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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 23, 1996
(Date of earliest event reported)
Vail Resorts, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-9614 51-0291762
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
137 Benchmark Road
Avon, Colorado 81620
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(Address of principal executive offices) (Zip Code)
(970) 476-5601
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(Registrant's telephone number, including area code)
Gillett Holdings, Inc.
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
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On July 22, 1996, Vail Resorts, Inc. (the "Company"),
entered into a Stock Purchase Agreement (the "Purchase
Agreement") dated as of July 22, 1996, among Vail, Ralston
Foods, Inc. ("Foods") and Ralston Resorts, Inc. ("Resorts")
pursuant to which Vail will acquire from Foods the ski and
resort operations of Resorts (the Acquisition").
In connection with the Acquisition, Foods will
receive common stock of Vail constituting approximately 25% of
the outstanding Vail common stock and Vail will assume
$165,000,000 of the outstanding indebtedness of Resorts.
The closing of the Acquisition is subject to various
closing conditions, including the obtaining of financing
necessary for refinancing certain of the assumed indebtedness,
the continued accuracy of the representations and warranties
and the receipt of necessary government approvals including
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
For a more complete description of the Acquisition,
reference is hereby made to the Purchase Agreement (a copy of
which is filed as an exhibit hereto).
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
As of the date of filing of this Current Report on
Form 8-K, it is impracticable for the Registrant to
provide the financial statements required by this
Item 7(a). In accordance with Item 7(a)(4) of Form
8-K, such financial statements shall be filed by
amendment to this Form 8-K no later than 60 days
after the closing of the Acquisition.
(b) Pro Forma Financial Information
As of the date of filing of this Current Report on
Form 8-K, it impracticable for the Registrant to
provide the pro forma financial information required
by this Item 7(b). In accordance with Item 7(b) of
Form 8-K, such financial statements shall be filed by
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amendment to this Form 8-K no later than 60 days
after the closing of the Acquisition.
(c) Exhibits
2.1 Stock Purchase Agreement dated as of July 22,
1996, among the Company, Foods and Ralston.
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SIGNATURE
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Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
VAIL RESORTS, INC.
Dated: July 23, 1996 By: /s/ James S. Mandel
-----------------------------
Name: James S. Mandel
Title: Senior Vice President,
General Counsel and
Secretary
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EXHIBITS INDEX
Vail Resorts, Inc. Form 8-K
July 23, 1996
Exhibit Item Page
- ------------ ----
Stock Purchase Agreement by and among
Vail Resorts, Inc., Ralston Foods, Inc.,
and Ralston Resorts, Inc.......................... 6
CONFORMED COPY
STOCK PURCHASE AGREEMENT
AMONG
VAIL RESORTS, INC.,
RALSTON FOODS, INC.
AND
RALSTON RESORTS, INC.
July 22, 1996
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................... 1
ARTICLE II SALE AND PURCHASE OF RALSTON STOCK;
CERTAIN PRE-CLOSING AND POST-CLOSING
MATTERS
2.1 Sale and Purchase of Ralston Stock.............. 11
2.2 Purchase Price.................................. 11
2.3 Post-Closing Adjustments........................ 11
2.4 Vail Dividend................................... 13
ARTICLE III FOODS' REPRESENTATIONS AND WARRANTIES
3.1 Ralston Stock................................... 13
3.2 Rights To Acquire Ralston Stock................. 13
3.3 Transfer of the Ralston Stock................... 13
3.4 Corporate Standing of Foods..................... 14
3.5 Authority of Foods.............................. 14
3.6 Corporate Standing.............................. 15
3.7 Authority of Ralston............................ 15
3.8 Qualifications To Do Business................... 16
3.9 Capital Stock of Subsidiaries................... 16
3.10 Corporate and Stock Transfer
Records...................................... 16
3.11 Employee Loans and Other Employee
Interests in Ralston......................... 17
3.12 Ralston Financial Statements; No
Material Adverse Change...................... 17
3.13 Conduct of Business............................. 17
3.14 Dividends....................................... 19
3.15 Absence of Undisclosed Liabilities.............. 19
3.16 Title to Property............................... 20
3.17 Real Property................................... 20
3.18 Personal Property............................... 23
3.19 Litigation and Claims........................... 24
3.20 Compliance with Laws............................ 24
3.21 Orders and Consent Decrees...................... 24
3.22 Labor Agreements................................ 24
3.23 Employees....................................... 25
3.24 Contracts....................................... 25
3.25 Validity of Material Contracts.................. 26
3.26 Trademarks and Copyrights....................... 27
3.27 Powers of Attorney.............................. 28
3.28 Taxes........................................... 28
3.29 Employee Benefit Plans.......................... 30
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Page
3.30 Environmental Matters........................... 32
3.31 Liability and Casualty Insurance................ 33
3.32 Consents or Approvals........................... 33
3.33 Transaction Fees................................ 34
3.34 Bank Accounts................................... 34
3.35 Ownership of Ralston Stock;
Ralston Assets............................... 34
3.36 Vail Stock Acquired For Foods'
Account...................................... 34
3.37 United States Forest Service.................... 35
3.38 Passenger Tramway............................... 35
3.39 Clean Water Act................................. 36
3.40 Keystone/Intrawest L.L.C........................ 37
3.41 Water Rights.................................... 40
ARTICLE IV VAIL'S REPRESENTATIONS AND WARRANTIES
4.1 Capital Stock................................... 41
4.2 Transfer of the Vail Stock...................... 41
4.3 Authority of Vail............................... 41
4.4 Corporate Standing.............................. 42
4.5 Qualifications To Do Business................... 42
4.6 Capital Stock of Subsidiaries................... 43
4.7 Corporate Records............................... 43
4.8 Employee Loans and Other Employee
Interests in Vail............................ 43
4.9 Vail Financial Statements; No
Material Adverse Change...................... 44
4.10 Conduct of Business............................. 44
4.11 Dividends....................................... 46
4.12 Absence of Undisclosed Liabilities.............. 46
4.13 Title to Property............................... 46
4.14 Real Property................................... 46
4.15 Personal Property............................... 49
4.16 Litigation and Claims........................... 50
4.17 Compliance with Laws............................ 50
4.18 Orders and Consent Decrees...................... 50
4.19 Labor Agreements................................ 50
4.20 Employees....................................... 50
4.21 Contracts....................................... 51
4.22 Validity of Material Contracts.................. 52
4.23 Trademarks and Copyrights....................... 52
4.24 Powers of Attorney.............................. 53
4.25 Taxes........................................... 53
4.26 Employee Benefit Plans.......................... 56
4.27 Environmental Matters........................... 58
4.28 Liability and Casualty Insurance................ 58
4.29 Consents or Approvals........................... 59
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Page
4.30 Transaction Fees................................ 59
4.31 Ralston Stock Acquired for Vail's
Account...................................... 59
4.32 United States Forest Service.................... 59
4.33 Passenager Tramway.............................. 60
4.34 Clean Water Act................................. 61
4.35 Water Rights.................................... 61
4.36 Financing Commitment............................ 61
ARTICLE V - COVENANTS PENDING CLOSING
5.1 Ralston Operations.............................. 61
5.2 Vail Operations................................. 66
5.3 Due Diligence Review............................ 67
5.4 Insurance....................................... 68
5.5 Public Announcements............................ 68
5.6 Hart-Scott-Rodino Filing; Investi-
gations or Litigation........................ 68
5.7 No Solicitation................................. 69
5.8 Audit of Ralston Financial State-
ments; Delivery of Additional
Financial Statements......................... 69
5.9 Supplemental Disclosure......................... 70
5.10 Real Property Transfer Laws..................... 71
5.11 Cooperation..................................... 70
5.12 Foods Receivables and Payables.................. 71
5.13 Environmental Surveys........................... 71
5.14 Affiliate Guarantors............................ 71
5.15 Notice of Certain Transactions.................. 71
5.16 Guarantee Fees.................................. 72
ARTICLE VI - CONDITIONS TO CLOSING
6.1 Conditions of Vail.............................. 72
6.2 Conditions of Foods............................. 74
6.3 Hart-Scott-Rodino............................... 74
6.4 No Litigation................................... 74
6.5 Material Change in Market
Circumstances................................ 75
ARTICLE VII - THE CLOSING
7.1 Place of Closing................................ 75
7.2 Date of Closing................................. 75
7.3 Effective Time of Closing....................... 75
7.4 Delivery of Closing Documents................... 75
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Page
ARTICLE VIII - CLOSING TRANSACTIONS
8.1 Transfer of Ralston Stock....................... 76
8.2 Delivery of Vail Stock.......................... 76
8.3 Receipt......................................... 76
8.4 Opinion of Counsel of Foods..................... 76
8.5 Opinion of Counsel of Vail...................... 78
8.6 Good Standing Certificates...................... 80
8.7 Corporate Resolutions of Foods.................. 80
8.8 Corporate Resolutions of Vail................... 80
8.9 Certificate of Foods............................ 80
8.10 Certificate of Vail............................. 81
8.11 Shareholder Agreement........................... 81
8.12 Resignation of Ralston Corporate
Officers..................................... 81
8.13 Consents........................................ 81
8.14 Ancillary Documents............................. 81
ARTICLE IX - ADDITIONAL COVENANTS
9.1 Commissions and Fees............................ 81
9.2 Costs and Expenses.............................. 82
9.3 Bank Accounts................................... 82
9.4 Business Relationships.......................... 83
9.5 Insurance Proceeds.............................. 83
9.6 Further Action.................................. 83
9.7 Records......................................... 84
9.8 Employee Benefit Plan Matters................... 84
9.9 Confidentiality Agreement....................... 86
9.10 Tax Election.................................... 87
9.11 Resale of Ralston Stock......................... 87
9.12 Non-Competition................................. 87
ARTICLE X - INDEMNIFICATION
10.1 Indemnification of Vail......................... 88
10.2 Indemnification of Foods........................ 88
10.3 Indemnification Procedure....................... 89
10.4 Third Party Claims.............................. 89
10.5 Tax Indemnification............................. 90
10.6 Limitation of Indemnification................... 91
10.7 Procedures Relating to Indemnifi-
cation of Tax Claims......................... 91
10.8 Survival of Representations and
Warranties................................... 93
10.9 Survival of Indemnities......................... 93
10.10 Transfer Taxes.................................. 93
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Page
10.11 Return Filings, Refunds and
Credits...................................... 94
10.12 Refunds from Carrybacks......................... 95
10.13 Termination of Tax Sharing
Agreements................................... 95
10.14 Payments........................................ 95
ARTICLE XI - TERMINATION
11.1 Mutual Consent.................................. 96
11.2 Obligation To Close............................. 96
11.3 Final Closing Date.............................. 96
11.4 Obligations After Termination................... 96
ARTICLE XII - MISCELLANEOUS PROVISIONS
12.1 Entire Agreement................................ 96
12.2 Effect of Supplemental Information.............. 96
12.3 Choice of Law................................... 97
12.4 Venue........................................... 97
12.5 Notices......................................... 97
12.6 Effective Date of Notice........................ 98
12.7 Amendments...................................... 99
12.8 Gender and Number............................... 99
12.9 Assignments..................................... 99
12.10 Headings and Captions........................... 99
12.11 Schedules and Exhibits.......................... 99
12.12 Severability.................................... 99
12.13 Counterparts.................................... 99
12.14 Remedies........................................ 100
12.15 Third-Party Beneficiaries....................... 100
12.16 Binding Agreement............................... 100
Exhibit A - Shareholder Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 22nd day of July, 1996, by and among Vail Resorts, Inc., a Delaware
corporation ("Vail"), Ralston Foods, Inc., a Nevada corporation ("Foods"), and
Ralston Resorts, Inc., a Colorado corporation ("Ralston").
WHEREAS, Foods is the owner of all the issued and outstanding capital
stock of Ralston; and
WHEREAS, Foods desires to sell all of the capital stock of Ralston to
Vail in accordance with the terms and subject to the conditions of this
Agreement; and
WHEREAS, Vail desires to purchase all of the capital stock of Ralston
in accordance with the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and subject to the terms and conditions of this Agreement,
Foods and Vail agree as follows:
ARTICLE I
DEFINITIONS
"Active Ralston Employee" shall have the meaning given it in Section
9.8(a).
"Adjusted Balance Sheet" shall mean the Ralston balance sheet as of
June 30, 1996, adjusted to remove the Excluded Assets, as set forth on Schedule
1.1.
"Affiliate" shall have the meaning given in the Shareholder Agreement.
"Affiliated Group" shall have the meaning given to it in Section
3.28(a).
"ANSI" shall have the meaning given it in Section 3.38(b).
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"Business Day" shall mean any day other than a Saturday, Sunday or
legal holiday for commercial banks in New York City or St. Louis, Missouri.
"Clean Water Act" shall have the meaning given it in Section 3.39(a).
"Closing" shall mean the consummation of the transactions
contemplated by this Agreement.
"Closing Contribution Adjustment" shall mean the lesser of (A) (i) the
Contribution Adjustment of Ralston for the period from August 1, 1996 through
the Closing Date, less (ii) the amount, if any, by which $6,676,000 exceeds the
Contribution Adjustment of Ralston for the period from July 1, 1996 through July
31, 1996; and (B) the greater of (x) $18,000,000 and (y) the amount set forth in
the certificate of an officer of Foods delivered pursuant to Section 6.1(k).
"Closing Date" shall mean the fifth Business Day after the date on
which the last to be received of all authorizations, approvals, consents,
permits and licenses from governmental and regulatory bodies and third parties
set forth in this Agreement that are conditions to the consummation of the
transactions contemplated hereby have been obtained.
"Closing Date Statements" shall have the meaning given it in Section
2.3(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
"Confidentiality Agreement" shall mean, collectively, (i) the
Confidentiality Agreement dated March 19, 1996 between Ralcorp Holdings, Inc.
and Apollo Advisors, L.P. and (ii) the Confidentiality and Exclusivity Agreement
dated May 16, 1996, as supplemented by a letter agreement dated July 10, 1996,
between Ralcorp Holdings, Inc. and Apollo Advisors, L.P.
"Contribution Adjustment" shall mean for any period (i) the Net
Investment during such period, less (ii) EBITDA for such period, plus (iii) Net
Assets on the last day of such period, less (iv) Net Assets on the first day of
such period.
"Contribution Agreement" shall mean the Contribution Agreement between
Ralston and Intrawest, dated February 7, 1994.
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"Corporate Officers" of Ralston are Ingrid Keiser, Howard Maves, Joe
R. Micheletto, John Rutter and Brian Smith; and of Vail are Andrew P. Daly,
Gerald E. Flynn, James S. Mandel, J. Kent Myers and Christopher P. Ryman.
"CPTSB" shall have the meaning given it in Section
3.38(a).
"EBITDA" shall mean for any period (i) earnings before interest and
taxes, plus (ii) depreciation and amortization expense, plus (iii) other
non-cash charges (including, but not limited to, losses on sale of assets, write
down of assets or extraordinary charges), plus (iv) losses related to the LLC or
other investments, less (v) income related to the LLC or other investments. All
terms shall be calculated for Ralston and its subsidiaries on a consolidated
basis according to GAAP.
"Employee Benefit Plans" shall mean all employee benefit plans as such
term is defined in Section 3(3) of ERISA, but excluding all pension and welfare
plans which are Multiemployer Plans or are otherwise maintained pursuant to a
collective bargaining agreement and to which more than one employer contributes
and any other deferred compensation, stock option, restricted stock or unit,
performance share or unit, bonus, vacation, severance, sick leave or other
welfare or incentive plan.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, liens, notices of noncompliance
or violation, investigations or proceedings relating to any Environmental Law or
Environmental Permit including, without limitation, (a) any demands or claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response or remedial action, (b) any demands or claims for damages pursuant to
any applicable Environmental Law, and (c) any demands or claims by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from any Hazardous Substance.
"Environmental Law" shall mean the following federal laws (including
related regulations) and all Colorado state or local equivalents thereof: The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986; the
Emergency Planning and Community Right-to-Know Act; the Resource Conservation
and Recovery Act; the Federal Water
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Pollution Control Act; the Clean Air Act; the Clean Water Act; the
Safe Drinking Water Act; the Toxic Substances Control Act; the Oil Pollution Act
of 1990; and the Hazardous Materials Transportation Act.
"Environmental Permit" shall mean a permit, identification number,
license or other written authorization required under any applicable
Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and all regulations promulgated thereunder.
"ERISA Affiliate" shall mean with respect to a party, (a) any entity
that is (or at any relevant time was) a member of a "controlled group of
corporations" with or under "common control" with such party (as such terms are
defined in Section 414(b) and (c) of the Code), or (b) any entity that is (or at
any relevant time was) a member of an "affiliated service group" (as such term
is defined in Section 414(m) of the Code) that includes such party.
"Excluded Assets" means those assets set forth on Schedule 1.1 as the
"Excluded Assets."
"Foods Affiliates" shall have the meaning given it in Section 9.12.
"GAAP" shall mean accounting principles which are (a) consistent with
the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect from time to time, and (b) applied on a
basis consistent with prior periods.
"Hart-Scott-Rodino" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and all regulations promulgated
thereunder.
"Hazardous Substances" shall mean: (a) any chemical, material or
substance defined as, or included in the definition of, "hazardous substances,"
"hazardous wastes," "hazardous materials," "toxic substances or toxic
pollutants," "contaminants," "toxic or hazardous chemicals" or "pesticides" in
any applicable Environmental Law, or (b) any petroleum or petroleum product or
asbestos-containing materials in a condition that would pose an imminent danger
to public health.
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"Income Tax" or "Income Taxes" shall mean any tax or taxes imposed or
based on income, including, but not limited to, any income, environmental,
minimum or franchise tax based on income, alternative net worth tax or single
business tax, imposed by any foreign, federal, state, county or local
government, or any subdivision or agency thereof, and any interest, penalty or
expense relating to such taxes.
"Indebtedness" shall mean (i) any liability, contingent or otherwise,
of Ralston or any of its subsidiaries (A) for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of Ralston or any of its
subsidiaries or only to a portion thereof) or (B) evidenced by a note, debenture
or similar instrument or letter of credit (including a purchase money obligation
or other obligation relating to the deferred purchase price of property and
trade payables that are more than 30 days past due); (ii) any liability of
others of the kind described in the preceding clause (i) which Ralston or any of
its subsidiaries has guaranteed or which is otherwise its legal liability; (iii)
any obligation secured by a lien to which the property or assets of Ralston or
any of its subsidiaries are subject, whether or not the obligations secured
thereby shall have been assumed by it or shall otherwise be its legal liability;
(iv) all capitalized lease obligations of Ralston or any of its subsidiaries;
and (v) any liability of Ralston or any of its subsidiaries for debt owing to
the National Bank of Australia relating to the Conference Center. For purposes
of this definition of Indebtedness, Indebtedness of the LLC shall not be
considered Indebtedness of Ralston or any of its subsidiaries unless Ralston or
any of its subsidiaries has guaranteed or otherwise become liable with respect
to such Indebtedness (other than by virtue of the pledge of the Option Land).
"Intrawest" shall mean Intrawest Resorts, Inc., a Delaware
Corporation.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" or "best knowledge" shall mean, when used in connection
with the representations and warranties and covenants herein, the knowledge,
after reasonable inquiry of the relevant facts and circumstances, of the
applicable party's Corporate Officers and not any other employees of the party
making the representation or warranty or covenant.
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"LLC" shall mean the Keystone/Intrawest Limited Liability Company
formed pursuant to the LLC Agreement.
"LLC Agreement" shall mean the Limited Liability Company Agreement
between Ralston and Intrawest, dated February 7, 1994.
"Loss" shall mean any liability, loss, damage, assessment, obligation,
settlement payment, award, fine, penalty, judgment, cost or expense, including
reasonable attorneys' fees, auditors' fees and experts' fees (but excluding
punitive damages that may be imposed on or against the indemnified party because
of its egregious conduct after the Closing), suffered by a party hereto,
including expenses related to investigating, defending and settling
indemnifiable claims, but net of any insurance proceeds received by the injured
party with respect to a Loss.
"Management Agreement" shall mean the Real Estate Development
Management Services Agreement between Intrawest and the LLC, dated February 7,
1994.
"Material Adverse Change" shall mean, with respect to a party, any
event, occurrence or change or effect that is materially adverse to the
business, operations, results of operations or condition (financial or
otherwise) or prospects of such party and its subsidiaries, taken as a whole.
"Multiemployer Plan" shall mean, with respect to a party, any
"multiemployer plan" as defined in Section 3(37) of ERISA that such party or any
ERISA Affiliate of such party contributes to or is required to contribute to, or
under which such party or any ERISA Affiliate of such party may incur any
liability.
"Net Assets" shall mean (i) current assets (excluding cash and cash
equivalents and any Excluded Assets), less (ii) total liabilities (excluding any
liabilities which would be included in the definition of Total Ralston
Indebtedness or liabilities to Foods or any of its Affiliates). All terms shall
be calculated for Ralston and its subsidiaries on a consolidated basis according
to GAAP.
"Net Investment" shall mean for any period (i) additions to property,
plant and equipment, plus (ii) cash investments in or loans to the LLC, plus
(iii) acquisitions for cash of real estate held for sale, less (iv) the proceeds
from
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the sale or disposal of any non-current assets (including real estate
held for sale and property, plant and equipment), less (v) cash received from
the LLC or any other investment. All terms shall be calculated for Ralston and
its subsidiaries on a consolidated basis according to GAAP.
"Notice of Claim" shall mean a written notice delivered by a party
claiming a right of indemnification to a party that would be required to
indemnify an injured party or hold such injured party harmless in accordance
with the terms of this Agreement.
"Option Land" shall mean the "option land" as defined in the LLC
Agreement.
"Permitted Debt Level" shall mean $165,000,000.
"Permitted Encumbrances" shall mean, collectively: (a) liens for
Taxes, fees, levies, duties or other governmental charges of any kind which are
not yet delinquent or are being contested in good faith by appropriate
proceedings; or (b) liens that arise by operation of law for work performed or
materials supplied to any of the real properties owned by Ralston or any of its
subsidiaries after the date hereof; or (c) easements, rights-of-way,
restrictions and covenants, none of which (a) through (c) above, individually or
in the aggregate, would be material as to the particular site or asset in
question as it relates to its current or presently intended use.
"Pre-Closing Tax Period" shall have the meaning given it in Section
10.5(a).
"Ralcorp" means Ralcorp Holdings, Inc., a Delaware corporation.
"Ralston Budget" means the 1996-1997 Ralston Budget (which includes
details as to estimated operating cash flow and capital expenditures for the
period commencing with July 1, 1996 and ending with December 31, 1996 on a
month-to-month basis) as set forth on Schedule 1.1(a) hereto.
"Ralston Employee" shall mean an individual who (a) is employed by
Ralston or any of its subsidiaries on the date of the Closing, or (b) was
employed by Ralston or any of its subsidiaries immediately prior to his or her
retirement or other termination of employment prior to the date of the
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Closing, or (c) is, as of the Closing, on any approved leave of
absence from employment with Ralston or any of its subsidiaries, including, but
not limited to, leave due to disability.
"Ralston Employee Benefit Plans" has the meaning given it in Section
3.29(a).
"Ralston Financial Statements" shall mean (i) the unaudited
consolidated balance sheets of Ralston as of September 30, 1994 and September
30, 1995, the consolidated statements of earnings and cash flow for the years
ended September 30, 1993, 1994 and 1995, the unaudited consolidated balance
sheet of Ralston as of June 30, 1996 and the consolidated statement of earnings
and cash flow for the nine months ended June 30, 1996, and (ii) any other
financial statements of Ralston delivered to Vail pursuant to Section 5.8(b).
"Ralston Leased Property" shall have the meaning given it in Section
3.17(a).
"Ralston Participant" shall mean any Ralston Employee, or a dependent,
beneficiary or alternate payee of a Ralston Employee, who, on the date of
Closing, was participating in, or was otherwise entitled to benefits from, an
Employee Benefit Plan maintained for Ralston Employees by Ralston or Foods or
Ralcorp or one of their Affiliates.
"Ralston Stock" shall mean all of the outstanding common stock of
Ralston, par value $10.00 per share.
"Retirement Plan" shall have the meaning given it in Section 9.8(b).
"Savings Plan" shall have the meaning given it in Section 9.8(b).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act of 1933" shall mean the Securities Act of 1933, as
amended, and all regulations promulgated thereunder.
"Shareholder Agreement" means the Shareholder Agreement, substantially
in the form of Exhibit A hereto, among Foods, Vail and Apollo Ski Partners, L.P.
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"Straddle Period" shall have the meaning given it in Section 10.5(c).
"Tax" or "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including without limitation all federal, state, local or foreign
net income, gross income, gross receipts, license, payroll, employment, excise,
severance, stamp, documentary, occupation, windfall profits, environmental
(including Taxes under Section 59A of the Code), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, estimated alternative or add-on minimum or other tax,
fee, assessment or charge of any kind whatsoever and shall include all interest
or penalties on Taxes, additions to tax or additional amounts imposed by any
taxing authority (domestic or foreign), whether or not disputed.
"Tax Claim" shall have the meaning given it in Section 10.7(a).
"Tax Indemnified Party" shall have the meaning given it in Section
10.7(a).
"Tax Indemnifying Party" shall have the meaning given it in Section
10.7(a).
"Tax Notice" shall have the meaning given it in Section 10.7(a).
"Tax Return" shall mean a return, declaration, report, claim for
refund or information return relating to Taxes including, without limitation,
any statement, information or documentation required to be provided to any
taxing authority with respect to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
"Tax Sharing Agreements" shall have the meaning given it in Section
10.13.
"Total Ralston Indebtedness" shall mean, as of any date, the sum of
the aggregate principal amount of and accrued interest on Indebtedness of
Ralston and its subsidiaries as of such date.
"Uncleared Ralston Checks" shall have the meaning given it in Section
9.3(b).
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"USFS" and "USFS Permits" shall have the meanings given in Section
3.37(a).
"Vail Dividend" shall mean the distribution to the then existing
shareholders of Vail made prior to the Closing of the right to receive up to $55
million in cash at one or more times prior to or subsequent to the Closing Date.
"Vail Employee" shall mean an individual who (a) is employed by Vail
or any of its subsidiaries on the date of the Closing, or (b) was employed by
Vail or any of its subsidiaries immediately prior to his or her retirement or
other termination of employment prior to the date of the Closing, or (c) is, as
of the Closing, on any approved leave of absence from employment with Vail or
any of its subsidiaries, including, but not limited to, leave due to disability.
"Vail Employee Benefit Plans" shall have the meaning given it in
Section 4.26(a).
"Vail Financial Statements" shall mean (i) the consolidated balance
sheet of Vail as of September 30, 1995 and September 30, 1994, and the related
statements of earnings and cash flow for the year ended September 30, 1995 and
September 30, 1994 and the period from October 9, 1992 through September 30,
1993, as audited by Arthur Andersen LLP, (ii) the consolidated balance sheet of
Vail as of April 30, 1996 and the related statement of earnings and cash flow
for the seven months ended April 30, 1996 and (iii) any other financial
statements of Vail delivered to Foods pursuant to Section 5.8(d).
"Vail Leased Property" shall have the meaning given it in Section
4.14(a).
"Vail Stock" shall mean the Common Stock, $.01 par value, of Vail.
"Ventures" shall have the meaning given it in Section 3.9.
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ARTICLE II
SALE AND PURCHASE OF RALSTON STOCK;
CERTAIN PRE-CLOSING AND POST-CLOSING MATTERS
2.1 Sale and Purchase of Ralston Stock. Upon the terms and subject to
the conditions contained in this Agreement, in reliance upon the
representations, warranties and agreements contained in this Agreement and in
consideration of the payment of the purchase price as provided in Section 2.2
below, on the date of the Closing, Foods shall sell, transfer, convey, assign
and deliver to Vail, or its nominee, all of the issued and outstanding shares of
Ralston Stock.
2.2 Purchase Price. Upon the terms and subject to the conditions
contained in this Agreement, in reliance upon the representations, warranties
and agreements contained in this Agreement and in consideration of the aforesaid
sale, transfer, conveyance, assignment and delivery of the outstanding shares of
Ralston Stock, on the date of the Closing, Vail will deliver to Foods, or its
nominee, 3,777,203 shares of Vail Stock.
2.3 Post-Closing Adjustments.
(a) Within 30 days after the Closing Date, Ralston shall deliver to
Foods and Vail (i) an audited consolidated balance sheet of Ralston as of the
Closing Date, (ii) an audited consolidated income statement and statement of
cash flows of Ralston for the period from July 1, 1996 to the Closing Date, and
(iii) a statement from Price Waterhouse, the independent auditors of Ralston,
setting forth the calculation of Total Ralston Indebtedness and the Closing
Contribution Adjustment (collectively, the "Closing Date Statements").
(b) Vail and Foods shall have 30 days to review the Closing Date
Statements after receipt thereof. Unless Vail or Foods deliver written
notice to the other party on or prior to the 30th day after receipt of the
Closing Date Statements of Vail's or Foods' objection to the Closing Date
Statements and specifying in reasonable detail all disputed items and the basis
therefor, Vail and Foods shall be deemed to have accepted and agreed to the
Closing Date Statements. If Vail or Foods so notify Ralston of their objection
to the Closing Date Statements, Vail and Foods shall, within 30 days following
such notice (the "Resolution Period"), attempt to resolve their
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differences, and any resolution by them as to any disputed amounts
shall be final, binding and conclusive.
(c) If, at the conclusion of the Resolution Period, any amounts remain
in dispute, then all such amounts remaining in dispute shall be submitted to
Deloitte & Touche LLP (the "Neutral Auditors"). Each of Vail, Foods and Ralston
agrees to execute, if requested by the Neutral Auditors, a reasonable engagement
letter. In the event that Vail, Foods and Ralston are unable to engage the
Neutral Auditors within five days after the conclusion of the Resolution Period
then they shall engage KPMG Peat Marwick LLP to act as alternative neutral
auditors (the "Alternative Neutral Auditors"). All fees and expenses relating to
the work, if any, to be performed by the Neutral Auditors or the Alternative
Neutral Auditors, as the case may be, shall be borne (i) 50% by Vail and (ii)
50% by Foods. The Neutral Auditors or the Alternative Neutral Auditors, as the
case may be, shall act as an arbitrator to determine, based solely on
presentations by Vail and Foods, and not by independent review, only those
issues still in dispute. Vail and Foods shall use their reasonable best efforts
to cause the determination of the Neutral Auditors or the Alternative Neutral
Auditors, as the case may be, to be made within 30 days of submission as
provided above, whether or not such presentation by Foods and Vail have been
made within such period and shall be set forth in a written statement delivered
to Foods and Vail and shall be final, binding and conclusive.
(d) To the extent that the amount of Total Ralston Indebtedness
exceeds or is less than the Permitted Debt Level on the Closing Date, Foods will
promptly pay to Vail, upon its demand, an amount equal to such excess (or Vail
will promptly pay to Foods, upon its demand, an amount equal to such deficiency)
in immediately available funds.
(e) Prior to Closing, Ralston shall (i) incur third party Indebtedness
in an amount not exceeding the Permitted Debt Level less the principal amount of
third party Indebtedness of Ralston outstanding at such time (the "Foods
Dividend Amount") and (ii) shall dividend the Foods Dividend Amount to Foods
prior to Closing (the "Foods Dividend"). On the Closing Date, Vail shall repay
in full the third party Indebtedness incurred by Ralston to pay the Foods
Dividend so that Foods and its Affiliates are unconditionally released from any
guarantee of said Indebtedness. In addition, prior to Closing, Ralston shall
distribute to Foods the Excluded Assets.
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(f) Within 10 days after the Closing Date Statements have been agreed
to or have become final, Vail will deliver to Foods, or its nominee, a number of
shares of Vail Stock equal to the excess, if any, of (a) the number obtained by
dividing the Closing Contribution Adjustment by the amount set forth on Schedule
2.3(e) over (b) 96,120.
2.4 Vail Dividend. Prior to the Closing, Vail shall declare the Vail
Dividend to its then existing shareholders (and Foods shall not be entitled to
any participation therein).
ARTICLE III
FOODS' REPRESENTATIONS AND WARRANTIES
Foods represents and warrants that:
3.1 Ralston Stock. The Ralston Stock is the only authorized class of
capital stock of Ralston. There are 100 shares of Ralston Stock authorized and
100 shares outstanding. All outstanding shares of Ralston Stock are duly
authorized, validly issued, fully paid and non-assessable. There are no options,
warrants, calls or agreements of any character for the issuance of additional
shares of Ralston Stock. There are no contracts for the authorization or
issuance of any other class of securities of Ralston, and there are no
outstanding securities convertible or exchangeable into Ralston Stock.
3.2 Rights To Acquire Ralston Stock. Neither Foods nor Ralston or any
of its subsidiaries is a party to any agreement or understanding, oral or
written, which (a) grants an option or other right to acquire any of the Ralston
Stock or any other equitable interest in Ralston, (b) grants a right of first
refusal or other such similar right upon the sale of any of the Ralston Stock,
or (c) restricts or affects the voting rights of any of the Ralston Stock.
3.3 Transfer of the Ralston Stock. The stock certificate(s)
representing all of the outstanding shares of Ralston Stock to be delivered to
Vail, or its nominee, at the Closing, and the signatures or endorsements thereon
(or on stock powers delivered therewith), when duly executed, shall be valid and
genuine, and shall transfer to and vest in Vail, or its nominee, good, valid,
marketable and indefeasible title to all of the outstanding shares of the
Ralston Stock, subject to
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no lien, security interest or other encumbrance on the Ralston Stock.
Upon the transfer of the Ralston Stock contemplated hereby, Vail will own the
entire equity interest in Ralston.
3.4 Corporate Standing of Foods. Foods is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri. The execution and delivery of this Agreement, and such other
agreements, instruments and documents required to be executed by Foods in
connection herewith, do not, and the consummation of the transactions
contemplated herein and therein will not, conflict with, or result in any
violation of, breach of or default (with or without notice or lapse of time)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a benefit under, (a) any provision of the Articles
of Incorporation or bylaws of Foods, or (b) except as set forth on Schedule 3.4,
any loan or credit agreement, note, bond, mortgage, indenture, lease, contract,
judgment, order, decree, writ or injunction to which Foods is a party, or by
which it or its properties or assets are bound, or result in the creation or
imposition of any lien upon any such properties or assets.
3.5 Authority of Foods.
(a) Foods has taken all action required by its Articles of
Incorporation and its bylaws to authorize the execution and delivery of this
Agreement, and such other agreements, instruments and documents required to be
executed by Foods in connection herewith, and the performance of the
transactions contemplated herein and therein. Foods has all requisite corporate
power and authority to authorize the execution and delivery of this Agreement,
and such other agreements, instruments and documents required to be executed in
connection herewith, to consummate the transactions contemplated herein and
therein, and to take all other actions required to be taken by Foods pursuant to
the provisions hereof. This Agreement, and such other agreements, instruments
and documents required to be executed in connection herewith, when duly executed
and delivered, shall constitute a valid and binding obligation of Foods
enforceable in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
(b) No approvals on the part of any class (whether voting together or
as separate classes) of Foods' shareholders
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are necessary to authorize this Agreement or any other agreements,
instruments and documents required to be executed in connection herewith, or the
transactions contemplated herein or therein.
3.6 Corporate Standing. Each of Ralston and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the corporate power and
authority to own its property and assets and to carry on its business in the
same manner as now being conducted. The execution and delivery of this
Agreement, and such other agreements, instruments and documents required to be
executed by Ralston in connection herewith, do not, and the consummation of the
transaction contemplated herein and therein will not, conflict with, or result
in any violation of, breach of or default (with or without notice or lapse of
time or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a benefit under, (a) any provision
of the Articles of Incorporation or bylaws of Ralston or any of its
subsidiaries, or (b) except as set forth on Schedule 3.6 hereto, any loan or
credit agreement, note, bond, mortgage, indenture, lease, contract, agreement,
instrument or permit, judgment, order, decree, writ or injunction to which
Ralston or any of its subsidiaries is a party, or by which it or any of its
subsidiaries or its or any of its subsidiaries' properties or assets are bound,
or result in the creation or imposition of any lien upon any of such properties
or assets.
3.7 Authority of Ralston. Ralston has taken all action required by its
Articles of Incorporation and its by-laws to authorize the execution and
delivery of this Agreement, and such other agreements, instruments and documents
required to be executed by Ralston in connection herewith, and the performance
of the transactions contemplated herein and therein. Ralston has all requisite
corporate power and authority to authorize the execution and delivery of this
Agreement, and such other agreements, instruments and documents required to be
executed in connection herewith, to consummate the transactions contemplated
herein and therein, and to take all other actions required to be taken by
Ralston pursuant to the provisions hereof. This Agreement, and such other
agreements, instruments and documents required to be executed in connection
herewith, when duly executed and delivered, shall constitute a valid and binding
obligation of Ralston enforceable in accordance with its terms except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization,
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moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
3.8 Qualifications To Do Business. Each of Ralston and its
subsidiaries is duly qualified and in good standing as a foreign corporation and
authorized to do business in each jurisdiction set forth on Schedule 3.8 hereto.
Each of Ralston and its subsidiaries is qualified and in good standing in every
other jurisdiction in which the ownership of its property or the conduct of its
business requires it to be qualified to do business, except in those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, result in a Material Adverse Change on Ralston.
3.9 Capital Stock of Subsidiaries. The only direct or indirect
subsidiaries of Ralston are those listed on Schedule 3.9. hereto. Except as set
forth on Schedule 3.9 hereto, Ralston is directly or indirectly the record and
beneficial owner of all of the outstanding shares of capital stock of each of
its subsidiaries, there are no proxies with respect to such shares, and no
equity securities of any of such subsidiaries are or may be required to be
issued by reason of any options, warrants, scrip, rights to subscribe for, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any such subsidiary is bound to issue additional shares of
its capital stock or securities convertible into or exchangeable for such
shares. Other than as set forth on Schedule 3.9 hereto, all of such shares so
owned by Ralston are validly issued, fully paid and nonassessable and are owned
by it free and clear of any claim, lien or encumbrance of any kind with respect
thereto. Except as disclosed on Schedule 3.9 hereto, Ralston does not directly
or indirectly own any interest in any corporation, partnership, joint venture or
other business association or entity. For purposes of this Section 3.9, the LLC,
Clinton Ditch & Reservoir Company, Ski the Summit and Starfire Ventures
(collectively, the "Ventures") shall each be considered a subsidiary of Ralston.
3.10 Corporate and Stock Transfer Records. True and correct copies of
the Articles of Incorporation and bylaws of Ralston have previously been
delivered to Vail. All minutes of Ralston contained in the minute books of
Ralston accurately reflect the substance of all actions taken by shareholders of
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Ralston and Ralston's Board of Directors. The Ralston Stock transfer
register is true, complete, correct and current.
3.11 Employee Loans and Other Employee Interests in Ralston. Except as
set forth on Schedule 3.11, there are no outstanding loans by or to Ralston or
any of its subsidiaries to or from any Ralston Employee, other than (a)
emergency loans which do not exceed $10,000 in the aggregate, and none of which
exceed $1,000 individually, (b) housing loans which do not exceed $10,000 in the
aggregate, and none of which exceed $1,000 individually, (c) ordinary travel
advances or (d) employee charges not exceeding $5,000 individually, and $50,000
in the aggregate. Except as set forth on Schedule 3.11, no Ralston Employee
currently employed has any material interest, direct or indirect, in any lease
or contract of Ralston.
3.12 Ralston Financial Statements; No Material Adverse Change. Except
as set forth on Schedule 3.12, the Ralston Financial Statements present fairly,
in all material respects, the consolidated financial position and results of
operations of Ralston and its subsidiaries as of the dates thereof, all in
conformity with GAAP applied on a consistent basis, except as set forth in the
notes to those financial statements, and EBITDA of Ralston and its subsidiaries
(excluding the Ventures) is at least $42,921,000 for the nine months ended June
30, 1996. Since June 30, 1996, there has not occurred a Material Adverse Change
of Ralston, or any event that, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Change of Ralston.
Neither this Section 3.12 nor any other Section in this Agreement shall be
construed as a representation or warranty as to the accuracy or attainability of
budgets or projections relating to or reflecting the business of Resorts.
3.13 Conduct of Business. Except as and to the extent set forth on
Schedule 3.13, since June 30, 1996, Foods on behalf of Ralston and its
subsidiaries has not, and Ralston and its subsidiaries have not:
(a) made any commitments for capital expenditures or commitments for
additions to property, plant, equipment or intangible capital assets other
than (i) those included in the Ralston Budget or (ii) commitments for
$100,000 or less made in the ordinary course of business;
(b) acquired (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership,
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joint venture, limited liability company or other business
organization, or division thereof, or entered into any contract or
agreement with respect thereto;
(c) incurred any obligations or liabilities (whether absolute,
accrued, contingent, or otherwise and whether due or to become due), except
for (i) Indebtedness which is permitted to be incurred pursuant to Section
2.3 and (ii) current liabilities incurred in the ordinary course of
business consistent with past practice; or experienced any change in any
assumptions underlying or methods of calculating any bad debt, contingency
or other reserve;
(d) sold, transferred or conveyed any of its properties or assets used
in Ralston's business or operations, except for current assets sold or
converted in the ordinary course of business and consistent with past
practice, or permitted or allowed any of the properties or assets used in
Ralston's business or operations to be mortgaged, pledged or subjected to
any lien or encumbrance, except liens or encumbrances for taxes not yet
delinquent and any mortgage, pledge, lien or encumbrance created, assumed
or incurred with respect to the real estate development of the LLC but
pertaining only to the Option Land;
(e) paid, discharged or satisfied any claim, lien, encumbrance or
liability (whether absolute, accrued, contingent or otherwise and whether
due or to become due), other than claims, liens, encumbrances or
liabilities (i) which are reflected or accrued for or reserved against in
the Adjusted Balance Sheet and which were paid, discharged or satisfied
since the date of the Adjusted Balance Sheet in the ordinary course of
business and consistent with past practice, or (ii) which were incurred and
paid, discharged or satisfied since the date of the Adjusted Balance Sheet
in the ordinary course of business and consistent with past practice;
(f) written down or determined to write down or written up or
determined to write up the value of any inventory, or written off or
determined to write off as uncollectible any notes or accounts receivable
or any portion thereof, except for immaterial write-downs or write-offs in
the ordinary course of business, consistent with past practice and at a
rate no greater than during the prior fifty-two (52) weeks;
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(g) waived any material rights;
(h) granted any increase in the compensation of any director of
Ralston or Ralston Employee (including, without limitation, any increase
pursuant to any bonus, pension, profit-sharing or other plan), except for
increases (i) made pursuant to the terms of any existing Employee Benefit
Plan, or (ii) occurring in the ordinary course of business in accordance
with customary practice (for purposes of the foregoing, ordinary course of
business shall be deemed to include those customary increases granted
during ongoing negotiation of labor agreements);
(i) instituted or adopted any new Employee Benefit Plan for any
director of Ralston or any Ralston Employee;
(j) directly or indirectly redeemed, purchased or otherwise acquired
or subdivided or reclassified any Ralston Stock;
(k) been involved in any labor dispute, litigation or governmental
investigation of any material nature;
(l) entered into any material agreement with any local, state or
federal governments or agencies; or entered into any consulting agreements
or sponsorship agreements requiring the payment of $100,000 or more or
having a term of one year or more;
(m) made any amendments to the Articles of Incorporation or bylaws of
Ralston or any of its subsidiaries or any organizational or operational
documents related to the Ventures to which Ralston or any of its
subsidiaries is a party; or
(n) agreed, whether in writing or otherwise, to take any action
described in this Section 3.13.
3.14 Dividends. Since June 30, 1996, Ralston has not declared or paid
any dividends on its capital stock in cash, stock or other property (other than
as permitted by Section 2.3(e)).
3.15 Absence of Undisclosed Liabilities. Other than as set forth on
Schedule 3.15 or as set forth on other Schedules hereto, or as otherwise
included in the Adjusted Balance Sheet, there are no liabilities or obligations
of Ralston and
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its subsidiaries of any nature, whether absolute, accrued, unmatured,
contingent or otherwise, that would be required to be reflected on the liability
side of a balance sheet prepared in accordance with GAAP or disclosed in the
notes thereto, without regard to materiality, other than liabilities incurred
since June 30, 1996 in the ordinary course of business related to Ralston's
operations. Each of the reserves provided for on the Adjusted Balance Sheet has
been established and maintained in accordance with GAAP.
3.16 Title to Property. Except as set forth on Schedule 3.16, Ralston
and its subsidiaries hold fee simple title, subject only to Permitted
Encumbrances, to all of their respective owned real properties, and Ralston and
its subsidiaries hold a good and valid leasehold title and estate to all of the
Ralston Leased Property, including, without limitation, all of such properties
and assets reflected on the Adjusted Balance Sheet and such assets which are
necessary for Ralston and its subsidiaries to conduct their business
substantially in the same manner as currently conducted. None of such owned or
leased properties (or such assets which are necessary for Ralston and its
subsidiaries to conduct their business substantially in the same manner as
presently conducted) are subject to any mortgage, deed of trust, pledge, lien,
security interest, conditional sale agreement, encumbrance, claim, mechanic's or
materialmen's lien, or charge of any kind, except liens shown on Schedule 3.16
as securing specific liabilities (with respect to which no default, or action or
omission which with the giving of notice or passage of time or both would
constitute a default, exists) and Permitted Encumbrances.
3.17 Real Property.
(a) All real property owned or leased (excluding property leased for
employee housing with leases having durations less than one year or annual
rental payments of less than $20,000) by Ralston and its subsidiaries is set
forth on Schedule 3.17(a)(i) (the "Ralston Leased Property") and such real
property is identified in a manner that reflects the properties which are owned
and those which are leased. Except as set forth on Schedule 3.17(a)(ii), all
building and structures required to operate the business of Ralston
substantially in the same manner as presently conducted located on the real
properties owned by Ralston and its subsidiaries and on the Ralston Leased
Property are in good operating condition and repair (considering the age of such
buildings and structures
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and ordinary wear and tear excepted), and are usable for their current
use.
(b) Except as set forth on Schedule 3.17(b), Ralston and its
subsidiaries have not received written notice regarding any of the following
(except for matters previously resolved): (x) any dispute from any contiguous
property owners concerning contiguous boundary lines, (y) that any of the said
owned or Ralston Leased Properties (or the buildings, structures or improvements
thereon), or Ralston's and its subsidiaries' operations, violate the zoning or
planning laws, ordinances, rules or regulations of the city, county or state in
which they are located, or any building regulations or codes of such city,
county or state, or land use laws or regulations applicable to said properties,
and no such violations exist, or (z) any claims of others to rights over, under,
across or through any of the owned or Ralston Leased Properties by virtue of use
or prescription. Except as set forth on Schedule 3.17, Ralston has or is able to
obtain without a material penalty or material incremental cost, or has a valid
exemption from the requirement to obtain, all governmental permits (excluding
permits from the United States Forest Service, which are covered in Section
3.37), approvals, authorizations or licenses required to conduct its business in
substantially the same manner as its business is currently conducted.
(c) Foods and Ralston have either previously delivered to Vail or will
so deliver as soon as practicable prior to Closing lists of the most recently
issued real and personal (including vehicles) property tax assessments and tax
bills, if any, for Ralston's 1994 and 1995 fiscal years for all property owned
or leased by Ralston and its subsidiaries.
(d) Except as set forth on Schedule 3.17(d), (i) all real properties
owned by Ralston or its subsidiaries are free from agreements creating an
obligation to sell, lease or grant an option to sell or lease and (ii) all
Ralston Leased Property is free of all agreements creating an obligation to
sublease, grant an assignment of lease or grant an option to sublease.
(e) Except as set forth on Schedule 3.17(e), to the Knowledge of
Ralston, all real properties owned by Ralston and its subsidiaries and Ralston
Leased Properties are currently zoned in the zoning category which permits
operation of said properties as now used, operated and maintained. To the
Knowledge of Ralston, the consummation of the transactions contemplated herein
will not result in a violation of any applicable
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zoning ordinance or the termination of any applicable zoning variance
now existing.
(f) Schedule 3.17(f) lists all properties owned or leased by Ralston
and its subsidiaries which are not presently being used in the business or
operations of Ralston and its subsidiaries.
(g) All buildings, structures or improvements owned and/or leased by
Ralston and its subsidiaries on any of the owned or leased real properties are
located entirely within the property boundary lines of such properties and do
not materially encroach onto adjoining lands, and there are no material
encroachments of buildings, structures or improvements from adjoining land onto
such properties.
(h) To the Knowledge of Ralston, the developed owned real properties
and the Ralston Leased Property currently have access to, at or within their
property boundary lines to all gas, water, electricity, storm, sewer, sanitary
sewer, telephone, and all other utilities necessary or beneficial to the current
operation of the owned or leased properties, and all of such utilities are
adequate and sufficient for the current operation of such properties, subject to
normal interruptions in the ordinary course.
(i) Ralston and its subsidiaries hold a valid lease-hold estate for
each Ralston Leased Property, as shown on Schedule 3.17(a)(i), and enjoy
peaceful and undisturbed possession thereunder. All such leases are valid,
binding and enforceable in accordance with their terms, and are in full force
and effect, Ralston and its subsidiaries have complied with all material
obligations thereunder, and there are no existing defaults by Ralston and its
subsidiaries, and, except as set forth in Schedule 3.17(i), there are no
existing defaults by any other party thereunder. No event has occurred which
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a default by Ralston and its subsidiaries and
no event has occurred which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) would constitute a default by
any other party thereunder. Except as disclosed on Schedule 3.17(i), all such
leases shall continue in full force and effect (without default) after the
Closing and the consummation of the transactions contemplated by this Agreement
without the consent, approval or act of any other party, except to the extent
that enforceability may be limited
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by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable or fiduciary principles.
3.18 Personal Property. Except as set forth on Schedule 3.18(a), and
except for any immaterial exceptions, restrictions or limitations contained in
financing statements with respect to such property, Ralston and its subsidiaries
own, or have a valid lease or license with respect to, the tangible personal
property (including without limitation ski lift systems and snowmaking equipment
and systems) which is necessary for the operation of their business
substantially in the same manner as currently conducted, free and clear of all
liens, mortgages, pledges, security interests, charges or encumbrances other
than Permitted Encumbrances, and enjoy peaceful and undisturbed possession
thereunder. Except as set forth on Schedule 3.18(b) or as expressly set forth in
the Ralston Budget, all such property that is material to the operations of
Ralston is in reasonably good operating condition and repair, ordinary wear and
tear excepted, and is suitable for the purposes for which it is used. Schedule
3.18(c) contains a list of each lease pursuant to which Ralston and its
subsidiaries lease personal property which involves payment over the remaining
term of such lease of more than $100,000 and which in each case is not
cancelable upon six months' notice or less without penalty of more than
$100,000. All such personal property leases are valid, binding and enforceable
in accordance with their terms and are in full force and effect, Ralston and its
subsidiaries have complied with all obligations thereunder and there are no
existing material defaults by Ralston and its subsidiaries or, to the Knowledge
of Ralston, by any other party thereunder; no event has occurred which (whether
with or without notice, lapse of time or the happening or occurrence of any
other event) would constitute a material default by Ralston and its subsidiaries
thereunder; and no event has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a material default by any other party thereunder. Except as set forth
on Schedule 3.18(d), all personal property leases which are set forth on
Schedule 3.18(c) hereto shall continue in effect after the Closing and the
consummation of the transactions contemplated by this Agreement without the
consent, approval or act of any other party. All unperformed contracts to
purchase personal property to which Ralston and its subsidiaries are party which
provide for a purchase price of $100,000 or more are set forth on Schedule
3.18(e).
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3.19 Litigation and Claims. Schedule 3.19 sets forth all pending
judicial or administrative investigations, lawsuits, actions or proceedings
against Ralston and its subsidiaries of which Foods or Ralston and its
subsidiaries have received written notice. Except as set forth on Schedule 3.19,
there are no actions, suits, investigations, administrative proceedings or
orders pending or, to Foods' Knowledge, threatened against (i) Foods, at law or
in equity, which, if adversely determined, would have an adverse effect on the
ability of Foods to perform the terms of this Agreement, or would interfere with
the ability of Vail to consummate the transactions contemplated herein, or (ii)
Ralston or any of its subsidiaries, at law or in equity.
3.20 Compliance with Laws. Except as set forth on Schedule 3.20, to
the Knowledge of Ralston, Ralston and its subsidiaries are not in violation of
any law, rule or regulation or in default in any material respect with respect
to any judgment, writ, injunction or decree of any federal, state or local
commission.
3.21 Orders and Consent Decrees. Except as set forth on Schedule 3.21,
or as specifically cross-referenced thereon from other Schedules hereto, Ralston
and its subsidiaries are not party to, or bound by, any material judicial or
administrative order, judgment, decree or consent decree relating to any past or
present practice, omission, activity or undertaking. To the Knowledge of
Ralston, Ralston and its subsidiaries are not in default in any material respect
under any of the judicial or administrative orders, judgments, decrees or
consent decrees or conciliation or compliance agreements set forth on Schedule
3.21.
3.22 Labor Agreements. There are no binding agreements of any type
with any labor union, labor organization, collective bargaining unit or employee
group to which Ralston and its subsidiaries are bound except those set forth on
Schedule 3.22. All agreements that are set forth on Schedule 3.22 are legal and
valid and, except for those that are presently under negotiation or
renegotiation due to the expiration of their stated term, are in full force and
effect. Further:
(a) Except for negotiations ongoing as of the date hereof, or as
otherwise set forth on Schedule 3.22(a), Ralston and its subsidiaries have
not agreed to any terms and conditions to be added or deleted in future
-25-
negotiations or otherwise regarding the agreements set forth on
Schedule 3.22.
(b) To the Knowledge of Ralston, there are no threatened or active
strikes, work stoppages, boycotts or concerted actions against Ralston and
its subsidiaries, other than those threats which commonly arise as a result
of normal labor contract renegotiations.
(c) Except as set forth on Schedule 3.22(c), Foods has no notice of
any pending (i) proceedings under the National Labor Relations Act or
before the National Labor Relations Board, (ii) grievances or arbitrations,
or (iii) organizational drives or unit clarification requests, in each case
against or affecting Ralston or any of its subsidiaries.
3.23 Employees. Except as set forth on Schedule 3.23, Ralston and its
subsidiaries have not received any written notice from a governmental authority
or official during the past two years of any non-compliance with any federal,
state or local laws, regulations and legal requirements relating to the
employment of labor in connection with their business, including those laws,
regulations and legal requirements relating to wages, hours, benefits,
affirmative action, equal opportunity, including the Americans with Disabilities
Act and the Occupational Safety and Health Act, collective bargaining, workers'
compensation and the payment of social security, unemployment and employment
taxes.
3.24 Contracts. All contracts of Ralston or any of its subsidiaries
which involve aggregate payments after the date of this Agreement of $100,000 or
more are set forth on Schedule 3.24 or are specifically cross-referenced thereon
from other Schedules hereto. Except as set forth on Schedule 3.24, Ralston and
its subsidiaries are not party to or obligated under any written agreement or
contract that:
(a) provides for the employment of any Corporate Officer of Ralston
not terminable at will and without liability for additional payments or
compensation, other than severance and vacation pay payable in accordance
with the established policies of Ralston as set forth on Schedule 3.24;
(b) provides for (i) the employment of any consultant or broker for
a term that would exceed one (1) year
-26-
from the date of the Closing, or provides for payments that exceed
$100,000, or (ii) the employment of any independent attorney or accounting
firm not terminable at will;
(c) would prohibit or limit in any material respect Ralston or any of
its subsidiaries from engaging in its present business;
(d) requires the purchase of materials, inventories services or
supplies that has a remaining contractual term of more than one (1) year
from the Closing, or would require payments in the aggregate in excess of
$100,000;
(e) involves the sale of any asset or property of Ralston or any of
its subsidiaries presently being used in Ralston's or any of its
subsidiaries' business or operations, other than in the normal course of
business;
(f) relates to the borrowing of money or bank credit (including, but
not limited to, indentures, notes, installment obligations and capital
leases) or the mortgaging or pledging of any asset or property of Ralston
or any of its subsidiaries;
(g) guarantees the obligations of any supplier, customer or other
third party, other than endorsements in the ordinary course;
(h) is a forward, swap, option or swaption contract or any other
financial instrument with similar characteristics and/or generally
characterized as a "derivative" security to which Ralston or any of its
subsidiaries are a party or to which Ralston or any of its subsidiaries or
any of their respective assets or properties is subject or bound
(including, without limitation, funds of Ralston invested by any other
person); or
(i) includes any indemnity provisions for claims based on product
liability, environmental or employee or retiree liabilities and arises out
of any purchase or acquisition of another entity or business.
3.25 Validity of Material Contracts.
(a) Except as set forth on Schedule 3.25(a), Ralston and its
subsidiaries have not: (i) received any written claim
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of breach or default from any party relating to any agreement,
commitment or contract listed on Schedule 3.24; or (ii) received any written
notice of termination from any party relating to any such agreement, commitment
or contract.
(b) Except as set forth on Schedule 3.25(b), Ralston and its
subsidiaries have not breached or defaulted in any material respect on any
agreement, commitment or contract listed on Schedule 3.24.
3.26 Trademarks and Copyrights.
(a) Schedule 3.26(a)(i) lists all registered trademarks and copyrights
owned by Ralston and its subsidiaries and the jurisdictions in which such are
registered or in which an application has been filed for such registration.
Schedule 3.26(a)(ii) lists each license or sublicense (with a term exceeding one
year or with a royalty payment of more than $1,000) to which Ralston and its
subsidiaries are a party and pursuant to which any other person or entity is
authorized to use any such trademark or copyright. All trademarks and copyrights
listed on Schedule 3.26(a)(i) are owned by Ralston and its subsidiaries and,
except as disclosed on Schedule 3.26(a)(iii), are free and clear of any known
adverse claim of any third party.
(b) Except as set forth on Schedule 3.26(b), to the Knowledge of
Ralston, Ralston and its subsidiaries do not infringe or unlawfully or wrongly
use any trademark or copyright rights owned or claimed by any other party.
(c) To the Knowledge of Ralston, except as disclosed on Schedule
3.26(c), no third party is now making any infringing use of any Ralston
trademark or copyright.
(d) Except as disclosed on Schedule 3.26(d) or required to be
disclosed on Schedule 3.26(a)(ii), Ralston and its subsidiaries have not sold or
otherwise disposed of, or transferred or granted, any interest in such Ralston
trademarks or copyrights listed on Schedule 3.26(a)(i).
(e) To the Knowledge of Ralston, no claims are being asserted by any
person against the use of any of the trademarks or copyrights listed on Schedule
3.26(a)(i), or challenging or questioning the validity or effectiveness of any
license or agreement related thereto. Except as disclosed on Schedule 3.26(e),
none of the Ralston trademarks or copyrights is
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subject to any outstanding order, judgment or decree restricting the
use thereof by Ralston and its subsidiaries, or restricting the licensing
thereof by Ralston and its subsidiaries to any other person or entity.
3.27 Powers of Attorney. Except as set forth on Schedule 3.27, neither
Ralston nor any of its subsidiaries has any material outstanding revocable or
irrevocable Powers of Attorney or similar authorizations issued to any
individual who is not a Ralston Employee.
3.28 Taxes.
(a) Ralston, the affiliated group, within the meaning of Section 1504
of the Code, of which Ralcorp is the common parent and any other affiliated
group, within the meaning of Section 1504 of the Code, of which Ralston has been
a member at any time since its date of incorporation (an "Affiliated Group" and,
collectively, the "Affiliated Groups") have timely filed on or before the date
hereof all Tax Returns required to be filed in accordance with all applicable
laws (taking into account all extensions of due dates), and all such Tax Returns
are true, correct and complete and all amounts shown thereon as owing have been
paid. Except as set forth on Schedule 3.28(a): (i) all Tax bills or Tax
assessments received by or with respect to Ralston have been paid (to the extent
the Taxes shown thereon are due and owing); (ii) all Taxes with respect to
Ralston and the Affiliated Groups (whether or not shown on any Tax Returns) have
been paid or accrued and all deficiencies for Taxes asserted or assessed by a
taxing authority against Ralston or an Affiliated Group have been paid or
finally settled or are being contested by appropriate proceedings; (iii) no
claim is currently being made by an authority in a jurisdiction where Ralston or
an Affiliated Group does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction; and (iv) there are no liens on any of the assets
of Ralston or an Affiliated Group that arose in connection with any failure (or
alleged failure) to pay any Tax. The term "Ralston" when used in this Section
3.28 means Ralston and its subsidiaries.
(b) Ralston and the Affiliated Groups have collected or withheld and
paid on a timely basis all Taxes required to have been collected or withheld and
paid to any taxing authority in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party.
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(c) Except as set forth on Schedule 3.28(c), neither Ralston nor an
Affiliated Group has received any written notice of pending or threatened
actions, audits, proceedings or investigations for the assessment or collection
of Taxes.
(d) Except as set forth on Schedule 3.28(d), neither Ralston nor an
Affiliated Group has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency
(but only to the extent such waiver or extension is still in effect) nor are
there any outstanding requests for any extension of time within which to pay any
Taxes not yet paid. For all taxable periods subsequent to the fiscal year ended
September 30, 1990, Foods has provided to Vail (i) true, correct and complete
copies of federal Form 1120 pro forma returns for Ralston and all other
information (compiled in a true, correct and complete manner) relating to
income, deductions, credits and Taxes of Ralston that is not included in the pro
forma returns, (ii) all statements of federal Income Tax deficiencies assessed
against, or attributable to, Ralston or an Affiliated Group and (iii) a true,
correct and complete copy of any Tax Sharing Agreement to which Ralston is a
party and a true, correct and complete description of any such Tax Sharing
Agreement not reduced to writing.
(e) Except as set forth on Schedule 3.28(e), neither Ralston nor an
Affiliated Group has made, is obligated to make or is a party to any contract,
agreement, arrangement or plan covering any Ralston Employee that (taking into
account the transactions contemplated by this Agreement) could obligate it to
make any payments that would not be deductible under Section 162 of the Code (by
reason of being unreasonable in amount), Section 404, Section 162(m) or Section
280G of the Code.
(f) Schedule 3.28(f) sets forth the following information with respect
to Ralston as of the most recent practicable date: (i) the tax basis of
Ralston's assets; and (ii) the amount of any net operating loss, net capital
loss, tax credit or other carryover allocable to Ralston.
(g) Except as set forth on Schedule 3.28(g), Ralston is not a party to
any joint venture, partnership or other arrangement or contract that could be
treated as a partnership for federal income tax purposes.
(h) The unpaid Taxes of Ralston do not exceed the reserve for Tax
liability as computed in a manner consistent
-30-
with the prior and customary accounting practice of Ralston (excluding
any reserve for deferred Taxes established to reflect timing differences between
book and tax income) set forth or included in the Adjusted Balance Sheet.
(i) All Consolidated Returns and Unitary Returns (as defined below),
and all state, local and foreign Tax Returns of Ralston and the Affiliated
Groups have been closed by applicable statute of limitations for all taxable
years ending on or before the dates shown on the attached Schedule 3.28(i).
"Consolidated Return" shall mean any consolidated federal Income Tax Return
filed by an Affiliated Group, and "Unitary Return" shall mean any Return with
respect to any Taxes, other than federal Income Taxes, filed, or required to be
filed, on a consolidated, combined or unitary basis by any group of corporations
of which Ralston is a member or has been a member at any time since its date of
incorporation.
(j) Ralston and the Affiliated Groups have made all payments of
estimated Taxes required to be made with respect to any of them under Section
6655 of the Code and any comparable provisions of state, local and foreign law.
(k) No power of attorney has been granted by Ralston or an Affiliated
Group with respect to any matter relating to Taxes which is currently in force.
(l) No consent has been filed under Section 341(f) of the Code with
respect to Ralston or an Affiliated Group.
(m) Neither Ralston nor an Affiliated Group has incurred or assumed
any corporate acquisition indebtedness, as defined in Section 279(b) of the
Code.
3.29 Employee Benefit Plans.
(a) All Employee Benefit Plans sponsored by Ralcorp, Foods or Ralston
or their Affiliates and covering Ralston Participants are set forth on Schedule
3.29(a) (the "Ralston Employee Benefit Plans"). With respect to each Ralston
Employee Benefit Plan, copies of the following have been delivered to Vail where
applicable: (i) the Plan document; (ii) a summary plan description; (iii) most
recent Annual Return/Report of Employee Benefit Plan, Form 5500 Series; (iv)
trust agreement; (v) insurance policy; and (vi) determination letter from the
IRS. The Ralston Employee Benefit Plans have in all material respects been
maintained and
-31-
administered in compliance with applicable federal and state laws,
regulations and rules, including, but not limited to, ERISA and the Code. All
contributions required as of the Closing, by law or contract, to be made to each
Ralston Employee Benefit Plan will have been timely made.
(b) No Ralston Employee Benefit Plan (or trust or other funding
vehicle pursuant thereto) is subject to any Tax under Section 511 of the Code
that remains unpaid and assessable against Ralston after the Closing.
(c) Neither Ralston nor any plan fiduciary of any Ralston Employee
Benefit Plan has engaged in any transaction in violation of Section 404 or 406
of ERISA, or in any "prohibited transaction" as defined in Section 4975(c)(1) of
the Code, for which no exemption exists under Section 408 of ERISA, or in
violation of Section 4975(c)(2) or 4975(d) of the Code.
(d) Except as listed on Schedule 3.29(d), neither Ralston nor any
Ralston Employee Benefit Plan is a party to any litigation with respect to
Ralston Participants relating to, or seeking benefits under, any Employee
Benefit Plan.
(e) Except as set forth on Schedule 3.29(e) and except as may be
required by the terms of a collective bargaining agreement or in connection with
any pending labor negotiations, neither Ralston nor any ERISA Affiliate has any
legally binding commitments to create any additional Employee Benefit Plans
which are intended to cover Ralston Employees, or to amend or modify any
existing Employee Benefit Plan with respect to benefits for Ralston Employees.
With respect to each collective bargaining agreement, there is no legally
binding commitment to create any additional Employee Benefit Plans which are
intended to cover Ralston Employees, to amend or modify any existing Employee
Benefit Plan which covers or has covered Ralston Employees, or to begin
contributing, or increase contributions, to a Multiemployer Plan, which would
materially increase the benefits to be provided under such collective bargaining
agreement.
(f) Except as described on Schedule 3.29(f), the execution and
performance of the transactions contemplated by this Agreement, and such other
agreements, instruments and documents required to be executed in connection
therewith, shall not constitute an event under any Employee Benefit Plan or
agreement under which Ralston may incur any liability that will result in any
payment (whether severance pay or otherwise),
-32-
acceleration, vesting or increase of benefits with respect to any
Ralston Employee.
(g) Schedule 3.29(g) sets forth the policy as to severance benefits
for Ralston Employees in effect at the Closing, as well as the names of each
Ralston Employee that has a specific severance arrangement other than the
policy.
(h) Each Ralston Employee Benefit Plan which is a retirement plan or a
savings plan has been established and operated so as to be qualified and tax
exempt under the provisions of Code Sections 401(a) and 501(a) from its adoption
to date and will be so as of the Closing. Neither Foods nor any of its
affiliates has, by its action or inaction, adversely affected the qualified
status of any such Ralston Employee Benefit Plan.
(i) Schedule 3.29(i) sets forth a summary of the retiree health and
retiree life insurance benefits provided at the Closing to all Ralston Employees
who are not covered by a collective bargaining agreement.
(j) All Ralston Employee Benefit Plans under which benefits are
provided under health maintenance and preferred provider organizations are set
forth on Schedule 3.29(j).
(k) Except as set forth on Schedule 3.29(k), neither Ralston (since
January 1, 1989) nor any ERISA Affiliate has been a party to any Multiemployer
Plan.
(l) Neither Ralston nor any of its ERISA Affiliates have incurred any
liability under Title IV of ERISA (other than for contributions not yet due or
for the payment of premiums not yet due), which liability has not been fully
paid as of the date hereof.
3.30 Environmental Matters. Except as set forth on Schedule 3.30:
(a) Ralston and its subsidiaries have obtained (or are capable of
obtaining without incurring any material incremental expense) all
Environmental Permits and all licenses and other authorizations and have
made all registrations and given all notifications that are required under
any applicable Environmental Law.
-33-
(b) Except as set forth on Schedule 3.30(b), there is no Environmental
Claim pending (excluding any of the foregoing with respect to which Foods
and/or Ralston have not received service of process or notice, as the case
may be, except if Foods and/or Ralston have Knowledge of the existence
thereof) against Ralston and its subsidiaries under an Environmental Law.
(c) Except as set forth on Schedule 3.30(c), Ralston and its
subsidiaries are in compliance with all terms and conditions of their
Environmental Permits, and are in compliance with all applicable
Environmental Laws.
(d) Except as set forth on Schedule 3.30(d), Ralston and its
subsidiaries did not generate, treat, store, transport, discharge, dispose
of or release any Hazardous Substances on any property now or previously
owned, leased or used by Ralston and its subsidiaries.
3.31 Liability and Casualty Insurance. Schedule 3.31 sets forth a
description of each liability or casualty insurance policy (including, without
limitation, fire and product liability policies) including self-insurance
maintained on the property, assets and business of Ralston and its subsidiaries,
specifying the insurer, the amount of coverage, the type of insurance, the
policy number, the expiration date and the annual premium. All such policies:
(i) are valid, outstanding and enforceable policies; (ii) shall remain in full
force and effect until their respective expiration dates as set forth on
Schedule 3.31 without the payment of additional premiums other than additional
premiums required in the ordinary course prior to the Closing; and (iii) except
as noted on Schedule 3.31, shall not in any way be adversely affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement.
3.32 Consents or Approvals.
(a) All consents and approvals of any third party required by the
terms hereof or required to consummate the transactions contemplated herein have
been obtained or, prior to the Closing, will be obtained and shall remain in
full force and effect through the Closing.
(b) Except as set forth in Schedule 3.32, no consent, waiver, approval
or authorization, registration, declaration or filing with any court,
administrative agency or
-34-
commission or other governmental authority or instrumentality,
domestic or foreign, is required by or with respect to Foods or Ralston in
connection with the execution and delivery of this Agreement, and such other
agreements, instruments and documents required to be executed by Foods or
Ralston in connection herewith contemplated herein and therein, or the
consummation by Foods or Ralston of the transactions contemplated herein and
therein.
3.33 Transaction Fees. Except as set forth on Schedule 3.33, neither
Foods, Ralston nor any member of their respective boards of directors has any
agreement or understanding, or has incurred any liability, requiring the payment
of a finder's fee, brokerage commission or like cost or charge to any person by
reason of this Agreement or the transactions contemplated herein. Foods is
solely responsible for all fees, commissions and other costs of the persons
listed on Schedule 3.33 and neither Ralston nor any of its subsidiaries has any
responsibility therefor.
3.34 Bank Accounts. Vail has been provided a listing of all Ralston
and its subsidiaries' bank accounts and lock boxes and Foods bank accounts and
lock boxes used by Ralston and its subsidiaries, including the names and
locations of all such banking institutions and depositories, the account
numbers, and the names of all persons authorized to draw thereon or to have
access thereto.
3.35 Ownership of Ralston Stock; Ralston Assets. Foods is the owner of
record, and the legal and beneficial owner, of all of the outstanding shares of
Ralston Stock, and Foods has the full right, power and authority to transfer,
convey and deliver good, valid, marketable and indefeasible title to such shares
of Ralston Stock to Vail, or its nominee, as called for under this Agreement,
free and clear of any liabilities, obligations, options, charges, encumbrances,
liens, claims, interests, powers of attorney, restrictions or contractual rights
of others of any kind whatsoever. Except as set forth on Schedule 3.35, none of
the assets used or useful in the business of Ralston and its subsidiaries is
owned by Foods or any of its Affiliates (other than Ralston and its
subsidiaries) and neither Foods nor any of its Affiliates (other than Ralston
and its subsidiaries) owns directly or indirectly any asset included in the
Adjusted Balance Sheet.
3.36 Vail Stock Acquired for Foods' Account. The Vail Stock to be
acquired by Foods pursuant to this Agreement
-35-
is being acquired for Foods' own account. Foods has no intention of
distributing or reselling such stock or any part thereof in any transaction that
would be in violation of the Securities Act of 1933, or the state securities law
of any state.
3.37 United States Forest Service.
(a) Except as set forth on Schedule 3.37(a), Ralston's operations and
those of its subsidiaries comply, in all material respects with the terms and
conditions set forth in each of the Term Special Use Permits issued by the
United States Department of Agriculture, Forest Service (the "USFS") to Ralston
or its subsidiaries and all documents incorporated in such permits
(collectively, the "USFS Permits") and such permits are in full force and effect
and neither Ralston nor its subsidiaries have received any notice of default
under the USFS Permits;
(b) Except as set forth on Schedule 3.37(b), neither Ralston nor its
subsidiaries have received any written notice of nor have any Knowledge that the
USFS has any intention of amending, revoking or otherwise altering the terms or
conditions of any of the USFS Permits, or portion thereof, or the application of
the USFS Permits to Ralston's or its subsidiaries' operations;
(c) Except as set forth on Schedule 3.37(c), neither Ralston nor its
subsidiaries are engaged in any on-going dispute or disagreement with the USFS
over the interpretation or application of any term or condition of any of the
USFS Permits; and
(d) Except as set forth on Schedule 3.37(d), Ralston has no Knowledge
of any third-party permitee or commercial operator operating within the areas
permitted to Ralston or its subsidiaries under any of the USFS Permits.
3.38 Passenger Tramway.
(a) Except as set forth on Schedule 3.38(a), neither Ralston nor its
subsidiaries have had, in the past three (3) ski seasons, any passenger tramway
incidents that required reporting to the Colorado Passenger Tramway Safety Board
(the "CPTSB") under CPTSB laws, rules, regulations and standards.
-36-
(b) Except as set forth on Schedule 3.38(b), each passenger tramway
operated by Ralston or its subsidiaries complies in all material respects with
current laws, rules, regulations and standards of CPTSB and the American
National Standards Institute ("ANSI") and, further, there are no defects or
conditions which are "grandfathered" under CPTSB or ANSI laws, rules,
regulations and standards.
(c) Except as set forth on Schedule 3.38(c), Ralston and its
subsidiaries have maintained in all material respects, each passenger tramway
owned or operated by Ralston or its subsidiaries according to all CPTSB laws,
rules, regulations and standards and all maintenance and replacement procedures
and standards recommended by the manufacturer, or manufacturer's successor, of
each such passenger tramway and, further, no such maintenance or replacement is
now outstanding or has been otherwise deferred or delayed beyond the
manufacturer's recommended maintenance and replacement schedule.
(d) Except as set forth on Schedule 3.38(d), neither Ralston nor its
subsidiaries have any Knowledge of any defect or condition that would preclude
or materially limit the normal operation of any passenger tramway owned or
operated by Ralston or its subsidiaries.
3.39 Clean Water Act.
(a) To Ralston's Knowledge, there have been no material discharges of
dredged or fill material into any waters of the United States, or any other
activity, on or within property owned or operated by Ralston or its subsidiaries
in violation of the Clean Water Act, 33 U.S.C. 1344, and its implementing
regulations (collectively, the "Clean Water Act"), other than discharges or
other activities pursuant to permits (the "Existing Permits").
(b) Except as described on Schedule 3.39(b), to Ralston's Knowledge,
the Existing Permits are in full force and effect and neither Ralston, its
subsidiaries nor anyone acting for or on behalf of Ralston or its subsidiaries
has materially violated nor is currently and materially in violation of any of
the terms and conditions of the Existing Permits and there are no outstanding
mitigation requirements or unsatisfied conditions contained in any of the
Existing Permits. Ralston represents that it has all permits required under the
Clean Water Act.
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3.40 Keystone/Intrawest L.L.C.
(a) The LLC is duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite power and
authority and the legal right to own, lease and operate its properties and to
carry on its business as now being conducted. The LLC is duly qualified or
licensed to do business and in good standing in Colorado. True and correct
copies of the LLC Agreements (as amended) and the Certificate of Formation (the
"Certificate") filed with the Delaware Secretary of State have been delivered to
Vail and, except as described on Schedule 3.40(a), neither the LLC Agreement nor
the Certificate has been amended (whether in writing or via oral agreement or
understanding) and each of the LLC Agreement and the Certificate are in full
force and effect. The LLC is not in violation of its organizational documents.
(b) Ralston owns beneficially and of record an undivided 50% interest
in the LLC (the "Ralston Interest") and has good and marketable title to the
Ralston Interest, and Ralston has the absolute right to sell, assign and
transfer the Ralston Interest to Vail free and clear of all liens. There are no
existing options, warrants, calls, subscriptions or other rights or agreements
or commitments or claims of any nature granted by or binding upon Ralston
granting or vesting in any party any claim or potential claim to the Ralston
Interest. Intrawest owns beneficially and of record an undivided 50% interest in
the LLC.
(c) Except as set forth on Schedule 3.40(c), to Ralston's Knowledge,
neither delivery of this Agreement nor the consummation of the transactions
contemplated on the part of Ralston to be performed, nor the fulfillment of the
terms hereof, constitute a default under, require consent under, give any person
any right to terminate any (A) note, bond, mortgage, indenture or other monetary
obligation or instrument, or (B) any material license, contract or other
agreement, in either case, to which the LLC is a party or by which it or any of
its properties or assets may be bound.
(d) To Ralston's Knowledge, there are no actions, suits or proceedings
pending or threatened against the LLC.
(e) Except as set forth on Schedule 3.40(e) (which Schedule outlines
the current outstanding balance of any such debt) and to Ralston's Knowledge,
the LLC is not indebted to
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any third party and is not currently obligated for the repayment of
any loan or debt.
(f) To Ralston's Knowledge, the LLC has obtained all of the
governmental licenses and permits required to own and operate its properties and
business as currently owned and operated, such licenses and permits are in full
force and effect, and no violation exists in respect of any such license or
permit. To Ralston's Knowledge, the LLC has complied in all material respects
with all laws, regulations, ordinances and orders that relate to any of its
properties and assets.
(g) To Ralston's Knowledge, the LLC is not in default of any material
covenant or obligation under any agreement to which the LLC is a party, and no
events have occurred which with the passage of time or giving of notice would
constitute such a material default.
(h) Ralston is not in default under the LLC Agreement or the
Contribution Agreement and no events have occurred which with the passage of
time or the giving of notice would constitute such a default. Ralston has not
waived any material requirement set forth in the LLC Agreement or the
Contribution Agreement. To the Knowledge of Ralston, Intrawest is not in default
in any material respect under the LLC Agreement or the Contribution Agreement or
the Management Agreement and no events have occurred that with the passage of
time or the giving of notice would constitute such a default.
(i) Except as set forth on Schedule 3.40(i), Ralston has not received
any distribution (in cash or other property) from the LLC.
(j) There are no bankruptcy, reorganization or arrangement proceedings
pending, being contemplated by or, to the Knowledge of Ralston, threatened
against the LLC.
(k) Neither Ralston nor any of its subsidiaries has sold, conveyed,
transferred, assigned or otherwise disposed of any portion of the Option Lands.
(l) Except as set forth in Schedule 3.40(l), neither Ralston nor any
of its Subsidiaries has loaned money to or otherwise participated in any real
estate development project described in Section 3.02(b) of the LLC Agreement.
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(m) Ralston has fully satisfied and fully performed all of its
material obligations under the Contribution Agreement and all transactions
contemplated therein have been fully performed and closed.
(n) Ralston has not made any Other Capital Contributions (as such term
is defined in the LLC Agreement), except as set forth in Schedule 3.40(n), and
such Schedule reflects all Capital Contributions made by Ralston to the LLC
since the LLC's formation.
(o) Neither Ralston nor Intrawest has made any Default Loans (as such
term is defined in the LLC Agreement), and Ralston has not received or given any
notice of a failure to make a Capital Contribution (as such term is defined in
the LLC Agreement). There are no outstanding requirements of either Ralston or
Intrawest to make Capital Contributions to the LLC.
(p) The current Annual Budget (as such term is defined in the LLC
Agreement), and each Project Budget (as such term is defined in the LLC
Agreement) has been delivered to Vail and, except as set forth on Schedule
3.40(p), to Resort's Knowledge there are currently no material deviations from
such budgets.
(q) Neither Ralston nor, to Ralston's Knowledge, Intrawest has
committed any act or omission that could cause a dissolution of the LLC under
Article 10 of the LLC Agreement.
(r) As of the date of this Agreement, the LLC has commenced the
construction of a minimum of 260 residential units at the Base I Property (as
such term is defined in the LLC Agreement).
(s) As of the date of this Agreement, Ralston has not purchased any
Additional Property (as such term is defined in the LLC Agreement), and Ralston
will not purchase any such Additional Property during the term of this
Agreement.
(t) True and correct copies of the Contribution Agreement and the
Management Services Agreement have been delivered to Vail and neither of such
agreements has been amended and each of such agreements are in full force and
effect.
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(u) Ralston has delivered to Vail, copies of the most currently
available LLC balance sheet and a summary of projects undertaken by the LLC
which, to Ralston's Knowledge are true and correct.
(v) Except as described on Schedule 3.40(v), projects undertaken by
the LLC are not subject to requirements or agreements of any kind not contained
in the PUD which would require Ralston to provide for ski or lift access,
infrastructure improvements or employee housing in connection with any such
project.
(w) Except as set forth in Schedule 3.40(w), the LLC holds fee simple
title, subject only to Permitted Encumbrances, to all of its owned real
properties. None of the LLC's owned properties are subject to any mortgage, deed
of trust, pledge, lien, security interest, conditional sale agreement,
encumbrance, claim, mechanic's or materialmen's lien or charge of any kind,
except liens shown on Schedule 3.40(w) as securing specific liabilities and
Permitted Encumbrances or except as securing Indebtedness of the LLC relating to
development or infrastructure projects, a listing of which is set forth on
Schedule 3.40(w).
(x) To Ralston's Knowledge, the LLC is not in violation of any law,
rule or regulation or in default in any material respect with respect to any
judgment, writ, injunction or decree of any federal, state or local commission,
nor is the LLC party to, or bound by any material judicial or administrative
order, judgment, decree or consent decree relating to any past or present
practice or undertaking.
(y) To Ralston's Knowledge, the LLC has obtained (or is capable of
obtaining without incurring any material expense) all Environmental Permits and
all licenses and other authorizations and have made all registrations and given
all notifications that are required under any applicable Environmental Law. To
Ralston's Knowledge, there is no Environmental claim pending against the LLC or
pertaining to property owned by the LLC, under an Environmental Law.
3.41 Water Rights. The representations and warranties set forth on
Schedule 3.41 are incorporated herein by reference.
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ARTICLE IV
VAIL'S REPRESENTATIONS AND WARRANTIES
Vail represents and warrants that:
4.1 Capital Stock. The authorized capital stock of Vail consists of
20,000,000 shares of Class A Common Stock, par value $.01 per share (the "Class
A Common Stock"), 40,000,000 shares of Vail Stock and 25,000,000 shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock" and together
with the Vail Stock and Class A Common Stock the "Capital Stock"). As of the
date of this Agreement, there are 3,612,809 shares of Vail Stock issued and
outstanding; 6,387,191 shares of Class A Common Stock issued and outstanding;
and zero shares of Preferred Stock issued and outstanding. All outstanding
shares of Capital Stock are duly authorized, validly issued, fully paid and
non-assessable. Except as set forth on Schedule 4.1, there are no options,
warrants, calls or agreements of any character for the issuance of additional
shares of Capital Stock. Except as set forth on Schedule 4.1, there are no
contracts for the authorization or issuance of any other class of securities of
Vail, and there are no outstanding securities convertible or exchangeable into
Capital Stock.
4.2 Transfer of the Vail Stock. The Vail Stock to be issued to Foods
pursuant to this Agreement shall be duly and validly authorized and, when issued
and delivered pursuant to this Agreement, shall be validly issued, fully paid
and non-assessable and shall transfer to and vest in Foods, or its nominee,
good, valid, marketable and indefeasible title to such shares of the Vail Stock,
subject to no lien, security interest or other encumbrance on such Vail Stock.
4.3 Authority of Vail.
(a) Vail has taken all action required by its Certificate of
Incorporation and its bylaws to authorize the execution and delivery of this
Agreement, and such other agreements, instruments and documents required to be
executed by Vail in connection herewith, and the performance of the transactions
contemplated herein and therein. Vail has all requisite corporate power and
authority to authorize the execution and delivery of this Agreement, and such
other agreements, instruments and documents required to be executed in
connection herewith, to consummate the transactions contemplated herein
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and therein, and to take all other actions required to be taken by
Vail pursuant to the provisions hereof. This Agreement, and such other
agreements, instruments and documents required to be executed in connection
herewith, when duly executed and delivered, shall constitute a valid and binding
obligation of Vail enforceable in accordance with its terms except to the extent
that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
(b) No approvals on the part of any class (whether voting together or
as separate classes) of Vail's shareholders are necessary to authorize this
Agreement or any other agreements, instruments and documents required to be
executed in connection herewith, or the transactions contemplated herein or
therein.
4.4 Corporate Standing. Each of Vail and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the corporate power and
authority to own its property and assets and to carry on its business in the
same manner as now being conducted. The execution and delivery of this
Agreement, and such other agreements, instruments and documents required to be
executed by Vail in connection herewith, do not, and the consummation of the
transaction contemplated herein and therein will not, conflict with, or result
in any violation of, breach of or default (with or without notice or lapse of
time or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a benefit under, (a) any provision
of the Certificate of Incorporation or bylaws of Vail or any of its
subsidiaries, or (b) except as set forth in Schedule 4.4 hereto, any loan or
credit agreement, note, bond, mortgage, indenture, lease, contract, agreement,
instrument or permit, judgment, order, decree, writ or injunction to which Vail
or any of its subsidiaries is a party, or by which it or any of its subsidiaries
or its or any of its subsidiaries' properties or assets are bound, or result in
the creation or imposition of any lien upon any of such properties or assets.
4.5 Qualifications To Do Business. Each of Vail and its subsidiaries
is duly qualified and in good standing as a foreign corporation and authorized
to do business in each jurisdiction set forth on Schedule 4.5 hereto. Each of
Vail and its subsidiaries is qualified and in good standing in every
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ther jurisdiction in which the ownership of its property or the
conduct of its business requires it to be qualified to do business, except in
those jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, result in a Material Adverse Change of Vail.
4.6 Capital Stock of Subsidiaries. The only direct or indirect
subsidiaries of Vail are those listed on Schedule 4.6 hereto. Except as set
forth on Schedule 4.6 hereto, Vail is directly or indirectly the record and
beneficial owner of all of the outstanding shares of capital stock of each of
its subsidiaries, there are no proxies with respect to such shares, and no
equity securities of any of such subsidiaries are or may be required to be
issued by reason of any options, warrants, scrip, rights to subscribe for, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any such subsidiary is bound to issue additional shares of
its capital stock or securities convertible into or exchangeable for such
shares. Other than as set forth on Schedule 4.6 hereto, all of such shares so
owned by Vail are validly issued, fully paid and non-assessable and are owned by
it free and clear of any claim, lien or encumbrance of any kind with respect
thereto. Except as disclosed on Schedule 4.6 hereto, Vail does not directly or
indirectly own any interest in any corporation, partnership, joint venture or
other business association or entity.
4.7 Corporate Records. True and correct copies of the Certificate of
Incorporation and bylaws of Vail have previously been delivered to Foods.
4.8 Employee Loans and Other Employee Interests in Vail. Except as set
forth on Schedule 4.8, there are no outstanding loans by or to Vail or any of
its subsidiaries to or from any Vail Employee, other than (a) emergency loans
which do not exceed $10,000 in the aggregate, and none of which exceed $1,000
individually, (b) housing loans which do not exceed $10,000 in the aggregate,
and none of which exceed $1,000 individually, or (c) ordinary travel advances or
(d) employee charges not exceeding $5,000 individually and $50,000 in the
aggregate. Except as set forth on Schedule 4.8, no Vail Employee currently
employed has any material interest, direct or indirect, in any lease or contract
of Vail.
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4.9 Vail Financial Statements; No Material Adverse Change. Except as
set forth on Schedule 4.9, the Vail Financial Statements present fairly, in all
material respects, the consolidated financial position and results of operations
of Vail and its subsidiaries as of the dates thereof, all in conformity with
GAAP applied on a consistent basis, except as set forth in the notes to those
financial statements. Since April 30, 1996, there has not occurred a Material
Adverse Change of Vail, or any event that, individually or in the aggregate,
would reasonably be expected to result in a Material Adverse Change of Vail.
Neither this Section 4.9 nor any other Section in this Agreement shall be
construed as a representation or warranty as to the accuracy or attainability of
budgets or projections relating to or reflecting the business of Vail.
4.10 Conduct of Business. Except as and to the extent set forth on
Schedule 4.10, since April 30, 1996, Vail and its subsidiaries have not:
(a) made any commitments for capital expenditures or commitments for
additions to property, plant, equipment or intangible capital assets other
than commitments for $100,000 or less made in the ordinary course of
business;
(b) acquired (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership, joint venture, limited liability
company or other business organization, or division thereof, or entered
into any contract or agreement with respect thereto;
(c) incurred any obligations or liabilities (whether absolute,
accrued, contingent, or otherwise and whether due or to become due), except
for current liabilities incurred in the ordinary course of business
consistent with past practice; or experienced any change in any assumptions
underlying or methods of calculating any bad debt, contingency or other
reserve;
(d) sold, transferred or conveyed any of its properties or assets used
in Vail's business or operations, except for current assets sold or
converted in the ordinary course of business and consistent with past
practice, or permitted or allowed any of the properties or assets used in
Vail's business or operations to be mortgaged, pledged or subjected to any
lien or encumbrance, except liens or encumbrances for taxes not yet
delinquent;
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(e) paid, discharged or satisfied any claim, lien, encumbrance or
liability (whether absolute, accrued, contingent or otherwise and whether
due or to become due);
(f) written down or determined to write down or written up or
determined to write up the value of any inventory, or written off or
determined to write off as uncollectible any notes or accounts receivable
or any portion thereof, except for immaterial write-downs or write-offs in
the ordinary course of business, consistent with past practice and at a
rate no greater than during the prior fifty-two (52) weeks;
(g) waived any material rights;
(h) granted any increase in the compensation of any director of Vail
or Vail Employee (including, without limitation, any increase pursuant to
any bonus, pension, profit-sharing or other plan), except for increases (i)
made pursuant to the terms of any existing Employee Benefit Plan, or (ii)
occurring in the ordinary course of business in accordance with customary
practice (for purposes of the foregoing, ordinary course of business shall
be deemed to include those customary increases granted during ongoing
negotiation of labor agreements);
(i) instituted or adopted any new Employee Benefit Plan for any
director of Vail or any Vail Employee;
(j) directly or indirectly redeemed, purchased or otherwise acquired
or subdivided or reclassified any Vail Stock;
(k) been involved in any labor dispute, litigation or governmental
investigation of any material nature;
(l) entered into any material agreement with any local, state or
federal governments or agencies; or entered into any consulting agreements
or sponsorship agreements requiring the payment of $100,000 or more or
having a term of one year or more;
(m) made any amendments to the Certificate of Incorporation or
bylaws of Vail or any of its subsidiaries; or
(n) agreed, whether in writing or otherwise, to take any action
described in this Section 4.10.
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4.11 Dividends. Since April 30, 1996, Vail has not declared or paid
any dividends on its capital stock in cash, stock or other property (other than
the Vail Dividend).
4.12 Absence of Undisclosed Liabilities. Other than as set forth on
Schedule 4.12 or as set forth on other Schedules hereto, or as otherwise
included in the April 30, 1996 balance sheet of Vail, there are no liabilities
or obligations of Vail and its subsidiaries of any nature, whether absolute,
accrued, unmatured, contingent or otherwise, that would be required to be
reflected on the liability side of a balance sheet prepared in accordance with
GAAP or disclosed in the notes thereto, without regard to materiality, other
than liabilities incurred since April 30, 1996 in the ordinary course of
business related to Vail's operations.
4.13 Title to Property. Except as set forth on Schedule 4.13, Vail and
its subsidiaries hold fee simple title, subject only to Permitted Encumbrances,
to all of their respective owned real property, and Vail and its subsidiaries
hold a good and valid leasehold title and estate to all of the Vail Leased
Property, including, without limitation such assets which are necessary for Vail
and its subsidiaries to conduct their business substantially in the same manner
as currently conducted. None of such owned or leased properties (or such assets
which are necessary for Vail and its subsidiaries to conduct their business
substantially in the same manner as presently conducted) are subject to any
mortgage, deed of trust, pledge, lien, security interest, conditional sale
agreement, encumbrance, claim, mechanic's or materialmen's lien, or charge of
any kind, except liens shown on Schedule 4.13 as securing specific liabilities
(with respect to which no default, or action or omission which with the giving
of notice or passage of time or both would constitute a default, exists) and
Permitted Encumbrances.
4.14 Real Property.
(a) All real property owned or leased (excluding property leased for
employee housing with leases having durations less than one year or annual
rental payments of less than $20,000) by Vail and its subsidiaries is set forth
on Schedule 4.14(a)(i) (the "Vail Leased Property") and such real property is
identified in a manner that reflects the properties which are owned and those
which are leased. Except as set forth on Schedule 4.14(a)(ii), all buildings and
structures required to operate the business of Vail substantially in the same
manner
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as presently conducted located on the real properties owned by Vail
and its subsidiaries and on the Vail Leased Property are in good operating
condition and repair (considering the age of such buildings and structures and
ordinary wear and tear excepted), and are usable for their current use.
(b) Except as set forth on Schedule 4.14(b), Vail and its subsidiaries
have not received written notice regarding any of the following (except for
matters previously resolved): (x) any dispute from any contiguous property
owners concerning contiguous boundary lines, (y) that any of the said owned or
Vail Leased Properties (or the buildings, structures or improvements thereon),
or Vail's and its subsidiaries' operations, violate the zoning or planning laws,
ordinances, rules or regulations of the city, county or state in which they are
located, or any building regulations or codes of such city, county or state, or
land use laws or regulations applicable to said properties, and no such
violations exist, or (z) any claims of others to rights over, under, across or
through any of the owned or Vail Leased Properties by virtue of use or
prescription. Except as set forth on Schedule 4.14, Vail has or is able to
obtain without a material penalty or material incremental cost, or has a valid
exemption from the requirement to obtain, all governmental permits (excluding
permits from the United States Forest Service which are covered in Section
4.32), approvals, authorizations or licenses required to conduct its business in
substantially the same manner as its business is currently conducted.
(c) Vail has previously delivered to Foods or will so deliver as soon
as practicable prior to Closing lists of the most recently issued real and
personal (including vehicles) property tax assessments and tax bills, if any,
for Vail's 1994 and 1995 fiscal years for all property owned or leased by Vail
and its subsidiaries.
(d) Except as set forth on Schedule 4.14(d)(i) all real properties
owned by Vail or its subsidiaries are free from agreements creating an
obligation to sell, lease or grant an option to sell or lease and (ii) all Vail
Leased Property is free of all agreements creating an obligation to sublease,
grant an assignment of lease or grant an option to sublease.
(e) Except as set forth on Schedule 4.14(e), to the Knowledge of Vail
all real properties owned by Vail and its subsidiaries and Vail Leased
Properties are currently zoned in the zoning category which permits operation of
said properties
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as now used, operated and maintained. To the Knowledge of Vail, the
consummation of the transactions contemplated herein will not result in a
violation of any applicable zoning ordinance or the termination of any
applicable zoning variance now existing.
(f) Schedule 4.14(f) lists all properties owned or leased by Vail and
its subsidiaries which are not presently being used in the business or
operations of Vail and its subsidiaries.
(g) All buildings, structures or improvements owned and/or leased by
Vail and its subsidiaries on any of the owned or leased real properties are
located entirely within the property boundary lines of such properties and do
not materially encroach onto adjoining lands, and there are no material
encroachments of buildings, structures or improvements from adjoining land onto
such properties.
(h) To the Knowledge of Vail, the developed owned real properties and
the Vail Leased Property currently have access to, at or within their property
boundary lines to all gas, water, electricity, storm, sewer, sanitary sewer,
telephone, and all other utilities necessary or beneficial to the current
operation of the owned or leased properties, and all of such utilities are
adequate and sufficient for the current operation of such properties, subject to
normal interruptions in the ordinary course.
(i) Vail and its subsidiaries hold a valid leasehold estate for each
Vail Leased Property, as shown on Schedule 4.14(a)(i), and enjoy peaceful and
undisturbed possession thereunder. All such leases are valid, binding and
enforceable in accordance with their terms, and are in full force and effect,
Vail and its subsidiaries have complied with all material obligations
thereunder, and there are no existing defaults by Vail and its subsidiaries,
and, except as set forth in Schedule 4.14(i), there are no existing defaults by
any other party thereunder. No event has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a default by Vail and its subsidiaries and no event has occurred
which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a default by any other party
thereunder. Except as disclosed on Schedule 4.14(i), all such leases shall
continue in full force and effect (without default) after the Closing and the
consummation of the
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transactions contemplated by this Agreement without the consent,
approval or act of any other party, except to the extent that enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable or fiduciary principles.
4.15 Personal Property. Except as set forth on Schedule 4.15(a), and
except for any immaterial exceptions, restrictions or limitations contained in
financing statements with respect to such property, Vail and its subsidiaries
own, or have a valid lease or license with respect to, the tangible personal
property (including without limitation ski lift systems and snowmaking equipment
and systems) which is necessary for the operation of their business
substantially in the same manner as currently conducted, free and clear of all
liens, mortgages, pledges, security interests, charges or encumbrances other
than Permitted Encumbrances, and enjoy peaceful and undisturbed possession
thereunder. Except as set forth on Schedule 4.15(b), all such property that is
material to the operations of Vail is in reasonably good operating condition and
repair, ordinary wear and tear excepted, and is suitable for the purposes for
which it is used. Schedule 4.15(c) contains a list of each lease pursuant to
which Vail and its subsidiaries lease personal property which involves payment
over the remaining term of such lease of more than $100,000 and which in each
case is not cancelable upon six months' notice or less without penalty of more
than $100,000. All such personal property leases are valid, binding and
enforceable in accordance with their terms and are in full force and effect,
Vail and its subsidiaries have complied with all obligations thereunder and
there are no existing material defaults by Vail and its subsidiaries or, to the
Knowledge of Vail, by any other party thereunder; no event has occurred which
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a material default by Vail and its
subsidiaries thereunder; and no event has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute a material default by any other party thereunder. Except as set
forth on Schedule 4.15(d), all personal property leases which are set forth on
Schedule 4.15(c) hereto shall continue in effect after the Closing and the
consummation of the transactions contemplated by this Agreement without the
consent, approval or act of any other party. All unperformed contracts to
purchase personal property to which Vail and its
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subsidiaries are a party which provide for a purchase price of
$100,000 or more are set forth on Schedule 4.15(e).
4.16 Litigation and Claims. Schedule 4.16 sets forth all pending
judicial or administrative investigations, lawsuits, actions or proceedings
against Vail and its subsidiaries of which Vail or Vail and its subsidiaries
have received written notice. Except as set forth on Schedule 4.16, there are no
actions, suits, investigations, administrative proceedings or orders pending or,
to Vail's Knowledge, threatened against (i) Vail, at law or in equity, which, if
adversely determined, would have an adverse effect on the ability of Vail to
perform the terms of this Agreement, or would interfere with the ability of Vail
to consummate the transactions contemplated herein, or (ii) against Vail or any
of its subsidiaries, at law or in equity.
4.17 Compliance with Laws. Except as set forth on Schedule 4.17, to
the Knowledge of Vail, Vail and its subsidiaries are not in violation of any
law, rule or regulation or in default in any material respect with respect to
any judgment, writ, injunction or decree of any federal, state or local
commission.
4.18 Orders and Consent Decrees. Except as set forth on Schedule 4.18,
or as specifically cross-referenced thereon from other Schedules hereto, Vail
and its subsidiaries are not a party to, or bound by, any material judicial or
administrative order, judgment, decree or consent decree relating to any past or
present practice, omission, activity or undertaking. To the Knowledge of Vail,
Vail and its subsidiaries are not in default in any material respect under any
of the judicial or administrative orders, judgments, decrees or consent decrees
or conciliation or compliance agreements set forth on Schedule 4.18.
4.19 Labor Agreements. There are no binding agreements of any type
with any labor union, labor organization, collective bargaining unit or employee
group to which Vail and its subsidiaries are bound. 4.20 Employees. Except as
set forth on Schedule 4.20, Vail and its subsidiaries have not received any
written notice from a governmental authority or official during the past two
years of any non-compliance with any federal, state or local laws, regulations
and legal requirements relating to the employment of labor in connection with
their business,
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including those laws, regulations and legal requirements relating to
wages, hours, benefits, affirmative action, equal opportunity, including the
Americans with Disabilities Act and the Occupational Safety and Health Act,
collective bargaining, workers' compensation and the payment of social security,
unemployment and employment taxes.
4.21 Contracts. All contracts of Vail or any of its subsidiaries which
involve aggregate payments after the date of this Agreement of $100,000 or more
are set forth on Schedule 4.21 or are specifically cross-referenced thereon from
other Schedules hereto. Except as set forth on Schedule 4.21, Vail and its
subsidiaries are not a party to or obligated under any written agreement or
contract that:
(a) provides for the employment of any Corporate Officer of Vail not
terminable at will and without liability for additional payments or
compensation, other than severance and vacation pay payable in accordance
with the established policies of Vail as set forth on Schedule 4.21;
(b) provides for (i) the employment of any consultant or broker for a
term that would exceed one (1) year from the date of the Closing, or
provides for payments that exceed $100,000, or (ii) the employment of any
independent attorney or accounting firm not terminable at will;
(c) would prohibit or limit in any material respect Vail or any of its
subsidiaries from engaging in their present business;
(d) requires the purchase of materials, inventories services or
supplies that has a remaining contractual term of more than one (1) year
from the Closing, or would require payments in the aggregate in excess of
$100,000;
(e) involves the sale of any asset or property of Vail or any of its
subsidiaries presently being used in Vail's or any of its subsidiaries'
business or operations, other than in the normal course of business;
(f) relates to the borrowing of money or bank credit (including, but
not limited to, indentures, notes, installment obligations and capital
leases) or the
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mortgaging or pledging of any asset or property of Vail or any of its
subsidiaries;
(g) guarantees the obligations of any supplier, cus- tomer or other
third party, other than endorsements in the ordinary course;
(h) is a forward, swap, option or swaption contract or any other
financial instrument with similar characteristics and/or generally
characterized as a "derivative" security to which Vail or any of its
subsidiaries are a party or to which Vail or any of its subsidiaries or any
of their respective assets or properties is subject or bound (including,
without limitation, funds of Vail invested by any other person); or
(i) includes any indemnity provisions for claims based on product
liability, environmental or employee or retiree liabilities and arises out
of any purchase or acquisition of another entity or business.
4.22 Validity of Material Contracts.
(a) Except as set forth on Schedule 4.22(a), Vail and its subsidiaries
have not: (i) received any written claim of breach or default from any party
relating to any agreement, commitment or contract listed on Schedule 4.21; or
(ii) received any written notice of termination from any party relating to any
such agreement, commitment or contract.
(b) Except as set forth on Schedule 4.22(b), Vail and its subsidiaries
have not breached or defaulted in any material respect on any agreement,
commitment or contract listed on Schedule 4.21.
4.23 Trademarks and Copyrights.
(a) Schedule 4.23(a)(i) lists all registered trademarks and copyrights
owned by Vail and its subsidiaries and the jurisdictions in which such are
registered or in which an application has been filed for such registration.
Schedule 4.23(a)(ii) lists each license or sublicense (with a term exceeding one
year or with a royalty payment of more than $1,000) to which Vail and its
subsidiaries are a party and pursuant to which any other person or entity is
authorized to use any such trademark or copyright. All trademarks and copyrights
listed on Schedule 4.23(a)(i) are owned by Vail and its
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subsidiaries and, except as disclosed on Schedule 4.23(a)(iii), are
free and clear of any known adverse claim of any third party.
(b) To the Knowledge of Vail, Vail and its subsidiaries do not
infringe or unlawfully or wrongly use any trademark or copyright rights owned or
claimed by any other party.
(c) To the Knowledge of Vail, except as disclosed on Schedule 4.23(c),
no third party is now making any infringing use of any Vail trademark or
copyright.
(d) Except as disclosed on Schedule 4.23(d) or as required to be
disclosed on Schedule 4.23(a)(ii), Vail and its subsidiaries have not sold or
otherwise disposed of, or transferred or granted, any interest in such Vail
trademarks or copyrights listed on Schedule 4.23(a)(i).
(e) To the Knowledge of Vail, no claims are being asserted by any
person against the use of any of the trademarks or copyrights listed on Schedule
4.23(a)(i), or challenging or questioning the validity or effectiveness of any
license or agreement related thereto. Except as disclosed on Schedule 4.23(e),
none of the Vail trademarks or copyrights is subject to any outstanding order,
judgment or decree restricting the use thereof by Vail and its subsidiaries, or
restricting the licensing thereof by Vail and its subsidiaries to any other
person or entity.
4.24 Powers of Attorney. Except as set forth on Schedule 4.24, neither
Vail nor any of its subsidiaries has any material outstanding revocable or
irrevocable Powers of Attorney or similar authorizations issued to any
individual who is not a Vail Employee.
4.25 Taxes.
(a) Vail, the affiliated group, within the meaning of Section 1504 of
the Code, of which Vail is the common parent and any other affiliated group,
within the meaning of Section 1504 of the Code, of which Vail has been a member
at any time since its date of incorporation (an "Affiliated Group" and,
collectively, the "Affiliated Groups") have timely filed on or before the date
hereof all Tax Returns required to be filed in accordance with all applicable
laws (taking into account all extensions of due dates), and all such Tax Returns
are true, correct and complete and all amounts shown thereon as owing
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have been paid. Except as set forth on Schedule 4.25(a): (i) all Tax
bills or Tax assessments received by or with respect to Vail have been paid (to
the extent the Taxes shown thereon are due and owing); (ii) all Taxes with
respect to Vail and the Affiliated Groups (whether or not shown on any Tax
Returns) have been paid or accrued and all deficiencies for Taxes asserted or
assessed by a taxing authority against Vail or an Affiliated Group have been
paid or finally settled or are being contested by appropriate proceedings; (iii)
no claim is currently being made by an authority in a jurisdiction where Vail or
an Affiliated Group does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction; and (iv) there are no liens on any of the assets
of Vail or an Affiliated Group that arose in connection with any failure (or
alleged failure) to pay any Tax. The term "Vail" when used in this Section 4.25
means Vail and its subsidiaries.
(b) Vail and the Affiliated Groups have collected or withheld and paid
on a timely basis all Taxes required to have been collected or withheld and paid
to any taxing authority in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party.
(c) Except as set forth on Schedule 4.25(c), neither Vail nor an
Affiliated Group has received any written notice of pending or threatened
actions, audits, proceedings or investigations for the assessment or collection
of Taxes.
(d) Except as set forth on Schedule 4.25(d), neither Vail nor an
Affiliated Group has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency
(but only to the extent such waiver or extension is still in effect) nor are
there any outstanding requests for any extension of time within which to pay any
Taxes not yet paid. For all taxable periods subsequent to the fiscal year ended
December 31, 1989, Vail has provided to Foods (i) true, correct and complete
copies of federal Form 1120 pro forma returns for Vail and all other information
(compiled in a true, correct and complete manner) relating to income,
deductions, credits and Taxes of Vail that is not included in the pro forma
returns, (ii) all statements of federal Income Tax deficiencies assessed
against, or attributable to, Vail or an Affiliated Group and (iii) a true,
correct and complete copy of any Tax Sharing Agreement to which Vail is a party
and a true, correct and complete description of any such Tax Sharing Agreement
not reduced to writing.
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(e) Except as set forth on Schedule 4.25(e), neither Vail nor an
Affiliated Group has made, is obligated to make or is a party to any contract,
agreement, arrangement or plan covering any Vail Employee that (taking into
account the transactions contemplated by this Agreement) could obligate it to
make any payments that would not be deductible under Section 162 of the Code (by
reason of being unreasonable in amount), Section 404, Section 162(m) or Section
280G of the Code.
(f) Schedule 4.25(f) sets forth the following information with respect
to Vail as of the most recent practicable date: (i) the tax basis of Vail's
assets; and (ii) the amount of any net operating loss, net capital loss, tax
credit or other carryover allocable to Vail.
(g) Except as set forth on Schedule 4.25(g), Vail is not a party to
any joint venture, partnership or other arrangement or contract that could be
treated as a partnership for federal income tax purposes.
(h) The unpaid Taxes of Vail do not exceed the reserve for Tax
liability as computed in a manner consistent with the prior and customary
accounting practice of Vail (excluding any reserve for deferred Taxes
established to reflect timing differences between book and tax income).
(i) All Consolidated Returns and Unitary Returns (as defined below),
and all state, local and foreign Tax Returns of Vail and the Affiliated Groups
have been closed by applicable statute of limitations for all taxable years
ending on or before the dates shown on the attached Schedule 4.25(i).
"Consolidated Return" shall mean any consolidated federal Income Tax Return
filed by an Affiliated Group, and "Unitary Return" shall mean any Return with
respect to any Taxes, other than federal Income Taxes, filed, or required to be
filed, on a consolidated, combined or unitary basis by any group of corporations
of which Vail is a member or has been a member at any time since its date of
incorporation.
(j) Vail and the Affiliated Groups have made all payments of estimated
Taxes required to be made with respect to any of them under Section 6655 of the
Code and any comparable provisions of state, local and foreign law.
(k) Except as set forth on Schedule 4.25(k), no power of attorney has
been granted by Vail or an Affiliated
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Group with respect to any matter relating to Taxes which is currently
in force.
(l) No consent has been filed under Section 341(f) of the Code with
respect to Vail or an Affiliated Group.
(m) Neither Vail nor an Affiliated Group has incurred or assumed any
corporate acquisition indebtedness, as defined in Section 279(b) of the Code.
4.26 Employee Benefit Plans.
(a) All Employee Benefit Plans sponsored by Vail and covering Vail
Participants are set forth on Schedule 4.26(a) (the "Vail Employee Benefit
Plans"). With respect to each Vail Employee Benefit Plan, copies of the
following have been delivered to Foods where applicable: (i) the Plan document;
(ii) a summary plan description; (iii) most recent Annual Return/ Report of
Employee Benefit Plan, Form 5500 Series; (iv) trust agreement; (v) insurance
policy; and (vi) determination letter from the IRS. The Vail Employee Benefit
Plans have in all material respects been maintained and administered in
compliance with applicable federal and state laws, regulations and rules,
including, but not limited to, ERISA and the Code. All contributions required as
of the Closing, by law or contract, to be made to each Vail Employee Benefit
Plan will have been timely made.
(b) No Vail Employee Benefit Plan (or trust or other funding vehicle
pursuant thereto) is subject to any Tax under Section 511 of the Code that
remains unpaid and assessable against Vail after the Closing.
(c) Neither Vail nor any plan fiduciary of any Vail Employee Benefit
Plan has engaged in any transaction in violation of Section 404 or 406 of ERISA,
or in any "prohibited transaction" as defined in Section 4975(c)(1) of the Code,
for which no exemption exists under Section 408 of ERISA, or in violation of
Section 4975(c)(2) or 4975(d) of the Code.
(d) Except as listed on Schedule 4.26(d), neither Vail nor any Vail
Employee Benefit Plan is a party to any litigation with respect to Vail
Participants relating to, or seeking benefits under, any Employee Benefit Plan.
(e) Except as set forth on Schedule 4.26(e), neither Vail nor any
ERISA Affiliate has any legally binding
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commitments to create any additional Employee Benefit Plans which are
intended to cover Vail Employees, or to amend or modify any existing Employee
Benefit Plan with respect to benefits for Vail Employees. With respect to each
collective bargaining agreement, there is no legally binding commitment to
create any additional Employee Benefit Plans which are intended to cover Vail
Employees, to amend or modify any existing Employee Benefit Plan which covers or
has covered Vail Employees, or to begin contributing, or increase contributions,
to a Multiemployer Plan, which would materially increase the benefits to be
provided under such collective bargaining agreement.
(f) Except as described on Schedule 4.26(f), the execution and
performance of the transactions contemplated by this Agreement, and such other
agreements, instruments and documents required to be executed in connection
therewith, shall not constitute an event under any Employee Benefit Plan or
agreement under which Vail may incur any liability that will result in any
payment (whether severance pay or otherwise), acceleration, vesting or increase
of benefits with respect to any Vail Employee.
(g) Each Vail Employee Benefit Plan which is a retirement plan or a
savings plan has been established and operated so as to be qualified and tax
exempt under the provisions of Code Sections 401(a) and 501(a) from its adoption
to date and will be so as of the Closing. Vail has not, by its action or
inaction, adversely affected the qualified status of any such Vail Employee
Benefit Plan.
(h) All Vail Employee Benefit Plans under which benefits are provided
under health maintenance and preferred provider organizations are set forth on
Schedule 4.26(h).
(i) Except as set forth on Schedule 4.26(i), neither Vail (since
January 1, 1989) nor any ERISA Affiliate has been a party to any Multiemployer
Plan in either a "complete withdrawal" as defined in Section 4203 of ERISA or a
"partial withdrawal" as defined in Section 4205 of ERISA.
(j) Neither Vail nor any of its ERISA Affiliates have incurred any
liability under Title IV of ERISA (other than for contributions not yet due or
for the payment of premiums not yet due), which liability has not been fully
paid as of the date hereof.
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4.27 Environmental Matters. Except as set forth on Schedule 4.27:
(a) Vail and its subsidiaries have obtained (or are capable of
obtaining without incurring any material incremental expense) all
Environmental Permits and all licenses and other authorizations and have
made all registrations and given all notifications that are required under
any applicable Environmental Law.
(b) Except as set forth on Schedule 4.27(b), there is no Environmental
Claim pending (excluding any of the foregoing with respect to which Vail
has not received service of process or notice, as the case may be, except
if Vail has Knowledge of the existence thereof) against Vail and its
subsidiaries under an Environmental Law.
(c) Except as set forth on Schedule 4.27(c) Vail and its subsidiaries
are in compliance with all terms and conditions of their Environmental
Permits, and are in compliance with all applicable Environmental Laws.
(d) Except as set forth on Schedule 4.27(d) Vail and its subsidiaries
did not generate, treat, store, transport, discharge, dispose of or release
any Hazardous Substances on any property now or previously owned, leased or
used by Vail and its subsidiaries.
4.28 Liability and Casualty Insurance. Schedule 4.28 sets forth a
description of each liability or casualty insurance policy (including, without
limitation, fire and product liability policies) including self-insurance
maintained on the property, assets and business of Vail and its subsidiaries,
specifying the insurer, the amount of coverage, the type of insurance, the
policy number, the expiration date and the annual premium. All such policies:
(i) are valid, outstanding and enforceable policies; (ii) shall remain in full
force and effect until their respective expiration dates as set forth on
Schedule 4.28 without the payment of additional premiums other than additional
premiums required in the ordinary course prior to the Closing; and (iii) except
as noted on Schedule 4.28, shall not in any way be adversely affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement.
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4.29 Consents or Approvals.
(a) All consents and approvals of any third party required by the
terms hereof or required to consummate the transactions contemplated herein have
been obtained or, prior to the Closing, will be obtained and shall remain in
full force and effect through the Closing.
(b) Except as set forth in Schedule 4.29, no consent, waiver, approval
or authorization, registration, declaration or filing with any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by or with respect to Vail in
connection with the execution and delivery of this Agreement, and such other
agreements, instruments and documents required to be executed by Vail in
connection herewith contemplated herein and therein, or the consummation by Vail
of the transactions contemplated herein and therein.
4.30 Transaction Fees. Except as set forth on Schedule 4.30, neither
Vail nor any member of its board of directors has any agreement or
understanding, or has incurred any liability, requiring the payment of a
finder's fee, brokerage commission or like cost or charge to any person by
reason of this Agreement or the transactions contemplated herein. Vail is solely
responsible for all fees, commissions and other costs of the persons listed on
Schedule 4.30 and neither Vail nor any of its subsidiaries has any
responsibility therefor.
4.31 Ralston Stock Acquired for Vail's Account. The Ralston Stock to
be acquired by Vail pursuant to this Agreement is being acquired for Vail's own
account. Vail has no intention of distributing or reselling such stock or any
part thereof in any transaction which would be in violation of the Securities
Act of 1933, or the state securities laws of any state.
4.32 United States Forest Service.
(a) Except as set forth on Schedule 4.32(a), Vail's operations and
those of its subsidiaries comply, in all material respects with the terms and
conditions of the USFS Permits issued by the USFS to Vail or its subsidiaries
and such permits are in full force and effect and neither Vail nor its
subsidiaries have received any notice of default under the USFS Permits;
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(b) Except as set forth on Schedule 4.32(b), neither Vail nor its
subsidiaries have received any written notice of nor have any Knowledge that the
USFS has any intention of amending, revoking or otherwise altering the terms or
conditions of any of the USFS Permits, or portion thereof, or the application of
the USFS Permits to Vail's or its subsidiaries' operations;
(c) Except as set forth on Schedule 4.32(c), neither Vail nor its
subsidiaries are engaged in any on-going dispute or disagreement with the USFS
over the interpretation or application of any term or condition of any of the
USFS Permits; and
(d) Except as set forth on Schedule 4.32(d), Vail has no Knowledge of
any third-party permitee or commercial operator operating within the areas
permitted to Vail or its subsidiaries under any of the USFS Permits.
4.33 Passenger Tramway.
(a) Except as set forth on Schedule 4.33(a), neither Vail nor its
subsidiaries have had, in the past three (3) ski seasons, any passenger tramway
incidents that required reporting to the CPTSB under CPTSB laws, rules,
regulations and standards.
(b) Except as set forth on Schedule 4.33(b), each passenger tramway
operated by Vail or its subsidiaries complies in all material respects with
current laws, rules, regulations and standards of CPTSB and the ANSI and,
further, there are no defects or conditions which are "grandfathered" under
CPTSB or ANSI laws, rules, regulations and standards.
(c) Except as set forth on Schedule 4.33(c), Vail and its subsidiaries
have maintained in all material respects, each passenger tramway owned or
operated by Vail or its subsidiaries according to all CPTSB laws, rules,
regulations and standards and all maintenance and replacement procedures and
standards recommended by the manufacturer, or manufacturer's successor, of each
such passenger tramway and, further, no such maintenance or replacement is now
outstanding or has been otherwise deferred or delayed beyond the manufacturer's
recommended maintenance and replacement schedule.
(d) Except as set forth on Schedule 4.33(d), neither Vail nor its
subsidiaries have any Knowledge of any defect or condition that would preclude
or materially limit the normal
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operation of any passenger tramway owned or operated by Vail or its
subsidiaries.
4.34 Clean Water Act.
(a) To Vail's Knowledge, there have been no material discharges of
dredged or fill material into any waters of the United States, or any other
activity, on or within property owned or operated by Vail or its subsidiaries in
violation of the Clean Water Act, other than discharges or other activities
pursuant to permits (the "Vail Existing Permits").
(b) Except as described on Schedule 4.34(b), to Vail's Knowledge, the
Vail Existing Permits are in full force and effect and neither Vail, its
subsidiaries nor anyone acting for or on behalf of Vail or its subsidiaries has
materially violated nor is currently and materially in violation of any of the
terms and conditions of the Vail Existing Permits and there are no outstanding
mitigation requirements or unsatisfied conditions contained in any of the Vail
Existing Permits. Vail represents that it has all permits required under the
Clean Water Act.
4.35 Water Rights. The representations and warran- ties set forth on
Schedule 4.35 are incorporated herein by reference.
4.36 Financing Commitment. Vail has obtained a commitment to lend Vail
sufficient funds to repay Indebtedness of Ralston up to the Foods Dividend
Amount from Nationsbank of Texas, N.A. and has provided Foods a true and correct
copy of such commitment. Vail has no Knowledge of any fact or circumstance that
may cause Nationsbank of Texas, N.A. not to loan such funds to Vail on or prior
to the Closing Date.
ARTICLE V
COVENANTS PENDING CLOSING
5.1 Ralston Operations. Until the Closing, Foods and Ralston shall
use, and shall cause Ralston's subsidiaries to use, their reasonable best
efforts to conduct Ralston's business in the usual and customary manner
consistent with past practice and exclusively through Ralston and its
subsidiaries. Until the Closing, Ralston shall, and shall cause its
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subsidiaries to, continue to make capital expenditures with respect to
the properties and resorts of Ralston as contemplated by the Ralston Budget and
shall make all expenditures reasonably necessary (including but not limited to
marketing and advertising expenditures and the hiring of seasonal employees) for
the Ralston resorts opening for the 1996-1997 ski season on a basis consistent
with past practice and in accordance with the Ralston Budget. Except with the
prior written approval of Vail (which approval shall not be unreasonably
withheld) or as specifically permitted by the terms of this Agreement, Foods
shall not permit Ralston to, and Ralston shall not and shall not permit any of
its subsidiaries to:
(a) enter into any employment agreement with any officer or director,
or any agreement to increase the compensation or benefits of any officer or
director (other than pursuant to normal merit salary reviews conducted in
the ordinary course of business after consultation with Vail);
(b) increase the compensation or benefits (including, without
limitation, increasing any severance benefits) of any Ralston Employee
except: (i) as required by law; (ii) in accordance with customary
negotiations of applicable labor or employment agreements to which Ralston
or any of its subsidiaries is bound; (iii) pursuant to any changes in
Employee Benefit Plans as set forth on Schedule 3.30(f); or (iv) pursuant
to normal merit salary reviews conducted in the ordinary course of business
after consultation with Vail;
(c) make any payment under any existing Employee Benefit Plan not
required under the terms thereof, or modify, amend or terminate any
existing Employee Benefit Plan (except as required by law) to materially
increase the benefits under such plan, or adopt any new Employee Benefit
Plan;
(d) hire any new Ralston Employee at a grade level of director or
higher (other than replacement employees after consultation with Vail);
(e) merge with or into another corporation, or become a partner,
shareholder or participant in any joint venture, limited liability company
or other business organization; or acquire by purchase or otherwise all or
any part of the business or the assets of, or stock or other
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evidence of beneficial ownership in, any firm, corporation or other
person;
(f) acquire or dispose of any material asset (other than current
assets in the ordinary course of business) or fail to execute all renewal
options on any Ralston Leased Property;
(g) permit any material change in any methods of calculating any bad
debt, or in the assumptions underlying such calculations;
(h) undertake any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due), except items
incurred in the ordinary course of business and consistent with past
practice, or permit any change in any assumptions underlying or methods of
calculating any bad debt, contingency or other reserves;
(i) permit or allow any of the properties (excluding the Option Land)
or assets used by Ralston or its subsidiaries in their business or
operations (whether real, personal or mixed, tangible or intangible) to be
mortgaged or pledged, or subjected to a lien, except for Permitted
Encumbrances;
(j) cancel or release any other debts or claims, or waive any rights
of substantial value or sell, transfer or convey any of its properties or
assets (whether real, personal or mixed, tangible or intangible), except in
the ordinary course of business and consistent with past practice;
(k) dispose of, or permit to lapse, or otherwise fail to use
reasonable efforts consistent with past practices, which may or may not
include the institution of litigation, to preserve the rights of Ralston or
any of its subsidiaries to use any material patent, trademark, service
mark, logo, trade dress, trade style, trade name, assumed name or copyright
or any registration or recording thereof or application therefor;
(l) dispose of, or permit to lapse, any material license, permit or
other form of material authorization; or dispose of or disclose to any
person, other than employees, consultants and representatives bound by
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confidentiality obligations or agreements, any trade secret, formula,
process or know-how;
(m) make any commitments for capital expenditures for replacements or
additions to property, plant or equipment, other than as required in the
ordinary course of business consistent with the Ralston Budget or otherwise
in the ordinary course in an aggregate amount not to exceed $100,000;
(n) declare, pay or make, or set aside for payment or making, any
dividend or other distribution in respect of its capital stock or other
securities (other than as permitted by Section 2.3 or 5.12 hereof), or
directly or indirectly redeem, purchase or otherwise acquire any of its
capital stock or other securities;
(o) issue, authorize or propose the issuance of any shares of its
capital stock, or subdivide or in any way reclassify any shares of its
capital stock;
(p) delay or defer payment of accounts payable or other obligations of
Ralston or any subsidiary, or accelerate collection of accounts receivable
or other obligations due Ralston or any subsidiary, in a manner
inconsistent with past practice, or otherwise make any material change in
any method of accounting or accounting practice;
(q) except pursuant to existing Employee Benefit Plans, pay, loan or
advance any amount to, or sell, transfer or lease, any property or asset
(whether real, personal, tangible or intangible) to, or enter into
agreement, arrangement or transaction with any of the Corporation Officers
or directors of Ralston;
(r) terminate any material contract, lease, agreement or license
except for contracts, leases, agreements or licenses expiring in the
ordinary course of business pursuant to their terms, amend or suffer the
amendment of, or fail to perform all of its material obligations under,
any material contract, lease, agreement or license;
(s) enter into any contract, lease, license or permit, except
contracts entered into in the ordinary course of business;
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(t) fail to take such action as may be reasonably necessary to
maintain, preserve, renew and keep in full force and effect the corporate
existence, qualifications, material licenses, permits, registrations and
franchises of Ralston and its subsidiaries, or fail to comply with any law
applicable to the conduct of the businesses of Ralston and its subsidiaries
where the failure to comply is reasonably likely to result in a Material
Adverse Change;
(u) amend the certificate of incorporation or by-laws of Ralston or
any of its subsidiaries, or fail to take such action as may be reasonably
necessary to maintain, preserve, renew and keep in full force and effect
the corporate existence and qualifications of Ralston or any of its
subsidiaries;
(v) incur or become liable with respect to any Indebtedness that would
be required to be repaid as a result of the transactions contemplated by
this Agreement or that would not be prepayable at any time following the
Closing without premium or penalty;
(w) enter into any agreement with any local, state or Federal
government or agency; or enter into any consulting agreement or sponsorship
agreement requiring the payment of $100,000 or more or having a term of one
year or more;
(x) knowingly take any action that would render any representation or
warranty inaccurate in any material respect at the time of Closing;
(y) take any action with respect to, or make any material change in
its accounting or Tax policies or procedures, except as may be required by
changes in generally accepted accounting principles upon the advice of its
independent accountants;
(z) make or revoke any Tax election or settle or compromise any Tax
liability, or amend any Tax Return;
(aa) take any action or fail to take any action which would constitute
a material breach or default under the LLC Agreement;
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(bb) permit its representatives to the LLC's Management Committee (as
defined in the LLC Agreement) to act upon, ratify, or approve any Major
Decisions (as defined in the LLC Agreement); or
(cc) dispose of, transfer or assign its interest or any part thereof
in the LLC.
5.2 Vail Operations. Until the Closing, Vail shall conduct its
business in the usual and customary manner consistent with past practice and
shall continue to make capital expenditures with respect to its properties and
resorts as contemplated by its 1996 fiscal budget. Except with the prior written
consent of Foods or in furtherance of the transactions contemplated by this
Agreement, Vail shall not:
(a) merge with or into another corporation;
(b) issue, authorize or propose the issuance of any shares of its
capital stock or options to acquire capital stock other than (i) the
issuance of shares of capital stock issued pursuant to the options listed
on Schedule 4.1, (ii) the issuance of up to 50,000 shares of Vail Stock to
officers and employees of Vail and (iii) the grant or issuance of options
for up to 300,000 shares of Vail Stock to officers and employees of Vail
minus the number of shares issued pursuant to clause (ii), or subdivide or
in any way reclassify any shares of its capital stock (other than shares of
capital stock issued in connection with Vail's stock option plan or other
existing options);
(c) declare or pay any extraordinary dividend or any other dividend
other than the Vail Dividend; or
(d) fail to take such action as may be reasonably necessary to
maintain, preserve, renew and keep in full force and effect the corporate
existence and qualification of Vail or amend the Certificate of
Incorporation or by-laws of Vail, except as contemplated herein.
In addition to the foregoing, Vail will not take any action with
respect to, or make any material change in its accounting or Tax policies or
procedures, except as may be required by changes in generally accepted
accounting principles upon the advice of its independent accountants, or make or
revoke any Tax election or settle or compromise any Tax
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liability, or amend any Tax Return, without first consulting with
Foods, it being understood that Vail may undertake such action after such
consultation.
5.3 Due Diligence Review.
(a) Until the Closing, each of Ralston and Vail shall permit each
other and their respective counsel, accountants, financial advisors and other
representatives access during normal business hours to the facilities, personnel
and accountants (including all audit work papers relating solely to Ralston
and/or its subsidiaries) of Ralston and Vail and to all of the properties,
operations, books, contracts and records of Ralston and Vail to the extent
relevant to the transactions contemplated herein, and shall furnish Ralston and
Vail during such period with all such information concerning the businesses and
operations of Ralston and Vail as Ralston or Vail may reasonably request, except
to the extent that, in the reasonable opinion of counsel, such furnishing of
information would violate or suggest a violation of any federal, state or local
statute, rule, regulation or ordinance, or any confidentiality agreements with
respect to such information. In furtherance of the foregoing, promptly following
the execution of this Agreement Ralston shall (i) permit Vail and its
representatives to directly communicate with directors and third party
consultants (at Vail's expense to the extent that the expenses of such
consultants as a result of such communications exceed $10,000) of Ralston and to
physically visit and inspect all of Ralston's resorts and properties, (ii)
provide to Vail all information reasonably requested by Vail with respect to
real estate owned or leased by Ralston and its subsidiaries and (iii) use its
best efforts prior to the Closing to permit Vail and its representatives to have
access to all of the personnel, properties, books, contracts and records of the
LLC, including attending all meetings between representatives of Ralston and of
the LLC. Vail shall coordinate and schedule any access to Ralston's and the
LLC's facilities and employees through Joe R. Micheletto and Ingrid Keiser.
(b) In the event of a material change to Ralston's or Vail's business
or operations, Ralston or Vail, as the case may be, shall notify the other party
of such material change and shall furnish such other party with all information
concerning such change as such other party may reasonably request, except to the
extent that, in the reasonable opinion of counsel, such furnishing of
information would violate or suggest a violation of any federal, state or local
statute, rule,
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regulation or ordinance or any confidentiality agreements with respect
to such information.
5.4 Insurance.
(a) Until the Closing, each of Foods and Vail shall use their best
efforts to maintain, in full force and effect, liability and casualty insurance
policies providing coverage substantially identical to the insurance coverage
provided under the policies of insurance now in effect for Ralston and Vail and
set forth on Schedules 3.31 and 4.28, respectively. Such party shall notify the
other party in writing in the event of any cancellation of insurance coverage.
(b) Ralston's insurable interest in the insurance policies listed in
Schedule 3.31 shall terminate (except for the property policy) at the Closing.
Vail shall add Ralston as additional named insured under Vail's casualties
policies effective as of the Closing. Vail shall assume Ralston's property
policy under an assignment until the expiration of such policy.
(c) Foods will provide notice in the form of claim printouts to the
respective insurers of "claims made" excess liability policies.
5.5 Public Announcements. Until the Closing, the parties hereto shall
consult with each other and shall mutually agree upon any press release or
public announcement relating to the transactions contemplated herein and will
not issue any such press release or make any such public announcements prior to
such consultation and agreement, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange, or that counsel deems any party should make to the investing public
and its shareholders, provided that the party proposing to issue such press
release or make such public announcement will use reasonable efforts to consult
in good faith with the other parties before issuing any such press release or
making any such public announcement.
5.6 Hart-Scott-Rodino Filing; Investigations or Litigation. Foods and
Vail shall (i) take all action necessary, as soon as reasonably practicable, to
make the filings required of Foods and Vail under Hart-Scott-Rodino, (ii)
endeavor to obtain early termination of the waiting period thereunder, (iii)
promptly comply with any request for
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additional information received by Foods or Vail from the Federal
Trade Commission or the Antitrust Division of the Department of Justice pursuant
to Hart-Scott-Rodino, (iv) use reasonable efforts to defend all lawsuits, other
legal proceedings, or investigations challenging this Agreement or the
transactions contemplated hereby (unless in the reasonable opinion of Vail, they
are unlikely to prevail in such matter), and (v) attempt to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby (unless in the
reasonable opinion of Vail, they are unlikely to prevail in such matter).
Without limiting the foregoing, each party will cooperate with the other parties
in connection with any filings required under Hart-Scott-Rodino, including (i)
furnishing to other parties, upon request, such information as shall reasonably
be required in connection with the preparation of the parties' filings under
Hart-Scott-Rodino, and (ii) with respect to the transactions contemplated by the
Agreement, coordinating responses and establishing reasonable schedules and
deadlines in connection with resolving any investigation, other inquiry, or
legal proceedings commenced by the Federal Trade Commission, the Antitrust
Division of the Department of Justice or any state attorney general.
5.7 No Solicitation. Unless and until this Agreement is terminated
pursuant to Article XI, Foods and Ralston shall not, and shall not permit any of
their Corporate Officers or directors to, (a) furnish any information concerning
the businesses of Ralston to any person (other than Vail) interested in
acquiring Ralston or, except in the ordinary course of business, any of its
assets, or (b) solicit any offer or enter into discussions or negotiations with
respect to any merger or sale of all or substantially all of the assets of
Ralston, or other acquisition transaction with respect to Ralston, with any
persons other than Vail. Foods shall notify Vail promptly upon the receipt of
any such inquiry, contact or offer.
5.8 Audit of Ralston Financial Statements; Delivery of Additional
Financial Statements.
(a) Promptly following the execution of this Agreement, Foods, at its
expense, shall cause its independent public accountants to audit the Ralston
Financial Statements (including the interim period ending June 30, 1996) and
cause such audit to be completed prior to August 31, 1996, together with the
delivery of such accountants' audit report with respect thereto. Foods shall
permit Vail and its accountants to have
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access to the auditors conducting such audit as well as their work
papers related thereto. Foods understands and agrees that such audited
statements, together with other relevant information concerning Ralston and its
business, will be included in a registration statement for the sale of Vail
Common Stock in a registered public offering.
(b) Until the Closing, Foods shall deliver to Vail interim
consolidated financial statements of Ralston as soon as practicable, but in no
event later than forty-five (45) days after the end of each fiscal quarter,
consisting of a balance sheet dated as of the last day of such fiscal quarter
and related statements of income and cash flow for such current and comparative
prior year and fiscal quarter, prepared in accordance with GAAP and consistent
with past practices, and thereafter such statements shall be considered Ralston
Financial Statements hereunder.
(c) To the extent not included within the Ralston Financial
Statements, Foods and Vail shall deliver to each other within twenty (20) days
after the period to which they relate unaudited monthly financial statements,
including a consolidated balance sheet and consolidated statements of earnings
and cash flow for the period then ended.
(d) Until the Closing, Vail shall make available to Foods interim
consolidated financial statements of Vail, as soon a practicable but in no event
later than forty-five (45) days after the end of each fiscal quarter, consisting
of a balance sheet dated as of the last day of such fiscal quarter, and related
statements of income, shareholders' equity and cash flow of such fiscal quarter,
prepared in accordance with GAAP and consistent with past practices, and
thereafter such statements shall be considered Vail Financial Statements
hereunder. In the event any such fiscal quarter shall be the last quarter of the
fiscal year, such statements shall be audited by independent public accountants.
5.9 Supplemental Disclosure. Until the Closing, Foods and Vail shall
have the continuing obligation to promptly supplement the information contained
in the Schedules attached hereto with respect to any matter hereafter discovered
which was in existence on the date hereof and, if known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules.
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5.10 Real Property Transfer Laws. Foods and Ralston shall comply with
any real property transfer laws that may be triggered by this transaction and
Foods and Vail shall equally pay any and all taxes, if any, thereunder.
5.11 Cooperation. Prior to the Closing, the parties shall cooperate in
preparing, and proceed with due diligence and in good faith in filing, any and
all registration statements, filings, and other documents necessary to
consummate the transactions contemplated by this Agreement.
5.12 Foods Receivables and Payables. Immediately prior to the Closing,
(i) all amounts then owing by Foods or any affiliate of Foods to Ralston or any
of its subsidiaries shall be forgiven and extinguished and (ii) all amounts then
owing to Foods or any affiliate of Foods from Ralston or any of its subsidiaries
shall be contributed to Ralston's capital and extinguished.
5.13 Environmental Surveys. In order to assist in arranging the
financing necessary for the Closing, promptly following the execution of this
Agreement Vail, in consultation with Foods, shall retain, at Vail's expense, a
reputable environmental consulting firm reasonably acceptable to Foods to
conduct a Phase I Environmental Assessment and Compliance Audit of such of the
properties of Ralston and its subsidiaries as Vail shall determine and, if
recommended by such firm, Phase II investigation of such properties. Foods, in
consultation with Vail, at its expense may have similar surveys done with
respect to such of the properties of Vail and its subsidiaries as Foods shall
determine.
5.14 Affiliate Guarantors. In the event that Foods at any time
Transfers (as defined in the Shareholders Agreement) any Vail Stock to an
Affiliate of Foods, prior to making such Transfer Foods shall cause such
Affiliate to execute and deliver to Vail a guaranty of such Affiliate, in form
and in substance satisfactory to Vail, whereby such Affiliate shall
unconditionally guaranty all of Foods' obligations to Vail under Article X
hereunder.
5.15 Notice of Certain Transactions. From the date of execution of
this Agreement until such time as Foods no longer has any liability under
Article X hereunder, Foods shall give Vail 20 days' prior written notice before
taking any of the following actions: (i) the distribution to shareholders of
Foods' indebtedness or of any substantial or material portion
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of the assets of Foods and its subsidiaries, taken as a whole (other
than cash dividends paid in the ordinary course); (ii) any consolidation or
merger of Foods with or into another entity or any sale of all or any
substantial portion of the assets of Foods and its subsidiaries taken as a
whole; or (iii) the voluntary dissolution, liquidation or winding up of Foods.
5.16 Guarantee Fees. Subject to Vail complying with Section 10.2(d),
Foods hereby promptly agrees to pay over to Vail any and all fees, commissions
or other amounts that Foods or any of its Affiliates may receive on or after the
Closing Date with respect to any Indebtedness of Ralston or its subsidiaries for
which Foods or any of its Affiliates remains liable for (as guarantor or
otherwise) after the Closing.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions of Vail. The obligation of Vail to close the
transactions contemplated herein is subject to the following conditions:
(a) performance of all covenants, obligations and agreements of Foods
in all material respects contained in this Agreement required to be
performed at or prior to the Closing;
(b) the representations and warranties of Foods contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and remain true and correct in all material respects on the date of
the Closing as if such representations and warranties are being made as of
the date of the Closing;
(c) the execution and delivery by Foods of all documents required to
be delivered by this Agreement at or prior to the Closing, including
without limitation the Shareholder Agreement;
(d) there shall not have occurred since June 30, 1996 a Material
Adverse Change of Ralston, or any event that, individually or in the
aggregate, could reasonably
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be expected to result in a Material Adverse Change of Ralston;
(e) Vail shall have received the audited Ralston Financial Statements
contemplated by Section 5.8(a) and there shall be no differences between
such audited statements and the unaudited Ralston Financial Statements
which are material;
(f) Vail shall have arranged sufficient financing sources, on terms
satisfactory to Vail, to repay all Indebtedness of Ralston and its
subsidiaries in full on the Closing Date, and the Indebtedness relating to
the Conference Center shall be amended to the reasonable satisfaction of
Vail;
(g) the aggregate amount reflected in the Ralston Budget to have been
spent on capital expenditures from July 1, 1996 through the end of the
month immediately preceding the Closing Date shall not be more than
$3,000,000 in excess of the aggregate amount of capital expenditures
actually made by Resorts and its subsidiaries from July 1, 1996 through the
end of the month immediately preceding the Closing Date;
(h) Vail shall have received consents and estoppel certificates with
respect to the transactions contemplated by this Agreement from the LLC and
the estate of Harry L. Baum;
(i) all requisite consents and approvals from the United States Forest
Service with respect to the transactions contemplated by this Agreement
shall have been received by Ralston;
(j) there shall exist no material defaults by Ralston or any of its
subsidiaries on any of the contracts or agreements relating to the Ventures
and there shall have been no change in the percentage ownership of the
Ventures of Ralston from that which exists as of the date of this
Agreement; and
(k) Vail shall have received a certificate of an officer of Foods
setting forth Foods' estimate in good faith of the amount determined
pursuant to clause (A) in the definition of Closing Contribution Adjustment
and such amount shall not exceed $18,000,000.
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Vail may waive any condition to the Closing; provided, however, that
such waiver shall not act as a waiver of any of Vail's available rights or
remedies against Foods pursuant to Article X hereof.
6.2 Conditions of Foods. The obligation of Foods to close the
transactions contemplated herein is subject to the following conditions:
(a) performance of all covenants, obligations and agreements of Vail
contained in this Agreement required to be performed at or prior to the
Closing;
(b) the representations and warranties of Vail contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and remain true and correct in all material respects on the date of
the Closing (other than the representations and warranties set forth in
Section 4.10) as if such representations and warranties are being made as
of the date of the Closing;
(c) the execution and delivery by Vail and Apollo Ski Partners, L.P.
of all documents required to be deliv- ered by this Agreement at or prior
to the Closing, includ- ing without limitation the Shareholder Agreement;
and
(d) there shall not have occurred since April 30, 1996 a Material
Adverse Change of Vail, or any event that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Change of Vail.
Foods may waive any condition to the Closing; provided, however, that
such waiver shall not act as a waiver of any of Foods' available rights or
remedies against Vail pursuant to Article X hereof.
6.3 Hart-Scott-Rodino. No party is obligated to close (a) until the
applicable waiting period (as may be extended) under Hart-Scott-Rodino shall
have expired or been terminated by the appropriate governmental agency, or (b)
if any challenge or objection has been made to the transactions contemplated
herein by such governmental agency unless any such challenge or objection made
has been withdrawn or resolved to the satisfaction of Vail in its sole
discretion.
6.4 No Litigation. The obligation of Foods and Vail to close the
transactions contemplated herein is subject to the
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condition that, upon Closing, there shall exist no bona fide lawsuit
or other legal action (or any administrative proceeding or investigation) by any
governmental authority that challenges or seeks to enjoin or modify the
transactions contemplated herein, or any other lawsuit, action, proceeding or
investigation which, in Vail's reasonable opinion, could materially interfere
with the consummation of the transactions contemplated by this Agreement.
6.5 Material Change in Market Circumstances. There shall not have
occurred any material adverse change in the financial markets in the United
States or any other calamity or crisis, the effect of which has resulted in a
material adverse effect on the market in the United States for equity securities
in general.
ARTICLE VII
THE CLOSING
7.1 Place of Closing. The Closing will be held at such place as shall
be mutually agreed upon by the parties.
7.2 Date of Closing. The Closing shall occur on the Closing Date;
provided, however, if the conditions contained herein have not been met or
waived by December 31, 1996, this Agreement shall terminate.
7.3 Effective Time of Closing. The Closing shall be deemed effective
at 11:59 p.m., Denver time, on the date of Closing.
7.4 Delivery of Closing Documents. All matters at the Closing shall be
considered to take place simultaneously, and no delivery of any document shall
be deemed complete until all documents are delivered and all transactions
contemplated herein are completed.
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ARTICLE VIII
CLOSING TRANSACTIONS
8.1 Transfer of Ralston Stock. At the Closing, Foods shall deliver to
Vail stock certificate(s) representing that whole number of the issued and
outstanding shares of Ralston Stock, duly and validly endorsed in blank by Foods
for transfer, or accompanied by duly and validly executed stock powers, with all
necessary stock transfer or other documentary stamps attached and any other
documents that are necessary to transfer legal valid title.
8.2 Delivery of Vail Stock. As consideration for the purchase of the
Ralston Stock, Vail will deliver to Foods, or its nominee, 3,777,203 shares of
Vail Stock.
8.3 Receipt. At the Closing, after receipt of the Vail Stock, Foods
shall deliver to Vail an appropriate receipt for the Vail Stock.
8.4 Opinion of Counsel of Foods. At the Closing, Foods shall deliver
to Vail an Opinion of Counsel from counsel for Foods, dated as of the Closing,
to the effect that:
(a) Foods is a corporation duly organized, validly existing and in
good standing under the laws of the State of Missouri; and Ralston is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado;
(b) Ralston and each of its subsidiaries have the corporate power and
authority to own their properties and assets and carry on their business,
and are duly qualified and in good standing as a foreign corporation in
each jurisdiction set forth in Schedule 3.8 hereto;
(c) Foods (through a wholly owned subsidiary) is the record and
beneficial owner of all of the issued and outstanding Ralston Stock, and
the Ralston Stock certificate(s) or stock powers that have been duly
executed and delivered by Foods transfer all rights to such stock to Vail,
or its nominee, free and clear of any and all liens, encumbrances or rights
of any other party;
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(d) Foods has taken all action required by its Articles of
Incorporation and its by-laws, and Ralston has taken all action required by
its Articles of Incorporation and by-laws, to authorize the execution and
delivery of this Agreement and such other agreements, instruments and
documents required to be executed in connection herewith;
(e) Foods and Ralston have the corporate power and authority to
execute and deliver this Agreement and, when executed and delivered, this
Agreement, and such other agreements, instruments and documents required to
be executed in connection herewith, constitute legal, valid and binding
obligations of Foods and Ralston, enforceable in accordance with their
terms, except that enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and general principles of equity;
(f) The execution and delivery of this Agreement, and such other
agreements, instruments and documents required to be executed in connection
herewith, and the consummation of the transactions contemplated herein and
therein, do not conflict with any provision of the Articles of
Incorporation or by-laws of Foods or conflict with any provision of the
Certificates of Incorporation or by-laws of Foods or Ralston or any of
Ralston's subsidiaries;
(g) The authorized and outstanding capital stock of Ralston consists
solely of 100 shares of Ralston Stock, with all 100 shares owned of record
and beneficially by Foods; all outstanding shares of Ralston Stock are duly
authorized, validly issued, fully paid and non-assessable, and there are no
other shares of capital stock or other securities of Ralston outstanding;
(h) Neither the execution or delivery of this Agreement, and such
other agreements, instruments and documents required to be executed in
connection herewith, nor the consummation of the transactions contemplated
herein and therein, to the knowledge of counsel: (i) violates any statute,
law, rule or regulation, or any order, award, judgment or decree of any
court or governmental authority affecting Ralston or any of its
subsidiaries or Foods; (ii) causes (with or without notice, the passage of
time or both) the maturity of any debt, liability or obligations of
Ralston or any of its subsidiaries or Foods to be accelerated, or
increases or will increase any such
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liability or obligation; or (iii) requires any filing with, the
notification of, or the obtaining of any authorization, consent or approval
of, any federal or state governmental or regulatory authority, other than
filings under Hart-Scott-Rodino and the approval of the U.S. Forest
Service, and licenses and permits as may be necessary for Ralston or any of
its subsidiaries to carry on its business subsequent to the Closing;
(i) Except as set forth in Schedule 3.19 of this Agreement, to the
best knowledge of counsel, there does not exist any action, proceeding or
investigation pending or threatened in writing against Foods or Ralston or
any of its subsidiaries attempting to enjoin this Agreement or the
transactions contemplated by this Agreement, and such other agreements,
instruments and documents required to be executed in connection herewith;
and
(j) Ralston is not (i) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940, or (ii) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Company Act of 1935.
8.5 Opinion of Counsel of Vail. At the Closing, Vail shall deliver to
Foods an Opinion of Counsel from counsel for Vail (which opinion may be made by
Vail's in-house counsel), with such counsel relying on opinions of other counsel
and such certificates of Corporate Officers of Vail as he or she deems
appropriate, dated as of the Closing, to the effect that:
(a) Vail is a corporation validly existing and in good standing under
the laws of the State of Delaware;
(b) Vail has the corporate power and authority to own its properties
and carry on its businesses as presently conducted;
(c) Vail has taken all action required by its Certificate of
Incorporation and by-laws to authorize the execution and delivery of this
Agreement, and such other agreements, instruments and documents required to
be executed in accordance herewith;
(d) Vail has the corporate power and authority to execute and deliver
this Agreement and, when executed and
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delivered, this Agreement, and such other agreements, instruments and
documents required to be executed in connection herewith, constitute legal,
valid and binding obligations of Vail, enforceable in accordance with their
terms, except that enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and general principles of equity;
(e) The execution and delivery of this Agreement, and such other
agreements, instruments and documents required to be executed in connection
herewith, and the consummation of the transactions contemplated herein and
therein, do not conflict with any provision of the Certificate of
Incorporation or by-laws of Vail;
(f) Neither the execution or delivery of this Agreement, and such
other agreements, instruments and documents required to be executed in
connection herewith, nor the consummation of the transactions contemplated
herein and therein, to the knowledge of counsel: (i) violates any statute,
law, rule or regulation, or any order, award, judgment or decree of any
court or governmental authority affecting Vail; (ii) violates or conflicts
with, or constitutes a default under any provision of, any contract,
agreement or trust to which Vail is a party, or by which Vail's assets are
bound; (iii) causes (with or without notice, the passage of time or both)
the maturity of any debt, liability or obligation of Vail to be
accelerated, or increases or will increase any such liability or
obligation; or (iv) requires any filing with, the notification of, or the
obtaining of any authorization, consent or approval of any federal
governmental or regulatory authority, other than filings under
Hart-Scott-Rodino;
(g) The authorized capital stock of Vail consists solely of 25,000,000
shares of preferred stock, 20,000,000 shares of Class A Common Stock and
40,000,000 shares of Common Stock; the Vail Stock issued to Foods pursuant
to this Agreement has been duly authorized and is validly issued, fully
paid and non-assessable; and
(h) To counsel's knowledge, there does not exist any action,
proceeding or investigation pending or threatened against Vail attempting
to enjoin this Agreement or the transactions contemplated by this
Agreement, and such
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other agreements, instruments and documents required to be executed in
connection herewith.
8.6 Good Standing Certificates. At the Closing, Foods shall deliver to
Vail a Certificate of Good Standing for each of Foods and Ralston from the
Secretary of State of their respective state of incorporation, dated not more
than fifteen (15) days prior to the Closing, with bring-down certificates as of
the date of the Closing if available from the applicable Secretary of State; and
Vail shall deliver to Foods Certificates of Good Standing for Vail from the
Secretary of State for the State of Delaware, dated not more than fifteen (15)
days prior to the Closing, with bring-down certificates as of the date of the
Closing.
8.7 Corporate Resolutions of Foods. At the Closing, Foods shall
deliver to Vail (x) a copy of the resolutions adopted by the Board of Directors
of Foods (or its Executive Committee), and a copy of the resolutions adopted by
the Board of Directors of Foods, authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein, duly
certified to as of the Closing by the appropriate corporate secretary or
assistant secretary and (y) the original corporate minute books and stock
transfer records of Ralston.
8.8 Corporate Resolutions of Vail. At the Closing, Vail shall deliver
to Foods a copy of the resolutions adopted by the Board of Directors of Vail (or
its Executive Committee), and a copy of the resolutions adopted by the Board of
Directors of Vail, authorizing the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein, duly certified to as
of the Closing by the appropriate corporate secretary or assistant secretary.
8.9 Certificate of Foods. At the Closing, Foods shall deliver to Vail
certificates signed by a corporate officer of Foods, on behalf of Foods, dated
as of the Closing, certifying (i) as to the truth and accuracy of the
representations and warranties made by Foods in this Agreement, and reaffirming
and remaking such representations and warranties of Foods as of the Closing and
(ii) that Foods has performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to the Closing Date.
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8.10 Certificate of Vail. At the Closing, Vail shall deliver to Foods
certificates, signed by a senior officer of Vail, on behalf of Vail, dated as of
the Closing, certifying (i) as to the truth and accuracy of the representations
and warranties made by Vail in this Agreement, and reaffirming and remaking such
representations and warranties of Vail as of the Closing and (ii) that Vail has
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Closing Date.
8.11 Shareholder Agreement. At the Closing, Foods, Vail and Apollo Ski
Partners, L.P. shall execute and deliver the Shareholder Agreement.
8.12 Resignation of Ralston Corporate Officers. At the Closing, Foods
shall deliver to Vail the executed resignation, dated as of the date of the
Closing and effective immediately prior to the Closing, for all of the members
of the board of directors of Ralston and each of its subsidiaries and, to the
extent requested by Vail, of the officers of Ralston and each of its
subsidiaries.
8.13 Consents. At the Closing, Foods and Ralston shall deliver to Vail
any consents from third parties required for the execution, delivery and
performance of this Agreement, and such other agreements, instruments and
documents required to be executed in connection herewith, and the consummation
of the transactions contemplated herein and therein.
8.14 Ancillary Documents. At the Closing, Foods shall deliver to Vail
all assignments, sublicenses, bills of sale or other instruments, in form
acceptable to Vail, as may be necessary or reasonably requested by Vail in order
to effectively sell, convey, transfer and assign to Ralston good and marketable
title to all assets used in Ralston's business or operations.
ARTICLE IX
ADDITIONAL COVENANTS
9.1 Commissions and Fees. Each party hereto shall pay any and all
finder's fees, brokerage commissions or like
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costs or charges to be paid by reason of the transactions contemplated
herein that may have been incurred by such party.
9.2 Costs and Expenses. Foods shall pay its own and Ralston's costs
and expenses, including fees of attorneys, accountants and financial advisors,
necessary in the preparation of this Agreement, and such other agreements,
instruments and documents required to be executed in connection herewith, and
the consummation of the transactions contemplated herein and therein. Vail shall
pay its own costs and expenses, including fees of attorneys, accountants and
financial advisors, necessary in the preparation of this Agreement, and such
other agreements, instruments and documents required to be executed in
connection herewith, and the consummation of the transactions contemplated
herein and therein. Notwithstanding the foregoing, Foods and Vail shall each pay
one-half of the fees of an economist jointly selected by them for Hart-Scott-
Rodino purposes.
9.3 Bank Accounts.
(a) Until the Closing, Foods shall continue to employ cash management
practices consistent with those employed immediately prior to the date of this
Agreement, including:
(i) continuing to collect funds generated from the business or
operations of Ralston from bank accounts and bank lock boxes of Foods or
Ralston and through Foods' standard depository transfer system; and
(ii) continuing to fund the bank accounts of Foods or Ralston in
connection with cash disbursements related to the business or operations of
Ralston.
(b) All collection and concentration bank accounts used in Ralston's
business (and all cash and checks therein) shall remain the property of Foods
after Closing. All disbursement accounts used in Resort's business shall remain
the property of Foods at Closing. All uncleared checks, drafts or other
withdrawal instruments written on such disbursements accounts prior to closing
("Uncleared Ralston Checks") shall be the responsibility of Foods after Closing.
Foods will assist Ralston in establishing its own bank accounts so that Ralston
will be able to write checks, drafts or other withdrawal instruments for its own
account immediately after Closing.
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9.4 Business Relationships. Within five (5) Business Days after the
Closing, Vail or Ralston shall notify all banking institutions used by Ralston
that Ralston has been acquired by Vail. In addition, Vail or Ralston and Foods
shall notify, in writing or by publication, the customers and suppliers of
Ralston that Ralston has been acquired by Vail, and that the payment of any
account receivable shall be paid directly to Ralston.
9.5 Insurance Proceeds.
(a) In the event Foods receives any amount of insurance proceeds
(other than self-insurance and insurance related to Employee Benefit Plans, lost
profits or business interruptions) in connection with any insurance policy
providing coverage for the properties and assets of Ralston for claims arising
after the date hereof, Foods shall promptly notify Vail of the receipt of such
proceeds, and with respect to amounts received prior to the Closing, shall
retain and deliver the aggregate amount of such insurance proceeds, net of any
amount of such proceeds used to replace or repair any properties or assets or
claims paid by Foods prior to the Closing, to Vail at the Closing, and shall
promptly deliver to Vail any such additional proceeds received after the
Closing.
(b) In the event Foods, subsequent to the Closing, receives any amount
of insurance proceeds (other than self-insurance and insurance related to
Employee Benefit Plans, lost profits or business interruption) in connection
with any insurance policy providing coverage for the properties and assets of
Ralston (including any proceeds received under any general liability, workers'
compensation or excess coverage policy), then Foods shall promptly deliver all
of such proceeds to Vail, without any set-off, reduction or hold back
whatsoever.
9.6 Further Action. Subsequent to the Closing, Foods, Vail and Ralston
shall each take such further action as may be reasonably requested by the other
in order to carry out the terms of this Agreement, and such other agreements,
instruments and documents required to be executed in connection herewith, and
consummate the transactions contemplated herein and therein. The parties shall,
on request, cooperate with one another by furnishing any additional information,
executing and delivering any additional documents and instruments, including
contract assignments, bills of sale and third party consents, and doing any and
all such other things as may be reasonably required by the parties or their
counsel.
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9.7 Records. Subsequent to the Closing, Vail and Foods shall provide,
or cause to be provided, to each other and each other's representatives,
reasonable access (for the purpose of examining and copying during normal
business hours) to the books and records of Ralston and Foods (insofar as they
relate to Ralston), including, but not limited to, accounting and Tax records
and Tax Returns, sales and purchase documents, notes, memoranda, test records
and any other electronic or written data ("Records") pertaining to periods or
occurrences prior to the Closing. Unless otherwise consented to in writing by
the other, the parties shall not, for a period of seven (7) years following the
Closing, destroy, alter or otherwise dispose of any of the books and records of
Ralston or Foods (insofar as they relate to Ralston) pertaining or relating to
periods prior to the Closing and, notwithstanding any other provision of this
Section 9.7, no party to this Agreement shall destroy, alter or otherwise
dispose of any tax or accounting records of Ralston or Foods (insofar as they
relate to Ralston) without the written consent of all other parties to this
Agreement.
9.8 Employee Benefit Plan Matters.
(a) Vail's Obligations. Effective on the Closing Date, Vail, Ralston
or one of their subsidiaries shall become the employer of Ralston Employees
excluding those Ralston Employees whose employment has terminated prior to the
Closing Date and excluding those Ralston Employees on leave due to, or in a
waiting period prior to, a finding of total or long-term disability pursuant to
any Ralston Employee Benefit Plan that provides disability benefits (for
purposes hereof, Ralston Employees, other than those excluded in this Section
9.8, shall be referred to as "Active Ralston Employee(s)").
(b) Retention of Retirement Plans. As between the parties hereto,
Ralcorp shall retain the assets and sponsorship of the Ralcorp Holdings, Inc.
Savings Investment Plan, the Ralston Resorts, Inc. Savings Investment Plan
(together the "Savings Plans"), and the Ralcorp Holdings, Inc. Retirement Plan
(the "Retirement Plan") as applicable to employees or former employees of
Ralston and its subsidiaries, and shall retain the obligations for providing any
benefits accrued by such employees or former employees under such plans. Ralcorp
shall take such actions as may be necessary to cause the Savings Plans and the
Retirement Plan to provide that benefits accrued under such plans on or prior to
the Closing Date by the Active Ralston Employees shall be fully vested as of the
Closing Date. Effective on the Closing Date, Ralston and its
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subsidiaries shall no longer participate in the Savings Plans or the
Retirement Plan.
(c) Defined Contribution Plans. The parties agree that pursuant to the
terms of the Savings Plans, whichever is applicable, Ralston will distribute to
the Active Ralston Employees or retain in the Savings Plans vested benefits
accrued by the Active Ralston Employees in the Savings Plans. If requested by
Vail, Ralcorp shall distribute cash and participant loans from the Savings Plans
to participants who are Active Ralston Employees in "direct rollover
distributions" (as described in Section 401(a)(31) of the Code).
(d) Defined Benefit Plan. For purposes of determining the amount of
benefits payable under the Retirement Plan, (i) the compensation of each Active
Ralston Employee shall only include compensation considered compensation
pursuant to the Retirement Plan and paid or payable to such Active Ralston
Employees by Ralston or Foods or their affiliates for services prior to and
including the Closing Date and shall not include compensation paid or payable to
Active Ralston Employees by Vail for services after the Closing Date; and (ii)
the period of service shall be determined pursuant to the Retirement Plan and
shall only include the time prior to and including the Closing Date during which
such Active Ralston Employee provided services to Ralston or Foods or their
affiliates and shall not include any period of time after the Closing Date
during which services were provided by such Active Ralston Employee to Vail.
Whether Active Ralston Employees shall be fully vested in benefits they have
accrued as of the Closing shall be determined pursuant to the Retirement Plan
provisions regarding vesting.
(e) Severance. With respect to Active Ralston Employees who are
terminated by Vail or Ralston on or after the Closing Date, Vail shall be
responsible for severance benefits payable pursuant to severance plans, policies
and practices applicable to Active Ralston Employees at the time of their
termination; provided, that Vail shall not be responsible for, and Foods shall
indemnify and hold harmless Vail from, any severance claims or obligations due
to any Active Ralston Employee under any contractual or other agreement other
than the severance benefits payable under Ralston's general severance benefits
program set forth in Schedule 3.29(g)(2). Vail further agrees to provide any
required notice under the WARN Act for any termination of Active Ralston
Employees by Vail on or after the Closing Date.
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(f) Vacation. Vail agrees, after the Closing Date, to credit each
Active Ralston Employee with vacation benefits which accrued but have not yet
been taken, provided, however, that requested or scheduled vacations are subject
to Vail's business needs; provided further, however, that Vail shall be required
to credit vacation carried forward from previous periods only to the extent
reflected on the Ralston balance sheet as of the Closing Date.
(g) Employee Related Obligations. (1) Except as may be provided in
this Section (g), Ralston shall retain all liabilities for all obligations to
the employees or former employees of Ralston and its subsidiaries derived from
Employee Benefit Plans offered to such employees or former employees by Ralston
or Foods or its affiliates which arise (medical and dental expenses arise when
the employee is provided with medi-cal and dental care) at any time out of their
employment by Ralston on or immediately before the Closing Date.
(2) Except as otherwise specifically provided herein, Vail is not
obligated to provide any particular benefits to the Active Ralston Employees
after closing, and may change any benefit program in the future, including plans
and programs applicable to the Active Ralston Employees. Further, no agreement
between the parties hereto nor any action by Vail or Foods or its affiliates
shall be deemed to create any third-party beneficiary rights in any employees of
Vail or Foods or any affiliate of either. Prior to the Closing, Vail will
provide Foods with evidence, reasonably satisfactory to Foods, that Vail has in
place, effective as of the Closing, a health benefit program for Active Ralston
Employees that provides substantially comparable benefits to the health benefit
program provided by Foods or its affiliates, and which does not exclude
preexisting conditions. After the Closing, Vail shall be responsible for such
coverage.
(h) On and after the Closing Date, Vail shall be responsible for
employee-related liabilities and obligations, with respect to the Active Ralston
Employees, under any employee benefit plan and any other plans, practice and
programs of Vail which may be offered to Active Ralston Employees.
9.9 Confidentiality Agreement. The Confidentiality Agreement shall
remain in full force and effect until the Clos- ing and (x) if the Closing
occurs, only the Confidentiality and Exclusivity Agreement dated May 16, 1996
between Ralcorp Hold- ings, Inc. and Apollo Advisors, L.P. shall remain in full
force
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and effect other than paragraphs 7, 8, or 9 of such agreement, and (y)
if the Closing does not occur and this Agreement is terminated pursuant to
Article XI, the Confidentiality Agreement shall continue in accordance with its
terms.
9.10 Tax Election. Vail shall not make a Section 338(h)(10) election
under Section 338 of the Code with respect to the acquisition of the Ralston
Stock or the operations of Ralston.
9.11 Resale of Ralston Stock. Foods shall not offer, sell or
distribute the shares of Vail Stock received in this transaction except in
accordance with the terms and conditions of the Shareholder Agreement.
9.12 Non-Competition.
(a) For a period beginning on the date hereof and ending five (5)
years hereafter, Foods agrees that it will not, and it will cause any entity
that Foods through one or more intermediaries, directly or indirectly controls
or is controlled by ("Foods Affiliates"), not to, within North America, directly
or indirectly, individually or as a member of any business organization, engage
in the ownership or operation of any ski resort business or facility or have any
interest in any entity engaged in the ownership or operation of any ski resort
business or facility; provided, that nothing set forth in this paragraph shall
prevent Foods or a Foods Affiliate from at any time owning shares issued by a
publicly traded corporation, including without limitation one that engages in
some or all of the activities described in this paragraph (in which activities
Foods or such Foods Affiliate will not participate); provided, further, that at
no time will Foods' or a Foods Affiliate's ownership in any such corporation
exceed five percent (5%) of the voting stock (other than the capital stock of
Vail if such ownership is in accordance with the terms of the Shareholder
Agreement) as may from time to time be issued by and outstanding from each such
publicly traded corporation.
(b) Foods agrees that any breach of the covenants contained in this
Section 9.12 would cause irreparable harm to Vail and Ralston and, therefore,
notwithstanding any right of Vail and Ralston to recover monetary damages with
respect to any such breach as set forth in this Section 9.12 or at law, Vail and
Ralston will be entitled to equitable relief to enjoin any threatened or
continuing breach hereof. If the scope of any restriction contained in this
Section 9.12 is too broad to
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permit enforcement to its full extent, then such restriction shall be
enforced to the maximum extent permitted by law. Nothing herein stated shall be
construed as prohibiting any party from pursuing any other remedies available to
that party for a breach hereunder, including recovery of damages.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification of Vail. Foods shall indemnify and hereby hold
harmless Vail and, after the Closing, Ralston and their nominees, affiliates,
officers, directors, employees and agents against any Loss, in full as such Loss
is incurred, suffered as a result of: (a) any breach of any representation or
warranty made by Foods in this Agreement or in any other document, instrument or
agreement entered into in connection herewith; (b) any breach of any covenant
made by Foods, Ralston or Ralcorp in this Agreement or in any other document,
instrument or agreement entered into in connection herewith; and (c) any breach
of the Confidentiality Agreement made by Foods in favor of Vail; provided, that
such indemnification obligation shall only arise with respect to Losses suffered
or incurred as a result of any breach of any representation or warranty to the
extent such Losses (which, individually, must be at least $25,000) in the
aggregate exceed $1,000,000.
10.2 Indemnification of Foods. Vail and, after the Closing, Ralston,
jointly and severally, shall indemnify and hold Foods, and its nominees,
affiliates, officers, directors, employees and agents, harmless against any
Loss, in full as such Loss is incurred, suffered as a result of: (a) any breach
of any representation or warranty made by Vail in this Agreement; (b) any breach
of any covenant made by Vail or, after the Closing, Ralston in this Agreement;
(c) any breach of the Confidentiality Agreement made by Apollo Advisors L.P. in
favor of Foods; and (d) Ralston or Vail failing to pay when due any and all
amounts due arising under Indebtedness of Ralston or its subsidiaries existing
at the Closing Date and for which Foods or any of its Affiliates remains liable
for (as guarantor or otherwise) after the Closing; provided, that such
indemnification obligation shall only arise with respect to Losses suffered or
incurred as a result of any breach of any representation or warranty to the
extent such Losses (which,
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individually, must be at least $25,000) in the aggregate exceed
$1,000,000.
10.3 Indemnification Procedure. Upon obtaining knowledge of a Loss
which shall entitle an injured party to indemnification hereunder, the injured
party shall deliver a Notice of Claim to the indemnifying party. The Notice of
Claim shall state in reasonable detail the nature and estimated amount of any
such Loss giving rise to the right of indemnification hereunder. The
indemnifying party shall have thirty (30) Business Days after receipt of the
Notice of Claim to indemnify the injured party, whether or not it disputes its
liability or the amount thereof, and to set forth the basis for any objection.
If the indemnifying party fails to respond to the injured party within such
thirty (30) Business Days, the indemnifying party shall be deemed to have
acknowledged its responsibility for such Loss, and in such event, or if the
indemnifying party does not dispute its liability, then the indemnifying party
shall pay and discharge any such Loss which is not contested within sixty (60)
days after receipt of the Notice of Claim.
10.4 Third Party Claims. If any party believes it may suffer a Loss
that should entitle such party to indemnification under this Agreement because
of a lawsuit, claim or other action by a third party, such injured party shall
deliver a Notice of Claim to the party required to indemnify. Within thirty (30)
days after receiving a Notice of Claim, the indemnifying party may: (a)
acknowledge its liability and elect to assume the defense of the third party
claim at its sole cost and expense; or (b) dispute its liability in the Notice
of Claim. Any contest of a third party claim in which the indemnifying party
assumes such defense shall be conducted by attorneys employed by the
indemnifying party; provided that the injured party shall have the right to
participate with its own attorneys and at its own cost and expense. Such
indemnifying party may agree to any settlement it deems in its best interest,
but shall not settle any action where the settlement includes an injunction or
other order affecting the injured party without the prior approval of the
injured party, which shall not be unreasonably withheld. If the indemnifying
party does not assume the defense of the third party claim as provided for
herein, the injured party shall have the right to defend such claim and
effectuate any settlement thereof it deems appropriate, and within fifteen (15)
Business Days of any final resolution, the indemnifying party shall pay the
injured party any Loss the injured party suffered. If the indemnifying
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party is defending any third party action in good faith, its
obligation to pay the indemnified party with respect to the defended matter
shall be suspended until the matter has been finally adjudicated or settled.
10.5 Tax Indemnification.
(a) Notwithstanding any other provisions of this Agreement to the
contrary, Foods shall be liable for and shall indemnify Vail and its affiliates
and hold them harmless for, from and against (i) all liability for Taxes of
Ralston and any of its subsidiaries (except as provided in Section 10.5(d) and
the immediately following paragraph) for all taxable periods ending on or before
the Closing Date and the portion of any Straddle Period ending on and including
the Closing Date (the "Pre-Closing Tax Periods"), including, without limitation,
any liability for Taxes imposed upon Ralston pursuant to Treasury Regulation {
1.1502-6 (and any comparable provision under applicable state or local law) as a
result of being a member of any Affiliated Group or any combined or unitary
group, and (ii) any liability for Taxes attributable to a breach by Foods of its
obligations under this Agreement.
(b) Vail shall indemnify Foods and its affiliates and hold them
harmless for, from and against all liability for Taxes of Ralston for any
taxable period ending after the Closing Date (except to the extent such taxable
period began before the Closing Date, in which case Vail's indemnity will, other
than for Taxes described in Section 10.5(a)(ii), cover only that portion of any
such Taxes that are not for the Pre-Closing Tax Period).
(c) In the case of any taxable period that includes (but does not end
on) the Closing Date (a "Straddle Period"), the Taxes of Ralston for the
Pre-Closing Tax Period shall be computed as if such taxable period ended on and
included the Closing Date.
(d) Foods shall not be liable for and shall not indemnify Vail and its
affiliates for, from and against all liability for Taxes, other than Income
Taxes, for the Pre-Closing Period (i) payment of which on a timely basis would
be made with an original Tax Return filed by Ralston after the Closing Date and
(ii) computation thereof is made in a manner consistent with the prior and
customary accounting practice of Ralston.
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10.6 Limitation of Indemnification.
(a) The aggregate amount of all claims subject to indemnification
under Sections 10.1(a), (b) and (c) with respect to indemnification of Vail
shall be $185,000,000 and Sections 10.2(a), (b) and (c) with respect to
indemnification of Foods shall be $185,000,000 except (x) in the case of any
Loss caused by the indemnifying party's violation of law, bad faith, fraud or
intentional misconduct, for which liability shall not be subject to such limit
and (y) in the case of clause (d) of Section 10.2, for which there shall be no
limit.
(b) The sole remedy of the parties hereto for any Loss against them or
their directors, officers, employees, agents, representatives, affiliates,
shareholders or subsidiaries related to or arising from in whatsoever manner
this Agreement and the other documents executed in contemplation of this
Agreement is the indemnification and other remedies specifically provided herein
(and therein with respect to such other documents). Therefore, no directors,
officers, employees, agents, representatives, affiliates, shareholders or
subsidiaries shall incur individual liability for matters arising hereunder
except to the extent that an Affiliate of Foods becomes a guarantor pursuant to
Section 5.14.
(c) An indemnifying party shall not be liable under Section 10.1 or
10.2, as the case may be, for a loss resulting from any event relating to the
other party's breach, falsity, inaccuracy, incompleteness, misrepresentation or
nonfulfillment of a representation.
10.7 Procedures Relating to Indemnification of Tax Claims.
(a) If any taxing authority provides written notice of any claim,
demand or circumstance which, if successful, might result in any indemnity
payment pursuant to Section 10.5, the party seeking indemnification (the "Tax
Indemnified Party") shall promptly notify the other party (the "Tax Indemnifying
Party") in writing of such claim (the "Tax Claim"). If notice of a Tax Claim
("Tax Notice") is not given to the Tax Indemnifying Party within a reasonably
sufficient period of time to allow such Tax Indemnifying Party effectively to
contest such Tax Claim, such Tax Indemnifying Party shall not be liable to the
Tax Indemnified Party or any of its affiliates to the extent that such Tax
Indemnifying Party's position is actually prejudiced as a result thereof.
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(b) With respect to any Tax Claim for any taxable period ending on or
prior to the Closing Date which might result in an indemnity payment to Vail
pursuant to Section 10.5, Foods, within 30 days of receiving written notice of
such Tax Claim, may in its sole discretion elect to control all proceedings
taken in connection with such Tax Claim and, without limiting the foregoing, may
in its sole discretion and at its sole expense pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with any taxing
authority with respect thereto, and may, in its sole discretion, either pay the
Tax claimed and sue for a refund where applicable law permits such refund suits
or contest such Tax Claim in any permissible manner and in any forum permitted
by law. In the event that Foods fails to provide Vail with written notice of
Foods' election to contest such Tax Claim within such 30 day period, Foods shall
forfeit any right to control the contest of such Tax Claim. In no case shall
Vail or Ralston settle or otherwise compromise any Tax Claim referred to in the
immediately preceding sentence without Foods' prior written consent, which
consent shall not be unreasonably withheld. Vail, Ralston and each of their
affiliates shall cooperate with Foods in contesting any Tax Claim that Foods
elects to contest, which cooperation shall include, without limitation, the
reasonable retention and (upon Foods' request) the provision to Foods of records
and information which are reasonably relevant to such Tax Claim, for which Foods
shall reimburse Vail and Ralston for their out-of-pocket expenses incurred in
connection therewith.
(c) The contest of any Tax Claim that relates to (i) taxable periods
ending after the Closing Date and (ii) any Tax Claim that Foods does not elect
to control pursuant to Section 10.7(b), shall be controlled by Vail, and Foods
agrees and agrees to cause its affiliates to cooperate with Vail and its
affiliates in pursuing such contest.
(d) Notwithstanding the provisions of Section 10.7(b) above, with
respect to any Tax Claim that Foods elects to control, Foods may not settle,
compromise or otherwise dispose of the Tax Claim without first notifying Vail of
Foods' proposal for settling, compromising or disposing of the Tax Claim;
provided, however, that this Section 10.7(d) shall apply only if such
settlement, compromise or other disposition could adversely affect the tax
liability of Vail or Ralston. After Foods has provided Vail with such written
notice, Foods and Vail shall cooperate as to how the Tax Claim will be handled,
answered, defended, compromised or settled, and Foods shall not
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settle, compromise or otherwise dispose of the Tax Claim until Foods
and Vail have mutually agreed to the manner of such settlement, compromise or
disposition.
10.8 Survival of Representations and Warranties. The representations
and warranties by Foods in Article III (with the exception of those
representations and warranties by Foods in Section 3.28 of this Agreement), and
by Vail in Article IV (with the exception of those representations and
warranties by Vail in Section 4.25 of this Agreement), and in any other
document, certificate, instrument or agreement executed in connection hereunder
unless explicitly provided otherwise in such document, certificate, instrument
or agreement, shall survive for a period of two (2) years following Closing and
thereafter to the extent a claim is made prior to such expiration. The
representations and warranties by Foods in Section 3.28 of this Agreement and by
Vail in Section 4.25 of this Agreement shall survive as to any Tax covered by
such representations and warranties for so long as any statute of limitations
for such Tax remains open, in whole or in part, including, without limitation,
by reason of waiver of such statute of limitations. No party shall be entitled
to indemnification for breach of any representation and warranty set forth in
Articles III and IV of this Agreement and in any other document, certificate,
instrument or agreement executed in connection hereunder unless explicitly
provided otherwise in such document, certificate, instrument or agreement unless
a Notice of Claim for such breach has been given to the breaching party or
parties prior to the termination of the period of survival of such
representation and warranty as set forth herein.
10.9 Survival of Indemnities. The obligations of each party to
indemnify another party for a Loss arising under this Agreement shall survive
the sale or other transfer by a party of any asset or liability transferred,
assumed or retained pursuant to this Agreement.
10.10 Transfer Taxes. Notwithstanding any other provisions of this
Agreement to the contrary, Vail and Foods shall equally pay all sales, use,
stock transfer, stamp, duties, recording, real property transfer, gains and
similar taxes, if any, required to be paid in connection with the transactions
contemplated by this Agreement, it being agreed that none of such payments shall
be borne directly or indirectly by Ralston or Vail.
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10.11 Return Filings, Refunds and Credits.
(a) Except as noted in the immediately following sentence, Ralcorp
shall prepare or cause to be prepared and file or cause to be filed on a timely
basis (in each case, at its own cost and expense and in a manner consistent with
past practice) all Tax Returns with respect to Ralston and with respect to an
Affiliated Group for taxable periods ending on or prior to the Closing Date.
Ralcorp agrees that Ralston shall sign and file all Tax Returns prepared solely
on behalf of Ralston and its subsidiaries. For purposes of this Section
10.11(a), Affiliated Group shall mean only such group of which Ralcorp is the
common parent. Ralcorp shall provide Vail with copies of all Returns that
Ralcorp prepares or causes to be prepared and filed and with originals of all
Returns that Ralston will sign and file. Ralcorp shall pay or cause to be paid
all Taxes shown on all such Tax Returns, whether filed by Ralcorp or by Ralston.
Ralcorp further agrees that Vail shall have a reasonable opportunity to review
and comment upon any Tax Return prior to Ralcorp's filing of such Tax Return
that could affect the Tax liability of Vail or Ralston.
(b) Vail shall prepare or cause to be prepared and shall file or cause
to be filed on a timely basis all other Tax Returns with respect to Ralston. In
connection therewith, Foods shall be responsible for and shall pay any Taxes for
which Foods has agreed to indemnify Vail pursuant to Section 10.5. Vail shall
provide Foods with copies of any such Tax Returns covering the Taxes described
in Section 10.5 at least ten days prior to the due date thereof (giving effect
to any extensions thereto), accompanied by a statement calculating Foods'
indemnification obligation pursuant to Section 10.5. Foods shall pay to Vail the
amount of Foods' indemnification obligation at least two business days prior to
the due date thereof (giving effect to any extensions thereto) unless the
parties are unable to agree on the amount of Foods' indemnification obligation
hereunder, in which case Foods shall promptly pay the portion of the
indemnification that is not in dispute and the disputed portion shall be
resolved by independent accountants acceptable to both parties whose fees and
expenses shall be paid by Vail and Foods in proportion to each party's
respective liability for Taxes as determined by such accountants, and Foods
shall pay the amount determined by such accountants within two days of such
determination, together with interest thereon from the original due date thereof
to the date of payment at a rate equal to 10% per annum.
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(c) Foods and Vail shall reasonably cooperate, and shall cause their
respective affiliates, officers, employees, agents, auditors and representatives
reasonably to cooperate, in preparing and filing all Tax Returns (including
amendments thereto and claims for refund), including maintaining and making
available to each other all records necessary in connection with Taxes and in
resolving all disputes and audits with respect to all taxable periods relating
to Taxes.
(d) Any refunds or credits of Taxes of Ralston for any taxable period
ending on or before the Closing Date, except as described in Section 10.12,
shall be for the account of Foods and shall be paid by Vail to Foods within ten
days after Vail receives such refund. Any refunds or credits of Taxes of Ralston
for any taxable period beginning after the Closing Date shall be for the account
of Vail and shall be paid by Foods to Vail within ten days after Foods receives
such refund. Any refunds or credits of Taxes of Ralston for any Straddle Period
shall be allocated between Foods and Vail on the basis of an "interim closing of
the books."
10.12 Refunds from Carrybacks. If Ralcorp becomes entitled to a refund
or credit of Taxes for any period for which Foods is liable under Section
10.5(a) to indemnify Vail and such Taxes are attributable solely to the
carryback of losses, credits of similar items from a taxable year or period that
begins after the Closing Date and attributable to Ralston, Foods shall cause
Ralcorp to pay to Vail within ten days after Ralcorp receives such refund or
credit the amount of such refund or credit together with any interest received
thereon.
10.13 Termination of Tax Sharing Agreements. Foods hereby agrees and
covenants that any obligation of Ralston pursuant to any agreements or
arrangements relating to the allocation or sharing of Taxes (the "Tax Sharing
Agreements") shall be terminated on or before the Closing Date, and no payments
pursuant to any such Tax Sharing Agreement shall be made after such termination.
10.14 Payments. Unless otherwise required by law, the parties shall
treat any payments made pursuant to this Article X as an adjustment to the
amount of the purchase price paid to Foods pursuant to Section 2.2 for federal,
state and local income tax purposes.
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ARTICLE XI
TERMINATION
11.1 Mutual Consent. This Agreement may be termi- nated at any time
before the Closing by the mutual consent of Foods and Vail.
11.2 Obligation To Close. This Agreement may be terminated by any
party upon giving written notice to the other parties, if a condition to the
notifying party's obligation to close pursuant to Article VI of this Agreement
becomes incapable of satisfaction other than as a result of the notifying
party's breach of its obligations hereunder.
11.3 Final Closing Date. This Agreement will termi- nate if the
Closing has not taken place on or before Decem- ber 31, 1996.
11.4 Obligations After Termination. Upon any termination of this
Agreement, the parties shall be released from all obligations or liabilities
arising hereunder except for: (i) liabilities arising from or out of
pre-termination breaches hereunder; (ii) liabilities arising out of the failure
or refusal of a party to consummate the Closing if all conditions precedent have
been met or waived; and (iii) obligations arising out of Sections 9.1, 9.2 and
9.9 of this Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Entire Agreement. This Agreement, including the attached
Schedules and Exhibits, constitutes the entire agreement between the parties
hereto relative to the subject matter hereof, and supersedes all prior written
or oral understandings, agreements, conditions, representations or warranties.
12.2 Effect of Supplemental Information. Pursuant to Section 5.9
hereof, the parties have the obligation to supplement their respective Schedules
with additional information which is discovered between the date hereof and the
Closing which should have been disclosed on the Schedules hereto.
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Neither the supplementation of the Schedules pursuant to such
obligation nor any disclosure after the date hereof of the untruth of any
representation and warranty made in this Agreement shall operate as a cure of
any breach involving (a) the failure to disclose the information or (b) any
untrue representation or warranty made herein. Notwithstanding the foregoing, if
such supplementation (i) is consented to in writing by both parties, (ii) with
respect to a supplementation by Vail, discloses any fact or set of facts which,
either singly or in the aggregate with other facts disclosed in the Schedules,
does not, or is not reasonably likely to, result in a Material Adverse Change of
Vail or (iii) with respect to a supplementation by Foods, does not, or is not
reasonably likely to, result in additional liability for Vail in an amount in
excess of $100,000 in the aggregate with all other supplemental information,
such supplementation shall be deemed to cure any such untrue representation or
warranty, and such representation or warranty, as supplemented, shall be deemed
to have been amended accordingly.
12.3 Choice of Law. This Agreement shall be construed under and in
accordance with the laws of the State of Colorado without giving effect to the
conflict of laws provisions thereof.
12.4 Venue. Any action or legal proceedings to enforce this Agreement
or any of its terms, or for indemnification and the recovery of any Loss by a
party, shall be brought and prosecuted exclusively in such court or courts
located in the State of Colorado as provided by law, and the parties to this
Agreement consent to the jurisdiction of said court or courts and to service of
process by registered mail, return receipt requested, or in any other manner
provided by Colorado law.
12.5 Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, return receipt requested, and addressed as follows (the address for any
party may be changed by giving notice thereof to the other parties):
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If to Foods:
Ralston Foods, Inc.
800 Market Street
Suite 2900
St. Louis, Missouri 63101
Attn.: Robert Lockwood, Esq.
Facsimile No.: (314) 877-7748
If to Ralston (prior to Closing):
Ralston Foods, Inc.
800 Market Street
Suite 2900
St. Louis, Missouri 63101
Attn.: Robert Lockwood, Esq.
Facsimile No.: (314) 877-7748
If to Vail or Ralston (after the Closing):
Vail Resorts, Inc. (Delivery other than by
mail)
137 Benchmark Road
Avon, Colorado 81620
or
Vail Resorts, Inc. (Mail Delivery)
P.O. Box 7
Vail, Colorado 81658
Attn.: James S. Mandel, Esq.
Facsimile No.: (970) 845-2521
With a copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
12.6 Effective Date of Notice. Any notice or commu- nication shall be
deemed to have been given on the next
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Business Day if sent by Federal Express or a similar overnight delivery service,
or on the third Business Day if sent by ordinary U.S. mail service.
12.7 Amendments. No changes, modifications, amendments or additions
shall be valid unless made in writing and signed by or on behalf of each party.
12.8 Gender and Number. Where appropriate in this Agreement, the
masculine pronoun shall include the feminine or neuter, and the singular shall
include the plural.
12.9 Assignments. No party hereto may assign this Agreement or any
rights or obligations hereunder except to the extent that written authorization
for such assignment is given by the other parties prior to such assignment.
12.10 Headings and Captions. All headings and captions used in the
Table of Contents and all section, Schedule and Exhibit headings and captions
used in this Agreement are for convenience only, and shall not be construed to
either limit or broaden the language of this Agreement or any particular
section.
12.11 Schedules and Exhibits. The inclusion of any information in any
Schedule or Exhibit attached hereto shall not be deemed to be an admission or
acknowledgment that such information is material to the transaction, or
represents matters that are outside the ordinary course of business. The
Schedules and Exhibits attached hereto are incorporated herein by reference and
are made a part hereof for all purposes.
12.12 Severability. The invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of the remainder hereof in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. To the extent permitted by applicable law, each party waives any
provision of law that renders any provision hereof prohibited or unenforceable
in any respect. If any provision of this Agreement is held to be unenforceable
for any reason, it shall be adjusted rather than voided, if possible, in order
to achieve the intent of the parties to the extent possible.
12.13 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall
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constitute a single agreement, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
12.14 Remedies. Any forbearance or failure or delay in exercising any
remedy hereunder shall not be deemed to be a waiver of any other remedy a party
may be entitled to under this Agreement.
12.15 Third-Party Beneficiaries. This Agreement is not intended to
confer upon any non-party any rights or remedies hereunder. Any representation
or warranty made by Foods in this Agreement is made to Vail alone, and solely
for the purposes of selling the Ralston Stock, and Foods has not made and makes
no representation or warranty to any person other than Vail. Any representation
or warranty made by Vail in this Agreement is made to Foods alone, and solely
for the purpose of purchasing the Ralston Stock, and Vail has not made and makes
no representation or warranty to any person other than Foods.
12.16 Binding Agreement. This Agreement shall be deemed effective and
legally binding upon the parties when it has been executed and delivered by all
parties hereto. This Agreement shall inure to the benefit of the parties hereto
and their respective successors and assignees.
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IN WITNESS WHEREOF, the parties have executed this Agreement by an
officer thereunto duly authorized, all as of the day and year first above
written.
RALSTON FOODS, INC.
By:/s/ J.R. Micheletto
----------------------------------
Name: J.R. Micheletto
Title: Vice President and
Chief Financial Officer
RALSTON RESORTS, INC.
By:/s/ J.R. Micheletto
---------------------------------
Name: J.R. Micheletto
Title: President
VAIL RESORTS, INC.
By:/s/ Andrew P. Daly
--------------------------------
Name: Andrew P. Daly
Title: President
RALCORP HOLDINGS, INC. (as to
Sections 9.8, 10.11 and 10.12
only)
By:/s/ J.R. Micheletto
--------------------------------
Name: J.R. Micheletto
Title: Chief Executive Officer
and Chief Financial
Officer
Exhibit A
SHAREHOLDER AGREEMENT
Among
VAIL RESORTS, INC.
RALSTON FOODS, INC.
AND
APOLLO SKI PARTNERS, L.P.
__________, 1996
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS ............................................. 1
ARTICLE II - STANDSTILL AND VOTING PROVISIONS ....................... 6
Section 2.1. Standstill Covenants .......................... 6
Section 2.2. Acquisition of Vail Securities ................ 8
Section 2.3. Voting of Vail Equity ......................... 9
Section 2.4. Restrictions on Certain Transac-
tions Prior to IPO .......................... 10
ARTICLE III - TRANSFER OF VAIL EQUITY ............................... 10
Section 3.1. Restrictions on Transfer ...................... 10
Section 3.2. Exceptions to Restrictions .................... 10
Section 3.3. Improper Transfer ............................. 11
Section 3.4. Restrictive Legend ............................ 12
ARTICLE IV - RIGHT OF FIRST OFFER ................................... 13
Section 4.1. Sales by Foods ................................ 13
ARTICLE V - REGISTRATION ............................................ 14
Section 5.1. Demand Registration ........................... 14
Section 5.2. Delay of Demand Registration .................. 16
Section 5.3. Piggyback Registration ........................ 17
Section 5.4. Delay of Piggyback Registration ............... 18
Section 5.5. Holdback Agreements ........................... 18
Section 5.6. Right to Purchase in Lieu of
Registration................................. 19
ARTICLE VI - REGISTRATION EXPENSES .................................. 19
Section 6.1. Registration Expenses ......................... 19
ARTICLE VII - REGISTRATION PROCEDURE ................................ 20
Section 7.1. Shareholder Information ....................... 20
Section 7.2. Compliance .................................... 21
Section 7.3. Provision of Prospectuses ..................... 21
Section 7.4. Blue Sky Compliance ........................... 22
Section 7.5. Listing of Vail Equity ........................ 22
Section 7.6. Stop Orders ................................... 22
ARTICLE VIII - INDEMNIFICATION AND CONTRIBUTION ..................... 23
Section 8.1. Indemnification ............................... 23
Section 8.2. Contribution .................................. 27
ARTICLE IX - TAKE-ALONG RIGHTS ...................................... 28
Section 9.1. Take-Along Rights ............................. 28
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Page
ARTICLE X - INITIAL PUBLIC OFFERING ................................. 29
Section 10.1. IPO Commitment ................................ 29
Section 10.2. Co-Manager .................................... 29
Section 10.3. Foods Initiated IPO ........................... 30
ARTICLE XI - ADDITIONAL COVENANTS ................................... 30
Section 11.1. Maintain Listing or Quotation ................. 30
Section 11.2. Board of Directors ............................ 31
Section 11.3. No Inconsistent Agreements .................... 31
Section 11.4. Rules 144 and 144A ............................ 31
Section 11.5. Limitations on Holdings of Foods
Associates................................... 31
ARTICLE XII - MISCELLANEOUS ......................................... 31
Section 12.1. Entire Agreement .............................. 31
Section 12.2. Headings and Captions ......................... 31
Section 12.3. Choice of Law ................................. 32
Section 12.4. Venue ......................................... 32
Section 12.5. Notices ....................................... 32
Section 12.6. Amendments .................................... 33
Section 12.7. Extended Meanings ............................. 33
Section 12.8. Successors and Assigns ........................ 33
Section 12.9. Severability .................................. 34
Section 12.10. Counterparts .................................. 34
Section 12.11. Remedies Cumulative ........................... 34
Section 12.12. Binding Agreement ............................. 34
Section 12.13. Recapitalizations, Exchanges,
Etc., Affecting Vail
Securities ................................. 34
Section 12.14. Other Agreements .............................. 35
Section 12.15. Termination ................................... 35
Section 12.16. Enforcement ................................... 35
Section 12.17. Confidentiality ............................... 36
Section 12.18. Fiduciary Accounts ............................ 36
-ii-
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT, dated ___________, 1996 (the "Agreement"),
is among Vail Resorts, Inc., a Delaware corporation ("Vail"), Ralston Foods,
Inc., a Nevada corporation ("Foods"), and Apollo Ski Partners, L.P., a Delaware
limited partnership ("Apollo") (Foods and Apollo and their respective legal
representatives, successors and assigns are referred to herein individually as a
"Shareholder" and collectively as the "Shareholders").
WHEREAS, pursuant to the Stock Purchase Agreement dated as of
__________, 1996 (the "Purchase Agreement") by and among Vail, Foods and Ralston
Resorts, Inc., a Colorado corporation ("Ralston"), Vail acquired all of the
outstanding shares of capital stock of Ralston in exchange for [ ] shares of
Common Stock, par value $.01 per share, of Vail ("Vail Stock"); and
WHEREAS, Apollo owns [ ] shares of Vail Stock and [ ] shares of Class
A Common Stock, par value $.01 per share, of Vail ("Vail Class A Stock"); and
WHEREAS, the parties hereto desire to enter into this Agreement to
provide for certain rights and restrictions with respect to the shares of Vail
Equity (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth herein, each of Vail and Foods agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms (whether used in the singular or plural) have the
meanings indicated herein. Any term used and not defined herein has the meaning
set forth in the Purchase Agreement.
"Affiliate" of a Person means any other Person that directly or
indirectly through one or more intermediaries Controls, is Controlled by or is
under common Control with such Person.
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"Apollo" has the meaning set forth above in the recitals to this
Agreement.
"Apollo Option Period" has the meaning set forth in Section 4.1(c) of
this Agreement.
"Associate" of a Person means any of such Person's directors,
officers, shareholders, representatives, trustees, employees, attorneys,
advisors or agents.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday for commercial banks in New York City.
"Change of Control" means any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than Apollo or one or more Affiliates of Appollo, becomes the
beneficial owner of (i) more than 50% of the total outstanding Vail Securities
or (ii) such number of Vail Securities which would allow such person or group to
elect a majority of the Board of Directors of Vail.
"Closing" means the closing of the transactions con- templated by the
Purchase Agreement.
"Control" (including the terms "Controlling," "Controlled by" and
"under common Control with") means the possession of the power, directly or
indirectly, (a) to elect a majority of the board of directors (or equivalent
governing body) of the entity in question; or (b) to direct or cause the
direction of the management and policies of or with respect to the entity or
assets in question, whether through ownership of securities, by contract or
otherwise.
"Demand Notice" has the meaning set forth in Section 5.1(a) of this
Agreement.
"Demand Registration" has the meaning set forth in Section 5.1(a) of
this Agreement.
"Discussion Period" has the meaning set forth in Sec- tion 10.3(b) of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
-3-
"First Option" has the meaning set forth in Section 4.1(b) of this
Agreement.
"Foods" has the meaning set forth above in the recit- als to this
Agreement.
"Foods Initiated IPO" has the meaning set forth in Section 10.3(b) of
this Agreement.
"Foods Notice" has the meaning set forth in Section 10.3(b) of this
Agreement.
"GAAP" means accounting principles which are (a) consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors in effect from time to time and (b) applied on a basis
consistent with prior periods.
"Group" means any group of Persons within the meaning of Section
13(d)(3) of the Exchange Act.
"IPO" means the consummation of an initial public offering of Vail
Stock pursuant to a registration statement filed with the Securities and
Exchange Commission.
"Loss" has the meaning set forth in Section 8.1(a)(i) of this
Agreement.
"Marketable Number" has the meaning set forth in Sec- tion 5.1(e) of
this Agreement.
"Non-Qualified Transferee" has the meaning set forth in Section 9.1 of
this Agreement.
"Non-Requesting Shareholder" has the meaning set forth in Section
5.1(e) of this Agreement.
"Person" means an individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Piggyback Notice" has the meaning set forth in Sec- tion 5.3(a) of
this Agreement.
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"Piggyback Registration" has the meaning set forth in Section 5.3(a)
of this Agreement.
"Piggyback Shareholder" has the meaning set forth in Section 5.3(a) of
this Agreement.
"Private Sale" has the meaning set forth in Section 2.2 of this
Agreement.
"Purchase Agreement" has the meaning set forth above in the recitals
to this Agreement.
"Ralston" has the meaning set forth above in the recitals to this
Agreement.
"Registration Statement" means any registration statement or
comparable document under Section 5 of the Securities Act through which a public
sale or disposition of Vail Securities may be registered other than a
registration statement (a) relating to an Employee Benefit Plan or similar plan
or a business combination or (b) on any form that is not available for a
secondary offering.
"Requesting Shareholder" has the meaning set forth in Section 5.1(d)
of this Agreement.
"SEC" means the Securities and Exchange Commission or other federal
agency at the time administering the Securities Act, the Exchange Act or any
successor acts thereto.
"Second Option" has the meaning set forth in Section 4.1(c) of this
Agreement.
"Section 4.1 Shares" has the meaning set forth in Section 4.1(a) of
this Agreement.
"Section 5.6 Shares" has the meaning set forth in Section 5.6 of this
Agreement.
"Section 9.1 Shares" has the meaning set forth in Section 9.1 of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Shareholder" means Apollo or Foods and its permitted successors and
assigns.
-5-
"Shareholder Indemnified Party" has the meaning set forth in Section
8.1(c) of this Agreement.
"Transfer" with respect to all or any part of the Vail Equity means to
directly or indirectly (whether or not through an underwriter) sell, convey,
distribute, transfer (by merger or otherwise), assign, devise, exchange,
encumber, gift, pledge, hypothecate or otherwise dispose of such Vail Equity
(including without limitation the sale or disposition of an entity the primary
asset of which is Vail Equity).
"Transfer Notice" has the meaning set forth in Section 4.1(a) of this
Agreement.
"Trigger Date" has the meaning set forth in Section 10.3(a) of this
Agreement.
"Vail" has the meaning set forth above in the recit- als to this
Agreement.
"Vail Class A Stock" means the Class A Common Stock of Vail, par value
$.01 per share.
"Vail Equity" means (i) shares of Vail Stock acquired by Foods at the
Closing and any other Vail Securities owned, beneficially or of record, by Foods
or any of its Affiliates at any time during the term of this Agreement and (ii)
shares of Vail Stock, Vail Class A Stock and any other Vail Securities owned,
beneficially or of record, by Apollo or any of its Affiliates at any time during
the term of this Agreement.
"Vail Indemnified Party" has the meaning set forth in Section 8.1(a)
of this Agreement.
"Vail Market Price" means the average of the closing sale prices of
the Vail Stock being valued on the New York Stock Exchange or, if the Vail Stock
is not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system of the principal
national securities exchange on which the Vail Stock is listed or admitted to
trading, for the twenty (20) trading days which end on the day immediately prior
to the date of the Demand Notice. If the Vail Stock is not listed or admitted to
trading on any national securities exchange, "Vail Market Price" means the last
quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
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Association of Securities Dealers, Inc. Automated Quotation System or
such other system then in use, for the twenty (20) trading days which end on the
day immediately prior to such date or, if on any such trading day the Vail Stock
is not quoted by any such organization, the average of the closing bid and asked
prices as furnished by two professional market makers making a market in the
Vail Stock, one selected in good faith by the board of directors of Vail and the
other selected in good faith by Foods. If the Vail Stock is not publicly held or
so listed or publicly traded, "Vail Market Price" means the cash price at which
a willing seller would sell and a willing buyer would buy such securities in an
arm's-length negotiated transaction without undue time restraints, as determined
in good faith by an investment banking firm selected by agreement between Vail
and Foods.
"Vail Option Period" has the meaning set forth in Section 4.1(b) of
this Agreement.
"Vail Securities" means the Vail Stock, Vail Class A Stock and any
other voting securities of Vail or its Affiliates, including any securities
convertible into or exercisable or exchangeable for any voting securities of
Vail.
"Vail Stock" has the meaning set forth above in the recitals to this
Agreement.
ARTICLE II
STANDSTILL AND VOTING PROVISIONS
Section 2.1 Standstill Covenants. Unless otherwise permitted in this
Agreement, Foods agrees that during the term of this Agreement, it will not,
directly or indirectly:
(a) acquire, offer to acquire, or agree to acquire by purchase or
otherwise, any Vail Securities except as a result of a stock split, stock
dividend or similar recapitalization by Vail;
(b) except in the ordinary course of business, acquire, offer to
acquire, or agree to acquire by purchase or otherwise, any assets of Vail;
(c) initiate, solicit, propose, seek to effect or negotiate, alone or
with any other Person, (i) any form of business combination transaction
involving Vail or any
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Affiliate thereof, or (ii) any restructuring, recapitalization or
similar transaction with respect to Vail or any Affiliate thereof;
(d) initiate, solicit, propose, seek to effect, negotiate, or announce
an intent to make, alone or with any other Person, any tender offer,
exchange offer, merger, consolidation or share exchange for any Vail
Securities, or disclose an intent, purpose, plan or proposal with respect
to Vail, any of its Affiliates or any Vail Securities inconsistent with the
provisions of this Agreement;
(e) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are defined or used in Regulation 14A under the
Exchange Act) with respect to Vail or any of its Affiliates or become a
"participant" in any "election contest" (as such terms are defined or used
in Rule 14a-11 under the Exchange Act) involving Vail or any of its
Affiliates;
(f) initiate, solicit or propose the approval of one or more
shareholder proposals with respect to Vail or any of its Affiliates or
induce or attempt to induce any other Person to initiate any such
shareholder proposal;
(g) form, join or in any way participate in a Group with respect to
the Vail Securities;
(h) except as expressly provided herein, seek election to or seek to
place a representative on the board of directors of Vail or any of its
Affiliates or seek the removal of any member of the board of directors of
Vail or any of its Affiliates;
(i) except for participation on the board of directors of Vail, act in
concert with any other Person to seek to affect the management or board of
directors of Vail or any of its Affiliates or the business, operations or
affairs of Vail or any of its Affiliates;
(j) call or seek to have called any meeting of the shareholders of
Vail or any of its Affiliates;
(k) disclose to any third party or in any filing with any governmental
authority any intention, plan or arrangement inconsistent with any of the
foregoing or with
-8-
the restrictions on transfer set forth in this Agreement; or
(l) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing,
or advise, assist, encourage or influence any other Person to take any
action with respect to any of the foregoing.
Section 2.2 Acquisition of Vail Securities. Notwithstanding Section
2.1 hereof, Foods may purchase in one or more open market transactions or
otherwise (including the IPO) that number of shares of Vail Securities necessary
for Foods to continue to account for its investment in Vail under the equity
accounting method under GAAP; provided, that in no event shall any such purchase
result in the ownership by Foods and its Affiliates of Vail Securities exceeding
23.5% of the total outstanding Vail Securities. In the event that Vail proposes
to register or otherwise offer any Vail Securities for sale for its own account
(including the IPO) under the Securities Act (other than a registration of
securities in connection with a merger, an acquisition, an exchange offer or an
employee benefit plan maintained by Vail or its Affiliates or on Form S-4 or S-8
or any successor or similar form or by means of a shelf registration pursuant to
Rule 415 under the Securities Act) or in a transaction exempt from registration
under the Securities Act (a "Private Sale"), Vail will give written notice to
Foods of its intention to do so and of Foods' rights under this Section 2.2, at
least twenty (20) calendar days prior to the anticipated filing date of a
Registration Statement relating to such registration (or if such transaction is
a Private Sale a comparable period of time). Foods will have the right, but not
the obligation, to elect to purchase shares in such offering (including the
IPO), at the same price Vail is to receive for the shares to be sold for its
account provided that if such offering is not the IPO Foods shall only have such
purchase right if Apollo is purchasing Vail Securities in such offering, in
which case the number of Vail Securities that Foods may purchase in such
offering shall be equal to the number of shares proposed to be purchased by
Apollo multiplied by a fraction, the numerator of which is the total number or
shares of Vail Equity owned by Foods at such time and the denominator of which
is the sum of the total number of shares of Vail Equity owned by Apollo and
Foods at such time. In the event that the size of such offering is increased
after Foods has received notice of such offering, Foods will have the right, but
not the obligation, to proportionately increase its purchase of shares in
-9-
such offering. Foods may exercise its purchase rights under this
Section 2.2 by notifying Vail of its election to purchase shares (which election
shall be irrevocable) in such offering within ten days of receiving notice from
Vail (failure by Foods to give such notice within such ten-business-day period
shall be deemed an election by Foods not to purchase Vail Securities in such
offering). Any purchase by Foods of Vail Securities pursuant to this Section 2.2
may not result in Foods and its Affiliates' ownership exceeding 23.5% of the
total outstanding Vail Securities. Foods shall not be entitled to a Piggyback
Registration with respect to any offering if it has elected to purchase Vail
Securities in such offering.
Section 2.3 Voting of Vail Equity. Foods agrees that during the term
of this Agreement, with respect to the election of directors of Vail, each class
of Vail Equity owned by Foods and its Affiliates shall be voted (i) "for" the
nominees recommended by the Board of Directors of Vail, provided Vail and Apollo
are in compliance with the terms of Section 11.2 of this Agreement, (ii) in
accordance with the recommendation of the Board of Directors of Vail on each
proposal of a security holder pursuant to Rule 14a-8 under the Exchange Act, so
long as the subject matter of such proposal does not fall within the proviso
hereto, and (iii) with respect to all other matters requiring a vote of the Vail
Equity, "for" any proposal in the same proportion as the votes cast "for" such
proposal by the holders of the Vail Securities of the same class (excluding the
Vail Equity owned by Foods), and "against" any proposal in the same proportion
as the votes cast "against" such proposal by the holders of each such class of
Vail Securities (excluding the Vail Equity owned by Foods) and that with respect
to broker non-votes and abstentions, each class of Vail Equity owned by Foods
will be voted in the same proportion as votes deemed "for," "against" or
"abstain," giving effect to broker non-votes and abstentions as required under
the laws and rules then applicable; provided, however, that Foods shall retain
the right to vote its Vail Equity in any manner it sees fit with respect to any
proposals for (1) the merger, consolidation or other business combination of
Vail or any subsidiary of Vail with or into any other corporation, (2) the sale,
lease, exchange, transfer or other disposition of all or substantially all of
the assets of Vail and all of its subsidiaries taken together as a single
business, (3) the creation of any other class of stock with voting rights and
(4) changes to the Certificate of Incorporation or Bylaws of Vail that adversely
affect Foods' rights under this Agreement. The provisions of this Section 2.3
shall apply to both the casting of votes at
-10-
meetings of shareholders and execution of actions by written consent.
Section 2.4 Restrictions on Certain Transactions Prior to IPO. Prior
to the IPO, Vail shall not, without the prior written approval of Foods, (1)
enter into transactions with Apollo or its Affiliates that are not on an
arm's-length basis (other than the continuation or extension of contracts or
arrangements between Vail and Apollo and its Affiliates that are in existence as
of the date of this Agreement and have heretofore been disclosed to Foods), (2)
permit (a) the merger of Vail with or into any other corporation (other than a
subsidiary of Vail), (b) the sale, lease, exchange, transfer or other
disposition of all or substantially all of the assets of Vail and all of its
subsidiaries taken together as a single business, (c) the creation of any other
class of stock with voting rights that materially adversely affects Foods'
rights under this Agreement or (d) changes to the Certificate of Incorporation
or Bylaws of Vail that adversely affect Foods' rights under this Agreement, or
(3) enter into any material business not currently conducted by Vail that is not
related to the operation of ski resorts, real estate or the vacation, leisure
and entertainment industries.
ARTICLE III
TRANSFER OF VAIL EQUITY
Section 3.1 Restrictions on Transfer. During the term of this
Agreement, Foods agrees that it will not, and it will cause each of its
Affiliates who acquire Vail Equity not to, Transfer any Vail Equity, except as
permitted by or in accordance with this Agreement.
Section 3.2 Exceptions to Restrictions. Subject to all applicable
laws, the restrictions on Transfer set forth in Section 3.1 hereof shall not
apply to any of the following:
(a) a Transfer of some or all of the Vail Equity pro rata to all of
the holders of common stock of Foods as a dividend or distribution, in
redemption of the Foods Stock or pursuant to a similar transaction;
(b) a Transfer of some or all of the Vail Equity to an Affiliate of
Foods, provided that such Affiliate (i) shall agree to be bound by and
subject to the provisions of this Agreement, (ii) Foods shall remain liable
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for the performance by such Affiliate of its obligations under this
Agreement and (iii) such Affiliate shall have executed and delivered to
Vail the guaranty required by Section 5.14 of the Purchase Agreement;
(c) a Transfer of some or all of the Vail Equity in accordance with
Section 5.1 or 5.3 of this Agreement;
(d) a Transfer of some or all of the Vail Equity in any tender offer,
self-tender, exchange offer, going private transaction or other transaction
involving a Transfer which is recommended to shareholders of Vail by at
least a majority of the Board of Directors of Vail;
(e) subject to Section 4.1, a Transfer of some or all of the Vail
Equity with the prior written consent of a majority of the Board of
Directors of Vail;
(f) subject to Section 4.1, a Transfer of some or all of the Vail
Equity pursuant to Rule 144 of the Securities Act if an IPO has not been
consummated by December 31, 1998;
(g) subject to Section 4.1, a Transfer of some or all of the Vail
Equity if an IPO has not been consummated by December 31, 1998 and such
transferee agrees to be bound by the terms of this Agreement; and
(h) subject to Section 4.1, a Transfer of some or all of the Vail
Equity on or after the date which is 18 months after the date of this
Agreement, provided that (i) the transferee agrees to be bound by and
subject to the provisions of this Agreement, (ii) after giving effect to
such Transfer, the transferee will not own, directly or indirectly, more
than 10% of the then outstanding Vail Securities and (iii) such transferee
agrees with Vail and Apollo not to thereafter purchase or otherwise
acquire, directly or indirectly, any additional Vail Securities if it would
result in such transferee owning, directly or indirectly, more than 10% of
the then outstanding Vail Securities.
Section 3.3 Improper Transfer. Any attempt to Transfer any shares of
Vail Equity not in accordance with this Agreement will be null and void and Vail
will not give nor permit the transfer agent of Vail to give any effect to such
attempted Transfer in its stock records.
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Section 3.4 Restrictive Legend.
(a) A copy of this Agreement will be filed with the Secretary of Vail
and kept with the records of Vail. All certificates representing shares of Vail
Equity hereafter issued to or acquired by Foods or its successors or permitted
assigns, will bear the following legend (until such time as such shares are sold
pursuant to an effective registration statement or pursuant to Rule 144 under
the Securities Act) noted conspicuously on such certificates:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
ONLY, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED (BY MERGER OR OTHERWISE),
ASSIGNED, DEVISED, EXCHANGED, GIFTED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS
SUCH TRANSFER IS EXEMPT FROM REGISTRATION, AND AN ACCEPTABLE OPINION OF
COUNSEL IS DELIVERED TO VAIL RESORTS, INC. WITH REGARD TO SUCH EXEMPTION,
OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH STATE SECURITIES LAWS.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN THE SHAREHOLDER AGREEMENT, DATED , 1996. NO TRANSFER
OF THESE SHARES WILL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS
OF SUCH SHAREHOLDER AGREEMENT HAVE BEEN COMPLIED WITH IN FULL AND NO PERSON
MAY REQUEST VAIL RESORTS, INC. TO RECORD THE TRANSFER OF ANY SHARES IF SUCH
TRANSFER IS IN VIOLATION OF SUCH SHAREHOLDER AGREEMENT. A COPY OF THE
SHAREHOLDER AGREEMENT IS ON FILE AT THE EXECUTIVE OFFICES OF VAIL RESORTS,
INC. AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON
WRITTEN REQUEST. THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON VOTING PROVIDED FOR IN THE SHAREHOLDER AGREEMENT AND NO
VOTE OF SUCH SHARES THAT CONTRAVENES THE SHAREHOLDER AGREEMENT SHALL BE
EFFECTIVE.
(b) Until such time as the Vail Equity has been registered pursuant to
a registration statement under the Securities Act or sold pursuant to Rule 144
of the Securities Act, the certificates representing Vail Equity (including,
without limitation, all certificates issued upon Transfer or in exchange or
substitution therefor) will also bear any legend required under any other
applicable laws, including state securities or blue sky laws.
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(c) Vail may make a notation on its records or give stop-transfer
instructions to any transfer agents or registrars for the Vail Equity in order
to implement the restrictions set forth in this Article III.
(d) In the event Foods acquires any other or additional Vail
Securities, Foods will submit all certificates representing such Vail Securities
to Vail so that any appropriate legend or legends required by this Section 3.4
may be placed thereon.
ARTICLE IV
RIGHT OF FIRST OFFER
Section 4.1 Sales by Foods.
(a) Prior to any Transfer pursuant to Section 3.2(e), (f), (g) and
(h), Foods must first give written notice of its intent to make such Transfer (a
"Transfer Notice") to Vail and Apollo setting forth the number of shares of Vail
Equity (the "Section 4.1 Shares") that Foods desires to Transfer and the cash
price that Foods proposes to be paid for such Section 4.1 Shares and the other
terms and conditions of such proposed Transfer.
(b) Vail shall have the right, but not the obligation, to purchase the
Section 4.1 Shares (the "First Option") on the same terms and conditions as set
forth in such notice, which option shall be exercised by delivering to Foods
irrevocable written notice of its commitment to purchase the Section 4.1 Shares
within ten business days after receipt of the Transfer Notice (the "Vail Option
Period"). Failure by Vail to give such notice within such ten-business-day
period shall be deemed an election by Vail not to purchase the Section 4.1
Shares.
(c) In the event that Vail decides not to purchase the Section 4.1
Shares pursuant to Section 4.1(b), then Apollo will have the right, but not the
obligation, to purchase the Section 4.1 Shares (the "Second Option") on the same
terms and conditions as set forth in the Transfer Notice, which option shall be
exercised by delivering to Foods irrevocable written notice of its commitment to
purchase the Section 4.1 Shares within five business days after the termination
of the Vail Option Period (the "Apollo Option Period"). Failure by Apollo to
give such notice within such five-business-day period shall
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be deemed an election by Apollo not to purchase the Section 4.1
Shares.
(d) Delivery of written notice by Vail or Apollo accepting the First
Option or the Second Option, as the case may be, shall constitute a contract
between Vail or Apollo, on the one hand, and Foods, on the other hand, for the
purchase and sale of the Section 4.1 Shares on the terms and conditions set
forth in the Transfer Notice. The purchase of any shares pursuant to the
exercise of the First Option or the Second Option, as the case may be, shall be
completed not later than 30 days following delivery of the Transfer Notice with
respect to the Section 4.1 Shares, subject to receipt of any required material
third-party or governmental approvals, compliance with applicable laws and the
absence of any injunction or similar legal order preventing such transaction. In
the event that neither the First Option nor the Second Option is exercised,
Foods shall have the right for a period of 45 days after the termination of the
Apollo Option Period to Transfer the Section 4.1 Shares at a price not less than
90% of the price contained in, and on terms and conditions no less favorable to
Foods than those set forth in, the Transfer Notice; provided that the Transferee
agrees to be bound by the terms and conditions of this Agreement (unless the
Transfer is pursuant to Rule 144 under the Securities Act).
ARTICLE V
REGISTRATION
Section 5.1 Demand Registration.
(a) After the consummation of an IPO or at such time prior to the
consummation of an IPO as is permitted by Section 10.3 with respect to a given
Shareholder, upon a Shareholder's written request specifying the intended manner
of disposition (including the number of shares of Vail Equity to be sold) (a
"Demand Notice"), Vail will use its best efforts to prepare and file with the
SEC, as expeditiously as possible, a Registration Statement on an available form
for which Vail then qualifies (but not including by means of a shelf
registration pursuant to Rule 415 under the Securities Act), which legal counsel
for Vail deems appropriate and which is available for the sale of Vail Equity to
permit an underwritten public offering of some or all of the shares of Vail
Equity then held by such Shareholder and use its best efforts to cause such
registration statement to become effective (a "Demand Registration").
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(b) A Demand Registration will not be deemed to have occurred until it
has become effective under the Securities Act (unless a Shareholder delivers a
Demand Notice and subsequently withdraws the Demand Notice, in which case such
Demand Registration will be deemed to have occurred unless such Shareholder
agrees to pay all reasonable out-of-pocket expenses associated with such
registration actually incurred by Vail); provided, however, that if, after a
Demand Registration has become effective, the offering of Vail Equity pursuant
to such Demand Registration is prohibited by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or a court, such
Demand Registration will be deemed not to have occurred (unless such prohibition
on the sale of the Vail Equity is based on actions or omissions of such
Shareholder, in which case such Demand Registration will be deemed to have
occurred unless such Shareholder agrees to pay all reasonable out-of-pocket
expenses associated with such registration actually incurred by Vail).
(c) Vail shall only be obligated to effect one Demand Registration per
Shareholder in any twelve month period under this Section 5.1; provided,
however, that Vail will not be required to register the Vail Equity pursuant to
a Demand Notice under this Section 5.1 if at such time (i) the shares of Vail
Equity which a Shareholder is requesting to be registered pursuant to this
Section 5.1 constitute less than 6.0% (or, if less, all of the shares of Vail
Equity owned by such Shareholder) of the outstanding Vail Securities so
requested to be registered or (ii) such Demand Notice is given within six (6)
months after the effective date of any other registration of any Vail Securities
under the Securities Act.
(d) The managing underwriter will be selected by the Shareholder
requesting registration pursuant to this Section 5.1 (the "Requesting
Shareholder"); provided, however, that such underwriter shall be subject to the
approval of Vail, which approval shall not be unreasonably withheld. In the
event there is one or more co-managers, the first such co-manager shall be
selected by Vail, provided that such co-manager shall be subject to the approval
of the Requesting Shareholder, which approval shall not be unreasonably withheld
or delayed, and all other co-managers will be selected by the Requesting
Shareholder.
(e) In connection with a Demand Registration, both the Shareholder not
requesting the Demand Registration (the "Non-Requesting Shareholder") and Vail
may elect to include
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additional shares of Vail Securities in such offering on the same
terms and conditions as the Vail Equity to be sold by the Requesting
Shareholder; provided, however, that if the managing underwriter(s) advises the
Requesting Shareholder, the Non-Requesting Shareholder and Vail that, in its
judgment, the number of shares proposed to be included in such offering exceeds
the largest number of Vail Securities which can be sold without having an
adverse effect on such offering, including the price at which such securities
can be sold (the "Marketable Number"), then the total number of shares to be
included in such offering shall be limited as follows: (i) first, all the shares
of Vail Equity that the Requesting Shareholder and the Non-Requesting
Shareholder propose to sell up to the Marketable Number, allocated pro rata
between the Requesting Shareholder and the Non-Requesting Shareholder on the
basis of the relative number of Vail Securities that the Requesting Shareholder
and the Non-Requesting Shareholder have proposed to be included in such
registration, and (ii) second, all the shares of Vail Securities that Vail
proposes to sell, which does not exceed the difference, if any, between the
Marketable Number and that number of shares which the Requesting Shareholder and
the Non-Requesting Shareholder have included pursuant to clauses (i) and (ii)
above.
Section 5.2 Delay of Demand Registration. Notwithstanding anything to
the contrary in Article V hereof, in the event that Vail determines in its
reasonable judgment that it may be advisable to delay filing a Registration
Statement described in Section 5.1 hereof or to withdraw such Registration
Statement if such Registration Statement has already been filed, Vail may delay
filing such, or withdraw such previously filed, Registration Statement for a
period of not more than ninety (90) days from the date of receipt of the request
for the Demand Registration if Vail furnishes to the Requesting Shareholder a
certificate signed by an executive officer of Vail stating that Vail has
reasonably determined that (i) such a filing would adversely affect any proposed
financing or acquisition by Vail or (ii) such a filing would otherwise represent
an undue hardship for Vail; provided, however, that Vail will, at the request of
the Requesting Shareholder, file or refile, as the case may be, such
Registration Statement promptly after Vail, in its reasonable judgment,
determines that it is no longer advisable to delay filing or to continue the
withdrawal of such Registration Statement but in no event shall the filing or
re-filing of such Registration Statement be delayed more than the aforementioned
ninety (90) days.
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Section 5.3 Piggyback Registration.
(a) Right To Include Vail Equity.
(i) If Vail or any other Person (other than a Shareholder) at any time
proposes to register any Vail Securities under the Securities Act (other than a
registration of securities in connection with a merger, an acquisition, an
exchange offer or an employee benefit plan maintained by Vail or its Affiliates
or on Form S-4 or S-8 or any successor or similar form or by means of a shelf
registration pursuant to Rule 415 under the Securities Act to permit sales of
Vail Securities by employees, officers and directors of Vail), whether or not
for sale for its own account, in a manner which would permit registration of the
Vail Equity for sale to the public under the Securities Act, it will give
written notice to each Shareholder of its intention to do so and of such
Shareholder's rights under this Section 5.3(a)(i), at least twenty (20) calendar
days prior to the anticipated filing date of a Registration Statement relating
to such registration (a "Piggyback Notice"). Such Piggyback Notice will offer
each Shareholder the opportunity to include in such Registration Statement that
number of shares of Vail Equity as such Shareholder may request. Upon the
written request (the "Piggyback Registration") (which request will specify the
number of shares of Vail Equity intended to be disposed of by each Shareholder
pursuant to such Registration Statement) of each Shareholder (the "Piggyback
Shareholder") made within ten (10) calendar days after the receipt of the
Piggyback Notice, Vail will use its best efforts to effect the registration
under the Securities Act of all shares of Vail Equity which Vail has been so
requested to register; provided, however, that each Shareholder must sell its
Vail Equity requested to be included in such registration to the underwriter(s)
selected by Vail on the same terms and conditions as apply to other Persons,
including Vail, and if, at any time after receiving a reply from each
Shareholder to a Piggyback Notice and prior to the effective date of the
Registration Statement filed in connection with such registration, Vail decides
for any reason not to register any shares of Vail Securities, Vail will notify
each Shareholder and thereupon be relieved of its obligation to register any
Vail Equity in connection with such registration.
(ii) No registration, whether or not effected under this Section
5.3(a), will relieve Vail of its obligations to effect Demand Registrations
under Section 5.1 hereof.
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(b) Priority in Piggyback Registrations. If the managing underwriter
advises Vail in writing that, in its opinion, the Marketable Number is less than
that intended to be included in a Registration Statement, Vail will include in
such Registration Statement (i) first, all of the Vail Securities Vail proposes
to sell for its own account, and (ii) second, the Vail Securities requested to
be included by the Shareholders and other Persons pursuant to Section 5.3(a)
hereof shall be allocated pro rata among the Shareholders on the basis of the
relative number of Vail Securities each Shareholder and such other Persons has
requested to be included in such registration.
Section 5.4 Delay of Piggyback Registration. Notwithstanding anything
to the contrary in this Article V, in the event that Vail determines in its
reasonable judgment that it may be advisable to delay filing a Registration
Statement described in Section 5.3 hereof or to withdraw such Registration
Statement if such Registration Statement has already been filed, Vail may delay
filing such, or withdraw such previously filed, Registration Statement in
accordance with the provisions of Section 5.2 hereof.
Section 5.5 Holdback Agreements.
(a) Whenever Vail effects an underwritten public offering of Vail
Equity pursuant to a registration statement (including the IPO), each
Shareholder agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, of any Vail Securities
(other than as part of such registration) during the 15 days prior to, and
during the 180-day period (or such shorter period as may be requested by the
lead underwriter for such offering) beginning on, the effective date of such
registration statement.
(b) In connection with underwritten public offering of Vail Equity
pursuant to a registration statement under this Agreement, Vail agrees not to
effect any public sale or distribution of any Vail Securities (other than as
part of such registration or in connection with any employee stock option or
other benefit plan or any private issuance of Vail Equity where the recipient
also agrees to be bound by the hold back arrangements applicable to Vail under
this Section 5.5) during the 15 days prior to, and during the 90-day period (or
such shorter period as may be requested by the lead underwriter for such
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offering) beginning on the effective date of, such registration
statement.
Section 5.6 Right to Purchase in Lieu of Registration.
(a) Any time Vail receives a request for a Demand Registration or a
Piggyback Registration from Foods, Vail shall have the option to purchase all
but not less than all of the Vail Equity proposed to be disposed of in such
request (the "Section 5.6 Shares") at the Vail Market Price by delivering to
Foods, a notice of Vail's election to purchase the Section 5.6 Shares within
seven (7) days of receipt by Vail of the request for the Demand Registration or
Piggyback Registration, as the case may be, pursuant to Section 5.1 or Section
5.3(a), as the case may be.
(b) In the event that Vail decides not to purchase the Section 5.6
Shares pursuant to Section 5.6(a), then Apollo will have the right, but not the
obligation, to purchase the Section 5.6 Shares at the Vail Market Price by
delivering to Foods a notice of Apollo's election to purchase the Section 5.6
Shares within seven (7) days of Vail deciding not to purchase the Section 5.6
Shares.
ARTICLE VI
REGISTRATION EXPENSES
Section 6.1 Registration Expenses.
(a) Subject to Section 5.1(b) of this Agreement, all expenses incident
to Vail's performance of or compliance with Articles V and VII of this Agreement
to effect Demand Registrations and Piggyback Registrations will be borne by
Vail, including, without limitation:
(i) all federal registration and filing fees;
(ii) subject to Section 7.4, fees and expenses of compliance with
securities or blue sky laws; provided, however, that Vail will in no event
be obligated to pay the fees and disbursements of counsel for the
underwriters or the Shareholders in connection with blue sky qualifications
of the Vail Equity under the laws of such jurisdictions as the managing
underwriter(s) may designate;
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(iii) printing, messenger, telephone and delivery expenses;
(iv) fees and disbursements of legal counsel for Vail;
(v) fees and disbursements of all independent cer- tified public
accountants of Vail;
(vi) NASD fees and disbursements of the underwriters; provided,
however, that in all cases a Shareholder will pay all costs of discounts,
commissions, spreads or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Vail Equity being sold by such Shareholder;
(vii) fees and expenses of other Persons retained by Vail; and
(viii) listing or quotation fees and expenses required to be made
pursuant to Section 7.5 hereof in connection with the Registration
Statement.
(b) Each of Vail and the Shareholders will pay its own respective
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the fees and
expenses of any Person, including special experts, retained by Vail or the
Shareholders, respectively.
ARTICLE VII
REGISTRATION PROCEDURE
Section 7.1 Shareholder Information. Each Shareholder will provide
Vail with such information about such Shareholder and the intended manner of
distribution of Vail Equity and otherwise cooperate with Vail and the
underwriter(s) as may be necessary in the reasonable opinion of Vail to satisfy
any obligation of Vail under this Agreement to register the Vail Equity under
federal or state securities laws and otherwise take actions related thereto. In
the event of the failure of a Shareholder to comply with the requirements of the
preceding sentence Vail may delay filing such, and withdraw such previously
filed, Registration Statement. Vail will file or refile, as the case may be,
such Registration Statement
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promptly following compliance with such requirements by a Shareholder;
provided, however, that a Shareholder will be responsible for any reasonable
out-of-pocket costs which arise out of such non-compliance. A Shareholder will
immediately notify Vail upon discovery that any information provided by such
Shareholder which is included in the prospectus that is included in a
Registration Statement, as then in effect, is untrue in any material respect, or
omits to state any material fact required to be stated therein or to make the
information stated therein not misleading in the light of the circumstances
under which it is presented.
Section 7.2 Compliance. Each Shareholder and Vail will comply with all
rules and regulations of the SEC and applicable state securities or blue sky
laws governing the manner of sale of securities in connection with the Transfer
of any of the Vail Equity pursuant to any Registration Statement.
Section 7.3 Provision of Prospectuses.
(a) Vail will furnish to each Shareholder such number of copies of a
summary prospectus or other prospectus, including a prospectus subject to
completion in conformity with the requirements of the Securities Act, and such
other documents as such Shareholder may reasonably request in writing, in order
to facilitate the public sale or other disposition of the Vail Equity of each
Shareholder included in a Registration Statement.
(b) At any time when a sale or other disposition of Vail Equity
pursuant to a Registration Statement is subject to a prospectus delivery
requirement, Vail will notify each Shareholder of the occurrence of any event
that causes the prospectus included in such Registration Statement, as then in
effect, to include an untrue statement of a material fact or to omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing and Vail
will use its best efforts, as expeditiously as possible, to either amend the
prospectus or otherwise take any actions so that use of the previous prospectus
may be legally resumed. Upon receipt of such a notice, each Shareholder will
immediately discontinue all sales or other dispositions of Vail Equity pursuant
to the Registration Statement. Each Shareholder may resume such sales or
dispositions only upon receipt of an amended prospectus or after such
Shareholder is advised by Vail that the use of the previous prospectus may be
legally resumed.
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Section 7.4 Blue Sky Compliance. Vail will use its best efforts to (a)
register or qualify the Vail Equity included in a Registration Statement under
the securities or blue sky laws of such jurisdictions as each Shareholder
reasonably requests and (b) do any and all other acts that may be reasonably
necessary or advisable to enable each Shareholder to consummate the public sale
or disposition of such securities in such jurisdictions; provided, however, that
Vail is not required to consent to, or take any action that would subject it to,
general service of process or taxation in any jurisdiction where it is not then
so subject, nor qualify to do business in any jurisdiction where it is not then
so qualified.
Section 7.5 Listing of Vail Equity. Vail will use its best efforts to
cause the Vail Equity when issued to be listed on all securities exchanges on
which any securities issued by Vail are then listed, or quoted on all automated
quotation systems on which any such securities of Vail are then quoted,
including, without limitation, entering into appropriate customary agreements
(including a listing application and indemnification agreement in customary
form).
Section 7.6 Stop Orders. Vail will promptly notify each Shareholder of
(a) the receipt by Vail of any notification with respect to the issuance by the
SEC of any stop order or order suspending the effectiveness of any Registration
Statement covering any Vail Equity or the initiation of any proceedings for that
purpose or (b) the receipt by Vail of any notification with respect to the
limitation, restriction or suspension of the offer or sale of Vail Equity in any
jurisdiction in which the Vail Equity was qualified to be sold, or the
initiation of any proceedings for such purpose. In the event that Vail notifies
each Shareholder of any such event, each Shareholder will immediately
discontinue all sales or other dispositions of Vail Equity pursuant to the
Registration Statement until such time that Vail notifies each Shareholder of
the lifting of such stop order or similar order; provided, however, that such a
stop order or similar order issued by a state securities or blue sky
administrator will apply only to offers and sales in such state, unless each
Shareholder is advised otherwise by Vail. Vail, with the cooperation of each
Shareholder, will use its best efforts to contest any such proceedings and to
obtain the withdrawal of any such order at the earliest possible date.
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ARTICLE VIII
INDEMNIFICATION AND CONTRIBUTION
Section 8.1 Indemnification.
(a) Indemnification by Foods.
(i) Foods agrees to indemnify and hold harmless Vail and its
Affiliates and Associates (each such Person being hereinafter referred to as a
"Vail Indemnified Party") from and against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and legal
expenses) (each a "Loss") arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or preliminary, final or summary prospectus covering the Vail Equity,
or in any amendment or supplement thereto, or in any document incorporated by
reference into any of the foregoing or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only if,
and only to the extent, such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to Vail or its representatives by or on behalf of Foods
for use in the preparation of such Registration Statement, preliminary, final or
summary prospectus or such amendment or supplement thereto, or such document
incorporated by reference. This indemnity will be in addition to any liability
which Foods may otherwise have. Foods will also indemnify the underwriter(s),
selling broker(s), dealer manager(s) and similar securities industry
professionals participating in the distribution, their officers and directors
and each Person who Controls such Persons to the same extent as provided above
with respect to the indemnification of a Vail Indemnified Party.
(ii) Foods also agrees to indemnify and hold harmless any Vail
Indemnified Party to the same extent as provided in clause (i) above from and
against all Losses arising out of any action or proceeding brought against any
Vail Indemnified Party in connection with the distribution or proposed
distribution of Vail Equity to the holders of Foods Stock; provided, however,
that this Section 8.1(a)(ii) shall not apply to any Losses for which Vail is
responsible as provided in Section 8.1(c) of this Agreement.
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(iii) If any action or proceeding (including any governmental
investigation or inquiry) is brought or asserted against a Vail Indemnified
Party in respect of which indemnity may be sought from Foods, such Vail
Indemnified Party will promptly notify Foods in writing of the commencement of
such action and Foods shall assume the defense thereof and have primary control
over any related suit or proceeding, including the employment of legal counsel
and the payment of all expenses in connection therewith; provided, however, that
the failure of any Vail Indemnified Party to give notice as provided herein
shall not relieve Foods of its obligations under this Section 8.1(a) except to
the extent that Foods is actually materially prejudiced by such failure to give
notice. A Vail Indemnified Party shall have the right to participate in and
jointly with Foods, to the extent that it may wish, and employ separate counsel
reasonably satisfactory to such Vail Indemnified Party, provided, however, that
Foods will not be liable to such Vail Indemnified Party for any legal or other
expenses incurred by such Vail Indemnified Party in connection therewith, unless
such Vail Indemnified Party shall have been advised by counsel that a conflict
of interest between such Vail Indemnified Party and Foods is likely to exist in
respect of such claim.
(b) Indemnification by Apollo.
(i) Apollo agrees to indemnify and hold harmless each Vail Indemnified
Party from and against all Losses arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or preliminary, final or summary prospectus covering the
Vail Equity, or in any amendment or supplement thereto, or in any document
incorporated by reference into any of the foregoing or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
but only if, and only to the extent, such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to Vail or its representatives by or on behalf of
Apollo for use in the preparation of such Registration Statement, preliminary,
final or summary prospectus or such amendment or supplement thereto, or such
document incorporated by reference. This indemnity will be in addition to any
liability which Apollo may otherwise have. Apollo will also indemnify the
underwriter(s), selling broker(s), dealer manager(s) and similar securities
industry professionals
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participating in the distribution, their officers and directors and
each Person who Controls such Persons to the same extent as provided above with
respect to the indemnification of a Vail Indemnified Party.
(ii) Apollo also agrees to indemnify and hold harmless any Vail
Indemnified Party to the same extent as provided in clause (i) above from and
against all Losses arising out of any action or proceeding brought against any
Vail Indemnified Party in connection with the distribution or proposed
distribution of Vail Equity to the holders of Apollo Stock; provided, however,
that this Section 8.1(b)(ii) shall not apply to any Losses for which Vail is
responsible as provided in Section 8.1(c) of this Agreement.
(iii) If any action or proceeding (including any governmental
investigation or inquiry) is brought or asserted against a Vail Indemnified
Party in respect of which indemnity may be sought from Apollo, such Vail
Indemnified Party will promptly notify Apollo in writing of the commencement of
such action and Apollo shall assume the defense thereof and have primary control
over any related suit or proceeding, including the employment of legal counsel
and the payment of all expenses in connection therewith; provided, however, that
the failure of any Vail Indemnified Party to give notice as provided herein
shall not relieve Apollo of its obligations under this Section 8.1(b) except to
the extent that Apollo is actually materially prejudiced by such failure to give
notice. A Vail Indemnified Party shall have the right to participate in and
jointly with Apollo, to the extent that it may wish, and employ separate counsel
reasonably satisfactory to such Vail Indemnified Party, provided, however, that
Apollo will not be liable to such Vail Indemnified Party for any legal or other
expenses incurred by such Vail Indemnified Party in connection therewith, unless
such Vail Indemnified Party shall have been advised by counsel that a conflict
of interest between such Vail Indemnified Party and Apollo is likely to exist in
respect of such claim.
(c) Indemnification by Vail.
(i) Vail agrees to indemnify and hold harmless each Shareholder and
its Affiliates and Associates (each such person being hereinafter referred to as
a "Shareholder Indemnified Party") from and against all Losses arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement,
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preliminary, final or summary prospectus covering the Vail Equity, or
in any amendment or supplement thereto, or in any document incorporated by
reference into any of the foregoing or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein not misleading, except
insofar as such Losses arise out of or are based solely upon any such untrue
statement or omission or allegation thereof based upon written information
provided by or on behalf of a Shareholder for inclusion in such Registration
Statement, preliminary, final or summary prospectus, or such amendment or
supplement thereto, or such document incorporated by reference; provided,
however, that Vail will not be liable in any such case to the extent that any
such Loss arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
(A) such Shareholder failed to send or deliver a copy of the final prospectus
with or prior to the delivery of written confirmation of the sale of the Vail
Equity covered by the Registration Statement to the Person asserting such Loss,
and (B) the final prospectus corrected such untrue statement or omission; and
provided, further, that Vail will not be liable in any such case to the extent
that any such Loss arises out of or is based upon an untrue statement or
omission in the final prospectus, if such untrue statement or omission is
corrected in an amendment or supplement to the final prospectus and if, having
previously been furnished by or on behalf of Vail with copies of the final
prospectus as so amended or supplemented, such Shareholder thereafter fails to
deliver such prospectus as so amended or supplemented, prior to or concurrently
with the sale of the Vail Equity to the Person asserting such Loss who purchased
such Vail Equity which is the subject thereof. This indemnity will be in
addition to any liability which Vail may otherwise have. Vail will also
indemnify the underwriter(s), selling broker(s), dealer manager(s) and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who Controls such Persons to the same
extent as provided above with respect to the indemnification of a Shareholder
Indemnified Party.
(ii) If any action or proceeding is brought against a Shareholder
Indemnified Party in respect of which indemnity may be sought against such
Shareholder Indemnified Party, such Shareholder Indemnified Party will promptly
notify Vail in writing of the commencement of such action and Vail will assume
the defense thereof and have primary control over any
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related suit or proceeding, including the employment of legal counsel
and the payment of all expenses in connection therewith; provided, however, that
the failure of any Shareholder Indemnified Party to give notice as provided
herein shall not relieve Vail of its obligations under this Section 8.1(c)
except to the extent that Vail is actually materially prejudiced by such failure
to give notice. A Shareholder Indemnified Party shall have the right to
participate in and jointly with Vail, to the extent that it may wish, and employ
separate counsel reasonably satisfactory to such Shareholder Indemnified Party,
provided, however, that Vail will not be liable to such Shareholder Indemnified
Party for any legal or other expenses incurred by such Shareholder Indemnified
Party in connection therewith, unless such Shareholder Indemnified Party shall
have been advised by counsel that a conflict of interest between such
Shareholder Indemnified Party and Vail is likely to exist in respect of such
claim.
Section 8.2 Contribution.
(a) If the Indemnification provided for in Section 8.1 hereof is
unavailable to a Vail Indemnified Party or Shareholder Indemnified Party under
Section 8.1(a), 8.1(b) or Section 8.1(c) hereof (other than by reason of the
exceptions provided in Sections 8.1(a), 8.1(b) and 8.1(c)) in respect of any
Losses referred to therein, then such indemnifying party, in lieu of
indemnifying such indemnified party, will contribute to the amount paid or
payable by such indemnified party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the indemnifying party, on
the one hand, and the indemnified party, on the other hand, in connection with
the statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party,
on the one hand, and the indemnified party, on the other hand, shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such indemnified
party and each parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by each party as a result of the Losses referred to above will be deemed
to include, subject to the limitations set forth in Sections 8.1(a), 8.1(b) and
8.1(c) hereof, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
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(b) Notwithstanding the provisions of Section 8.2(a) hereof, no Person
found to be guilty of fraudulent misrepresentation shall be entitled to
contribution from any Person who is not found to be guilty of such fraudulent
misrepresentation.
ARTICLE IX
TAKE-ALONG RIGHTS
Section 9.1 Take-Along Rights. Apollo may not effect a Transfer (or a
series of related Transfers) of Vail Equity to one person or a related group of
persons if such Transfer would result in a Change of Control of Vail (other than
Transfers effected by sales of Vail Equity through underwriters in a public
offering or in the securities markets generally) (the "Section 9.1 Shares")
without first complying with this Section 9.1. If Apollo desires to Transfer the
Section 9.1 Shares, Apollo shall give written notice (the "Take-Along Notice")
to Foods stating (i) the name and address of the transferee (the "Non-Qualified
Transferee") and (ii) the price and terms upon which the Non-Qualified
Transferee proposes to purchase the Section 9.1 Shares. Foods shall have the
irrevocable option, but not the obligation (the "Take-Along Option"), to sell to
the Non-Qualified Transferee, up to a number of shares of Vail Equity (the
"Included Shares") determined in accordance with Section 9.1(a), at the price
and on the terms set forth in the Take-Along Notice. The Take-Along Option shall
be exercised by Foods by giving written notice to Apollo, within ten business
days of receipt of the Take-Along Notice, indicating its election to exercise
the Take-Along Option. Failure by Foods to give such notice within the ten
business day period shall be deemed an election by Foods not to sell its shares
of Vail Equity pursuant to that Take-Along Notice. The closing with respect to
any sale to a Non-Qualified Transferee pursuant to this Section 9.1 shall be
held at the time and place specified in the Take-Along Notice but in any event
within 30 days of the date the Take-Along Notice is given; provided that if
through the exercise of reasonable efforts Apollo is unable to cause such
transaction to close within 30 days, such period may be extended for such
reasonable period of time as may be necessary to close such transaction.
Consummation of the sale of the Section 9.1 Shares by Apollo to a Non-Qualified
Transferee shall be conditioned upon consummation of the sale by Foods to such
Non-Qualified Transferee of the Included Shares, if any.
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(a) The number of Included Shares purchased from Foods shall be
determined by multiplying the number of Shares proposed to be purchased from
Apollo by a Non-Qualified Transferee by a fraction, the numerator of which is
the total number of shares of Vail Equity owned by Foods and the denominator of
which is the sum of the total number of shares of Vail Equity owned by Apollo
and Foods.
(b) Apollo shall arrange for payment directly by the Non-Qualified
Transferee to Foods, upon delivery of the certificate or certificates
representing the Included Shares duly endorsed for transfer, together with such
other documents as the Non-Qualified Transferee may reasonably request. The
reasonable costs and expenses incurred by Apollo and Foods in connection with a
sale of shares of Vail Equity subject to this Section 9.1 shall be allocated pro
rata based upon the number of shares of Vail Equity sold by each Shareholder to
a Non-Qualified Transferee.
(c) If, at end of 30 days following the date on which a Take-Along
Notice was given, the sale of shares of Vail Equity by Apollo and the sale of
the Included Shares, if any, have not been completed in accordance with the
terms of the Non-Qualified Transferee's offer, all certificates representing the
Included Shares shall be returned to Foods, and all the restrictions on Transfer
contained in this Agreement with respect to shares of Vail Equity owned by
Apollo shall again be in effect.
ARTICLE X
INITIAL PUBLIC OFFERING
Section 10.1 IPO Commitment. Vail and Apollo hereby agree to use
reasonable efforts to consummate the IPO as soon as possible following the
Closing.
Section 10.2 Co-Manager. In connection with the IPO (unless the IPO is
effected by means of a Demand Registration by Foods), Foods shall select one of
the co-managers (other than the lead manager); provided, however, that such
co-manager shall be subject to the approval of Vail, which approval shall not be
unreasonably withheld.
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Section 10.3 Foods Initiated IPO.
(a) If the IPO has not been consummated on the later of (i) September
30, 1997 or (ii) nine months after the Closing (the "Trigger Date"), Apollo,
Vail and Foods agree to abide by the procedures of this Section 10.3.
(b) Following the Trigger Date, Apollo and Foods agree to discuss in
good faith for a period of 30 days (the "Discussion Period") the timing of the
IPO. At the conclusion of the Discussion Period, Foods may deliver a notice to
Vail within 30 days (the "Foods Notice") stating that it will request a Demand
Registration unless Vail consummates the IPO within three months from the date
of the Foods Notice. If at the conclusion of such three-month period the IPO has
not been consummated, during the next six months Foods shall have the right to
request a Demand Registration and consummate the IPO by means of such Demand
Registration. If at the conclusion of such six-month period the IPO has not been
consummated, Foods' right to request a Demand Registration to effect the IPO
shall be suspended for a twelve-month period. If at the conclusion of such
twelve-month period the IPO has not otherwise been consummated, during the next
six months Foods shall again have the right to request a Demand Registration and
consummate the IPO by means of such Demand Registration. If the IPO is
consummated by means of a Demand Registration by Foods (the "Foods Initiated
IPO"), then Foods shall select the lead manager for the Foods Initiated IPO;
provided, however, that such lead manager shall be subject to the approval of
Vail, which approval shall not be unreasonably withheld or delayed. Vail may
select one co-manager in connection with a Foods Initiated IPO, subject to the
approval of the lead manager for the Foods Initiated IPO, which approval shall
not be unreasonably withheld or delayed.
ARTICLE XI
ADDITIONAL COVENANTS
Section 11.1 Maintain Listing or Quotation. Vail hereby covenants and
agrees that it shall use its best efforts to maintain its listing of Vail
Securities on any securities exchanges on which Vail Securities are listed in
the future pursuant to Section 7.5 hereof and to maintain its quotation of Vail
Securities on any automated quotation systems on which Vail Securities are
quoted in the future pursuant to Section 7.5 hereto.
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Section 11.2 Board of Directors. Vail and the Shareholders agree to
take all actions necessary to cause the Board of Directors to consist of no more
than twenty directors. As long as Foods owns at least 10% of the outstanding
Vail Securities, Vail and the Shareholders agree to take all actions necessary
for Foods to be able to nominate and appoint two directors to the Board of
Directors of Vail, including without limitation Apollo nominating and electing
such directors as Class 1 directors elected by the holders of the Vail Class A
Stock.
Section 11.3 No Inconsistent Agreements. Vail hereby covenants and
agrees that it shall not enter into any agreements governing the transfer or
registration of shares of Vail Securities which would materially adversely
affect Foods' rights under this Agreement without Foods' prior written consent.
Section 11.4 Rules 144 and 144A. Vail hereby covenants and agrees that
it will use its reasonable best efforts to file any reports required to be filed
by it under the Securities Act and the Exchange Act and it will take such
further action as Foods may reasonably request, all to the extent required from
time to time to enable Foods to sell its Vail Equity (subject to the terms
hereof) without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144 or 144A under the Securities Act, as
such Rules may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.
Section 11.5 Limitations on Holdings of Foods Associates. Foods shall
use its best efforts to cause its Associates and Associates of its Affiliates
not to own, in the aggregate, 2% or more of the outstanding Vail Securities.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto relative to the subject matter hereof, and
supersedes all prior written or oral understandings, agreements, conditions or
representations.
Section 12.2 Headings and Captions. All headings and captions used in
this Agreement are for convenience only,
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and will not be construed to either limit or broaden the language of
this Agreement or any particular section.
Section 12.3 Choice of Law. This Agreement will be governed by and
construed under and in accordance with the laws of the State of New York,
without giving effect to the conflict of laws provisions thereof, except that
all matters relating to the internal affairs of Vail shall be governed by and
construed under and in accordance with the General Corporation Law of the State
of Delaware.
Section 12.4 Venue. Any action or legal proceedings to enforce this
Agreement or any of its terms, or for indemnification and the recovery of losses
as provided for in this Agreement by a party, may be brought and prosecuted in
such court or courts located in the State of New York as provided by law, and
the parties to this Agreement consent to the jurisdiction of said court or
courts and to service of process by registered mail, return receipt requested,
or by any other manner provided by New York law.
Section 12.5 Notices. Any notice or other communication required or
permitted hereunder is deemed delivered when delivered in person, when
transmitted by telecopier (which will also be sent concurrently by certified or
registered mail), on the next Business Day when sent by Federal Express or a
similar overnight delivery service, or on the third Business Day when sent by
registered or certified U.S. mail service as follows:
If to Foods:
Ralston Foods, Inc.
800 Market Street
Suite 2900
St. Louis, Missouri 63101
Attn.: Robert W. Lockwood, Esq.
Facsimile No.: (314) 877-7748
If to Vail:
Vail Resorts, Inc. (Delivery other than mail)
137 Benchmark Road
Avon, Colorado 81620
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Vail Resorts, Inc. (Mail Delivery)
Post Office Box 7
Vail, Colorado 81658
Attn.: James S. Mandel, Esq.
Facsimile No.: (970) 845-2912
If to Apollo:
1301 Avenue of the Americas
New York, New York 10019
Attn.: Marc Rowan
Facsimile No.: (212) 261-4071
With a copy to:
James J. Clark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
The parties to this Agreement will promptly notify each other in the
manner provided in this Section 12.5 of any change in their respective
addresses. A notice of change of address will not be deemed to have been given
until received by the addressee.
Section 12.6 Amendments. No changes, modifications, amendments or
additions will be valid unless such be made in writing and signed by or on
behalf of each party.
Section 12.7 Extended Meanings. Words importing the singular number
include the plural and vice versa, and words importing the masculine gender
include the feminine and neuter genders.
Section 12.8 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided each of Foods and Vail shall have the
right to assign its rights and obligations under this Agreement as a whole (i)
in a transaction pursuant to Section 3.2(b), (g) or (h) or (ii) to the surviving
entity in a merger, consolidation, combination or other corporate transaction
involving it if the surviving entity agrees in writing to be bound by the terms
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hereof, and Apollo shall have the right to assign its rights and
obligations under this Agreement to any of its Affiliates or in a bona fide
distribution of its assets following dissolution or liquidation, provided each
of the distributees agrees in writing to be bound by the terms hereof.
Section 12.9 Severability. The invalidity or unenforceability of any
provision hereof in any jurisdiction will not affect the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. To the extent permitted by applicable law, each party waives any
provision of law that renders any provision hereof prohibited or unenforceable
in any respect. If any term, provision, covenant or restriction in this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the parties hereto will use their best efforts to find and employ
an alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction and the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect, in order to achieve the intent of the
parties to the extent possible.
Section 12.10 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which is deemed an original,
but all of which together constitute a single agreement, and it is not necessary
in making proof of this Agreement to produce or account for more than one such
counterpart.
Section 12.11 Remedies Cumulative. Except as otherwise expressly
limited herein, the remedies given to any party by this Agreement are in
addition to all remedies under any statute or rule of law. Any forbearance or
failure or delay in exercising any remedy hereunder is not deemed to be a waiver
of any other remedy a party may have under this Agreement.
Section 12.12 Binding Agreement. This Agreement will be deemed
effective and legally binding upon the parties when it has been executed and
delivered by all parties hereto. This Agreement will inure to the benefit of the
parties hereto and their successors and permitted assignees.
Section 12.13 Recapitalizations, Exchanges, Etc., Affecting Vail
Securities. The provisions of this Agreement apply to the full extent set forth
herein with respect to the Vail Equity, to any and all shares of capital stock
of Vail or
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any successor or assign of Vail (whether by merger, consolidation,
sale of assets or otherwise) which may be issued in respect of or in exchange or
substitution for Vail Equity and will be appropriately adjusted for any stock
dividends, splits, reverse splits, combinations, recapitalizations and the like
occurring after the date hereof.
Section 12.14 Other Agreements. Nothing contained in this Agreement
will be deemed to be a waiver of, or release from, any obligations any party
hereto may have under any other agreement, including, without limitation, the
Purchase Agreement.
Section 12.15 Termination. This Agreement, and all rights and
obligations of each party hereto, shall terminate (i) upon agreement of each of
the Shareholders, (ii) upon the voluntary or involuntary dissolution of Vail,
(iii) upon the sale of all or substantially all of the assets of Vail or upon a
Change of Control of Vail, (iv) when Apollo and its Affiliates own less than 10%
of the shares of Vail Equity owned by Apollo on the date of this Agreement
(adjusted accordingly for any stock splits, stock dividends or similar
recapitalizations by Vail after the date hereof) or (v) when Foods and its
Affiliates own less than 10% of the outstanding Vail Securities. The provisions
of Article VIII hereof shall survive the termination of this Agreement.
Section 12.16 Enforcement. Each of Vail, Apollo and Foods agree that
any breach of the provisions contained in this Agreement by Vail, Apollo and/or
Foods would cause irreparable harm to the other and its Affiliates and
therefore, notwithstanding any right of Vail, Apollo and/or Foods to recover
monetary damages with respect to any such breach (a) as set forth in this
Agreement or (b) at law, Vail, Apollo and Foods will each be entitled to
equitable relief to enjoin any threatened or continuing breach of the other
hereof and, in the event of any action for specific performance, each party
shall waive the defense that a remedy at law would be adequate. If the scope of
any restriction contained in this Agreement is too broad to permit enforcement
to its fullest extent, then such restriction will be enforced to the maximum
extent permitted by law in the manner provided in Section 12.9 hereof. Nothing
herein stated will be construed as prohibiting any party from pursuing any other
remedies available to that party for a breach hereunder, including recovery of
damages.
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Section 12.17 Confidentiality. Each of Foods, Apollo and Vail
acknowledges that the other would be irreparably damaged if confidential
knowledge of its business and affairs were disclosed or utilized on behalf of
any Person. Each of Vail, Apollo and Foods covenants and agrees not to disclose
or use any such confidential information of the other unless such information
has been made available to the public generally (other than in violation of this
Section 12.17) or Vail, Apollo and/or Foods is required to disclose such
information by a governmental body or regulatory agency or by law in connection
with a transaction that is not otherwise prohibited hereby.
Section 12.18 Fiduciary Accounts. Vail, Apollo and Foods each
acknowledge and agree that this Agreement shall apply only to the Vail
Securities owned by Foods and Apollo for its own respective account and does not
apply to any Vail Securities which may be deemed to be beneficially owned or
controlled by Foods or their respective Affiliates and which shares are held in
fiduciary accounts in connection with any pension plans, profit sharing plans or
other employee benefit plans or held in any other fiduciary accounts.
IN WITNESS WHEREOF, the parties have executed this Agreement by an
officer thereunto duly authorized, all as of the day and year first above
written.
VAIL RESORTS, INC.
By:
--------------------------------
Name:
Title:
RALSTON FOODS, INC.
By:
-------------------------------
Name:
Title:
APOLLO SKI PARTNERS, L.P.
By:
--------------------------------
Name:
Authorized Signatory