EXHIBIT 4.2
EXECUTION COPY
VAIL RESORTS, INC.
GUARANTORS (named in Schedule I hereto)
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$200,000,000
8 3/4% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
May 6, 1999
BEAR, STEARNS & CO. INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
BT ALEX. BROWN INCORPORATED
LEHMAN BROTHERS INC.
SALOMON SMITH BARNEY INC.
VAIL RESORTS, INC.
$200,000,000
8 3/4% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
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May 6, 1999
New York, New York
BEAR, STEARNS & CO. INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
BT ALEX. BROWN INCORPORATED
LEHMAN BROTHERS INC.
SALOMON SMITH BARNEY INC.
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies & Gentlemen:
Vail Resorts, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to Bear, Stearns & Co. Inc., Nationsbanc Montgomery Securities
LLC, BT Alex. Brown Incorporated, Lehman Brothers Inc. and Salomon Smith Barney
Inc. (each, an "Initial Purchaser" and, collectively, the "Initial Purchasers")
$200,000,000 in aggregate principal amount of 8 3/4% Senior Subordinated Notes
due 2009 (the "Restricted Notes"), subject to the terms and conditions set forth
herein. The Restricted Notes will be issued pursuant to an indenture (the
"Indenture"), to be dated the Closing Date (as defined), among the Company, the
Guarantors (as defined) and United States Trust Company of New York, as trustee
(the "Trustee"). The Notes (as defined) will be fully and unconditionally
guaranteed (the "Guarantees") as to payment of principal, interest, premium and
liquidated damages, if any, on an unsecured senior subordinated basis, jointly
and severally by each entity listed on Schedule I hereto (collectively, the
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"Guarantors"). Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Indenture.
1. Issuance of Securities. The Company proposes, upon the terms
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and subject to the conditions set forth herein, to issue and sell to the Initial
Purchasers an aggregate of $200,000,000 in principal amount of Restricted Notes.
The Restricted Notes and the Exchange Notes (as defined) issuable in exchange
therefor are collectively referred to herein as the "Notes."
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act of 1933,
as amended (the "Act"), the Restricted Notes (and all securities issued in
exchange therefor or in substitution thereof) shall bear the following legend:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH
BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QIB IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE
THE UNITED STATES TO AN ACCREDITED INVESTOR (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT, PRIOR
TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY, IF
THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE
COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE
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REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT."
2. Offering. The Restricted Notes will be offered and sold
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to the Initial Purchasers pursuant to an exemption from the registration
requirements under the Act. The Company has prepared a preliminary offering
memorandum, dated April 23, 1999 (the "Preliminary Offering Memorandum"), and a
final offering memorandum, dated May 6, 1999 (the "Offering Memorandum"),
relating to the Company and its subsidiaries and the Restricted Notes.
The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers (the "Exempt Resales") of the Restricted Notes on
the terms set forth in the Offering Memorandum, as amended or supplemented,
solely to (i) persons whom the Initial Purchaser reasonably believes to be
"qualified institutional buyers," as defined in Rule 144A under the Act ("QIBs")
and (ii) non-U.S. persons outside the United States in reliance upon Regulation
S ("Regulation S") under the Act (each, a "Reg S Investor"). The QIBs and the
Reg S Investors are collectively referred to herein as the "Eligible
Purchasers." The Initial Purchaser will offer the Restricted Notes to such
Eligible Purchasers initially at a price equal to 100% of the principal amount
thereof. Such price may be changed by the Initial Purchasers at any time without
notice.
Holders (including subsequent transferees) of the Restricted
Notes will have the registration rights set forth in the registration rights
agreement relating thereto (the "Registration Rights Agreement"), to be dated
the Closing Date, for so long as such Restricted Notes constitute "Transfer
Restricted Securities" (as defined in the Registration Rights Agreement).
Pursuant to the Registration Rights Agreement, the Company and the Guarantors
will agree to file with the Securities and Exchange Commission (the
"Commission"), under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the Company's 8 3/4% Senior Subordinated Notes due 2009 (the "Exchange
Notes") and Guarantees thereof to be offered in exchange for the Restricted
Notes and Guarantees thereof (the "Exchange Offer") and (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement" and, together with the Exchange Offer Registration
Statement, the "Registration Statements") relating to the resale by certain
holders of the Restricted Notes, and to use their commercially reasonable best
efforts to cause such Registration Statements to be declared effective and to
consummate the Exchange Offer. This Agreement, the Notes, the Guarantees, the
Indenture and the Registration Rights Agreement are hereinafter referred to
collectively as the "Operative Documents."
3. Purchase, Sale and Delivery. (a) On the basis of the
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representations, warranties and covenants contained in this Agreement, and
subject to its terms and
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conditions, the Company agrees to issue and sell to the Initial Purchasers, and
each Initial Purchaser agrees, severally and not jointly, to purchase from the
Company the principal amounts of Restricted Notes set forth opposite the name of
such Initial Purchaser on Schedule II hereto. The purchase price for the
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Restricted Notes will be $971.25 per $1,000 principal amount Restricted Note.
(b) Delivery of the Restricted Notes shall be made, against payment of
the purchase price therefor, at the offices of Kramer Levin Naftalis & Frankel
LLP, 919 Third Avenue, New York, New York or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 9:00 a.m., New
York City time, on May 11, 1999 or at such other time as shall be agreed upon by
the Initial Purchasers and the Company. The time and date of such delivery and
payment are herein called the "Closing Date."
(c) On the Closing Date, one or more Restricted Notes in definitive
global form, registered in the name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"), having an aggregate amount corresponding to the aggregate
principal amount of the Restricted Notes (the "Global Note") sold pursuant to
Exempt Resales to Eligible Purchasers shall be delivered by the Company to the
Initial Purchasers (or as the Initial Purchasers directs), against payment by
the Initial Purchasers of the purchase price therefor, by wire transfer of same
day funds, to an account designated by the Company, provided that the Company
shall give at least two business days' prior notice to the Initial Purchasers of
the information required to effect such wire transfer. The Global Note shall be
made available to the Initial Purchasers for inspection not later than 9:30 a.m.
on the business day immediately preceding the Closing Date.
4. Agreements of the Company and the Guarantors. Each of the
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Company and the Guarantors covenants and agrees with the Initial Purchasers as
follows:
(a) To advise the Initial Purchasers promptly and, if requested
by the Initial Purchasers, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending
the qualification or exemption from qualification of any Notes or the
related Guarantees for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities
commission or other regulatory authority and (ii) of the happening of
any event that makes any statement of a material fact made in the
Preliminary Offering Memorandum or the Offering Memorandum untrue or
that requires the making of any additions to or changes in the
Preliminary Offering Memorandum or the Offering Memorandum in order to
make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Company and the Guarantors
shall use their commercially reasonable best efforts to prevent the
issuance of any stop order or order suspending the qualification or
exemption of any Notes or the related Guarantees under any state
securities or Blue Sky laws and, if at any time any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption of any Notes or the related Guarantees
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under any state securities or Blue Sky laws, the Company and the
Guarantors shall use their commercially reasonable best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company, without charge, as
many copies of the Preliminary Offering Memorandum and the Offering
Memorandum, including all documents incorporated therein by reference,
and any amendments or supplements thereto, as the Initial Purchasers may
reasonably request. The Company and the Guarantors consent to the use of
the Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments and supplements thereto required pursuant hereto, by the
Initial Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Offering Memorandum during
such period as in the opinion of counsel for the Initial Purchasers the
Offering Memorandum is required by law to be delivered in connection
with Exempt Resales and in connection with market-making activities of
the Initial Purchasers for so long as any Restricted Notes are
outstanding unless the Initial Purchasers shall previously have been
advised thereof and shall not have objected thereto within a reasonable
time after being furnished a copy thereof. The Company and the
Guarantors shall promptly prepare, upon the Initial Purchasers' request,
any amendment or supplement to the Offering Memorandum that may be
necessary or advisable in connection with such Exempt Resales or such
market making activities.
(d) If, during the period referred to in Section 4(c) above, any
event shall occur as a result of which, in the judgment of the Company
and the Guarantors or in the reasonable opinion of counsel for the
Company and the Guarantors or counsel for the Initial Purchasers, it
becomes necessary or advisable to amend or supplement the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances when such Offering Memorandum is delivered to an Eligible
Purchaser, not misleading, or if it is necessary or advisable to amend
or supplement the Offering Memorandum to comply with applicable law, (i)
to notify the Initial Purchasers and (ii) forthwith to prepare an
appropriate amendment or supplement to the Offering Memorandum so that
the statements therein as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so
that the Offering Memorandum will comply with applicable law.
(e) To cooperate with the Initial Purchasers and counsel for the
Initial Purchasers in connection with the qualification or registration
of the Restricted Notes and the Guarantees thereof under the securities
or Blue Sky laws of such jurisdictions as the Initial Purchasers may
reasonably request and to continue such qualification in effect so long
as required for the Exempt Resales; provided, however, that neither the
Company nor any Guarantor shall be required in connection therewith to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action
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that would subject it to service of process in suits or taxation, in
each case, other than as to matters and transactions relating to the
Preliminary Offering Memorandum, the Offering Memorandum or Exempt
Resales, in any jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is
terminated, to pay all costs, expenses, fees and taxes incident to the
performance of the obligations of the Company and the Guarantors
hereunder, including in connection with: (i) the preparation, printing,
filing and distribution of the Preliminary Offering Memorandum and the
Offering Memorandum (including, without limitation, financial
statements) and all amendments and supplements thereto required pursuant
hereto, (ii) the preparation (including, without limitation, duplication
costs) and delivery of all agreements, correspondence and all other
documents prepared and delivered in connection herewith and with the
Exempt Resales, (iii) the issuance, transfer and delivery of the
Restricted Notes and the Guarantees endorsed thereon to the Initial
Purchasers, (iv) the qualification or registration of the Notes and the
related Guarantees for offer and sale under the securities or Blue Sky
laws of the several states (including, without limitation, the cost of
printing and mailing a preliminary and final Blue Sky Memorandum and the
reasonable fees and disbursements of counsel for the Initial Purchasers
relating thereto), (v) furnishing such copies of the Preliminary
Offering Memorandum and the Offering Memorandum, and all amendments and
supplements thereto, as may be requested for use in connection with
Exempt Resales, (vi) the preparation of certificates for the Notes
(including, without limitation, printing and engraving thereof), (vii)
the fees, disbursements and expenses of the Company's and the
Guarantors' counsel and accountants, (viii) all fees and expenses
(including fees and expenses of counsel) of the Company and the
Guarantors in connection with the approval of the Notes by DTC for
"book-entry" transfer, (ix) rating the Notes by rating agencies, (x) the
reasonable fees and expenses of the Trustee and its counsel, (xi) the
performance by the Company and the Guarantors of their other obligations
under this Agreement and the other Operative Documents and (xii)
"roadshow" travel and other expenses incurred in connection with the
marketing and sale of the Notes.
(g) To use the proceeds from the sale of the Restricted Notes in
the manner described in the Offering Memorandum under the caption "Use
of Proceeds."
(h) Not to voluntarily claim, and to resist actively any
attempts to claim, the benefit of any usury laws against the holders of
any Notes.
(i) To use their respective commercially reasonable best efforts
to do and perform all things required to be done and performed under
this Agreement by them prior to or after the Closing Date and use their
respective commercially reasonable best efforts to satisfy all
conditions precedent on their part to the delivery of the Restricted
Notes.
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(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Restricted Notes in a
manner that would require the registration under the Act of the sale to
the Initial Purchasers or the Eligible Purchasers of the Restricted
Notes or to take any other action that would result in the Exempt
Resales not being exempt from registration under the Act.
(k) For so long as any of the Notes remain outstanding and
during any period in which the Company and the Guarantors are not
subject to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), to make available to any holder or
beneficial owner of Restricted Notes in connection with any sale thereof
and any prospective purchaser of such Restricted Notes from such holder
or beneficial owner, the information required by Rule 144A(d)(4) under
the Act.
(l) To cause the Exchange Offer to be made in the appropriate
form to permit registered Exchange Notes and the Guarantees thereof to
be offered in exchange for the Restricted Notes and the Guarantees
thereof and to comply with all applicable federal and state securities
laws in connection with the Exchange Offer.
(m) To comply with the Registration Rights Agreement and the
representation letters to DTC relating to the approval of the Notes by
DTC for "book-entry" transfer.
(n) To effect the inclusion of the Notes in PORTAL and to obtain
approval of the Restricted Notes by DTC for "book-entry" transfer.
(o) During a period of two years following the Closing Date, to
deliver without charge to the Initial Purchasers, as they may reasonably
request, promptly upon their becoming available, copies of (i) all
reports or other publicly available information that the Company and the
Guarantors shall mail or otherwise make available to their
securityholders and (ii) all reports, financial statements and proxy or
information statements filed by the Company with the Commission or any
national securities exchange and such other publicly available
information concerning the Company or any of its subsidiaries.
(p) Prior to the Closing Date, to furnish to the Initial
Purchasers, as soon as they have been prepared in the ordinary course by
the Company, copies of any unaudited interim financial statements for
any period subsequent to the periods covered by the financial statements
appearing or incorporated by reference in the Offering Memorandum.
(q) Not to take, directly or indirectly, any action designed to,
or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price
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of any security of the Company to facilitate the sale or resale of the
Notes. Except as permitted by the Act, neither the Company nor any
Guarantor will distribute any (i) preliminary offering memorandum,
including, without limitation, the Preliminary Offering Memorandum, (ii)
offering memorandum, including, without limitation, the Offering
Memorandum, or (iii) other offering material in connection with the
offering and sale of the Notes.
5. Representations and Warranties.
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(a) The Company and the Guarantors, jointly and severally,
represent and warrant to the Initial Purchasers that:
(i) The Offering Memorandum as of its date and as of the Closing
Date does not and will not, and any supplement or amendment to them will
not, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties contained in this paragraph shall not apply to statements
in or omissions from the Offering Memorandum (or any supplement or
amendment thereto) made in reliance upon and in conformity with
information relating to the Initial Purchasers and the third sentence in
the penultimate paragraph on the cover page and the first and last three
paragraphs in the Plan of Distribution furnished to the Company and the
Guarantors in writing by the Initial Purchasers expressly for use
therein. No stop order preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued.
(ii) (A) The documents incorporated by reference in the Offering
Memorandum, when they were filed with the Commission, did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; (B) the documents incorporated by reference in
the Offering Memorandum when they were filed with the Commission
conformed in all material respects to the requirements of the Exchange
Act; and (C) any further documents so filed and incorporated by
reference in the Offering Memorandum or any further amendment or
supplement hereto, when such documents are filed with the Commission,
will conform in all material respects to the requirements of the
Exchange Act.
(iii) The accountants who have certified or will certify the
financial statements included or to be included as part of the Offering
Memorandum are independent accountants as required by the Act. The
historical consolidated financial statements, together with related
schedules and notes thereto, comply as to form in all material respects
with the requirements applicable to registration statements on Form
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S-1 under the Act and present fairly in all material respects the
consolidated financial position and results of operations of the Company
and its subsidiaries at the dates and for the periods indicated. Such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout
the periods presented. The pro forma financial statements included in
the Offering Memorandum fairly present the information purported to be
shown therein at the respective dates thereof and for all respective
periods covered thereby and all adjustments have been properly applied.
(iv) Subsequent to the respective dates as of which information
is given in the Offering Memorandum and up to the Closing Date, except
as set forth in the Offering Memorandum, there has not been any material
adverse change in the business, properties, operations, condition
(financial or other) or results of operations of the Company and the
subsidiaries (as defined below) taken as a whole, whether or not arising
from transactions in the ordinary course of business, and since the date
of the latest balance sheet of the Company included in the Offering
Memorandum, and except as described in the Offering Memorandum, (A)
neither the Company nor any subsidiary (1) has incurred or undertaken
any liabilities or obligations, direct or contingent, that are,
individually or in the aggregate, material to the Company and the
subsidiaries taken as a whole, or (2) entered into any transaction not
in the ordinary course of business that is material to the Company and
the subsidiaries taken as a whole; and (B) the Company has not declared
or paid any dividend on or made any distribution of or with respect to
any shares of its capital stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares
of its or its subsidiaries' capital stock. As used in this Agreement,
the term "subsidiary" means any corporation, partnership, joint venture,
association, company, business trust or other entity in which the
Company directly or indirectly (x) beneficially owns or controls at
least 50% of the outstanding voting securities having by the terms
thereof ordinary voting power to elect a majority of the board of
directors (or other body fulfilling a substantially similar function) of
such entity (irrespective of whether or not at the time any class or
classes of such voting securities shall have or might have voting power
by reason of the happening of any contingency) or (y) has the authority
or ability to control the policies of such entity (including, but
without limitation thereto, any partnership of which the Company or a
subsidiary is a general partner or owns or has the right to obtain a
majority of limited partnership interests and any joint venture in which
the Company or a subsidiary has liability similar to the liability of a
general partner of a partnership or owns or has the right to obtain at
least 50% of the joint venture interests); provided, however, that for
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the purposes of any representations and warranties made in this Section
5, the term "subsidiaries" shall include Keystone/Intrawest LLC, Slifer,
Smith & Frampton/Vail Associates Real Estate, L.L.C. and SSI Venture LLC
only to the extent of the Company's actual knowledge (the Company hereby
representing to the Initial Purchasers that the Company does not manage
the day to day operations of either of such subsidiaries); and provided
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further, that, for the purposes of any representations
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and warranties made in this Section 5, except for Section 5(a)(i) and
(ii), the term "subsidiaries" shall exclude Avon Partners II, Limited
Liability Company, Ski The Summit, Clinton Ditch & Reservoir Company, BC
Housing, LLC, Eagle Park Reservoir Company, Boulder/Beaver, LLC and
Eclipse Television and Sports Marketing LLC.
(v) When the Restricted Notes and the Guarantees thereof are
issued and delivered pursuant to this Agreement, no Restricted Note or
Guarantee thereof will be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company or any Guarantor that
are listed on a national securities exchange registered under Section 6
of the Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(vi) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and each of the other Operative
Documents to which it is a party. This Agreement has been duly and
validly authorized, executed and delivered by the Company and each
Guarantor and (assuming the due authorization, execution and delivery by
the Initial Purchasers) is a legal and binding obligation of the Company
and each Guarantor, enforceable against each of them in accordance with
its terms, subject to (A) applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors rights generally and (B) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity except insofar as rights to
indemnification and contribution contained herein may be limited by
federal or state securities laws or related public policy).
(vii) The Indenture has been duly and validly authorized by the
Company and each Guarantor and, when duly executed and delivered by the
Company and each Guarantor (assuming the due authorization, execution
and delivery by the Trustee), will be a legal and binding agreement of
the Company and each Guarantor, enforceable against each of them in
accordance with its terms, subject to (A) applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors rights generally
and (B) general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity except
insofar as rights to indemnification and contribution contained herein
may be limited by federal or state securities laws or related public
policy). On the Closing Date, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder.
The Offering Memorandum contains a summary of the material terms of the
Indenture, which is accurate in all material respects.
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(viii) The Registration Rights Agreement has been duly and
validly authorized by the Company and each Guarantor and, when duly
executed and delivered by the Company and each Guarantor (assuming due
authorization, execution and delivery by the Initial Purchasers), will
be a legal and binding obligation of the Company and each Guarantor,
enforceable against each of them in accordance with its terms, subject
to (A) applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors rights generally and (B) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity except insofar as rights to
indemnification and contribution contained herein may be limited by
federal or state securities laws or related public policy). The Offering
Memorandum contains a summary of the material terms of the Registration
Rights Agreement, which is accurate in all material respects.
(ix) The Restricted Notes have been duly and validly authorized
by the Company for issuance and sale to the Initial Purchasers pursuant
to this Agreement and, when issued and authenticated in accordance with
the terms of the Indenture and delivered against payment therefor in
accordance with the terms hereof and thereof, will be the legal and
binding obligations of the Company, enforceable against it in accordance
with their terms and entitled to the benefits of the Indenture, subject
to (A) applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors rights generally and (B) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity except insofar as rights to
indemnification and contribution contained herein may be limited by
federal or state securities laws or related public policy). The Offering
Memorandum contains a summary of the material terms of the Notes, which
is accurate in all material respects.
(x) The Guarantees of the Restricted Notes have been duly and
validly authorized by each of the Guarantors and, when executed and
delivered in accordance with the terms of the Indenture and when the
Restricted Notes have been issued and authenticated in accordance with
the terms of the Indenture and delivered against payment therefor in
accordance with the terms hereof and thereof, will be the legal and
binding obligations of each of the Guarantors, enforceable against each
of them in accordance with their terms and entitled to the benefits of
the Indenture, subject to (A) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws now and
hereafter in effect relating to creditors rights generally and (B)
general principles of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity except insofar as
rights to indemnification and contribution contained herein may be
limited by federal or state securities laws or related public policy).
The Offering Memorandum contains a summary of the material terms of the
Guarantees, which is accurate in all material respects.
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(xi) The Exchange Notes have been duly and validly authorized
for issuance by the Company and, when issued and authenticated in
accordance with the terms of the Exchange Offer and the Indenture, will
be the legal, valid and binding obligations of the Company, enforceable
against it in accordance with their terms and entitled to the benefits
of the Indenture, subject to (A) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws now and
hereafter in effect relating to creditors rights generally and (B)
general principles of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity except insofar as
rights to indemnification and contribution contained herein may be
limited by federal or state securities laws or related public policy).
(xii) The Guarantees of the Exchange Notes have been duly and
validly authorized by each of the Guarantors and, when executed and
delivered in accordance with the terms of the Indenture and when the
Exchange Notes have been issued and authenticated in accordance with the
terms of the Exchange Offer and the Indenture, will be the legal and
binding obligations of each of the Guarantors, enforceable against each
of them in accordance with their terms and entitled to the benefits of
the Indenture, subject to (A) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws now and
hereafter in effect relating to creditors rights generally and (B)
general principles of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity except insofar as
rights to indemnification and contribution contained herein may be
limited by federal or state securities laws or related public policy).
(xiii) The execution, delivery or performance by the Company or
any Guarantor of this Agreement or any of the other Operative Documents
to which it is a party will not (1) conflict with or result in a breach
of any of the terms and provisions of, or constitute a default under (or
an event that with notice or lapse of time, or both, would constitute a
default under) or require approval or consent under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to the
terms of any agreement, contract, indenture, mortgage, lease, license,
arrangement or understanding to which the Company or a subsidiary is a
party, or to which any of its properties is subject, that is material to
the Company and the subsidiaries taken as a whole (hereafter,
collectively, "Material Contracts"), or any governmental franchise,
license or permit heretofore issued to the Company or any subsidiary
that is material to the Company and the subsidiaries taken as a whole
(hereafter, collectively, "Material Permits"), (2) violate or conflict
with any provision of the certificate of incorporation, by-laws or
similar governing instruments of the Company or any subsidiary listed on
Schedule III hereto (the "Material Subsidiaries") or (3) violate or
------------
conflict with any judgment, decree, order, statute, rule or regulation
of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any Material Subsidiary or any
of its respective properties or assets, except for those violations or
conflicts, that, individually or in the aggregate, could not reasonably
be expected to
-12-
have, a material adverse effect on the Company and its subsidiaries,
taken as a whole (hereinafter referred to as a "Material Adverse
Effect").
(xiv) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any
public, governmental or regulatory agency or body having jurisdiction
over the Company or any subsidiary or any of its respective properties
or assets is required for (A) the execution, delivery and performance by
each of the Company and the Guarantors of this Agreement or any of the
other Operative Documents to which it is a party or (B) the issuance and
sale of the Notes, the issuance of the Guarantees and the transactions
contemplated hereby and thereby, except such as have been or will be
obtained and made on or prior to the Closing Date (or, in the case of
the Registration Rights Agreement, will be obtained and made under the
Act, the Trust Indenture Act, and state securities or Blue Sky laws and
regulations).
(xv) All of the currently outstanding shares of capital stock of
the Company, and all of the outstanding shares of capital stock (or
similar interests) owned by the Company of each of the subsidiaries of
the Company have been duly and validly authorized and issued, are fully
paid and nonassessable and were not issued in violation of or subject to
any preemptive rights. The Company has, as of the date hereof, and will
have, as of the Closing Date an authorized and outstanding
capitalization as set forth in the Offering Memorandum, both on an
historical basis and as adjusted to give effect to the offering of the
Notes. The Company owns directly or indirectly such percentage of the
outstanding capital stock (or similar interests) of each of its
subsidiaries as is set forth opposite the name of such subsidiary in
Schedule IV hereto, free and clear of all claims, liens, security
-----------
interests, pledges, charges, encumbrances, stockholders agreements and
voting trusts, except those the absence of which would not have a
Material Adverse Effect.
(xvi) The Company has no subsidiaries other than those listed in
Schedule IV hereto. Each of the Company and the Material Subsidiaries
-----------
has been duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdictions of incorporation. Each of
the Company and the Material Subsidiaries is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good
standing that will not have a Material Adverse Effect. Each of the
Company and the Material Subsidiaries has all requisite corporate power
and authority, and all necessary consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses and permits of
and from all public, regulatory or governmental agencies and bodies, to
own, lease and operate its properties and conduct its business as now
being conducted and as described in the Offering Memorandum (except for
those the absence of which would not have a Material Adverse Effect).
Neither the Company nor any of the Material Subsidiaries
-13-
has received any notice of proceedings relating to revocation or
modification of any such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or permits.
(xvii) Neither the Company nor any subsidiary is in violation or
breach of, or in default under (nor has an event occurred that with
notice, lapse of time or both, would constitute a default under) any
Material Contract, and each Material Contract is in full force and
effect, and is the legal, valid, and binding obligation of the Company
or such subsidiary, as the case may be, and (subject to applicable
bankruptcy, insolvency, and other laws affecting the enforceability of
creditors' rights generally) is enforceable as to the Company or such
subsidiary, as the case may be, in accordance with its terms, subject to
such exceptions which, individually or in the aggregate, do not have and
are not reasonably likely to have a Material Adverse Effect. Neither the
Company nor any Material Subsidiary is in violation of its certificate
of incorporation, by-laws or similar governing instrument.
(xviii) There is no litigation, arbitration, claim, governmental
or other proceeding or investigation pending or, to the best knowledge
of the Company, threatened in writing with respect to the Company or any
Material Subsidiary, or any of its respective operations, businesses,
properties or assets, except as described in the Offering Memorandum,
that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect. Neither the Company nor any Material
Subsidiary is, or, to the best knowledge of the Company, with the giving
of notice or lapse of time or both would be, in violation of or
non-compliance with the requirements of any Material Permit or the
provisions of any law, rule, regulation, order, judgment or decree,
including, but without limitation thereto, all applicable federal, state
and local laws and regulations relating to (A) zoning, land use,
protection of the environment, human health and safety or hazardous or
toxic substances, wastes, pollutants or contaminants and (B) employee or
occupational safety, discrimination in hiring, promotion or pay of
employees, employee hours and wages or employee benefits, except for
such violations or failures of compliance that, individually or in the
aggregate, would not have a Material Adverse Effect.
(xix) Except as described in the Offering Memorandum, the
Company and each Material Subsidiary have (A) good and marketable title
to all real and personal properties owned by them, free and clear of all
liens, security interests, pledges, charges, encumbrances, and
mortgages, and (B) valid, subsisting and enforceable leases for all real
and personal properties leased by them, in each case, subject to such
exceptions as, individually or in the aggregate, do not have and are not
reasonably likely to have a Material Adverse Effect. Except as disclosed
in the Offering Memorandum, no real property owned, leased, licensed or
used by the Company or by a Material Subsidiary lies in an area that is,
or to the best knowledge of the Company will be, subject to zoning, use,
or building code restrictions that would prohibit or prevent the
continued effective ownership, leasing, licensing, or use of
-14-
such real property in the business of the Company or such Material
Subsidiary as presently conducted or as the Offering Memorandum indicate
are contemplated to be conducted, subject to such exceptions which,
individually or in the aggregate, do not have and are not reasonably
likely to have a Material Adverse Effect. The Company will have the
opportunity to lease commercial space created by the Keystone JV (as
defined in the Offering Memorandum).
(xx) The Company, directly or through one or more of the
subsidiaries, owns or possesses all patents, patent rights, licenses,
inventions, copyrights, trademarks, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), service marks and trade names
(collectively, "Intellectual Property") necessary to conduct its
business as now conducted and proposed to be conducted as disclosed in
the Offering Memorandum, except where the failure to own or possess such
Intellectual Property, individually or in the aggregate, would not have
a Material Adverse Effect. Neither the Company nor any subsidiary has
received notice of infringement of or conflict with the asserted rights
of others with respect to any Intellectual Property, except for those
which would not have a Material Adverse Effect. To the best actual
knowledge of the Company's senior management (no duty of inquiry being
implied), there is no infringement by others of any Intellectual
Property of the Company or any subsidiary that has had or may in the
future have a Material Adverse Effect. The Company or a predecessor has
registered, and the Company or a subsidiary owns the rights to all
registrations of the rights to the trademark and related logo for each
of "Vail" and "Beaver Creek" in all jurisdictions in which the failure
to so register or to so own such rights to such registrations would,
individually or in the aggregate, have a Material Adverse Effect.
(xxi) To the Company's best knowledge, neither the Company nor
any subsidiary, nor any director, officer or employee of the Company or
any subsidiary has, directly or indirectly, used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activity, made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds, violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or
made any bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment.
(xxii) There are no holders of securities of the Company or any
of its subsidiaries who, by reason of the execution by the Company or
any of the Guarantors of this Agreement or any other Operative Document
to which it is a party or the consummation by the Company or any of the
Guarantors of the transactions contemplated hereby and thereby, have the
right to request or demand that the Company or any of its subsidiaries
register under the Act or analogous foreign laws and regulations
securities held by them other than pursuant to the Registration Right
Agreement.
-15-
(xxiii) None of the Company or any of its subsidiaries is an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(xxiv) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and its subsidiaries
and any other person that would give rise to a valid claim against the
Company or any of its subsidiaries or the Initial Purchasers for a
brokerage commission, finder's fee or like payment in connection with
the issuance, purchase and sale of the Notes.
(xxv) Other than as disclosed in the Offering Memorandum, no
labor dispute with the employees of the Company or any subsidiary
exists or, to the best knowledge of the Company, is imminent that,
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect.
(xxvi) (A) All United States Federal income tax returns of the
Company and each subsidiary required by law to be filed have been
filed and all taxes shown by such returns or otherwise assessed that
are due and payable have been paid, except assessments against which
appeals have been or will be promptly taken and (B) the Company and
the subsidiaries have filed all other tax returns that are required to
have been filed by them pursuant to the applicable laws of all other
jurisdictions, except, as to each of the foregoing clauses (A) and
(B), insofar as the failure to file such returns, individually or in
the aggregate, would not have a Material Adverse Effect, and the
Company and the subsidiaries have paid all taxes due pursuant to said
returns or pursuant to any assessment received by the Company or any
subsidiary, except for such taxes, if any, as are being contested in
good faith and as to which adequate reserves have been provided in
accordance with US GAAP. The charges, accruals and reserves on the
consolidated books of the Company in respect of any tax liability for
any years not finally determined are adequate to meet any assessments
or re-assessments for additional tax for any years not finally
determined, except to the extent of any inadequacy that would not have
a Material Adverse Effect.
(xxvii) The Company and each subsidiary is insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in
which the Company and the subsidiaries are engaged.
(xxviii) Except as disclosed in, or incorporated by reference
into, the Offering Memorandum, there are no business relationships or
related party transactions of the nature described in Item 404 of
Regulation S-K of the Commission involving the Company or any other
persons referred to in such Item 404, except for such transactions
that would be considered immaterial under such Item 404.
-16-
(xxix) No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental
agency that prevents the issuance of the Notes or the Guarantees or
prevents or suspends the use of the Offering Memorandum; no
injunction, restraining order or order of any nature by a federal or
state court of competent jurisdiction has been issued that prevents
the issuance of the Notes or the Guarantees or prevents or suspends
the sale of the Notes or the Guarantees in any jurisdiction referred
to in Section 4(e) hereof; and every request of any securities
authority or agency of any jurisdiction for additional information has
been complied with in all material respects.
(xxx) To the extent described in the Offering Memorandum the
Company has (A) initiated a review and assessment of all areas within
its and each of its Material Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that
could be materially and adversely affected by the "Year 2000 Problem"
(that is, the risk that computer applications used by the Company or
any of its Material Subsidiaries (or suppliers, vendors and customers)
may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December
31, 1999), (B) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis and (C) to date, has implemented that
plan in accordance with that timetable.
(xxxi) No registration under the Act of the Restricted Notes or
the Guarantees thereof is required for the sale of the Restricted
Notes to the Initial Purchasers as contemplated hereby or for the
Exempt Resales assuming (A) that the purchasers who buy the Restricted
Notes in the Exempt Resales are Eligible Purchasers and (B) the
accuracy of the Initial Purchasers' representations regarding the
absence of general solicitation in connection with the sale of
Restricted Notes to the Initial Purchasers and the Exempt Resales
contained herein. No form of general solicitation or general
advertising (as defined in Regulation D under the Act) was used by the
Company or any of the Guarantors or any of their representatives
(other than the Initial Purchasers, as to which the Company and the
Guarantors make no representation or warranty) in connection with the
offer and sale of any of the Restricted Notes or the Guarantees
thereof or in connection with Exempt Resales, including, but not
limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising. No securities of the
same class as the Notes have been issued and sold by the Company or
any of its subsidiaries within the six-month period immediately prior
to the date hereof.
(xxxii) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Restricted Notes to be
purchased by Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975
of the Internal Revenue Code of 1986. The
-17-
representation made by the Company and the Guarantors in the preceding
sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made
by Eligible Purchasers as set forth in the Offering Memorandum under
the caption "Transfer Restrictions."
(xxxiii) The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources which the
Company and the Guarantors believe to be reliable and accurate in all
material respects.
(xxxiv) The Offering Memorandum, as of its date, contains the
information specified in, and meets the requirements of, Rule
144A(d)(4) under the Act.
(xxxv) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the Trust
Indenture Act.
(xxxvi) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes, the application of the
proceeds from the issuance and sale of the Notes and the consummation
of the transactions contemplated thereby as set forth in the Offering
Memorandum, will violate Regulations T, U or X promulgated by the
Board of Governors of the Federal Reserve System.
(xxxvii) Neither the Company nor any Guarantor intends to, nor
believes that it will, incur debts beyond its ability to pay such
debts as they mature. The present fair saleable value of the assets of
the Company and each Guarantor exceeds the amount that will be
required to be paid on or in respect of its existing debts and other
liabilities (including contingent liabilities) as they become absolute
and matured. The assets of the Company and each Guarantor does not
constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Upon the issuance of the
Notes and the Guarantees, the present fair saleable value of the
assets of the Company and each Guarantor will exceed the amount that
will be required to be paid on or in respect of its existing debts and
other liabilities (including contingent liabilities) as they become
absolute and matured. Upon the issuance of the Notes and the
Guarantees, the assets of the Company and each Guarantor will not
constitute unreasonably small capital to carry out its business as now
conducted.
(xxxviii) Each certificate signed by any officer of the Company
or any Guarantor and delivered to the Initial Purchasers or counsel
for the Initial Purchasers shall be deemed to be a representation and
warranty by the Company or such Guarantor, as the case may be, to the
Initial Purchasers as to the matters covered thereby.
(xxxix) Each of the Company and the Guarantors acknowledge that
the Initial Purchasers and, for purposes of the opinions to be
delivered to the Initial Purchasers pursuant to Section 8 hereof,
counsel for the Company and the Guarantors
-18-
and counsel for the Initial Purchasers, will rely upon the accuracy
and truth of the foregoing representations and hereby consent to such
reliance.
(xl) None of the Company, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf
(other than the Initial Purchasers, as to whom the Company and the
Guarantors make no representation) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with
respect to the Restricted Notes.
(xli) The Restricted Notes offered and sold in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions.
(xlii) The sale of the Restricted Notes pursuant to Regulation S
is not part of a plan or scheme to evade the registration provisions
of the Act.
(xliii) The Company, the Guarantors and their respective
affiliates and all person acting on their behalf (other than the
Initial Purchasers, as to whom the Company and the Guarantors make no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the
offering of the Restricted Notes outside the United States and, in
connection therewith, the Offering Memorandum will contain the
disclosure required by Rule 902(g)(2).
(xliv) Each of the Company and the Guarantors is a "reporting
issuer," as defined in Rule 902 under the Act.
(b) Each of the Initial Purchasers, severally and not jointly,
represents, warrants and covenants to the Company and the Guarantors
and agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order
to evaluate the merits and risks of an investment in the Restricted
Notes.
(ii) Such Initial Purchaser (A) is not acquiring the Restricted
Notes with a view to any distribution thereof that would violate the
Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling
the Restricted Notes only to QIBs in reliance on the exemption from
the registration requirements of the Act provided by Rule 144A and in
offshore transactions in reliance upon Regulation S under the Act.
(iii) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) has been or will be
used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Restricted Notes or
Guarantees, including, but not limited to, articles, notices or
-19-
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation
or general advertising.
(iv) Such Initial Purchaser agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Restricted Notes
only from, and will offer to sell the Restricted Notes only to,
Eligible Purchasers. Such Initial Purchaser further agrees that (A) it
will offer to sell the Restricted Notes only to, and will solicit
offers to buy the Restricted Notes only from Eligible Purchasers who
in purchasing such Restricted Notes will be deemed to have represented
and agreed that they are purchasing the Restricted Notes for their own
account or accounts with respect to which they exercise sole
investment discretion and that they or such accounts are Eligible
Purchasers, and (B) such Eligible Purchasers will acknowledge and
agree that such Restricted Notes will not have been registered under
the Act and may be resold, pledged or otherwise transferred only (1)
to the company or any subsidiary thereof, (2) inside the United States
to a QIB in compliance with Rule 144A under the Act, (3) inside the
United States to an accredited investor (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Act) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to the
trustee a signed letter containing certain representations and
agreements relating to the restrictions on transfer of this security
(the form of which letter can be obtained from the trustee for this
security), (4) outside the United States in an offshore transaction in
compliance with Rule 904 of Regulation S under the Act, (5) pursuant
to the exemption from registration provided by Rule 144 under the Act
(if available), or (6) pursuant to an effective registration statement
under the Act, and (C) acknowledges that it will, and each subsequent
holder is required to, notify any purchaser of the security evidenced
thereby of the resale restrictions set forth in (B) above.
(v) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged or will no engage in
any directed selling efforts within the meaning of Regulation S with
respect to the Restricted Notes or the Guarantees thereof.
(vi) The Restricted Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and
will be offered and sold only in offshore transactions.
(vii) The sale of Restricted Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not
part of a plan or scheme to evade the registration provisions of the
Act.
(viii) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Restricted Notes in the United
States or to, or for the benefit or account of, a U.S. Person (other
than a distributor), in each case, as defined in Rule
-20-
902 under the Act (1) as part of its distribution at any time and (2)
otherwise until 40 days after the later of the commencement of the
offering of the Restricted Notes pursuant hereto and the Closing Date,
other than in accordance with Regulation S of the Act or another
exemption from the registration requirements of the Act. Such Initial
Purchaser agrees that, during such 40-day distribution compliance
period, it will not cause any advertisement with respect to the
Restricted Notes (including any "tombstone" advertisement) to be
published in any newspaper or periodical or posted in any public place
and will not issue any circular relating to the Restricted Notes,
except such advertisements as are permitted by and include the
statements required by Regulation S.
(ix) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Restricted Notes by it to any distributor,
dealer or person receiving a selling concession, fee or other
remuneration during the 40-day distribution compliance period referred
to in Rule 903(c)(2) under the Act, it will send to such distributor,
dealer or person receiving a selling concession, fee or other
remuneration a confirmation or notice to substantially the following
effect:
"The Restricted Notes covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered and sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of your distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of
the Offering and the Closing Date, except in either case in
accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are
exempt from the registration requirements of the Securities Act),
and in connection with any subsequent sale by you of the
Restricted Notes covered hereby in reliance on Regulation S
during the period referred to above to any distributor, dealer or
person receiving a selling concession, fee or other remuneration,
you must deliver a notice to substantially the foregoing effect.
Terms used above have the meanings assigned to them in Regulation
S."
The Initial Purchasers acknowledge that the Company and the
Guarantors and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Section 8 hereof, counsel for the
Company and the Guarantors and counsel for the Initial Purchasers will
rely upon the accuracy and truth of the foregoing representations and
hereby consent to such reliance.
6. Indemnification.
---------------
(a) The Company and the Guarantors, jointly and severally, agree
to indemnify and hold harmless (i) the Initial Purchasers, (ii) each
person, if any, who controls the Initial Purchasers within the meaning of
Section 15 of the Act or Section 20(a) of the
-21-
Exchange Act and (iii) the respective officers, directors, partners,
employees, representatives and agents of the Initial Purchasers or any
controlling person against any and all losses, liabilities, claims, damages
and expenses whatsoever (including but not limited to reasonable attorneys'
fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any investigation or litigation, commenced
or threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation, provided that such settlement was
effected with the Company's and the Guarantor's written consent in
accordance with Section 6(c) hereof), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum (in each case,
including the documents incorporated by reference therein), or in any
supplement thereto or amendment thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that neither the Company nor any Guarantor will be
liable in any such case to the extent, but only to the extent, that any
such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information relating to the Initial Purchasers furnished to the Company and
the Guarantors in writing by or on behalf of the Initial Purchasers
expressly for use therein and provided further, that with respect to any
Preliminary Offering Memorandum, such indemnity shall not inure to the
benefit of any Initial Purchaser (or the benefit of any person controlling
such Initial Purchaser) if the person asserting any such losses,
liabilities, claims, damages or expenses purchased the Notes that are the
subject thereof from such Initial Purchaser and if such person was not sent
or given a copy of the final Offering Memorandum at or prior to
confirmation of the sale of such Notes to such person and the untrue
statement or omission of a material fact contained in such Preliminary
Offering Memorandum was corrected in the final Offering Memorandum. This
indemnity agreement will be in addition to any liability which the Company
and the Guarantors may otherwise have, including under this Agreement.
(b) The Initial Purchasers, severally and not jointly, agree to
indemnify and hold harmless (i) the Company and the Guarantors, (ii) each
person, if any, who controls the Company or any of the Guarantors within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
and (iii) the officers, directors, partners, employees, representatives and
agents of the Company and the Guarantors, against any losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to
reasonable attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or
litigation, commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation, provided that
such settlement was effected with such Initial Purchaser's written consent
in accordance with Section 6(c) hereof), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims,
-22-
damages or expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent,
that any such loss, liability, claim, damage or expense arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information relating to the Initial Purchasers furnished to the Company and
the Guarantors in writing by or on behalf of the Initial Purchasers
expressly for use therein; provided, however, that in no case shall the
Initial Purchasers be liable or responsible for any amount in excess of the
discounts and commissions received by the Initial Purchasers, as set forth
on the cover page of the Offering Memorandum. This indemnity will be in
addition to any liability which the Initial Purchasers may otherwise have,
including under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not
relieve it from any liability which it may have under this Section 6 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may otherwise have). In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified
party or parties unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying parties in connection with the
defense of such action, (ii) the indemnifying parties shall not have
employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case
the indemnifying party or parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties with
respect to such different defenses), in any of which events such fees and
expenses of counsel shall be borne by the indemnifying parties; provided,
however, that the indemnifying party under subsection (a) or (b) above
shall only be liable for the legal expenses of one counsel (in addition to
any local counsel) for all indemnified parties in each jurisdiction in
which any claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of
-23-
any claim or action effected without its prior written consent, provided
that such consent was not unreasonably withheld.
7. Contribution. In order to provide for contribution in
------------
circumstances in which the indemnification provided for in Section 6 is for
any reason held to be unavailable from an indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company
and the Guarantors, on the one hand, and the Initial Purchasers, on the
other hand, shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in
the case of losses, liabilities, claims, damages and expenses suffered by
the Company or any Guarantor, any contribution received by the Company and
the Guarantors from persons, other than the Initial Purchasers, who may
also be liable for contribution, including persons who control the Company
or any of the Guarantors within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) to which the Company, the Guarantors and
the Initial Purchasers may be subject, in such proportion as is appropriate
to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
from the offering of the Restricted Notes or, if such allocation is not
permitted by applicable law or indemnification is not available as a result
of the indemnifying party not having received notice as provided in Section
6, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and
the Guarantors, on the one hand, and the Initial Purchasers, on the other
hand, in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Guarantors, on the one hand, and the Initial Purchasers, on
the other hand, shall be deemed to be in the same proportion as (i) the
total proceeds from the offering of Restricted Notes (net of discounts and
commissions but before deducting expenses) received by the Company and the
Guarantors and (ii) the discounts and commissions received by the Initial
Purchasers, respectively, in each case as set forth on the cover page of
the Offering Memorandum. The relative fault of the Company and the
Guarantors, on the one hand, and of the Initial Purchasers, on the other
hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied
by the Company, any Guarantor or the Initial Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Guarantors
and the Initial Purchasers agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 7, (i) in no case shall the
Initial Purchasers be required to contribute any amount in excess of the
amount by which the discounts and
-24-
commissions applicable to the Restricted Notes purchased by the Initial
Purchasers pursuant to this Agreement exceeds the amount of any damages
which the Initial Purchasers has otherwise been required to pay by reason
of any untrue or alleged untrue statement or omission or alleged omission
and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 7, (A) each person, if any, who controls the
Initial Purchasers within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and (B) the respective officers, directors,
partners, employees, representatives and agents of the Initial Purchasers
or any controlling person shall have the same rights to contribution as the
Initial Purchasers, and (A) each person, if any, who controls the Company
or any Guarantor within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and (B) the respective officers, directors,
partners, employees, representatives and agents of the Company and the
Guarantors shall have the same rights to contribution as the Company and
the Guarantors, subject in each case to clauses (i) and (ii) of this
Section 7. Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against
another party or parties under this Section 7, notify such party or parties
from whom contribution may be sought, but the failure to so notify such
party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under
this Section 7 or otherwise. No party shall be liable for contribution with
respect to any action or claim settled without its prior written consent,
provided that such written consent was not unreasonably withheld. The
Initial Purchasers' obligations to contribute pursuant to this Section 7
are several in proportion to the respective principal amounts of Restricted
Notes purchased by each of the Initial Purchasers hereunder and not joint.
8. Conditions of Initial Purchasers' Obligations. The obligations
---------------------------------------------
of the Initial Purchasers to purchase and pay for the Restricted Notes, as
provided herein, shall be subject to the satisfaction of the following
conditions:
(a) At the Closing Date, the Initial Purchasers shall have
received a certificate of the Company, executed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, and
a certificate of each Guarantor, executed by two authorized officers
of such Guarantor, dated the date of its delivery, to the effect that
as of the date of such certificate the representations and warranties
of the Company or the Guarantor, as applicable, set forth in Section 5
hereof are true and correct in all material respects as of such
Closing Date, the obligations of the Company or the Guarantor, as
applicable, to be performed hereunder on or prior thereto have been
duly performed in all material respects, and subsequent to the
respective dates of which information is given in the Offering
Memorandum, the Company or Guarantor, as applicable, and its
subsidiaries have not sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and
there has not
-25-
been any material adverse change, or any development involving a
material adverse change, in the business prospects, properties,
operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries taken as a whole,
except in which case as described in or contemplated by the Offering
Memorandum.
(b) At the Closing Date, the Initial Purchasers shall have
received (i) the written opinion of Ingrid Keiser, Esq., Assistant
General Counsel to the Company, dated the Closing Date, addressed to
the Initial Purchasers, and in form and substance reasonably
acceptable to the Initial Purchasers' Counsel, to the effect set forth
in Exhibit 1, (ii) the written opinion of Cahill Gordon & Reindel,
---------
special counsel for the Company, dated the Closing Date, addressed to
the Initial Purchasers, and in form and substance reasonably
satisfactory to Initial Purchasers' Counsel, to the effect set forth
in Exhibit 2 and (iii) the written opinion of Arnold & Porter, special
---------
counsel for the Company, dated the Closing Date, addressed to the
Initial Purchasers, and in the form and substance reasonably
satisfactory to Initial Purchasers' Counsel, to the effect set forth
in Exhibit 3.
---------
(c) At the Closing Date, the Initial Purchasers shall have
received the written opinion of Balcomb & Greene, P.C., special
counsel for the Initial Purchasers, dated the Closing Date, addressed
to the Initial Purchasers, and in form and substance reasonably
satisfactory to Initial Purchasers' Counsel, to the effect set forth
in Exhibit 4.
---------
(d) At the time this Agreement is executed and at the Closing
Date, the Initial Purchasers shall have received from Arthur Andersen
LLP, independent public accountants, dated as of the date of this
Agreement and as of the Closing Date, customary comfort letters
addressed to the Initial Purchasers and in form and substance
satisfactory to the Initial Purchasers and counsel for the Initial
Purchasers with respect to the financial statements and certain
financial information of the Company and its subsidiaries contained in
the Offering Memorandum and/or incorporated therein by reference.
(e) The Initial Purchasers shall have received an opinion, dated
the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, of Kramer Levin Naftalis & Frankel LLP, counsel
for the Initial Purchasers, covering such matters as are customarily
covered in such opinions.
(f) Kramer Levin Naftalis & Frankel LLP shall have been furnished
with such documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass
upon the matters referred to in this Section 8 and in order to
evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions
herein contained.
-26-
(g) Prior to the Closing Date, the Company and the Guarantors
shall have furnished to the Initial Purchasers such further
information, certificates and documents as the Initial Purchasers may
reasonably request.
(h) The Company, the Guarantors and the Trustee shall have
entered into the Indenture and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
(i) The Company, the Guarantors and the Initial Purchasers shall
have entered into the Registration Rights Agreement and the Initial
Purchasers shall have received counterparts, conformed as executed,
thereof.
(j) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any
notice have been given of any potential or intended downgrading,
suspension or withdrawal of, or of any review (or of any potential or
intended review) for a possible change that does not indicate the
direction of the possible change in, any rating of the Company or any
Guarantor or any securities of the Company or any Guarantor
(including, without limitation, the placing of any of the foregoing
ratings on credit watch with negative or developing implications or
under review with an uncertain direction) by any "nationally
recognized statistical rating organization" as such term is defined
for purposes of Rule 436(g)(2) under the Act, (ii) there shall not
have occurred any change, nor shall any notice have been given of any
potential or intended change, in the outlook for any rating of the
Company or any Guarantor or any securities of the Company or any
Guarantor by any such rating organization and (iii) no such rating
organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which
the Notes were marketed.
(k) The Notes shall have been approved for trading on PORTAL.
(l) All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by the Company and the
Guarantors will be in compliance with the provisions hereof only if
they are reasonably satisfactory in form and substance to the Initial
Purchasers. The Company and the Guarantors shall furnish the Initial
Purchasers with such conformed copies of such opinions, certificates,
letters and other documents as it shall reasonably request.
9. Initial Purchasers' Information. The Company and the Guarantors
-------------------------------
acknowledge that the statements with respect to the offering of the
Restricted Notes set forth in (i) the third sentence of the penultimate
paragraph on the cover page and (ii) the first and last four paragraphs in
the "Plan of Distribution" in the Offering Memorandum constitute the only
information relating to any of the Initial Purchasers furnished to the
Company and the Guarantors in writing by or on behalf of the Initial
Purchasers expressly for use in the Offering Memorandum.
-27-
10. Survival of Representations and Agreements. All representations
------------------------------------------
and warranties, covenants and agreements of the Initial Purchasers, the
Company and the Guarantors contained in this Agreement, including the
agreements contained in Sections 4(f) and 11(d), the indemnity agreements
contained in Section 6 and the contribution agreements contained in Section
7, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Initial Purchasers, any
controlling person thereof, or by or on behalf of the Company, the
Guarantors or any controlling person thereof, and shall survive delivery of
and payment for the Restricted Notes to and by the Initial Purchasers. The
representations contained in Section 5 and the agreements contained in
Sections 4(f), 6, 7 and 11(d) shall survive the termination of this
Agreement, including any termination pursuant to Section 11.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective upon execution and delivery
of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to terminate this
Agreement at any time prior to the Closing Date by notice to the Company
from the Initial Purchasers, without liability (other than with respect to
Sections 6 and 7) on the Initial Purchasers' part to the Company or any of
the Guarantors if, on or prior to such date, (i) the Company or any of the
Guarantors shall have failed, refused or been unable to perform in any
material respect any agreement on its part to be performed hereunder, (ii)
any other condition to the obligations of the Initial Purchasers hereunder
as provided in Section 8 is not fulfilled when and as required in any
material respect, (iii) in the reasonable judgment of the Initial
Purchasers, any material adverse change shall have occurred since the
respective dates as of which information is given in the Offering
Memorandum in the condition (financial or otherwise), business, prospects,
or results of operations of the Company and its subsidiaries, taken as a
whole, other than as set forth in the Offering Memorandum, or (iv)(A)
trading in securities generally on the New York Stock Exchange, the
American Stock Exchange, or the Nasdaq National Market shall have been
suspended or materially limited, or minimum or maximum prices for trading
shall have been established, or maximum ranges for prices for securities
shall have been required, on such exchange or the Nasdaq National Market,
or by such exchange or other regulatory body or governmental authority
having jurisdiction; or (B) a banking moratorium shall have been declared
by federal or state authorities; or (C) there is an outbreak or escalation
of armed hostilities involving the United States on or after the date
hereof, or if there has been a declaration by the United States of a
national emergency or war, the effect of which shall be, in the Initial
Purchasers' judgment, to make it inadvisable or impracticable to proceed
with the offering or delivery of the Restricted Notes on the terms and in
the manner contemplated in the Offering Memorandum; or (D) there shall have
occurred such a material adverse change in the financial markets in the
United States such as,
-28-
in the Initial Purchasers' judgment, makes it inadvisable or impracticable
to proceed with the delivery of the Restricted Notes as contemplated
hereby.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone or facsimile and, in either case, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to clause (iv) of Section 11(b),
in which case each party will be responsible for its own expenses), or if
the sale of the Restricted Notes provided for herein is not consummated
because any condition to the obligations of the Initial Purchasers set
forth herein is not satisfied or because of any refusal, inability or
failure on the part of the Company or any Guarantor to perform any
agreement herein or comply with any provision hereof, the Company and the
Guarantors shall reimburse the Initial Purchasers for all out-of-pocket
expenses (including the reasonable fees and expenses of the Initial
Purchasers' counsel), incurred by the Initial Purchasers in connection
herewith.
(e) If on the Closing Date any one or more of the Initial Purchasers
shall fail or refuse to purchase the Restricted Notes which it or they have
agreed to purchase hereunder on such date and the aggregate principal
amount of the Restricted Notes which such defaulting Initial Purchaser or
Initial Purchasers, as the case may be, agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of
the Restricted Notes to be purchased on such date by all Initial
Purchasers, each non-defaulting Initial Purchaser shall be obligated
severally, in the proportion which the principal amount of the Restricted
Notes set forth opposite its name in Schedule II bears to the aggregate
-----------
principal amount of the Restricted Notes which all the non-defaulting
Initial Purchasers, as the case may be, have agreed to purchase, or in such
other proportion as Bear, Stearns & Co. Inc. ("Bear Stearns") may specify,
to purchase the Restricted Notes which such defaulting Initial Purchaser or
Initial Purchasers, as the case may be, agreed but failed or refused to
purchase on such date; provided that in no event shall the aggregate
principal amount of the Restricted Notes which any Initial Purchaser has
agreed to purchase pursuant to Section 3 hereof be increased pursuant to
this Section 11 by an amount in excess of one-ninth of such principal
amount of the Restricted Notes without the written consent of such Initial
Purchaser. If on the Closing Date any Initial Purchaser or Initial
Purchasers shall fail or refuse to purchase the Restricted Notes and the
aggregate principal amount of the Restricted Notes with respect to which
such default occurs is more than one-tenth of the aggregate principal
amount of the Restricted Notes to be purchased by all Initial Purchasers
and arrangements satisfactory to the Initial Purchasers and the Company for
purchase of such the Restricted Notes are not made within 48 hours after
such default, this Agreement will terminate without liability on the part
of any non-defaulting Initial Purchaser and the Company. In any such case
which does not result in termination of this Agreement, either Bear Stearns
or the Company shall have the right to postpone the Closing Date, but in no
event for longer
-29-
than seven days, in order that the required changes, if any, in the
Offering Memorandum or any other documents or arrangements may be effected.
Any action taken under this paragraph shall not relieve any defaulting
Initial Purchaser from liability in respect of any default of any such
Initial Purchaser under this Agreement.
12. Notice. All communications hereunder, except as may be otherwise
------
specifically provided herein, shall be in writing and, if sent to the Initial
Purchasers shall be mailed, delivered, telecopied and confirmed in writing or
sent by a nationally recognized overnight courier service guaranteeing delivery
on the next business day to Bear, Stearns & Co. Inc., 245 Park Avenue, New York,
New York 10167, Attention: Corporate Finance Department, telecopy number: (212)
272-3092, with a copy to Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue,
New York, New York 10022, Attention: Howard A. Sobel, Esq., telecopy number:
(212) 715-8000; and if sent to the Company and the Guarantors, shall be mailed,
delivered, telecopied and confirmed in writing or sent by a nationally
recognized overnight courier service guaranteeing delivery on the next business
day to Vail Resort, Inc., 137 Benchmark Road, Avon, Colorado 81620, Attention:
Chief Financial Officer, telecopy number: (970) 845-2521, with a copy to Cahill
Gordon & Reindel, 80 Pine Street, New York, New York 10005, Attention: James J.
Clark, Esq., telecopy number: (212) 269-5420.
13. Parties. This Agreement shall inure solely to the benefit of, and shall
-------
be binding upon, the Initial Purchasers, the Company, the Guarantors and the
controlling persons and agents referred to in Sections 6 and 7, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. The
term "successors and assigns" shall not include a purchaser, in its capacity as
such, of Notes from the Initial Purchasers.
14. Construction. This Agreement shall be construed in accordance with the
------------
internal laws of the State of New York.
15. Captions. The captions included in this Agreement are included solely
--------
for convenience of reference and are not to be considered a part of this
Agreement.
16. Counterparts. This Agreement may be executed in various counterparts
------------
which together shall constitute one and the same instrument.
[Signature pages to follow]
-30-
If the foregoing correctly sets forth the understanding among the Initial
Purchasers, the Company and the Guarantors please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
VAIL RESORTS, INC.
By: /s/ James P. Donohue
--------------------------
Name: James P. Donohue
Title: Senior Vice President and
and Chief Financial Officer
[Purchase Agreement Signature Page for Company]
GHTV, Inc.
Gillett Broadcasting of Maryland, Inc.
Gillett Broadcasting, Inc.
Gillett Group Management, Inc.
Vail Holdings, Inc.
The Vail Corporation
Beaver Creek Associates, Inc.
Beaver Creek Consultants, Inc.
Lodge Properties, Inc.
Piney River Ranch, Inc.
Vail Food Services, Inc.
Vail Resorts Development Company
Vail Summit Resorts, Inc.
Vail Trademarks, Inc.
Vail/Arrowhead, Inc.
Vail/Beaver Creek Resort Properties, Inc.
Beaver Creek Food Services, Inc.
Lodge Realty, Inc.
Vail Associates Consultants, Inc.
Vail Associates Holdings, Ltd.
Vail Associates Management Company
Vail Associates Real Estate, Inc.
Vail/Battle Mountain, Inc.
Keystone Conference Services, Inc.
Keystone Development Sales, Inc.
Keystone Food and Beverage Company
Keystone Resort Property Management Company
Property Management Acquisition Corp., Inc.
The Village at Breckenridge Acquisition Corp., Inc.
Each by its authorized officer:
By: /s/ James P. Donohue
--------------------------
Name: James P. Donohue
Title: Senior Vice President of
each Guarantor listed above
[Purchase Agreement Signature Page for Guarantors]
Accepted and agreed to as of
the date first above written:
Bear, Stearns & Co. Inc.
By: /s/ Steve Winegrad
---------------------------------
Name: Steve Winegrad
Title: Senior Managing Director
Nationsbanc Montgomery Securities LLC
By:
---------------------------------
Name:
Title:
Bt Alex. Brown Incorporated
By:
---------------------------------
Name:
Title:
Lehman Brothers Inc.
By:
---------------------------------
Name:
Title:
Salomon Smith Barney Inc.
By:
---------------------------------
Name:
Title:
[Purchase Agreement Signature Pages for Initial Purchasers]
Accepted and agreed to as of
the date first above written:
Bear, Stearns & Co. Inc.
By:
---------------------------------
Name:
Title:
Nationsbanc Montgomery Securities LLC
By: /s/ Sam A. Wilkins, III
---------------------------------
Name: Sam A. Wilkins, III
Title: Senior Managing Director
Bt Alex. Brown Incorporated
By:
---------------------------------
Name:
Title:
Lehman Brothers Inc.
By:
---------------------------------
Name:
Title:
Salomon Smith Barney Inc.
By:
---------------------------------
Name:
Title:
[Purchase Agreement Signature Pages for Initial Purchasers]
Accepted and agreed to as of
the date first above written:
Bear, Stearns & Co. Inc.
By:
---------------------------------
Name:
Title:
Nationsbanc Montgomery Securities LLC
By:
---------------------------------
Name:
Title:
Bt Alex. Brown Incorporated
By: /s/ Larry Zimmerman
---------------------------------
Name: Larry Zimmerman
Title: Managing Director
Lehman Brothers Inc.
By:
---------------------------------
Name:
Title:
Salomon Smith Barney Inc.
By:
---------------------------------
Name:
Title:
[Purchase Agreement Signature Pages for Initial Purchasers]
Accepted and agreed to as of
the date first above written:
Bear, Stearns & Co. Inc.
By:
---------------------------------
Name:
Title:
Nationsbanc Montgomery Securities LLC
By:
---------------------------------
Name:
Title:
Bt Alex. Brown Incorporated
By:
---------------------------------
Name:
Title:
Lehman Brothers Inc.
By: /s/ John Russell
---------------------------------
Name: John Russell
Title: Managing Director
Salomon Smith Barney Inc.
By:
---------------------------------
Name:
Title:
[Purchase Agreement Signature Pages for Initial Purchasers]
Accepted and agreed to as of
the date first above written:
Bear, Stearns & Co. Inc.
By:
---------------------------------
Name:
Title:
Nationsbanc Montgomery Securities LLC
By:
---------------------------------
Name:
Title:
Bt Alex. Brown Incorporated
By:
---------------------------------
Name:
Title:
Lehman Brothers Inc.
By:
---------------------------------
Name:
Title:
Salomon Smith Barney Inc.
By: /s/ Wendell M. Brooks
---------------------------------
Name: Wendell M. Brooks
Title: Director
[Purchase Agreement Signature Pages for Initial Purchasers]
SCHEDULE I
Guarantors
GHTV, Inc.
Gillett Broadcasting of Maryland, Inc.
Gillett Broadcasting, Inc.
Gillett Group Management, Inc.
Vail Holdings, Inc.
The Vail Corporation
Beaver Creek Associates, Inc.
Beaver Creek Consultants, Inc.
Lodge Properties, Inc.
Piney River Ranch, Inc.
Vail Food Services, Inc.
Vail Resorts Development Company
Vail Summit Resorts, Inc.
Vail Trademarks, Inc.
Vail/Arrowhead, Inc.
Vail/Beaver Creek Resort Properties, Inc.
Beaver Creek Food Services, Inc.
Lodge Realty, Inc.
Vail Associates Consultants, Inc.
Vail Associates Holdings, Ltd.
Vail Associates Management Company
Vail Associates Real Estate, Inc.
Vail/Battle Mountain, Inc.
Keystone Conference Services, Inc.
Keystone Development Sales, Inc.
Keystone Food and Beverage Company
Keystone Resort Property Management Company
Property Management Acquisition Corp., Inc.
The Village at Breckenridge Acquisition Corp., Inc.
SCHEDULE II
Initial Purchasers
Initial Purchasers Principal Amount
- ------------------ ----------------
Bear, Stearns & Co. Inc. ................................. 76,522,000
NationsBanc Montgomery Securities LLC .................... 76,522,000
BT Alex. Brown Incorporated .............................. 15,652,000
Lehman Brothers Inc. ..................................... 15,652,000
Salomon Smith Barney Inc. ................................ 15,652,000
------------
Total ............................................... $200,000,000
============
SCHEDULE III
Material Domestic Subsidiaries of the Company
Owned Directly by Vail Resorts, Inc.
GHTV, Inc.
Gillett Broadcasting of Maryland, Inc.
Gillett Broadcasting, Inc.
Gillett Group Management, Inc.
Vail Holdings, Inc.
Owned Directly by Vail Holdings, Inc.
The Vail Corporation
Owned Directly by The Vail Corporation
Beaver Creek Associates, Inc.
Beaver Creek Consultants, Inc.
Lodge Properties, Inc.
Piney River Ranch, Inc.
SSI Venture, LLC
Vail Associates Investments, Inc.
Vail Food Services, Inc.
Vail Resorts Development Company
Vail Summit Resorts, Inc.
Vail Trademarks, Inc.
Vail/Arrowhead, Inc.
Vail/Beaver Creek Resort Properties, Inc.
Owned Directly by Beaver Creek Associates, Inc.
Beaver Creek Food Services, Inc.
Owned Directly by Lodge Properties, Inc.
Lodge Realty, Inc.
Owned Directly by Vail Resorts Development Company
Vail Associates Consultants, Inc.
Vail Associates Holdings, Ltd.
Vail Associates Management Company
Vail Associates Real Estate, Inc.
Owned Directly by Vail Associates Real Estate, Inc.
Slifer, Smith & Frampton/Vail Associates Real Estate, LLC Vail/Battle
Mountain, Inc.
Owned Directly by Vail Summit Resorts, Inc.
Keystone Conference Services, Inc.
Keystone Development Sales, Inc.
Keystone Food and Beverage Company
Keystone/Intrawest, LLC
Keystone Resort Property Management Company
Property Management Acquisition Corp., Inc.
The Village at Breckenridge Acquisition Corp., Inc.
SCHEDULE IV
Subsidiaries of the Company
Owned Directly by Vail Resorts, Inc.
=========================================================================================
State of Qualified to do
Subsidiary % Owned Incorporation Business in
- ---------- ------- ------------- -----------
- -----------------------------------------------------------------------------------------
GHTV, Inc. 100% Delaware California
- -----------------------------------------------------------------------------------------
Gillett Broadcasting of Maryland, 100% Delaware Tennessee
Inc.
- -----------------------------------------------------------------------------------------
Gillett Broadcasting, Inc. 100% Delaware --
- -----------------------------------------------------------------------------------------
Gillett Group Management, Inc. 100% Delaware Colorado
- -----------------------------------------------------------------------------------------
Vail Holdings, Inc. 100% Colorado --
=========================================================================================
Owned Directly by Vail Holdings, Inc.
=========================================================================================
State of Qualified to do
Subsidiary % Owned Incorporation Business in
- ---------- ------- ------------- -----------
- -----------------------------------------------------------------------------------------
The Vail Corporation 100% Colorado --
==========================================================================================
Owned Directly by The Vail Corporation
=========================================================================================
State of Qualified to do
Subsidiary % Owned Incorporation Business in
- ---------- ------- ------------- -----------
- -----------------------------------------------------------------------------------------
Avon Partners II, LLC 50% Colorado --
- -----------------------------------------------------------------------------------------
Beaver Creek Associates, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Beaver Creek Consultants, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
BC Housing, LLC 49% Colorado --
- -----------------------------------------------------------------------------------------
Eagle Park Reservoir Company 55% Colorado --
- -----------------------------------------------------------------------------------------
Eclipse Television and Sports
Marketing, LLC 25% Colorado --
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Lodge Properties, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Piney River Ranch, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
SSI Venture, LLC 52% Colorado --
- -----------------------------------------------------------------------------------------
Vail Associates Investments, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Vail Food Services, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Vail Resorts Development Company 100% Colorado --
- -----------------------------------------------------------------------------------------
Vail Summit Resorts, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Vail Trademarks, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Vail/Arrowhead, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Vail/Beaver Creek Resort
Properties, Inc. 80% Colorado --
=========================================================================================
Owned Directly by Beaver Creek Associates, Inc.
=========================================================================================
State of Qualified to do
Subsidiary % Owned Incorporation Business in
- ---------- ------- ------------- -----------
- -----------------------------------------------------------------------------------------
Beaver Creek Food Services, Inc. 100% Colorado --
=========================================================================================
Owned Directly by Beaver Creek Food Services, Inc.
=========================================================================================
State of Qualified to do
Subsidiary % Owned Incorporation Business in
- ---------- ------- ------------- -----------
- -----------------------------------------------------------------------------------------
Boulder/Beaver, LLC 86% Colorado --
=========================================================================================
Owned Directly by Lodge Properties, Inc.
=========================================================================================
State of Qualified to do
Subsidiary % Owned Incorporation Business in
- ---------- ------- ------------- -----------
- -----------------------------------------------------------------------------------------
Lodge Realty, Inc. 80% Colorado --
=========================================================================================
Owned Directly by Vail Resorts Development Company
=========================================================================================
State of Qualified to do
Subsidiary % Owned Incorporation Business in
- ---------- ------- ------------- -----------
- -----------------------------------------------------------------------------------------
Vail Associates Consultants, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Vail Associates Holdings, Ltd. 100% Colorado --
- -----------------------------------------------------------------------------------------
Vail Associates Management Company 100% Colorado --
- -----------------------------------------------------------------------------------------
Vail Associates Real Estate, Inc. 80% Colorado --
=========================================================================================
Owned Directly by Vail Associates Real Estate, Inc.
=========================================================================================
State of Qualified to do
Subsidiary % Owned Incorporation Business in
- ---------- ------- ------------- -----------
- -----------------------------------------------------------------------------------------
Slifer, Smith & Frampton/Vail 50% Colorado --
Associates Real Estate, LLC
- -----------------------------------------------------------------------------------------
Vail/Battle Mountain, Inc. 100% Colorado --
=========================================================================================
Owned Directly by Vail Summit Resorts, Inc.
=========================================================================================
State of Qualified to do
Subsidiary % Owned Incorporation Business in
- ---------- ------- ------------- -----------
- -----------------------------------------------------------------------------------------
Clinton Ditch and Reservoir Company 49% Colorado --
- -----------------------------------------------------------------------------------------
Keystone Conference Services, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Keystone Development Sales, Inc. 100% Colorado --
- -----------------------------------------------------------------------------------------
Keystone Food and Beverage Company 100% Colorado --
- -----------------------------------------------------------------------------------------
Keystone/Intrawest, LLC 50% Delaware --
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Keystone Resort Property Management 100% Colorado --
Company
- -----------------------------------------------------------------------------------------
Property Management Acquisition 100% Tennessee Colorado
Corp., Inc.
- -----------------------------------------------------------------------------------------
The Village at Breckenridge 100% Tennessee Colorado
Acquisition Corp., Inc.
=========================================================================================
Exhibit 1
Form of Assistant General Counsel Opinion
Exhibit 2
Form of Cahill Gordon & Reindel Opinion
Exhibit 3
Form of Arnold & Porter Opinion
Exhibit 4
Form of Balcomb & Greene, P.C. Opinion