1
EXHIBIT 10.9
PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 21, 1997
BY AND BETWEEN
THE PERSONS IDENTIFIED HEREIN AS SELLERS,
THE REPRESENTATIVE AS IDENTIFIED HEREIN
AND
DRE, L.L.C.
Execution Copy
Preferred Stock Purchase Agreement
2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 General . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Definitions . . . . . . . . . . . . . . . . . . . . . 2
1.3 Interpretation . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
SALE AND PURCHASE OF SHARES . . . . . . . . . . . . . . . . . 5
2.1 Sale and Purchase of Shares . . . . . . . . . . . . . 5
2.2 Payment of the Purchase Price . . . . . . . . . . . . 5
2.3 Purchase Dates . . . . . . . . . . . . . . . . . . . . 6
2.4 Business Day . . . . . . . . . . . . . . . . . . . . . 7
2.5 Deductions . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Prepayment . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Default . . . . . . . . . . . . . . . . . . . . . . . 7
2.7.1 Events of Default . . . . . . . . . . . . . . . 7
2.7.2 Consequences of Default . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . 9
3.1 Authority of Sellers; Enforceability . . . . . . . . . 9
3.2 Capitalization; Subsidiaries . . . . . . . . . . . . . 9
3.3 Title to Purchased Shares . . . . . . . . . . . . . . 10
3.4 Consents . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Broker's or Consultant's Fees . . . . . . . . . . . . 10
3.6 Disclosure . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . 11
4.1 Corporate Status . . . . . . . . . . . . . . . . . . . 11
4.2 Due Authorization . . . . . . . . . . . . . . . . . . 11
4.3 Authority of Purchaser . . . . . . . . . . . . . . . . 11
4.4 Enforceability . . . . . . . . . . . . . . . . . . . . 11
4.5 Consents . . . . . . . . . . . . . . . . . . . . . . . 11
4.6 Proceedings . . . . . . . . . . . . . . . . . . . . . 12
4.7 Indebtedness . . . . . . . . . . . . . . . . . . . . . 12
4.8 Membership Interests . . . . . . . . . . . . . . . . . 12
4.9 No Default . . . . . . . . . . . . . . . . . . . . . . 12
4.10 No Agreements . . . . . . . . . . . . . . . . . . . . 12
4.11 Financial Information . . . . . . . . . . . . . . . . 12
Execution Copy
Preferred Stock Purchase Agreement
i
3
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . 12
4.13 Broker's or Consultant's Fees . . . . . . . . . . . . 13
4.14 Investment . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Transfer Taxes . . . . . . . . . . . . . . . . . . . . 13
5.2 Reservation Agreement . . . . . . . . . . . . . . . . 13
5.3 Notice . . . . . . . . . . . . . . . . . . . . . . . . 13
5.4 Sale of Assets . . . . . . . . . . . . . . . . . . . . 13
5.5 Merger; Corporate Existence . . . . . . . . . . . . . 13
5.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . 13
5.7 Affiliate Transactions . . . . . . . . . . . . . . . . 14
5.8 Limitation on Liens . . . . . . . . . . . . . . . . . 14
ARTICLE VI
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Closing Transactions . . . . . . . . . . . . . . . . . 14
6.2 Deliveries by Sellers to Purchaser . . . . . . . . . . 15
6.3 Deliveries by Purchaser to Sellers . . . . . . . . . . 15
ARTICLE VII
OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 16
7.1 Further Assurance . . . . . . . . . . . . . . . . . . 16
7.2 Confidentiality . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 Indemnification by Sellers . . . . . . . . . . . . . . 17
8.2 Indemnification by Purchaser . . . . . . . . . . . . . 18
8.3 Procedure for Indemnification . . . . . . . . . . . . 19
8.4 Limitations on Liability . . . . . . . . . . . . . . . 20
8.5 Payment . . . . . . . . . . . . . . . . . . . . . . . 20
8.6 Set-Off . . . . . . . . . . . . . . . . . . . . . . . 20
8.7 Escrow Account . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX
SELLERS' REPRESENTATIVE . . . . . . . . . . . . . . . . . . . 21
9.1 Appointment . . . . . . . . . . . . . . . . . . . . . 21
9.2 Authorization . . . . . . . . . . . . . . . . . . . . 21
9.3 Irrevocable Appointment . . . . . . . . . . . . . . . 22
9.4 Resignation . . . . . . . . . . . . . . . . . . . . . 22
9.5 Purchaser's Reliance . . . . . . . . . . . . . . . . . 22
9.6 Exculpation and Indemnification . . . . . . . . . . . 22
Execution Copy
Preferred Stock Purchase Agreement
ii
4
ARTICLE X
DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . 23
10.1 Dispute Resolution . . . . . . . . . . . . . . . . . . 23
10.2 Arbitration Award . . . . . . . . . . . . . . . . . . 23
10.3 Procedures . . . . . . . . . . . . . . . . . . . . . . 23
10.4 Attorneys' Fees . . . . . . . . . . . . . . . . . . . 24
ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . 24
11.1 Post-Closing Deliveries . . . . . . . . . . . . . . . 24
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 24
11.3 Assignment . . . . . . . . . . . . . . . . . . . . . . 25
11.4 Benefit of the Agreement . . . . . . . . . . . . . . . 25
11.5 Exhibits . . . . . . . . . . . . . . . . . . . . . . . 25
11.6 Headings . . . . . . . . . . . . . . . . . . . . . . . 25
11.7 Entire Agreement . . . . . . . . . . . . . . . . . . . 25
11.8 Modifications and Waivers . . . . . . . . . . . . . . 26
11.9 Counterparts . . . . . . . . . . . . . . . . . . . . . 26
11.10 Severability . . . . . . . . . . . . . . . . . . . . . 26
11.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 26
11.12 Expenses . . . . . . . . . . . . . . . . . . . . . . . 26
11.13 Liquidated Damages . . . . . . . . . . . . . . . . . . 26
EXHIBITS
--------
Exhibit A Form of Opinion of Sellers' Counsel
Exhibit B Form of Opinion of Purchaser's Counsel
Exhibit C Form of Escrow Agreement
SCHEDULES
---------
Schedule 1.1 Outstanding Preferred Stock Balance
Execution Copy
Preferred Stock Purchase Agreement
iii
5
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT is entered into as of this
21st day of February, 1997 by and between DRE, L.L.C., a Delaware limited
liability company (together with its successors and permitted assigns,
"Purchaser"), the individuals identified on the signature page hereto as
"Sellers" (each, a "Seller", and collectively, the "Sellers") and the
Representative (as hereafter defined).
RECITALS
WHEREAS, Sellers, collectively, own all of the issued and outstanding
shares of capital stock of Ski Lifts, Inc., a Washington corporation (the
"Company"), consisting of (i) 1,000 shares of common stock, no par value, and
(ii) 28,000 shares of preferred stock, no par value (the "Shares");
WHEREAS, the Company is engaged in the ownership and operation of a
ski resort by the name of "Alpental Ski Resort," and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Alpental Business");
WHEREAS, the Company also is engaged in the ownership and operation of
a ski resort by the name of "Snoqualmie Ski Resort" and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Snoqualmie Business");
WHEREAS, the Company also is engaged in the ownership and operation of
a ski resort by the name of "Hyak Ski Resort" and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Hyak Business");
WHEREAS, the Company also is engaged in the ownership and operation of
a ski resort by the name of "Ski Acres Ski Resort" and other facilities and
properties, all located in the Cascade Mountains outside of Seattle, Washington
(the "Ski Acres Business", and together with the Alpental Business, the
Snoqualmie Business and the Hyak Business, the "Business");
WHEREAS, on or prior to the date hereof, and in connection with the
transactions contemplated hereby, Sellers have caused the Company to contribute
substantially all of the Developmental Real Estate (as hereinafter defined) to
Purchaser in consideration for 99% of the membership interest therein;
WHEREAS, Booth Creek Ski Holdings, Inc., a Delaware corporation ("Ski
Holdings"), holds the other 1% membership interest in Purchaser;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Ski Holdings is entering into the Holdings Purchase Agreement (as
hereafter defined) with Sellers, pursuant to
Execution Copy
Preferred Stock Purchase Agreement
6
which Ski Holdings is agreeing to purchase from Sellers all of the issued and
outstanding common stock of the Company;
WHEREAS, Purchaser desires to purchase the Shares from Sellers and
Sellers desire to sell and transfer to Purchaser the Shares, all subject to the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual agreements and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Purchaser and Sellers hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 General. Each term defined in the first paragraph of this
Agreement and in the Recitals shall have the meaning set forth above whenever
used herein, unless otherwise expressly provided or unless the context clearly
requires otherwise.
1.2 Definitions. As used herein, the following terms shall have
the meanings ascribed to them in this Section 1.2:
Adverse Consequences. All actions, suits, proceedings,
hearings, investigations, claims, judgments, orders, decrees, stipulations,
injunctions, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, Taxes, interest, Liens, losses, expenses and fees,
including all accounting, consultant and attorneys' fees and court costs, costs
of expert witnesses and other expenses of litigation.
Affiliate. As set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
Agreement. This Preferred Stock Purchase Agreement, together
with all Exhibits and Schedules referred to herein, as amended, modified or
supplemented from time to time in accordance with the terms hereof.
Alpental Business. As defined in the Recitals hereto.
Amended Articles. The Amended and Restated Articles of
Incorporation of the Company filed on the date hereof with the Secretary of
State of the State of Washington.
Authority. Any governmental, regulatory or administrative
body, agency or authority, any court of judicial authority, any arbitrator or
any public, private or industry regulatory authority, whether foreign, federal,
state or local.
Execution Copy
Preferred Stock Purchase Agreement
2
7
Booth Creek Guaranty. That certain Booth Creek Guaranty dated
the date hereof by Ski Holdings in favor of the Representative for the
"Sellers" identified in the Holdings Purchase Agreement.
Business. As defined in the Recitals hereto.
Business Day. A day on which banks are open for business in
New York, New York.
Certificate of Formation. As defined in Section 6.2(e).
Claim Notice. As defined in Section 8.3.
Common Stock Deed of Trust. That certain Common Stock
Purchase Deed of Trust dated the date hereof by the Company in favor of the
Representative for the "Sellers" identified in the Holdings Purchase Agreement.
Common Stock Pledge Agreement. That certain Common Stock
Pledge Agreement dated the date hereof by Ski Holdings in favor of the
Representative for the "Sellers" identified in the Holdings Purchase Agreement.
Common Stock Security Agreement. That certain Common Stock
Purchase Security Agreement dated the date hereof by the Company in favor of
the Representative for the "Sellers" identified in the Holdings Purchase
Agreement.
Company. As defined in the Recitals hereto.
Confidential Information. As defined in Section 7.2.
DRE Deed. As defined in Section 6.2(g).
Escrow Account. As defined in Section 8.7.
Escrow Agreement. As defined in Section 8.7.
Holdings Purchase Agreement. As defined in Section 6.2(d).
Hyak Business. As defined in the Recitals hereto.
Indemnified Party. As defined in Section 8.3.
Indemnifying Party. As defined in Section 8.3.
Law. Any law, statute, regulation, rule, ordinance,
requirement, announcement or other binding action or requirement of an
Authority.
Execution Copy
Preferred Stock Purchase Agreement
3
8
Liabilities. Any obligation or liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated and whether
due or to become due), including, without limitation, any liability for Taxes.
Lien. Any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
Operating Agreement. As defined in Section 6.2(f).
Order. Any decree, order, judgment, writ, award, injunction,
stipulation or consent of or by an Authority.
Ordinary Course of Business. The ordinary course of business
of the Company in accordance with past custom and practice (including with
respect to quantity and frequency).
Outstanding Preferred Stock Balance. On the date of
determination, the amount set forth on Schedule 1.1 with respect to such date.
Person. Any natural person, corporation, limited liability
company, partnership, firm, joint venture, joint-stock company, trust,
association, Authority, unincorporated entity or organization of any kind.
Preferred Stock. The preferred stock, no par value, of the
Company.
Preferred Stock Purchase Deed of Trust. As defined in Section
6.3(e).
Preferred Stock Purchase Security Agreement. As defined in
Section 6.3(e).
Purchase Date(s). The purchase date or dates described in
Section 2.3.
Purchase Price. As defined in Section 2.2
Purchaser Warranty Claim. As defined in Section 8.2(a).
Recapitalization Plan. As defined in Section 6.2(h).
Representative. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or any successor thereto
in accordance with Section 9.1.
Execution Copy
Preferred Stock Purchase Agreement
4
9
Security Documents. The Preferred Stock Purchase Security
Agreement, the Preferred Stock Purchase Deed of Trust, the Common Stock Pledge
Agreement, the Common Stock Deed of Trust, the Booth Creek Guaranty and the
Common Stock Security Agreement.
Seller Warranty Claim. As defined in Section 8.2(a).
Sellers' Knowledge. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ actual knowledge after
review of the books and records of the Company and after interviewing the
principal managers and officers of the Company.
Shares. As defined in the Recitals hereto.
Ski Acres Business. As defined in the Recitals hereto.
Ski Holdings. As defined in the Recitals hereto.
Snoqualmie Business. As defined in the Recitals hereto.
1.3 Interpretation. Unless otherwise expressly provided or
unless the context requires otherwise, (a) all references in this Agreement to
Articles, Sections and Exhibits shall mean and refer to Articles, Sections and
Exhibits of this Agreement; (b) all references to statutes and related
regulations shall include all amendments of the same and any successor or
replacement statutes and regulations; (c) words using the singular or plural
number also shall include the plural and singular number, respectively; (d)
references to "hereof", "herein", "hereby" and similar terms shall refer to
this entire Agreement (including the Schedules and Exhibits hereto); and (e)
references to any Person shall be deemed to mean and include the successors and
permitted assigns of such Person (or, in the case of an Authority, Persons
succeeding to the relevant functions of such Person).
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 Sale and Purchase of Shares. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties, covenants and agreements made in this Agreement by Sellers and
Purchaser, Purchaser shall purchase and accept from Sellers, and Sellers shall
sell, transfer, convey, assign and deliver to Purchaser, the Shares on the date
hereof and on each of the other Purchase Dates. On the date hereof and on each
other Purchase Date, each Seller shall deliver to Purchaser, upon receipt of
the payment required to be made on such date pursuant to Section 2.3 the
certificates evidencing the Shares owned by such Seller to be sold on such
date.
2.2 Payment of the Purchase Price.
(a) The aggregate purchase price (the "Purchase Price")
payable by Purchaser to Sellers in consideration for the Shares shall be THREE
MILLION FIVE HUNDRED THOUSAND
Execution Copy
Preferred Stock Purchase Agreement
5
10
DOLLARS ($3,500,000) plus all accrued and unpaid dividends on such Shares. The
Purchase Price shall be payable in cash to the Representative for the benefit
of Sellers. For purposes of calculating the amount of accrued and unpaid
dividends due hereunder, all such dividends shall be deemed to be accrued and
unpaid from January 15, 1997 to the date of payment; provided, however, that
the dividends accrued on the Shares purchased on the date hereof shall be paid
on January 15, 1998 instead of on the date hereof, and the dividends accrued on
the Shares to be purchased on the date described in Section 2.3(ii) hereof
shall be paid on January 15, 1998 instead of on such date described therein.
(b) The Representative shall distribute all cash received
by him from Purchaser pursuant to the terms hereof to Sellers based on such
Seller's pro rata share of the Purchase Price.
(c) The amounts paid hereunder shall be by wire transfer
of immediately available federal funds to an account designated in writing to
Purchaser by the Representative in writing prior to the date hereof. Place of
payment may be altered with ten (10) days prior written notice to Purchaser.
2.6 Purchase Dates. Purchaser shall purchase and accept from
Sellers, and Sellers shall transfer, convey, assign and deliver to Purchaser
(i) on the date hereof, 2,000 Shares in exchange for $250,000 plus secured and
unpaid dividends thereon (provided that such amount of dividends shall not be
payable until January 15, 1998); (ii) on the earlier of (A) the date the Ski
Lifts Promissory Note (as defined in the Holdings Purchase Agreement) is paid
in full or (B) April 30, 1997, 1,000 Shares in exchange for $125,000 plus
accrued and unpaid dividends thereon (provided that such amount of dividends
shall not be payable until January 15, 1998); and (iii) the number of Shares,
in exchange for the allocable portion of the Purchase Price plus accrued and
unpaid dividends thereon, as set forth below:
Purchase Dates Number of Shares Purchase Price
-------------- ---------------- --------------
January 15, 1998 1,000 $ 125,000
April 15, 1998 1,000 $ 125,000
July 15, 1998 1,000 $ 125,000
October 15, 1998 1,000 $ 125,000
January 15, 1999 1,000 $ 125,000
April 15, 1999 1,000 $ 125,000
July 15, 1999 1,000 $ 125,000
October 15, 1999 1,000 $ 125,000
January 15, 2000 1,000 $ 125,000
April 15, 2000 1,000 $ 125,000
July 15, 2000 1,000 $ 125,000
October 15, 2000 1,000 $ 125,000
January 15, 2001 1,000 $ 125,000
April 15, 2001 1,000 $ 125,000
July 15, 2001 1,000 $ 125,000
Execution Copy
Preferred Stock Purchase Agreement
6
11
October 15, 2001 1,000 $ 125,000
January 15, 2002 9,000 $1,125,000
2.4 Business Day. If any Purchase Date is not a Business Day,
payment shall be made on the next succeeding Business Day.
2.5 Deductions. Except for offsets by Purchaser pursuant to
Section 8.6 and Ski Holdings pursuant to Section 8.6 of the Holdings Purchase
Agreement, Purchaser shall timely make all payments to Sellers free and clear
of any offsets, restrictions or conditions and free and clear of, and without
deduction for, any taxes or withholding of any nature, present or future.
2.6 Prepayment. Purchaser may prepurchase the Shares in whole or
in part, at any time, without penalty, upon giving of three (3) Business Days'
written notice to the Representative. Prepurchases shall be in integral
multiples of $125,000 and shall be credited against scheduled purchases in
chronological order.
2.7 Default.
2.7.1 Events of Default. Each of the following shall be an
"Event of Default" under this Agreement:
(a) Purchaser fails to pay any amount due hereunder
on the relevant Payment Date; provided, no Event of Default shall be deemed to
exist under this Section 2.7.1(a) if amounts due and owing under this Agreement
are deposited into the Escrow Account pursuant to Section 8.7 or Section 8.7 of
the Holdings Purchase Agreement.
(b) Any material default shall occur under the terms
of this Agreement, the Holdings Purchase Agreement or any of the Security
Documents.
(c) It becomes unlawful for (i) Purchaser to make
the payments required under Section 2.3 hereof; (ii) Purchaser to
fulfill any material covenants or obligations contained in any of the Security
Documents and the collateral thereunder is materially impaired thereby; or
(iii) Sellers to exercise in any material respect their rights, powers, or
remedies, or any of them, vested in them under any of the Security Documents,
or otherwise.
(d) Any representation or warranty made or deemed to
be made pursuant to Article IV or any other provision of this Agreement or any
of the Security Documents proves to have been incorrect when made in any
respect reasonably considered by the Representative to be material.
(e) Purchaser, Ski Holdings or the Company files or
there is filed against any of them any petition seeking relief under bankruptcy
or insolvency laws, and such petition is not dismissed within sixty (60) days.
Execution Copy
Preferred Stock Purchase Agreement
7
12
(f) Any order is made and not dismissed within sixty
(60) days by any competent court or other appropriate authority, or any
resolution is passed by Purchaser, Ski Holdings or the Company for bankruptcy,
dissolution or winding-up, or analogous proceedings, or for the appointment of
a liquidator, receiver or trustee of Purchaser, Ski Holdings or the Company or
all or a substantial part of the assets of any of them, except for the purposes
of merger or consolidation (not involving or arising out of insolvency) which
does not impair Sellers' security under the Security Document.
(g) Purchaser, Ski Holdings or the Company stops
payment to creditors generally, or is unable or admits inability to pay its
debts as they fall due, or enters into any composition or other arrangement
with its creditors generally or is adjudicated or found bankrupt or insolvent.
(h) Ski Holdings or the Company ceases or threatens
to cease to carry on business or, a substantial part of the respective
businesses, properties or assets of Purchaser, Ski Holdings or the Company is
seized or appropriated; or an encumbrancer shall take possession, or a receiver
is appointed of the whole or a material part of the assets or undertakings of
Purchaser, Ski Holdings or the Company, or a distress or execution shall be
levied or enforced upon and sued out against a material part of the property
and assets of any of them and is not discharged or satisfied within sixty (60)
days.
(i) Any judgment or order is made, the effect of
which would be to render this Agreement or any of the Security Documents
ineffective or invalid.
(j) The "beneficial owners" (as defined in Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended) of Ski
Holdings existing on the date hereof cease to own, directly or indirectly, 50%
or more of Purchaser.
2.7.2 Consequences of Default. If an Event of Default has
occurred and is continuing, then the Representative on behalf of Sellers may,
unless the such Event of Default is earlier cured (after five (5) days in any
circumstance described in Section 2.7.1(a), and after fifteen (15) days notice
to Purchaser in any circumstance described in subsections (b) or (d) of Section
2.7.1, by notice in writing to Purchaser, declare that the aggregate amounts
remaining to be paid under this Agreement are immediately due and payable with
interest thereon at a per annum rate equal to 12% to the date of actual
payment. If an Event of Default described in any of subsections (c), (e), (f),
(g), (h), (i) or (j) of Section 2.7.1 occurs, all amounts remaining to be paid
under this Agreement shall be deemed, automatically and without any further
action or passage of time whatsoever, due and payable with interest thereon at
a per annum rate equal to 12% to the date of actual payment. Furthermore,
Sellers may exercise from time to time all other legal and equitable rights to
which Sellers may be entitled, all of which rights and remedies shall be
cumulative, and none of which shall be exclusive. All of such rights and
remedies shall be in addition to any other rights and remedies contained in
this Agreement or any of the Security Documents. Notwithstanding any payment
made or other action taken by Sellers, an Event of Default will not be deemed
cured unless cured to the reasonable satisfaction of the Representative. The
failure or delay of
Execution Copy
Preferred Stock Purchase Agreement
8
13
Sellers to exercise or enforce any rights, liens, powers or remedies hereunder
or under any of the Security Documents, shall not operate as a waiver of any
such liens, rights, powers or remedies, but all such liens, rights, powers and
remedies shall continue in full force and effect until the aggregate amounts to
be paid under this Agreement have been indefeasibly paid in full.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Purchaser to enter into and perform its
obligations under this Agreement, and in consideration of the covenants of
Purchaser contained herein, Sellers, jointly and severally (subject to the
limitations set forth in Sections 8.1 and 8.4), hereby make representations and
warranties to Purchaser as set forth below. Such representations and
warranties shall survive the date hereof (subject to Sections 8.1 and 8.4)
regardless of what examinations, inspections, audits and other investigations
Purchaser has heretofore made, or may hereafter make, with respect to such
representations and warranties; provided, Sellers shall have no liability for
matters expressly disclosed to Purchaser in this Agreement unless expressly
provided for in this Agreement. Subject to the foregoing, Sellers, jointly and
severally, represent and warrant as follows:
3.1 Authority of Sellers; Enforceability.
(a) Each Seller has the capacity to execute and deliver
this Agreement and to perform his or her obligations hereunder. This Agreement
is binding upon, and enforceable against, each Seller in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally and by general principles of equity
(whether in a proceeding at law or in equity).
(b) Neither the execution or delivery of this Agreement
by any Seller nor the performance by any Seller of its obligations under this
Agreement will conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any contract, lease, license,
franchise, permit, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which such Seller or the Company is a party or is
bound, the articles of incorporation or by-laws of the Company or any
applicable Law or Order to which such Seller or the Company is a party or by
which such Seller or the Company is bound.
3.2 Capitalization; Subsidiaries.
(a) The total number of shares of capital stock and the
par value thereof which the Company is authorized to issue and the number of
such shares which are issued and outstanding are as follows:
Execution Copy
Preferred Stock Purchase Agreement
9
14
--------------------------------------------------------------------------
Issued and Outstanding
Class Authorized Shares Shares
--------------------------------------------------------------------------
Common Stock, no par value 1,000 1,000
--------------------------------------------------------------------------
Preferred Stock, no par value 28,000 28,000
--------------------------------------------------------------------------
No shares of the Company's capital stock are held as treasury stock.
(b) There are no outstanding options, conversion rights,
warrants or other rights in existence to acquire from the Company any of its
shares of capital stock.
(c) The Shares have been duly and validly issued and are
fully paid and nonassessable and are not subject to any preemptive rights; and
there are no voting trust agreements or other contracts, agreements or
arrangements restricting voting or dividend rights or transferability with
respect to the Shares.
(d) The Company has not violated in any material respect
any federal, state or local Law in connection with the offer for sale or sale
and issuance of its outstanding shares of capital stock or any other
securities.
(e) The Company does not own any securities or any other
direct or indirect interest in any other Person except for (i) the securities
described in notes 4 and 5 to the Reference Balance Sheet (as defined in the
Holdings Purchase Agreement) and (ii) its interest in Purchaser.
3.3 Title to Purchased Shares. Each Seller owns the number of
shares of capital stock of the Company set forth in Schedule 3.12 to the
Holdings Purchase Agreement, free and clear of any Liens. The persons listed
as "Sellers" on the signature pages of this Agreement are all of the record and
beneficial owners of the Preferred Stock of the Company. The Shares constitute
all of the issued and outstanding shares of Preferred Stock of the Company and
upon delivery of and payment by the Purchaser to each Seller of his or her
proportionate share of the Purchase Price in respect of the Shares owned by
such Seller, the Purchaser will acquire good and marketable title to the Shares
free and clear of all Liens.
3.4 Consents. To the Sellers' Knowledge, no consent, approval,
order or authorization of, or registration, declaration or filing with, any
Authority or any other Person is required to be obtained or made by the Sellers
or the Company in connection with the execution and delivery of this Agreement
or the performance by the Sellers of their respective obligations hereunder.
3.5 Broker's or Consultant's Fees. Each Seller represents and
warrants that it has dealt with no broker, finder or consultant in connection
with any of the transactions contemplated by this Agreement, and, to Sellers'
Knowledge, no Person is entitled to any commission or finder's fee in
connection with the sale of the Shares to Purchaser other than a fee in the
aggregate amount of $75,000 to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, L.L.C., which shall be paid by
Sellers.
Execution Copy
Preferred Stock Purchase Agreement
10
15
3.6 Disclosure. To the Sellers' Knowledge, none of the
representations and warranties made by Sellers in this Agreement or in any
letter, certificate or memorandum furnished or to be furnished by Sellers, or
on their behalf, contains or will contain any untrue statement of a material
fact, or omits any material fact the omission of which would make the
statements made therein misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Sellers to enter into and perform their
obligations under this Agreement, and in consideration of the covenants of
Sellers contained herein, Purchaser (subject to the limitations set forth in
Section 8.2) hereby makes representations and warranties to Sellers as set
forth below. Such representations and warranties shall survive the date hereof
(subject to Section 8.2) regardless of what examinations, inspections, audits
and other investigations Sellers have heretofore made, or may hereafter make,
with respect to such representations and warranties; provided, Purchaser shall
have no liability for matters expressly disclosed to Sellers in this Agreement
unless expressly provided for in this Agreement. Subject to the foregoing,
Purchaser represents and warrants as follows:
4.1 Corporate Status. Purchaser is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
4.2 Due Authorization. The execution and delivery by Purchaser of
this Agreement, and the performance by Purchaser of its obligations hereunder,
have been duly and validly authorized and approved by all necessary corporate
action on the part of Purchaser.
4.3 Authority of Purchaser. Purchaser has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Neither the execution or delivery of this Agreement by Purchaser
nor the performance by Purchaser of its obligations under this Agreement will
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any contract, lease, license, franchise, permit,
indenture, mortgage, deed of trust, note agreement or other agreement or
instrument to which Purchaser is a party or is bound, its certificate of
formation, operating agreement or any applicable Law or Order to which
Purchaser is a party or by which Purchaser is bound.
4.4 Enforceability. This Agreement is binding upon, and
enforceable against, Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, reorganization and other laws affecting creditors'
rights generally and by principles of equity (whether in a proceeding at law or
in equity).
4.5 Consents. To Purchaser's knowledge, no consent, approval,
Order or authorization of, or registration, declaration or filing with, any
Authority or any other Person is required to be
Execution Copy
Preferred Stock Purchase Agreement
11
16
obtained or made by Purchaser in connection with its execution and delivery of
this Agreement or the performance by it of its obligations hereunder which has
not been made or obtained.
4.6 Proceedings. To Purchaser's knowledge, no material
litigation, arbitration or administrative proceeding before or of any court,
tribunal, arbitrator or governmental authority is pending or threatened against
Purchaser or any of its assets or properties.
4.7 Indebtedness. Purchaser does not have any material
indebtedness of any kind including, without limitation, contingent liabilities,
liabilities for taxes, long-term leases, or unusual forward or long-term
commitments, which have not been disclosed in writing to Sellers, and Purchaser
does not know or have reasonable grounds to know of any basis for the assertion
against it of any material indebtedness or any kind not disclosed in writing to
Sellers.
4.8 Membership Interests. The Company holds a 99% membership
interest in Purchaser and Ski Holdings holds the other 1% membership interest
in Purchaser. There are no outstanding options, conversion rights, warrants or
other rights in existence to acquire from Purchaser any of the membership
interests. The Purchaser does not own any securities or any other direct or
indirect interest in any other entity.
4.9 No Default. To Purchaser's knowledge, no event has occurred
which constitutes or would with the giving of notice or lapse of time, or both,
constitute an Event of Default.
4.11 No Agreements. Purchaser is not a party to any management,
marketing or operational agreement relating to its properties or assets, or to
any other contract other than contracts described in this Agreement or in the
Security Documents.
4.12 Financial Information. To Purchaser's knowledge, Purchaser
has (i) no liability with respect to its business of any nature (whether
accrued, absolute, contingent or otherwise) of the type which should be
reflected in balance sheets (including the notes thereto) prepared in
accordance with generally accepted accounting principles other than the
liabilities under this Agreement and the Security Documents and (ii) no other
assets other than the Developmental Real Estate (as defined in the Holdings
Purchase Agreement) owned by Purchaser and the personal property situated
thereon.
4.13 Disclosure. To Purchaser's knowledge (i) none of the
representations and warranties made by Purchaser in this Agreement or in any of
the Security Documents or in any letter, certificate or memorandum furnished or
to be furnished by Purchaser, or on its behalf, contains or will contain any
untrue statement of a material fact, or omits any material fact the omission of
which would make the statements made therein misleading; and (ii) except for
facts or circumstances affecting the ski resort industry generally or as
otherwise disclosed to Sellers, there is no fact which materially adversely
affects, or is reasonably likely to materially adversely affect, the condition
(financial or otherwise), assets, liabilities, business, operations or
prospects of the Purchaser's business, the value or utility of Purchaser's
assets or the ability of Purchaser to consummate the transactions contemplated
hereby that has not been set forth herein or otherwise disclosed to Sellers.
Execution Copy
Preferred Stock Purchase Agreement
12
17
4.13 Broker's or Consultant's Fees. Purchaser represents and
warrants that it has dealt with no broker, finder or consultant in connection
with any of the transactions contemplated by this Agreement, and, to its
knowledge, no Person is entitled to any commission or finder's fee in
connection with the sale of the Shares to Purchaser.
4.14 Investment. The Shares are being acquired by Purchaser for
its own account, for investment and not with a view to resale or distribution.
ARTICLE V
COVENANTS
5.1 Transfer Taxes. Sellers shall pay the cost of any transfer,
stamp, excise or similar tax imposed under the laws of the United States, or
any state or political subdivision thereof, which arises out of the transfer of
any of the Shares.
5.2 Reservation Agreement. Purchaser hereby covenants and agrees
to exercise its option to purchase the Developmental Real Estate (as defined in
the Holdings Purchase Agreement) pursuant to the terms and conditions of the
Reservation Agreement as soon as such option becomes exercisable.
5.3 Notice. From and after the date hereof until all the
obligations of Purchaser hereunder have been satisfied in full, Purchaser shall
promptly inform Representative of any Event of Default, or any event, which
upon the giving of notice or lapse of time or determination of Representative
might constitute an Event of Default, or of any other material occurrence which
might entitle Sellers to make a claim hereunder or under any related document,
or which materially adversely affects the ability of Purchaser to fully perform
any of its obligations under this Agreement or the Security Documents.
5.4 Sale of Assets. From and after the date hereof until all the
obligations of Purchaser hereunder have been satisfied in full, Purchaser shall
not sell or otherwise dispose of any part, interest in, or control of any of
its material assets (material in the reasonable opinion of the Representative)
without the prior written consent of the Representative (which consent shall
not be unreasonably withheld), unless all of the net proceeds of such
disposition is applied to the prepurchase of the Shares.
5.5 Merger; Corporate Existence. From and after the date hereof
until all the obligations of Purchaser hereunder have been satisfied in full,
Purchaser shall preserve and maintain its existence and qualification to do
business as a Delaware limited liability company and not merge or consolidate
with any entity.
5.6 Indebtedness. From and after the date hereof until all the
obligations of Purchaser hereunder have been satisfied in full, Purchaser shall
not incur any other debts or obligations except
Execution Copy
Preferred Stock Purchase Agreement
13
18
in the ordinary course of business or which are expressly subordinate in right
and payment to the obligations of Purchaser under this Agreement and the
Security Documents, and shall not issue any guaranties or make any new
investment, without the prior written consent of the Representative (which
consent shall not be unreasonably withheld), and any such obligations (other
than those incurred in the ordinary course of business) shall in any event be
subordinate to the obligations of Purchaser under this Agreement and the
Security Documents.
5.7 Affiliate Transactions. From and after the date hereof until
all the obligations of Purchaser hereunder have been satisfied in full,
Purchaser shall not make any loans to any of its members, officers, directors,
owners or managers, or to any related person or entity, without the prior
written consent of the Representative (which consent shall not be unreasonably
withheld), and shall not borrow monies from any member, officer, director,
owner or manager or from any related person or entity, except if such loans are
subordinated to the obligations of Purchaser under this Agreement and the
Security Documents.
5.8 Limitation on Liens. From and after the date hereof until all
obligations of Purchaser hereunder have been satisfied in full, Purchaser will
not create or incur, or suffer to be incurred or to exist, (a) any Lien on its
property or assets with respect to indebtedness for borrowed money; or (b) any
Lien on its property or assets, whether now owned or hereafter acquired, except
only with respect to this clause (b):
(i) Liens for taxes, assessments or governmental
charges being contested in good faith;
(ii) Liens arising in the ordinary course of
business;
(iii) Liens of the type disclosed in the Title
Policies (as defined in the Holdings Purchase
Agreement) or similar encumbrances or charges
which do not interfere with the market value
or use of the Business; and
(iv) Liens existing on the date hereof or incurred
in favor of the Representative for the
benefit of Sellers in connection with the
obligations under this Agreement.
ARTICLE VI
CLOSING
6.1 Closing Transactions. The obligations of the parties hereto
shall not be considered to be in effect unless and until all actions and
deliveries set forth in this Article VI have been completed or waived in
writing. All documents and other instruments required to be delivered
hereunder shall be regarded as having been delivered simultaneously, and no
document or other instrument shall be regarded as having been delivered until
all have been delivered.
Execution Copy
Preferred Stock Purchase Agreement
14
19
6.2 Deliveries by Sellers to Purchaser. Prior to and as a
condition precedent to the effectiveness of the transactions contemplated
hereunder, Purchaser shall have received and/or Sellers shall deliver or cause
to be delivered to Purchaser:
(a) certificates representing 2,000 of the purchased
Shares which certificates shall be either duly endorsed or accompanied
by stock powers duly endorsed, executed together with evidence
satisfactory to the Purchaser that any Lien on such purchased Shares
has been released or terminated;
(b) the legal opinion of Carney, Badley, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for Sellers and the Company, substantially in the
form attached hereto as Exhibit A;
(c) all releases necessary to terminate and discharge any
Liens on the Shares;
(d) an executed copy of the Stock Purchase Agreement
dated the date hereof between Ski Holdings, the Representative and Sellers (the
"Holdings Purchase Agreement") and evidence of consummation of the transactions
contemplated thereunder;
(e) a certified copy of the Certificate of Formation from
the Secretary of State of the State of Delaware evidencing the creation of
Purchaser (the "Certificate of Formation");
(f) an executed copy of the Operating Agreement of
Purchaser (the "Operating Agreement");
(g) a transfer deed evidencing transfer of certain
Developmental Real Estate from the Company to Purchaser (the "DRE Deed");
(h) an executed copy of the Agreement and Plan of
Recapitalization between the Company and Sellers (the "Recapitalization Plan");
(i) evidence that Sellers have designated ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ as Representative in accordance with Section 9.1 of the Agreement; and
(j) such other instruments and documents as are: (i)
required by any other provisions of this Agreement to be delivered by Sellers
to Purchaser; or (ii) reasonably necessary, in the opinion of Purchaser, to
effect the performance of this Agreement by Sellers.
6.3 Deliveries by Purchaser to Sellers. Prior to and as a
condition precedent to the effectiveness of the transactions contemplated
hereunder, Sellers shall have received and/or Purchaser shall deliver or cause
to be delivered to Sellers:
(a) the legal opinion of Winston & ▇▇▇▇▇▇, special
counsel for Purchaser, substantially in the form attached hereto as
Exhibit B;
Execution Copy
Preferred Stock Purchase Agreement
15
20
(b) a certificate of the Manager of Purchaser, of the
date hereof, certifying to (i) the operating agreement of Purchaser;
(ii) resolutions of the Members of Purchaser approving the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby; and (iii) incumbency and signatures
of the officers of Manager executing this Agreement and any other
certificate or document delivered in connection herewith;
(c) a certified copy of the Certificate of Formation of
Purchaser from the Secretary of State of the State of Delaware;
(d) an executed copy of the Holdings Purchase Agreement
and evidence of consummation of the transactions contemplated
thereunder;
(e) an executed copy of the security agreement (the
"Preferred Stock Purchase Security Agreement") and the deed of trust
(the "Preferred Stock Purchase Deed of Trust"), each dated the date
hereof from Purchaser on behalf of the Representative for the benefit
of Sellers, securing the obligations of Purchaser under this
Agreement;
(f) a certified copy of the Amended Articles from the
Secretary of State of the State of Washington;
(g) an executed copy of the Operating Agreement;
(h) an executed copy of the DRE Deed;
(i) an executed copy of the Recapitalization Plan;
(j) an executed copy of that certain Reservation
Agreement dated the date hereof between the Company and Purchaser (the
"Reservation Agreement"); and
(k) such other instruments and documents as are: (i)
required by any other provisions of this Agreement to be delivered by
Purchaser to Sellers; or (ii) reasonably necessary, in the opinion of
Sellers, to effect the performance of this Agreement by Purchaser.
ARTICLE VII
OTHER AGREEMENTS
7.1 Further Assurance. At any time and from time to time from and
after the date hereof, Sellers and Purchaser will, at the request of the other
parties hereto, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such instruments and other documents and perform or
cause to be performed such acts and provide such information, as may reasonably
be required to evidence or effectuate the sale, conveyance, transfer,
assignment and delivery to
Execution Copy
Preferred Stock Purchase Agreement
16
21
Purchaser of the Shares or for the performance by Sellers or Purchaser of any
of their other respective obligations under this Agreement. Each party hereto
shall be liable for its own expenses incurred pursuant to this Section 7.1.
7.2 Confidentiality.
(a) The parties hereto agree with respect to the terms
and conditions of this Agreement, including, without limitation, the Purchase
Price, and all information that is furnished or disclosed by the other party
(collectively, "Confidential Information"), that (i) such Confidential
Information is confidential and/or proprietary to the furnishing/disclosing
party and entitled to and shall receive treatment as such by the receiving
party; (ii) the receiving party will hold in confidence and not disclose nor
use (except in respect of the transactions contemplated by this Agreement) any
such Confidential Information, treating such Confidential Information with the
same degree of care and confidentiality as it accords its own confidential and
proprietary information; provided, however, that the receiving party shall not
have any restrictive obligation with respect to any Confidential Information
which (A) is contained in a printed publication available to the general
public, (B) is or becomes publicly known through no wrongful act or omission of
the receiving party, or (C) is known by the receiving party without any
proprietary restrictions by the furnishing/disclosing party at the time of
receipt of such Confidential Information; and (iii) all such Confidential
Information furnished to either party by the other, unless otherwise specified
in writing, shall remain the property of the furnishing/disclosing party, and
in the event this Agreement is terminated, shall be returned to it, together
with any and all copies made thereof, upon request for such return by it
(except for documents submitted to an Authority with the consent of the
furnishing/disclosing party or upon subpoena and which cannot be retrieved with
reasonable effort).
(b) Each party hereto acknowledges that the remedy at law
for any breach by either party of its obligations under Section 7.2(a) is
inadequate and that the other party shall be entitled to equitable remedies,
including an injunction, in the event of breach of any other party.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Sellers. Sellers, jointly and severally,
agree to indemnify, defend, hold harmless and waive any claim for contribution
against Purchaser, the Company and all of their officers, directors,
shareholders, Affiliates, employees and agents (the "Purchaser Indemnified
Persons") after the date hereof from and against any Adverse Consequence
arising out of or resulting from:
(a) any misrepresentation or breach as of the date hereof
of any representation or warranty of Sellers contained in this
Agreement (each a "Purchaser Warranty Claim"); provided, however, that
the Purchaser Indemnified Persons' rights to indemnification for
Purchaser Warranty Claims shall be subject to the limitations set
forth in Section 8.4 and the following:
Execution Copy
Preferred Stock Purchase Agreement
17
22
(i) such Purchaser Warranty Claims shall expire
fifteen (15) months following the date hereof, except with
respect to claims under Sections 3.1, 3.2 and 3.3 as to which
there shall be no expiration date; provided, that if at the
stated expiration of any indemnification obligation there
shall then be pending any indemnification claim by a Person,
such Person shall continue to have the right to such
indemnification with respect to such claim notwithstanding
such expiration;
(ii) No Purchaser Indemnified Person shall be
entitled to indemnification for Purchaser Warranty Claims
unless and until the aggregate Adverse Consequences suffered
by all Purchaser Indemnified Persons collectively exceeds
$50,000, whereupon the Purchaser Indemnified Persons shall be
entitled to indemnification hereunder from Sellers for all
Adverse Consequences suffered by Purchaser Indemnified Persons
in excess of such threshold amount.
(b) the failure by any Seller to perform any of its
covenants or obligations under Sections 5.1, 7.1, 7.2 and 11.1;
provided, the indemnification obligations of Sellers under this
Section 8.1(b) shall expire on the thirty-ninth (39th) month
anniversary of the date hereof, except for any pending indemnification
claims by a Purchaser Indemnified Person which shall continue
notwithstanding such expiration;
(c) any brokers' commissions, finders' fees or other like
payments incurred or alleged to have been incurred by Sellers in
connection with the sale of the Shares or the consummation of the
transactions contemplated by this Agreement;
8.2 Indemnification by Purchaser. Purchaser agrees to indemnify,
defend and hold harmless Sellers after the date hereof from and against any
Adverse Consequences arising out of or resulting from:
(a) any misrepresentation or breach as of the date hereof
of any representation or warranty of Purchaser contained in this
Agreement (each a "Seller Warranty Claim"); provided, however, that the
Sellers' rights to indemnification for Seller Warranty Claims shall be
subject to the following limitations:
(i) such Seller Warranty Claims shall expire fifteen
(15) months following the date hereof; provided, that if at
the stated expiration of any indemnification obligation there
shall then be pending any indemnification claim by a Seller,
said Seller shall then continue to have the right to such
indemnification with respect to such claim notwithstanding
such expiration;
(ii) Purchaser's maximum aggregate liability to
Sellers for indemnification shall not exceed the Outstanding
Preferred Stock Balance; and
Execution Copy
Preferred Stock Purchase Agreement
18
23
(iii) Sellers shall not be entitled to
indemnification for Seller Warranty Claims unless and until
the aggregate Adverse Consequences suffered by Sellers exceeds
$50,000, whereupon Sellers shall be entitled to
indemnification hereunder from Purchaser for all Adverse
Consequences suffered by Sellers in excess of such threshold
amount.
(b) the failure by Purchaser to perform any of its
covenants or obligations hereunder;
(c) the operation of the Business after October 1, 1996
(except for or with respect to any Adverse Consequences for which any
Purchaser Indemnified Person is entitled to indemnification hereunder
or under the Holdings Purchase Agreement, without regard to any of the
limitations set forth in Sections 8.1 or 8.4); or
(d) any brokers' commissions, finders' fees or other like
payments incurred or alleged to have been incurred by Purchaser in
connection with the sale of the Shares or the consummation of the
transactions contemplated by this Agreement.
8.3 Procedure for Indemnification. If any Person shall claim
indemnification (the "Indemnified Party") hereunder for any claim, the
Indemnified Party shall promptly give written notice to the other party from
whom indemnification is sought (the "Indemnifying Party") of the nature and
amount of the claim. If an Indemnified Party shall claim indemnification
hereunder arising from any claim or demand, the Indemnified Party shall
promptly give written notice (a "Claim Notice") to the Indemnifying Party of
the basis for such claim or demand, setting forth the nature of the claim or
demand in detail. If the claim is by a third-party, the Indemnifying Party
shall have the right to compromise or, if appropriate, defend at its own cost
and through counsel of its own choosing, any claim or demand set forth in a
Claim Notice giving rise to such claim for indemnification. In the event the
Indemnifying Party undertakes to compromise or defend any such claim or demand,
it shall promptly (and in any event, no later than fifteen (15) days after
receipt of the Claim Notice) notify the Indemnified Party in writing of its
intention to do so and shall give the Indemnified Party such security in that
regard as the Indemnified Party reasonably may request. The Indemnified Party
shall fully cooperate with the Indemnifying Party and its counsel in the
defense or compromise of such claim or demand. After the assumption of the
defense by the Indemnifying Party, the Indemnified Party shall not be liable
for any legal or other expenses subsequently incurred by the Indemnifying
Party, in connection with such defense, but the Indemnified Party may
participate in such defense at its own expense. No settlement of a third party
claim or demand defended by the Indemnifying Party shall be made without the
written consent of the Indemnified Party, such consent not to be unreasonably
withheld. The Indemnifying Party shall not, except with written consent of the
Indemnified Party, consent to the entry of a judgment or settlement which does
not include as an unconditional term thereof, the giving by the claimant or
plaintiff to the Indemnified Party of an unconditional release from all
liability in respect of such third party claim or demand.
Execution Copy
Preferred Stock Purchase Agreement
19
24
8.4 Limitations on Liability.
(a) Notwithstanding anything else in this Agreement to
the contrary, the relative liability of each Seller with respect to any claim
for indemnification pursuant to this Agreement and the Holdings Purchase
Agreement shall be limited to such Seller's pro rata share of the sum of (i)
the Purchase Price plus (ii) the "Purchase Price" under the Holdings Purchase
Agreement.
(b) Sellers' maximum aggregate liability to Purchaser
Indemnified Persons for indemnification of (i) Purchaser Warranty Claims
pursuant to Sections 3.1, 3.2 and 3.3 shall not exceed the sum of (A) the
Purchase Price plus (B) the "Purchase Price" under the Holdings Purchase
Agreement; and (ii) claims pursuant to Section 8.1(b) and for Purchaser
Warranty Claims (other than those set forth in clause (i)) shall not exceed the
Outstanding Preferred Stock Balance.
(c) For purposes of calculating the amount of any
threshold or maximum aggregate liability under this Article VIII,
indemnification claims under this Agreement shall be aggregated with
indemnification claims under the Holdings Purchase Agreement and Purchaser and
Ski Holdings shall be deemed one and the same entity.
8.5 Payment. Except for third-party claims being defended in good
faith by the Indemnifying Party in accordance with Section 8.3 or claims being
disputed by either Sellers or Purchaser in accordance with Article X hereof,
the Indemnifying Party shall satisfy its obligations hereunder within fifteen
(15) days after receipt of a claim notice. Any amount not paid to the
Indemnified Party by such date shall bear interest at a rate equal to nine
percent (9%) per annum from the date due until the date paid.
8.6 Set-Off. If any Seller fails to make any payment with respect
to any indemnification claim in accordance with this Article VIII or in
accordance with Article VIII of the Holdings Purchase Agreement, Purchaser may,
in addition to any other rights hereunder, set-off the amount of such claim
against any amounts payable by Purchaser, the Company or their Affiliates to
any Seller under this Agreement. Any amounts Purchaser determines it is
entitled to set off pursuant to this Section 8.6 shall be paid into the Escrow
Account (as defined herein) on the date otherwise due to Sellers.
8.7 Escrow Account. In the event Purchaser is entitled to set-off
the amount of any claim for indemnification pursuant to Section 8.6, Purchaser
shall be obligated to deposit all amounts to be set-off into an escrow account
(the "Escrow Account") with a banking institution of national standing
reasonably acceptable to Representative and Purchaser pursuant to the terms and
conditions of an escrow agreement in substantially the form of Exhibit C
attached hereto (the "Escrow Agreement"). Such Escrow Agreement will provide,
without limitation, for the release of such amount only upon (i) the mutual
consent of the Representative and Purchaser or (ii) the order of an arbitrator
issued in accordance with Article X hereof. Representative and Purchaser agree
to act in good faith to promptly take any actions reasonably required to enter
into the Escrow Agreement and to establish the Escrow Account should the Escrow
Agreement be called for by terms of this Agreement. Upon deposit of any such
amount into the Escrow Account, the Representative shall
Execution Copy
Preferred Stock Purchase Agreement
20
25
deliver written notice to Purchaser acknowledging that the payment into the
Escrow Account satisfies Purchaser's payment obligation under this Agreement to
the extent of such payment, as the case may be.
ARTICLE IX
SELLERS' REPRESENTATIVE
9.1 Appointment. Sellers hereby irrevocably make, constitute and
appoint ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as their agent and representative (the
"Representative") for all purposes under this Agreement. In the event of the
death, resignation or incapacity of the Representative, Sellers shall promptly
designate another individual to act as their representative under this
Agreement so that at all times there will be a Representative with the
authority provided in this Article IX. Such successor Representative shall be
designated by Sellers by an instrument in writing signed by Sellers (or their
successors in interest) holding a majority of the Shares, and such appointment
shall become effective as to the successor Representative when such instrument
shall have been delivered to him or her and a copy thereof delivered to
Purchaser.
9.2 Authorization. Sellers hereby authorize the Representative,
on their behalf and in their name, to:
(a) Receive all notices or documents given or to be given
to Sellers by the Purchaser pursuant hereto or in connection herewith and to
receive and accept service of legal process in connection with any suit or
proceeding arising under this Agreement. The Representative shall promptly
forward a copy of such notice of process to each Seller;
(b) Deliver on the date hereof and hereafter the
certificates for the Shares of the Sellers in exchange for their respective
portion of the consideration payable with respect to such securities;
(c) Upon confirmation of the receipt of the cash portion
of the Purchase Price to be paid on the date hereof, sign and deliver to
Purchaser on the date hereof a receipt for Sellers' portion of the
consideration and forward such amount to Sellers;
(d) Deliver to Purchaser on the date hereof all
certificates and documents to be delivered to Purchaser by Sellers pursuant to
this Agreement, together with any other certificates and documents executed by
Sellers and deposited with the Representative for such purpose;
(e) Engage counsel, and such accountants and other
advisors for Sellers and incur such other expenses on behalf of Sellers in
connection with this Agreement and the transactions contemplated hereby as the
Representative may deem appropriate; and
(f) Take such action on behalf of Sellers as the
Representative may deem appropriate in respect of:
Execution Copy
Preferred Stock Purchase Agreement
21
26
(i) waiving any inaccuracies in the
representations or warranties of Purchaser
contained in this Agreement or in any
document delivered by Purchaser pursuant
hereto;
(ii) waiving the fulfillment of any of the
conditions precedent to Sellers' obligations
hereunder, except with respect to Purchaser's
payment of the Purchase Price to be paid to
Representative for the benefit of Sellers
pursuant to Section 2.2;
(iii) taking such other action as the
Representative is authorized to take under
this Agreement;
(iv) receiving all documents or certificates and
making all determinations, on behalf of
Sellers, required under this Agreement;
(v) all such other matters as the Representative
may deem necessary or appropriate to
consummate this Agreement and the
transactions contemplated hereby; and
(vi) taking all such action as may be necessary
after the date hereof to carry out any of the
transactions contemplated by this Agreement.
9.3 Irrevocable Appointment. The appointment of the
Representative hereunder is irrevocable and any action taken by the
Representative pursuant to the authority granted in this Article IX shall be
effective and absolutely binding on each Seller notwithstanding any contrary
action of, or direction from, a Seller, except for actions taken by the
Representative which are in bad faith or grossly negligent. The death or
incapacity of a Seller shall not terminate the prior authority and agency of
the Representative.
9.4 Resignation. The Representative may resign at any time by
giving notice to Sellers, and such resignation shall be effective upon the
appointment and qualification of a successor. The Representative may be
discharged, and replaced by another person to act as his or her successor, by
an instrument in writing signed by Sellers (or their successors in interest)
holding a majority of the Shares.
9.5 Purchaser's Reliance. Purchaser shall not be obliged to
inquire into the authority of the Representative, and Purchaser shall be fully
protected in dealing with the Representative in good faith.
9.6 Exculpation and Indemnification.
(a) In performing any of his or her duties as
Representative under this Agreement, the Representative shall not incur any
Liability to any Person, except for Liability caused by the Representative's
willful misconduct or gross negligence. Accordingly, the Representative shall
not
Execution Copy
Preferred Stock Purchase Agreement
22
27
incur any such Liability for (i) any action that is taken or omitted in good
faith regarding any questions relating to the duties and responsibilities of
the Representative under this Agreement, or (ii) any action taken or omitted to
be taken in reliance upon any instrument that the Representative shall in good
faith believe to be genuine, to have been signed or delivered by a proper
person or persons and to conform with the provisions of this Agreement.
(b) Sellers, jointly and severally, shall indemnify,
defend and hold harmless the Representative against, from and in respect of any
Adverse Consequence arising out of or resulting from the performance of his or
her duties hereunder or in connection with this Agreement (except for
Liabilities arising from the gross negligence or willful misconduct of the
Representative).
ARTICLE X
DISPUTE RESOLUTION
10.1 Dispute Resolution. Any controversy, claim or dispute arising
out of or relating to this Agreement, or the alleged breach hereof shall be
resolved by binding arbitration by one arbitrator subject to the sole
jurisdiction of the Judicial Arbitration and Mediation Service of King County,
Washington (J.A.M.S.). Either Purchaser or Representative may submit any such
controversy, claim or dispute to such arbitration by notifying the other, in
writing, of such election. Within ten (10) days after receipt of such notice,
Purchaser and Representative shall designate in writing one (1) arbitrator
mutually agreeable to each; provided, that if Purchaser and Representative are
unable to agree on one (1) arbitrator within such ten-day period, an arbitrator
shall be selected by the American Arbitration Association, subject to the last
two (2) sentences of this Section 10.1. The arbitrator shall permit a period
of open and free discovery, including the taking of depositions, and will
promptly conduct an arbitration hearing. It is the intent of the parties
hereto that an arbitration hearing be concluded within ninety (90) days of the
appointment of the arbitrator. The arbitrator shall have broad authority to
fashion any legal or equitable remedy including the authority to award specific
performance. The arbitrator will render a final and binding decision within
ten (10) days of the conclusion of the arbitration hearing. Such arbitrator
shall, at the sole election of Purchaser, be a resident of, or maintain a
principal place of business in, the City of San Francisco, State of California.
In no event shall such arbitrator be a resident of, or maintain a principal
place of business in, the State of Washington unless Purchaser otherwise
agrees.
10.2 Arbitration Award. After the arbitration award being
rendered, it may be entered in any court of competent jurisdiction and shall
constitute a final adjudication of all matters submitted to arbitration.
10.3 Procedures. If any party at any time subsequent to execution
of this Agreement refuses to comply with the arbitration provisions of this
Article X, any party may make specific application to the Superior Court of
King County, Washington to compel the party to submit to arbitration in
accordance with the terms of this Article. Nothing in this Article X, however,
shall deprive a court of competent jurisdiction of the authority to apply a
temporary restraining order or preliminary injunction prohibiting a violation
of this Agreement prior to any arbitration proceeding.
Execution Copy
Preferred Stock Purchase Agreement
23
28
10.4 Attorneys' Fees. It if shall be necessary for any party to
this Agreement to employ an attorney to enforce their rights pursuant to this
Agreement because of the default of another party(s), the defaulting party(s)
shall reimburse the prevailing party(s) for reasonable attorneys' fees and
expenses arising from such enforcement, including such fees and expenses on
appeal and in bankruptcy or arbitration proceedings.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Post-Closing Deliveries. After the date hereof, any monies,
checks, instruments, invoices, bills, receipts, notices, mail and other
communications received by one party but directed toward or due to another
shall be promptly delivered to the other party. Sellers shall cooperate with
Purchaser after the date hereof, to ensure the orderly transition of the
operation of the Business from Sellers to Purchaser and to minimize any
disruption in the business of Purchaser that might result from the transactions
contemplated hereby.
11.2 Notices. All notices or other communications required or
permitted by this Agreement shall be in writing and shall be deemed to have
been duly received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a business day
and during normal business hours of the recipient, and otherwise on the next
business day following transmission, (b) if given by certified or registered
mail, return receipt requested, postage prepaid, three (3) business days after
being deposited in the U.S. mails and (c) if given by courier or other means,
when received or personally delivered, and, in any such case, addressed as
follows:
(1) if to Purchaser:
c/o Booth Creek, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Execution Copy
Preferred Stock Purchase Agreement
24
29
(2) if to Sellers or Representative:
c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
Carney, Badley, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other addresses as may be specified by any such Person to the other
Person pursuant to notice given by such Person in accordance with the
provisions of this Section 11.2.
11.3 Assignment. No party may assign or transfer any or all of its
rights or obligations under this Agreement without the prior written approval
of all the other parties; provided, however, that Purchaser may assign or
transfer all (but not less than all) of its rights and obligations under this
Agreement (a) to any Person that is an Affiliate of Purchaser or (b) after the
date hereof, to any Person to whom Purchaser sells the Business and
substantially all of the Company's assets; and, provided further, that
Purchaser may collaterally assign its rights hereunder to any Person or Persons
providing financing to Purchaser in connection with the transactions
contemplated hereby.
11.4 Benefit of the Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement shall not be construed so as
to confer any right or benefit upon any Person, other than the parties hereto
and their respective successors and permitted assigns.
11.5 Exhibits. The Exhibits hereto shall be construed with and as
an integral part of this Agreement to the same effect as if the contents
thereof had been set forth verbatim herein.
11.6 Headings. The headings used in this Agreement are for
convenience of reference only and shall not be deemed to limit, characterize or
in any way affect the interpretation of any provision of this Agreement.
11.7 Entire Agreement. This Agreement contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and no other representations, promises, agreements or understandings
regarding the subject matter hereof shall be of any force or effect unless in
writing, executed by the party to be bound thereby and dated on or after the
date hereof.
Execution Copy
Preferred Stock Purchase Agreement
25
30
11.8 Modifications and Waivers. No change, modification or waiver
of any provision of this Agreement shall be valid or binding unless it is in
writing, dated subsequent to the date hereof and signed by Purchaser and each
Seller. No waiver of any breach, term or condition of this Agreement by any
party shall constitute a subsequent waiver of the same or any other breach,
term or condition.
11.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.10 Severability. In case any one or more of the provisions
contained herein for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF WASHINGTON.
11.12 Expenses. Except as otherwise expressly provided herein, each
party hereto shall pay all of its own costs and expenses incurred or to be
incurred in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
11.13 Liquidated Damages. The parties hereto agree that an Event of
Default which has occurred and is continuing, the liquidated value of the
Sellers' damages with respect thereto shall be deemed to equal the aggregate
amount remaining to be paid to Sellers pursuant to Section 2.3.
[SIGNATURE PAGE FOLLOWS]
Execution Copy
Preferred Stock Purchase Agreement
26
31
IN WITNESS WHEREOF, the parties hereto have executed this Preferred
Stock Purchase Agreement as of the date first written above.
PURCHASER: DRE, L.L.C.
By: Ski Lifts, Inc.
Title: Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Title: Chairman
----------------------------
SELLERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as custodian for
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as custodian for
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as custodian for
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually
and as representative of the Estate
of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.,
deceased
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
REPRESENTATIVE
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
