STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, ("Agreement"), dated as of July 22,
2002, is entered into by and among BEAR MOUNTAIN RESORT, INC, a California
corporation ("Buyer"), SNOW SUMMIT SKI CORPORATION, a California Corporation
("Summit"), the sole shareholder of Buyer, and BOOTH CREEK SKI HOLDINGS, INC., a
Delaware corporation, ("Seller"), the sole shareholder of BEAR MOUNTAIN, INC., a
Delaware corporation (the "Corporation"). Buyer and Summit are sometimes herein
referred to as "Purchasing Parties."
WHEREAS, Seller has represented that it owns all the outstanding stock
of the Corporation and Buyer desires to purchase from Seller, and Seller desires
to sell to Buyer, all of the outstanding stock of the Corporation (the
"Shares"); and
WHEREAS, the Corporation is engaged in the operation of a ski resort by
the name of Big Bear Mountain Ski Resort and a golf course by the name of Big
Bear Mountain Golf Course, all located in or adjoining the City of Big Bear
Lake, California (the "Business"); and
WHEREAS, the Corporation owns or leases certain real property located
in and around the City of Big Bear Lake, California, and owns or leases certain
tangible and intangible assets used in the Business, including without
limitation buildings and improvements, machinery and equipment, vehicles, retail
inventory, non-retail inventory, logos, intellectual property, contract rights,
water rights, and prepaid expenses and receivables (collectively, the "Assets");
and
WHEREAS, the Corporation has obtained a special-use permit from the
United States Department of Agriculture - Forest Service ("Forest Service")
granting the right to use certain real property adjacent to the Corporation's
owned real property in order to operate the Business;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, at the Closing (as defined below) Seller shall sell, transfer
and deliver to Buyer, and Buyer shall purchase from Seller, all of the Shares.
ARTICLE 2
PURCHASE PRICE
2.1 Base Purchase Price and Adjustment.
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(a) The base purchase price shall be Twelve Million and 00/100
Dollars ($12,000,000.00) (the "Base Purchase Price"), adjusted as provided below
(the "Adjustments") at the date (the "Closing Date") of the Closing (as defined
below).
(b) The Base Purchase Price shall be increased or decreased,
as the case may be, as specified below:
(i) The Base Purchase Price shall be increased by the
aggregate amount of the following, based on the recorded balances in the
Corporation's financial statements at the Closing Date (the "Working Capital
Assets"):
(1) Xxxxx cash and working cash balances;
(2) Accounts Receivable;
(3) Inventories; and
(4) Prepaid Expenses and Other Current Assets, less prepaid
insurance.
(ii) The Base Purchase Price shall be decreased by the
aggregate amount of the following, to the extent actually assumed by Buyer,
based on the recorded balances in the Corporation's financial statements at the
Closing Date (the "Balance Sheet Assumed Liabilities"):
(1) Accounts Payable;
(2) Taxes Other than Income Taxes;
(3) Unearned Income;
(4) Accrued Compensation and Benefits;
(5) Other Accrued Liabilities; and
(6) Long Term Debt and Current Portion of Long Term Debt of
the Corporation consisting of the 1915 Improvement Bond
Act obligation and Other Long-Term Debt - Capital
Leases, each of which shall be fully assumed by Buyer
or the Corporation on the Closing Date.
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(iii) Seller and Buyer shall share equally (i.e., on a 50/50
basis) the responsibility for funding the budgeted business activities of the
Corporation from May 4, 2002 to October 4, 2002 ("the Interim Period"). Buyer
shall be responsible for all amounts in excess of Seller's share of the budgeted
or projected figures, as described below. Accordingly, the Base Purchase Price
shall be adjusted by the aggregate amount of the following, determined by
reference to the financial statements which are regularly prepared by the
Corporation, in accordance with generally accepted accounting principles,
consistently applied ("GAAP"), for purposes of reporting to Seller:
(1) The budgeted EBITDA Losses for the Interim Period in
the amount of $1,080,000 (Seller's 50% share equals
$540,000). Seller's share of the budgeted EBITDA Losses
shall be funded through the incurrence of actual EBITDA
Losses from May 4, 2002 to the Closing Date, subject to
Adjustments to the Base Purchase Price at the Closing
Date to result in the Seller actually funding $540,000
of EBITDA Losses. Buyer shall be responsible for all
other EBITDA Losses incurred subsequent to May 3, 2002;
provided, however, that Seller will use reasonable
efforts to avoid incurring actual EBITDA Losses in
excess of $100,000 of budgeted EBITDA Losses for the
period from May 4, 2002 to the Closing Date unless (a)
Buyer has consented in writing or (b) such increase in
actual EBITDA Losses is due to (1) expenditures
reasonably required to rectify or address any of the
claims or other matters specified in Section 11.7(f) or
(2) unanticipated expenditures relating to regulatory
or safety matters. (By way of example, if actual EBITDA
Losses are $600,000 for the period from May 4, 2002 to
the Closing Date, Seller shall receive a $60,000 credit
(the difference between $600,000 and $540,000) in the
Adjustments to the Base Purchase Price.) For purposes
of this Agreement, actual EBITDA Losses of the
Corporation means, for any applicable period of
determination, the sum of (a) the Net Loss of the
Corporation for such period, (b) the provision, if any,
for income taxes of the Corporation for such period,
(c) the amount of amortization of intangibles for such
period deducted in arriving at such Net Loss, (d) the
amount of depreciation for such period deducted in
arriving at such Net Loss, (e) interest charges and (f)
any other non-cash items deducted or added in arriving
at such Net Loss, all as determined in accordance with
GAAP.
(2) The maintenance accruals on the Corporation's books as
of May 3, 2002, which were approximately $252,000.
Through actual spending or accruals from May 4, 2002 to
the Closing Date or Adjustments to the Base Purchase
Price, Seller will be responsible for funding one-half
($126,000) of the maintenance accrual spending planned
for the Summer of 2002. Buyer shall be responsible for
funding the remaining share ($126,000) of maintenance
accrual spending. Accordingly, the Base Purchase Price
shall be increased (or decreased) by the amount which
the actual reduction in the maintenance accruals for
the period from May 4, 2002 to the Closing Date exceeds
(or is less than) $126,000. (By way of example, if the
maintenance accruals are reduced from $252,000 to
$102,000 at the Closing Date (a reduction of $150,000),
Seller shall receive a $24,000 credit (the difference
between $150,000 and $126,000) in the Adjustments to
the Base Purchase Price).
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(3) The preliminary 2002 maintenance capital allocation for
the Corporation is $350,000. Through actual spending or
accruals to the Closing Date or Adjustments to the Base
Purchase Price, Seller shall be responsible for funding
one-half ($175,000) of the maintenance capital spending
for 2002. Buyer shall be responsible for funding all
other 2002 maintenance capital spending. Accordingly,
the Base Purchase Price shall be increased (or
decreased) by the amount by which 2002 recorded
maintenance capital expenditures, as reflected on the
Corporation's monthly capital expenditures report,
exceed (or are less than) $175,000. (By way of example,
if 2002 recorded maintenance capital expenditures to
the Closing Date were $200,000, Seller would receive a
$25,000 credit (the difference between $200,000 and
$175,000) in the Adjustments to the Base Purchase
Price).
(4) Other Adjustments as mutually agreeable to Buyer and
Seller.
(iv) In order to comply with a Stipulated Order of Abatement
with the South Coast Air Quality Management District (the "SCAQMD"), the
Corporation is in the process of installing thirty-five airless fan guns and
related infrastructure (the "Fan Gun Project"). Through May 3, 2002, Seller and
Corporation funded $565,000 of costs associated with the Fan Gun Project. Buyer
shall be responsible for funding all amounts incurred after May 4, 2002 in
connection with the completion of the Fan Gun Project, the estimated cost for
which is $885,000 (although Seller makes no representation or warranty regarding
the actual amounts that will be incurred to achieve completion). Accordingly,
Seller shall receive a credit in the Adjustments to the Base Purchase Price for
the amount of recorded capital expenditures for the Fan Gun Project from May 4,
2002 to the Closing Date. From and after the Closing Date, the Buyer shall
directly assume all remaining obligations, liabilities and costs associated with
completing the Fan Gun Project.
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(v) The Corporation is currently pursuing grant funds from
the SCAQMD to offset a portion of its previous and planned investments in the
Fan Gun Project. Buyer shall receive a credit in the Adjustments to the Base
Purchase Price for any grant funds received from the SCAQMD up to the $435,000
requested by the Corporation in its application (the "Requested Amount"). Seller
shall receive a credit in the Adjustments to the Base Purchase Price for any
amount of grant funds received by the Corporation in excess of the Requested
Amount. Following the Closing Date, Buyer or the Corporation may pursue grant
funds for the Fan Gun Project for their own account; provided that any amount of
such funds in excess of the Requested Amount received by Buyer or the
Corporation after the Closing Date shall promptly be paid to Seller. Seller and
Corporation make no representation or warranty regarding the likelihood of
success of the efforts to date to obtain such grant funds or whether the SCAQMD
will grant any funds to the Corporation in the future.
(vi) The Corporation is currently pursuing property tax
assessment reductions for 2001 and 2002 pursuant to Proposition 8. Seller shall
retain all rights with respect to any such property tax refund claims for
periods prior to the Closing Date. If any property tax refunds are received
prior to the Closing Date, Seller shall receive a credit for such refunds in the
Adjustments to the Base Purchase Price. Following the Closing Date, Buyer shall
(on behalf of the Corporation) cause Corporation to or permit Seller on
Corporation's behalf to continue to pursue the property tax refunds for Seller's
sole account and benefit, and Buyer shall cause the Corporation to remit to
Seller any proceeds of such property tax refund received by the Corporation.
Seller shall be solely responsible for all costs and expenses incurred after May
3, 2002 in pursuit of property tax refunds for the tax periods prior to the
Closing Date. Buyer shall execute and deliver and cause Corporation to execute
and deliver to Seller such powers of attorney or other instruments appropriate
to enable Seller to pursue such property tax refunds or receive payment thereof
from the relevant authorities.
(vii) Buyer shall bear or be responsible for (i) all taxes,
other than taxes measured based on the income of Seller or the Corporation,
resulting from the sale of the Common Stock and (ii) all title insurance costs,
license transfer fees and other costs of obtaining the necessary regulatory and
contractual approvals to consummate the proposed transaction.
(viii) Buyer shall assume or, as set forth below, reimburse
Seller for the following purchase commitments of the Corporation:
(1) Rental equipment purchases for the 2002/2003 season.
(2) Uniform purchases for the 2002/2003 season.
(3) Retail inventory purchases.
(4) Groomer acquisitions for the 2002/2003 season,
including (a) lease buyouts in the amount of $110,000
for 2 BR2000 Bombardier groomers and (b) the purchase
of a BR275MP groomer for $140,000 plus accessories and
taxes.
To the extent that Seller or the Corporation pays or accrues
any amount towards the purchase of any of the above commitments prior to the
Closing Date, Seller shall be reimbursed for the full amount of such purchases
or acquisitions through the Adjustments to the Base Purchase Price.
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2.2 Determination of Total Purchase Price. In payment for the Shares
Buyer shall pay the sum of the Base Purchase Price, as adjusted by the
Adjustments (the "Total Purchase Price") in the manner described above.
2.3 Payment of the Closing Purchase Price. On the Closing Date Buyer
will pay to Seller, by wire transfer of immediately available funds, an amount
equal to the Base Purchase Price plus or minus a good faith estimate of the
Adjustments prepared by Seller.
2.4 Closing Balance Sheet. Seller at its expense shall prepare a
post-Closing adjustments schedule (the "Adjustments Schedule") as of the Closing
Date, in conformity with GAAP, which shall provide a detailed schedule with
supporting material setting forth the calculation of the Adjustments to Base
Purchase Price described in Section 2.1(b). Buyer shall give and cause the
Corporation to give Seller access to all information relevant to Seller's
preparation of the Adjustments Schedule. Seller shall deliver the Adjustments
Schedule to Buyer within thirty (30) days after the Closing Date.
2.5 Closing Balance Sheet Dispute Resolution. Any dispute which may
arise between Seller and Buyer as to such Adjustments Schedule or the proper
amount of the Adjustments described in Section 2.1(b) shall be resolved in the
following manner:
(a) Buyer, if it disputes the amount of the Adjustments
specified in the Adjustments Schedule, shall notify Seller in writing within
fifteen (15) days after receipt of the Adjustments Schedule that Buyer disputes
the amount of the Adjustments specified in the Adjustments Schedule and shall
specify in reasonable detail the nature of the dispute;
(b) during the fifteen (15) day period following the date of
such notice, Seller and Buyer shall attempt to resolve such dispute and to
determine the appropriateness of the Adjustments Schedule or the amount of the
Adjustments shown thereon; and
(c) if at the end of the fifteen (15) day period specified in
subsection (b) above, Seller and Buyer shall have failed to reach a written
agreement with respect to such dispute, the dispute shall be resolved by and
through an expedited arbitration ("Expedited Arbitration") proceeding to be
conducted before a single arbitrator under the auspices of the American
Arbitration Association (or any like organization or successor thereto) at Los
Angeles, California, except that the parties and the arbitrator will also have
all of the rights and duties provided by Section 1283.05 of the California Code
of Civil Procedure, which is hereby made a part of this Agreement. Such
arbitration proceeding shall be conducted in as expedited a manner as is then
permitted by the commercial arbitration rules (formal or informal) of the
American Arbitration Association, and the arbitrator in any such arbitration
shall be a certified public accountant. Both the foregoing agreement of the
parties to arbitrate any and all such claims and the results, determination,
finding, judgment and/or award rendered through such Expedited Arbitration shall
be final and binding on the parties hereto and may be specifically enforced by
legal proceedings. Any such Expedited Arbitration may be initiated by written
notice from either party to the other which shall be a compulsory and binding
proceeding on each party. The Expedited Arbitration shall be conducted before a
single arbitrator selected in accordance with the rules pertaining to expedited
arbitration. The costs of said arbitrator and the Expedited Arbitration shall be
borne equally by the parties hereto. Each party shall bear separately the cost
of their respective attorneys, witnesses and experts in connection with such
Expedited Arbitration. Time is of the essence of this Expedited Arbitration
procedure, and the arbitrator shall be instructed and required to render his
decision within ten (10) days following completion of the Expedited Arbitration.
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2.6 Deposit. (a) Prior to the execution and delivery of this Agreement,
Seller shall have received evidence that Buyer has deposited with Lawyers Title
Insurance Company (the "Escrow Agent"), having its office at 000 Xxxxx Xxxx
Xxxxxx, 0xx. Xxxxx, Xxxxxxxx, XX 00000, the sum of Three Hundred Thousand
Dollars ($300,000.00) (such sum, together with any earnings thereon, shall be
the "Deposit") in good funds.
(b) Subject to Section 2.7, the Deposit shall be distributed
by Escrow Agent to Seller as partial payment of the Purchase Price in accordance
with Section 2.3.
(c) The Escrow Agent shall hold the Deposit in an
interest-bearing account reasonably acceptable to Seller and Buyer, in
accordance with the terms and conditions of this Agreement. Buyer shall be
responsible for the payment of all costs and fees imposed on the Deposit account
or otherwise owing to the Escrow Agent in connection with the Deposit. The
Deposit and all accrued interest on such sum shall be deemed income of the
Deposit account and shall be distributed by the Escrow Agent in accordance with
the terms hereof.
2.7 Deposit as Liquidated Damages. IN THE EVENT THE SALE OF THE STOCK
AS CONTEMPLATED HEREUNDER IS NOT CONSUMMATED FOR ANY REASON EXCEPT AS A RESULT
OF BUYER'S TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 15.3 DUE TO A
DEFAULT UNDER THIS AGREEMENT ON THE PART OF SELLER, THE DEPOSIT (INCLUDING ALL
INTEREST EARNED THEREON) SHALL BE PAID TO AND RETAINED BY SELLER AS LIQUIDATED
DAMAGES. IN VIEW OF THE RESTRICTIONS PLACED ON SELLER IN THE OPERATION OF THE
BUSINESS DURING THE INTERIM PERIOD AS PROVIDED IN SECTION 6.2 AND OTHER
CONSIDERATIONS, THE PARTIES ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE
EVENT THAT THE SALE IS NOT CONSUMMATED WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY SEPARATELY EXECUTING THIS SECTION 2.7
BELOW, THE PARTIES ACKNOWLEDGE THAT THE NONREFUNDABLE DEPOSIT HAS BEEN AGREED
UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES
AND AS SELLER'S EXCLUSIVE REMEDY AGAINST BUYER IN THE EVENT THE CLOSING DOES NOT
OCCUR. IN ADDITION, BUYER SHALL PAY ALL TITLE AND ESCROW CANCELLATION CHARGES.
NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THIS SECTION 2.7 LIMIT THE
DAMAGES RECOVERABLE BY EITHER PARTY AGAINST THE OTHER PARTY DUE TO (A) THE OTHER
PARTY'S OBLIGATION TO INDEMNIFY SUCH PARTY IN ACCORDANCE WITH THIS AGREEMENT, OR
(B) THIRD PARTY CLAIMS. BY THEIR SEPARATELY EXECUTING THIS SECTION 2.7 BELOW,
BUYER AND SELLER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTOOD THE ABOVE
PROVISION COVERING LIQUIDATED DAMAGES AND THAT EACH PARTY WAS REPRESENTED BY
COUNSEL, WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT
THE TIME THIS AGREEMENT WAS EXECUTED.
/s/ Xxxxxxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxx
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SELLER BUYER
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Section 2.8 Escrow Agent. Escrow Agent shall hold and dispose of the
Deposit in accordance with the terms of this Agreement. Seller and Buyer agree
that the duties of Escrow Agent hereunder are purely ministerial in nature and
shall be expressly limited to the safekeeping and disposition of the Deposit in
accordance with this Agreement. Escrow Agent shall incur no liability in
connection with the safekeeping or disposition of the Deposit for any reason
other than Escrow Agent's willful misconduct or gross negligence. In the event
that Escrow Agent shall be in doubt as to its duties or obligations with regard
to the Deposit, or in the event that Escrow Agent receives conflicting
instructions from Buyer and Seller with respect to the Deposit, Escrow Agent
shall not be required to disburse the Deposit and may, at its option, continue
to hold the Deposit until both Buyer and Seller agree as to its disposition, or
until a final judgment is entered by a court of competent jurisdiction directing
its disposition, or Escrow Agent may interplead the Deposit in accordance with
California law. Escrow Agent shall not be responsible for any interest on the
Deposit except as is actually earned, or for the loss of any interest resulting
from the withdrawal of the Deposit prior to the date interest is posted thereon.
Escrow Agent shall execute this Agreement solely for the purpose of being bound
by the provisions of Sections 2.6, 2.7 and 2.8.
ARTICLE 3
THE CLOSING
The closing of the transactions contemplated by this Agreement shall
take place at the offices of Loeb & Loeb LLP, 00000 Xxxxx Xxxxxx Xxxx., Xxx
Xxxxxxx, XX 00000, at 10:00 a.m. local time, on September 20, 2002, or sooner,
at such other place and/or time as the parties may agree (the "Closing"). The
date on which the closing takes place is referred to herein as the "Closing
Date". In the event that the conditions specified in this Agreement have not
been fulfilled by such date, the parties may extend the Closing for an
additional period or periods by mutual consent. The parties further agree that
time is of the essence in fulfilling the obligations to consummate the
transactions contemplated by this Agreement on or before the specified date of
Closing.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Schedule of Exceptions attached hereto as
Schedule 4A (which shall be supplemented at Closing to reasonably reflect
changes occurring during the period from the Stub Period Date to the Closing
Date, the "Schedule 4A Supplement"), Seller hereby represents and warrants to
Buyer that the following facts and circumstances are true and correct to
Seller's knowledge as of the date of this Agreement; notwithstanding anything to
the contrary set forth in this Agreement, all representations and warranties set
forth in this Article 4 are expressly limited to Seller's knowledge. For
purposes of this Agreement, and all schedules and exhibits hereto and documents
delivered or to be delivered in connection herewith, "Seller's knowledge" means
the actual knowledge of Xxxxxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxxx Xxxxx, Xxxxx Xxxx
and Xxxx Xxxxxxxx as of the date of this Agreement, without inquiry or
investigation:
4.1 Organization, Good Standing, and Qualification. The Corporation is
a corporation duly organized, validly existing, and in good standing under the
laws of Delaware, is duly qualified to do business and in good standing in the
State of California and has all necessary corporate powers to own its properties
and to carry on its business as now owned and operated by it. Neither the
ownership of its properties nor the nature of its business requires the
Corporation to be qualified in any jurisdiction other than Delaware and
California. Seller is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware. The Corporation's issued and
outstanding capital stock consists of one hundred (100) shares of common stock,
$0.01 par value. All such issued and outstanding shares of common stock have
been duly authorized and issued, are fully paid and non-assessable, and are
owned of record and beneficially by Seller without any adverse claim, interest,
lien or other rights in any other person (other than the lien in favor of Fleet
Bank as agent for Fleet Bank and US Bank as lenders under the Seller's senior
credit facility, which lien shall be released on or prior to the Closing Date).
The Corporation does not have any outstanding options, warrants or similar
rights to acquire, or any securities convertible into or exchangeable for, any
of its capital stock. Upon consummation of the transaction contemplated herein,
the Buyer will own all of the outstanding equity in the Corporation.
4.2 Financial Statements. SCHEDULE 4.2-1 to this Agreement sets forth
the Interim Balance Sheet at May, 3 2002 (the "Stub Period Date"; such balance
sheet to be referred to herein as the "Stub Period Balance Sheet"), together
with the related unaudited statements of income and retained earnings for the
period ended May 3, 2002. SCHEDULE 4.2-2 to this Agreement sets forth the
balance sheets of the Corporation as of October 30, l998, October 29, l999,
October 27, 2000 and November 2, 2001 ("Last Fiscal Year End"), and the related
statements of income and retained earnings for the years then ended, (which have
been subjected to auditing procedures in connection with the annual audits of
Seller's Consolidated Financial Statements). The financial statements in
SCHEDULES 4.2-1 and 4.2-2 are referred to as the "Financial Statements." The
Financial Statements attached hereto have been prepared based upon the
accounting practices, procedures and methods regularly and historically employed
by the Corporation for reporting to Seller and are in accordance with GAAP as
historically applied by the Corporation throughout the periods indicated and in
accordance with the books and records of the Corporation (which books and
records are complete and correct in all material respects) and in all material
respects present fairly the financial position of the Corporation as of the
respective dates of the balance sheets included in the Financial Statements, and
the results of its operations for the respective periods indicated.
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4.3 Debts, Obligations and Liabilities. SCHEDULE 4.3 to this Agreement
contains a true and complete schedule of all debts and known liabilities of the
Corporation recorded in the Stub Period Balance Sheet in excess of $25,000. The
Corporation has no material debt, obligation or liability of any nature (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that is not disclosed in this Agreement or the Schedules hereto.
4.4 Absence of Specified Changes. Since the Stub Period Date, there has
not been any:
(a) material unusual purchase commitment or transaction by the
Corporation except in the ordinary course of business as conducted on that date;
(b) change in the financial condition of the Corporation
(other than operating losses incurred in the ordinary course of business) or the
Assets or the Business that has a Material Adverse Effect; for purposes of this
Agreement and any related document or instrument, "Material Adverse Effect"
means a material adverse effect on (i) the assets, liabilities, properties or
business of the Corporation, taken as a whole, (ii) the validity, binding effect
or enforceability of this Agreement or (iii) the ability of the Corporation to
perform its obligations under this Agreement; provided, however, that none of
the following shall constitute a Material Adverse Effect on the Corporation: (x)
occurrences due to a disruption of the Corporation business as a result of the
announcement of the execution of this Agreement or changes caused by the taking
of action required by this Agreement, (y) general economic conditions or (z) any
changes generally affecting the industries in which the Corporation operates;
(c) destruction, damage to, or loss of any assets of the
Corporation (whether or not covered by insurance) or the Business that has a
Material Adverse Effect;
(d) labor trouble or similar event or condition that has a
Material Adverse Effect;
(e) execution, creation, amendment or termination of any
material contract agreement, or license to which the Corporation is a party,
except in the ordinary course of business, that has a Material Adverse Effect;
(f) mortgage, pledge, or other encumbrance of any material
Asset, other than arising by operation of law or in the ordinary course of
business consistent with past practice;
(g) other event or condition of any character that has a
Material Adverse Effect; or
(h) agreement by the Corporation to do any of the things
described in the preceding clauses (a) through (g) which agreement has a
Material Adverse Effect.
4.5 Tax Returns and Audits. Within the times and in the manner
prescribed by law, the Corporation and (with respect to the Corporation's
federal and state income tax returns) Seller, have filed all federal, state and
local tax returns required by law and have paid all taxes, assessments, and
penalties shown on such returns as due and payable relating to the Corporation,
the Assets or the Business. The provisions for taxes reflected in the
Corporation's Balance Sheet as of the Stub Period Date are adequate for any and
all federal, state, county and local taxes payable by the Corporation for the
period ending on the date of that balance sheet, whether or not disputed. There
are no present disputes as to taxes of any nature payable by the Corporation,
although, as described in Section 2.1(b)(vi), Seller and the Corporation are
currently pursuing property tax reductions for 2001 and 2002 pursuant to
Proposition 8.
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4.6 Real Property. SCHEDULE 4.6-1 to this Agreement contains a
materially complete and accurate legal description of each parcel of real
property owned by the Corporation (collectively, the "Owned Real Property").
SCHEDULE 4.6-2 to this Agreement contains a materially complete and accurate
description of each parcel of real property leased by the Corporation including
that portion of the Golf Course owned by the City of Big Bear Lake
(collectively, the "Real Property Leases", and together with the Owned Real
Property, the "Real Property"). All of the Real Property Leases are valid and in
full force, and there does not exist any material default or event that with
notice or lapse of time, or both, would constitute a material default under any
of the Real Property Leases. All the buildings, fixtures and leasehold
improvements used by the Corporation in the Business are located on the Real
Property or on the real property used by the Corporation pursuant to the USFS
Permit (as defined in Section 4.27). Except for the Real Property Leases, there
is no material unrecorded or undisclosed legal or equitable interest in the Real
Property owned or claimed by any person, firm or corporation.
There exists no unfulfilled obligation on either of Seller or the
Corporation to dedicate or grant an easement or easements over any portion or
portions of the Owned Real Property to a governmental entity or utility.
4.7 Improvements. The improvements located on the Owned Real Property
are in material compliance with all applicable laws, ordinances, rules,
regulations, and codes, and are in reasonable and serviceable condition and
repair, normal wear and tear excepted. Neither the Owned Real Property nor the
use or occupancy thereof materially violates applicable laws, ordinances, rules,
regulations, codes, judgments, orders or covenants, conditions and restrictions
material to the operation of the Business, whether federal, state, local or
private.
4.8 Zoning. The zoning of each parcel of property described in
SCHEDULES 4.6-1 and 4.6-2 permits the presently existing improvements and the
continuation of the business presently being conducted on such parcel and there
is no pending or contemplated rezoning thereof. All the Owned Real Property is
in compliance with the California Subdivision Map Act and all applicable local
subdivision ordinances in all material respects. No final subdivision or parcel
map is required in connection with this Agreement.
4.9 No Commitments. There are no material outstanding, defaulted or
unsatisfied contracts, commitments, agreements (including without limitation
developer agreements) or understandings which have been made to, with or for the
benefit of any governmental authorities, utility companies, school districts,
water districts, improvement districts or other governmental agencies, bodies or
authorities which would impose any material obligation, liability or condition
on the Corporation or the Owned Real Property to grant any easements or to make
any payments, contributions or dedications of money or land or to construct,
install or maintain or to contribute to the construction, installation or
maintenance of any improvements of a public or private nature, whether on or off
the Owned Real Property.
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4.10 Continued Use of Real Property. There are no claims, governmental
investigations, litigations or proceedings which are pending or threatened
against the Owned Real Property, or the Corporation or the Business with respect
to the Owned Real Property, which would have a Material Adverse Effect. There
are no presently pending, contemplated or threatened proceedings to (a) condemn,
take or demolish the Owned Real Property or any part thereof, (b) declare the
Owned Real Property or any part thereof a nuisance or (c) to exercise the power
of eminent domain or a similar power with respect to all or any part of the
Owned Real Property.
4.11 Big Bear Lake Pipeline. The Corporation is the owner of the
pipeline and related pumping plant and facilities from Big Bear Lake to the land
the Corporation is allowed to use pursuant to the USFS Permit, as defined in
Section 4.27 (the "Lake Pipeline"). The Lake Pipeline is located in public
rights of way, in easements, in the Owned Real Property and in the land used
pursuant to the USFS Permit. All of the contracts and agreements permitting the
Corporation to locate the Lake Pipeline in such public rights of way and
easements are valid, binding and enforceable in accordance with their terms.
There are currently no material defaults or events that, with notice or lapse of
time, or both, would constitute a material default by any party to any of such
contracts and agreements. The Lake Pipeline is in good operating condition and
repair, normal wear and tear excepted. Neither of the Corporation nor the Seller
has received any written notice or written indication that the Lake Pipeline
would have to be relocated. There are no claims, governmental investigations,
litigation or proceedings which are pending or threatened against the Lake
Pipeline, Seller, or the Corporation which would affect the operation, continued
use or location of the Lake Pipeline.
4.12 Parking, Traffic Control and Shuttle System. The Corporation has
adequate permits, licenses and approvals for its parking and traffic control and
to operate its shuttle system between its parking lots and the Owned Real
Property (the "Shuttle System"), all as operated during the 2001-2002 ski
season, and to permit the Shuttle System to be operated immediately after the
Closing along the routes and in the manner that it was operated during that
season.
4.13 Inventories. The inventories included in the Assets consist of
items of a quality and quantity useable or saleable in the ordinary course of
business by the Corporation, except for obsolete or slow moving items and items
below standard quality which have been written down on the books of the
Corporation to net realizable market value or have been provided for by adequate
reserves. All items included in the inventories are the property of the
Corporation, except for sales made in the ordinary course of business for which
either the purchaser has made full payment or the purchaser's liability to make
payment is reflected in the books of the Corporation. No items included in the
inventories have been pledged as collateral, or are held by the Corporation on
consignment from third parties. The Corporation's inventories shown on the
balance sheets included in the Financial Statements are based on quantities
determined by physical count or measurement, taken within the preceding 12
months, and are valued at the lower of cost (determined on a first-in, first-out
basis) or market value and on a basis consistent with prior years.
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4.14 Other Tangible Personal Property. Each item of equipment or group
of items with a book value in excess of $10,000, other than Inventories, and
each improvement to the Real Property or group of improvements with a book value
in excess of $10,000 is listed in SCHEDULE 4.14 to this Agreement. All of the
equipment, improvements and inventories are, or on the Closing Date will be,
located on the Real Property or the real property used by the Corporation
pursuant to the USFS Permit. The tangible Assets of the Corporation constitute
all tangible personal property necessary for the conduct by the Corporation of
the Business as conducted by the Corporation thus far during its 2001-2002
fiscal year. All motor vehicles included in the Assets have current smog
certificates. Except as reflected on SCHEDULE 4A, no material equipment,
improvement or inventories used by the Corporation in connection with the
Business is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, or is in the
possession of anyone other than the Corporation.
4.15 Accounts Receivable. The accounts receivable reflected on the Stub
Period Balance Sheet, and the accounts receivable created after the Stub Period
Date, are valid and genuine and arose from bona fide transactions in the
ordinary course of the Corporation's business.
4.16 Trade Names, Trademarks and Copyrights. SCHEDULE 4.16 to this
Agreement is a true, correct and complete list of all registered trademarks,
service marks, logos, trade names, web site addresses, and copyrights owned by
the Corporation, together with a brief description of each. There is no
infringement or alleged infringement by others of any such trademark, service
xxxx, trade name or copyright which has had or may have a Material Adverse
Effect. The Corporation has not received any written notice that it has
infringed or is now infringing on any trademark, service xxxx, trade name or
copyright belonging to any other person. The Corporation is not a party to any
license, agreement or arrangement, whether as licensor, licensee, franchiser,
franchisee, or otherwise, with respect to any trademarks, service marks, trade
names, or applications for them, or any copyrights.
4.17 No Patent Rights. The Corporation does not own, hold or have any
rights, licenses or immunities with respect to any patents, inventions,
industrial models, processes, designs, formulas and applications for patents.
The Corporation has not infringed and is not now infringing on any patent or
related right belonging to any person, firm, or corporation. The Corporation is
not a party to any license, agreement, or arrangement, whether as licensee,
licensor, or otherwise, with respect to any patent, application for patent,
invention, design, model, process, trade secret, or formula.
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4.18 Title to Assets.
4.18.1 Except for the Leased Real Property and the land used
pursuant to the USFS Permit and leased equipment referred to in the Schedules to
this Agreement, the Corporation owns the real, personal, mixed, tangible, and
intangible assets of the Corporation that are used in the Business.
4.18.2 All these assets or interests are free and clear of
mortgages, liens, pledges, charges, encumbrances, equities, claims, easements,
rights of way, covenants, conditions, or restrictions (collectively, "Liens"),
except for (i) those disclosed in the Stub Period Balance Sheet or in the
Schedules to this Agreement; (ii) any Lien for current taxes not yet due and
payable or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP; (iii) Liens
contemplated by and existing pursuant to agreements to which the Corporation is
a party; (iv) those disclosed in Schedule 4A, (v) those disclosed in the
preliminary title report for the Owned Real Property from First American Title
Insurance Company dated March 21, 2002, a copy of which has been delivered to
Buyer, (vi) any statutory Lien arising in the ordinary course of business by
operation of law with respect to a liability that is not yet due or delinquent
and (vii) any minor imperfection of title or similar Lien which individually or
in the aggregate with other such Liens does not materially impair the value of
the property subject to such Lien or the use of such property in the conduct of
the Business. All real property fixtures and tangible personal property of the
Seller including without limitation all buildings, lifts, snow-making machinery
and other equipment is in reasonable and serviceable operating condition and
repair, ordinary wear and tear excepted, and has been properly and adequately
maintained in accordance with the manufacturer's specifications where
applicable. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER DISCLAIMS ALL
OTHER WARRANTIES REGARDING THE CORPORATION'S ASSETS, EXPRESSED OR IMPLIED,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
The Corporation is in possession of all premises leased to it under the Real
Property Leases. Neither any officer, nor any director or employee of the
Corporation, nor any spouse, child, or other relative of any of these persons,
owns, or has any interest, directly or indirectly, in any of the real or
personal property owned by or leased to the Corporation or any copyrights,
patents, trademarks, trade names, or trade secrets licensed by the Corporation.
The Corporation does not occupy any real property in material violation of any
law, regulation, or decree.
4.19 Customers and Vendors. SCHEDULE 4.19-1, which will be provided to
Buyer at the Closing, will be a materially correct and current list of all
season pass, group sales and other mass purchase customers of the Corporation
during the 2001-2002 ski season. SCHEDULE 4.19-2 to this Agreement is a
materially correct and current list of all vendors and suppliers of the
Corporation during the 2001-2002 ski season.
4.20 Insurance Policies. SCHEDULE 4.20 to this Agreement is a list of
all insurance policies held by Seller covering the Corporation, its assets or
its business. The policy limits of each of these policies is set forth in
SCHEDULE 4.20.
4.21 Other Contracts. SCHEDULE 4.21 is a complete list of all
contracts, agreements, arrangements, leases, commitments, permits (other than
those set forth in Schedule 4.29), licenses, registrations and authorizations,
oral or written, executed or executory, entered into or agreed to by the
Corporation in connection with the Business or by which the Corporation or the
Assets are currently bound which call for future consideration of more than
$25,000 or require performance by the Corporation of any obligation for a period
of time extending beyond one year from the date hereof (the "Contracts"), copies
of which written Contracts have been provided to Buyer or its counsel. All
material Contracts are valid and binding upon the parties thereto except as
limited by bankruptcy and insolvency laws and by other laws affecting the rights
of creditors generally. There is no material default or event that with notice
or lapse of time, or both, would constitute a material default by any party to
any of the material Contracts. Neither Seller nor the Corporation has received
written notice that any party to any of the material Contracts intends to cancel
or terminate such Contract or Contracts.
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4.22 Compliance with Laws. The Corporation is in compliance with, and
not in violation of, applicable federal, state, or local statutes, laws, and
regulations (including, without limitation, any applicable building, zoning,
environmental protection, water use, occupational health and safety, employment,
disability rights or food service facilities law, ordinance, or regulation)
affecting its properties or the operation of the Business except where
non-compliance or violation has not had and could not reasonably be expected to
have a Material Adverse Effect. No material capital expenditures will be
required for compliance with applicable federal, state or local laws or
regulations now in force, the non-compliance with which has had or could
reasonably be expected to have a Material Adverse Effect. No proceeding is
pending against the Corporation as a holder of any alcoholic beverage license to
be transferred under this Agreement before the California Department of
Alcoholic Beverage Control and no investigation is now in progress by the
California Department of Alcoholic Beverage Control concerning any act or
omission that could result in an accusation, claim or proceeding being filed
against the Corporation.
4.23 Litigation. SCHEDULE 4.23 sets forth a brief description of all
suits, actions, arbitrations, and legal, administrative, and other proceedings,
and governmental investigations pending or threatened against the Corporation,
or against Seller with respect to any of the Corporation's business, assets,
financial condition or prospects. None of the matters set forth in SCHEDULE 4.23
if decided adversely to the Corporation will have a Material Adverse Effect. If
and to the extent requested by Buyer, Seller has made available for Buyer's
inspection copies of all relevant court papers and other documents relating to
the matters set forth in SCHEDULE 4.23, other than matters the defense of which
has been tendered to and accepted by one of Seller's insurers. The Corporation
is not in default with respect to any order, writ, injunction, or decree of any
federal, state, local, or foreign court, department, agency, or instrumentality
where such default has had or could reasonably be expected to have a Material
Adverse Effect. Except as set forth in SCHEDULE 4.23, the Corporation is not
presently engaged in any legal action (as plaintiff or cross-claimant) to
recover moneys due to it or damages sustained by it.
4.24 Agreement Will Not Cause Breach or Violation. Neither Seller's
entry into this Agreement nor its performance of the transactions contemplated
hereby will result in or constitute any of the following which has had or could
reasonably be expected to have a Material Adverse Effect: (i) a breach of any
material term or provision of this Agreement; (ii) a default or an event that,
with notice or lapse of time or both, would be a default, breach, or violation
of the articles of incorporation or bylaws of Seller or any material Contract;
(iii) an event that would permit any party to terminate any material Contract or
to accelerate the maturity of and indebtedness evidenced by a material Contract;
(iv) the creation or imposition of any lien, charge, or encumbrance on any
Assets which, in the aggregate, are material to the Business; or (v) the
violation of any law, regulation, ordinance, judgment, order, or decree
applicable to or affecting the Corporation, the Business or the Assets.
4.25 Authority and Consents. Seller has the right, power, legal
capacity and authority to enter into, and perform its obligations under this
Agreement, and, except as set forth on SCHEDULE 4A, no approvals or consents of
any persons other than Seller are necessary in connection with it. The execution
and delivery of this Agreement by Seller have been duly authorized by all
necessary corporate action of Seller (including all necessary legal action by
security holders), and this Agreement constitutes a legal, valid and binding
obligation of Seller enforceable in accordance with its terms, except as limited
by bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally.
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4.26 Documents Delivered. Each copy or original of any Contract, or
other material instrument or document which is delivered by Seller or its
counsel to Buyer or its counsel or representatives, whether before or after the
execution hereof, is a true, correct and complete copy and has not, as of the
date of delivery thereof, been amended, canceled or otherwise modified.
4.27 Forest Service Permit. SCHEDULE 4.27 to this Agreement contains a
materially complete and accurate description of the real property which the
Corporation is entitled to use to conduct its Business pursuant to and for the
term set forth in the special use permit issued December 3, 1996 by the Forest
Service (the "USFS Permit"). The USFS Permit is valid and in full force, and
there does not exist any material default or event that with notice or lapse of
time, or both, would constitute a material default under the USFS Permit. All
fees and charges required to be paid by the Corporation pursuant to the USFS
Permit have been properly computed and fully paid, and no such fees or charges
have been deferred or are now due and owing, except as accrued in the Stub
Period Balance Sheet.
4.28 Employee Benefit Plans. Each employee benefit plan established for
the Corporation's employees, to the extent applicable:
(a) Is in substantial compliance with all reporting and
disclosure requirements of the Employee Retirement Income Security Act of l974,
as amended ("ERISA");
(b) Has had the materially correct Form 5500, 990 and/or 1041
filed timely for each year of its existence;
(c) Has not engaged in any material non-exempt prohibited
transaction as described in ERISA or the Internal Revenue Code ("Code");
(d) Has materially complied with the bonding requirements of
ERISA;
(e) Has no issue pending nor any issue resolved adversely to
the Corporation which can reasonably be anticipated to subject the Corporation
to a payment of a material penalty, interest, tax or other amount; and
(f) Can be unilaterally terminated or amended on no more than
90 days notice.
Any voluntary employee benefit association ("VEBA") has been submitted and
approved as exempt from federal income tax. Except as otherwise agreed between
the parties or as set forth in Section 11.11, no plan, arrangement or agreement
will cause the Corporation to have liability for severance pay as a result of
Buyer acquiring the Stock. Except as required by the Consolidated Omnibus Budget
Reconciliation Act ("COBRA") or as otherwise may be required by law, the
Corporation does not provide employee post-retirement medical or health coverage
or contribute to any plan that does. All group health plans maintained by the
Corporation have been operated in material compliance with COBRA. All employee
pension benefit plans intended to be qualified under Section 401 of the Code
have received a favorable determination letter from the Internal Revenue Service
("IRS") and no event has occurred since the issuance of such letter(s) which can
reasonably be anticipated will result in the disqualification of those plans.
All plans that are required to be funded in accordance with the Code have been
so funded. The Corporation has paid all premiums due the Pension Benefit
Guaranty Corporation ("PBGC"). No employee pension benefit plan has been
terminated which would cause the Corporation to have liability to the PBGC.
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4.29 Environment
4.29.1 Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) The term "Real Property" as used in this Section 4.29
shall mean and refer to both the Owned Real Property and the property leased
under the Real Property Leases.
(b) The term "Environmental Law(s)" means each and every
applicable federal, state and local law, statute, ordinance, regulation, rule,
judicial or administrative order or decree, permit, license, approval,
authorization or similar requirement of each and every federal, state and local
governmental agency or other governmental authority, pertaining to the
protection of human health or the environment, including without limitation, as
amended, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Resource Conservation and Recovery Act, the Clean Air Act and
the Clean Water Act.
(c) The term "Hazardous Substance" means any substance which
is (i) defined as a hazardous substance, hazardous material, hazardous waste,
pollutant or contaminant under any Environmental Law, (ii) a petroleum
hydrocarbon, including crude oil or any fraction thereof, (iii) hazardous,
toxic, corrosive, flammable, explosive, infectious, radioactive, carcinogenic or
a reproductive toxicant or (iv) regulated pursuant to any Environmental Law.
(d) The term "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including without limitation the abandonment
or discarding of barrels, containers, and other receptacles containing any
Hazardous Substance).
4.29.2 Compliance with Law. The Real Property, and all
existing uses and conditions of the Real Property, are in material compliance
with all Environmental Laws the non-compliance with which has had or could
reasonably be expected to have a Material Adverse Effect, and neither the
Corporation nor the Seller has received any notice of violation issued pursuant
to any Environmental Law with respect to the Real Property or any use or
condition thereof.
4.29.3 Handling of Hazardous Substances. Neither the
Corporation nor any other present or former owner, tenant, occupant or user of
the Real Property has used, handled, generated, produced, manufactured, treated,
stored, transported, released, discharged or disposed of any Hazardous Substance
on, under or from the Real Property in material violation of any Environmental
Law where such violation has had or could reasonably be expected to have a
Material Adverse Effect.
17
4.29.4 No Release of Hazardous Substances. There is no Release
or threatened Release of any Hazardous Substance existing on, beneath or from or
in the surface or ground water associated with the Real Property, nor is there
or has there been any Release or threatened Release of Hazardous Substances on,
beneath or from the Real Property occurring at any time in the past which has
had or could reasonably be expected to have a Material Adverse Effect.
4.29.5 Permits. All material permits, licenses and
authorizations required by or issued pursuant to any Environmental Law or other
law for the ownership or operation of the Real Property or the Corporation's
business have been obtained and are presently maintained in full force and
effect. SCHEDULE 4.29-1 is a true and complete listing of all such permits,
licenses and authorizations. The Real Property and the operations of the
Corporation's business are in compliance with all material terms and conditions
of such permits, licenses and authorizations except where non-compliance has not
had and could not reasonably be expected to have a Material Adverse Effect.
Except as disclosed on SCHEDULE 4A, neither the Corporation nor the Seller has
received any written notice of any alleged violation of any such permits,
licenses or other authorizations.
4.29.6 No Proceedings. There exists no writ, injunction,
decree, order or judgment outstanding, nor any lawsuit, claim, proceeding,
citation, directive, summons or investigation pending or threatened pursuant to
any Environmental Law relating to (i) the ownership, lease, occupation or use of
the Real Property by the Corporation or any other present or former owner,
tenant, occupant or user of the Real Property, (ii) any alleged violation of any
Environmental Law by the Corporation or (iii) the suspected presence, release or
threatened Release of any Hazardous Substance on, under, in or from the Real
Property not in material compliance with Environmental Laws, nor does there
exist any valid basis for any such lawsuit, claim, proceeding, citation,
directive, summons or investigation.
4.29.7 Storage of Hazardous Substances. Except as described on
SCHEDULE 4.29-2, there are no aboveground or underground tanks located on the
Real Property used or formerly used for the purpose of storing any Hazardous
Substance and there are no Hazardous Substances stored on the Real Property
except as needed for use, maintenance and repair of the Assets or operation of
the Business.
4.29.8 No Asbestos or PCB's. There is no asbestos-containing
building material on the Real Property presently in need of abatement (in light
of construction projects currently in progress on the Real Property), and no
asbestos abatement or remediation work has been performed on the Property during
Seller's ownership of the Corporation. There is no Corporation-owned or
Seller-owned PCB-containing equipment or PCB-containing material located on the
Real Property.
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ARTICLE 5
PURCHASING PARTIES' REPRESENTATIONS AND WARRANTIES
The Purchasing Parties, jointly and severally, represent and warrant to
Purchasing Parties knowledge (which, for purposes of this Agreement, shall be
deemed to be the actual knowledge of Xxxx Xxx, Xxxxx Xxxxxxx, Xxx Sokolwoski,
Xxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxx) that:
5.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
California and has all necessary corporate power and authority to own its
properties and to carry on its business as now owned and operated by it. Summit
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all necessary corporate power and
authority to own its properties and to carry on its business as now owned and
operated by it.
5.2 Corporate Authority. Each of the Purchasing Parties has the right,
power, legal capacity and authority to enter into and perform its obligations
under this Agreement and no approvals or consents of any person other than
Purchasing Parties are necessary in connection with it. The execution and
delivery of this Agreement and the consummation of this transaction by the
Purchasing Parties have been duly authorized by all necessary corporate action
of the Purchasing Parties, and this Agreement constitutes a legal, valid and
binding obligation of each of the Purchasing Parties enforceable in accordance
with its terms, except as limited by bankruptcy and insolvency laws and by other
laws affecting the rights of creditors generally.
5.3 Agreement Will Not Cause Breach or Violation. Neither the execution
of this Agreement by the Purchasing Parties nor their performance of the
transactions contemplated hereby will result in or constitute any of the
following: (i) a breach of any material term or provision of this Agreement;
(ii) a default or an event that, with notice or lapse of time or both, would be
a default, breach, or violation of the articles of incorporation or bylaws of a
Purchasing Party or any material agreement by which it is bound; or (iii) the
violation of an law, regulation, ordinance judgment, order, or decree applicable
to or affecting a Purchasing Party.
5.4 Confidentiality Agreement. The Purchasing Parties have complied
with all terms and conditions of that certain Confidentiality Agreement dated
March 10, 2000 by and between Seller, Corporation and Summit, as the same was
acknowledged and confirmed pursuant to that certain letter agreement between
Seller, Corporation and Summit dated April 23, 2002 (collectively, the
"Confidentiality Agreement").
5.5 Documents Delivered. Each copy or original of any instrument or
document which is delivered by the Buyer or its counsel to Seller or the
Corporation (or their counsel or representatives), whether before or after the
execution hereof, is a true, correct and complete copy and has not been amended,
canceled or otherwise modified.
5.6 No Buyer Knowledge of Seller Misrepresentation. Except as disclosed
on SCHEDULE 5.6, no facts or circumstances exist or are believed by the
Purchasing Parties to exist which, if within Seller's knowledge, would
constitute a breach of any representation, warranty or covenant of Seller set
forth in this Agreement or any exhibit hereto or document or instrument
delivered or to be delivered pursuant to the terms hereof.
5.7 Parental Guarantee; Loan Commitment. Concurrently with the
execution and delivery of this Agreement, Summit has duly executed and delivered
to Seller a Guarantee of Obligations in the form of EXHIBIT 5.7 attached hereto,
pursuant to which Summit has guaranteed Buyer's performance of each of its
obligations under this Agreement. A true, complete and correct copy of Summit's
loan commitment from Xxxxx Fargo Bank has been delivered to Seller. Except as
disclosed on SCHEDULE 5.7, such loan commitment is unmodified and in full force
and effect. Based on such loan commitment from Xxxxx Fargo Bank and other cash
resources available to Summit and Buyer, the Purchasing Parties have, and at the
Closing will have, sufficient financial resources to consummate the transactions
contemplated hereby.
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ARTICLE 6
SELLER'S OBLIGATIONS BEFORE CLOSING
Seller covenants that, except as otherwise agreed in writing by Buyer,
from the date of this Agreement until (i) the Closing or termination of this
Agreement or (ii) in the case of Sections 6.2, 6.3, 6.5, 6.6, 6.7 and 6.9, if
earlier, September 20, 2002:
6.1 Buyer's Access to Premises and Information. Subject to the
confidentiality provisions of Section 7.1 hereof and the Confidentiality
Agreement, Buyer and its counsel, accountants, and other representatives shall
be entitled to have reasonable access during normal business hours to all the
Corporation's properties, books, accounts, records, contracts, and documents
other than those related to the Excluded Assets (as defined in Section 6.8
hereof). Seller shall furnish or cause to be furnished to Buyer and its
representatives all data and information concerning the Business, finances, and
properties of the Corporation that may reasonably be requested.
6.2 Conduct of Business in Normal Course. During the Interim Period the
Corporation shall carry on its business and activities diligently and
substantially in the same manner as they previously have been carried on and in
conformity with all applicable laws, rules and regulations, and shall not make
or institute any unusual or novel methods of purchase, sale, lease, management,
marketing, accounting or operation that will vary materially from the methods
used by Seller as of the date of this Agreement. Without limiting the foregoing,
Seller shall not (i) make any agreements or commitments for advertising,
promotions or other marketing efforts that, in each case, would require the
expenditure by the Corporation of more than $25,000 (except (a) to the extent
relating to the initial season pass initiative described in (ii)(a) below and
(b) for agreements or commitments relating to participation by the Corporation
in ski industry shows and events and the distribution by the Corporation of
complimentary or discounted tickets and vouchers), or (ii) determine and
publicly announce, or make commitments with respect to, the pricing of lift
tickets and other products or services of the Corporation for the 2002/2003 ski
season (other than (a) an initial season pass offering that will be revocable at
any time and will not dictate future season pass pricing and (b) any offerings,
packages or products made or offered to group customers), without, in either
case, the approval of the Buyer (which approval shall not be unreasonably
withheld or delayed). Seller shall cooperate with Buyer to facilitate the smooth
and efficient transfer of control of the Corporation to Buyer on the Closing
Date.
6.3 Preservation of Business and Relationships. Seller shall cause the
Corporation to use its commercially reasonable efforts, without making any
commitments on behalf of Buyer, to preserve its business organization intact, to
keep available to Buyer its present officers and employees (other than employees
who will work for Seller after the Closing), and to preserve its present
relationships with suppliers, customers, and others having business
relationships with it.
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6.4 Maintenance of Insurance. Seller shall continue to carry in force
its existing insurance for the business and the assets of the Corporation,
subject to variations in amounts required by the ordinary operations of its
business.
6.5 Employees, Compensation and Benefit Plans.
6.5.1 Seller and the Corporation shall not do, or agree to do,
any of the following acts outside the ordinary course of the Corporation's
business as conducted prior to the date hereof: (i) grant any material increase
in salaries payable or to become payable to any officer, employee, sales agent,
or representative, (ii) materially increase benefits payable to any officer,
employee, sales agent, or representative under any bonus or pension plan or
other contract or commitment, or (iii) make any material modifications to any
collective bargaining agreement to which it is a party by which it may be bound;
provided, however, that Seller at its expense shall be entitled to pay one-time
bonuses to any or all of the employees of the Corporation if it desires to do
so. From and after a date at least 20 days prior to the Closing, Seller shall
permit Buyer free access to communicate and meet with the Corporation's
employees at all reasonable times for the purpose of discussing with such
employees the operation of the Business following the Closing.
6.5.2 Seller shall take all necessary action to ensure that,
effective as of the Closing, the Corporation shall no longer be a participating
employer in any of Seller's employee benefit plans.
6.6 New Transactions. Except as described on SCHEDULE 6.6, Seller shall
not cause the Corporation to do or agree to do any of the following acts,
without the prior written consent of Buyer, which consent shall not be
unreasonably withheld or delayed:
(a) enter into any contract, commitment, or transaction or
incur any liabilities not in the usual and ordinary course of its business,
consistent with past practice; or
(b) enter into any material contract, commitment, or
transaction in the usual and ordinary course of business involving an amount
exceeding $25,000, individually, or $250,000 in the aggregate; or
(c) sell, lease or dispose of, or subject to any lien,
security interest or encumbrance, any Assets or any part of the Business, other
than in the usual and ordinary course of business, consistent with past
practice; or
(d) initiate, participate in or enter into an agreement to do
any of the actions described in the foregoing subparagraphs (a) - (c).
6.7 Existing Agreements. Without the prior written consent of Buyer,
which consent shall not be unreasonably withheld or delayed, Seller shall not
modify, amend, cancel, or terminate any of the Contracts where such
modification, amendment cancellation would have a Material Adverse Effect.
6.8 Transfer to Seller of Excluded Assets. Prior to Closing, Seller
shall cause the transfer from the Corporation to the Seller ownership and
possession of the assets described on SCHEDULE 6.8 (the "Excluded Assets").
Notwithstanding anything to the contrary set forth in this Agreement, such
transfer of the Excluded Assets is expressly permitted by this Agreement and
shall not be considered a breach or default by Seller or the non-fulfillment of
any condition to performance by the Purchasing Parties.
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6.9 No Solicitations. From and after the date of this Agreement until
the Closing or termination of this Agreement pursuant to Article 15, Seller will
not, nor will it authorize or permit the Corporation or any of its officers,
directors, affiliates or employees or any investment banker, attorney or other
advisor or representative retained by any of them to, directly or indirectly,
(i) solicit or initiate the making, submission or announcement of any proposed
acquisition of the Corporation or its business, (ii) participate in any
substantive negotiations regarding any such proposed acquisition, or (iii) enter
into any contract agreement or commitment contemplating such proposed
acquisition.
Notwithstanding the foregoing, if the Closing has not occurred by September 20,
2002 and regardless of whether the Closing Date has been mutually extended
beyond such date, Sections 6.2, 6.3, 6.5, 6.6, 6.7 and 6.9 shall, as of such
date, no longer apply and Seller shall not be bound in any way by the
restrictions or obligations set forth in such provisions.
ARTICLE 7
PURCHASING PARTIES' OBLIGATIONS BEFORE CLOSING
Purchasing Parties covenant as follows:
7.1 Confidentiality. In the event the transactions contemplated by this
Agreement are not consummated for any reason, all copies of proprietary
documents and information provided to Buyer by Seller or the Corporation (or
their attorneys or other representatives) hereunder, including without
limitation customer lists, shall be returned to Seller by Buyer or destroyed by
Buyer, and Buyer shall maintain in confidence all proprietary data and
information that the Buyer has obtained regarding the Corporation, its Assets or
its Business and shall not disclose or utilize the same except with the consent
of the Seller, which may be granted or withheld in Seller's sole and absolute
discretion. All such proprietary documents, data and information is hereby
deemed "Confidential Information" as defined in the Confidentiality Agreement.
7.2 Restrictions on Communications. Unless and until the occurrence of
the Closing, neither Buyer or Summit nor any officer, director or employee
thereof or anyone acting on their behalf shall communicate in any way directly
with any officer or employee of the Corporation other than Xxxxx Xxxxxxxxx. All
communications regarding the Corporation or with any of its personnel shall be
coordinated through Xxxxx Xxxxxxxxx, who will, if appropriate and necessary,
arrange for access to other personnel of the Corporation.
ARTICLE 8
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Stock under this Agreement are
subject to the satisfaction, at or before the Closing, of all the conditions set
out below in this Article 8. Buyer may waive any or all of these conditions;
provided, however, that by proceeding with the Closing the Purchasing Parties
shall waive all of their rights or remedies, at law or in equity, for any Seller
default of any of its representations, warranties, or covenants under this
Agreement which is within Buyer's Knowledge prior to or as of the Closing.
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8.1 Accuracy of Seller's Representations and Warranties. Subject to the
Schedule 4A Supplement, all representations and warranties by Seller in this
Agreement or in any written statement that shall be delivered to Buyer by Seller
under this Agreement shall be true on and as of the Closing Date in all material
respects as though made at that time (except to the extent that any
representation and warranty was made expressly as of an earlier date, in which
case it shall have been true and correct in all material respects as of such
date).
8.2 Absence of Liens. At or prior to the Closing, Buyer shall have
received a UCC search report dated as of a date not more than five days before
Closing issued by the California Secretary of State indicating that there are no
filings under the Uniform Commercial Code on file with such Secretary of State
which name the Corporation as debtor or otherwise indicating any lien on the
Assets, except for (a) those leases and liens described in the Schedules hereto,
(b) other leases entered into or liens granted in the ordinary course of the
Corporation's business, (c) other liens described in Section 4.18.2 or (d) as to
which either (i) UCC Termination Statements have been obtained from lien holders
subject only to Seller's payment of specified dollar amounts at Closing or (ii)
as to which Seller has obtained pay-off letters and UCC Termination Statements.
8.3 Seller's Performance. Seller shall have performed, satisfied, and
complied in all material respects with all material covenants, agreements, and
conditions required by this Agreement to be performed or complied with by Seller
on or before the Closing Date.
8.4 Sales and Use Tax. Seller shall have furnished to Buyer a clearance
letter from the California Board of Equalization as evidence that all sales and
use and other tax liabilities of the Corporation (other than income tax
liabilities) have been fully satisfied or provided for with respect to all full
fiscal years of the Corporation ending prior to Closing.
8.5 Department of Employment Development Release. Seller shall have
furnished to Buyer a clearance certificate from the California Department of
Employment Development dated not more than sixty (60) days prior to the Closing
Date as evidence that all employee withholding and other taxes of the
Corporation have been fully satisfied or provided for with respect to all full
fiscal years of the Corporation ending prior to Closing.
8.6 Certification by Seller. Buyer shall have received a certificate,
dated the Closing Date, signed and verified by an officer of Seller certifying,
in such detail as Buyer and its counsel may reasonably request, that the
conditions specified in Sections 8.1 and 8.3 have been fulfilled.
8.7 Opinions of Seller's Counsel. Buyer shall have received from Loeb &
Loeb LLP, counsel for Seller, an opinion dated the Closing Date, to the effect
that:
(a) The Corporation and Seller is each a corporation duly
organized, validly existing and in good standing under the laws of its
respective state of incorporation and has all necessary corporate power to own
its properties as now owned and operate its business as now operated and to
perform its obligations under this Agreement;
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(b) This Agreement has been duly and validly authorized and,
when executed and delivered by the Seller, will be valid and binding on the
Seller and enforceable against the Seller in accordance with its terms, except
as limited by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally;
(c) Except as set forth in the schedules to this Agreement,
such counsel does not know of any suit, action, arbitration, or legal,
administrative, or other proceeding or Governmental investigation pending or
threatened against the Corporation; and
(d) Neither the execution nor delivery of this Agreement nor
the consummation of the transactions contemplated by this Agreement will
constitute a default, or an event that would with notice or lapse of time or
both constitute a default under, or violation or breach of, Seller's articles of
incorporation or bylaws.
In rendering its opinion, such counsel for Seller may rely on
certificates of governmental authorities and certificates of officers of the
Seller.
8.8 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority shall have been instituted or
threatened on or before the Closing Date which challenges this Agreement or any
transactions contemplated hereby or which claims damages in a material amount as
a result of the consummation of this Agreement.
8.9 Corporate Approval. The execution and delivery by Seller of this
Agreement and the other documents, instruments and agreements referred to or
provided for herein, and the performance by Seller of its covenants and
obligations hereunder, shall have been duly authorized by all necessary
corporate action, including without limitation approval by Seller's Board of
Directors, and Buyer shall have received copies of all resolutions pertaining to
that corporate authorizations, certified by the secretary or assistant secretary
of Seller.
8.10 Title Policies. Buyer, at Buyer's sole cost and expense, shall
have received updated title insurance policies, dated as of or sufficiently
proximate to the Closing Date, issued by Lawyers Title Company, insuring fee
simple title in the Corporation to all the Owned Real Property subject only to
(i) the lien, if any, of current real property taxes, payment of which is not
delinquent, (ii) liens and encumbrances with respect to the Owned Real Property
disclosed in SCHEDULE 4A and (iii) other objections and exceptions noted in
these title insurance policies which have been approved in writing by Buyer.
8.11 Corporation Tax Clearance. Buyer shall have received a corporation
tax clearance certificate for the Corporation as of a date not more than sixty
(60) days before the Closing Date, issued by the California Franchise Tax Board
with respect to California corporate income tax liability for full fiscal years
of the Corporation ending prior to Closing.
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8.12 Consents. The following consents shall have been obtained:
(a) Reasonable evidence of the Forest Service's willingness to
consent to the transfer of the USFS Permit to Buyer, which transfer the parties
hereto contemplate will be accomplished by (i) the filing by the Corporation and
Buyer of a Request for Termination and Application for Special-Use Permit with
the Forest Service and (ii) potentially after Closing, the issuance to Buyer of
a Ski Area Term Special-Use Permit by the Forest Service containing
substantially the same terms and conditions as set forth in the USFS Permit
(which consent may be temporary or conditional, permitting continued operation
of the Business during a waiting period or application processing).
(b) The consent of Fleet National Bank ("Fleet Bank") and U.S.
Bank, National Association ("US Bank"), as lenders to Seller, to the extent that
their consent to the consummation of the transactions contemplated hereby is
required by their debt instruments with Seller, and the release by such lenders
of their security interest in the assets of the Corporation and of the
Corporation's obligations to such lenders pursuant to any guaranty by the
Corporation of Seller's obligations to Fleet Bank.
(c) Such other material authorizations or consents to the
consummation of the transactions contemplated by this Agreement, or otherwise
pertaining to the matters covered by it as are reasonably necessary to ensure
that the consummation of the transactions contemplated herein do not violate any
law or material contract to which the Corporation is a party (which consent may
be temporary or conditional, permitting continued operation of the Business
during a waiting period or application processing). No such authorizations,
agreements and consents shall impose any commercially unreasonable conditions or
requirements on Buyer. Notwithstanding the foregoing, procuring each of (i) the
transfer of liquor and beverage licenses, (ii) the FCC's consent to the transfer
of the Radio Station License for the portable radio repeater or (iii) the
reissuance of any expired environmental permits or authorizations that are not
necessary for the Corporation's business prior to the commencement of the
2002/2003 Winter season, shall be deemed not to be conditions precedent to
Buyer's obligations under this Agreement and, if not completed prior to Closing,
such matters shall be addressed as post-Closing matters through the reasonable
cooperation of Buyer, Seller and the Corporation.
8.13 Approval of Documentation. The form and substance of all
certificates, instruments, opinions, and other documents delivered to Buyer
under this Agreement shall be satisfactory in all reasonable respects to Buyer
and its counsel.
8.14 Condition of Assets. The Assets shall not have been adversely
affected in any material respect as a result of any fire, accident, storm or
other casualty or labor or civil disturbance or act of God or the public enemy.
8.15 No Material Adverse Change. No change shall have occurred with
respect to the Corporation's assets, business or financial condition since the
Stub Period Date which shall have had a Material Adverse Effect.
ARTICLE 9
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to sell and transfer the Shares under this
Agreement are subject to the satisfaction, at or before the Closing, of all the
following conditions set out below in this Article 9, any or all of which may be
waived by Seller:
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9.1 Accuracy of Purchasing Parties' Representations and Warranties. All
representations and warranties by the Purchasing Parties contained in this
Agreement or in any written statement delivered by the Purchasing Parties under
this Agreement shall be true on and as of the Closing in all material respects
as though such representations and warranties were made on and as of that date
(except to the extent that any representation and warranty was made expressly as
of an earlier date, in which case it shall have been true and correct in all
material respects as of such date).
9.2 Purchasing Parties' Performance. Purchasing Parties shall have
performed and complied with all material covenants and agreements, and satisfied
all conditions that each of them is required by this Agreement to perform,
comply with, or satisfy before or at the Closing.
9.3 Purchasing Parties' Corporate Approval. Each of the Purchasing
Parties shall have received corporate authorization and approval for the
execution and delivery of this Agreement and all corporate action necessary or
proper to fulfill the obligations to be performed under this Agreement on or
before the Closing Date, including without limitation, the approval by the Board
of Directors of each of the Purchasing Parties.
9.4 Consents. Reasonable evidence of the Forest Service's willingness
to consent to the issuance of the USFS Permit to Buyer shall have been received,
which transfer the parties hereto contemplate will be accomplished by (i) the
filing by the Corporation and Buyer of a Request for Termination and application
for Special-Use Permit with the Forest Service and (ii) potentially after
Closing, the issuance to Buyer of a Ski Area Term Special-Use Permit by the
Forest Service containing substantially the same terms and conditions as set
forth in the USFS Permit. The receipt of all other necessary authorizations,
agreements and consents of any parties to the consummation of the transactions
contemplated by this Agreement, or otherwise pertaining to the matters covered
by it, shall have been obtained by Seller and delivered to Buyer, it being
understood that no such authorizations, agreements and consents shall impose any
commercially unreasonable conditions or requirements on Buyer.
9.5 Certification by Buyer. Seller shall have received a certificate,
dated the Closing Date, signed and verified by an officer of Buyer and Summit,
respectively, certifying, in such detail as Seller and its counsel may
reasonably request, that the conditions specified in Sections 9.1 and 9.2 have
been fulfilled.
9.6 Opinion of Purchasing Parties' Counsel. Seller shall have received
from Xxxxxx Xxxxxx, Esq., counsel for Purchasing Parties an opinion dated the
Closing Date, to the effect that:
(a) Each of Purchasing Parties is a corporation duly
organized, validly existing and in good standing under the laws of its
respective state of incorporation and has all necessary corporate power to own
its properties as now owned and operate its business as now operated and to
perform its obligations under this Agreement; and
(b) This Agreement has been duly and validly authorized and,
when executed and delivered by each of the Purchasing Parties, will be valid and
binding on each of Purchasing Parties and enforceable against each of the
Purchasing Parties in accordance with its terms, except as limited by bankruptcy
and insolvency laws and by other laws affecting the rights of creditors
generally.
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9.7 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority shall have been instituted or
threatened on or before the Closing Date which challenges this Agreement or any
transactions contemplated hereby or which claims damages in a material amount as
a result of the consummation of this Agreement.
9.8 Lender Consents. The consent of each of Fleet Bank and US Bank, as
lenders to Seller, shall have been received with respect to (i) Seller's
execution of the transactions contemplated hereby and (ii) Seller's intended
application of the proceeds of such transactions. In addition, the consent of
such lenders shall have been received with respect to (a) the release of such
lenders' security interest in the assets of the Corporation and (b) the release
by such lenders of the Corporation's obligations to such lenders pursuant to any
guaranty by the Corporation of Seller's obligations to the lenders.
9.9 Corporate Approval. The execution and delivery by Purchasing
Parties of this Agreement and the other documents, instruments and agreements
referred to or provided for herein, and the performance by Purchasing Parties of
their covenants and obligations hereunder, shall have been duly authorized by
all necessary corporate action.
9.10 Approval of Documentation. The form and substance of all
certificates, instruments, opinions, and other documents delivered to Seller
under this Agreement shall be satisfactory in all reasonable respects to Seller
and its counsel.
ARTICLE 10
OBLIGATIONS AT CLOSING
10.1 Seller's Obligations at the Closing. At the Closing, Seller shall
deliver or cause to be delivered to Buyer:
(a) Stock certificate(s), in form suitable for transfer,
registered in the name of Seller, evidencing the Shares, endorsed in blank or
with an executed blank stock transfer power attached.
(b) Such other instruments, certificates and documents
required by the terms of this Agreement.
(c) Resignations of the officers and directors of the
Corporation.
(d) All stock certificates, stock books, stock transfer
ledgers, minute books and the corporate seal of the Corporation.
Simultaneously with the consummation of the transfer, Seller, through
its officers, agents, and employees, shall put Buyer into full possession of all
material property of the Corporation.
10.2 Buyer's Obligations at the Closing. At the Closing, Buyer shall
deliver to Seller: (i) in immediately available funds, by wire transfer, in an
amount equal to the Base Purchase Price plus or minus the Adjustments prepared
by Seller; and (ii) such other instruments, certificates and documents required
by the terms of this Agreement.
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10.3 Forgiveness of Intercompany Debt. Seller or the Corporation as
applicable, shall forgive the intercompany account balance between such entities
effective as of the Closing Date; provided however that this provision shall not
affect adjustments otherwise to be paid pursuant to Article 2.
10.4 Buyer's Payment Obligations after Closing. Buyer shall pay
directly to Seller the balance of the Purchase Price within two (2) business
days after determination of the final Adjustments Schedule pursuant to Sections
2.4 and 2.5 hereof.
ARTICLE 11
THE PARTIES' OBLIGATIONS AFTER THE CLOSING
11.1 No Use of Name. Seller agrees that after the Closing Date it shall
not use or employ in any manner directly or indirectly the name "Bear Mountain",
or any variation thereof, in the State of California or in any states contiguous
to the State of California.
11.2 Indemnification by Seller. From and after the Closing, Seller
shall indemnify, defend, and hold harmless each of the Purchasing Parties and
their respective successors and assigns (an "Indemnified Party") against, and in
respect of claims and demands of, third parties, and all losses, costs,
expenses, fines, judgment obligations, liabilities, monetary or other damages
(excluding consequential and punitive damages), recoveries, and deficiencies,
including without limitation settlement costs, interest, penalties, and
reasonable attorneys', accountants' and experts' fees and expenses ("Costs"),
that an Indemnified Party shall incur or suffer, which arise, result from, or
relate to:
(a) the failure of any representation or warranty set forth in
ARTICLE 4 of this Agreement, including any Schedule incorporated therein by
reference, to be materially true and correct as of the date of this Agreement
and as of the Closing Date;
(b) any breach by Seller of any of Seller's covenants or
agreements contained herein;
(c) any pre-Closing Date general liability or worker's
compensation matters of the type generally covered by Seller's insurance
policies covering the Corporation (including that certain litigation matter
brought by Xxx Xxxxxx, et al., Case No. BBC00320);
(d) accrued compensation (including bonus accruals), vacation,
sick leave, 401(k) contributions, payroll taxes and health and welfare reserves
related to employees of the Corporation with respect to all periods prior to
Closing, to the extent not assumed by Buyer; or
(e) any sexual harassment or employment discrimination claim
by full-time year-round employees of the Corporation the employment of whom
terminated prior to the date of this Agreement if and to the extent arising out
of occurrences from December 3, 1996 to the date such employee's employment
terminated.
11.3 Indemnification by Buyer. Following the Closing, Buyer shall
indemnify, defend and hold Seller, and its affiliates, and their officers,
directors, successors, assigns, agents and representatives harmless from any and
all Costs that arise out of or relate to (a) the failure of any representation
or warranty made by Buyer hereunder to be true and correct as of the date of
this Agreement and as of the Closing Date, or (b) any breach by Buyer of any of
its covenants or agreements contained herein, or (c) the operation of the
Corporation or the Business from and after the Closing.
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11.4 Procedure for Indemnification. If any claim for which a party is
obligated under this Article 11 to provide indemnification ("Indemnifying
Party") is asserted by any third party against or sought to be collected from
any party indemnified hereunder ("Indemnified Party"), such Indemnified Party
shall promptly notify the Indemnifying Party of such claim and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall not
be conclusive of the final amount of such claim) (such notice to include all
relevant correspondence from or with any such third party). The Indemnifying
Party shall have thirty (30) days after receipt of such notice to assume the
conduct and control, through counsel reasonably acceptable to the Indemnified
Party and at the expense of the Indemnifying Party, of the settlement or defense
thereof; provided that the Indemnifying Party shall permit the Indemnified Party
to participate in such settlement or defense through counsel chosen by the
Indemnified Party so long as the fees and expenses of such counsel are borne by
the Indemnified Party. The Indemnified Party shall not pay or settle any such
claim during the thirty (30) day period during which the Indemnifying Party is
entitled to assume control. So long as the Indemnifying Party is reasonably
contesting any such claim in good faith, the Indemnified Party shall not pay or
settle any such claim; provided that the Indemnified Party may pay or settle any
such claim if the Indemnified Party waives its right to indemnification
hereunder in respect of such claim. If the Indemnifying Party does not notify
the Indemnified Party within thirty (30) days after the receipt of the
Indemnified Party's notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof or is not eligible to assume such defense pursuant
to this Section 11.4, the Indemnified Party shall have the right in good faith
to contest, pay or settle the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement; provided that, unless that
Indemnifying Party did not or was not eligible to assume the conduct and control
of the claim, the Indemnified Party shall not pay or settle any such claim
without the prior consent of the Indemnifying Party, unless the Indemnified
Party waives its right to indemnification hereunder with respect to such claim.
The Indemnifying Party shall not, except with the prior consent of the
Indemnified Party, enter into any settlement that does not include as an
unconditional term thereof the unconditional release of the Indemnified Party
from all liability with respect to the related claim.
11.5 Books and Records. The Indemnified Party shall make available to
the Indemnifying Party and its attorneys and accountants all books and records
of the Indemnified Party relating to such proceedings or litigation, and the
parties hereto agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper and adequate
defense of any such action, suit or proceeding (including any necessary powers
of attorney).
11.6 Waiver of Claims. Buyer acknowledges that Purchasing Parties had
no actual knowledge of any material breach of a representation or warranty
contained in Article 4 hereof or any facts or circumstances which, if within
Seller's knowledge, would have constituted a material breach of a representation
or warranty contained in Article 4 hereof and agrees that it shall not have any
indemnification rights hereunder with respect to any such breach to the extent
it had actual knowledge of any such breach as of the execution of this Agreement
or as of the Closing Date.
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11.7 Limitations Upon Indemnification.
(a) Indemnification Basket. Notwithstanding anything to the
contrary in this Article 11, Seller shall not be liable under this Article 11
for any Costs unless and until the aggregate amount of all Costs incurred or
suffered by the Indemnified Parties exceeds Two Hundred Thousand U.S. Dollars
($200,000), and then only to the extent of the Costs in excess of $200,000.
(b) Maximum Liability. Sellers' obligation to indemnify Buyer
with respect to all Costs under this Article XI shall not exceed in the
aggregate Seven Hundred and Fifty Thousand U.S. Dollars ($750,000).
(c) Survival and Timing of Claims for Indemnification. The
representations, warranties, covenants and agreements contained in this
Agreement (other than those covenants and agreements to be performed after the
Closing) shall survive the Closing for a period of one (1) year therefrom
(except for Seller's representations and warranties set forth in Sections 4.1,
4.5 and 4.18.1, which shall survive for the applicable statute of limitations).
No claim for indemnification (other than for an alleged breach of a
representation set forth in Sections 4.1, 4.5 and/or 4.18.1) may be made under
this Article 11 after such one (1) year period.
(d) Sole Remedy. The indemnification provided in this Article
11 shall be the exclusive post-Closing remedy available for any breach of any
representation, warranty, covenant or agreement by Seller under this Agreement.
(e) No Limitation on Certain Representation, Warranties and
Covenants. Seller's representations and warranties contained in Sections 4.1,
4.5 and 4.18.1 and the parties' covenants to be performed from and after Closing
shall not be subject to the dollar or time limitations, but shall be unlimited
in amount and shall continue for the applicable period of statute of limitations
and a claim for indemnification in connection thereof may be made at any time
within such period.
(f) Certain Assumed Obligations. Buyer acknowledges Seller has
disclosed and that it is aware of (1) matters involving its diesel compressors
and rules of the South Coast Air Quality Management District and the
implementation of the Fan Gun Project, (2) alleged contamination of water runoff
to Big Bear lake, (3) the continuing discount ticket liability under the
proposed settlement of the Resort Association lawsuit, (4) the in lieu
tax-increment liability to the City of Big Bear Lake Improvement Agency under
the Developer Agreement between said Agency and the Corporation's predecessors,
(5) the post-Closing obligations of the Corporation regarding the Xxxxxxxx
Homeowners Association litigation (including but not limited to lift passes
and/or season passes for the 2002/2003 ski season given in settlement and any
required remediation) and (6) pending rate proposals and proceedings relating to
the electrical service provided to the Corporation by Bear Valley Electric
Service. Buyer acknowledges that it is purchasing the stock of the Corporation
subject to these matters and that it will make no claim against Seller under
this Article 11 or otherwise under this Agreement for costs incurred by Buyer
because of such matters. This list shall not be construed as a complete list of
circumstances disclosed by Seller to Buyer hereunder for which Seller has been
relieved of liability, and, other than those obligations expressly retained by
Seller pursuant to Section 11.2, Buyer shall be deemed to, and hereby expressly
does, assume all other liabilities and obligations of or relating to the
Corporation.
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11.8 Access to Records. From and after the Closing, the parties shall
allow each other, and the counsel, accountants and other representatives of each
other, such access to records which after the Closing are in the custody or
control of a party as is reasonably required in order to comply with its
obligations under the law or under contracts and obligations assumed pursuant to
this Agreement.
11.9 Insurance Coverage. From and after the Closing, Seller shall
maintain its right under its present general liability and workers compensation
insurance policies to coverage of the Corporation for personal injury losses,
damages and claims which relate to occurrences prior to the Closing. Purchasing
Parties shall be named as additional insureds on all such policies at no expense
to Purchasing Parties. Seller shall be responsible for the costs of the
insurance deductible attributable to any third party claim and the costs to
administer such claims.
11.10 Post-Closing Support. For a period not to exceed ninety (90) days
after the Closing, Buyer and Seller shall each provide to the other such
clerical support and assistance as may be reasonably requested to enable it to
discharge its obligations after Closing, to make an orderly transition in the
transfer of the business, as contemplated by this Agreement, and to retain such
records as may reasonably be required. Neither Buyer nor Seller will be
reimbursed for any expenses thereof without the prior written consent of the
reimbursing party.
11.11 Employee Benefits.
(a) As soon as practicable following the Closing, but not more
than 30 days thereafter, Summit and Buyer shall each take all necessary action
to cause the Corporation to become a participating employer in each of the
employee benefit plans which Summit and/or Buyer maintains for their employees
(a "Buyer Plan") and to credit the employees of the Corporation with their
periods of service under Seller's benefit plans prior to the Closing for
purposes of eligibility and vesting under any Buyer Plan subsequent to Closing.
The parties intend and agree that Seller's benefit plans will not cover any
employee of the Corporation after the Closing and these provisions may not be
enforced by any employee of the Corporation, either before or after the Closing.
(b) Buyer, in conjunction with its planned restructuring
activities subsequent to the Closing, will have, prior to the execution of this
Agreement, identified certain employees of the Corporation to be terminated
after Closing, due to duplication of effort within Summit's and the
Corporation's collective organization ("Terminated Employees"). Seller shall
determine the amount of severance payable to each such Terminated Employee, such
severance amount not to exceed the amounts set forth in that certain side letter
dated the date hereof without Buyer's consent, such consent not to be
unreasonably withheld. Buyer and Seller shall each be responsible for one-half
of the payment of severance to Terminated Employees who execute and deliver a
release in favor of the Corporation, Seller and Buyer for all claims,
liabilities, actions or suits of any kind that such Terminated Employee may have
against any of the Corporation, Seller or Buyer arising before, or as a result
of, the termination of such Terminated Employee's employment with the
Corporation. Seller agrees to use reasonable efforts not involving the payment
of money to assist Buyer in obtaining a release from each such Terminated
Employee. In no way shall the failure of any Terminated Employee to execute and
deliver such a release constitute a breach of this Agreement by Seller or an
unfulfilled condition to Buyer's obligation to close.
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11.12 Tax Matters.
(a) Tax Returns. Seller shall file or cause to be filed when
due all Tax Returns that are required to be filed by or with respect to the
Corporation for taxable periods ending on or before the Closing Date and Buyer
shall file or cause to be filed when due all Tax Returns that are required to be
filed by or with respect to the Corporation for taxable periods ending after the
Closing Date. Seller may, in its sole discretion, amend any Tax Return of the
Corporation filed or required to be filed for any taxable period ending on or
before the Closing Date; provided, however, that any such amendment which would
result in increased Tax liability for the Corporation for any taxable period
ending on or before the Closing Date shall require the consent of Buyer, which
consent shall not be unreasonably withheld. Neither Buyer nor any of its
affiliate shall (or shall cause or permit the Corporation to) amend, refile or
otherwise modify any Tax Return relating in whole or in part to the Corporation
with respect to any taxable period ending on or before the Closing Date without
the prior written consent of Seller, which consent may be withheld in the sole
discretion of Seller.
(b) Termination of Existing Tax Sharing Agreements. Any and
all existing Tax sharing agreements or arrangements, written or unwritten,
between the Seller and the Corporation, shall be terminated as of the Closing.
(c) Assistance and Cooperation. After the Closing Date, each
of Seller and Buyer shall (and shall cause their respective affiliates to):
(i) timely sign and deliver such certificates or forms as
may be necessary or appropriate to file Tax Returns;
(ii) assist the other party in preparing any Tax Returns
(subject to reimbursement for reasonable and necessary out-of-pocket costs);
(iii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of the Corporation;
(iv) make available to the other and to any taxing authority
as reasonably requested in connection with any Tax Return described in Section
11.12(a), all information relating to any Taxes or Tax Returns of the
Corporation;
(v) furnish the other with copies of all correspondence
received from any taxing authority in connection with any Tax audit or
information request with respect to any such taxable period; and
(vi) provide the other with at least 90 days' written notice
prior to transferring, discarding or destroying any books or records relating to
Tax matters of the Corporation and, if the other so requests, allow such other
to take possession of such books and records.
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Notwithstanding the foregoing or any other provision in this
Agreement, neither Buyer nor any of its affiliates shall have the right to
receive or obtain any information relating to Taxes of Seller, any of its
affiliates, or any of its predecessors other than information relating solely to
the Corporation.
Buyer shall execute and deliver and cause Corporation to
execute and deliver to Seller such powers of attorney or other instruments
appropriate to enable Seller to file the Tax Returns required to be filed by
Seller pursuant to Section 11.12(a).
(d) Adjustment to Purchase Price. For all Tax purposes, any
payment by Buyer or Seller under Article 11 hereof shall be treated as an
adjustment to the Purchase Price.
(e) Certain Definitions. For purposes of this Agreement:
(i) "Tax" or "Taxes" shall mean taxes of any kind, levies or
other like assessments, customs, duties, imposts, charges or fees, including,
income, gross receipts, ad valorem, value added, excise, real or property,
asset, sales, use, license, payroll, transaction, capital, net worth,
withholding, estimated, social security, utility, workers' compensation,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed or payable
to the United States, or any state, county, local or foreign government or
subdivision or agency thereof, together with any interest, penalties or
additions with respect thereto and any interest in respect of such additions or
penalties; and
(ii) "Tax Returns" shall mean all returns, reports,
statements, declarations, estimates and forms or other documents, including any
related or supporting information (collectively, "Returns"), required to be
filed with respect to any Taxes, and amended Returns and claims for refund.
(iii) Where certain financial or accounting terms are used
in this Agreement but not defined herein, such terms shall be read to refer to
specific headings or categories under the Corporation's financial statements.
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(f) Section 338(h)(10) Election. Buyer and Seller's parent
company shall timely make a joint election pursuant to Section 338(h)(10) of the
Code, as amended, and Treasury Regulation Section 1.338(h)(10)-1 (the
"Election") with respect to the sale of the Corporation's stock pursuant to this
Agreement. As promptly as reasonably practicable after the Closing Date and in
all events within 150 days after the Closing Date, Buyer and Seller's parent
company shall mutually prepare a Form 8023 (with all attachments), and execute
such Form 8023. In connection with the Election, Buyer and Seller's parent
company shall mutually determine the Modified Aggregate Deemed Sales Price and
Adjusted Grossed-up Basis (in each case, as defined under the applicable
Treasury Regulations). After thorough analysis and arms' length negotiations
between the parties, the parties agree that the Modified Aggregate Deemed Sales
Price and Adjusted Grossed-Up Basis shall be allocated in the manner set forth
on Schedule 11.12(f). Buyer and Seller's parent company (i) shall be bound by
the allocations described in this Section 11.12 (f) for all purposes, including
determining any Taxes, (ii) shall prepare and file all Tax Returns to be filed
with any Tax authority in a manner consistent with such allocations, (iii) shall
not take any position inconsistent with such allocation, in any Tax Return, any
proceeding before any Tax authority or otherwise, absent a determination (within
the meaning of Section 1313(a) of the Code) to the contrary, and (iv) shall
cause its affiliates to comply with the provisions of this paragraph as if they
were signatories to this Agreement. In the event the allocation is disputed by
any Tax authority, the party receiving notice of such dispute shall promptly
notify and consult with the other parties concerning resolution of such dispute,
and shall keep the other party apprised of the status of such dispute and the
resolution thereof.
11.13 Retention of Records of the Corporation. For a period ending
seven (7) years following the Closing, Buyer shall cause the Corporation to
retain all business records of the Corporation for periods prior to the Closing.
During such period, on two (2) business days prior notice, Buyer will (and will
cause the Corporation to) afford duly authorized representatives of Seller
reasonable access, during regular business hours, to all such records and permit
such representatives, at Seller's expense (for Buyer's reasonable and necessary
out-of-pocket costs), to make abstracts from or to make copies of any such
records, or to obtain temporary possession thereof as may reasonably be required
by Seller (provided that such possession does not unreasonably interfere with
the business of the Corporation). Should the Corporation wish to dispose of any
such records, Buyer will advise Seller of such desire in writing and, if Seller
so requests, Buyer shall cause the Corporation to promptly deliver to Seller, at
Seller's expense, the records in question. If Seller does not request delivery
of such records within thirty (30) days after Buyer's notice, the Corporation
may thereafter dispose of such records.
ARTICLE 12
COSTS
12.1 Finder's or Broker's Fees. Each of the parties represents and
warrants that it has dealt with no broker or finder in connection with any of
the transactions contemplated by this Agreement, and, insofar as it knows, no
broker or other person is entitled to any commission or finder's fee in
connection with any of these transactions.
12.2 Expenses. Except as otherwise expressly provided in this
Agreement, each of the parties shall pay all costs and expenses incurred or to
be incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement. Buyer shall pay
all title costs associated with the preliminary title report and title
insurance.
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ARTICLE 13
FORM OF AGREEMENT
13.1 Headings. The subject headings of the Articles and Sections of
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
13.2 Entire Agreement; Modification; Waiver. This Agreement and any
other agreement or document expressly referred to herein constitutes the entire
agreement between the parties pertaining to the subject matter contained herein.
No supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by all the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
13.3 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
ARTICLE 14
PARTIES
14.1 Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
shareholders, successors and assigns, nor is anything in this Agreement intended
to relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over against any party to this Agreement.
14.2 Assignment. This Agreement shall be binding on and shall inure to
the benefit of the parties to it and their respective heirs, legal
representatives, successors, and assigns
ARTICLE 15
REMEDIES; TERMINATION
15.1 Recovery of Litigation Costs. Except as otherwise expressly
provided in this Agreement, if any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys, fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
15.2 Conditions Permitting Termination. Subject to the provisions of
ARTICLE 3, either party may on or prior to the Closing Date terminate this
Agreement, by written notice to the other, if any bona fide action or proceeding
shall be pending against either party on the Closing Date that could result in
an unfavorable judgment, decree, or order that would prevent or make unlawful
the carrying out of this Agreement. Notwithstanding anything in this Agreement
to the contrary, if the Closing of the transactions contemplated by this
Agreement has not occurred, for any reason, on or before October 15, 2002, this
Agreement may be terminated by Seller at any time thereafter by written notice
to Buyer.
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15.3 Defaults Permitting Termination. If either Buyer or Seller
materially defaults in the due and timely performance of any of its warranties,
covenants, or agreements under this Agreement, the non-defaulting party or
parties may on or prior to the Closing Date give notice of the termination of
this Agreement, in the manner provided in ARTICLE 16. The notice shall specify
with particularity the default or defaults on which the notice is based. The
termination shall be effective seven days after giving of such notice, unless
the specified default or defaults have been cured on or before the effective
date for termination.
ARTICLE 16
NOTICES
All notices, requests, demands, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or on the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail registered or certified, postage prepaid, and
properly addressed as follows:
To Seller and, prior to Closing, the Corporation:
Booth Creek Ski Holdings, Inc.
0000 Xxxxx Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx, XX 00000
Attention: Xxxx X. Xxxx, General Counsel
FAX No.: (000) 000 0000
With a copy to:
Booth Creek Ski Holdings, Inc.
0000 Xxxxxxx 000,
Xxxxx #0
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Fax No. (000) 000-0000
To Buyer and Summit:
Snow Summit Ski Corporation
Xxxx Xxxxxx Xxx 00
Xxx Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxx, CEO
FAX No.: (000) 000-0000
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With copy to: Xxxxxx X. Xxxxxx, Esq.
000 Xxxxx Xx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
FAX No.: (000) 000-0000
Any party may change its address for purposes of this Article by giving
the other parties written notice of the new address in the manner set forth
above.
ARTICLE 17
GOVERNING LAW
This Agreement shall be construed in accordance with, and governed by,
the laws of the State of California, except that this Agreement shall be given a
fair and reasonable construction in accordance with the intention of the parties
and without regard to, or aid of, Section 1654 of the California Civil Code.
ARTICLE 18
MISCELLANEOUS
18.1 Announcements. None of the parties will make any announcements to
the public or to employees of the other parties concerning this Agreement or the
transactions contemplated hereby without the prior approval of the other
parties, which will not be unreasonably withheld. Notwithstanding any failure of
the other parties to approve it, a party may make an announcement of
substantially the same information as theretofore announced to the public by the
other parties, or any announcement required by applicable law, but the
announcing party shall in either case notify the other parties of the contents
thereof at least 48 hours in advance of its issuance.
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the day and year first above written.
SELLER: PURCHASING PARTIES:
BOOTH CREEK SKI HOLDINGS, INC. BEAR MOUNTAIN RESORT, INC.
By /s/ Xxxxxxxxxxx X. Xxxxx By /s/ Xxxxxxx X. Xxx
-------------------------------- -----------------------------
Name:Xxxxxxxxxxx X. Xxxxx Xxxxxxx X. Xxx, President & CEO
Title:President and Chief Operating Officer
SNOW SUMMIT SKI CORPORATION
By /s/ Xxxxxxx X. Xxx
-----------------------------
Xxxxxxx X. Xxx, President & CEO
ESCROW AGENT:
LAWYERS TITLE INSURANCE COMPANY
By /s/ Xxxxxxx Xxxxxx
--------------------------------
Name:Xxxxxxx Xxxxxx
Title:Escrow Officer
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