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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 18, 1997
BY AND AMONG
BOOTH CREEK SKI GROUP, INC.,
LMRC ACQUISITION CORP.
AND
LOON MOUNTAIN RECREATION CORPORATION
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS............................................................1
1.1 General.......................................................1
1.2 Definitions...................................................1
1.3 Interpretation................................................9
ARTICLE II
THE MERGER.............................................................9
2.1 The Merger....................................................9
2.2 Conversion of Shares Upon the Merger.........................10
2.3 Company Common Stock.........................................11
2.4 Appraisal Rights.............................................13
2.5 Options......................................................13
2.6 Articles of Incorporation....................................13
2.7 By-Laws......................................................14
2.8 Directors and Officers.......................................14
2.9 Effect of the Merger.........................................14
2.10 Company Closing Expenses.....................................14
2.11 Escheat......................................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................14
3.1 Corporate Status; Due Authorization; Authority
of the Company; Enforceability...............................15
3.2 Accounts Receivable..........................................15
3.3 Trade Names, Trademarks and Copyrights.......................16
3.4 No Patent Rights.............................................16
3.5 Ski and Other Passes.........................................16
3.6 Contracts....................................................16
3.7 Compliance with Laws.........................................17
3.8 Litigation...................................................17
3.9 Personnel Identification and Compensation....................17
3.10 Existing Employment Contracts................................17
3.11 Capitalization; Subsidiaries.................................18
3.12 Shareholder List; Shareholder Agreements.....................19
3.13 Forest Service Permits.......................................19
3.14 Environmental................................................19
3.15 Certain Transactions.........................................22
3.16 Employee Benefit Matters, Plans and Claims...................22
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3.17 Tax Matters................................................24
3.18 Inventories................................................27
3.19 Title to Assets; Liens.....................................27
3.20 Real Property..............................................27
3.21 Improvements...............................................28
3.22 Zoning.....................................................28
3.23 No Commitments.............................................29
3.24 Continued Use of Real Property.............................29
3.25 Water Rights...............................................29
3.26 Condition of Assets........................................29
3.27 Consents...................................................29
3.28 Licenses and Permits.......................................30
3.29 No Alternative Transactions................................30
3.30 Occupational Safety and Health.............................30
3.31 Insurance..................................................30
3.32 Financial Statements.......................................30
3.33 Undisclosed Liabilities....................................30
3.34 Conduct of Business Since Reference Balance Sheet Date.....31
3.35 Broker's or Consultant's Fees..............................32
3.36 Banking Arrangements.......................................32
3.37 Powers of Attorney.........................................32
3.38 Disclosure.................................................32
3.39 Proxy Statement............................................32
3.40 Shareholders...............................................33
3.41 Expansion..................................................33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND ACQUISITION SUB.................................................33
4.1 Corporate Status...........................................33
4.2 Due Authorization..........................................33
4.3 Authority of Purchaser.....................................33
4.4 Enforceability.............................................34
4.5 Consents...................................................34
4.6 Broker's or Consultant's Fees..............................34
4.7 Litigation.................................................34
4.8 Business Activities of Acquisition Sub.....................34
ARTICLE V
PRE-CLOSING COVENANTS...............................................34
5.1 Required Consents..........................................34
5.2 Conduct of the Business....................................35
5.3 Right of Inspection; Access to Books and Personnel.........35
5.4 Notification of Material Adverse Events....................36
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5.5 Disclosure Schedule and Supplemental Disclosures...........36
5.6 Title Insurance and Surveys................................36
5.7 Code Section 1445 Withholding..............................37
5.8 Exclusivity................................................38
5.9 Required Filings...........................................38
5.10 Shareholder Approval and Dissenting Shares.................38
5.11 Interim Financial Statements...............................39
5.12 Xxxxxxx Money Deposit......................................39
5.13 Company Preferred Stock....................................40
5.14 Exchange Agent Agreement...................................41
5.15 Marketing Agreement........................................41
ARTICLE VI
CONDITIONS PRECEDENT TO PURCHASER'S
AND ACQUISITION SUB'S OBLIGATIONS...................................41
6.1 Obligations to be Satisfied on or Prior to Closing Date....41
6.2 Procedure for Failure to Satisfy Conditions................44
ARTICLE VII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS..........44
7.1 Obligations to Be Satisfied on or Prior to Closing Date....44
7.2 Procedure for Failure to Satisfy Conditions................45
ARTICLE VIII
CLOSING.............................................................45
8.1 Time and Place.............................................45
8.2 Closing Transactions.......................................45
8.3 Deliveries by the Company to Purchaser
and Acquisition Sub........................................45
8.4 Deliveries by Purchaser and Acquisition
Sub to the Company.........................................47
ARTICLE IX
OTHER AGREEMENTS....................................................48
9.1 Further Assurance..........................................48
9.2 Confidentiality............................................48
9.3 Employment Matters.........................................49
9.4 Sales and Transfer Taxes...................................49
9.5 Purchaser Non-Solicitation.................................49
9.6 Section 338 of the Code....................................50
ARTICLE X
INDEMNIFICATION.....................................................50
10.1 Indemnification by Merger Consideration Recipients.........50
10.2 Indemnification by Purchaser...............................51
10.3 Procedure for Indemnification..............................51
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10.4 Limitations on Indemnity...................................52
10.5 Escrow Agreement...........................................54
10.6 Payment....................................................54
10.7 Set-Off....................................................54
ARTICLE XI
TERMINATION.........................................................55
11.1 Rights to Terminate........................................55
11.2 Effects of Termination.....................................55
ARTICLE XII
THE REPRESENTATIVE..................................................56
12.1 Appointment................................................56
12.2 Authorization..............................................56
12.3 Irrevocable Appointment....................................57
12.4 Resignation and Removal....................................57
12.5 Purchaser's Reliance.......................................58
12.6 Exculpation and Indemnification............................58
ARTICLE XIII
MISCELLANEOUS PROVISIONS............................................58
13.1 Public Announcements.......................................58
13.2 Post-Closing Deliveries....................................58
13.3 Notices....................................................58
13.4 Assignment.................................................60
13.5 Benefit of the Agreement...................................60
13.6 Exhibits and Schedules.....................................60
13.7 Headings...................................................60
13.8 Entire Agreement...........................................60
13.9 Modifications and Waivers..................................61
13.10 Counterparts...............................................61
13.11 Severability...............................................61
13.12 GOVERNING LAW..............................................61
13.13 Expenses...................................................61
13.14 Waiver of Jury Trial.......................................61
ARTICLE XIV
GUARANTEE...........................................................62
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EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Exchange Agreement
Exhibit C Form of Option Cancellation Agreement
Exhibit D Articles of Merger
Exhibit E Company Closing Expenses
Exhibit F Form of Shareholder Agreement
Exhibit G Opinion of Company's, Subsidiary's and
Representative's Counsel
Exhibit H Form of Severance Agreement
Exhibit I Form of Withholding Certificates
Exhibit J Opinion of Purchaser and Acquisition Sub's Counsel
DISCLOSURE SCHEDULES
Schedule 1.1 Expansion of Company's Business
Schedule 3.3 Trade Names, Trademarks and Copyrights
Schedule 3.5 Ski and Other Passes
Schedule 3.6 Contracts, Indebtedness and Promissory Notes
Schedule 3.7 Compliance with Laws
Schedule 3.8 Litigation
Schedule 3.9 Personnel Identification and Compensation
Schedule 3.10 Existing Employment Contracts
Schedule 3.11 Copy of Stock Option Plan; List of Option Holders
with Details
Schedule 3.12 Shareholder List
Schedule 3.13 Forest Service Permits
Schedule 3.14.2 Compliance with Environmental Laws
Schedule 3.14.4 Release of Hazardous Substances
Schedule 3.14.5 Environmental and Related Permits
Schedule 3.14.6 Environmental Proceedings
Schedule 3.14.7 Tanks, Asbestos and PCB's
Schedule 3.15 Certain Transactions - Non-ownership
Schedule 3.16 Employee Benefit Matters, Plans and Claims
Schedule 3.17(j) Joint Ventures and Partnerships
Schedule 3.18 Inventories
Schedule 3.19 Title to Assets; Liens
Schedule 3.20 Real Property
Schedule 3.23 Commitments With Utility Companies, School
Districts, Water Districts or Improvement Districts
Schedule 3.25 Water Rights
Schedule 3.26 Equipment & Improvements
Schedule 3.27 Consents
Schedule 3.28 Licenses and Permits
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Schedule 3.30 Occupational Safety and Health Violations and
Investigations
Schedule 3.31 Insurance
Schedule 3.32 Financial Statements
Schedule 3.34 FY 1997-98 Operating and Capital Budget
Schedule 3.36 Banking Arrangements
Schedule 9.3 Parties to Severance Agreements, Length of Severance
Period, Base Salary & Addresses
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made
as of this 18th day of September, 1997, by and among BOOTH CREEK SKI GROUP,
INC., a Delaware corporation (together with its successors and permitted
assigns, "Purchaser"), LMRC ACQUISITION CORP., a New Hampshire corporation and
an indirect wholly-owned subsidiary of Purchaser ("Acquisition Sub"), and LOON
MOUNTAIN RECREATION CORPORATION, a New Hampshire corporation (the "Company").
RECITALS
WHEREAS, the Company has authorized capital stock of (i) 750,000 shares
of common stock, $.10 par value per share ("Company Common Stock"), of which
590,470 shares are outstanding as of the date hereof; and (ii) 2,250 shares of
7% non-cumulative preferred stock, $100 par value per share ("Company Preferred
Stock"), of which 1,334 shares are outstanding as of the date hereof;
WHEREAS, under the Company's Non-Qualified Stock Option Plan dated June
22, 1990 (the "Stock Option Plan"), options (including those options not yet
fully vested and/or exercisable in accordance with their terms) to purchase
14,155 shares of Company Common Stock (the "Option Shares") are outstanding as
of the date hereof and the Company is hereby agreeing that it will not issue any
additional options thereunder;
WHEREAS, the Company and the Subsidiary (as hereinafter defined) are
engaged in the ownership and operation of a ski resort by the name of "Loon
Mountain," together with a real estate and development company and other
facilities and properties, all located in the White Mountains in Lincoln, New
Hampshire (the "Business"); and
WHEREAS, Purchaser, Acquisition Sub and the Company desire to have
Acquisition Sub merge with and into the Company pursuant to a transaction in
which the separate existence of Acquisition Sub will cease, the Company shall
continue as the surviving corporation and become an indirect, wholly-owned
subsidiary of Purchaser, and (i) each share of Company Common Stock (except for
shares, if any, with respect to which the holder thereof shall have perfected
dissenter's rights) will be converted into a right to receive the Common Share
Merger Consideration, (ii) each share of Company Common Stock with respect to
which the holder thereof shall have perfected dissenter's rights shall be
converted into the right to receive the fair value for such share as determined
pursuant to New Hampshire Law and (iii) each outstanding Option will be
converted into a right to receive the Option Merger Consideration.
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual agreements and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Purchaser, Acquisition Sub, and the Company hereby agree as
follows:
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ARTICLE I
DEFINITIONS
1.1 General. Each term defined in the first paragraph of this Agreement
and in the Recitals shall have the meaning set forth above whenever used herein,
unless otherwise expressly provided or unless the context clearly requires
otherwise.
1.2 Definitions. As used herein, the following terms shall have the
meanings ascribed to them in this Section 1.2:
Accounts Receivable. All present and future rights to payment
for goods sold or services rendered whether or not earned by performance,
including, without limitation, all accounts or notes receivable owned or held by
the Company or the Subsidiary.
Acquisition Sub. As defined in the Recitals hereto.
Acquisition Sub Stock. All of the issued and outstanding
shares of capital stock of Acquisition Sub, consisting of 100 shares of common
stock, $.01 par value.
Adverse Consequences. All allegations, charges, complaints,
actions, suits, proceedings, hearings, investigations, claims, demands,
judgments, orders, decrees, stipulations, injunctions, damages, dues, penalties,
fines, costs, amounts paid in settlement, Liabilities, Taxes, interest, Liens,
losses, expenses and fees, including all accounting, consultant and reasonable
attorneys' fees and court costs, costs of expert witnesses and other expenses of
litigation.
Affiliate. As set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
Agreement. This Agreement and Plan of Merger, together with all
Exhibits and Disclosure Schedules referred to herein, as amended, modified or
supplemented from time to time in accordance with the terms hereof.
Aggregate Merger Consideration. Seventeen Million Nine Hundred
Ninety-Nine Thousand Nine Hundred and Seventy Dollars ($17,999,970) (subject to
the Price Adjustment, if any, required pursuant to Section 2.2(b)).
Aggregate Preferred Redemption Consideration. One Hundred Forty-Two
Thousand Seven Hundred Thirty-Eight Dollars ($142,738).
Allocable Portion. The ratable portion of the Holdback attributable
to any share of Company Common Stock (other than Dissenting Shares) or any
Option Share derived by
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multiplying the Holdback times the fraction equal to the number of such shares
of Company Common Stock (other than Dissenting Shares) or Option Shares being
considered over the aggregate number of outstanding shares of Company Common
Stock (other than Dissenting Shares) and the number of Option Shares that could
be issued upon exercise of all remaining Options on the Closing Date.
Authority. Any governmental, regulatory or administrative
body, agency or authority, any court or judicial authority, any arbitrator or
any public or governmental regulatory authority, whether foreign, federal, state
or local.
Business. As defined in the Recitals hereto.
CERCLA. Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601, et seq.
Closing. The closing of the Merger.
Closing Date. Five (5) days following the date on which
Purchaser and the Company agree all closing conditions have been satisfied (or
will be satisfied on the Closing Date) or waived or such other date as Purchaser
and the Company may mutually agree in writing, in either case, upon which the
Closing shall occur.
Code. Internal Revenue Code of 1986.
Common Share Merger Consideration. The quotient obtained by
dividing (a) the Aggregate Merger Consideration (as adjusted) by (b) the sum of
the number of issued and outstanding shares of Company Common Stock plus the
number of Option Shares that could be issued upon the vesting and exercise of
all remaining Options on the Closing Date.
Company. As defined in the Recitals hereto.
Company Closing Expenses. All attorneys' fees and other legal
costs and expenses, accountants' fees and other accounting costs and expenses
and investment banker fees and other investment banking costs and expenses
incurred by the Company in connection with its negotiation, preparation and
execution of this Agreement and its consummation of the Merger and the other
transactions contemplated hereby.
Company Common Stock. As defined in the Recitals hereto.
Company's Knowledge or Knowledge. The knowledge after due
inquiry and reasonable investigation of each of the senior executives of the
Company, including, without limitation, Xxxxxx X. Xxxxx, Xxxxxxxxx X. Xxxxxxxx,
Xxxxx Xxxxxxxx, Xxxx Berkeley, Xxxxx Xxxxxxx, Xxxx Xxxxxx, Xxx Xxxxxx and Xxxxx
Xxxxxx.
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Company Preferred Stock. As defined in the Recitals hereto.
Contracts. All contracts, leases, subleases, arrangements,
commitments, promissory notes, loan or credit agreements, instruments and other
agreements of the Company or the Subsidiary, including all customer agreements,
vendor agreements, purchase orders, installation and maintenance agreements,
computer software licenses, hardware lease or rental agreements, contract claims
and all other arrangements and understandings related to the Business,
including, without limitation, those items which are listed on Schedule 3.6.
Dissenting Shares. The shares of Company Common Stock held by
persons who perfect dissenter's rights under New Hampshire Law with respect to
such Company Common Stock.
DOJ. United States Department of Justice.
ENVIRON Environmental Site Assessment Report. The Phase I
Environmental Site Assessment Report dated July, 1997, prepared by ENVIRON
International Corporation with respect to the Company.
Equipment and Improvements. All ski lifts, pylons, towers,
ski-lift machinery and equipment, snow-cats, groomers, snow-making machinery and
equipment, lighting equipment, ski trail improvements, mountain restaurants,
signs, snow-making facilities and other facilities and structures, buildings,
installations, fixtures, improvements, betterments and additions located on or
within the Real Property, machinery, equipment, service trucks, shuttle busses,
golf carts, snowmobiles, bicycles, vehicles, tractors, spare tires and parts,
tools, appliances, furniture, office furniture, fixtures, office supplies and
office equipment, computers, computer terminals and printers, computer software,
telephone systems, telecopiers and photocopiers, and other tangible personal
property of every kind and description that are located upon or within the Real
Property, which are owned or leased by the Company or the Subsidiary, or are
utilized in connection with the Company's or the Subsidiary's operations upon or
within the Real Property, including, without limitation, the items listed on
Schedule 3.26.
ERISA. Employee Retirement Income Security Act of 1974.
Escrow Account. The escrow account to be established by the
Escrow Agent pursuant to the Escrow Agreement, into which the Holdback delivered
to the Escrow Agent shall be placed.
Escrow Agent. Initially, Citizens Bank New Hampshire, a New
Hampshire guaranty savings bank, and any successor or replacement thereof
appointed in accordance with the Escrow Agreement.
Escrow Agreement. The Escrow Agreement among the Escrow Agent,
the Purchaser and the Representative in substantially the form of Exhibit A
hereto as amended from time to time
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after the Closing Date, which Escrow Agreement shall govern the establishment
of, and the investment and disposition of, the funds held in the Escrow Account.
Exchange Account. The trust account to be established by the
Exchange Agent pursuant to the Exchange Agreement, into which the amounts to be
delivered to the Exchange Agent pursuant to Section 2.3 shall be placed.
Exchange Agent. Initially, Citizens Bank New Hampshire, a New
Hampshire guaranty savings bank, and any successor or replacement thereof
appointed in accordance with the Exchange Agreement.
Exchange Agreement. The Exchange Agreement among the Exchange
Agent, the Purchaser, the Company and the Representative in substantially the
form of Exhibit B hereto as amended from time to time after the Closing Date,
which Exchange Agreement shall govern the establishment of, and the investment
and disposition of, the funds held in the Exchange Account.
Existing Title Commitment. The mortgagee title commitment,
covering approximately 455 acres, issued to Citizens Bank of New Hampshire by
Lawyer's Title Insurance Company dated August 25, 1997.
Expansion. The Company's plan and proposal to expand its
facilities, including, without limitation, expansion into the south portion of
the mountain as described on Schedule 1.1.
Financial Statements. The audited balance sheets and income
statements and statements of cash flow of the Company and its subsidiaries, on a
consolidated basis, for the years ended April 30, 1996 and April 30, 1997,
together with the unaudited balance sheet and income statement and statement of
cash flow of the Company and its subsidiaries, on a consolidated basis, for the
three (3) month period ended July 27, 1997, copies of which are attached hereto
as Schedule 3.32.
Forest Service. The United States Forest Service.
FTC. United States Federal Trade Commission.
HSR Act or Xxxx-Xxxxx-Xxxxxx Act. The Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976.
Holdback. One Million Five Hundred Thousand Dollars
($1,500,000); provided, however, that to the extent that holders of more than
ten percent (10%) of the shares of Company Common Stock outstanding ("Excess
Dissenters' Shares") shall have perfected dissenter's rights under New Hampshire
Law, and the Purchaser nonetheless elects to waive Section 6.1(m) and proceed
with the Merger, then the Holdback shall be reduced dollar for dollar in an
amount equal to the Allocable Portion of the Holdback which would have been
attributable to such Excess
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Dissenters' Shares if the holders of such Excess Dissenters' Shares had not
caused such shares to become Dissenting Shares.
Initial Option Cash Payment. An amount equal to the Option
Merger Consideration less the Allocable Portion of the Holdback attributable to
such Option based on the number of Option Shares covered thereby.
Initial Per Common Share Cash Payment. An amount equal to the
Common Share Merger Consideration less the Allocable Portion of the Holdback
attributable to such share of Company Common Stock.
Intangibles. All trade names, trademarks, service marks,
copyrights, trade secrets, registrations and applications for any thereof, and
all technical know-how and other intellectual property rights or intangibles
used by the Company or the Subsidiary in the operation of the Business,
including, without limitation, those listed on Schedule 3.3 to this Agreement
and all goodwill associated therewith, licenses and sublicenses granted and
obtained with respect thereto and rights thereunder, remedies against
infringement thereof and rights to protection of interests therein under all
applicable Laws.
Inventories. All of the Company's and the Subsidiary's retail
inventory (including, without limitation, all inventories of food and beverages
and inventory customarily sold by the Company or the Subsidiary in new or used
condition to the public) and non-retail inventory (including, without
limitation, all inventories of ski rental equipment and employee and ski patrol
jackets, parkas, pants and other uniform items, other than those which are
customarily sold by the Company or the Subsidiary in new or used condition to
the public and which are included in the Company's and the Subsidiary's retail
inventory), consumable supplies, spare parts and repair materials and any and
all other inventories of the Company and the Subsidiary, an approximate summary
of which retail and non-retail inventories currently on hand is set forth on
Schedule 3.18 to this Agreement under the heading "Inventories", plus any
replacements for or additions to such inventories acquired on or before the
Closing Date, and minus any items of inventory sold or consumed by the Company
or the Subsidiary in the Ordinary Course of Business on or before the Closing
Date.
IRS. Internal Revenue Service.
Law. Any law, statute, regulation, rule, ordinance,
requirement, announcement or other binding action or requirement of an
Authority.
Leased Real Property. Those certain parcels of land more fully
described on Schedule 3.20.
Letter of Intent. The letter of intent dated June 30, 1997
between Booth Creek, Inc. and the Company relating to the transactions
contemplated by this Agreement, and as amended on
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August 15, 1997 and August 29, 1997, and as may be further modified or amended
from time to time.
Liabilities. Any obligation or liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated and whether due or to
become due), including, without limitation, any liability for Taxes.
Lien. Any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor or lessor
under any conditional sale, capitalized lease or other title retention
agreement).
Merger. As defined in the Recitals hereto.
Merger Consideration Recipient. At the Effective Time, each
holder of Company Common Stock and each holder of Options.
Options. The options issued pursuant to the Company's Stock
Option Plan, whether or not then exercisable.
Option Shares. As defined in the Recitals hereto.
Option Cancellation Agreement. A written agreement from the
holder of any Options, substantially in the form of Exhibit C, relating to the
termination of such employee's Options.
Option Merger Consideration. With respect to each Option
outstanding as of the Effective Time, an amount equal to (a) the product of (i)
the Common Share Merger Consideration and (ii) the aggregate number of Option
Shares which are subject to such Option less (b) the aggregate exercise price
payable with respect to such Option.
Order. Any decree, order, judgment, writ, award, injunction,
stipulation or consent of or by an Authority.
Ordinary Course of Business. The ordinary course of business
of the Company and/or the Subsidiary, as applicable, in accordance with past
custom and practice (including with respect to quantity and frequency).
Owned Real Property. Those certain parcels of land more fully
described on Schedule 3.20, together with all timber and water rights and other
privileges and appurtenances thereto and all plants, buildings, structures,
installations, fixtures, fittings, improvements, betterments and additions
situated thereon and together with all easements and rights-of-way used or
useful in connection therewith.
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Person. Any natural person, corporation, limited liability
company, partnership, firm, joint venture, joint-stock company, trust,
association, Authority, unincorporated entity or organization of any kind.
Preferred Share Redemption Consideration. One Hundred Seven
Dollars ($107) per share of Company Preferred Stock.
Purchaser. As defined in the Recitals hereto.
RCRA. Resource Conservation and Recovery Act, 42 U.S.C.
Section 9201, et seq.
Real Property. Collectively, the USFS Permitted Property, the
Owned Real Property and the Leased Real Property.
Real Property Leases. All leases to the Leased Real Property.
Records. All books of account, ledgers, forms, records,
documents, files, invoices, vendor or supplier lists, plans and other data which
are necessary to or desirable for the ownership, use, maintenance or operation
of the Business and which are owned or used by the Company or the Subsidiary,
including, without limitation, all blueprints and specifications, all Tax,
personnel, payroll, payroll tax and labor relations records, all environmental
control records, environmental impact reports, statements, studies and related
documents, handbooks, technical manuals and data, engineering specifications and
work papers, ski trail design specifications and improvement records, all
pricing and cost information, all sales records, all accounting and financial
records, all sales and use tax returns, reports, files and records, asset
history records and files, all data entry and accounting systems used to conduct
the day-to-day operations of the Business, all maintenance and repair records,
all correspondence, notices, citations and all other documents received from,
sent to or in the Company's or the Subsidiary's possession in connection with
any Authorities (including, without limitation, federal, state, county or
regional environmental protection, air or water quality control, occupational
health and safety, land use, planning or zoning, Forest Service, and any
alcohol, beverage or fire prevention Authorities), all plans, maps and surveys
of the Real Property, and all plans and designs of buildings, structures,
fixtures and equipment.
Reference Balance Sheet. The unaudited balance sheet of the
Company and the Subsidiary, on a consolidated basis, for the Business dated the
Reference Balance Sheet Date.
Reference Balance Sheet Date. July 27, 1997.
Shareholder Agreement. The Shareholder Agreement among the
Purchaser, Acquisition Sub and a shareholder of Company Common Stock, in
substantially the form of Exhibit F.
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South Mountain. The region covered by a one-year USFS Permit,
which is due to expire May 15, 1998, permit number 4031-01, and consisting of
approximately 581 acres as shown on the map contained in Schedule 1.1 of this
Agreement.
Stock Option Plan. As defined in the Recitals hereto.
Subsidiary. Loon Realty Corp., a New Hampshire corporation and
a wholly-owned subsidiary of the Company.
USFS Permits. The special use permits issued by the Forest
Service, each of which is described on Schedule 3.13, including the maps, master
development plans, operating plans, and other exhibits attached thereto or
incorporated therein.
USFS Permitted Property. The land described in the USFS
Permits and the plants, buildings, structures, installations, fixtures,
improvements, betterments and additions situated thereon.
In addition to the terms defined above, the following terms
are defined in the Sections as listed below:
DEFINED TERM SECTION
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Alternative Transaction Section 5.8
Articles of Merger Section 2.1(b)
Company Warranty Claim Section 10.2(a)
Confidential Information Section 9.2(a)
Disclosure Schedules Section 5.5
Xxxxxxx Money Section 5.12
Effective Time Section 2.1(b)
Environmental Claims Section 3.14.6
Environmental Laws Section 3.14.1(a)
FY 1997-98 Budget Section 3.34
Hazardous Substances Section 3.14.1(b)
Indemnified Party Section 10.3(a)
Indemnifying Party Section 10.3(a)
Land Status Report Section 5.6(a)(iv)
Leasehold Policies Section 5.6(a)(ii)
New Hampshire Law Section 2.1(a)
Permits Section 3.28
Plan Section 3.16(a)
Price Adjustment Section 2.2(b)
Proxy Statement Section 3.39
Purchaser Indemnified Person Section 10.1
Purchaser Warranty Claims Section 10.1(a)
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Release Section 3.14.1(c)
Representative Section 12.1
Section 1445 Withholding Section 5.7
Shareholders' Meeting Section 5.10
Surveys Section 5.6(a)(iii)
Surviving Company Section 2.1(a)
Taxes Section 3.17(a)
Third-Party Notice Section 10.3(b)
Title Company Section 5.6(a)(i)
Title Policies Section 5.6(a)(i)
1.3 Interpretation. Unless otherwise expressly provided or
unless the context requires otherwise, (a) all references in this Agreement to
Articles, Sections, Disclosure Schedules and Exhibits shall mean and refer to
Articles, Sections, Disclosure Schedules and Exhibits of this Agreement; (b) all
references to statutes and related regulations shall include all amendments of
the same and any successor or replacement statutes and regulations; (c) words
using the singular or plural number also shall include the plural and singular
number, respectively; (d) references to "hereof", "herein", "hereby" and similar
terms shall refer to this entire Agreement (including the Disclosure Schedules
and Exhibits hereto); and (e) references to any Person shall be deemed to mean
and include the successors and permitted assigns of such Person (or, in the case
of an Authority, Persons succeeding to the relevant functions of such Person).
ARTICLE II
THE MERGER
2.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, and
in reliance upon the representations, warranties, covenants and agreements made
in this Agreement by Purchaser, Acquisition Sub and the Company, at the
Effective Time (as such term is defined in Section 2.1(b)), Acquisition Sub
shall be merged with and into the Company in accordance with the New Hampshire
Business Corporation Act (the "New Hampshire Law"), the separate existence of
Acquisition Sub shall cease and the Company shall continue as the surviving
corporation in the Merger (herein sometimes called the "Surviving Company")
under the name "Loon Mountain Recreation Corporation."
(b) At the Closing, the parties hereto shall cause the Merger
to be consummated by filing with the Secretary of State of New Hampshire the
appropriate articles of merger (the "Articles of Merger") duly executed by the
Company and Acquisition Sub in accordance with the requirements of New Hampshire
Law and with this Agreement and in substantially the form attached hereto as
Exhibit D. The date and time of filing with and acceptance of the Articles of
Merger with the Secretary of the State of New Hampshire is referred to herein as
the "Effective Time."
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2.2 Conversion of Shares Upon the Merger.
(a) At the Effective Time, the outstanding shares of Company
Common Stock and Acquisition Sub Stock will be converted or canceled and retired
or remain outstanding, in each case pursuant to the Merger and without any
action on the part of the holder thereof, as follows:
(i) All the shares of Acquisition Sub Stock shall be
converted into one-hundred (100) validly issued, fully paid and
nonassessable shares of Company Common Stock, par value $.10 per share,
of the Surviving Company. The certificate which formerly represented
the outstanding Acquisition Sub Stock shall, from and following the
Effective Time, represent, and for all purposes be evidence of
ownership of, the number of shares of the class of the Surviving
Company set forth in the preceding sentence.
(ii) Each share of Company Common Stock which,
immediately prior to the Effective Time, was held by the Company as a
treasury share shall be canceled and retired without any payment being
made therefor.
(iii) Each share of Company Common Stock issued and
outstanding as of the Effective Time, other than Dissenting Shares,
shall be converted into the right to receive in cash the Common Share
Merger Consideration, subject to the payment of the Holdback on the
Closing Date as required by Section 2.2(c), which amount shall be
payable in the manner set forth in Section 2.3.
(iv) Each share of Company Common Stock which is
outstanding as of the Effective Time with respect to which the holder
thereof shall have perfected dissenter's rights under New Hampshire Law
will be converted into, and become a right to receive the fair value
for such share as determined pursuant to New Hampshire Law, RSA 293-A:
13.01 et. seq.
(b) At the Closing Date, the Aggregate Merger Consideration
shall be adjusted ("Price Adjustment") as follows:
(i) In the event that the Company pays a dividend on
the Company Common Stock during the time period beginning on the date
hereof and ending on the Closing Date, the Aggregate Merger
Consideration shall be reduced on the Closing Date by the aggregate
amount of such dividend;
(ii) In the event that any of the Options are
effectively exercised or terminated during the time period beginning on
June 30, 1997 and ending on the Closing Date, the Aggregate Merger
Consideration shall be reduced by the aggregate amount of the exercise
price on such Options which are effectively exercised or terminated
during such time period unless such amounts have been paid to the
Company in cash; and
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(iii) In the event that on the Closing Date there
exists declared and unpaid dividends on Company Common Stock which are
outstanding, the Aggregate Merger Consideration shall be reduced by the
amount of such dividends.
(c) Notwithstanding anything to the contrary contained herein,
at the Effective Time, each Merger Consideration Recipient shall have the right
to receive in the case of the holders of Company Common Stock (other than
Dissenting Shares) only the Initial Per Common Share Cash Payment for each share
of Company Common Stock which amount shall be payable in the manner set forth in
Section 2.3 or, in the case of each Option, the Initial Option Cash Payment
which amount shall be payable in the manner set forth in Section 2.5. The
remaining portion of the Common Share Merger Consideration (less the amount
equal to the Common Share Merger Consideration multiplied by the number of
Dissenting Shares) and the Option Merger Consideration payable to such Merger
Consideration Recipients, which in the aggregate for all Merger Consideration
Recipients constitutes the Holdback, shall be deposited at the Effective Time
into the Escrow Account. The Holdback shall be available to satisfy the Merger
Consideration Recipients' obligations to indemnify Purchaser and Surviving
Company in accordance with the terms of Article X and the Escrow Agreement.
(d) As of the Effective Time, the holders of the Company
Common Stock (other than Dissenting Shares) converted into the right to receive
the Common Share Merger Consideration shall have no rights with respect to the
Surviving Company by virtue of their ownership of such Company Common Stock
immediately prior to the Effective Time, except for the right to receive the
Common Share Merger Consideration and the Holdback pursuant to this Section 2.2,
Section 2.3, Article X and the Escrow Agreement, and each certificate which
formerly represented a Company Common Share (other than Dissenting Shares)
shall, from and following the Effective Time, represent only the right to
receive the Common Share Merger Consideration with respect to such Company
Common Share in accordance herewith.
(e) With respect to Dissenting Shares, the Surviving Company
shall be responsible for and liable to pay any additional amounts (over the
Common Share Merger Consideration) which are determined to be due by a final
determination of a court of competent jurisdiction under New Hampshire Law and
may keep any amounts (up to the Common Share Merger Consideration) should a
lesser amount ultimately be determined to be due under New Hampshire Law.
2.3 Company Common Stock.
At the Effective Time:
(a) Acquisition Sub shall make delivery in immediately
available funds to the Exchange Agent by wire transfer to the Exchange Account
of the amount equal to the Initial Per Common Share Cash Payment multiplied by
the number of outstanding shares of Company Common Stock (other than Dissenting
Shares);
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(b) The Exchange Agent shall deliver to each holder of shares
of Company Common Stock (other than Dissenting Shares) converted into the right
to receive the Common Share Merger Consideration pursuant to Section 2.2, who
has surrendered to the Exchange Agent the certificate or certificates
representing his, hers or its shares of Company Common Stock (other than
Dissenting Shares) together with any other customary instruments of transfer
that reasonably may be required by Acquisition Sub, a check (or, if required by
the next sentence, immediately available funds by wire transfer to the account
designated in writing by such holder) for an amount equal to the Initial Per
Common Share Cash Payment multiplied by the number of shares of Company Common
Stock represented by the certificate(s) so surrendered by such holder (less any
tax withholdings); provided, however, the Exchange Agent shall make delivery of
the initial payment amount required hereunder to each such holder by wire
transfer of immediately available funds only if the Exchange Agent is in receipt
of the certificate(s) held by such holder together with a written request
containing all of the necessary information to effectuate a wire transfer to
such holder of such certificate(s) no later than 2:00 p.m. Chicago time at least
three (3) business days prior to the Closing;
(c) Acquisition Sub shall make delivery in immediately
available funds to the Company by wire transfer of the amount equal to the
Common Share Merger Consideration multiplied by the number of outstanding
Dissenting Shares;
(d) The Surviving Company shall be obligated to pay each
holder of Dissenting Shares who has surrendered to the Surviving Company the
certificate or certificates representing his, hers or its Dissenting Shares
together with any other customary instruments of transfer that reasonably may be
required by the Company, the fair value for each Dissenting Share multiplied by
the number of shares of Company Common Stock being surrendered (less any tax
withholdings) as determined pursuant to New Hampshire Law RSA 293-A:13.01 et.
seq., and all such payments shall be made at such time as shall be required by
New Hampshire Law;
(e) Acquisition Sub shall make delivery in immediately
available funds to the Escrow Agent by wire transfer to the Escrow Account of
the remaining portion of the aggregate Common Share Merger Consideration for all
outstanding shares of Company Common Stock (other than Dissenting Shares), which
remaining portion constitutes part of the Holdback;
(f) There shall be no obligation (i) on the part of the
Exchange Agent to deliver any payment in respect of any of the shares of the
Company Common Stock until (and then only to the extent that) the holder thereof
surrenders the certificate(s) representing his, hers or its shares of Company
Common Stock for exchange as provided in this Section 2.3, or, in lieu thereof,
delivers to the Exchange Agent an appropriate affidavit of loss and an indemnity
agreement, or (ii) on the part of the Surviving Company to deliver any payment
in respect of the Dissenting Shares until (and then only to the extent that) the
holder thereof surrenders the certificate(s) representing his, hers or its
shares of Company Common Stock for exchange as provided in this Section 2.3, or,
in lieu thereof, delivers to the Surviving Company an appropriate affidavit of
loss and an indemnity agreement;
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If any payment for the Company Common Stock is to be made in a
name other than that in which the certificate for the Company Common Stock
surrendered for exchange is registered, it shall be a condition to the payment
that the certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer, that all signatures shall be guaranteed by a member
firm of any national securities exchange in the United States or the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office in the United States, and that the person requesting
the payment shall either (i) pay to the Exchange Agent (or the Company with
respect to Dissenting Shares) any transfer or other taxes required by reason of
the payment to a person other than the registered holder of the certificate
surrendered or (ii) establish to the reasonable satisfaction of the Exchange
Agent (or the Company with respect to Dissenting Shares) that such taxes have
been paid or are not payable. From and after the Effective Time, there shall be
no transfers on the stock transfer books of the Company of any shares of Company
Common Stock outstanding immediately prior to the Effective Time and any such
shares of Company Common Stock presented to the Exchange Agent shall be canceled
in exchange for the aggregate amounts payable with respect thereto as provided
in Section 2.2.
2.4 Appraisal Rights. The holder of any Dissenting Share shall
have the rights and be subject to the limitations, provided by New Hampshire
Law.
2.5 Options. At the Effective Time, the Company shall cancel
and terminate each of the Options. In consideration of the foregoing,
Acquisition Sub shall make a cash payment to the holder of each Option, at the
time provided in the final sentence of this Section 2.5 (and subject, in the
case of each such holder, to the receipt from such holder of an Option
Cancellation Agreement), in an amount (less any applicable withholding taxes and
subject to any applicable reporting requirements) equal to the Initial Option
Cash Payment, and Acquisition Sub shall deposit the remaining portion of the
aggregate Option Merger Consideration for all Options (which remaining portion
constitutes part of the Holdback) into the Escrow Account. The Company shall use
commercially reasonable and good faith efforts to promptly after the date hereof
obtain an Option Cancellation Agreement to be effective as of the Effective Time
from each holder of Options relating to the termination of such holder's Options
at the Effective Time. A holder of an Option who delivers to the Company an
Option Cancellation Agreement (i) prior to the Effective Time shall be paid
pursuant to this Section 2.5 at the Effective Time, (ii) within thirty (30) days
after the Effective Time shall be paid pursuant to this Section 2.5 as soon as
reasonably practicable but in no event later than five (5) business days after
receipt of such Option Cancellation Agreement by the Surviving Company and (iii)
after thirty (30) days following the Effective Time shall be paid pursuant to
this Section 2.5 as soon as reasonably practicable but in no event later than
ten (10) business days after receipt of such Option Cancellation Agreement by
the Surviving Company.
2.6 Articles of Incorporation. The articles of incorporation
of Acquisition Sub shall be amended as set forth in the form of the Articles of
the Merger and, as so amended, shall continue in full force and effect from and
after the Effective Time as the articles of incorporation of the Surviving
Company, until otherwise amended as provided by law or by such articles of
incorporation.
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2.7 By-Laws. The By-laws of Acquisition Sub, as in effect at
the Effective Time, shall be the By-laws of the Surviving Company from and after
the Effective Time until otherwise amended as provided by law or by such
By-laws.
2.8 Directors and Officers. The directors and officers of
Acquisition Sub at the Effective Time shall be the directors and officers of the
Surviving Company and each shall hold office from and after the Effective Time
until their respective successors are duly elected or appointed and qualified,
and Purchaser and the Surviving Company shall take any corporate action
necessary to effectuate the provisions of this Section 2.8.
2.9 Effect of the Merger. Following the Merger, the Surviving
Company will continue its corporate existence under New Hampshire Law, and the
separate corporate existence of Acquisition Sub shall cease. The Merger shall
have the further effects set forth under New Hampshire Law.
2.10 Company Closing Expenses. In the event that actual
Company Closing Expenses exceed the estimated Company Closing Expenses as set
forth on Exhibit E hereto, Purchaser and the Representative shall immediately
jointly instruct the Escrow Agent to pay the amount of such excess from the
Escrow Account to the Surviving Company. In the event that actual Company
Closing Expenses as calculated by Company exceed the estimated Company Closing
Expenses as set forth on Exhibit E hereto, Company shall immediately give
written notice to Purchaser and to Acquisition Sub of the amount of the actual
Company Closing Expenses and that such amount exceeds the estimated Company
Closing Expenses as set forth on Exhibit E hereto.
2.11 Escheat. Notwithstanding anything in this Agreement to
the contrary, no party hereto shall be liable to a former holder of Company
Common Stock, Company Preferred Stock or Options for any cash delivered to a
public official pursuant to applicable escheat or abandoned property laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Purchaser and Acquisition Sub to enter
into and perform their obligations under this Agreement, and in consideration of
the covenants of Purchaser and Acquisition Sub contained herein, the Company
represents and warrants to Purchaser and Acquisition Sub (which representations
and warranties shall survive the Closing for the periods set forth in Section
10.4 regardless of what examinations, inspections, audits and other
investigations Purchaser and/or Acquisition Sub have heretofore made, or may
hereafter make, with respect to such representations and warranties) as follows:
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3.1 Corporate Status; Due Authorization; Authority of the
Company; Enforceability.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Hampshire and
in each other jurisdiction where the failure to so qualify could have a material
adverse effect on the business, operations or condition of the Company or the
Business. The Company has the corporate power and authority necessary to own,
lease, operate or otherwise hold its properties and assets and to carry on its
business as presently conducted. The Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Hampshire and in each other jurisdiction where the failure to so qualify could
have a material adverse effect on the business, operations or condition of the
Subsidiary or the Business. The Subsidiary has the corporate power and authority
necessary to own, lease, operate or otherwise hold its properties and assets and
to carry on its business as presently conducted.
(b) The execution and delivery by the Company of this
Agreement, and the performance by the Company of its obligations hereunder, have
been duly and validly authorized and approved by all necessary corporate action
on the part of the Company, subject only to approval of its shareholders as set
forth in Section 5.10.
(c) The Company has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
Neither the execution or delivery of this Agreement by the Company nor the
performance by the Company of its obligations under this Agreement will in any
material respect (assuming that the approval of the shareholders of the Company
is obtained as set forth in Section 5.10., and assuming the receipt of all
consents referred to in Section 3.27), conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any material
contract, lease, license, franchise, permit, indenture, mortgage, deed of trust,
note agreement or other agreement or instrument to which the Company or the
Subsidiary is a party or is bound, the articles of incorporation or by-laws of
the Company or the Subsidiary or any applicable Law or Order to which the
Company or the Subsidiary is a party or by the Company or the Subsidiary is
bound.
(d) This Agreement is binding upon, and enforceable against,
the Company in accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally and by
general principles of equity (whether in a proceeding at law or in equity).
3.2 Accounts Receivable. Except as reserved against on the
Reference Balance Sheet, the Accounts Receivable reflected on such balance
sheet: (a) were acquired by the Company or the Subsidiary (as the case may be)
in the Ordinary Course of Business and represent fully completed bona fide
transactions that require no further act on the part of the Company or the
Subsidiary to make such Accounts Receivable payable by the account debtors; (b)
to the Company's Knowledge are not subject to any material claim, counterclaim,
set-off or deduction; (c) represent
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valid obligations owing to the Company or the Subsidiary by account debtors that
are not Affiliates of the Company or the Subsidiary, which are enforceable in
accordance with their respective terms; and (d) are owned by the Company or the
Subsidiary free and clear of all Liens.
3.3 Trade Names, Trademarks and Copyrights. Schedule 3.3 to
this Agreement contains a true and complete list of all trademarks, service
marks, trade names and copyrights and their registrations or applications, if
any, owned by the Company or the Subsidiary or in which the Company or the
Subsidiary has any rights or licenses, together with a brief description of
each. To the Company's Knowledge, there is no infringement or alleged
infringement by any Person of any such trademark, service xxxx, trade name or
copyright. Each of the Company and the Subsidiary has not infringed, nor is now
infringing on any trademark, service xxxx, trade name or copyright belonging to
any other Person. Each of the Company and the Subsidiary is not a party to any
license, agreement or arrangement, whether as licensor, licensee, franchisor,
franchisee or otherwise, with respect to any trademarks, service marks, trade
names or any copyrights or any applications therefor other than as listed on
Schedule 3.3. Each of the Company and the Subsidiary owns or holds adequate
licenses or other rights to use all trademarks, service marks, trade names and
copyrights necessary for the Business as now conducted.
3.4 No Patent Rights. Each of the Company and the Subsidiary
does not own, hold, or have any right, license or immunity with respect to any
patents, inventions, industrial models, processes, designs, formulas or
applications for patents. Each of the Company and the Subsidiary has not
infringed, nor is either of the Company or the Subsidiary now infringing, on any
patent or other right belonging to any Person. Each of the Company and the
Subsidiary 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.
3.5 Ski and Other Passes. Schedule 3.5 contains a true and
complete list of all outstanding lifetime and limited period ski and other
passes, tickets, vouchers, coupons or other passes for products, services or
activities of the Business, including the identity of the holder (if known),
type, number and value of such passes, tickets, vouchers or coupons.
3.6 Contracts. Schedule 3.6 to this Agreement contains a
complete list of all Contracts to which the Company or the Subsidiary is party
or by which the Company or the Subsidiary is currently bound which either (i)
were not entered into by the Company or the Subsidiary in the ordinary course of
business in accordance with past practices or (ii) severally have or will have
an economic effect on the Company or the Subsidiary or require a payment by any
party thereto of at least Ten Thousand Dollars ($10,000) in any calendar year
and which will not expire or cannot be terminated by the Company or the
Subsidiary upon written notice of thirty (30) days or less without penalty.
Copies of all such written Contracts disclosed on Schedule 3.6 to this Agreement
have been provided to Purchaser or its counsel. Each of the Company and the
Subsidiary is not a party to any Contract not entered into in the Ordinary
Course of Business. To the Company's Knowledge, all 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 and
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by general principles of equity (whether in a proceeding at law or in equity).
To the Company's Knowledge, there is no default or event that with notice or
lapse of time, or both, would constitute a default by any party to any of the
Contracts. Except as set forth on Schedule 3.6, neither the Company nor the
Subsidiary has received notice that any party to any of the Contracts intends to
cancel or terminate any of such agreements or to exercise or not exercise any
options under any of such agreements.
3.7 Compliance with Laws. Except as disclosed on Schedule 3.7,
each of the Company and the Subsidiary is in compliance in all material respects
with all, and is not in violation of any, applicable Laws or Orders (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 its Business. No charge of any state or local alcohol or beverage
commission is pending against the Company or the Subsidiary as a holder of any
alcoholic beverage license and, to the Company's Knowledge, no investigation is
now in progress by any state or local alcohol or beverage commission concerning
any act or omission that could result in a charge, claim or proceeding being
filed against the Company or the Subsidiary.
3.8 Litigation. Schedule 3.8 sets forth a brief description of
all suits, actions, arbitrations, and legal, administrative and other
proceedings and governmental investigations pending or, to the Company's
Knowledge, threatened against or affecting the Company, the Subsidiary or the
Business. None of the matters set forth in Schedule 3.8 (except as specifically
referenced on such Schedule 3.8 as potentially having a material adverse effect
if adversely decided), if decided adversely to the Company or the Subsidiary,
could reasonably be expected to have a material adverse effect on the Business.
Each of the Company and the Subsidiary is not presently engaged in any legal
action to recover moneys due to it or damages sustained by it except as listed
in Schedule 3.8.
3.9 Personnel Identification and Compensation. Schedule 3.9
contains a true and complete list of the names, addresses and titles of all
current officers, directors, employees and independent contractors of the
Company and the Subsidiary and all seasonal employees, employed during the
1996-1997 ski season, together with a true and correct schedule stating the
rates of compensation payable (or paid, as the case may be) to each such person
including, without limitation, base pay and prior year's bonus.
3.10 Existing Employment Contracts. Schedule 3.10 contains a
list of all employment contracts and collective bargaining agreements, if any,
to which the Company or the Subsidiary is a party or by which the Company or the
Subsidiary is bound. All these contracts and arrangements are in full force and
effect, and neither the Company, the Subsidiary nor, to the Company's Knowledge,
any other Person is in default under any such contract or arrangement. There
have been no claims of default and, to the Company's Knowledge, there are no
facts or conditions which if continued, or on notice, will result in a default
under these contracts or arrangements. There is no pending or, to the Company's
Knowledge, threatened labor dispute, union organizing activities, strike or work
stoppage affecting the Business.
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3.11 Capitalization; Subsidiaries. (a) The total number of
shares of capital stock and the par value thereof which the Company is
authorized to issue and the number of such shares which are issued and
outstanding are as follows:
Issued and Par Value
Class Authorized Shares Outstanding Shares Per Share
----- ----------------- ------------------ ---------
Company Common Stock 750,000 590,470 $.10
Company Preferred Stock 2,250 1,334 $100
As of the date hereof, 80,630 shares of Company Common Stock
and 127 shares of Company Preferred Stock are held as treasury stock.
(a) Except for the Company's Stock Option Plan, pursuant to
which outstanding Options have been granted to officers and employees of the
Company for 14,155 shares of Company Common Stock, there are no outstanding
options, conversion rights, warrants or other rights in existence to acquire
from the Company any of its shares of capital stock. Schedule 3.11 attached
hereto contains a true and correct copy of the Company's Stock Option Plan
together with a list setting forth the name of each Option holder, the number of
Option Shares (and the exercise price for each such Option Share) held by such
holder and identifies the agreements pursuant to which such Options were
granted.
(b) All shares of Company Common Stock have been duly and
validly issued and are fully paid and nonassessable and are not subject to any
preemptive rights; and there are no voting trust agreements or other contracts,
agreements or arrangements restricting voting or dividend rights or
transferability with respect to the outstanding shares of capital stock of the
Company; other than the Shareholder Agreements which are entered into pursuant
to Section 5.10.
(c) Each of the Company and the Subsidiary has not violated in
any material respect any federal, state or local Law in connection with the
offer for sale or sale and issuance of its outstanding shares of capital stock
or any other securities.
(d) The total number of shares of capital stock, with no par
value, which the Subsidiary is authorized to issue is three hundred (300) shares
and the number of such shares which are issued and outstanding is eighty (80)
shares. The Company owns all of the issued and outstanding shares of capital
stock of Subsidiary. Neither the Company nor Subsidiary own any securities or
any other direct or indirect interest in any other Person (other than the
Company's interest in Subsidiary). Copies of the articles of incorporation and
by-laws of Subsidiary, as in effect the date hereof, including all amendments
thereto, have been provided to Purchaser by the Company. Each outstanding share
of capital stock of Subsidiary is duly and validly issued and is fully paid and
nonassessable and is not subject to any preemptive rights, and is owned of
record and beneficially
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by the Company free and clear of all Liens. There are no outstanding options,
conversion rights, warrants or other rights in existence to acquire from
Subsidiary any of its shares of capital stock. There are no voting trust
agreements or other contracts, agreements or arrangements restricting voting or
dividend rights or transferability with respect to the outstanding shares of
capital stock of the Subsidiary.
3.12 Shareholder List; Shareholder Agreements.
(a) The persons listed as shareholders of the Company on
Schedule 3.12 are all of the record and beneficial owners of the capital stock
of the Company. The Company Common Stock and the Company Preferred Stock
constitute all of the issued and outstanding shares of capital stock of the
Company and such shares are owned in the amounts as set forth on Schedule 3.12.
(b) Each of the shareholders entering into the Shareholder
Agreements on the date hereof (i) is the record and beneficial owner of the
shares of Company Common Stock subject to such Shareholder Agreement, and (ii)
has the power and authority to enter into such Shareholder Agreement, and all
such Shareholder Agreements are the valid, binding obligation of the person or
entity executing the same, enforceable against such person in accordance with
its terms, which terms include, without limitation, conveying and granting to
Acquisition Sub the right to vote such shares at any shareholders' meeting of
the Company where a vote is taken on the approval of the Merger.
3.13 Forest Service Permits. Schedule 3.13 to this Agreement
contains a complete and accurate description of all of the Company's and the
Subsidiary's USFS Permits together with an accurate description of the real
property which the Company or the Subsidiary is entitled to use to conduct its
business pursuant to and for the terms set forth in such USFS Permits. Except as
set forth on Schedule 3.13 to this Agreement, the USFS Permits are valid and in
full force, and there does not exist any default or event that with notice or
lapse of time, or both, would constitute a default under the USFS Permits or any
Order relating to the USFS Permits. Except as set forth on Schedule 3.13 to this
Agreement, neither the Company nor the Subsidiary has received any notice nor to
the Company's Knowledge is there any actual, threatened, or contemplated
termination, default, revocation, suspension, or modification of the USFS
Permits or any Order relating thereto, and there are no administrative actions
or proceedings pending or threatened involving the USFS Permits. All fees and
charges required to be paid by the Company or the Subsidiary pursuant to the
USFS Permits have been properly computed and fully paid, no such fees or charges
have been deferred or are due and owing.
3.14 Environmental.
3.14.1 Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) The term "Environmental Law(s)" means each and every Law,
Order, Permit, or similar requirement of each and every Authority, pertaining to
(i) the protection of human health, safety, the environment, natural resources
and wildlife, including without limitation, as amended,
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the National Environmental Policy Act, 42 U.S.C. Section 4321 et seq., the
Endangered Species Act, 16 U.S.C. Section 1531 et seq., and the National Forest
Management Act, 16 U.S.C. Section 1600 et seq., (ii) the protection or use of
surface water, groundwater, rivers and other bodies of water, (iii) the
management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release, abatement, removal,
remediation or handling of, or exposure to, any Hazardous Substance or (iv)
pollution, including without limitation, as amended, CERCLA, RCRA, the Clean Air
Act, 42 U.S.C. Section 7401 et seq., and the Federal Water Pollution Control
Act, 33 U.S.C. Section 1251, et seq.
(b) The term "Hazardous Substance(s)" means any substance
which is defined or regulated as a hazardous substance, hazardous material,
hazardous waste, pollutant or contaminant under any Environmental Laws and also
includes, without limitation, petroleum hydrocarbons, crude oil or any fraction
thereof.
(c) 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), except for a Release occurring pursuant to a Permit issued
by an Authority presently in full force and effect and not subject to challenge.
(d) For purposes of this Section 3.14, the Company and the
Subsidiary shall be deemed to include any Persons from which the Company or the
Subsidiary has assumed or is deemed to have assumed liabilities by operation of
Law.
3.14.2 Compliance with Environmental Laws. Except as set forth
on Schedule 3.14.2, the Real Property, and all uses and conditions of the Real
Property and the Business, have been and are in compliance in all material
respects with all Environmental Laws, and each of the Company and the Subsidiary
has not received any notice of violation or other communication or have
Knowledge of any facts or circumstances concerning any alleged violation or
liability arising under any Environmental Law with respect to the Real Property
or the Business or any use or condition thereof. Except as otherwise specified
on Schedule 3.14.2, none of the matters disclosed on Schedule 3.14.2 have or
will have material impact or effect on the Company, the Subsidiary or the
Business. Any real property formerly owned or leased by either the Company or
the Subsidiary or otherwise related to the Business were in compliance in all
material respects with all Environmental Laws during the Company's or the
Subsidiary's period of ownership or operation and each of the Company and the
Subsidiary has not received any notice of violation or other communication or
have Knowledge of any facts or circumstances concerning any alleged violation or
liability arising under any Environmental Law with respect to such formerly
owned or operated real property or any use or condition thereof.
3.14.3 Handling of Hazardous Substances. Each of the Company
and the Subsidiary and any other present or to the Company's Knowledge former
owner, tenant, occupant or user of the Real Property has not used, handled,
generated, produced, manufactured, treated, stored or transported any Hazardous
Substance on, under, about, to or from the Real Property or any real
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property formerly owned or operated by the Company or the Subsidiary in material
violation of or in a manner that may form the basis of material liability under
any Environmental Law.
3.14.4 No Release of Hazardous Substances. Except as disclosed
on Schedule 3.14.4, there is no Release or threatened Release of any Hazardous
Substance existing on, beneath or from the surface, subsurface or ground water
of the Real Property or to the Company's Knowledge any real property formerly
owned, or operated for offsite disposal by the Company or the Subsidiary, nor,
to the Company's Knowledge, is there or has there been any Release or threatened
Release of Hazardous Substances directly adjacent to, from or in the vicinity of
the Real Property currently occurring or occurring at any time in the past.
Except as otherwise specified on Schedule 3.14.4, none of the exceptions
disclosed on Schedule 3.14.4 have or will have material impact or effect on the
Company, the Subsidiary or the Business.
3.14.5 Permits. Except for the (i) National Pollutant
Discharge Elimination System Permit for which the Company has applied and for
which the United States Environmental Protection Agency has accepted the
Company's application but has not to date issued a Permit, (ii) Authorization
for Installation and Operation of a Pipeline as set forth in a decision memo
dated August 26, 1997, which is currently in litigation and (iii) exemptions
disclosed on Schedule 3.14.5, all Permits required by or issued pursuant to any
Environmental Law for the current operations of the Business have been obtained
in a timely manner and are presently maintained in full force and effect. Except
as otherwise specified on Schedule 3.14.5, none of the exceptions disclosed on
Schedule 3.14.5 have or will have material impact or effect on the Company, the
Subsidiary or the Business. Schedule 3.14.5 contains a true and complete listing
of all such Permits. The Real Property and the operations of each of the Company
and the Subsidiary are in compliance with all terms and conditions of such
Permits in all material respects and each of the Company and the Subsidiary has
not received any notice or other written communication or has Knowledge of any
facts or circumstances concerning any alleged violation of any such Permits.
3.14.6 No Proceedings. Except as set forth on Schedule 3.14.6,
there exists no Order nor any written demand, allegation, suit, claim,
proceeding, citation, directive, summons, investigation, information request, or
notice of violation pending or, to the Company's Knowledge, threatened against
the Company pursuant to any Environmental Law relating to (a) the ownership,
occupation or use of the Real Property or any formerly owned, leased, or
occupied Real Property by the Company or the Subsidiary or, to the Company's
Knowledge, any other present or former owner, occupant or user of the Real
Property, (b) any alleged violation of or liability under any Environmental Law
by the Company or the Subsidiary, including but not limited to liability for
disposal of Hazardous Substances on or under property belonging to one or more
third parties, (c) the Release or threatened Release of any Hazardous Substance
on, under, in or from the surface, subsurface, or ground water associated with
the Real Property, or any formerly owned, leased, occupied or operated real
property including, without limitation, any migration of Hazardous Substances
from the Real Property or Leased Real Property, (d) any actual or alleged
damage, injury, threat or harm to health, safety, natural resources or the
environment caused by the Company or related to the Real Property (collectively
referred to herein as "Environmental Claims") nor, to the Company's Knowledge,
does there exist any valid basis for any such Environmental Claims.
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Except as otherwise specified on Schedule 3.14.6, the matters described on
Schedule 3.14.6 will not have a material impact on the Company, the Subsidiary
or the Business.
3.14.7 No Tanks, Asbestos or PCB's. Except as set forth on
Schedule 3.14.7, there are no aboveground or underground storage tanks currently
or, to the Company's Knowledge, formerly located on the Real Property used or
formerly used for the purpose of storing any Hazardous Substance. There is no
PCB-containing equipment or PCB-containing material, in each case, as defined by
applicable Environmental Law, or any friable asbestos containing material on the
Real Property. The matters disclosed in Schedule 13.14.7 will not have a
material impact on the Company, the Subsidiary or the Business.
3.14.8 Lists and Liens. The Real Property and any real
property formerly owned, operated, leased, or used by the Company or Subsidiary:
(i) is not listed on any or nominated for listing on the National Priority List
promulgated by the United States Environmental Protection Agency pursuant to
CERCLA or any analogous state remedial priority list promulgated or published
pursuant to any comparable state law, (ii) is not subject to any restriction on
the ownership, occupancy or use of the Real Property, including, without
limitation, any Liens, and (iii) to the Company's Knowledge, there are no such
imminent restrictions or Liens that are reasonably likely to be imposed upon the
Real Property.
3.14.9 Documents. The Company has provided Purchaser access to
any and all documents, correspondence, pleadings, reports, assessments,
analytical results, Permits or other records concerning Environmental Laws or
Hazardous Substances.
3.15 Certain Transactions. All purchases and sales or other
transactions, if any, between the Company or the Subsidiary, on the one hand,
and any officer, director, shareholder or key employee or Affiliate thereof, on
the other hand, within the three (3) years immediately preceding the date hereof
have been made on the basis of prevailing market rates and terms such that from
the prospective of the Company, all such transactions have been made on terms no
less favorable than those which would have been available from unrelated third
parties. Except as set forth on Schedule 3.15, neither any officer, nor any
director or employee of the Company nor of the Subsidiary, nor any spouse, child
or other relative of any of such persons, owns, or has any interest, directly or
indirectly, in any of the real or personal property owned by or leased to the
Company or the Subsidiary or any copyrights, patents, trademarks, trade names or
trade secrets owned or licensed by the Company or the Subsidiary.
3.16 Employee Benefit Matters, Plans and Claims.
(a) Schedule 3.16 contains a true, complete and correct list
of each pension, retirement, profit sharing, savings, stock option, restricted
stock, severance, termination, bonus, fringe benefit, insurance, supplemental
benefit, medical, education reimbursement or other employee benefit plan,
program, agreement or arrangement, including each "employee benefit plan" as
defined in Section 3(3) of ERISA, sponsored, maintained or contributed to or
required to be contributed to
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by the Company or the Subsidiary within the last six years for the benefit of
current or former employees of the Business (each a "Plan").
(b) True, complete and correct copies of the following items
relating to each Plan, where applicable, have been delivered to Purchaser:
(i) the plan document and related trust agreement and
insurance contracts, including any amendments (including descriptions
of vacation and severance policies);
(ii) the most recent determination letter received
from the IRS with respect to each such Plan that is intended to be
qualified under Section 401 of the Code;
(iii) the most recent summary plan description,
summary of material modifications and all material communications to
participants; and
(iv) the most recent annual report (5500 series) and
accompanying schedules.
(c) Each of the Plans has been operated and administered in
accordance with the applicable provisions of ERISA and the Code, including
COBRA, and all other applicable Laws, and there are no actions, suits or claims
pending or to the Company's Knowledge threatened against any Plan or any
administrator or fiduciary thereof, nor to the Company's Knowledge do any facts
exist which could give rise to any such action, suit or claim.
(d) Each of the Plans that is intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified.
(e) Each of the Company and the Subsidiary does not have any
liability with respect to a plan termination under Title IV of ERISA, a funding
deficiency under Section 412 of the Code or Section 302 of ERISA or a withdrawal
from a "multiemployer plan" as defined in (f) below or under Section 4063 of
ERISA.
(f) None of the Plans is a plan subject to Title IV of ERISA
or a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA. No
Plan which is a "welfare plan" within the meaning of Section 3(1) of ERISA
provides benefits with respect to employees beyond termination of employment
other than coverage required by law.
(g) Each of the Company and the Subsidiary is not, and has
never been, a member of a "controlled group of corporations" within the meaning
of Section 414(b) of the Code, a member of a group under "common control" within
the meaning of Section 414(c) of the Code, or a member of an "affiliated service
group" within the meaning of Section 414(m) of the Code, which includes any
member other than the Company or the Subsidiary.
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(h) To the Company's Knowledge, Schedule 3.16 contains a true,
complete and correct list of all Liabilities of or attributable to the Company
or its Subsidiary arising from workers' compensation claims, both medical and
disability, or other government-mandated programs which are based on injuries
that occurred prior to the Closing Date regardless of when such claims are filed
including the identity of the claimant, type and value of such Liabilities.
(i) To the Company's Knowledge, Schedule 3.16 contains a true,
complete and correct list of all claims for medical, dental, life insurance,
health, accident, disability or other benefits brought by or in respect of
employees under any of the Company's or Subsidiary's welfare benefit plans where
the claims were incurred prior to the Closing regardless of when such claims are
filed including the identity of the claimant, type and value of such claims.
(j) To the Company's Knowledge, Schedule 3.16 contains a true,
complete and correct list of all Liabilities in connection with claims for
benefits brought by or in respect of all employees and former employees of the
Company or the Subsidiary not retained by the Surviving Company as of the
Closing Date under any of the Company's or Subsidiary's welfare benefit plans
with respect to medical, dental, life insurance, health, accident or disability
or other benefits, including without limitation continuation coverage pursuant
to Section 4980B of the Code and Part 6 of Title I of ERISA including the
identity of the claimant, type and value of such Liabilities.
3.17 Tax Matters.
(a) The term "Taxes" means all net income, capital gains,
gross income, gross receipts, sales, use, transfer, ad valorem, franchise,
profits, license, capital, withholding, payroll, employment, excise, goods and
services, severance, stamp, occupation, premium, property, assessments or other
governmental charges of any kind whatsoever, together with any interest, fines
and any penalties, additions to tax or additional amounts incurred or accrued
under applicable federal, state, local or foreign tax law or assessed, charged
or imposed by any Authority, domestic or foreign, provided that any interest,
penalties, additions to tax or additional amounts that relate to Taxes for any
taxable period (including any portion of any taxable period ending on or before
the Closing Date) shall be deemed to be Taxes for such period, regardless of
when such items are incurred, accrued, assessed or charged. For the purposes of
this Section 3.17, the Company and the Subsidiary shall be deemed to include any
predecessor to the Company and the Subsidiary, respectively, and any Person from
which the Company or the Subsidiary incurs a liability for Taxes as a result of
transferee liability.
(b) Each of the Company and the Subsidiary has duly and timely
filed, taking into account any extensions that have been properly granted (and
prior to the Closing Date will duly and timely file), true, correct and complete
Tax returns, reports or estimates, all prepared in accordance with applicable
Laws, for all years and periods (and portions thereof), for all jurisdictions
(whether federal, state, local or foreign) in which any such returns, reports or
estimates were due, and for all such returns, reports and estimates which are
required to be filed by any applicable Law on or prior to the Closing Date.
Except where the Company is disputing the payment of any Taxes in good faith and
has established adequate reserves in accordance with generally accepted
accounting principles,
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consistently applied, all Taxes shown as due and payable on such returns,
reports and estimates have been paid (or will be paid prior to the Closing), and
there is no current liability for any Taxes due and payable in connection with
any such returns. Any charges, accruals and reserves for Taxes provided for on
the Financial Statements are adequate. There are no existing liens for Taxes
upon any of the assets of the Company or Subsidiary other than for inchoate Tax
Liens incurred in the ordinary course of business in accordance with past
practices for any Taxes not then due and owing. The Company has provided to
Purchaser copies of all federal, state and foreign tax returns filed by each of
the Company and the Subsidiary for the past four (4) years. All applicable sales
Taxes, to the extent due, were paid by the Company or the Subsidiary when its
assets were acquired by the Company or the Subsidiary.
(c) Each of the Company and the Subsidiary has (i) withheld
all required amounts from its employees, agents, contractors and nonresidents
and remitted such amounts to the proper Authorities; (ii) paid all employer
contributions and premiums; and (iii) filed all federal, state, local and
foreign returns and reports with respect to employee income Tax withholding, and
social security and unemployment Taxes and premiums, all in compliance with the
withholding provisions of the Code, or any prior provision of the Code and other
applicable Laws.
(d) None of the Company's or the Subsidiary's assets is tax
exempt use property under Code Section 168(h). None of the Company's or the
Subsidiary's assets is property that the Company or the Subsidiary is required
to treat as being owned by any other Person pursuant to the safe harbor lease
provision of former Code Section 168(f)(8).
(e) No portion of the cost of any of the Company's or the
Subsidiary's assets was financed directly or indirectly from the proceeds of any
tax exempt state or local government obligation described in Code Section
103(a).
(f) Neither the Company nor the Subsidiary has (and has not
previously had any) permanent establishment in any foreign country and neither
the Company nor the Subsidiary engages (and has not previously engaged) in a
trade or business within the meaning of the Code relating to the creation of a
permanent establishment in any foreign country.
(g) Neither the Company nor the Subsidiary is a foreign person
within the meaning of Code Section 1445.
(h) Neither the Code nor any other provision of Law requires
Purchaser to withhold any portion of the Aggregate Merger Consideration.
(i) Neither the Company nor the Subsidiary has ever been a
member of any consolidated, combined or unitary group with any other Person for
federal, state, local or foreign Tax purposes.
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(j) Except as set forth on Schedule 3.17(j), neither the
Company nor the Subsidiary is a party to any joint venture, partnership or other
arrangement that could be treated as a partnership for federal income Tax
purposes.
(k) The federal income Tax returns of each of the Company and
the Subsidiary have been examined by the IRS for all periods ending on or before
April 30, 1990, and have been closed by the applicable statute of limitations,
for all tax returns filed more than three (3) years prior to the date hereof;
the state Tax returns of each of the Company and the Subsidiary have never been
examined by the relevant agencies and therefore such returns have been closed by
the applicable statute of limitations for all tax returns filed more than three
(3) years prior to the date hereof; no deficiencies or reassessments for any
Taxes have been proposed, asserted or assessed against the Company or the
Subsidiary by any federal, state, local or foreign taxing authority.
(l) Neither the Company nor the Subsidiary has executed or
filed with any taxing authority (whether federal, state, local or foreign) any
agreement or other document extending or have the effect of extending the period
for assessment, reassessment or collection of any Taxes, and no power of
attorney granted by the Company or the Subsidiary with respect to any Taxes is
currently in force.
(m) No federal, state, local or foreign Tax audits or other
administrative proceedings, discussions or court proceedings are presently
pending with regard to any Taxes or Tax returns of the Company or the Subsidiary
and no additional issues are being asserted against the Company or the
Subsidiary in connection with any existing audits of the Company or the
Subsidiary.
(n) Neither the Company nor the Subsidiary has entered into
any agreement relating to Taxes which affects any taxable year ending after the
Closing Date.
(o) Neither the Company nor the Subsidiary has agreed to or is
required to make any adjustment by reason of a change in accounting methods that
affects any taxable year ending after the Closing Date. Neither the IRS nor any
other agency has proposed any such adjustment or change in accounting methods
that affects any taxable year ending after the Closing Date. Neither the Company
nor the Subsidiary has any application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to its
business or operations and that affects any taxable year ending after the
Closing Date.
(p) Neither the Company nor the Subsidiary is or has ever been
a party to any Tax sharing agreement or similar arrangement with any other
Person for the sharing of Tax liabilities or benefits.
(q) Neither the Company nor the Subsidiary has consented to
the application of Code section 341(f).
(r) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Company or the Subsidiary that,
individually or collectively, could give
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rise to the payment by the Company or the Subsidiary of any amount that would
not be deductible by reason of Code section 280G.
3.18 Inventories. The Inventories (which are accurately and
completely described in all material respects as of July 27, 1997 on Schedule
3.18 on the basis of a full physical inventory taken by the Company as of such
date) consist of items of a quality and quantity useable or saleable in the
Ordinary Course of Business, except for obsolete or slow moving items and items
below standard quality, all of which have been written down on the books of the
Company or the Subsidiary to net realizable market value or have been provided
for by adequate reserves. All items included in the Inventories are the property
of the Company or the Subsidiary, except for sales made in the Ordinary Course
of Business; for each of these sales either the purchaser has made full payment
or the purchaser's liability to make payment is reflected in the books of the
Company or the Subsidiary. Except as set forth on Schedule 3.18, no items
included in the Inventories have been pledged as collateral, or are held by the
Company or the Subsidiary on consignment from third parties. The Company's or
the Subsidiary'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 twelve (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. The quantities of items included in
the Company's and the Subsidiary's respective ski rental inventory, including,
without limitation, skis, ski boots, bindings, ski poles and snow boards, (i)
are not, and on the Closing Date shall not be, significantly lower than the
quantities of such items (compared on an item-by-item basis) on hand at the end
of the 1996-1997 ski season due to usage of such items in the ordinary course of
business, and (ii) based on historical data, should be sufficient to meet the
normal and expected demand of the 1997-1998 ski season.
3.19 Title to Assets; Liens. Except as set forth on Schedule
3.19 hereof, each of the Company and Subsidiary has (i) based on the Existing
Title Commitment, good and marketable title to Real Property as provided in the
Existing Title Commitment, and in any event subject to no other Liens except as
disclosed in the Existing Title Commitment; (ii) a valid and binding leasehold
interest in all of the Leased Real Property; (iii) based on the Land Status
Report, the exclusive contractual right to use the USFS Permitted Property in
strict accordance with its USFS Permits except as may be modified by the Court's
Order in the case of Xxxxxx et al. v. United States Forest Service (said action
being more fully identified on Schedule 3.8 hereto); and (iv) good and
marketable title to all of its other assets, real, personal or otherwise, free
and clear of all Liens.
3.20 Real Property.
(a) Schedule 3.20 to this Agreement contains complete and
accurate legal descriptions of each parcel of Real Property owned, leased or
occupied under permit. To the Company's Knowledge, all of the Real Property
Leases are valid and in full force, and there does not exist any default or
event that with notice or lapse of time, or both, would constitute a default
under any of the Real Property Leases.
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(b) Except as set forth on Schedule 3.20: (i) all the
buildings, fixtures and leasehold improvements used by the Company and the
Subsidiary in the Business are located on the Real Property; (ii) each parcel of
Real Property abuts on at least one side a public street or road in a manner so
as to permit reasonable, customary and adequate vehicular and pedestrian
ingress, egress and access to such parcel, or has adequate easements across
intervening property to permit reasonable, customary and adequate vehicular and
pedestrian ingress, egress and access to such parcel from a public street or
road; and (iii) there are no restrictions on entrance to or exit from the Real
Property to adjacent public streets and no conditions which will result in the
termination of the present access from the Real Property to existing highways or
roads.
(c) Subject to any exceptions set forth in the Existing Title
Commitment, each of the Company and the Subsidiary has good and marketable fee
simple title to its Owned Real Property, and good and marketable leasehold
interests to the property leased by the Company or the Subsidiary, in each case,
free and clear of all Liens. Except for the Real Property Leases and subject to
any exceptions set forth in the Existing Title Commitment, to the Company's
Knowledge, there is no unrecorded or undisclosed legal or equitable interest in
any Real Property owned or claimed by any Person. Subject to the Real Property
Leases, each of the Company and the Subsidiary has enjoyed the continuous and
uninterrupted quiet possession, use and operation of its Real Property without
any material complaint or objection by any Person. There exists no unfulfilled
obligation on the part of the Company or the Subsidiary to dedicate or grant an
easement or easements over any portion or portions of any of the Real Property
to any Authority.
(d) All real estate Taxes and assessments which may be due and
payable with respect to the Real Property have been paid.
(e) Neither the Company nor the Subsidiary has received any
notice of any special Tax assessment affecting any property owned or leased in
connection with the Business, and, to Company's Knowledge, no such assessments
are pending or threatened.
3.21 Improvements. The improvements located on the Real
Property are in compliance in all material respects with all applicable Laws and
Orders, and, to the Company's Knowledge, are in reasonable and serviceable
condition and repair, normal wear and tear excepted. Neither the Real Property
nor the use, occupancy, or transfer to Purchaser thereof violates in any
material respect any applicable Laws, Orders or covenants, conditions and
restrictions, whether federal, state, local or private.
3.22 Zoning. Subject to any limitations set forth in the
Existing Title Commitment, the zoning of each parcel of Real Property permits
the presently existing improvements and the continuation of the business
presently being conducted on such parcel. In all material respects, there is no
pending or, to the Company's Knowledge, contemplated rezoning of any Real
Property. All the Real Property is in compliance in all material respects with
applicable state law and local subdivision ordinances, and no final subdivision
or parcel map is required in connection with the Merger.
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3.23 No Commitments. Except as set forth on Schedule 3.23,
there are no 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 utility
companies, school districts, water districts, improvement districts or other
Authorities which could reasonably be expected to impose any obligation,
liability or condition on the Company or the Subsidiary, 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 Real Property.
3.24 Continued Use of Real Property. There are no presently
pending or, to the Company's Knowledge, threatened, proceedings to (a) condemn,
take or demolish the Real Property or any part thereof, (b) declare the Real
Property or any part of it a nuisance or (c) exercise the power of eminent
domain or a similar power with respect to all or any part of the Real Property.
3.25 Water Rights. Except as set forth in Schedule 3.25, each
of the Company and the Subsidiary has all necessary Permits, property rights and
other necessary approvals to use in all material respects the aggregate amount
of water it has historically used (and at its historic rate of use) in the
operation of the Business, including, but not limited to, the use of water for
snowmaking, and its water use has otherwise been and will be in compliance with
all applicable Laws and Orders (except as described in Schedule 1.1). To the
Company's Knowledge, except as described in Schedule 1.1, no event has occurred
or failed to occur which presently, or upon the giving of notice or lapse of
time, or both, could reasonably be expected to materially adversely affect or
decrease the supply of water to the Company's or the Subsidiary's premises so as
to adversely affect the Company's or the Subsidiary's ability to manufacture
snow at such premises after the Closing Date in amounts approximating the
maximum amounts previously manufactured by the Company and the Subsidiary, or
which the Company and the Subsidiary had the right to manufacture. Schedule 3.25
sets forth a description of all the Company's and the Subsidiary's water rights
at each of its locations, including, without limitation, South Mountain.
3.26 Condition of Assets. Schedule 3.26 lists in all material
respects all of the Company's and the Subsidiary's Equipment and Improvements.
All of the Equipment and Improvements which are necessary for operation of the
Business as currently conducted are in good operating condition and repair
subject to normal wear and tear.
3.27 Consents. Except as contemplated by this Agreement with
respect to the filing of the Articles of Merger with the Secretary of State of
New Hampshire, the USFS Permits, the appropriate filings pursuant to the HSR
Act, if applicable, or as otherwise disclosed on Schedule 3.27, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Authority or any other Person is required to be obtained or made by
the Company in connection with the execution and delivery of this Agreement or
the performance by the Company of its obligations hereunder.
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3.28 Licenses and Permits. Schedule 3.28 lists and describes
all material qualifications, registrations, filings, privileges, franchises,
immunities, licenses, permits, authorizations and approvals of Authorities which
are used or required in order for the Company and the Subsidiary to own and
operate the Business, including, without limitation, all certificates of
occupancy and certificates, licenses and permits relating to zoning, building,
housing, safety, Environmental Laws, fire and health (collectively, the
"Permits"); and each Permit is in good standing, valid and subsisting, and in
full force and effect in accordance with its terms.
3.29 No Alternative Transactions. Neither the Company nor the
Subsidiary is a party to or otherwise bound by any agreement with respect to an
Alternative Transaction.
3.30 Occupational Safety and Health. Except as set forth on
Schedule 3.30, neither the Company nor the Subsidiary has received any notice,
citation, claim, assessment or proposed assessment as to or alleging any current
violation of any federal, state or local occupational safety and health laws nor
to the Company's Knowledge has the Company or the Subsidiary been subject to any
investigation by any federal, state or local occupational safety and health
agency within the three (3) years preceding the date hereof, and to the
Company's Knowledge no such violation exists. Neither the Company nor the
Subsidiary is a party to any pending dispute with respect to compliance with any
federal, state or local occupational safety and health law.
3.31 Insurance.
(a) Schedule 3.31 sets forth a list and brief description of
all insurance policies maintained by the Company and the Subsidiary.
(b) Each of the Company and the Subsidiary is not in default
with respect to any provision contained in any such insurance policy, nor has it
failed to give any notice or present any claim thereunder in a due and timely
fashion. Neither the Company nor the Subsidiary has received notice from any
insurance carrier that material alterations to the Real Property, the facilities
located thereon or the Business are required by such carrier.
3.32 Financial Statements. The Financial Statements attached
hereto as Schedule 3.32 were prepared by the Company from the books and records
of the Business and in accordance with generally accepted accounting principles
consistently applied and present fairly the financial position and results of
operations of the Company and the Subsidiary at the dates and for the periods
indicated therein.
3.33 Undisclosed Liabilities. On the Reference Balance Sheet
Date, the Company had no liability with respect to the Business of any nature
(whether accrued, absolute, contingent or otherwise) of the type which should be
reflected in balance sheets (including the notes thereto) prepared in accordance
with generally accepted accounting principles which was not fully disclosed,
reflected or reserved against in the Reference Balance Sheet; and, except for
liabilities which have been incurred since the Reference Balance Sheet Date in
the Ordinary Course of Business, since the
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Reference Balance Sheet Date neither the Company nor the Subsidiary has incurred
any liability of any nature (whether accrued, absolute, contingent or
otherwise).
3.34 Conduct of Business Since Reference Balance Sheet Date.
Since the Reference Balance Sheet Date:
(a) the Business has been conducted only in the Ordinary
Course of Business;
(b) except for equipment, inventory and supplies purchased,
sold or otherwise disposed of in the Ordinary Course of the Business, neither
the Company nor the Subsidiary has purchased, sold, leased, mortgaged, pledged
or otherwise acquired or disposed of any properties or assets except for
continuing to implement and fund the Company's current operating and capital
budget for the 1997-1998 fiscal year ("FY 1997-98 Budget") as such budget is
described on Schedule 3.34;
(c) neither the Company nor the Subsidiary has sustained or
incurred any loss or damage with respect to the Business (whether or not insured
against) on account of fire, flood, accident or other calamity which has in any
material respect interfered with or affected, or may in any material respect
interfere with or affect, the operation of the Business;
(d) neither the Company nor the Subsidiary has increased the
rate of compensation of any officer or other employee of the Business, except in
the Ordinary Course of Business, or in any event offered or issued any
additional Options or has hired any officer or other employee;
(e) to the Company's Knowledge there has been no material
adverse change in or with respect to the condition (financial or otherwise),
operations, business, prospects, rights, properties, assets or liabilities of
the Business or the Company's or the Subsidiary's relations with Authorities or
its employees, creditors, advertisers, suppliers, distributors, customers or
others having business relationships with the Company or the Subsidiary;
(f) neither the Company nor the Subsidiary has canceled any of
its debts or claims owed to it;
(g) neither the Company nor the Subsidiary has changed any
accounting methods or practices (including, without limitation, any change in
depreciation or amortization policies or rates);
(h) neither the Company nor the Subsidiary has made any
dividend or distribution to its shareholders or other holders of capital stock,
except that (i) the Company has paid on August 1, 1997 a one-time cash dividend
to the holders of the Company Common Stock in the aggregate amount of Fifty-Nine
Thousand and Forty-Seven Dollars ($59,047) and (ii) the Company shall after the
date hereof redeem all of its Company Preferred Stock immediately prior to the
Shareholders' Meeting (as hereinafter defined); or
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(i) neither the Company nor the Subsidiary has agreed to take
any of the actions described in paragraphs (b), (d), (f), (g) or (h) above.
3.35 Broker's or Consultant's Fees. Neither the Company nor
the Subsidiary has dealt with any broker, finder or consultant in connection
with any of the transactions contemplated by this Agreement, and, to the
Company's Knowledge, no Person is entitled to any commission or finder's fee in
connection with the transactions contemplated by this Agreement except for Fifty
Thousand Dollars ($50,000) plus reasonable expenses payable to Xxxxxx Xxxxxxx
Incorporated in accordance with that certain engagement letter dated as of May
30, 1997 between the Company and Xxxxxx Xxxxxxx Incorporated.
3.36 Banking Arrangements. Except as set forth in Schedule
3.36, neither the Company nor the Subsidiary has banking, borrowing or
depository relationship, or accounts or deposits of funds, and all persons
authorized as signatories on each such account are listed in Schedule 3.36.
3.37 Powers of Attorney. No Person holds any power of attorney
from the Company or the Subsidiary.
3.38 Disclosure. None of the representations and warranties
made by the Company in this Agreement or in any letter, certificate or
memorandum furnished or to be furnished by the Company, or on its behalf,
contains or will contain any untrue statement of a material fact, or omits any
material fact the omission of which would make the statements made therein
misleading. Except for facts or circumstances affecting the ski resort industry
generally, there is no fact known to any of the Company's or the Subsidiary's
officers which materially adversely affects, or is reasonably likely to
materially adversely affect, the condition (financial or otherwise), assets,
liabilities, business, operations or prospects of the Business, the value or
utility of the Company's or the Subsidiary's assets or the ability of the
Company or the Subsidiary to consummate the transactions contemplated hereby
that has not been set forth herein or heretofore communicated to Purchaser in
writing pursuant hereto.
3.39 Proxy Statement. The proxy statement to be sent to the
shareholders of the Company in connection with the shareholders meeting referred
to in Section 5.10 (such proxy statement, as amended or supplemented, is herein
referred to as the "Proxy Statement"), shall not, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
shareholders or at the time of such shareholders meeting, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or shall omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they are made, not misleading. The Proxy Statement shall comply in all material
respects with New Hampshire Law and shall include, without limitation, a notice
which complies with RSA 293-A:13:20 of New Hampshire Law.
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3.40 Shareholders. At no point in time has the Company Common
Stock been owned by 500 or more shareholders of record.
3.41 Expansion. Schedule 1.1 hereto sets forth a summary
description of the Company's efforts to expand its ski facilities onto the South
Mountain and the current status of and any legal impediments to such Expansion,
including, without limitation, a list of all development activities to date, any
USFS Permits, the status of any legal actions or rights to use additional water
for snow making purposes on the South Mountain as well as the status of any
repermitting efforts and any agreements by the USFS to reimburse the Company for
additional costs; provided, however, that the Company makes no representation or
warranty relating to its Permits or agreements with respect to the Expansion or
the likelihood of completing such Expansion.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND ACQUISITION SUB
As an inducement to the Company to enter into and perform its
obligations under this Agreement, and in consideration of the covenants of the
Company contained herein, Purchaser and Acquisition Sub hereby, jointly and
severally, represent and warrant to the Company (which representations and
warranties shall survive the Closing for the periods set forth in Section 10.4
regardless of what examinations, inspections, audits and other investigations
the Company has heretofore made, or may hereafter make, with respect to such
representations and warranties) as follows:
4.1 Corporate Status. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Acquisition Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Hampshire.
4.2 Due Authorization. The execution and delivery by each of
Purchaser and Acquisition Sub of this Agreement, and the performance by each of
Purchaser and Acquisition Sub of its obligations hereunder, have been duly and
validly authorized and approved by all necessary corporate action on the part of
each of Purchaser and Acquisition Sub.
4.3 Authority of Purchaser. Except as expressly set forth
herein (which approvals will be received on or before the Effective Time), each
of Purchaser and Acquisition Sub has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
Neither the execution or delivery of this Agreement by Purchaser or Acquisition
Sub nor the performance by Purchaser or Acquisition Sub of its obligations under
this Agreement will in any material respect and subject to the receipt of the
consents and approvals referred to in Section 4.5 conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, any
material contract, lease, license, franchise, permit, indenture, mortgage, deed
of trust, note agreement or other agreement or instrument to which Purchaser or
Acquisition Sub is a party or is
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bound, its certificate or articles of incorporation, by-laws or any applicable
Law or Order to which Purchaser or Acquisition Sub is a party or by which
Purchaser or Acquisition Sub is bound.
4.4 Enforceability. This Agreement is binding upon, and
enforceable against, each of Purchaser and Acquisition Sub in accordance with
its terms, subject to bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally and by principles of equity (whether in a
proceeding at law or in equity).
4.5 Consents. Except as contemplated by this Agreement with
respect to the filing of the Articles of Merger with the Secretary of State of
New Hampshire, the USFS Permits, the appropriate filings pursuant to the HSR
Act, if applicable, or as otherwise contemplated by this Agreement, no consent,
approval, Order or authorization of, or registration, declaration or filing
with, any Authority or any other Person is required to be obtained or made by
Purchaser or Acquisition Sub in connection with its execution and delivery of
this Agreement or the performance by either of them of its obligations
hereunder.
4.6 Broker's or Consultant's Fees. Each of Purchaser and
Acquisition Sub represents and warrants that it has dealt with no broker, finder
or consultant in connection with any of the transactions contemplated by this
Agreement, and, to its knowledge, no Person is entitled to any commission or
finder's fee in connection with the transactions contemplated by this Agreement.
4.7 Litigation. As of the date hereof, there are no actions,
suits, proceedings or investigations pending, or to the knowledge of the
Purchaser or Acquisition Sub threatened, against Purchaser or Acquisition Sub
which question the validity, legality or propriety of the transactions
contemplated by this Agreement or could have a material adverse effect on
Purchaser's or Acquisition Sub's ability to perform its obligations hereunder.
4.8 Business Activities of Acquisition Sub. Acquisition Sub
was formed for purposes of the transactions contemplated by this Agreement and
it has not conducted any business activities other than those related to the
transactions contemplated by this Agreement as of the date hereof.
ARTICLE V
PRE-CLOSING COVENANTS
Each of the Company, Purchaser and Acquisition Sub covenant
and agree that from the date hereof through and including the Closing Date:
5.1 Required Consents. The Company will use all commercially
reasonable efforts to obtain the consents listed on Schedule 3.27. Purchaser and
Acquisition Sub will use all commercially reasonable efforts to obtain the
consents expressly listed in Section 4.5 hereof.
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5.2 Conduct of the Business. Except as otherwise contemplated
by this Agreement or consented to by Purchaser in writing:
(a) The Company will (i) operate and maintain the Business in
the Ordinary Course of Business; (ii) cause Subsidiary to operate and maintain
its business in the ordinary course; (iii) keep and cause Subsidiary to keep all
Equipment and Improvements necessary for the operation of the Business as
currently conducted in good operating condition and repair, reasonable wear and
tear excepted, and replace any of it that may be worn out, lost, stolen or
destroyed; (iv) maintain and cause Subsidiary to maintain normal quantities of
retail and non-retail Inventories; (v) not and cause Subsidiary not to execute
any employment contracts with any Person; and (vi) proceed forward as
expeditiously as reasonably practicable to complete the capital improvements as
proposed by the FY 1997-98 Budget.
(b) The Company shall not, and shall not allow the Subsidiary,
if applicable, to (i) permit or allow any of the Company's or the Subsidiary's
assets to be subjected to any Lien; (ii) purchase, sell, lease, transfer or
otherwise dispose of any of the Company's or the Subsidiary's assets, except for
Inventory sold, leased, transferred or otherwise disposed of in the Ordinary
Course of Business and purchases made in accordance with the Company's FY
1997-98 Budget; (iii) terminate, modify or amend materially any of the Contracts
listed on Schedule 3.6 or any other Contract to the extent that such change
would require it to be disclosed on the Disclosure Schedules; (iv) enter into
any material contract, lease, registration, license or permit without the prior
written consent of Purchaser; (v) change the Business' accounting methods,
principles or practices (including without limitation, any change in
depreciation or amortization methods, policies or rates or income recognition
methods); (vi) increase or otherwise change the rate or nature of the
compensation (including wages, salaries, bonuses and benefits under any Plan)
which is paid or payable to any officer, employee or other representative of the
Business or of the Subsidiary's business, except in the Ordinary Course of
Business or in any event offer or issue any additional Options; (vii) make, or
commit to make, any payment, contribution or award under or into any bonus,
pension, profit-sharing, deferred compensation or similar plan, program or
trust; (viii) make any other material change in the Business or in the
Subsidiary's business or the operation thereof; (ix) make any dividend
distributions to its stockholders other than for the redemption by the Company
by payment of the Aggregate Preferred Redemption Consideration of all of its
Company Preferred Stock immediately prior to the Shareholders' Meeting (as
hereinafter defined); or (x) hire any officer or executive; and
(c) The Company shall, and shall cause the Subsidiary to, use
all commercially reasonable efforts to preserve and protect the Business'
goodwill, prospects, rights, properties, assets and business, to keep available
to it and Purchaser the services of the Business' employees, and to preserve and
protect the Business' relationships with Authorities and its employees,
officers, advertisers, suppliers, customers, creditors and others having
business relationships with it.
5.3 Right of Inspection; Access to Books and Personnel. The
Company shall, and shall cause the Subsidiary, the Company's and the
Subsidiary's officers, directors, employees, auditors and agents to, afford to
Purchaser and Purchaser's officers, employees, auditors, agents and
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lenders the right at any time prior to the Closing during normal business hours,
access to and the right to investigate each of the Company's and the
Subsidiary's directors, officers, employees, auditors, agents, facilities, books
and records as Purchaser reasonably shall deem necessary or desirable and shall
furnish such financial and operating data and other information as Purchaser may
reasonably require and to permit Purchaser to conduct environmental testing;
provided, however, that if this Agreement is terminated in accordance with
Article XI hereof, Purchaser shall thereafter be required to repair or remediate
any damage or contamination to the Company's land, buildings or other property
that Purchaser's environmental engineering firm may have directly caused in
connection with such environmental testing, and Purchaser shall indemnify and
hold the Company harmless from and against any costs, expenses, liabilities,
causes of action or losses that the Company may suffer or incur as the direct
result of any damage or contamination to the Company's land, buildings or other
property caused solely by Purchaser's environmental engineering firm performing
such environmental testing. No such access, examination or review shall in any
way affect, diminish or terminate any of the representations, warranties or
covenants of the Company set forth herein.
5.4 Notification of Material Adverse Events. The Company shall
promptly notify Purchaser in writing of any event following the date hereof of
which the Company or the Subsidiary is or becomes aware that will or may
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), rights, properties, assets or prospects of the Company
or of the Subsidiary or the performance by the Company of its obligations under
this Agreement.
5.5 Disclosure Schedule and Supplemental Disclosures. The
Company has delivered disclosure schedules (the "Disclosure Schedules") dated
the date hereof which contain the information required by this Agreement. The
Company shall have the continuing obligation to promptly propose in writing
supplements and amendments to the Disclosure Schedules as necessary or
appropriate with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in the Disclosure Schedules; provided, however, that for
the purpose of the rights and obligations of the parties hereunder, any such
proposed supplemental or amended disclosure shall not, except as Purchaser may
otherwise agree in writing, be deemed to have been accepted or to have cured any
breach of any representation or warranty made in this Agreement.
5.6 Title Insurance and Surveys.
(a) The Company shall endeavor in good faith on behalf of
Purchaser to obtain and deliver to Purchaser at least thirty (30) days prior to
the Closing Date the following:
(i) with respect to each parcel of Owned Real
Property, an owner's preliminary report on title covering a date
subsequent to the date hereof, issued by Chicago Title Insurance
Company or another title insurance company reasonably acceptable to
Purchaser (the "Title Company"), which preliminary report shall contain
a commitment of the Title Company to issue an owner's title insurance
policy on ALTA 1992 Owner's Form B (the "Title Policies") insuring the
fee simple title of the Company or of the Subsidiary, as
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the case may be, in such real estate, subject only to exceptions which
are reasonably satisfactory to Purchaser, and shall include extended
coverage, a zoning 3.1 with parking endorsement, a non-imputation
endorsement, an owner's comprehensive endorsement and such other
endorsements or coverages deemed necessary or advisable in the
reasonable judgment of Purchaser;
(ii) with respect to each parcel of Leased Real
Property, a preliminary report on title covering a date subsequent to
the date hereof, issued by the Title Company, which preliminary report
shall contain a commitment of the Title Company to issue a leasehold
title insurance policy on ALTA Leasehold Owner's Policy (10-17-92)
insuring the Company's or the Subsidiary's (as the case may be)
leasehold interests under the leases covering such parcels in amounts
reasonably satisfactory to Purchaser, and shall include extended
coverage, a zoning 3.1 with parking endorsement, a non-imputation
endorsement, an owner's comprehensive endorsement and such other
endorsements or coverages deemed necessary or advisable in the
reasonable judgment of Purchaser (the "Leasehold Policies");
(iii) surveys certified by a registered land surveyor
as of a date subsequent to the date hereof (the "Surveys"), of the real
estate covered by the preliminary report on title deliverable under
paragraphs (i) and (ii) above, prepared in accordance with ALTA/ACSM
standards, and showing with respect to such real estate: (A) the legal
description; (B) all buildings, structures and improvements thereon and
all "setback" lines, restrictions of record and other restrictions that
have been established by an applicable zoning or building code or
ordinance and all easements or rights of way; (C) any encroachments
upon such parcel or upon adjoining parcels by buildings, structures,
improvements or easements; and (D) access to such parcel; and
(iv) with respect to the USFS Permitted Property, a
land status report in the form of a letter from the Laconia, New
Hampshire office of the Forest Service, together with copies of pages
from the land status atlas maintained at such office, with respect to
all existing interests in and burdens on the USFS Permitted Property
including, without limitation, all mineral claims and patents, leases,
inholdings, permits, rights of way and easements (the "Land Status
Report").
(v) The costs and expenses of the Title Policies,
Leasehold Policies and the Land Status Report referred to in this
Section 5.6 shall be paid by the Company and the costs and expenses of
the Survey shall be paid by the Purchaser, in each case whether or not
the transactions contemplated under this Agreement are consummated.
5.7 Code Section 1445 Withholding. The Company shall take all
actions as may be necessary to comply with Sections 897 and 1445 of the Code and
any rules, regulations and orders which may be promulgated thereunder. In the
event that the Company fails to provide to Purchaser, at or prior to the
Closing, either (a) a certificate from the Company in the form of Exhibit I(A)
attached hereto, or (b) evidence satisfactory to Purchaser's counsel that the
transaction contemplated by this Agreement is exempt from any Taxes which may
apply by reason of Section
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897 of the Code, Purchaser shall (or shall require the Exchange Agent to)
withhold ten percent (10%) of any payment to any holder of Company Common Stock
or Options who fails to provide the Purchaser or the Exchange Agent with a fully
executed original certificate in the form of Exhibit I(B) attached hereto signed
by such holder (the "Section 1445 Withholding"), and Purchaser shall hold and
dispose of the Section 1445 Withholding in accordance with the requirements of
Section 1445 of the Code. The amount of the Section 1445 Withholding shall be
credited against the Aggregate Merger Consideration otherwise due and payable
hereunder by Acquisition Sub at the Closing and neither the Company nor any
holder of any Company Common Stock or Options shall have recourse against
Purchaser therefor. It shall be a condition to the Closing that the Title
Company shall omit from the Title Policies and the Leasehold Policies any and
all exceptions based upon any Tax Liabilities arising under Section 897 of the
Code.
5.8 Exclusivity. Unless this Agreement has been terminated in
accordance with Article XI, (a) the Company shall not, and shall not permit the
Subsidiary or any other of the Company's Affiliates, directors, officers, agents
or advisors to, initiate, pursue or encourage (by way of furnishing information
or otherwise) any inquiries or proposals, or enter into any discussions,
negotiations or agreements (whether preliminary or definitive) with any Person,
contemplating or providing for any merger, acquisition, purchase or sale of all
or substantially all of the assets or stock or any business combination or
change in control of the Business, other than the transaction contemplated by
this Agreement (an "Alternative Transaction"), (b) the Company shall deal
exclusively with Purchaser and Acquisition Sub with respect to the Merger and
the transactions contemplated by this Agreement and (c) the Company shall
immediately notify Purchaser and share the terms of any offer it receives from
any other party which could qualify as an offer, proposal or other notice
concerning or in respect of an Alternative Transaction.
5.9 Required Filings.
(a) If required, the Company and Purchaser shall cause to be
filed with the DOJ and the FTC the premerger notification form required pursuant
to the HSR Act with respect to the transactions contemplated hereby, together
with a request for early termination of the waiting period specified under the
HSR Act. The parties agree with respect to such filing that they shall (i) after
any request by the DOJ or FTC, promptly file any information or documents
requested by the DOJ or the FTC and (ii) notify each other of any communications
with the DOJ or the FTC which relate to the transactions contemplated hereby.
Purchaser shall pay the HSR Act filing fee.
(b) The Company, Purchaser and Acquisition Sub agree to (i)
promptly file, or cause to be promptly filed, with all appropriate Authorities
all notices, registrations, declarations, applications and other documents as
may be necessary to consummate the transactions contemplated hereby and (ii)
thereafter diligently pursue all consents, approvals and authorizations from
such Authorities as may be necessary to consummate the transactions contemplated
hereby.
5.10 Shareholder Approval and Dissenting Shares. The Company
will promptly take all steps necessary to circulate the Proxy Statement to all
of its shareholders within twenty (20) days after the date hereof (which Proxy
Statement shall include the recommendation by all of the
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members of its Board of Directors (except for the recommendation by Xxxxxx X.
Xxxxx and Xxxxxx Xxxxxx who have abstained from such recommendation because of a
conflict of interest, but who each have executed and delivered a Shareholder
Agreement with respect to the Company Common Stock owned by them on the date
hereof) that the shareholders approve the Merger) and then to call a special
meeting of its shareholders and submit this Agreement for approval at such
meeting of shareholders ("Shareholders' Meeting"), which the Company shall hold
within forty-five (45) days after the date hereof or at such later date as to
which Purchaser shall consent in writing. The Company will use its reasonable
and good faith efforts to obtain the necessary approvals of this Agreement and
the transactions contemplated hereby by the shareholders of the Company.
Simultaneous herewith holders of Company Common Stock who own beneficially and
of record at least 51% of the outstanding shares of Company Common Stock on a
fully diluted basis have executed and delivered to Purchaser a Shareholder
Agreement in substantially the form of Exhibit F attached hereto. Additionally,
the Company shall have kept the Purchaser apprised of the number of holders of
shares of Company Common Stock who have exercised appraisal or dissenter's
rights and the Company shall not enter into any negotiations, agreements or
settlements with or make any payments to holders of Dissenting Shares without
the prior written consent of the Purchaser.
5.11 Interim Financial Statements. The Company shall deliver
to Purchaser within twenty (20) days following the end of each fiscal month
hereafter, an unaudited balance sheet and statement of income for the Company
and its subsidiaries (prepared in accordance with generally accepted accounting
principles, consistently applied with the preparation of the Financial
Statements) as of the end of and for each such fiscal month, beginning with the
month ending in August 1997.
5.12 Xxxxxxx Money Deposit. On the date hereof the Purchaser
shall deposit One Hundred Fifty Thousand Dollars ($150,000) (the "Xxxxxxx
Money") with the Company by payment in the form of a check or by wire transfer
of immediately available funds to the Company, and the Company agrees to retain
and use such Xxxxxxx Money pursuant to this Section 5.12. If the Merger
contemplated hereby is not consummated and this Agreement is terminated in
accordance with the terms and conditions hereof solely by reason of (i) a
material breach by the Purchaser or Acquisition Sub hereunder, (ii) the failure
of the Purchaser or Acquisition Sub to satisfy the condition precedent to the
Purchaser's obligation to close hereunder as set forth in either the first
sentence of Section 6.1(h) or the third sentence of Section 6.1(n), then in such
instances the Company shall be entitled to retain the Xxxxxxx Money, together
with any interest or income earned thereon, as and for full liquidated damages
with respect to the transactions contemplated hereby and not as a penalty. If
the Merger contemplated hereby is not consummated for any reason other than as
described above, then the Company shall promptly after the termination of this
Agreement refund the Xxxxxxx Money to the Purchaser, in cash, together with
interest thereon for the number of days it had such Xxxxxxx Money calculated at
a per annum rate equal to the prime rate as announced by the Wall Street
Journal. If the Merger contemplated hereby is consummated, then the Xxxxxxx
Money (plus any interest or income earned thereon as calculated above less the
Aggregate Preferred Redemption Consideration) shall be forwarded by the Company
on behalf of the Purchaser to the Exchange Agent on the Closing Date as part of
the Aggregate Merger Consideration.
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5.13 Company Preferred Stock.
(a) Immediately following the date hereof, the Company will
(i) promptly circulate notices of redemption of the Company Preferred Stock to
all of its shareholders of Company Preferred Stock at a per share redemption
price equal to the Preferred Share Redemption Consideration, (ii) pursuant to
RSA 293-A:7.21(d) of New Hampshire Law deposit the Aggregate Preferred
Redemption Consideration with an escrow agent to be held under an irrevocable
obligation to pay the shareholders of Company Preferred Stock the Preferred
Share Redemption Consideration in accordance with New Hampshire Law and (iii)
provide the Purchaser with written evidence of the deposit of the Aggregate
Preferred Redemption Consideration with such escrow agent in accordance with New
Hampshire Law.
(b) After thirty (30) days following the circulation of the
notices of redemption of Company Preferred Stock (and in any no event later than
immediately prior to the Shareholders' Meeting), the Company shall redeem each
share of Company Preferred Stock by making a cash payment to the holder of each
share of Company Preferred Stock (and subject, in the case of each such holder,
to the receipt from such holder of the original stock certificate or certificate
representing such shares of Company Preferred Stock together with any customary
instruments of transfer that may reasonably be required by the Company), in an
amount equal to the Preferred Share Redemption Consideration multiplied by the
number of shares of Company Preferred Stock being surrendered by each such
holder. The Company shall use commercially reasonable and good faith efforts to
advise each holder of Company Preferred Stock relating to the redemption of his,
hers or its Company Preferred Stock as of the Shareholders' Meeting and obtain
the transfer documentation as required by this Section 5.13. A holder of Company
Preferred Stock who delivers to the Company his, her or its stock certificate
and proper transfer documentation (i) prior to the Shareholders' Meeting shall
be paid pursuant to this Section 5.13 on the date immediately preceding the date
of the Shareholders' Meeting, (ii) within thirty (30) days after the date of the
Shareholders' Meeting shall be paid pursuant to this Section 5.13 as soon as
reasonably practicable after receipt of such stock certificate and proper
transfer documentation by the Company and (iii) after thirty (30) days following
the date of the Shareholders' Meeting shall be paid pursuant to this Section
5.13 as soon as reasonably practicable but in no event later than ten (10)
business days after receipt of such stock certificate and proper transfer
documentation by the Company.
(c) Each share of Company Preferred Stock which, immediately
prior to the redemption notice in clause (a) above, was held by the Company as a
treasury share shall be canceled and retired without any payment being made
therefor;
(d) There shall be no obligation on the part of the Company to
deliver any payment in respect of any the Company Preferred Stock until (and
then only to the extent that) the holder thereof surrenders its certificate(s)
representing his, hers or its shares of Company Preferred Stock for exchange as
provided in this Section 5.13, or, in lieu thereof, delivers to the Company an
appropriate affidavit of loss and an indemnity agreement.
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If any payment for the Company Preferred Stock is to be made
in a name other than that in which the certificate for the Company Preferred
Stock surrendered for exchange is registered, it shall be a condition to the
payment that the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer, that all signatures shall be guaranteed
by a member firm of any national securities exchange in the United States or the
National Association of Securities Dealers, Inc., or by a commercial bank or
trust company having an office in the United States, and that the person
requesting the payment shall either (i) pay to the Company any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the certificate surrendered or (ii) establish to the reasonable
satisfaction of the Company that such taxes have been paid or are not payable.
From and after the date of the redemption notice in clause (a) above, there
shall be no transfers on the stock transfer books of the Company of any shares
of Company Preferred Stock outstanding immediately prior to such redemption
notice and any such shares of Company Preferred Stock presented to the Company
shall be canceled in exchange for the aggregate amounts payable with respect
thereto as provided in this Section 5.13.
5.14 Exchange Agent Agreement. The Company, the Purchaser and
the Acquisition Sub agree to promptly execute (and in the case of the Company to
cause the execution by the Representative) the Exchange Agreement after the
approval of the Merger by the Company's shareholders at the Shareholders'
Meeting.
5.15 Marketing Agreement. The Company hereby agrees to
negotiate in good faith and to enter into a commercially reasonable Marketing
Agreement for the 1997-98 ski season with certain affiliates of Purchaser (being
Waterville Valley Ski Resort, Inc. and Mount Cranmore Ski Resort, Inc.) as
promptly as possible after the date hereof.
ARTICLE VI
CONDITIONS PRECEDENT TO PURCHASER'S
AND ACQUISITION SUB'S OBLIGATIONS
6.1 Obligations to be Satisfied on or Prior to Closing Date.
The obligations of Purchaser and Acquisition Sub to effect the Merger and the
transactions contemplated by this Agreement is subject to the satisfaction (or
waiver by Purchaser or Acquisition Sub), on or prior to the Closing Date, of the
following conditions:
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties made by the Company in this Agreement shall be
true, correct and complete in all material respects on the Closing Date as
though made on such date.
(b) Compliance with Agreement. The Company and the Subsidiary
shall have performed or complied in all material respects with the covenants,
agreements and obligations required by this Agreement to be performed or
complied with by the Company or the Subsidiary on or prior to the Closing Date.
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(c) Investigation. Each of Purchaser, Purchaser's agents,
Acquisition Sub and Acquisition Sub's agents and their respective lenders shall
have been afforded access to the Company's and the Subsidiary's books and
records, officers, employees, agents, facilities and personnel, as provided in
Section 5.3, and Purchaser, Purchaser's agents, Acquisition Sub and Acquisition
Sub's agents and their respective lenders shall have completed their respective
due diligence reviews of the assets, properties, liabilities, business and books
and records (including, but not limited to, financial and Tax books and records)
of the Company and the Subsidiary, and the results thereof shall be satisfactory
to Purchaser and Acquisition Sub in their sole discretion. The Purchaser shall
have received a Phase I environmental report with respect to the Real Property
which is satisfactory in form and substance to Purchaser in its sole and
absolute discretion.
(d) Consents. All consents, approvals, orders, authorizations,
registrations, declarations and filings described on Schedule 3.27 shall have
been obtained or made in form reasonably satisfactory to Purchaser and
Acquisition Sub. This Agreement shall have been adopted and approved by the
requisite vote of the holders of the Company Common Stock required under New
Hampshire Law and the Company's articles of incorporation, as amended. Any
required consent of the Forest Service or reissuance of each USFS Permit to the
Company upon consummation of the Merger and the transactions contemplated by
this Agreement shall have been obtained on or prior to the Closing Date. All
necessary authorizations, agreements and consents of any Persons or Authorities
to the consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, shall have been obtained by
the Company and delivered to Purchaser and shall be in full force and effect as
of the Closing Date, and no such authorizations, agreements and consents shall
impose any burdensome or, in Purchaser's reasonable determination,
unsatisfactory conditions or requirements on Purchaser or Acquisition Sub or
Purchaser shall have entered into new contracts or agreements which permit the
continued use or supply of the property, products, technology or services
provided for by the Company's and the Subsidiary's existing contracts or
agreements on terms no less favorable to Purchaser than the prior contract or
agreement of the Company or the Subsidiary as to such property, products,
technology or services.
(e) No Adverse Proceedings. No Law shall have been enacted or
promulgated, and no investigation, action, suit or proceeding shall have been
threatened or instituted against the Company or the Subsidiary, which, in any
case, in the reasonable judgment of Purchaser, challenges, or might result in a
challenge to, the consummation of the transactions contemplated hereby, or which
claims, or might give rise to a claim for, damages against the Purchaser or
Acquisition Sub as a result of the consummation of such transactions.
(f) No Material Adverse Change. There shall have occurred no
material adverse change in or with respect to the condition (financial or
otherwise), business, prospects, rights, properties or assets of the Business,
the Company or the Subsidiary since the date hereof.
(g) Schedules. All amendments or supplements to the Disclosure
Schedules made by the Company pursuant to Section 5.5 shall be reasonably
acceptable to Purchaser and Acquisition Sub.
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(h) Financing; Purchaser Consent. Purchaser shall have
received funds pursuant to any and all necessary debt and equity financing for
the consummation of the transactions contemplated herein and the operation of
the Business after the Closing Date and the consent of its current lenders to
such new financing together with appropriate pay-off letters and lien releases
form the Company's current lenders to terminate and discharge any Liens such
lenders have on the Company's or the Subsidiary's assets, in each case on such
terms and subject to such conditions as are satisfactory to the Purchaser in its
sole discretion. This Agreement and the transactions contemplated hereby shall
have been approved by Purchaser's shareholders.
(i) Closing Documents. The Company shall have delivered all
reports, agreements, certificates, instruments, opinions and other documents
required to be delivered by the Company on the Closing Date pursuant to Section
8.3, and the form and substance of all such reports, agreements, certificates,
instruments, opinions and other documents shall be reasonably satisfactory to
Purchaser and Acquisition Sub; provided, however, that the Company acknowledges
that neither Purchaser nor Acquisition Sub has been given an opportunity to
review or approve the fee schedules attached as Exhibit V to the Exchange
Agreement or Exhibit IV to the Escrow Agreement and that such exhibits are
subject to the review and approval of Purchaser and Acquisition Sub, which
approval may be withheld in their reasonable discretion.
(j) Title Insurance and Surveys. As of the date hereof,
Purchaser has not yet received the Title Policies, Leasehold Policies, the Land
Status Report, the Surveys or any draft versions thereof, and as such at the
Closing, Purchaser shall have received the Title Policies, Leasehold Policies,
Land Status Report and Surveys, each dated the Closing Date, and in form and
substance satisfactory to Purchaser in its sole and absolute discretion
including, without limitation, being satisfied as to the extent and nature of
any easements or encumbrances whether or not disclosed on the Existing Title
Commitment and the amount of real property owned, leased or subject to permits
in favor of the Company or the Subsidiary.
(k) UCC, Tax Lien and Judgment Search Results. Each of
Purchaser and Acquisition Sub shall have received a report, in form and
substance satisfactory to Purchaser, as to the results of an examination
relating to the Company and the Subsidiary of financing statements filed under
the Uniform Commercial Code, and tax lien and judgment records, in each office
in each such jurisdiction as Purchaser shall reasonably request, and such report
shall indicate no material security interests, Tax Liens, judgments or other
Liens not previously disclosed in writing to Purchaser.
(l) Xxxx-Xxxxx-Xxxxxx Act. All filings required pursuant to
the Xxxx-Xxxxx-Xxxxxx Act will have been made, and any approvals required
thereunder will have been obtained, or the waiting period required thereby will
have expired or have been terminated, as the case may be.
(m) Dissenters. Holders of the Company Common Stock shall have
approved the Merger at a duly convened meeting of the shareholders of the
Company and holders of not more than five percent (5%) of the shares of Company
Common Stock outstanding shall have exercised appraisal or dissenter's rights
under New Hampshire Law.
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(n) Forest Service Permits; Water Rights and Expansion. All
notices required under the USFS Permits will have been made, and any approvals
required thereunder or by any Law or Order relating thereto will have been
obtained. All necessary Permits and approvals will have been obtained to allow
the Company to use the maximum aggregate amount of water it has historically
used in the operation of the Business, including, but not limited to, the use of
water for snowmaking. Purchaser is satisfied in its sole discretion that the
Expansion will be authorized by the Forest Service and any other necessary
Authorities without material future cost, delay, or restrictions.
6.2 Procedure for Failure to Satisfy Conditions. In the event
that, in Purchaser's or Acquisition Sub's reasonable judgment, any of the
conditions precedent set forth in Section 6.1 have not been satisfied, Purchaser
or Acquisition Sub shall notify the Company in writing indicating its election
to (a) waive such condition precedent or (b) terminate this Agreement pursuant
to Section 11.1.
ARTICLE VII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
7.1 Obligations to Be Satisfied on or Prior to Closing Date.
The obligations of the Company to effect the Merger and the transactions
contemplated by this Agreement are subject to the satisfaction (or waiver by the
Company), on or prior to the Closing Date, of the following conditions:
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties made by each of Purchaser and Acquisition Sub in
this Agreement shall be true, correct and complete in all material respects on
the Closing Date as though made on such date.
(b) Compliance with Agreement. Purchaser and Acquisition Sub
shall have performed or complied in all material respects with the covenants,
agreements and obligations required by this Agreement to be performed or
complied with by it on or prior to the Closing Date.
(c) No Adverse Proceedings. No Law shall have been enacted or
promulgated, and no investigation, action, suit or proceeding shall have been
threatened or instituted against Purchaser or Acquisition Sub, which, in any
case, in the reasonable judgment of the Company, challenges, or might result in
a challenge to, the consummation of the transactions contemplated hereby, or
which claims, or might give rise to a claim for, damages against the Company as
a result of the consummation of such transactions.
(d) Closing Documents. Purchaser and Acquisition Sub shall
have delivered all reports, agreements, certificates, instruments, opinions and
other documents required to be delivered by it on the Closing Date pursuant to
Section 8.4, and the form and substance of all such certificates, instruments,
opinions and other documents shall be reasonably satisfactory to the Company.
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(e) Xxxx-Xxxxx-Xxxxxx Act. All filings required pursuant to
the Xxxx-Xxxxx-Xxxxxx Act will have been made, and any approvals required
thereunder will have been obtained, or the waiting period required thereby will
have expired or have been terminated, as the case may be.
(f) Shareholder Consent. This Agreement shall have been
adopted and approved by the requisite vote of the holders of the Company Common
Stock required under New Hampshire Law and the Company's articles of
incorporation, as amended.
7.2 Procedure for Failure to Satisfy Conditions. In the event
that, in the Company's reasonable judgment, any of the conditions set forth in
Section 7.1 have not been satisfied, the Company shall notify Purchaser and
Acquisition Sub in writing indicating the Company's election to: (a) waive such
conditions precedent; or (b) terminate this Agreement pursuant to Section 11.1.
ARTICLE VIII
CLOSING
8.1 Time and Place. The Closing shall be a "New York style"
closing and shall take place at 10:00 a.m. (Chicago time) on the Closing Date at
the offices of Winston & Xxxxxx, 00 Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000
or at such other time and place as the Company, Purchaser and Acquisition Sub
may mutually agree.
8.2 Closing Transactions. All documents and other instruments
required to be delivered at the Closing shall be regarded as having been
delivered simultaneously, and no document or other instrument shall be regarded
as having been delivered until all have been delivered.
8.3 Deliveries by the Company to Purchaser and Acquisition
Sub. At the Closing, the Company shall deliver or cause to be delivered to
Purchaser and Acquisition Sub:
(a) a file stamped copy of the Articles of Merger from the New
Hampshire Secretary of State evidencing the effectiveness of the Merger;
(b) articles of incorporation of the Company and the
Subsidiary certified by the Secretary of State of New Hampshire and the by-laws
of the Company and the Subsidiary certified by the Secretary or Assistant
Secretary of the Company and the Subsidiary, respectively;
(c) certificates of good standing for the Company and the
Subsidiary from the State of New Hampshire and any state where the Company's or
the Subsidiary's failure to be qualified to transact business as a foreign
corporation would have a material adverse effect on the Company or the
Subsidiary or its business or financial condition;
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(d) the legal opinion of Peabody & Xxxxx, counsel for the
Company, the Subsidiary and the Representative concerning the opinions
substantially in the form attached hereto as Exhibit G;
(e) a certificate of each of the Company and Subsidiary,
executed by the Secretary or an Assistant Secretary of Company and Subsidiary,
respectively, dated as of the Closing Date, certifying to (i) the certificate of
incorporation and by-laws of Company or Subsidiary, as applicable; (ii)
resolutions of the Board of Directors of Company or Subsidiary, as applicable,
and of the Company's shareholders of Company Common Stock approving the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby; and (iii) incumbency and signatures of the
officers of Company or Subsidiary, as applicable, executing this Agreement and
any other certificate or document delivered in connection herewith (together
with copies of the same);
(f) a certificate executed by the President or Vice President
of the Company, dated as of the Closing Date, certifying that all
representations and warranties of the Company herein contained are true, correct
and complete in all material respects as of the Closing Date as if made thereon
and that each of the Company and the Subsidiary has performed or complied in all
material respects with all of the covenants and obligations required by this
Agreement to be performed or complied with by the Company or the Subsidiary on
or prior to the Closing Date;
(g) an executed original of each consent required to be
obtained pursuant to Section 6.1(d);
(h) the USFS Permits and all other Permits issued or reissued
in the name of the Company and in the form and substance satisfactory to
Purchaser in its sole discretion;
(i) an affidavit of the President or a Vice President of each
of the Company and the Subsidiary stating, under penalty of perjury, the
Company's and the Subsidiary's, respectively, United States taxpayer
identification number together with a withholding certificate, in the form of
Exhibit I executed by the Company and the Subsidiary;
(j) the Severance Agreement in substantially in the form of
Exhibit H attached hereto executed by each of the individuals listed on Schedule
9.3 (the "Severance Agreement");
(k) the Escrow Agreement executed by the Purchaser, the Escrow
Agent and the Representative;
(l) a GAP undertaking and all other documents deemed
reasonably necessary by the Title Company for purposes of delivering the Title
Policies and the Leasehold Policies;
(m) the Exchange Agreement executed by the Company, Purchaser,
the Representative and the Exchange Agent;
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(n) evidence that a redemption notice was forwarded to the
shareholders of the Company Preferred Stock at least 30 days prior to the date
of the Shareholders' Meeting and that thereafter the Company Preferred Stock was
redeemed and paid for prior to the date of the Shareholders' Meeting;
(o) evidence that the Company shall have received all the
Option Cancellation Agreements referred to in Section 2.5; and
(p) such other instruments and documents as are: (i) required
by any other provisions of this Agreement to be delivered on the Closing Date by
the Company or the Subsidiary to Purchaser or Acquisition Sub; or (ii)
reasonably necessary, in the opinion of Purchaser or Acquisition Sub, to effect
the performance of this Agreement and the other documents and agreements
contemplated hereby by the Company.
8.4 Deliveries by Purchaser and Acquisition Sub to the
Company. At the Closing, Purchaser shall deliver or cause to be delivered to the
Company:
(a) the legal opinion of Winston & Xxxxxx, special counsel for
Purchaser and Acquisition Sub, and of any local New Hampshire counsel to such
parties concerning the opinions in substantially in the form attached hereto as
Exhibit J;
(b) a certificate of each of the Purchaser and Acquisition
Sub, executed by the Secretary or an Assistant Secretary of Purchaser and
Acquisition Sub, respectively, dated as of the Closing Date, certifying to (i)
the certificate of incorporation and by-laws of Purchaser or Acquisition Sub, as
applicable; (ii) resolutions of the Board of Directors and shareholders of
Purchaser or Acquisition Sub, as applicable, approving the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby; and (iii) incumbency and signatures of the officers of
Purchaser or Acquisition Sub, as applicable, executing this Agreement and any
other certificate or document delivered in connection herewith (together with
copies of the same);
(c) a certificate of each of the Purchaser and Acquisition
Sub, executed by the President or Vice President of Purchaser and Acquisition
Sub, respectively, dated as of the Closing Date, certifying that all
representations and warranties of Purchaser or Acquisition Sub, as applicable,
herein contained are true, correct and complete in all material respects as of
the Closing Date as if made thereon and that Purchaser or Acquisition Sub, as
applicable, has performed or complied in all material respects with all of the
covenants and obligations required by this Agreement to be performed or complied
with by Purchaser or Acquisition Sub, as applicable, on or prior to the Closing
Date;
(d) certificate of incorporation of Purchaser certified by the
Secretary of State of the State of Delaware;
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(e) certificate of incorporation of Acquisition Sub certified
by the Secretary of State of the State of New Hampshire;
(f) the Escrow Agreement, the Exchange Agreement and each
Severance Agreement executed by Purchaser; and
(g) such other instruments and documents as are: (i) required
by any other provisions of this Agreement to be delivered on the Closing Date by
Purchaser or Acquisition Sub to the Company; or (ii) reasonably necessary, in
the opinion of the Company, to effect the performance of this Agreement by
Purchaser and Acquisition Sub.
ARTICLE IX
OTHER AGREEMENTS
9.1 Further Assurance. At any time and from time to time from
and after the Closing, the Company, Purchaser and Acquisition Sub will, at the
request and expense of the other parties hereto, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such instruments
and other documents and perform or cause to be performed such acts and provide
such information, as may reasonably be required to evidence or effectuate the
Merger or the transactions contemplated by this Agreement or for the performance
by the Company, Purchaser or Acquisition Sub of any of their other respective
obligations under this Agreement.
9.2 Confidentiality.
(a) The parties hereto agree with respect to the terms and
conditions of this Agreement, including, without limitation, the Aggregate
Merger Consideration, and all information that is furnished or disclosed by the
other party (collectively, "Confidential Information"), that (i) such
Confidential Information is confidential and/or proprietary to the
furnishing/disclosing party and entitled to and shall receive treatment as such
by the receiving party; (ii) the receiving party will hold in confidence and not
disclose nor use (except in respect of the transactions contemplated by this
Agreement) any such Confidential Information, treating such Confidential
Information with the same degree of care and confidentiality as it accords its
own confidential and proprietary information; provided, however, that the
receiving party shall not have any restrictive obligation with respect to any
Confidential Information which (A) is contained in a printed publication
available to the general public, (B) is or becomes publicly known through no
wrongful act or omission of the receiving party, (C) is known by the receiving
party without any proprietary restrictions by the furnishing/disclosing party at
the time of receipt of such Confidential Information or (D) is required by Law
to be disclosed; and (iii) all such Confidential Information furnished to either
party by the other, unless otherwise specified in writing, shall remain the
property of the furnishing/disclosing party, and in the event this Agreement is
terminated, shall be returned to it, together with any and all copies made
thereof, upon request for such return by it (except for documents submitted to
an Authority with the consent of the furnishing/disclosing party or upon
subpoena and which cannot be retrieved with reasonable effort).
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(b) Each party hereto acknowledges that the remedy at law for
any breach by any party of its obligations under Section 9.2(a) is inadequate
and that the other parties shall be entitled to equitable remedies, including an
injunction, in the event of breach of any other party.
9.3 Employment Matters.
(a) On the Closing Date, Acquisition Sub shall retain the
employees of the Company engaged full-time or part-time in the conduct of the
Business; provided, however, that such employees will all continue to be at-will
employees subject to termination as determined by Surviving Company in its sole
discretion after the Closing Date. Subject to the prior sentence, the Surviving
Company will initially continue the employment of all of the Company's employees
as of the Closing at the same base salary or hourly rate cash compensation
levels as provided by the Company immediately prior to the Closing and upon such
other terms and provisions, including employee benefits, as the Company
currently provides its employees having years of service equivalent to the
Company's employees. The Surviving Company will give full credit for the years
of service with the Company for employee benefits eligibility and vesting
purposes for which such employees are eligible at the Closing to all employees
of the Company who have worked for the Company during the year prior to the
Closing and become employees of the Surviving Company again by the beginning of
the 1997 ski season. Notwithstanding the foregoing, the Surviving Company and
Acquisition Sub reserve the right to amend, modify or terminate any employee
benefit plan sponsored by them at any time in their sole discretion.
(b) The Company shall offer severance agreements to those
employees listed on Schedule 9.3 for the length of time after the Closing Date
and at the per annum base salary as set forth on Schedule 9.3 and otherwise on
substantially the terms and conditions set forth in Exhibit H attached hereto.
In addition Schedule 9.3 also lists the respective residence address of each
covered employee.
9.4 Sales and Transfer Taxes. The Escrow Agent will disburse
funds from the Escrow Account to Surviving Company to pay for the cost of any
transfer, stamp, sales, purchase, use, value added, excise or similar tax
imposed on the Surviving Company, the Company or the Subsidiary under the laws
of the United States, or any state or political subdivision thereof, which
arises out of the Merger or any deemed transfer of any shares of capital stock
of the Company or the Subsidiary in connection with the Merger, and the
Purchaser and the Representative shall immediately jointly instruct the Escrow
Agent to pay to the Surviving Company the amount of any such taxes upon notice
to Representative by Surviving Company or Purchaser of such taxes.
9.5 Purchaser Non-Solicitation. Purchaser agrees for itself,
its successors and other persons claiming directly through Purchaser that for
the period beginning on June 30, 1997 until the earlier of the Closing or June
30, 1999, Purchaser shall not solicit, approach or otherwise encourage any then
current employees of the Company to leave the Company's employ in order to
become an employee of Purchaser.
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9.6 Section 338 of the Code. The Surviving Company will be
responsible for any Tax liability and receive any Tax benefit due to any Code
Section 338 election or deemed election, if any, made in connection with the
Merger.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Merger Consideration Recipients. The
Company (on behalf of the Merger Consideration Recipients) and the Merger
Consideration Recipients jointly and severally agree to indemnify, defend, hold
harmless and waive any claim for contribution against Purchaser, the Surviving
Company and all of their officers, directors, shareholders, Affiliates,
employees and agents (the "Purchaser Indemnified Persons") from and against any
Adverse Consequence arising out of or resulting from:
(a) the untruth, inaccuracy or incompleteness as of the date
hereof or on the Closing Date of any representation or warranty of the Company
contained in this Agreement or the Disclosure Schedules (or in any document,
writing, certificate, data or financial statements delivered by the Company
under this Agreement) (each a "Purchaser Warranty Claim");
(b) the failure by the Company to perform any of its covenants
or obligations hereunder;
(c) any brokers' commissions, finders' fees or other like
payments incurred or alleged to have been incurred by the Company or the
Subsidiary in connection with the Merger or the consummation of the transactions
contemplated by this Agreement other than as disclosed in Section 3.35;
(d) all Taxes attributable to the Company or the Subsidiary
for taxable periods ending on or before the Closing Date, and for their
allocable share of Taxes for any period that begins prior to the Closing Date
and ends after the Closing Date; provided, however, that this clause (d) shall
(i) exclude any Taxes related to or incurred for periods after April 30, 1996
except to the extent that such Taxes exceed the sum of the amount which was (A)
accrued for Taxes on the Financial Statements as of July 31, 1997 and (B)
amounts which may be accrued in accordance with generally accepted accounting
principles, consistently applied, on any balance sheet prepared as of the
Closing Date for Taxes incurred after July 31, 1997 in the ordinary course of
business and (ii) exclude any additional Taxes assessed by the IRS for any tax
year in which the Purchaser, of its own accord and without being so required by
the IRS, reopens or challenges the Taxes assessed or paid in such taxable period
in which a return has previously been filed in an effort to obtain a refund for
such period and as a result thereof the IRS after further review assesses
additional Tax Liabilities for such prior taxable period. For purposes of
determining any Person's allocable share of Taxes for any period which was not
closed as of the Closing Date, the Company's or the Subsidiary's allocable share
of Taxes shall be determined by reference to income, capital gains, gross
receipts, sales, net profits, windfall profits or similar items or resulting
from the sale of assets allocated based on the
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date the items occurred and all other Taxes shall be allocated pro rata based on
the number of days in the taxable period for which each party is liable; and
(e) fifty percent (50%) of the total costs, expenses and other
liabilities incurred in upgrading or replacing the five single-walled
underground storage tanks (being UST's No. 1, 2, 3, 4 and 7 registered under
owner number 0-111275 with the State of New Hampshire) up to a maximum of
$50,000 to bring such UST's into compliance with federal regulation by December,
1998 including, without limitation, the costs and expenses of clean-up and
remediation of any contaminated soil (except any contamination directly caused
by the negligence of the party retained by the Surviving Company to replace such
tanks) which must by law be removed or cleaned up in connection with such UST
upgrades and replacement.
10.2 Indemnification by Purchaser. Purchaser and Acquisition
Sub agree to indemnify, defend and hold harmless Merger Consideration Recipients
after the Closing from and against any Adverse Consequence arising out of or
resulting from:
(a) the untruth, inaccuracy or incompleteness as of the date
hereof or on the Closing Date of any representation or warranty of Purchaser or
Acquisition Sub contained in this Agreement (or in any document, writing or
certificate delivered by Purchaser or Acquisition Sub under this Agreement)
(each a "Company Warranty Claim");
(b) the failure by Purchaser or Acquisition Sub to perform any
of its covenants or obligations hereunder, or the failure of the Surviving
Company to perform its obligations or covenants under Section 9.6; and
(c) any brokers' commissions, finders' fees or other like
payments incurred or alleged to have been incurred by Purchaser or Acquisition
Sub in connection with the Merger or the consummation of the transactions
contemplated by this Agreement.
10.3 Procedure for Indemnification.
(a) If any Person shall claim indemnification (the
"Indemnified Party") hereunder for any claim other than a third party claim, the
Indemnified Party shall promptly give written notice to the other party from
whom indemnification is sought (the "Indemnifying Party") of the nature and
amount of the claim.
(b) If an Indemnified Party shall claim indemnification
hereunder arising from any claim or demand of a third party, the Indemnified
Party shall promptly give written notice (a "Third-Party Notice") to the
Indemnifying Party of the basis for such claim or demand, setting forth the
nature of the claim or demand in detail. The Indemnifying Party shall have the
right to compromise or, if appropriate, defend at its own cost and through
counsel of its own choosing, any claim or demand set forth in a Third-Party
Notice giving rise to such claim for indemnification. In the event the
Indemnifying Party undertakes to compromise or defend any such claim or demand,
it shall promptly (and in any event, no later than fifteen (15) days after
receipt of the Third-Party
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Notice) notify the Indemnified Party in writing of its intention to do so and
shall give the Indemnifying Party such security in that regard as the
Indemnified Party reasonably may request.
The Indemnified Party shall fully cooperate with the Indemnifying Party and its
counsel in the defense or compromise of such claim or demand. After the
assumption of the defense by the Indemnifying Party, the Indemnified Party shall
not be liable for any legal or other expenses subsequently incurred by the
Indemnifying Party, in connection with such defense, but the Indemnified Party
may participate in such defense at its own expense. No settlement of a third
party claim or demand defended by the Indemnifying Party shall be made without
the written consent of the Indemnified Party, such consent not to be
unreasonably withheld. The Indemnifying Party shall not, except with written
consent of the Indemnified Party, consent to the entry of a judgment or
settlement which does not include as an unconditional term thereof, the giving
by the claimant or plaintiff to the Indemnified Party of an unconditional
release from all liability in respect of such third party claim or demand. If a
firm written offer is made to settle any such third party claim, demand, action
or proceeding which (I) does not require the Indemnified Party to admit any
liability, complicity or responsibility for any actions, injuries, negligence or
other similar matters or restrain, restrict or limit in any way the Indemnified
Party's ability to operate its business or take actions in the future, (II)
contains reasonable confidentiality obligations with respect to the terms of
such settlement, (III) in the instance the Purchaser or the Acquisition Sub is
the Indemnified Party, the settlement requires payments in excess of the
remaining available amount of the Holdback, and (IV) the Indemnifying Party
proposes to accept and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party shall upon ten (10) business days prior
written notice to the Indemnified Party have the right to pay the Indemnified
Party in immediately available funds the lesser of the total amount constituting
the proposed settlement or the remaining amounts it is obligated to pay under
this Article X, and thereafter, to be excused from, and the Indemnified Party
shall be solely responsible for, all further defense of such third party claim,
demand, action or proceeding.
(c) Upon resolution or any claim under this Article X in favor
of Purchaser or Acquisition Sub, whether by agreement or the rendering of a
final judgment in any litigation, the Purchaser and the Representative shall
jointly instruct the Escrow Agent to pay over and deliver to an Indemnified
Party an amount equal to the amount of any claim so resolved.
10.4 Limitations on Indemnity. (a) The indemnities contained
in this Article X with respect to Purchaser Warranty Claims and Company Warranty
Claims shall expire fifteen (15) months following the Closing Date, except with
respect to claims (a) under Section 3.14 as to which the indemnification
obligation shall survive until thirty (30) months following the Closing Date,
(b) under Section 3.17 as to which the indemnification obligation shall survive
for the applicable statute of limitations period, and (c) under Sections 3.1,
3.11, 3.39 and 3.40 or with respect to fraud as to which there shall be no
expiration date; provided, however, that if at the stated expiration of any
indemnification obligation there shall then be pending any indemnification claim
by a Person, such Person shall continue to have the right to such
indemnification with respect to such claim notwithstanding such expiration. The
indemnification provided herein shall not limit any liability of the Company,
the Subsidiary, Merger Consideration Recipients, Purchaser or Acquisition Sub
which may arise by statute or common law. Except as expressly set forth herein,
Purchaser's and
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Acquisition Sub's rights under this Article X shall not be limited by or to any
amounts held pursuant to the Escrow Agreement.
(b) The Merger Consideration Recipients' maximum aggregate
liability to the Purchaser Indemnified Persons for indemnification of Purchaser
Warranty Claims pursuant to Section 10.1(a) and as to any obligations set forth
in Section 10.1(e) shall not exceed an amount equal to the Holdback.
(c) Purchaser's maximum aggregate liability to the Merger
Consideration Recipients for indemnification of Company Warranty Claims pursuant
to Section 10.2(a) shall not exceed an amount equal to the Holdback.
(d) No Purchaser Indemnified Person shall be entitled to
indemnification pursuant to Section 10.1 for any Purchaser Warranty Claims
unless and until the aggregate Adverse Consequences suffered by all Purchaser
Indemnified Persons collectively exceeds $500,000 whereupon the Purchaser
Indemnified Persons shall be entitled to indemnification hereunder from the
Merger Consideration Recipients for all Adverse Consequences suffered by
Purchaser Indemnified Persons in excess of such threshold amount.
(e) The Merger Consideration Recipients shall not be entitled
to indemnification pursuant to Section 10.2 for any Company Warranty Claims
unless and until the aggregate Adverse Consequences suffered by the Merger
Consideration Recipients in the aggregate exceeds $500,000 whereupon the Merger
Consideration Recipients shall be entitled to indemnification hereunder from
Purchaser for all Adverse Consequences suffered by the Company in excess of such
threshold amount.
(f) The Company hereby acknowledges and agrees on behalf of
itself, the Merger Consideration Recipients and the Representative that
notwithstanding the fact that certain covenants, representations, warranties and
agreements are given by the Company in favor of Purchaser and/or Acquisition
Sub, that the Merger Consideration Recipients shall assume all liability and
obligation for any inaccuracy, violation or breach thereof (including, without
limitation, by way of payments against the Holdback) and shall not have any
right to seek contribution, indemnity or payment of any kind from the Surviving
Company and/or the Subsidiary with respect thereto.
Except for losses or damages due to fraud or indemnification
claims other than Purchaser Warranty Claims, any loss incurred by the Purchaser
or Acquisition Sub for which it is to be indemnified hereunder shall be
satisfied solely from the Holdback, and with respect to any amounts claimed
directly against the Merger Consideration Recipients, as opposed to against the
Holdback, no Merger Consideration Recipient shall be liable to the Purchaser for
more than his pro rata share of any such claim. Such pro rata share of each
Merger Consideration Recipient shall be determined by multiplying the amount
claimed times the fraction equal to the number of shares of Company Common Stock
(other than Dissenting Shares) and Option Shares which were owned by such Merger
Consideration Recipient at the Effective Time over the aggregate number of
outstanding shares of Company Common Stock (other than Dissenting Shares) and
the number of
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Option Shares that could have been issued upon execution of all remaining
options as of the Effective Time.
10.5 Escrow Agreement. In addition to any right or remedy
available to Purchaser hereunder or otherwise, Purchaser shall be entitled to be
paid for any indemnification claims against Merger Consideration Recipients by
demanding payment of funds in accordance with the Escrow Agreement and against
the Holdback in accordance with the terms and conditions in the Escrow
Agreement. The Holdback placed by Acquisition Sub in the Escrow Account shall be
held in escrow in the Escrow Account and shall be available to pay for
indemnification claims asserted by the Purchaser Indemnified Persons pursuant to
this Article X. On the first business day of the first month which is at least
(i) fifteen (15) months following the Closing Date, and on the first business
day of each month occurring three (3), six (6), nine (9) and twelve (12) months
thereafter, the Purchaser and the Representative each agree to direct the Escrow
Agent to pay into the Exchange Account on behalf of the Merger Consideration
Recipients $200,000 (or such lesser amount then remaining in the Escrow Account)
and (subject to any tax withholdings) to have the Allocable Portion of such
amounts paid out to the former holders of Company Common Stock (other than
Dissenting Shares) and Option Shares, and (ii) thirty (30) months following the
Closing Date, the Purchaser and the Representative each agree to direct the
Escrow Agent to pay $500,000 (or such lesser amount then remaining in the Escrow
Account) into the Exchange Account on behalf of the Merger Consideration
Recipients and (subject to any tax withholdings) to have the Allocable Portion
of such amounts paid out to the former holders of Company Common Stock (other
than Dissenting Shares) and Option Shares; provided, however, that the amount of
each such payment will be less the sum of (a) the aggregate of all claims for
indemnification which have been paid out to date and not already deducted from a
payment or are then pending against such Merger Consideration Recipients, plus
(b) if any tax audit is in process or has been noticed, an additional amount as
estimated by Purchaser as shall be necessary to cover any potential claims
related to Taxes which may be reasonable assessed or incurred. On the first
business day of each calendar month subsequent to the third (3rd) anniversary of
the Closing Date, the Purchaser and the Representative each agree to direct the
Escrow Agent to pay into the Exchange Account on behalf of the Merger
Consideration Recipients any amounts withheld from the final payment in
accordance with clauses (a) or (b) in the preceding sentence and which are no
longer required to be held by the terms of such clause (a) or (b) above and
(subject to any tax withholdings) to have the Allocable Portion of such amounts
paid out to the former holders of Company Common Stock (other than Dissenting
Shares) and Option Shares, until all amounts held in the Escrow Account have
been paid into the Exchange Account.
10.6 Payment. Except for third-party claims being defended in
good faith by the Indemnifying Party in accordance with Section 10.3, the
Indemnifying Party shall satisfy its obligations hereunder within fifteen (15)
days after receipt of notice of a claim. Any amount not paid to the Indemnified
Party by such date shall bear interest at a rate equal to nine percent (9%) per
annum from the date due until the date paid.
10.7 Set-Off. If any Merger Consideration Recipient fails to
make any payment with respect to any indemnification claim in accordance with
this Article X, Purchaser may set-off
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the amount of such claim against any amounts payable by Purchaser or the Company
to any Merger Consideration Recipient under this Agreement or any other
agreement, promissory note or instrument delivered in connection with the
transactions contemplated hereby.
ARTICLE XI
TERMINATION
11.1 Rights to Terminate. This Agreement may be terminated at
any time prior to the Closing only as follows:
(a) by mutual written consent of the Company and
Purchaser;
(b) by the Company, if Purchaser or Acquisition Sub is in
material breach of any representation, warranty, covenant or condition under
this Agreement (and the Company is not then in material breach of any
representation, warranty, covenant or condition hereunder) and such breach
continues for ten (10) business days after written notice of the same to the
breaching party or if the alleged breach is reasonably capable of being cured
and the breaching party is working in good faith to cure such breach but it
cannot be cured in ten (10) business days, said ten (10) business day period to
cure such breach shall be extended by an additional twenty (20) days;
(c) by Purchaser, if the Company is in material breach of any
representation, warranty, covenant or condition under this Agreement (and
Purchaser and Acquisition Sub are not then in material breach of any
representation, warranty, covenant or condition hereunder) and such breach
continues for ten (10) business days after written notice of the same to the
breaching party or if the alleged breach is reasonably capable of being cured
and the breaching party is working in good faith to cure such breach but it
cannot be cured in ten (10) business days, said ten (10) business day period to
cure such breach shall be extended by an additional twenty (20) days;
(d) by the Company or by Purchaser if, at or before the
Closing, any condition set forth herein for the benefit (i) of the Company or
(ii) Purchaser or Acquisition Sub, respectively, shall not have been timely met
and cannot be met on or before the Closing Date and has not been waived; or
(e) by Purchaser or the Company if the Closing shall not have
occurred on or before November 30, 1997; provided, however, that neither such
party shall be entitled to terminate this Agreement pursuant to this Section
11.1(e) if such party's willful breach of this Agreement has prevented the
consummation of the transactions contemplated hereby.
Each party's right of termination hereunder is in addition to
any of the rights it may have hereunder or otherwise.
11.2 Effects of Termination. Notwithstanding any other
provision of this Agreement to the contrary, no termination of this Agreement
shall release (i) the Company from its
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obligation to pay the costs and expenses described in Section 5.6, 5.9 or
6.1(j), (ii) any party hereto from any Liabilities arising hereunder for any
pre-termination breaches in any material respect hereof or intentional
misrepresentations made herein, (iii) any party hereto from its obligations
under Section 9.2 or (iv) any party hereto (if such party is in default in any
material respect of any of its obligations or duties under the Agreement and the
other parties hereto are not in default of their obligations and duties under
the Agreement), in addition to all other remedies available to such
non-defaulting party at law and in equity, of its obligation to pay and fully
reimburse the non-defaulting party for all reasonable expenses paid or incurred
by such non-defaulting party in connection with the transactions contemplated
hereby, including, without limitation, reasonable attorneys' and accountants'
fees, which fees with respect to the Company shall also include the actual out
of pocket fees paid to its investment bankers (but in any event not in excess of
$75,000) solely related to providing a fairness opinion for the transaction
contemplated hereby; provided, however, that if the Company is entitled to
retain the Xxxxxxx Money in connection with any termination of this Agreement,
then such Xxxxxxx Money shall be retained by the Company as and for full
liquidated damages hereunder, and not as a penalty, and the Company shall not be
permitted to claim any additional amounts.
ARTICLE XII
THE REPRESENTATIVE
12.1 Appointment. Upon approval of the Merger, the Merger
Consideration Recipients shall be deemed for themselves and their respective
successors, assigns, heirs, executors and legal representatives to have
constituted and appointed, effective from and after the Effective Time, Xxxxxxx
X. Xxxxxx, an individual residing in New Hampshire, as the agent and
representative (the "Representative") of the Merger Consideration Recipients and
their respective successors, assigns, heirs, executors and legal representatives
to act as Representative for all purposes under this Agreement. In the event of
the death, resignation or incapacity of the Representative, J. Xxxxxxx Xxxxxx,
an individual residing in New Hampshire, shall automatically be deemed to be
appointed as successor Representative (subject to receipt by the Company of a
written acceptance from such successor Representative within twenty (20) days
after notice of such automatic appointment), and in the event of the successor
Representative's death, resignation, incapacity or failure to timely accept the
appointment in writing, the Merger Consideration Recipients shall promptly
designate another individual to act as their representative under this Agreement
so that at all times there will be a Representative with the authority provided
in this Article XII. Such successor Representative shall be designated by the
Merger Consideration Recipients by an instrument in writing executed by Merger
Consideration Recipients with an aggregate contingent interest or right to
receive (subject to set off in accordance with this Agreement) not less than 51%
of the Holdback then remaining and such appointment shall become effective as to
the successor Representative when such instrument shall have been delivered to
any such proposed successor Representative (and accepted in writing) and a copy
thereof received by Purchaser and the Company.
12.2 Authorization. The Merger Consideration Recipients hereby
authorize the Representative, on their behalf and in their name, to:
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(a) Receive all notices or documents given or to be given to
the Company or the Merger Consideration Recipients by the Purchaser or
Acquisition Sub pursuant hereto or in connection herewith and to receive and
accept service of legal process in connection with any suit or proceeding
arising under this Agreement;
(b) Engage counsel, and such accountants and other advisors on
behalf of the Merger Consideration Recipients and incur such other reasonable
expenses on behalf of the Merger Consideration Recipients in connection with
this Agreement and the transactions contemplated hereby as the Representative
may deem appropriate; and
(c) Take such action on behalf of the Merger Consideration
Recipients as the Representative may deem appropriate in respect of:
(i) waiving any inaccuracies in the representations
or warranties of Purchaser or Acquisition Sub contained in this
Agreement or in any document delivered by Purchaser or Acquisition Sub
pursuant hereto;
(ii) taking such other action as the Representative
is authorized to take under this Agreement;
(iii) receiving all documents or certificates and
making all determinations on behalf of the Merger Consideration
Recipients required under this Agreement;
(iv) all such other matters as the Representative may
deem necessary or appropriate in connection with the administration of
this Agreement and the transactions contemplated hereby; and
(v) taking all such action as may be necessary after
the Closing Date to carry out any of the transactions contemplated by
this Agreement and permit any disbursements or payments out of the
Escrow Account.
12.3 Irrevocable Appointment. The appointment of the
Representative hereunder is irrevocable (subject to Section 12.4) and any action
taken by the Representative pursuant to the authority granted in this Article
XII shall be effective and absolutely binding on the Merger Consideration
Recipients notwithstanding any contrary action of, or direction from, the
Company, except for actions taken by the Representative which are in bad faith
or grossly negligent.
12.4 Resignation and Removal. The Representative may resign at
any time by giving notice to the Company and to the Merger Consideration
Recipients, and such resignation shall be effective upon the appointment and
qualification of a successor. The Representative may be discharged, and replaced
by another person to act as his or her successor, by an instrument in writing
signed by Merger Consideration Recipients with an aggregate contingent interest
or right to receive (subject to set off in accordance with this Agreement) not
less than sixty-six percent (66%) of the Holdback then remaining.
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12.5 Purchaser's Reliance. Purchaser, Acquisition Sub and
Surviving Company shall not be obliged to inquire into the authority of the
Representative, and such parties shall be fully protected in dealing with the
Representative in good faith.
12.6 Exculpation and Indemnification. (a) In performing any of
such Representative's duties under this Agreement, the Representative shall not
incur any Liability to any Person, except for Liability caused by the
Representative's willful misconduct, unlawful acts or gross negligence.
Accordingly, the Representative shall not incur any such Liability for (i) any
action that is taken or omitted in good faith regarding any questions relating
to the duties and responsibilities of the Representative under this Agreement,
or (ii) any action taken or omitted to be taken in reliance upon any instrument
that the Representative shall in good faith believe to be genuine, to have been
signed or delivered by a proper person or persons and to conform with the
provisions of this Agreement.
(b) The Merger Consideration Recipients shall indemnify,
defend and hold harmless the Representative against, from and in respect of any
Adverse Consequence arising out of or resulting from the performance of such
Representative's duties hereunder or in connection with this Agreement (except
for Liabilities arising from the gross negligence, unlawful acts or willful
misconduct of the Representative).
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Public Announcements. Prior to the Closing Date, any
announcements or similar publicity with respect to this Agreement or the
transactions contemplated herein shall be at such time and in such manner as the
Company and Purchaser shall mutually agree; provided, that nothing herein shall
prevent either party upon notice to the other party from making such public
announcements as such party's counsel may consider advisable in order to satisfy
that party's legal obligations in such regard.
13.2 Post-Closing Deliveries. After the Closing, any monies,
checks, instruments, invoices, bills, receipts, notices, mail and other
communications received by one party but directed toward or due to another shall
be promptly delivered to the other party.
13.3 Notices. All notices or other communications required or
permitted by this Agreement shall be in writing and shall be deemed to have been
duly received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a business day and during
normal business hours of the recipient, and otherwise on the next business day
following transmission, (b) if given by certified or registered mail, return
receipt requested, postage prepaid, three business days after being deposited in
the U.S. mails and (c) if given by courier or other means, when received or
personally delivered, and, in any such case, addressed as follows:
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(i) if to Purchaser, Acquisition Sub or Surviving Company:
c/o Booth Creek, Inc.
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
Facsimile: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
(ii) if to the Company before the Closing:
Loon Mountain Recreation Corporation
XX #0, Xxx 00
Kancamagus Highway
Lincoln, New Hampshire 03251-9711
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Peabody & Xxxxx
000 Xxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
(iii) if to the Representative or the Merger
Consideration Recipients, after the Closing:
c/o Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
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with a copy to:
Peabody & Xxxxx
000 Xxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
or to such other addresses as may be specified by any such Person to the other
Person pursuant to notice given by such Person in accordance with the provisions
of this Section 13.3.
13.4 Assignment. No party may assign or transfer any or all of
its rights or obligations under this Agreement without the prior written
approval of all the other parties; provided, however, that Purchaser may assign
or transfer all (but not less than all) of its rights and obligations under this
Agreement (a) to any Person that is wholly-owned, directly or indirectly, by
Purchaser or (b) after the Closing, to any Person to whom Purchaser sells the
Business and substantially all of the Company's assets so long as such Person
agrees in a writing reasonably satisfactory in form and substance to the
Representative, prior to or contemporaneously with the acquisition, to be bound
by all of the terms and conditions hereof in respect to the Merger Consideration
Recipients; and, provided further, that Purchaser may collaterally assign its
rights hereunder to any Person or Persons providing financing to Purchaser in
connection with the transactions contemplated hereby.
13.5 Benefit of the Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement shall not be construed so as to
confer any right or benefit upon any Person or create any third party
beneficiary, other than the parties hereto and their respective successors and
permitted assigns.
13.6 Exhibits and Schedules. The Exhibits and Disclosure
Schedules hereto shall be construed with and as an integral part of this
Agreement to the same effect as if the contents thereof had been set forth
verbatim herein.
13.7 Headings. The headings used in this Agreement are for
convenience of reference only and shall not be deemed to limit, characterize or
in any way affect the interpretation of any provision of this Agreement.
13.8 Entire Agreement. This Agreement contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and no other representations, promises, agreements or understandings
regarding the subject matter hereof (including, without limitation, the Letter
of Intent which shall be deemed to be superseded and replaced hereby) shall be
of any force or effect unless in writing, executed by the party to be bound
thereby and dated on
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or after the date hereof; provided, however, that the Confidentiality and
Non-Disclosure Agreement dated May 6, 1997 between the Company and Booth Creek,
Inc. shall survive the execution and delivery hereof and shall only terminate on
the Closing Date.
13.9 Modifications and Waivers. No change, modification or
waiver of any provision of this Agreement shall be valid or binding unless it is
in writing, dated subsequent to the date hereof and signed by Purchaser,
Acquisition Sub and the Company. No waiver of any breach, term or condition of
this Agreement by any party shall constitute a subsequent waiver of the same or
any other breach, term or condition.
13.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.11 Severability. In case any one or more of the provisions
contained herein for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
13.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF DELAWARE.
13.13 Expenses. Except as otherwise expressly provided herein,
each party hereto shall pay all of its own costs and expenses incurred or to be
incurred in negotiating and preparing this Agreement (including, without
limitation, any legal fees, accounting fees, brokers fees, or other fees or
expenses) and in closing and carrying out the transactions contemplated by this
Agreement in each case, whether or not the Merger and the other transactions
contemplated hereby are consummated but subject to Section 11.2.
13.14 WAIVER OF JURY TRIAL. PURCHASER, THE COMPANY AND
ACQUISITION SUB EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED IN CONNECTION HEREWITH OR
HEREAFTER AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
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ARTICLE XIV
GUARANTEE
14.1 Guarantee. Purchaser hereby guarantees for the benefit of
the Company the performance by Acquisition Sub and the Surviving Company of all
of their obligations under Article II of this Agreement. The discharge,
termination or extinguishment of any undertakings and indemnifications of
Acquisition Sub for any reason including, without limitation, Acquisition Sub's
dissolution, liquidation or bankruptcy, shall not release Purchaser from its
obligations under this Section 14.1.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
PURCHASER: BOOTH CREEK SKI GROUP, INC.
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Title: Executive Vice President
-------------------------------
ACQUISITION SUB: LMRC ACQUISITION CORP.
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Title: Executive Vice President
-------------------------------
COMPANY: LOON MOUNTAIN RECREATION CORPORATION
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Title: President
--------------------------------
Acknowledged and Agreed to by the undersigned, as
Representative, who hereby agrees, subject to the approval of the holders of
Company Common Stock as set forth in Section 12.1 hereof, to act as
Representative in accordance with this Agreement.
/s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx, an individual
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