
25
equipment of the Companies are adequate for the uses to which they were being
put as of the end of the 1996-1997 ski season.
(w) Relationships with Affiliates. To the Knowledge of the Seller,
neither the Seller nor the Companies or any Affiliates of the Seller or of any
of the Companies has, or since May 31, 1996 has had, any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or pertaining to the Companies' businesses in the United States (except
for property that is owned or leased by any of the Companies or their
subsidiaries). To the Knowledge of the Seller, except as set forth in ss. 5(w)
of the Disclosure Schedule, neither the Seller or any Affiliates of the Seller
or of any of the Companies is a party to any contract with or has any claim or
right against, any of the Companies.
(x) Guarantees. Except as set forth in ss. 5(y) of the Disclosure
Schedule, (i) there is no Indebtedness of Persons other than the Companies
secured by a lien or other Security Interest on or in any assets of the
Companies (whether or not such indebtedness is assumed by the Companies), (ii)
the Companies do not have any preferred stock outstanding and (iii) the
Companies have not guaranteed any Indebtedness or other obligations of any
Persons other than the Companies.
6. Pre-closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in ss. 8 below).
(b) Notices to and Consents by Government. Each of the Parties will
(and the Seller will cause each of the Companies to) give any notices to, make
any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in ss. 4(a)(ii), ss. 4(b)(ii) and ss.
5(c) above. Without limiting the generality of the foregoing, each of the
Parties will file (and the Seller will cause each of the Companies to file) any
Notification and Report Forms and related material that it may be required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will use his or
its reasonable best efforts to obtain (and the Seller will cause each of the
Companies to use its reasonable best efforts to obtain) a
26
waiver from the applicable waiting period, and will make (and the Seller will
cause each of the Companies to make) any further filings pursuant thereto that
may be necessary, proper, or advisable in connection therewith.
(c) Operation of Business. Except as otherwise specifically
permitted under this agreement, including ss. 6(d) below, the Seller will not
cause or permit any of the Companies to engage in any practice, take any action,
or enter into any transaction outside the Ordinary Course of Business. The
Seller will cause the Companies to use their reasonable efforts to preserve
intact their respective business organization and their respective relationship
with suppliers, distributors, employees, customers and others having business
relationships with the Companies, except as may otherwise be agreed in writing
by the Buyer.
(d) Maintenance of Assets. The Seller shall cause the Companies to
maintain their respective assets consistent with their respective current
practices until the Closing; provided however, on or prior to the Closing Date,
the Seller may retain certain assets pursuant to ss. 2(h) herein and cause the
Companies to distribute such assets set forth in Schedule 2(h)(ii) attached
hereto.
(e) Full Access, Disclosure, Press Release. The Seller will permit
the Buyer, and the Seller will cause each of the Companies to permit the Buyer,
representatives of the Buyer, the Buyer's financing sources and their
representatives to have full access at all reasonable times, and in a manner so
as not to interfere with the normal business operations of the Companies, to all
premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to each of the Companies, whether in
the Companies' possession or in the possession of its independent public
accountants, subject to the rights of any tenants therein. The Buyer will treat
and hold as such any Confidential Information it receives from the Seller and
any of the Companies in the course of the reviews contemplated by this ss. 6(e),
will not use any of the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason whatsoever, will
return to the Seller and the Companies all tangible embodiments (and all copies)
of the Confidential Information which are in its possession. The Parties shall
make a mutually agreeable joint press release upon execution and delivery of
this Agreement. No Party shall issue any other press release or make any public
announcement relating to the subject matter of this Agreement prior to the
Closing without the prior written approval of the Buyer and the Seller, which
will not be unreasonably withheld or delayed; provided, however, that any Party
may make any public disclosure (in the case of information of a primarily
financial nature concerning the Seller or the Compa-
27
xxxx, limited to historical financial information) that in the opinion of
counsel to such Party is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities or which may be necessary or
desirable in connection with the Buyer's obtaining financing, including without
limitation in complying with the provisions of federal and state securities laws
and regulations and in conducting related underwriting and solicitation
activities, in which case the disclosing Party will use its reasonable best
efforts to advise the other Parties prior to making the disclosure.
(f) Notice of Developments. Each Party will give prompt written
notice to the others of any material adverse development causing a breach of any
of its own representations and warranties in this Agreement. No disclosure by
any Party pursuant to this ss. 6(f), however, shall be deemed to amend or
supplement Annex I, Annex II, or the Disclosure Schedule or to prevent or cure
any misrepresentation or breach of warranty.
(g) Payment of Indebtedness. On or prior to the Closing Date, the
Seller shall pay or assume full and complete liability for all Indebtedness for
borrowed money (including capital leases, if any) of the Companies existing at
the Closing Date, which Indebtedness for borrowed money, to the extent in
existence on the date hereof, is set forth on Schedule 6(g), and the Seller
shall deliver at Closing evidence satisfactory to the Buyer that the Companies
have been released of any and all liability or obligation therefor.
(h) USFS Permit. Each of ASC and the Buyer shall use its best
efforts to obtain (x) either (i) consents related to the transfer of ownership
interests in the Steamboat and Heavenly ski areas (the "USFS Consents") or (ii)
new USFS permits (the "New USFS Permits") and (y) any consents or agreements
which may be required in connection therewith, and the Seller shall cooperate
with the Buyer and furnish the Buyer such information as is in its possession
and is necessary to obtain such USFS Consents and New USFS Permits. Each of ASC
and the Buyer shall regularly inform the Seller of any developments with respect
to the process of obtaining such consents and agreements or New USFS Permits and
shall promptly respond to all inquiries of the Seller with respect thereto.
(i) Cooperation. The Buyer, ASC and the Seller each covenant to use
diligent efforts to cause all conditions to Closing to be met on or prior to the
Closing Date.
(j) Qualification of the Buyer to Secure Permits, Licenses and Other
Approvals. Each of ASC and the Buyer or its permitted assignee, shall take such
action as may reasonably be required to qualify itself under all applicable laws
and regula-
28
tions in order to consummate the transactions contemplated hereunder including
without limitation, obtaining the USFS Consents and the New USFS Permits. Each
of ASC and the Buyer shall timely and diligently proceed with such action so as
to be able to perform its obligations in accordance with the provisions of this
Agreement.
(k) Escrow Agreement. Upon execution of this Agreement, the Parties
shall enter into an escrow agreement in form and substance as set forth in
Exhibit G attached hereto, pursuant to which the Buyer agrees to deposit with
the Escrow Agent $11 million (the "Contract Deposit").
(l) Financial Statements. The Seller shall provide to the Buyer,
immediately upon receipt thereof, a full and complete copy of the Companies'
audited consolidated balance sheets and statements of income, changes in
stockholders' equity and cash flows as of, and for the twelve months ended on,
May 31, 1997, including all notes, together with the report of the Seller's
independent public accountants thereon.
(m) No Shop. The Seller shall not solicit, initiate, or encourage
any proposals from, or negotiate with, any Person other than the Buyer or ASC
with respect to the sale of any or all portion of its stock, any stock of any of
the Companies, or any assets of any of the Companies, except in the Ordinary
Course of Business, subject to the provisions of xx.xx. 6(c) and 6(d) hereof
until this Agreement is terminated. The Seller shall inform any prospective
purchasers that have contacted the Seller of the existence of this provision and
shall terminate any discussions with such prospective purchasers as promptly as
reasonably possible following any contact. Upon the Buyer's request, the Seller
will cooperate with the Buyer in informing any potential purchasers of this
provision.
7. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under ss.
10 below).
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim,
29
or demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving any of the Companies,
each of the other Parties shall cooperate with him or it and his or its counsel
in the defense or contest, make available their personnel, and provide such
testimony and access to their books and records as shall be necessary in
connection with the defense or contest, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under ss. 10 below).
(c) Perpetual Lift and Golf Passes.
(i) The Buyer shall honor the currently outstanding perpetual
ski-lift passes and golf passes for the Companies previously issued by the
Seller or its Affiliates or their respective predecessors, which passes
are listed on Schedule 7(c)(i) hereof, if and to the extent permitted
under federal law and by the USFS.
(ii) At the Closing, the Buyer shall issue ten new perpetual
ski-lift passes for each of the Steamboat and Heavenly resorts to and in
the name of the Seller, and shall have the ongoing obligation to issue ten
new perpetual ski- lift passes for each of the ski resorts other than the
Steamboat and Heavenly resorts which the Buyer will directly or indirectly
own on or after the Closing Date. All such passes shall be assignable to
any Affiliate of Kamori Kanko Co., Ltd., a Japanese corporation, the
majority owner of the Seller and each of the passes described in this ss.
7 may be used by any person designated by the recipient of such pass.
(iii) For so long as ASC directly or indirectly through its
Affiliates holds the concession from the USFS to operate the ski areas to
which such ski passes relate, ASC shall on an annual basis prior to
November 15th of each year hereafter issue or cause such Affiliates to
issue such new ski passes for the coming ski season to each of the persons
entitled to receive such new ski passes pursuant to the terms of this
Section. ASC further agrees that they shall require as a condition
precedent to the transfer of its interests in the Companies holding such
concession that the person or entity obtaining the succeeding concession
to operate such ski area (i) assume in all respects ASC's continuing
obligation to provide such new ski passes, and (ii) agrees to require any
succeeding transferee of the ski area concession to assume such
obligations as a condition precedent to such succeeding transfer.
30
(d) Employment. The Buyer and ASC shall not effectuate, or cause any
of the Companies to effectuate, a "plant closing" or "mass layoff" with respect
to either SSRC or HVLP within 60 days after the Closing within the meaning of
the Worker Adjustment and Restraining Notification Act.
(e) Bonus. The Buyer and ASC agree to make bonus payments in
December of 1997 to certain employees of HVLP as indicated in Schedule 7(e)
attached hereto. The bonus payments shall be, in the aggregate, $250,000.
8. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer and ASC. The obligations
of each of the Buyer and ASC to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in ss.4(a) and ss.5
above shall be true and correct in all material respects on the date
hereof and at and as of the Closing Date, subject only to such exceptions
as are not, individually or in the aggregate, materially adverse to the
business, properties, results of operations or financial position of the
Companies as a whole; provided that solely for such purpose such
representations and warranties shall be construed without any Knowledge
qualification contained therein, if any;
(ii) the Seller shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) the Seller shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in ss.
8(a)(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Parties and the Companies shall have received all other
authorizations, consents, and approvals of Governmental Bodies and other
third parties referred to in ss. 4(a)(ii), ss. 5(c) and including, without
limitation, ss. 5(c) of the Disclosure Schedule, subject only to such
conditions that would not cause a Material Adverse Effect; except where
failure to receive such authorizations, consents, and approvals of
Governmental Bodies and other third parties would not have a Material
Adverse Effect;
31
(vi) The Buyer shall have obtained the New USFS Permits in the name
of the Buyer, or an assignment of the existing USFS Permits which shall be
accompanied by an appropriate instrument of assignment or transfer to the
Buyer, and all required consents to such assignment or transfer, if any;
(vii) the Buyer shall have received from counsel to the Seller an
opinion addressed to the Buyer in form and substance reasonably
satisfactory to the Buyer's counsel, and dated as of the Closing Date; and
(viii) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer.
The Buyer or ASC may waive any condition specified in this ss. 8(a) if it
executes a writing so stating at or prior to the Closing. The availability of
financing is not a condition to the obligation of the Buyer and ASC to
consummate the transactions to be performed by them in connection with the
Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss. 4(b) above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer and ASC shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) the Buyer and ASC shall have delivered to the Seller a
certificate to the effect that each of the conditions specified above in
ss. 8(b)(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Parties and the Companies shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in ss. 4(a)(ii), ss. 4(b)(ii), and ss. 5(c) above
including, without limitation, ss. 5(c) of the Disclosure Schedule;
32
(vi) the Buyer and the Seller shall have entered into a licensing
agreement with respect to certain software owned by SSRC and a licensing
agreement with respect to certain trademarks, logos, service marks,
symbols or trade names as set forth in Exhibits D and E attached hereto
and the same shall be in full force and effect;
(vii) the Buyer shall have entered into a purchase agreement for Xx.
Xxxxxxxx Xxxxxx'x residence at Polo Place, 0000 Xxxx Xxxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxx 00000 in form and substance as set forth in Exhibit C
attached hereto and the same shall be in full force and effect;
(viii) the Seller shall have received from counsel to the Buyer an
opinion addressed to the Seller in form and substance reasonably
satisfactory to the Seller's counsel, and dated as of the Closing Date;
and
(ix) all actions to be taken by the Buyer and ASC in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Seller.
The Seller may waive any condition specified in this ss. 8(b) if it executes a
writing so stating at or prior to the Closing.
9. Tax Matters
(a) Tax Sharing Agreements. Any tax sharing agreement between the
Seller and any of the Companies is terminated as of the Closing Date and will
have no further effect for any taxable year (whether the current year, a future
year, or a past year).
(b) Returns for Periods Through the Closing Date. Seller's
Responsibility. The Seller shall be responsible for paying, and shall indemnify
and hold the Buyer and the Companies harmless, from and after the Closing Date,
from and against any liabilities in respect of (i) any Taxes of the Seller and
the Companies for any taxable periods ending on or before the Closing Date
("Pre-Closing Tax Periods") and (ii) any liability arising from the breach of
the Seller's representations and warranties contained in ss. 5(i) hereof;
provided, however, that the Seller shall not be responsible for any taxes
described in ss. 3(b) hereof. The Seller shall duly prepare, or cause to be
prepared, and file, or cause to be filed, on a timely basis all Tax Returns
including any consolidated, combined or similar Tax Return with respect to the
Companies for all Pre-Closing Tax Periods.
Buyer Responsibility. The Buyer and the Companies shall be
responsible for paying, and shall indemnify and hold the Seller harmless from,
against, and in respect of any Taxes of the Buyer
33
and of the Companies for (i) any Post-Closing Tax Periods and (ii) any taxes
described in ss. 3(b) hereof. The Buyer shall duly prepare, or cause to be
prepared, and file, or cause to be filed, on a timely basis all Tax Returns with
respect to the Companies for any taxable periods ending after the Closing Date
("Post-Closing Tax Periods"). Neither the Buyer nor the Companies shall file any
amended Tax Returns for any periods for or in respect of the Companies with
respect to which the Buyer is not obligated to prepare or cause to be prepared
pursuant to this ss. 9 without the prior written consent of the Seller. With
respect to the Closing Date, the Buyer and ASC shall not cause the Companies to
engage in any transaction that is not in each Company's Ordinary Course of
Business except as otherwise provided in this Agreement.
(c) Audits. With respect to any audits relating to taxes with
respect to taxable periods ending on or before the Closing Date, the Seller
shall control all proceedings and may make all decisions taken in connection
with such audit. With respect to any tax claim relating to taxable periods
ending after the Closing Date, the Buyer shall control all proceedings and may
make all decisions taken in connection with such audit. The Buyer and the Seller
shall cooperate in contesting any tax claim, which cooperation shall include the
retention and (upon request) the provision to the requesting party of records
and information which are reasonably relevant to such tax claim, and making
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such tax claim.
(d) Section 338(h)(10) ElectThe Seller will join with the Buyer in
making an election under Section 338(h)(10) of the Code (and any corresponding
elections under state, local, or foreign tax law) (collectively a "Section
338(h)(10) Election") with respect to the purchase and sale of the Shares
hereunder. The Seller will pay any tax attributable to the making of the Section
338(h)(10) Election as soon as practicable following the Closing Date, but in no
event later than thirty days prior to the date such ss. 338 forms are required
to be filed, the Buyer and the Seller shall prepare and agree upon the
computation of the Modified Aggregate Deemed Sale Price (as defined under
applicable Treasury Regulations) of the assets of the Companies in accordance
with the terms hereof and the allocation of such Modified Aggregate Deemed Sale
Price among such assets. This allocation of the Modified Aggregate Deemed Sale
Price shall be based upon the fair market value of the assets of the Companies
as determined by an appraisal conducted by a firm or firms through procedures as
the Buyer and the Seller mutually agree upon. The Buyer shall bear the cost of
all fees and expenses of the appraisal. All values contained in the allocation
shall be consistently reported for tax purposes in accordance with the
procedures reflected herein. The Buyer and the Seller shall report the purchase
and sale under this Agreement consistent with such ss. 338(h)(10) Election. The
Buyer and the Seller shall not take a position or any action contrary thereto
unless re-
34
quired to do so by applicable tax laws pursuant to a determination as defined in
ss. 1313(a) of the Code. The Seller shall execute and deliver to Buyer such
documents or forms as are reasonably requested and are required by any tax laws
in order to properly complete the ss. 338 forms at least twenty days prior to
the date such ss. 338 forms are required to be filed.
10. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties.
All of the representations and warranties of the Seller contained in
ss. 5 above (other than ss. 5(t)) shall survive the Closing hereunder (unless
the damaged Party knew of any misrepresentation or breach of warranty at the
time of Closing) and continue in full force and effect until May 31, 1998;
provided, however, the representations and warranties contained in ss. 5(t)
shall survive the Closing hereunder (unless the damaged Party knew of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect until September 30, 1998. All of the representations and
warranties of the Parties contained in ss. 4 above shall survive the Closing
(unless the damaged Party knew of any misrepresentation or breach of warranty at
the time of Closing) and continue in full force and effect for five (5) years
thereafter (subject to any applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
In the event the Seller breaches any of its representations,
warranties, and covenants contained herein and, if there is an applicable
survival period pursuant to ss. 10(a) above, provided that the Buyer makes a
written claim for indemnification against the Seller pursuant to ss. 12(h) below
within such survival period, then the Seller agrees to indemnify the Buyer from
and against any Adverse Consequences the Buyer shall suffer through and after
the date of the claim for indemnification caused by the breach; provided,
however, that the Seller shall not have any obligation to indemnify the Buyer
from and against any Adverse Consequences caused by the breach of any
representation or warranty of the Seller contained in ss. 5 above (other than
ss. 5(e), (t), and (u)): (A) until the Buyer has suffered Adverse Consequences
by reason of all such breaches in excess of a $100,000 aggregate deductible
(after which point the Seller will be obligated only to indemnify the Buyer from
and against further such Adverse Consequences) or thereafter (B) to the extent
the Adverse Consequences the Buyer has suffered by reason of all such breaches
exceeds a one (1) million dollars aggregate ceiling (after which point the
Seller will have no obligation to indemnify the Buyer from and against further
such Adverse Consequences); provided further that the Seller shall not have any
obligation to indemnify the Buyer from and against any Adverse Consequences by
the breach of any representation or warranty of the Seller:
35
(1) contained in ss. 5(e): (A) until the Buyer has suffered Adverse
Consequences by reason of such breaches in excess of $100,000 aggregate
deductible (after which point the Seller will be obligated only to
indemnify the Buyer from and against further such Adverse Consequences) or
thereafter (B) to the extent the Adverse Consequences the Buyer has
suffered by reason of such breaches exceed a one (1) million dollars
aggregate ceiling (after which point the Seller will have no obligation to
indemnify the Buyer from and against further such Adverse Consequences);
(2) contained in ss. 5(t): (A) until the Buyer has suffered Adverse
Consequences by reason of such breaches in excess of $500,000 aggregate
deductible (after which point the Seller will be obligated only to
indemnify the Buyer from and against further such Adverse Consequences) or
thereafter (B) to the extent the Adverse Consequences the Buyer has
suffered by reason of such breaches exceed a five (5) million dollars
aggregate ceiling (after which point the Seller will have no obligation to
indemnify the Buyer from and against further such Adverse Consequences);
(3) contained in ss. 5(u): (A) until the Buyer has suffered Adverse
Consequences by reason of such breaches in excess of $250,000 aggregate
deductible (after which point the Seller will be obligated only to
indemnify the Buyer from and against further such Adverse Consequences) or
thereafter (B) to the extent the Adverse Consequences the Buyer has
suffered by such breaches exceed a two (2) million dollars aggregate
ceiling (after which point the Seller will have no obligation to indemnify
the Buyer from and against further such Adverse Consequences;
provided further that, the Seller shall not have any obligation to indemnify the
Buyer from and against any Adverse Consequences caused by the breach of any
representation or warranty of the Seller contained in ss. 5 (e), (t) and (u): to
the extent the Adverse Consequences the buyer has suffered by reason of all such
breaches of ss. 5 (e), (t) and (u) exceed a five (5) million dollars aggregate
ceiling (after which point the Seller will have no obligation to indemnify the
Buyer from and against further such Adverse Consequences).
(c) Indemnification Provisions for Benefit of the Seller. In the
event the Buyer or ASC breaches any of their respective representations,
warranties, and covenants contained herein, and, if there is an applicable
survival period pursuant to ss. 10(a) above, provided that the Seller makes a
written claim for indemnification against the Buyer pursuant to ss. 12(h) below
within such survival period, then the Buyer and ASC agree to indemnify jointly
and severally the Seller from and against the entirety of any Adverse
Consequences the Seller shall suffer through and after the date of the claim for
indemnification caused by the breach.
36
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this ss. 10, then the Indemnified Party shall
promptly (and in any event within [five business days] after receiving
notice of the Third Party Claim) notify each Indemnifying Party thereof in
writing.
(ii) Any Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third Party Claim with counsel of
his or its choice reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages and does not impose
an injunction or other equitable relief upon the Indemnified Party.
(iii) Unless and until an Indemnifying Party assumes the defense of
the Third Party Claim as provided in ss. 10(d)(ii) above, however, the
Indemnified Party may defend against the Third Party Claim in any manner
he or it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of each of the Indemnifying
Parties (not to be withheld unreasonably).
(e) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage in determining
Adverse Consequences for purposes of this ss. 10. All indemnification payments
under this ss. 10 shall be deemed adjustments to the Unadjusted Purchase Price.
(f) Exclusive Remedy. The Parties agree that the remedies provided
in this Agreement shall constitute the sole and exclusive remedy available to
the Parties.
(g) Liquidated Damages. In the event the Buyer or ASC breaches any
of its representations, warranties, and covenants contained herein in any
material respect (including the Buyer's failure to purchase from the Seller the
Shares pursuant to this Agreement or if the closing condition with respect to
the Xxxx- Xxxxx-Xxxxxx Act set forth in ss. 8(a)(v) shall not have been
satisfied prior to October 31, 1997, each of which shall be deemed such a
material breach), the Seller shall retain the Contract
37
Deposit as liquidated damages; provided, however, that the Seller shall not
retain the Contract Deposit if the transactions contemplated hereby are not
consummated because the Seller has breached any one or more of its
representations, warranties or covenants contained in this Agreement, which
breach, individually or in the aggregate, is materially adverse to the business,
properties, results of operations or financial position of the Companies taken
as a whole, and the Buyer has notified the Seller of the breach, and the breach
has continued without cure and has remained materially adverse in the manner
described immediately above for a period of 30 days after the notice of breach.
If the Buyer and ASC breach their obligations hereunder in any material respect,
the Seller's damages would be impossible to ascertain and the Contract Deposit
constitutes a fair and reasonable amount of compensation. Notwithstanding the
foregoing, the Seller shall retain the Contract Deposit as liquidated damages if
ASC directly or through its subsidiary will not have issued stock publicly in a
recognized United States securities market and raised at least $200 million or
otherwise provided for full funding of the purchase price for the Shares in a
manner satisfactory to the Seller on or prior to October 31, 1997;
provided,however, that the Seller shall not retain the Contract Deposit if (i)
the transactions contemplated hereby are not consummated because the Seller has
breached any one or more representations, warranties or covenants contained in
this Agreement, which breach, individually or in the aggregate, is materially
adverse to the business, properties, results of operations or financial position
of the Companies taken as a whole (a "Breach"), and the Buyer has notified the
Seller of the Breach on or prior to October 31, 1997, and (ii) the Breach has
continued without cure and has remain materially adverse in the manner described
immediately above for a period of 30 days after the notice of breach. Upon the
cure of such a Breach, the Seller shall be entitled to and to retain the
Contract Deposit. Any such Breach by the Seller after October 31, 1997 shall not
impair the right of the Seller to retain the Contract Deposit. Notwithstanding
the foregoing sentences in this ss. 10(g), the Seller will apply the Contract
Deposit to the Unadjusted Purchase Price if the Closing takes place on or prior
to December 1, 1997.
11. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Buyer, ASC and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing (A) in the event the Seller
has breached any one or more representations, warranties, or covenants
contained in this Agreement, which breaches, individually or in the
aggregate,
38
are materially adverse to the business, properties, results of operations
or financial position of the Companies taken as a whole, the Buyer has
notified the Seller of the breach, and the breach has remained materially
adverse to the business, properties, results of operations and financial
condition of the Companies taken as a whole for a period of 30 days after
the notice of breach or (B) if the Closing shall not have occurred on or
before December 1, 1997, by reason of the failure of any condition
precedent under ss. 8(a) hereof (unless the failure results primarily from
the Buyer itself or ASC breaching any representation, warranty, or
covenant contained in this Agreement); and
(iii) the Seller may terminate this Agreement by giving written
notice to the Buyer or ASC at any time prior to the Closing (A) in the
event the Buyer or ASC, as the case may be, has breached any one or more
representations or warranties contained in this Agreement, which breaches,
individually or in the aggregate, result in a failure or refusal of USFS
to issue the USFS Consents or New USFS Permits or are otherwise materially
adverse to the business, properties, results of operations or financial
position of the Companies taken as a whole or if the Buyer or ASC has
breached any covenants contained in this Agreement, the Seller has
notified the Buyer or ASC, as the case may be, of the breach, and the
breach has continued without cure for a period of 30 days after the notice
of breach or (B) if the Closing shall not have occurred on or before
December 1, 1997.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to ss. 11(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then in breach); provided, however, that the
confidentiality provisions contained in ss. 6(d) and liquidated damages
provisions contained in ss. 10(g) above shall survive termination.
12. Miscellaneous.
(a) Arbitration. Any dispute required to be resolved pursuant to
Section 2(c) or Section 2(e) of this Agreement shall be finally settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") then in effect as modified herein (the "Rules").
The arbitration shall be held in New York, New York, For the purposes of any
arbitration hereunder, ASC and the Buyer shall be deemed to be one Party. There
shall be three arbitrators, of whom each party shall select one. The claimant
shall name its arbitrators in its demand. The respondent shall name its
arbitrator in its answering statement, or, at the latest, within ten (10) days
of its notification by the AAA of the claimant's demand. The party-appointed
arbitrators shall select the third arbitrator within fifteen days of the
appointment of the second arbitrator. The hearing shall commence
39
no later than thirty days and the award shall be rendered no later than sixty
days following the appointment of the last of the three arbitrators. The
arbitration shall be governed by the U.S. Arbitration Act, 9 U.S.C. ss. ss.
1-16. Judgment upon the arbitrators' award may be entered in any court of
competent jurisdiction.
(b) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they have related in any way to the
subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Buyer and the Seller; provided, however, that the Buyer
may (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases the Buyer nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller:
Kimihito Kamori
Kamori International Corporation
0000 Xx. Xxxxxx Xxxxxx,
Xxxxxxxxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
40
Copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Buyer and ASC:
ASC Holdings, Inc.
X.X. Xxx 000
Attn: Xxxxx Xxxxxx, Esq.
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Copy to:
Xxxxxx Xxxxxx
0 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without giving effect to
any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer, ASC and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in
41
any way any rights arising by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Except as otherwise specifically provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
(i) all costs and expenses incurred by the Buyer in connection with this
Agreement and the transactions contemplated hereby shall be paid by the Buyer or
ASC, as the case may be, and (ii) all costs and expenses incurred by the Seller
and the Companies in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Seller or the Companies, as the case
may be. It is agreed that the Buyer shall pay the cost of all surveyors and
title companies in connection with the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) Joint and Several Obligations of the Buyer and ASC. ASC and the
Buyer shall be jointly and severally liable with respect to any of the
representations, warranties, covenants and other agreements of either or both of
them contained herein.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
on the date first above written.
ASC WEST
By: /s/ Xxxxxx X. Xxxxx
Title:_________________________________
ASC HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxx
Title:_________________________________
KAMORI INTERNATIONAL
CORPORATION
By: /s/ Kimihito Kamori
Title:_________________________________
43
